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Wednesday, 26 October 2011
Repost: Why A €1 Trillion EFSF Is Not A "Bazooka" But A "Peashooter", And Is Woefully Inadequate
The most important news of the night is not that the Greek haircut will be 50%, which is still insufficient as it excludes ECB Greek debt holdings, plus as the IMF noted, a 60% NPV haircut on all bonds is needed for Greece to return to viability, but that the EFSF will be just €1 trillion. Unfortunately, the EU Council and its advisor, JPM, refused to read the Zero Hedge analysis on why anything less than €2.4 trillion is insufficient (not to mention assumes no French AAA-downgrade... ever). Which is why we repost it for whatever sentient carbon-based life forms are left to realize why tonight's Euro TARP should be promptly faded until it is at least doubled to well €2 trillion, which, alas is impossible: absent Uncle Sam footing €250 billion solely to bailout French banks, this will not work!