Ambrose Evans-Pritchard nails it in his latest Telegraph column:
The leaders of Germany and France have three bad choices as they decide whether to save EMU this week, or pretend to do so.
The choices: Fiscal union, an ECB multi-trillion bond buying bonanza, or the current state of perpetual crisis, with one failed bailout mechanism after another.
There is a fourth option of course: Give up hope, and end pull the project on the euro once and for all.
Of the above options, the ECB seems the most likely, and it obviously cranked into gear last week, bringing Italian 10-year yields from over 6% to around 5%. What’s more, the ECB approach is politically lazy (and un-democratic), as it doesn’t require more tough votes in bailout-hostile parliaments across the continent. Furthermore, with CDS rising in Germany (and France), the cat’s out of the bag: Europe’s core is a credit risk too if they’re really to shoulder the burden of everyone else.
AEP is also probably right about this point:
They have days or weeks to make up their minds, not months.
Indeed, with concerns finally breaking into France (will it lose its AAA? Ar its banks at risk?) endgame seems fairly close at hand. Doubt it will be a quiet week.