The Economist sceptical about rescue plan

On the front page of The Economist, Europe’s leaders are seen escaping the sinking boat that the Eurozone seems to have become. But for the influential British weekly, “The scheme is confused and unconvincing. Confused, because its financial engineering is too clever by half and vulnerable to unintended consequences. Unconvincing, because too many details are missing and the scheme at its core is not up to the job of safeguarding the euro”, writes the weekly, regretting that “Germany and the European Central Bank (ECB) have ruled out the only source of unlimited support: the central bank itself.”

For The Economist, the strengthening of the European Financial Stability Facility (EFSF) by the creation of special-purpose vehicles financed by other investors, including sovereign-wealth funds is not enough : “Why should China or Brazil invest a lot in them when Germany is holding back from putting in more money?” As for the writing-down of the Greek debt, “while the EFSF scheme is designed to offer insurance to bondholders, the European leaders’ insistence that the Greek writedown be voluntary will make euro-zone debt harder to insure.”