Last week I promised to provide a little more insight into what the ECB is doing with its OMT program and what this should mean for the euro, economic growth, and European sovereign bond markets. This weekly post is dedicated to that theme. On the whole, the OMT decision is a significant move by the ECB, especially given Bundesbank opposition. But hurdles still remain both in terms of the German constitutional court challenge to the ESM and in terms of capital flight and likely bank resolution burdens.
Fundamental problem in Europe
Since this is a weekly, I want to look at the issue comprehensively. And that means framing the euro zone's problem. At heart, the issue is the nexus of sovereign indebtedness and bank solvency in a fixed currency union without a lender of last resort. The eur...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.