Tuesday, I explained that the most sensible plan to limit contagion from the Greek meltdown would be for the European Central Bank to set interest-rate targets for the sovereign debt of other distressed nations in the euro zone.
This morning, David Malpass of Encima Global argued for this as the way to prevent the contagion from spreading to Italy and Spain.
Malpass argues that the ECB should be focusing on lowering the bond yields in Italy and Spain. It's possible that this could be done with guarantees. But it would be even better to do it through direct bond purchases.