Friday, September 07, 2012

Blog 2

Europe’s debt crisis has reached it’s limit.  As many countries in Europe have been living off of debt for some time now, but the European Central Bank is now doing something to try to bail them out.  Some of the countries may not qualify being there are strict policy conditions that have to be met and the countries have to be active in the debt market.  Ireland is predicted to receive a great amount of benefit from this bailout, as it is presumed to rid all the risk  of the euro zone break-up, but wanted to be sure that they weren’t announcing any purchasing of the Irish bonds.  The European Central Bank was very confident in their decision stating “Anybody who had any doubts that the ECB was prepare to bring the tools needed any doubts must be removed now,” Patrick Honohan, leader of Irelands central bank stated.  While the ECB was ready to get the press running and help, there was also lots of criticism on the ways of how it was being handled.  Some were stating that it was going to put the entire currency at risk because it was ready to write unlimited amounts of bonds to bail out the troubled euro zone states.  ECB President Mario Draghi said they were going to extreme highs for the bailout request, and that they were even willing to buy unlimited amounts of bonds of up to three-year maturities, but only under strict conditions.  Honohan was assuring that this unlimited plan would be of much more help then the previous temporary bond-buying.  Dublin has already sold new long-term debt in preparation for the 2013 85 billion euro bailout, the first time selling long-term debt since 2010.  While this may seem drastic the President was reassuring that the bank wasn’t rushing to warm up the printing press, that this was a well thought out plan and it’s purpose was to make the euro and it’s system strong again.

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