Mohammad El-Erian likes what he sees. Well, he at least likes the Europe finally walked the plank and decided to take the anything-and-everything approach to rescuing itself.
In a guest post over at FT Alphaville he concludes:
Tonight, Europe has done much more than boldly step up in its policy response; it has taken it to a completely new level and dimension. We are now in uncharted waters when it comes to how all this will impact the secular workings and make-up of the eurozone.
For now, this would seem to be the real story.
Barring a breakdown in the mechanism (i.e. a realisation that the money isn’t fully there yet), it seems hard to imagine that the bond and forex vigilantes will have the guts to take on the entire continent for a while (we think).
But in terms of Europe now being a common fiscal body, the story is going to take a lot of interesting turns — Angela Merkel’s losing one house of parliament is part of it. They’re also squabbling in the UK over power sharing, where much of the difference between the two parties (Torys and Lib Dems) has to do with attitudes towards Eurozone integration.