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Circular UnReasoning - Deconstructing Europe's Bailout Mechanism
Want to understand how messed up Europe really is? Simply deconstruct the European Financial Stability Facility which was the financing mechanism that was to be salvation of the Euro. The EFSF was the so called "bazooka" touted by top EU officials that would supposedly put all fears to rest regarding the financial stability and future of the Euro. Only problem with the EFSF is that it is funded by the very same countries that need to be bailed out by it. 

Spain, Portugal, Italy, Ireland, and Greece represent 36.73% of the entire EFSF liability! These countries have been or have been about to feed at the trough of the same EFSF they are supposedly funding. Think Greece is really going to come up with their share when they are borrowing money from Germany and the IMF just to pay a portion of their bills to avoid a complete meltdown? Think Spain with approximately 25%+ unemployment and has begun to deny needing bailouts (code for "we desperately need bailout money") will be good for their share?

And while I am pointing fingers, it would be rude for me to leave France out of the group of countries that will likely not come up with their share of the bailout funds. Their debt to GDP is worse than Spain's. France alone represent another 20%+ of the EFSF liability! Looks like Germany, representing 27%+ of the EFSF will be left holding the bag. Too bad most of the German banks are loaded to the gills with all these other countries' sovereign debts, right? They might need their own bailout if enough people figure out the "sources" of all of these bailout mechanisms.




Written By: Joshua Ungerecht
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Euro, European Central Bank, European Financial Stability Facility, France, Germany, Greece, Italy, Portugal, Spain