Global risk assets on Tuesday are weighed by a snag in passing a measure to increase the size and powers of the Eurozone bailout fund EFSF.
Futures on the S&P 500 Index are down 0.71 percent at 9:08 a.m. ET, futures on the Dow Jones Industrial Average are down 0.54 percent, and futures on the Nasdaq 100 are down 0.38 percent.
Since 3:30 a.m. ET, the euro has declined about 80 pips against the U.S. dollar.
As of early Tuesday, Slovakia remains the only Eurozone member to not approve the EFSF expansion, which delays the measure at best and derails it at worst.
Writing on Monday, Marc Chandler, global head of currency strategy at Brown Brothers Harriman, warned that Slovakia “could be the wild card.”
To fund the EFSF expansion, Slovakia is on the hook for just 7.7 billion euros. However, Chandler pointed out that the country’s entire GDP is just 65 billion euros.
On Monday, Slovak Prime Minister Iveta Radicova failed to negotiate an agreement to approve the expansion. On Tuesday, the Eurozone and anxious investors are still waiting for an answer.
One of the main arguments of Slovak politicians against the EFSF expansion and Slovakia’s 7.7 billion lot is that profligate countries like Greece, for whom the EFSF fund is intended to aid, are actually richer than Slovakia.
According to 2010 IMF data, the Greek PPP GDP per capita was $28,496 while the Slovak PPP GDP per capita was $22,195.