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German Parliament Approves EFSF Expansion

German parliamentarians on Thursday approved the planned expansion of the European Financial Stability Facility (EFSF) with 523 voting in favor, 85 against and three abstentions. The bill’s passage is a vital hurdle in euro-zone efforts to increase the fund’s lending capacity from its current €250 billion ($338 billion) to €440 billion. Germany’s share of guarantees for the fund will rise from €120 billion to €211 billion, though several other euro-zone parliaments must still vote on the expansion.

 The result also means that Chancellor Angela Merkel can breathe a sigh of relief. There had been concern that renegades within her center-right coalition could mean that Merkel would be forced to rely on opposition votes to pass the legislation. Had that come to pass, her power would have been severely curtailed . ( Read the whole article in Spiegel online)

The EFSF will have the possibility to buy bonds from debt-ridden countries, to recapitalize the banking sector and intervene in advance according to the decisions of July 21st. The decision of German parliament is positive for Greece provided Greeks do more than verbal or written promises…

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3 comments

  1. i’m from switzerland and i read here daily!

    hey there.. i just wanted to tell you that this is NOT good for europe and even worse for greece.

    it is a pure financial elite / banking system hoax and will only cost you,me,every average citizen and only help the banks not people!

    the governments are losing decision power also..

    i can suggest you some material to read if you want/need.

    (my personal opinion is that greece should stop pay and force a hard default and build a sustainable country again from ground up deflating internally so you have good export and have to buy local for yourself)

    thanks & sorry

  2. Perhaps someone could give me just one precedent in financial history where governments rushed forward to relieve banks of risk assets and losses (AIG is not an example because there decisions had to be taken ad hoc). And where government begged banks to share just a little bit in those losses (far less than the 21% of principal which they talk about). Normally, it is the other way around: Banks come to governments to beg them very politely that they should participate in some of the losses!

    http://klauskastner.blogspot.com/2011/06/perverson-of-banking.html