Euro Area

[Furunculus]

Germany and France in combination. Even better for them if others get involved to share the load.

As I've outlined here before there is no realistic alternative to their continuing to stump up the cash required to keep Greece afloat for the foreseable future (aka kick the can down the road and hope for something to happen to help them out).

Either they do so, or they let Greece default which will cause european banks to have to recognise huge losses and hold larger capital reserves against the bad loans, which in turn will kill off trade finance, world trade and impact global growth. Cue market panic!

Or they allow their precious Euro to break apart, Greece devalues and effectively defaults causing the same issues.

Or they create a political and fiscal union and issue Eurobonds to replace the entirety of eurozone sovereign debt. Goodbye Germany and France as sovereign countries!

france does not have the leeway, if it commits to to much more liability on behalf of the eurozone it risks its own credit rating being downgraded.

Italy has just been downgraded, that however was expected, but the eurozone cannot afford to have the 'other' supporting pillar beside germany dissolve.