DEBT FINANCING. The euro area and the danger zone

(CNN) - London Thus, the word this week is that the leaders of the euro area may be ready to quadruple the region Rescue Fund and write down 50% of the debt of the Greece. This, as a final solution to a crisis that continues to overshadow the single currency a decade after its introduction.
Markets in Frankfurt and Paris reacted with cautious optimism by the magnitude of the financial commitment and, finally, an acknowledgement of receipt that the Greece did not hope to pay off the coast of all its existing obligations.
Ministers moving to forge a concrete plan, investors on some questions still remain unanswered:
(1) It will be sufficient?
(2) How soon pass measures?
(3) It is too late?

If the euro zone can increase the size of its European installation of financial stability, or rescue Fund, 2.7 trillion dollar its politicians are discussing would not only if that was "serious money" as the only Economist today, but it is crucial to the Fund is to big enough to support some of the greatest peripheral nations with the eye of the storm as Italy and the Spain.
Give European leaders a nudge in the right direction, this weekend was the Monetary Fund International. The World Bank of last resort, which has played a vital role by providing financial assistance to the Greece, the Ireland and Portugal, stated that it would support the euro zone, but warned that it could not have enough cash to help everyone.
The amount of financial assistance that might be required is gargantuan. The euro area is today a trillion problem euro rather than a question of billions of dollars and even gave us Treasury Secretary Timothy Geithner night white of the strange.
Yet, some economists have questioned repeatedly if European leaders needed to put aside quite so much cash, had they been faster by showing strong support for a hesitant Member and its banks.
As for the banks themselves. Many financial institutions in Greece, France and the Germany would stand to lose billions should impose a discount of 50% on Greek debt holders. This is why the part of the plan have been considered in Washington would also repair of stricken lenders, effectively their disadvantage of neutralization and preventing a run on deposits euro per client.
Nick Parsons, chief strategist of the NAB Capital London market, said investors in Greek debt can see the value of their assets decline of more than 75 per cent.
"We are looking in the process of orderly default," he said.
"We don't expect to leave the single currency, the Greece. "It will remain a member of the euro, but the creditors who are owed money by the Greece will not be refunded," said.
Adding to the confusion, it is desperate insurance of Minister of Finance of Greece saying that his country would do all its possible to meet its obligations.
As an investor said it me today: "is the only Greece in denial of its imminent failure?". "
In the meantime, sovereign debt - the countries measured by credit default swap contracts - insurance show that markets are still pricing in a 90% of payments missed chance.
Greek politicians and economists agree that they will meet a tightening of liquidity may be as early as next month, means that European politicians have little valuable time for debate.
However, any plan will have to be ratified by all 17 Member States and that could take up to six weeks.
The Greece is still awaiting its next tranche of funding from troika - a body composed of the European Central Bank, the European Union and the Monetary Fund International in negotiations stretched over the cuts and tax hikes.
The countries of the euro area in July agreed to expand original rescue plan presented in May 2010, but this approach has yet to make its way through a Parliament Germany tired of bailing his brothers Europeans prodigus.
Other users such as the Finland euro have stipulated their own requirements in return for future assistance in Greece, by requiring the loan guarantees. Which may be fine for the Finland, but these terms are not realistic for all countries contributing to the financial future of the Greece.
Against this background dark economists are also disagree as to whether if austerity really is the standardized solution appropriate for the different conditions zone nations euro is facing today.
Severe austerity, arrived too late, in Greece is likely to contribute to an economic contraction of 5% this year.
Add to that the rate of inflation, future job cuts and receipts collected to finance the deficit of the country say will probably is worth less and less tax.
The economic reality of the Athen today provides a lesson for the Outlook for the eurozone tomorrow.

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