logo
  Join        Login             Stock Quote

Euro Burns Money

 January 31, 2012 04:55 PM


Money is being burnt. Yes, Europe is about to burn money and that for a decade. In my last article I revealed about the propelling Euro debt payment where it will need around 1 trillion euros to be paid by June 2012.Please click the link below to find the PREVIOUS STORY OF EURO DEBThttp://ianalysis.blogspot.in/2012/01/europe-debt-to-explode.html
In my last article I received a couple of queries where I found the readers are perplexed about the mechanism being implemented by euro to fight out the debt. European commission has formed two mechanisms to deal with falling debt burden. European Financial Stability Fund is the fund which has been built by the 27 members of the Eurozone to fight out the sovereign crisis. On 9th March 2010 the 27 euro nations gave birth to EFSF.EFSF was authorized to borrow upto €440 billion. At present out of this €440 billion only €250 billion have remained available after the Irish and Portuguese bailout being executed .EFSF funding mechanism will be based upon issue bonds or other debt instruments backed by the by guarantees given by the euro area member states in proportion to their share in the paid-up capital of the European Central Bank (ECB).In the below chart the paid up capital details of the member states are given clearly. The amounts are based on the European Central Bank capital key weightings.

 The next vehicle is called European Financial Stability Mechanism. This is an emergency fund which was built based upon the funds raised on the financial markets guaranteed by the European commission by pledging the budget of the Euro nations as collateral. Now pledging the budget of the Euro nations as a collateral means that the extent to which the euro nations will cut down on budgets depending upon that the funds will be paid by EFSM to Member states. Now cut down on budget expenditures will result to prolonged crisis for the Euro nations in terms of GDP growth. Less government spending is going to result prolonged job losses and cut downs, low consumption and less manufacturing to happen. This will further increase the burden of the Euro member states regarding their income generation from taxes and other government avenues. So, where growth of the Euro economy is being foreseen in the near future is the question in demand. Unemployment benefits numbers are going to increase despite of government cut down in the expenditure.

Next Page >>12
iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageChipotle Mexican Grill, Inc. (CMG) Q2 Earnings Preview: Will Higher Traffic Offset Higher Costs the Key

Chipotle Mexican Grill, Inc. (NYSE:CMG) will host a conference call to discuss second quarter 2014 read on...

article imageNetflix, Inc. (NFLX) Q2 Earnings Preview: The Ruby Month for a Reason

Netflix, Inc. (NASDAQ:NFLX) will post its second-quarter 2014 financial results and business outlook on its read on...

article imageLadenburg Thalmann Financial Services (NYSEMKT:LTS): Heavy, Durable Insider Buying

Ahh, but any worries over price levels didn’t stop multiple insiders at Ladenburg Thalmann Financial read on...

article imageInternational Business Machines Corp. (IBM) Q2 Earnings Preview: Small Beat and Pop

International Business Machines Corp. (NYSE:IBM) will host a conference call Wednesday, Jul. 16, 2014 at read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.