October 12th, 2011
05:42 PM GMT
London (CNN) – It's taken months, but Europe's leaders are starting to put pen to paper and be willing to spell out, in some detail, how to fix the eurozone - if it's fixable.
I think it is fixable. It will include a massive restructuring of Greek debt, call it default or not.
European Commission president Jose Manuel Barroso - or what he should be called; the euro cheerleader - did not say as much in his speech to the European Parliament Wednesday.
He did do, however, lay out in some detail five road marks on how to get out of the euro mess. I did have to laugh when he said there was no option but "to act now." You think?
The plan he presented for Parliament's approval included of course sorting out Greece now, building up Europe's bail out fund and building more Europe, not less.
Nothing new there. But he did call for Europe's permanent bailout backstop, the European Stability Mechanism (get used to the term EMS) to be up and running by mid 2012, not 2013.
We know the existing bail out fund - the European Financial Stability Facility - will be enhanced. But Barosso argues the EMS should start sooner to "reinforce confidence." Again, the theory being that having the firepower around would hopefully mean it would not have to be used.
Barroso also went into some detail about recapitalizing the banks. We all know this is coming, no matter what the French have been saying before this week, so now its about what banks (only troubled ones), with what money and how much tier 1 capital they must hold (7% or 9%).
There are those who say it does not matter much what Barroso tells unknown European parliamentarians. I have some sympathy for that position, given that what really matters is that 'Merkozy' will do: Germany and France make up half the eurozone economy, and no agreement on how to allow Greece to default, no agreement how to recapitalize banks, no agreement on a fiscal union will come about unless Berlin and Paris agree.
It is clear to me that while Europe has not been speaking with one voice, for a few weeks now various voices have been floating trial balloons and the markets have been going higher. Mr Barroso did the same today.
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