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Why Germany Won’t Offer Unsecured Working Capital
At the end of last week the Euro rose due to speculation that the ECB will buy Spanish and Italian bonds, thus stemming borrowing costs. High bond yields haven’t been attracting bargain hunters, who instead of feasting on these returns, prefer the safety of lower returns. Unfortunately, greater austerity will not bring about lower bond yields, especially in another global recession.
Since these weaker countries can’t print their own currency, they will wind up defaulting. Printing money allows countries to repay debt with less purchasing power. But Greece simply will not be able to repay its debt, nor will Italy, nor will Spain. If a global recession continues, chances of default and a return to respective currencies will be great. There is also the chance that the ECB could buy up vast quantities of debt, as it began to do last week. However, this means that the fiscally unsound countries such as Greece and Italy would be getting off the hook with unsecured working capital while more solvent countries (Germany) bear the brunt of inflation. As it becomes harder to get a merchant cash advance in the wake of a weakening global economy,  over the next few months Germany will press more and more for the weaker countries to default.
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Posted on: Monday, November 21st, 2011 at 9:53 am
Posted in: working capital loan
Tags: merchant cash advance, Unsecured Working Capital