oil slick = euro trick
Stopping the spread of financial contagion is deceptively similar to plugging a ruptured deep-sea oil well: the cost is epic, the risk of failure is catastrophic, and expectations of success may be more hopeful than realistic. Recent efforts to address both crises share so many elements that a few tweaks to the following report on the Gulf catastrophe also freakishly describes efforts by the Eurozone to head off the risk of cascading sovereign defaults…
[European Central Bank] to [inject $1 trillion] to stop flow from [Club Med economies]
Adapted from an article on guardian.co.uk Friday 7 May 2010
The [$1 trillion facility] that remains [Europe's] best hope of containing the disaster in [Greece, Spain and Portugal] was [introduced] today amid acrid fumes from thick layers of [political rhetoric]. [Bond vigilantes] swept the [markets] for debris that has been spewing [billions of sovereign debt into European bond markets] for more than a [decade].
Officials said they needed time to get [a multilateral agreement] into position over the leaking [economies]. Work was [accelerated] overnight because of fears of triggering a [collapse of the banking system]. If all goes to plan, the [funds will buy up billions in government bonds] gushing from the [indebted PIIGS]. But [the ECB] admits it is unclear whether its efforts will work.
No [multilateral fund] has ever been deployed at such depths, and the operation is threatened by [public opposition to harsh austerity measures]. The [ECB] said today it was also exploring the possibility of injecting [funds into sovereign bond markets] whose failure two weeks ago led to the disaster. Meanwhile, [the IMF and regional governments] have begun to [draft painful new budgets] but that could take months.
The [Obama administration] warned that [Europe]‘s very survival could depend on its response effort. “It’s all about psychology,” said the senior official. “You have to convince people that the government will get its act together.” “Are they doing everything that they can possibly do? I hope that they are.”
The [bailout] could also kickstart stalled [financial regulation] legislation in the Senate. [Christopher Dodd], the Democratic Senator, said today he would formally roll-out his proposals on Wednesday even though a key Republican ally, [Richard Shelby], has withdrawn support for the measures.