EU Bailout...some info

FNMA 4.5% bond came down by 22bps today and the stock market surged by several hundred points.  There was an announcement over the weekend that the European Union along with the International monetary fund will come together to provide nearly ONE TRILLION in aid to the struggling countries in the Eurozone.  This comes after it was noted that many of the countries agreeing to contribute to the 149-ish billion dollar bailout of late were struggling themselves.  Remember that monies committed to the bailout coming from the International Monetary Fund (over 300 billion of the Trillion) means that WE are putting up a fair sum as American citizens.  I have read anywhere from 12-17% of the IMF contribution is directly from the USA.

The tough nut: the only way to come up with that kind of money is to sell more debt.  Meaning: each of the nations contributing will be essentially printing money to contribute.  There is a general fear that the inflation monster is still under the blanket here and when we add more "money" to any economy...meaning there is more money to go 'round chasing the same goods and services: inflation ensues.

The European Union bailout is similar to our TARP or "Troubled Assets Relief Plan" money where the "bailout" is in the form of government guarantees and monies to prevent defaults.  In a sense, they are trying to prevent the "wobble" experienced by Greece lately from spreading to other countries in the Union.

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Chad Schauers
Montana Mortgage Lender, Bozeman, Montana
Personal Cell: 406 799 8613
Personal Email: metchad@gmail.com