PIMCO - The ESM: Saviour, Super SIV or End of the Road

PIMCO released an article on the ESM.  It is worth a read.  Key points are highlighted below.

Link

1. The 4 presidents in Europe:
1. ECB - Mario Draghi
2. European Commission - Jose Manuel Barroso
3. Eurogroup - Jean-Claude Junker
4. European Council - Herman Van Rompuy
2. The lending capacity of the ESM will be  € 500 billion.
3. As of August 29, 2012 the EFSF had €131 billion face value of bonds outstanding.
1. Of this total, the EFSF has placed  €45 billion in the primary market.
2. The remainder,  €85 billion, was essentially funded by the ECB through a roundabout transmission mechanism (ie: IOU from government to EFSF, then IOU from banks to governments, then banks use the bonds as collateral to borrow from the ECB).
4. The 17 stakeholders will have to pay in  €80 billion to the ESM by early 2014
5. Apparently when the ESM lends money to governments, that debt DOES NOT appear as a debt on the sovereigns' national account.
6. Germany's capital subscription to the ESM is initially capped at  €190 billion.  To put that amount in perspective, Germany's annual federal budget amounts to $300 billion.  Granted, the ESM contribution is not supposed to be an annual line item.
7. Since 1989, the new net borrowing requirement of the eurozone's southern countries averaged  €95 billion per annum.