I expect we will see a “grand plan” soon. It will have a massive headline number. It will have all sorts of bells and whistles. It will have caveats.
The headline program will sound huge. The fact that most of it is self-referencing, writing insurance on yourself, etc., won’t even be important. It will be the conditions that are attached. It won’t be carte blanche, recipients will have to meet set criteria to receive help. It will be phased in. It won’t be all available at the first stage.
This is because Germany finally realizes, that if it commits the money carte blanche and takes leveraged exposure, it is no longer in charge. The recipients are in charge. Germany gets in. France is still somewhat clueless, but Germany finally gets that the Grand Plan is the Grand Disaster for Germany.
Anything with stages of implementation and contingencies will fail to appease the market. French ratings won’t survive long enough to see full implementation, and it is unlikely the weak countries will meet any reasonable contingencies (though the TROIKA will be hiring like mad).
Maybe someone in Germany finally picked up a medical textbook and saw that a key element of battling “contagion” is QUARANTINE! The Grand Plan ensures the spread of contagion. If you want to stop contagion you QUARANTINE it, you don’t give it mouth to mouth resuscitation. (I still like my gangrene analogy better).
Go back to letting Greece default. Let CDS trigger. Deal with the fallout. It may not be as bad as people fear, in fact, in may provide a stable base that can let Europe really address the problems.