European leaders have agreed to important terms that are needed for utilizing Europe’s rescue fund, the European Financial Stability Facility (EFSF). Reuters reported on Sunday that Europe’s leaders have agreed to new terms that will govern how the rescue fund will be leveraged in the future to assist weaker euro zone countries.
On Tuesday European Finance Ministers will meet to finalize the rules for borrowing, intervening in the bond markets, and providing credit to European governments.
Last week the Euro fell again for a fourth week and dropped to an 18 month low against the dollar amidst rising concerns that Germany was struggling with a bond auction, highlighting the magnitude of Europe’s unfolding debt crisis.
European Central Bank
Although German Chancellor Angela Merkel rejected calls last week for more borrowing and a wider role for the European Central Bank (ECB), on Sunday Welt an Sonntag reported that France and Germany are now planning to develop a new pact for budget discipline that could sway the ECB to increase its bond purchases.
The bond yields on Italian and Spanish debt has steadily grown higher in recent weeks despite the ECB’s bond purchasing intervention.
Last Friday the U.S. stock market turned negative at the end of the shortened trading session after it was reported that Belgium’s credit rating was downgraded. Europe’s mounting debt problems are weighing heavily on global markets amidst renewed calls for a stronger intervention from the ECB and EFSF.
In the wake of European financial uncertainty, U.S. economic data from Black Friday shows that holiday spending is off to a good start. According to the National Retail Federation, 226 million shoppers visited stores over the 4 day week-end, which is up from 212 million in 2010. The average spending level over the week-end was also higher with $ 398. 62 compared to $ 365.34 in 2010.