Fears Grow Over Woes of Europe’s Periphery

The EU is truly in crisis mode here:

           On Monday, fear has been sparked among the Eurozone.  The balance within the countries currently running under the Euro is looking bleak, as Ireland, Portugal, and Greece all had rising yielding interest rates since the EU summit, raising 84 basis points in Ireland (rates now at 7.75%), 74bp in Portugal (6.67%), and 72bp in Greece (11.27%).  These bonds being traded are similarly high to the recent bail out seen in Greece in May.  This has all come after the Euro was gaining strength up until Monday.          

           Germany discussed at the EU summit, held on October 29, that there is no way the Eurozone could protect these countries, and the countries in question should default if need be.  This would harm investors on these bonds.  A European economist has stated that since the summit it has gotten much worse, and the Germans do not recognize the need for support.       

           The European Financial Stability Facility (EFSF) has been another way that the countries can attempt to turn, specifically Ireland.  Ireland currently has enough money to run until July, so the possibilities that Ireland may be able to stick this one out are still in question, and relying on the EFSF is not completely urgent at the moment.   

           The structure and stability of the Eurozone seem to be at unease, and it should be interesting how this pans out.  Hopefully the countries can hold strong and manage to stop their interest rate growth.  These uncertainties within the EU continue to cause fear of default by investors.  More to be posted upon the situation in Europe.  For more on the economic crisis, follow the link below or at the top of the article. 

Reference: Financial Times: http://www.ft.com/cms/s/0/9260e85a-eb66-11df-b482-00144feab49a.html#axzz14jS0Ypv6

(This post was created by Evan Amano)