Over at FT Alphaville, an interesting (and rare) Saturday guest post from Pimco’s chief executive Mohamed El-Erian on the EU’s seemingly new found determination to actually sort the current mess out :

Yesterday night’s important news out of Europe points to renewed efforts to rescue Greece and safeguard the Euro. The news will undoubtedly be accompanied by additional announcements out of Brussels and Berlin, as well as Washington DC. In the process, the stakes are getting even bigger…for Greece, Europe and the global economy.

As the announcements multiply, it is even more important to be clear about the key question. This is best summarized by a simple, and disturbing image, that a friend alerted me to:

With Greece (as well as Portugal and some other countries) now visibly drowning in a sea of debt, the question is whether the rescuer (EU/IMF) can pull off the rescue or, instead, get pulled down with all parties drowning.

As I noted here, the IMF has limited resources and is itself largely backed by the US which has it’s own $11 trillion debt pile to be worried about.

As a result, the Greek crisis morphed in the following days into something much more sinister for Europe and the global economy. This explains this weekend’s shift in the EU to a “whatever it takes” mindset. We are seeing evidence of a significant step-up in crisis management. Yet the question is not whether a step-up is required-it clearly is. The question is whether the strengthened rescue attempt will prove sufficient.

Has the rescuer been bolstered enough to pull out the drowning parties, or will the latest rescuer be pulled down too?

It is too early to make this call with a sufficient degree of foundation and conviction. At the very minimum, we have to wait for tomorrow’s operational details.

Even with this critical uncertainty, we should not under-estimate the historical relevance of what is happening this weekend; and the stakes for Europe and the global economy are huge.

If this rescue attempt does not work, there will be a material acceleration in the process of change to Europe’s economic, financial, and institutional landscape; and the reality of the debt explosion in industrial economies will become even more of a destabilizing factor for the world economy.

All of which, not forgetting our own domestic political situation, should make for interesting market moves early next week.