Emergency fund in the Eurozone

Because there is a potential for financial market panic regarding the bailout of Greece, as well as other struggling European economies, the members of eurozone economies are conducting emergency meetings.  So far there is not much to write about other than the usual European shenanigans when crisis hits that continent.  In other words, there have been press releases of promises but without substantive details.

This time the eurozone is promising that they have created an “emergency fund” designed to shore up confidence in the financial markets.  However, only one specific has been disclosed.  Namely, the EU’s big guns (Germany, France, UK, et. al.) will be able to issue bonds – that is, they will be able to raise money.  Those monies are to be used to protect the Euro from its catastrophic fall, as well as additional bailouts, if needed.  These debts will supposedly be guaranteed by eurozone members.  However, the EU charter provides no authority for the EU to raise debt as a sovereign entity.  That means that individual states, like Germany, would be required to raise the money in the debt capital markets.  In other words, the latest round of activity from the eurozone folks is akin to having your rich uncle say that he will cover your rent if you run into any trouble.

However, in a positive sign, the EU folks do seem to be cognizant of what is going on in the financial markets around the world.  And they do seem to be trying to do something.  Whether that ‘something’ will be enough remains to be seen.  But this compares to the normal EU pace of a groggy, hungover, mentally deficient snail.

Keep your fingers crossed that the eurozone can finally put the meat of action on the skeleton of good intention.

Jason