Shares rose in recent days, inspired by the hope that leaders of the European Union (EU) are close to an agreement that will significantly increase the size of the European Financial Stability Fund (EFSF) – a practice rescue fund for examiners debt difficulties eurozone countries – so keep the second year debt crisis in the region to finally be addressed, says CNBC.


Mike Riddle, fund manager of M & G Investments, believes that there are more than one or two reasons for this optimism can be misleading. In fact, he believes that any boulders are 10:

1. There is a risk that at least one of the countries with AAA rating, which will ensure the fund can lose their premium credit evaluation, warned Standard & Poor’s over the weekend.

2. Riddle and fears that “this size and frame EFSF will not be enough to save Spain and Italy.”

3. Even if EFSF was big enough to save Spain and Italy, the chance to lower the ratings of the eurozone countries is increasing.
4. There is legal risk. “Investors in EFSF bonds are not sure what the money will be used, and if subsequently guarantor party refuses to participate, not provided any mechanism to resolve this issue. If for example, Slovakia decided to withdraw, Germany just to ensure a greater amount, “said Riddle.

5. According to analysts, the fact that Spain and Italy will initially be guarantors of the scheme, then it may be that they need the support of EFSF, raises the issue of “effects of mushrooms,” he said.

6. Guarantor countries are too heterogeneous, and some may themselves need support. “Each has different EFSF bond guarantors, as such bonds were first issued in January in support of Ireland. Portugal to this day remains the guarantor of the funds for the rescue of Ireland, even though Portugal itself had to be rescued, “said Riddle.

7. “Then, if necessary restructuring of banks and government debt, and EFSF guarantors had to pay the investors EFSF then guarantors will have to raise money by issuing bonds, which would increase their debt levels, and this brings us back to risk to lower credit ratings of Guarantors, “said Riddle.

8. The restructuring of debt in the eurozone will be “proof that EFSF mechanisms and measures for fiscal discipline have failed. EFSF does not solve the solvency problem. ”

9. EFSF should be in force until 2013, when it should be restarted with the European Stability Mechanism (ESM).

10. “Investors will have to be persuaded to part with billions to invest in ever-expanding financial instrument that provides loans to European governments and banks, just at a time when the market has decided that these banks and governments are insolvent” warns Riddle.

Britain believes that such a tax should be adopted worldwide


The proposed EU tax on financial transactions in the amount of 0.1 percent for bonds and shares and 0.01 per cent in derivatives, can be faced with an unexpected problem.

British government rejects the notion of EU President Manuel Barroso project. Britain was not in principle against such a tax, but it should be adopted worldwide, said Treasury, quoted by BBC. The British have announced that they can prevent the introduction of tax by veto.

Introduction of pan levy is needed and British consent. Only when all 27 EU member states voted for the tax, it may be valid throughout the Union. In Sweden and Holland Barroso proposal did not meet much support.

“I will not do anything contrary to the interests of Britain,” BBC quoted a spokesman for the Treasury.

EC proposal is to tax only covers transactions involving financial institutions. The objective is taxation of the financial sector, not its customers. The aim is to extend the tax 85 per cent of transactions between financial institutions.

However, if households and businesses buy or sell financial products, financial institutions may transfer tax. For example, to purchase shares worth 10,000 euros, the bank may charge a fee of 10 euros, which is not excessive.

The European Commission announced that in the case of British tax veto can only be introduced initially in the euro area. But the success of this option is controversial.

There is an option to tax is imposed only in part by the EU. It is possible, for example by means of so called. “Enhanced cooperation”, which was adopted at the end of 2009 EU legislation.

Meanwhile, British Foreign Secretary William Hague, who in 1998 was called the euro “a burning building with no exits”, today said that the events in some countries have confirmed its discretion, forward AFP.

“I compared the euro to a burning building with no exits and this proved true in some eurozone countries,” says Haig. “In some burning buildings can extinguish fires or to master. Perhaps my comparison goes too far. But the euro does not exits. It is difficult to abandon the currency unless specified how to do it,” Haig continued.

According to him, for centuries will be talking about the euro as a “monument of collective madness. But it is a fact and must comply with it,” said Britain’s top diplomat.