The EFSF: The EU's Cap Gun

     It could only plausibly work if the contagion didn't spread. However it is spreading like wildfire. What seemed plausible a month ago isn't now with the worsening market conditions that now even saw German bonds rise. While they remain historically low they are more expensive than British debt and much more than U.S. which yet again shows that there is no debt crisis here in the U.S. or in Britain despite David Cameron's austerity package.

    http://www.cnbc.com/id/45433559

     "A plan to boost the firepower of the euro zone’s €440 billion ($585.5 billion) rescue fund could deliver as little as half what the bloc’s leaders had hoped for because of a sharp deterioration in market conditions over the past month, according to several senior euro zone government officials."

     "European leaders hailed a scheme to offer insurance on losses for investors buying troubled euro zone bonds as a means of leveraging the €250 billion spare capacity of the rescue fund four or five fold, to more than €1,000 billion."

     "But the dramatic spike in borrowing costs for Italy since the summit is likely to force the European Financial Stability Facility to sweeten the deal offered to investors, which will limit the number of bonds the insurance would cover."

       The only thing that will save the EU now are fiscal integration. Germany continues to fight this idea worrying about it's worthy credit. In the end it may lose it anyway. Germany continues to pretend that when the blizzard hits it will bypass their house because they adequately saved for the winter.