Tag: euro

What Is The European Financial Stability Facility (EFSF), and what does it mean to the Euro zone countries?

Posted by WFG – October 19, 2011

The beginning of the EFSF: MAY 2010 to help Ireland

 

The European Financial Stability Facility (EFSF) : The creation of an emergency special purpose vehicle (SPV)- On May 9th 2010 the 16 countries( Estonia joined on Jan 1 2011) that share the euro entered an agreement to form a new entity. It was incorporated in Luxembourg under Luxembourgish law on June 7th 2010. Read the rest of this article

Greece’s Economy and How it Will Affect the Eurozone

Posted by Winflow – July 12, 2011

What are Greece’s financial options to pay back the money they owe?

  • Debt rollovers. Greece can borrow money from other countries to pay off the debt they have incurred but they will be replacing their old debt with new debt. Essentially, they would be participating in something similar to a Ponzi scheme.
  • Bailout. At this point, the chances Greece will be bailed out are slim. With other struggling economies in the Eurozone (Ireland, Spain, Italy, Belgium and Portugal to name a few) there isn’t enough money to provide bailout funds necessary to stabilize each economy.
  • Leaving the EU17. If Greece stop using the Euro they would have the ability to print their own money again which means they would be able to control inflation rates to pay back debt.

Read the rest of this article

Temperamental Gold Prices

Posted by WFG – July 5, 2011

Gold prices have surged today due to the combination of a weaker US dollar and the demand from bargain hunters. Traders began buying into the low prices after it fell below US1,49/oz at the beginning of the week. The gold prices have performed a sharp correction in the last few weeks, due to concerns that the bullion was overbought.

Gold’s appeal was that it be counted on as a safe asset. But this reputation took a hit recently when Greece passed the austerity measures. This secured a 8.7 billion euro payment which will help try to reduce the deficit.

Because of this news, gold hit a six week low at US$1,478/oz last week, but has since begun a recovery because of weakness in the US market. The American dollar fell against the euro as speculation circulated that the European Central Bank (ECB) will increase interest rates this week. This will make the euro more attractive and offer better returns than the US dollar.