Morgan Stanley's Joachem Fels says that the leveraged EFSF is looking more like a water pistol than a bazooka.
Let's hope that the Euro Finance Chiefs can make the EFSF into something more effective, because a water pistol won't do anything stop the BIG BEAR that has been mauling each of the European economies.
How you fix leverage with more leverage in the EFSF without creating potentially more risks is puzzling indeed. Would be very interesting to find out what this magical solution actually looks like.
Demand for EFSF bonds was weak today (3 billion euros of orders today vs 44.5 billion euros of orders for its first offering on Jan. 25), so if the bailout fund doesn't work, we're back to square one. There are definitely concerns about EFSF being a relatively new issuer and about its sustainability as well.
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