Default is the only thing that will work in Europe. The example of Iceland is right there for everyone to see.
But making bond-holders take major losses will shake the system in ways that LIBOR manipulation and MFGlobal-style outright theft have not.
Bond confidence must be maintained.
The US major banks "insure" a large chunk of Euro credit. These banks must be saved, so the Euro bubble must be addressed.
Expect a major bailout of the Euro zone by the US Fed.
But making bond-holders take major losses will shake the system in ways that LIBOR manipulation and MFGlobal-style outright theft have not.
Bond confidence must be maintained.
The US major banks "insure" a large chunk of Euro credit. These banks must be saved, so the Euro bubble must be addressed.
Expect a major bailout of the Euro zone by the US Fed.
