Time of markets and time of politics

Krugman's Eurovenn, or notes reading Martin Wollf

Barclay's math says italy's down. Tyler Cowen posted a summary of Barclays Capital Inst sales:

1) At this point, it seems Italy is now mathematically beyond point of no return
2) While reforms are necessary, in and of itself not be enough to prevent crisis
3) Reason? Simple math--growth and austerity not enough to offset cost of debt
4) On our ests, yields above 5.5% is inflection point where game is over
5) The danger:high rates reinforce stability concerns, leading to higher rates
6) and deeper conviction of a self sustaining credit event and eventual default
7) We think decisions at eurozone summit is step forward but EFSF not adequate
8) Time has run out--policy reforms not sufficient to break neg mkt dynamics
9) Investors do not have the patience to wait for austerity, growth to work
10) And rate of change in negatives not enuff to offset slow drip of positives
11) Conclusion: We think ECB needs to step up to the plate, print and buy bonds

12) At the moment ECB remains unwilling to be lender last resort on scale needed

13) But frankly will have hand forced by market given massive systemic risk

Hint:Not Good.Sell EUR, Buy Gold

Bullet point number 8 points at the difference markets' and politics' time. Markets dynamics are on a different time level than politics. It takes longer to reach politically acceptable solutions, and even more longer to build institutions. This crisis speaks about a mismatch between financial systems and institutions and so the intersection between the later and what would be needed to solve the crisis is zero.