10 Days To Save The Euro Zone

“We are now entering the critical period of 10 days to complete and conclude the crisis response of the European Union,” Economic and Monetary Affairs Commissioner Olli Rehn said on Wednesday as EU finance ministers met.

Euro zone ministers meeting in Brussels, Belgium at the European Union headquarters agreed on detailed plans to leverage the European Financial Stability Mechanism (EFSF), but could not say by how much because of rapidly worsening market conditions. The agreement came late on Tuesday night with the finance ministers looking to the International Monetary Fund to help with the crisis.

Two years into Europe’s sovereign debt crisis, investors are fleeing the euro zone bond market, European banks are dumping government debt, while southern European banks are bleeding deposits and a recession looms. Doubts are being fueled about the survival of the single currency. “We are now looking at a true financial crisis, that is a broad-based disruption in financial markets,” said Christian Noyer, France’s Central Bank Governor.

The euro zone finance ministers agreed to release their portion of an 8 billion euro aid tranche to Greece, the 6th installment of 110 billion euros of EU/IMF loans agreed last year and necessary to help Athens stave off the immediate threat of default. The payment will be released in mid December after the IMF signs off on its portion.

“We will have to look at the IMF which can also make available additional funds for the emergency fund. I think countries in Europe and outside of Europe should be prepared to give more money to the IMF,” Dutch Finance Minister Jan Kees de Jager told reporters. One option EU sources said is being is explored is for euro system central banks to lend to the IMF so it can in turn lend to Italy and Spain while applying IMF borrowing conditions.

Needless to say, the first half of December will prove to be a make or break point for the European Union. The point of no return in getting its sovereign debt crisis in control has arrive just in time for the holiday season.

written by

Kyle Pinder has has over five years trading and research experience in the large cap space. While still in grad school, Kyle trades daily and keep Active Investor up to date with the latest breaking news coming out of Wall Street and Washington.
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