What is a shock, to me at least, is that this is seen as the end of the EFSF as "the big bazooka" to fix all Europe's woes, and markets attentions are now turning to the ESM to fulfil that role.
How stupid are these people? As someone with 20 years on a bank trading floor I can say with conviction the answer is very.
THERE IS NO BIG BAZOOKA. THERE IS NO QUICK FIX.
Europe as a whole is about to go through a period of Thatcherism, except this time it will be called Merkelism.
As with the UK when Thatcher came to power. The problem is too much debt. The solution is to pay off that debt. That takes time. And it hurts. There will be economic stagnation, and people are going to lose their jobs. But the alternative is mass default and economic collapse. Austerity sucks, but it will eventually lead to financial stability and growth. it's going to take 5 to 10 years to get these problems under control.
It's going to hurt. The alternative is far far worse.
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