These are some good points you brought forward. One thing I don’t think is clear is what it means for a country to access the package. Is it a credit event? Is it not? Because this is clearly not market-based financing. It’s almost like DIP financing for sovereigns, if you ask me. I called it a home for wayward debt before, but you get my point.
Watching LIBOR-OIS, the TED spread, etc. I keep getting the feeling all this liquidity is just making volatility in the market worse – not better. I say that because we’re essentially in a global ZIRP environment. With rates being where they are, the volatility of a basis point move (i.e. DV01) is amplified. Most of us know it as convexity, but if folks don’t know about it, it can be very damaging.
The EUR is still in a death spiral at this stage. The ECB can sterilize its bond purchases but that’s just creating the opportunity to sell the EUR, just as BNP suggests.
All in all, there are no good choices at this stage.