Europe: a three part plan to stop systemic crisis

Time is running out for Europe’s politicians and central bankers. Months of inaction over a festering Greece has led to the infection spreading into Italy, the eurozone’s third largest economy and the world’s third largest bond market. If Italy cannot fund itself — and if politicians cannot agree on a far-reaching plan of action quickly then that is a real possibility — the eurozone will be in meltdown. It does not have the tools to cope with Italy’s funding requirement — the country has Eu900bn to refinance over the next five years — let alone any other sovereign’s debt caught up in what will no doubt be a systemic crisis. All the while, European debt markets remain crippled.