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A Working Capital Loan for 2012
The new year is upon us, and with it a sense of change. Last week, positive labor numbers were overshadowed by bad news from across the Atlantic. European debt is now greater than American: approximately 22% of GDP compared to roughly 21% of American GDP.
When debt-buying is temporary, or when new money is temporarily added into a market, there is little chance for inflation. The ECB won’t buy unlimited amounts of debt, thereby boosting inflation, because there is no chance they could reverse the transaction. Plus, if any country were to default, that would mean serious losses, and greater inflation, which would be permanent. As it stands the bonds are producing lower yields than a healthy economy usually does.
Unlike an individual applying for a merchant cash advance, Euro Zone countries can get 3-year loans, complete with interest and securities. But this is only a short-term fix. If the ECB bought up the remaining debt, restructuring would only become more imminent. This would leave banks to huge losses, which everyone, particularly Germany, is reluctant to do. What will most likely happen is an attempt at fiscal union with clauses for repayment in legacy currency (drachma, lira, etc.).
Luckily we don’t have this problem in the U.S. due to fiscal integration between states. And that puts our economy in a much better position to advocate spending instead of austerity, which makes it much easier to take on a working capital loan or merchant cash advance.
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Posted on: Monday, January 9th, 2012 at 8:51 am
Posted in: Merchant Cash Advance
Tags: merchant cash advance, working capital loan