Germany Votes Yes On EFSF - NOT The Geithner Plan
We want to be clear, as some readers have already expressed confusion this morning. The 'Yes' vote today in the German Parliament was widely expected, and is part of the deal reached earlier this Summer, subject to approval by all 17 Euro nations. Germany was the 9th member nation to agree to the expanded EFSF, with Slovokia next to vote.
As stated, this is not a big story and will do nothing to stem the Euro crisis. The Geithner Plan, that of a dramatically leveraged EFSF, has not been voted on anywhere, and as we told you yesterday, is being ridiculed all over Europe, along with Geithner himself for having proposed it.
Details below.
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The facility is nowhere near enough to handle Spain, let alone the roughly €2 trillion of obligations Italy faces.
More than half of the euro zone’s 17 members have approved the package, which boosts the European Financial Stability Facility’s lending power to 440 billion euros ($599 billion) from €250 billion and gives it power to buy sovereign bonds, provide credit lines to governments and facilitate bank recapitalizations.
For Germany, the euro zone’s largest economy and the largest contributor to bailouts, the guarantees to the EFSF provided by German taxpayers would rise from around €123 billion to €211 billion.
The measures were part of a package of measures approved alongside a second bailout for Greece in a July 21 summit of euro-zone leaders but must first be approved by all 17 national parliaments.
But many economists question whether €440 billion would be sufficient, particularly if the EFSF is eventually needed to pull Spain or Italy back from the brink of default.
Even as the measures wind their way through national parliaments, a deepening sovereign-debt crisis has policy makers debating how or whether to further enhance the firepower of the fund.
“Today’s vote in Berlin was expected to pass, what is more important is whether there is any appetite left for German lawmakers to extend the fund even further,” said Kathleen Brooks, research director at Forex.com.
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Further reading:
Sep 29, 2011 at 9:24 AM
Reader Comments (5)
http://www.marketwatch.com/story/euro-edges-higher-ahead-of-german-efsf-vote-2011-09-29?dist=beforebell
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http://www.marketwatch.com/story/second-quarter-gdp-revised-up-to-show-13-growth-2011-09-29?dist=beforebell
http://www.marketwatch.com/story/us-jobless-claims-fall-37000-to-391000-2011-09-29?dist=beforebell
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