On Monday, Oct.8, the 17 Finance Ministers of the EuroZone (the Nations using the Common Currency) will meet, in Brussels, to discuss stabilizing the weaker member economies.. The Plan, as it has been previously discussed, would be the European Stabilization Mechanism (A/K/A The Bazooka). Perhaps part of the problem, in the EuroZone’s continued dalliance in solving the Debt Crisis, is the difficulty in getting agreement by 17 Ministers, each with different Constituencies, as well as different economic perspectives. None seem to regard themselves as Europeans.
The ESM was first discussed two years ago and it would entail member Countries contributing a total of 32 Billion Euros this Thursday, pro-rata with the respective size of the various Economies. By the time that final contributions are made, in 2014, the total of the ESM would be 80 Billion Euros (or roughly $104 Billion US Dollars).
The Fund would be leveraged through the issuance of ESM Bonds, guaranteed by the Member Nations, bringing the total Fund available up to 500 Billion Euros ($650 Billion US Dollars), by 2014. Unfortunately there still is not complete agreement, among the Member Nations, as to the structure of The Bazooka. The linked article, Europe Still at Odds Over the Workings of Its Bailout Fund, by James Kanter, in today’s NY Times, is: http://www.nytimes.com/2012/10/08/business/global/a-bailout-bazooka-awaits-its-ammo.html?_r=1&ref=business.
So, after two and one-half years, why isn’t there a solution actually in place? And, if all goes “well”, it will still take another two years before the Mechanism is fully funded. Remember, in February of 2010, the question was how to have 16 countries bail-out Greece. But, now we are looking at twelve countries saving five. Also, will $500 Billion Euros be enough?