Germany rejects idea of further EFSF expansion

Discussion in 'Wall St. News' started by ASusilovic, Sep 27, 2011.

  1. LONDON (MarketWatch) -- A German government spokesman on Tuesday ruled out plans to expand the scope of the euro-zone bailout fund beyond what European leaders agreed on in July, the Wall Street Journal reported. Steffen Seibert, a spokesman for German Chancellor Angela Merkel, said the European Financial Stability Facility should look exactly as the plan set out on July 21, according to the report. Spanish Finance Minister Elena Salgado earlier Tuesday also said there were no plans to expand the EFSF any further. Global stock markets have rallied this week, buoyed by growing speculation that euro-zone leaders were planning to boost the firepower of the EFSF.

  2. There has been talk about how to "leverage" the fund. One guy on CNBC World this morning suggested, "have the fund guarantee the 1st 20% of bonds issued.... that would lever the fund 5X". You know, our guarantee stands behind $2.2 Trillion of bonds... (well, 20% of those bonds anyway.)

    We all know about leverage. Once you get into the "guarantee" phase, leveraged funds are wiped out quickly.
  3. sheda