Deutsche Bank: If Merkel Doesn't Budge, 'Our Investment Advice Is To Dig A Hole In The Ground And Hide'
Line of the day from Deutsche Bank's Jim Reid on Angela Merkel, and German refusal to back ECB purchases of peripheral sovereign debt.
The problem for the market is whether to take these comments at face value or to see them as part of a general tactic of trying to force other leaders into line or believing that the comments will be reversed if the alternative to an aggressive ECB is the collapse of the Euro. If you don't think Merkel's tone will change then our investment advice is to dig a hole in the ground and hide. It’s difficult to see any other scenario than widescale Sovereign defaults without an aggressive ECB. Indeed it doesn't seem we're alone on this anymore. An Irish Times story overnight said that Sarkozy told his deputies yesterday that the euro would not survive unless the ECB decisively entered the fray.
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