This raises a series of questions when it comes to estimating how much capital the banks are going to have to raise.
- Are sovereign debts going to be written down to today's market price or the market price in a month after the market has had a chance to absorb that no bailouts are coming?
- Are banks going to be required to recognize all the losses in their banking book?
- Are banks going to be required to recognize all the losses in their investment/trading book?
Finally, is Europe embarking on the Irish bank clean up experience? Regular readers will recall that Ireland's experience was that it had to keep returning with new programs to clean up the bad assets on its banks books.