Eurozone bailout bonds not selling

It’s not time to press the panic button yet, but failing to raise the bailout fund money is not a good sign. Even worse, the eurozone is looking at serious fallout if any one of the members are thrown out. Raising €1 trillion was never going to be easy in this climate, but falling short of a public goal is always going to be a problem. The Guardian:

Klaus Regling, the head of the European Financial Stability Facility (EFSF), is expected to tell eurozone finance ministers meeting in Brussels on Tuesday evening that the scheme to quintuple the firepower of the fund by underwriting initial losses on eurozone bond-buying by China and sovereign wealth funds in the far and Middle East has failed to attract enough interest.

The blow to eurozone efforts to save the currency came amid increasingly apocalyptic predictions of a euro collapse. The Organisation for Economic Co-operation and Development in Paris forecast a “deep depression” across Europe and a tidal wave of bankruptcies if any of the 17 countries was forced to quit the euro. The Polish foreign minister, Radoslaw Sikorski, urged Germany to save the EU from “a crisis of apocalyptic proportions”.

The Moody’s ratings agency predicted that a euro exit by any country would trigger a cascade of sovereign defaults across the eurozone. Jean Pisani-Ferry, director of the influential Bruegel thinktank in Brussels, said that “real businesses” as well as the financial markets were now “pricing in a break-up scenario … If disaster expectations build up and a growing number of players start positioning themselves to protect themselves from it, the consequences could become overwhelming.”

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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