Monday 14 March 2011

Munchau’s purgatory between bailout and default

Tom McDonnell: Weak measures to report from Part 1 of the big European double header last weekend: see here and here. The unfortunate unwillingness to accept the true scale of the crisis and take the decisive action required is troubling.

The Guardian is taking the line that Ireland is facing a default if a renegotiation of the IMF/EU bailout isn't available.

They point to a Sunday Independent article claiming the stress tests will identify an additional €15 to €25 billion to cover the bank losses.

As Wolfgang Munchau at the Financial Times reports, “muddling through will not work this time – the EU has created a purgatory between bailout and default”. Munchau’s preference is for a bailout not through cross-country transfers, but through a single European bond.

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