European Summit: A Yorktown Moment?
The EU summit may be a significant turning point in the eurozone crisis.
A big step forward has been made towards more fiscal integration, as hostile comment from Germany attests.
Greece will give up sovereignty but will be helped by lower interest rates and an increased focus on structural measures.
Greek debt sustainability has been improved significantly. Critics argue for a bigger reduction in the debt-to-GDP burden but ignore the significant reduction in Greece's interest rate, which is much more important in reducing the required future fiscal adjustment.
The selective default issue has been resolved satisfactorily - no CDS event and no impact on the funding of Greek banks by the ECB.
In addition, contagion issues have been addressed more convincingly. While critics argue for a bigger EFSF, far bigger sums may not be needed and, if they were, there is every chance they would be provided.
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