Eurotalk consists of vague statements and restatements of information that was previously available. There is nothing new here.
1. How will a new ESM banking license help? The eurocrats keep talking about turning this fund into a bank, so it can use leverage. Leverage is created when assets are pledged in return for loans. What is never discussed is who is going to loan the ESM money? Does this look like a good investment to anybody?
2. ECB bond buying is a temporary fix. Speculators frontrun the ECB making good profits and bidding debt prices down. When the bond buying program ends, rates go right back up. Furthermore, the ECB debt preference means that every bond it buys pushes a private investor down the seniority list decreasing the value of the bonds left in circulation. Hence, increased ECB bond buying leads to higher interest rates to counteract buyout risk in the future.
3. If the Eurozone is going to merge their banking systems together, then all countries will have to give up sovereignty AND be on the hook for every other’s countries liabilities. These actions will take years, and they do not have years.
The PIIGS either need to grow their economies at a rapid clip, which will be difficult as they are all in varying degrees of recession or depression, or they need a devalued currency to increase productivity and lower the value of the debts they are repaying. NOTHING else will solve the crisis. Things that will definitely not work are Eurosummits, bureaucrats talking about doing something, politicians talking about doing something, “firepower” increases, “firewall” bolstering or one of Wile E. Coyote’s ingenious plans.