The initial reaction to the EU plan to backstop Greece and other weak countries was very favorable as demonstrated by massive rallies in stock markets around the world. On this second day, however, more careful reading and analysis of the program is underway. Markets are muted as the program is dissected.
What does all this mean? Is it possible for governments to “create money” to offset underlying real economic problems? Markets will eventually sort these questions out. In the meantime, Where is Ze Moola presents a composite of the early reactions of many of the better analysts.
By the end of this week, it is likely that we know whether the EU has bluffed its way through the immediate crisis. If the markets are back to where they were pre-plan announcement, then markets have called their bluff. The danger for the EU is that they have gone “all in.” If this doesn’t work, then what?
