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European Council President Herman Van Rompuy says 25 of 27 EU member states will sign off on the...
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Monday, January 30, 2012, 6:05 PM ETEuropean Council President Herman Van Rompuy says 25 of 27 EU member states will sign off on the European Stability Mechanism rescue fund. The U.K. and the Czech Republic are not supporting the fund, which will go into effect after 12 nations ratify it, Van Rompuy says. The ESM will replace the European Financial Stability Fund.
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This news story has 9 comments:
The biggest misconception is that this is a "cash fund", that is not true. Here is how it works:
1) the fund is an SPV, who through bond issuance, raise funds by selling "ultra high risk" sovereign debt, in the form of a BOND.
2) This is only done after an EU State formally submits a support request. Then the process begins, and everything is investigated by the Euro Group.
3) If everything is kosher, a "sovereign debt" BOND ISSUANCE takes place to raise funds, and said funds are then disbursed, in the form of a LOAN, which is to be paid back at interest, by the aforementioned EU State who requested support.
That is it, full stop. It does not deviate.
* We keep hearing that Germany won't pay forever, and I say that's funny....they haven't paid YET.
Germany is not part of this process, nor will they EVER be part of this process. It is controlled by Euro Group, under European Supervisory Authority. Despite constant attempts to interfere with this process as reported daily by the Press, Germany as a subordinate State of the EU, has absolutely no form of involvement with this process, and NO GERMAN TAXPAYER; IS PAYING FOR ANY OTHER EU COUNTRY.
SUMMARY:
* Germany is not loaning ANYONE any money, Euro Group is doing that.
On 16 December 2010 the European Council agreed a two line amendment. The text is being inserted into Article 136 of the Treaty on the Functioning of the European Union as paragraph 3.
In addition to that amendment the European Stability Mechanism itself will be established by a Treaty among the Eurozone States, the Treaty Establishing the European Stability Mechanism, which replaces the temporary EFSF, needs a 75% majority to pass.
* Germany did not take the lead on this issue and has argued vehemently against it, in nearly every meeting I have attended, which is 3+ meetings per week since September 2011. They (Germany) have a problem with increasing the total of the ESM, even though they are not paying a dime for it. Strange, that is.
* According to the Treaty, the European Stability Mechanism will be an Intergovernmental Organization under Public International Law and will be located in Luxembourg, (translation: IT WILL NEITHER BE RUN BY, NOR WILL IT BE CONTROLLED BY GERMANY, FULL STOP). Germany will also not be allowed to decide what's best for the EU, as they have no such authority to do so.
It will be open to other members to join and will be led by a Board of Governors. Each EU State will appoint a Governor and the Board will either be chaired by the President of the Euro Group, or by a separate elected Chair from amongst the Governors themselves.
Germany's appointed Governor, WILL NOT BE THE LORD OF RULES & DISCIPLINE, as they ONLY have "national supervisory authority" over themselves, locally within the boarders of their own sovereign state.
The timeline is a July 2012 launch date.
As you can see, Market Correction 2.0 will hit first, July is too far out to forecast.
Thanks for the clarification. Like everyone else, I've been doing my best to stay on top of the situation, but its been so "fluid", I've found it a challenge to keep all of the various plans, "solutions", proposals, etc., straight!
Our biggest problem continues to be Germany, as they influence the entire process through a series of phony Press Reports. It seems they would have the entire world believe that they are taking the lead on this and sacrificing the most. Nothing could be further from the truth. They caused this, and were the first one's to offer their own misguided "draconian" monetary policy as a solution, to benefit themselves. History repeating.
Austerity is the wrong answer here, liquidity is paramount. It seems the "non-economic" types are having the most trouble wrapping their tiny political minds around this in Germany, which is 99% of everyone in attendance at these meetings.
Last week, we had a German Politician try to explain his argument regarding "stock flow adjustment" in a session. Stock flow adjustment, being the difference between the annual change in gross debt and the budget deficit.
I asked him to simply write the equation out for us on the overhead, knowing he could not.
He then claimed he was not an Economist.
My colleague not missing a beat, gave him an order for 2 Espresso, upon which he answered, "and I am not a waiter". I asked him why he was among us then, not an Economist, not a member of Service Staff, he had no business being there.
He left the Session in a huff, red faced.
And that's my point. When your auto's transmission starts to give you trouble, you don't drive to the Barber Shop to have him look at it, you go to the Service Garage. Qualified personel.
There are far too many Politicians trying to meddle in this process, and we are starting to flex a little more now.
As part of the ESRB, we have European Supervisory Authority, granted by the EC/EU, and that trumps ANY European Head of State, as far as us enforcing Macroprudential Monetary Policy within the EU under the auspices of the ESRB. Higher pushes to lower, making ANY individual nation, and / or their Head of State, subordinate to us as our European Supervisory Authority supersedes their lesser "national supervisory authority".
They refuse to accept this in General, and we have started to make examples of them. Financial experts come up with great plans, then Politicians vote whether or not to adopt the plan, and that's the problem.
NO POLITICIANS NEEDED; NO VOTING NECESSARY.
Experts develop plan > Plan is announced > Plan is implemented.
We don't need a vote. It's law. Our EC/EU Supervisory Authority is ABSOLUTE.
Jack
http://jackfoley.net
March 2010 they defaulted, full stop.
Do you know what a default is?
This is about Greece as a "money pit" trying to regain solvency, and how to wean them from being breast fed by the EU.