Monday, 21 November 2011

Euro-debt-crisis in the wake

The interest rates for the states rising and rising. Now many call for
the central bank
In Greece, it all started, now in core countries also lose confidence
in Europe.

The European debt crisis Augsburg unfolds more and more an
idiosyncratic dynamics. Even previously stable countries in the center
of the current euro area feel the pull of the debt crisis. For Italy
and Spain, the question is asked whether the two states can fund the
medium term reliable. The result is that some politicians and
economists are now an even greater commitment of the European Central
Bank (ECB) call - to the call to fire up the printing presses. What
has happened?

To understand this, one must keep in mind the development of the
crisis: The starting point was in 2010, the small but highly indebted
euro-state of Greece. Be rescued after he had gone there, the fiscal
position of the rudder, Athens had to go through international aid.
With Ireland and Portugal, two countries in the wake of Greece's been
captured, they had to slip in under the euro rescue EFSF. In summer,
the crisis spilled over to the third-and fourth-largest economy €
Italy and Spain. Although these countries are still on the free market
to refinance, however, only sensitive to higher interest rates. Last
week, approached the interest of Spanish and Italian government bonds
of the critical level of 7 percent.

New peak of development, is that countries come under fire, which were
assumed to be solid: Austria, Finland and especially France. The
growing distrust of investors in the euro area is reflected in higher
risk premiums. French five-year bonds climbed last week to 2.82
percent, to 2.31 percent in October. For the affected countries, it is
therefore more expensive to finance current expenditures of the state.
Should the crisis spread to the core, even the rescue fund EFSF would
be powerless, could provide a financial engineering "leverage" up to
one billion euros. Some scientists and politicians called for the
weekend, the ECB should buy more government bonds in order to calm the
markets and ensure necessary fire up the printing presses. There
remains only the Federal Reserve as a "money-fire" to prevent
existential risk to the stability of the monetary union, for example,
said the director of the Hamburg Institute of International Economics,
Thomas Straubhaar. The ECB buying bonds of debt since May 2010 states
such as Greece, Italy and finally to the interest on their debts do
not rise more and more.

Federal Finance Minister Wolfgang Schaeuble rejected demands for the
firing up the printing presses back immediately: "The Fed is not there
to finance government debt. Point, "he said.

EU partners want to return for German interest benefits

But Germany is also comfortable in a situation. Unlike most euro area
countries, Germany has not yet lost any confidence, the demand for
government bonds is large. The federal budget will benefit from this
flight to safety. Decrease due to the high demand for German bonds,
the interest rates.

The German advantage awoke promptly at the weekend, the desires of
other EU states. Several European finance ministers have agreed not to
demand from Germany in return for interest benefits, it said in a
report of the Focus

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