“The size Greece ‘needed’ implies the others will need numbers beyond euro zone capacity, especially as the Greek deal used up euro zone capacity.
So this means Greece is the last rescue possible- the rest are on their own. They wanted to stop the contagion, but that would have had to be done by showing they could save Greece without weakening themselves, and in a manner that shows they can help any and all. They didn’t do that. Instead they showed the effort necessary to save Greece was so large that they don’t have the means to save anyone larger than Greece.
So now they are performing without a net. And, as Marshall (Auerback) put it, the austerity measures are likely to increase rather than decrease deficits, making it all that much worse. This euro zone problem is not going away.”
Dead on Warren. Was Greece truly the Bear Stearns of Europe? It’s looking more and more possible….