Multiple Equilibria

The Economist's Free Exchange gives a free macro lecture to Europe's Central Bank. Meaning of the graph: Without outside intervention, "marginal" countries (Greece, Italy, Spain...) debt is sure to become worthless. The information on those countries's real financial position is fraudulent (surely so in the case of Greece, suspected in the case of the rest - see post below). The only player with credibility is der Rollstuhldespot Schäuble (the wheelchair dictator) but he refuses to seize European leadership (except if granted imperial powers). The average German wants to muddle through without having to take a decision.

Stanley Fisher, our Zimbabwean central banker, says that the problem is political. If Merkel assumes responsability for the fraudulent debts of Greece and other disliked countries, she is sure to lose the next elections. Is she does not and lets Greece, Italy, Spain's debt become worthless, all European banks will crash, and she will lose the elections. Not a "win-win" situation. Fischer says Israel is strong but we may feel the storm.

Now, at J's microinvestor level, what is to be done? TASE is very low, will it rise in tandem with Nasdaq or fall with Frankfurt?