Photo: Wikimedia COmmons
Following last night’s big meeting — which is being greeted with a strong rally — here’s what to watch next:We would expect the next 24 hours to be driven by how the Sarkozy call to China President Hu Jintao goes, how investors analyse the sustainability of Greek debt under this program, and the reception that the EFSF proposal will get. We are a bit surprised by the enthusiasm given the lack of detail and lack of surprise. We are also wondering how seriously investors will take the EFSF guarantees (which only apply in the event of a default), given that the banks were strongly encouraged to declare the current restructuring voluntary. Investors may fear that the EFSF – guaranteeing – governments will similarly contrive to avoid paying out on their first-loss guarantees.
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