Doug Kass points out this “comprehensive checklist of the eurozone challenges” from Omega Advisors (and former Goldman Sachs strategist) Steve Einhorn. As Doug notes, “it is a template upon which we can all monitor and measure ‘the progress of eurozone governments/ECB/IMF in addressing the challenge…. It will help us understand whether the problems in the EU are being adequately addressed and whether these problems bring manageable corrections in risk markets or outcomes that are more severe.’ ”
-Merkel backs away from pure austerity to a balance of austerity and pro-growth policies.
-Germany accepts higher wage/consumer inflation so as to increase the relative competitiveness of weak peripherals.
-Euro bonds are approved by a means of joint Euro zone financing, including joint liability of Euro zone countries.
-The EFSF/ESM provide funds directly for bank recapitalizations.
-ESM is granted a bank charter and gets unlimited access to ECB liquidity.
-A U.S.-like FDIC program is introduced for Euro zone bank deposits.
-The ECB cuts its target rate by 25 to 50 basis points in June or July and reintroduces the Security Markets Program.
-Greek elections on June 17 bring a pro Troika coalition.
-Labor reform begins.
-There is increased fiscal integration including heightened monitoring of eurozone deficits, spending, and movement toward tax harmonization.
Steve Einhorn, vice chairman of Omega Advisors
Doug adds “Each one of these can and should be monitored by us to assess eurozone progress.”
Interesting approach to the turmoil in the EU . . .