Is Europe Going to Be Just Fine?

Recently, Mario Draghi came out with positive news that just might comfort investors with European exposure. According to the European Central Bank, investors have been found to help fund the European sovereign bailout. The support came from an extremely unlikely source: European financial institutions

The package is not necessarily ideal for the ECB, who had to concede bargain rates to Euro banks in order to coax them for funding. On the other hand, the offer was good enough to garner nearly $500 billion from banks in relatively cheap three-year loans.

Polls were not so positive about the prospects, going into the meeting. Polls claimed that the average amount of estimated funding was about $300 million, less than half of the $639 billion found. Draghi stood by his decision to allocate loans en masse, despite some analysts' concerns for high debt obligations.

Some analysts are relieved that the loans are three-year term loans instead of one-years, which could have put Europe in a "Lehman-like" situation. Ultimately, everyone has acknowledged that Europe will have to change its financial system on a fundamental basis, in order to revamp its economic health. Draghi has also made it clear that he's wary about emulating the US Federal Reserve by pursuing quantitative easing strategies.

Investors can take solace in the fact that Europe has finally found a new source for funding. About than a week ago, traders were commenting on how grim the funding situation was getting, citing the fact that demand has been low for the last several months for European sovereign debt. While the current strategy is unsustainable, it literally buys time for Europe, and perhaps one day, will be the action that saves Europe from self-destruction

Consumers have a few options when it comes to understanding the global economy. The ECB's fundraising tactics could help investors gauge where the global economy is heading into the future. Investors should also keep up with the news via Benzinga Pro to stay on top of major developments that move markets.

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