http://blogs.ft.com/gavyndavies/2011/06/19/emu-getting-the-worst-of-all-worlds/
The hallmark of Europe’s response to the debt crisis has been a refusal to admit openly to the loss of solvency which has occurred. Every intervention so far has pretended that the crisis is one of liquidity, which can be solved by making loans to the troubled banks and governments in question.
And since there has been no open admission of default or debt restructuring by any of the troubled nations, the banking sector has not been forced to write down debt and raise more capital.
A list of the main creditors to Greece is now topped by the European Central Bank, the European Financial Stability Facility (EFSF), and the IMF.
The hallmark of Europe’s response to the debt crisis has been a refusal to admit openly to the loss of solvency which has occurred. Every intervention so far has pretended that the crisis is one of liquidity, which can be solved by making loans to the troubled banks and governments in question.
And since there has been no open admission of default or debt restructuring by any of the troubled nations, the banking sector has not been forced to write down debt and raise more capital.
A list of the main creditors to Greece is now topped by the European Central Bank, the European Financial Stability Facility (EFSF), and the IMF.
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