Solving the Euro Debt Crisis
Can anyone explain why the following isn't a viable solution to the European debt crisis? The main problem is that yields on the debt eventually rise to unsustainable levels - even with austerity measures reducing the budget deficits.
Why can't the ECB just step in an say "We won't let yields on Greek / Spanish / Portuguese / Irish / Italian bonds exceed 5%. The ECB will intervene in the market to prevent this from happening."
What am I missing here? This would have the benefit shaking out the short sellers and providing some cushion for countries to implement deficit cutting measures, while stabilizing the markets. I don't imagine it would stoke inflation either if it is managed correctly - akin to how the Fed plans to remove the QE funds.