Think Tank Says Bailout Fund Will Need US$6 Trillion And France Will Lose AAA Rating!
- Do not be suckered by all the stock market euphoria. The fact of the matter is: Merkozy presented a Plan for a Plan by end October ie no plan at all. If they have something really concrete they would have said so. They know that the bailout amount required is something in the order of US$5-6T. Both France and Germany will become bust should they enact a plan to bail out the PIIGS and banks. My assessment is that they have already decided to ditch the Euro and save their own banks. They will preserve their funds for saving some but not all of their banks.
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Think Tank Says Bailout Fund Will Need $6 Trillion And France Will Lose AAA Rating
by http://dailybail.com/
Pardon while we chuckle, because $1 trillion, let alone $6 trillion, is never going to happen in Europe. Where do they plan to get the money, Euro Claus?
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Consisdering that the current proposal being voted on by all 17 Eurozone members calls for a fund of less than $500 billion, this new number, though more realistic in terms of the size needed to fix the problem, is a political impossibility, especially given the popular resistance among voters in France and Germany to bailouts for irresponsible neighboring countries.
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Financial Times Excerpt:
Many European policymakers are beginning to envisage the fund, known formally as the European financial stability facility, as a nascent eurozone treasury that could sit alongside the European Central Bank. It would be quickly tapped to deal with crises without relying on national parliaments, which cannot act at the speed demanded by markets.
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Senior officials have even begun referring to this future construction by a new name, the European Monetary Fund, which would operate like many other European Union institutions – with decisions taken by a qualified majority vote rather than unanimity. Such proposals will feature in a review of eurozone governance overseen by Herman Van Rompuy, the European Council president, next month
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Daniel Gros, director of the Centre for European Policy Studies think-tank, estimated that under some scenarios, the EFSF – and its successor, a permanent agency called the European Stability Mechanism – would have to be as big as €4,000bn ($5.6 trillion).
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Such an increase would mean France, whose triple A rating is essential to the market credibility of the EFSF, would see its debt levels rocket, at a time when its bond rating is already under scrutiny. “It’s just not conceivable to have a much larger EFSF and still have France as triple A,” said Mr Gros.
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