March 25, 2011
Permanent bailout fund on the way for Europe - ESM
Article by Anthony Faiol at the Washington Post about the efforts of European leaders to set up a permanent bailout program to deal with the economic roulette of European countries over-extended with international debt:
"European leaders agreed early Friday to create a permanent fund to rescue financially troubled nations even as the debt crisis in Portugal sharply worsened, with the Iberian nation appearing almost sure to follow Greece and Ireland in seeking an international bailout.
The escalating problems in Portugal — which tipped into a red zone on Wednesday after its prime minister resigned after parliament rejected deficit-busting austerity measures — underscored the still unsettling financial problems gripping the 17-nation union that shares the euro.
Meeting in Brussels, European leaders agreed to replace an emergency — and temporary — rescue fund set up last May with a larger, permanent one armed with $700 billion. At the insistence of Germany, national contributions into the fund will happen more gradually than anticipated, with less cash required by each nation at inception in 2013. Leaders also delayed until June a decision on whether to increase the size of the temporary $620 billion bailout fund."
"European Union finance ministers agreed on Monday that member states will pay €80 billion ($114 billion) of capital into the permanent bailout fund, the European Stability Mechanism (ESM), to back its effective lending capacity of €500 billion.
The fund will also be backed by €620 billion of so-called callable capital, which will be made available should it become necessary, said Luxembourg Prime Minister Jean-Claude Juncker, who is also chairman of the Euro Group made up of the 17 euro-zone finance ministers. That will bring the total volume of the fund, which will start operating in mid-2013 and will replace the temporary European Financial Stability Facility (EFSF) currently in effect, to €700 billion.
The aim is to ensure the ESM gets a triple-A credit rating, which will minimize the interest it pays on bonds it issues. "
Greece's Golden Visa program
