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Alternatives to a Merchant Cash Advance for Europe
There are strong signs that the economy is weakening. It’s really due to Europe, as we’ve mentioned before. The chances that Mario Draghi, the head of the ECB, will print new money are very small, due to EU treaties. And no one wants to buy Europe’s distressed debt because it points back to questions about the Euro’s soundness. So if the ECB won’t offer a metaphorical merchant cash advance, how will the EU recover from its problems?
One possibility is to make debt-ridden countries credible again by adding a conversion clause to their debt. This would tack on a premium to the bond yields of distressed countries and allow them to revert back to their pre-Euro currencies. With a credible policy, conversion rates would be low. With unstable fiscal policy, rates would be high, thus weakening the value of their converted currencies. The maturity age of European debt is about seven years, which would in theory be enough time for these countries to stabilize their fiscal policy and maintain using the Euro. All the countries in the Euro Zone would remain in it, and to pay back their debts based on their own ability, without being bailed out by stronger countries.
The result is a lot like taking it upon oneself to make good on a working capital loan. If you have good credit and repay your working capital loan, it will be easier to get the next merchant cash advance.
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Posted on: Monday, December 12th, 2011 at 2:52 pm
Posted in: working capital loan
Tags: merchant cash advance, working capital loan