This Article is About
financial meltdown
christmas present
paying attention
financial crisis
trillion
Is It A Remedy Of €48919bn Offered By Ecb Or A Time Bomb?
Join 1000's of Authors at StreetArticles Today!

Is it A Remedy Of €48919bn Offered By Ecb Or A Time Bomb?

As a pre-Christmas present to smooth the economic yo-yo market of recent months; ECB (European Central Bank) has offered €489.19 bn of low collateral debts in exchange for loans pegged at the ECB rate (which currently stands at 1%). With over 500 banks , 523 to be more precise, this means that when it comes to 2015 (the end of three years loan deal), the debt matures for repayment, and the scary part is that will cost the EU banks dearly - around € 700 bn.

Of course, such step was needed to save the Euro and recurrence of another financial crisis, which undoubtedly would have the spill over effects around the world (as it happen back in 2008). Yet, I feel that this question will be reopen very soon and decision will need to be made urgently to avoid such crisis in 2015.

Now, why shall we expect a financial meltdown if this short-sighted remedy is not resolved beforehand?

Well, firstly, the EU banks are already under high financial pressure, followed by bail out of weaken economies, as an example based on June 2011 figures, that's how much of foreign debt is already owed by these countries to the banks : Spain € 1.9 trillion, Ireland € 1.7 trillion, Italy € 2 trillion, Portugal and Greece - € 0.4 trillion each. Those amounts are so huge, that there is no guarantee that repayment is feasible and moreover that amount borrowed from ECB is enough to maintain and back up these EU member states from further collapse in three years time; not mentioning paying back to ECB. It is most likely this time frame will be stretched further to ten years and more until the economies will pick up; and if that happens the amount of debt will only mount more and more creating a pressure inside of a loan bubble to burst.

Secondly, the economies are not doing well with their slow growing GDP (Gross domestic product - total market value of all products and services, produced in the country during certain time) and the proportion of foreign debt to date. While, we are paying attention on restoring the EU and preventing a financial turmoil, it is ordinary taxpayers who suffer, but there is only that much pressure that everyone can resist to.

The difference is, although Spain, Portugal and Greece do owe monies, the picture we need to look at is this: how much of the foreign debt this means per person? And to you surprise, the UK is in much worse position , including our neighbour Ireland, than all Spain, Greece, Portugal and Italy together! I refer to the BBC financial data* , the foreign debt, allocated per person in the countries as follows: Italy €32,875, Portugal €38,081, Greece € 38,073, Spain € 41,366 , the UK - € 117,580 and Ireland € 399,969. (and this data collated before the ECB offer, which was actioned in December 2011 and means that the actual situation now may well be much worse).

The UK GDP of € 1.7 trillion is not suffice to recover the foreign debt of € 7.3 trillion, which partly belongs to the rescue contribution to the EU countries. The money flow chart of owed to owned currently as follows : Germany € 141 billion ( the UK owned €379), France €227 billion (the UK owned € 209 billion), Spain €316 billion (the UK owned €74 billion), Japan € 122 billion (owned €102 billion), Ireland €113 billion (owned €104), the US €578 billion (owned €835 billion).

So, does it mean that the ECB loan is a remedy or is it a time bomb? Both.

It is a remedy to start with, which delays a point to make a decision in resolving this huge burden of debts, hence it is a dangerous time bomb too. This has to be brought to attention sooner or later, and better sooner; before the Eurobonds require to be paid, before the ECB loans mature, before other malicious threat appears. Just remember the property bubble in the US, when it is all started with collateralized debt obligation (CDO) and resulted in the global crisis, drowning the US economy into huge debt of $15 trillion (which largely affects the inflation, economic growth and interest rates). The action is needed urgently with a realistic view as a collaboration from every country worldwide.


Street Talk

No comments present
You May Also Like
Protect Yourself And Profit In the Next Global financial Meltdown- Book Summary
The Bubble economy?There is a new concept to the understanding of the world economy as suggested by Wiedemer et al. in their book titled “Protect Yourself and Profit in the Next Global Financial Meltdown” It is known as the bubble economy. Just like a real bubble, it begins small and…
By: ronhi in  Book Reviews  >  Non Fiction   Nov 15, 2011  
0
  Likes: 0

Make Money From Home – Unheard Of Benefits If You Have Located A Real Leader In the Field
Why is it so important to be your own boss and make money from home? First and foremost: to be ready when the long expected global financial meltdown materializes in all its expected ugliness! But what if all the talk about the coming global financial meltdown is merely alarmist talk?…
By: Kobus van Zyl in  Internet and Businesses Online  >  Affiliate Revenue   Dec 09, 2011  
0
  Likes: 0

How Much Do I Need to Save for Retirement
I know that I have been wondering how much do I need to save for retirement. So I started looking around to see how bad my retirement situation really is. I won’t go into my details but the bottom line is that I’m way behind in my planning for retirement.…
By: C. Hughes in  Investing  >  Retirement Planning   May 31, 2013  
15
  Likes: 7

How to Make A Successful Job Application
Finding a job has always been a struggle for most people. Because of the financial meltdown which started in 2008, nowadays it is even harder to find a job. However, there are some tricks which put you in front of the line when making a job application. I will try…
By: Ertugrul Oner in  Business  >  Job Search Techniques   Dec 12, 2011  
0
  Likes: 0

How Can I Prepare for 2012?: Basics
How can I prepare for 2012? There are many ways. When the phrase comes up most people think, as people always will, of money. They think money will simply answer all their problems. Naiveté in its most extreme form. Has anyone considered hyperinflation? Has anyone thought that food and other…
By: Doomsdayrealist in  News and Society  >  International   Jan 17, 2012  
0
  Likes: 2

A Solution To The Shortage Of Silicon Valley Jobs And Jobs Elsewhere
For people living in the San Jose area of Northern California, one of the big questions on people's minds is, "Where have all the Silicon Valley jobs gone?”. The people of Silicon Valley are used to cyclical ups and downs and seeing this happen to Silicon Valley jobs, since much…
By: Ray Boreham in  Internet and Businesses Online  >  Internet Marketing   May 30, 2011  
0
  Likes: 0

Online Christmas Shopping Deals
As soon as the holiday season gets underway, nearly everyone is searching for online Christmas shopping deals. After all, more and more people are using the Internet to do their shopping. Those looking for Christmas gifts are no exception.But even with a growing list of online options, buying Christmas presents…
By: Steve DeVane in  Shopping and Product Reviews  >  Gifts   Oct 31, 2011  
0
  Likes: 1

Payday Loans Pros Vs Cons Should I Get A Payday Loan?
There is a lot of controversy surrounding the payday loan business. For those of you who are not familiar with the concept, payday lenders will give you a small amount of cash, usually somewhere between $50 and $500 (sometimes more), in exchange for a post dated check. When your next…
By: CecilSmith in  Finance  >  Loans   Jun 07, 2016  
0
  Likes: 0

Payday Loans Pros Vs Cons Should I Get A Payday Loan?2016
There is a lot of controversy surrounding the payday loan business. For those of you who are not familiar with the concept, payday lenders will give you a small amount of cash, usually somewhere between $50 and $500 (sometimes more), in exchange for a post dated check. When your next…
By: CecilSmith in  Finance  >  Loans   Jun 07, 2016  
0
  Likes: 0

What You Should Look for When Getting Payday Loans UK
There are plenty of payday loans online which you can get as a reprieve whenever you are running short of cash. However, not all of them are made the same. You need to watch out for ones which could seriously put a dent on your credit rating should you be…
By: Trey Reed in  Finance  >  Loans   May 28, 2016  
0
  Likes: 0

Popular Types Of Home Loans for First Time Property Buyers
A person buying a house for the first time would like to choose from an array of loan types that give them the best options available. Among the loan types available like FHA, VA home loan, and other choices that can help them save money. Not only will the right…
By: Max Mortiz in  Finance  >  Loans   Apr 28, 2016  
0
  Likes: 0

What is A Bridge Mortgage And Could Getting One Be Relevant For You?
Whilst shifting up to a brand new residence, one of the principal concerns that people are faced with is a way to discern out the timing of the entirety. One has to be able to discover a residence to buy, however for you to have the funds for it, one…
By: Mark John3 in  Finance  >  Loans   Apr 28, 2016  
0
  Likes: 0

Mortgage And Interest Rates: Experts' Opinion on Today's Market
Every first time home buyer looks for good references that will educate them about this loan type. No one can explain mortgage better than experts. Aside from being well-versed in the business, they can also observe trend and give opinions about the current real estate and financial markets. Here is…
By: Max Mortiz in  Finance  >  Loans   Apr 18, 2016  
0
  Likes: 0

Find Payday Loan Lendersto Meet That Extra Dollar Need
Summary: It is easy to Find Payday Loan Lenders on the internet at easy terms with minimum formalities and no credit scores to maintain when you have dues to pay. Financial crunch and the need for that extra amount has become a common feature for most common people not just…
By: tomashworth in  Finance  >  Loans   Apr 18, 2016  
0
  Likes: 0

Best Moneylender Guide In Singapore 2016
Even with the new rules in place since Oct 2015, errant licensed moneylenders in Singapore have been reported to worked around the rules instead. This has led to another public outcry and luckily the Singapore government is stepping in strongly on this. Let’s look into some of the best moneylender…
By: cysmoneylender in  Finance  >  Loans   Apr 12, 2016  
0
  Likes: 0

Article Views: 1737    Report this Article