Eurozone crisis is 'postponed'
Last night eurozone governments and the European Central Bank announced new safety nets for financially overstretched countries and banks.
The first immediate consequences are that we're bound to see a recovery in the euro, a fall in the risk premium for insuring eurozone bank debt and a rise in stock markets.
But many would say the crisis has been postponed rather than solved - and that eurozone countries have a good deal more work to do to remove the serious underlying strains in the euro area.
For investors, probably the most important initiative is that of the European Central Bank, which has said that it will buy up government and private-sector bonds where it sees that markets are becoming "dysfunctional".
What does that mean?
Well a couple of weeks ago, Greek government debt with a two-year maturity was for a very brief period yielding 40% - which was extraordinary for a country that's joined to some of the richest in the world.
In practice it meant that the market for two-year Greek government bonds was closed.
What the ECB has said is that where there is evidence of markets malfunctioning in that way, it will intervene to buy up the relevant securities, to re-start the markets.
However it will not be creating new money in the eurozone in the process of purchasing such bonds, because for every bond shunned by investors that it buys, it will sell other securities back into the secondary market to remove the additional liquidity it has created.
So this should not be seen as an attempt by the eurozone to ease monetary conditions in countries such as Portugal or Ireland, to offset the recessionary impact of public spending cuts and tax rises necessitated by the imperative of reducing their excessive public-sector deficits.
In fact the ECB is standing by its mantra that all eurozone member states face the serious obligation to cut deficits deemed as excessive under the eurozone's founding treaty - which is another way of saying that it won't exploit the strength of Germany's balance sheet in a backdoor way to provide financial succour to weaker eurozone economies.
Even so, if it ends up making significant additional purchases of - for example - Greek and Portuguese government bonds, there are bound to be fears among German taxpayers that they are in effect rescuing their more profligate neighbours. And that if the price of those supposedly lower quality bonds were never to recover, well that would be a permanent loss falling on all eurozone citizens.
In addition to these market purchases, the ECB will lend directly to banks for terms of three months and six months.
And to ease the palpable tensions in the bank-to-bank market for dollar loans - where there have been signs that banks have become less keen to lend to each other for longer periods - there is collective action by the Federal Reserve, the ECB, the Bank of England, the Swiss National Bank and the Bank of Canada.
In essence, the Fed will swap dollars with these other central banks for their respective domestic currencies, and the dollars will then be lent to banks in Europe.
As for the separate 750bn euros initiative by eurozone governments and the International Monetary Fund to provide loans or guarantees to individual eurozone governments that experience difficulties borrowing from investors, that is more ambitious than most bankers and investors had been expecting.
So it'll provide comfort to those lending to - for example - Portugal, Ireland and Spain that there's a de facto guarantee from France and Germany behind the IOU's issued by Portugal, Ireland and Spain.
Three important caveats however.
The actual loans and guarantees may turn out to be harder to deliver than the words of comfort from eurozone government heads.
Second, 750bn euros is just over one-year's new borrowing by eurozone members and a bit more than 10% of eurozone government debt. So it's certainly not enough if investors were to start to lose confidence in the ability of some big countries - such as Spain or Italy - to honour their debts.
Which takes us to the import third caveat. In the end, there won't be a cure for the underlying eurozone strains unless and until the record, unsustainable deficits of some eurozone members are reduced in a permanent way.