Skip to comments.EU agrees to rescue debt-ridden Greece
Posted on 03/27/2010 7:54:51 AM PDT by myknowledge
The euro firmed and Athens breathed a sigh of relief after European leaders agreed to rescue debt-ridden Greece, but markets stayed cautious amid lingering concerns over the currency's health.
"I think Europe proved its capacity for action on a major issue," said German Chancellor Angela Merkel as European Union leaders wound up a two-day summit mulling a new 10-year jobs and growth strategy for the bloc's half a billion people.
"For all of us it is important that our common currency ... remains stable and that's why yesterday was important for the euro," Merkel said of a rescue plan brokered on Thursday that enabled joint EU-IMF relief for Athens.
The deal, inked by heavyweights Germany and France, ended weeks of EU bickering and opened a new chapter in eurozone history - allowing the Washington-based International Monetary Fund to have a say in euro affairs for the first time in the currency's 11-year existence.
"I now hope the financial markets act on facts not on fiction," said European Commission chief Jose Manuel Barrosso as the crunch summit ended. "I think it was an important decision."
In London deals on Friday the currency pulled away from 10-month lows against the dollar, up from $US1.3277 in New York late on Thursday, but shares were mixed.
"The positive aspect is that following the long struggle, at least some form of agreement has now been reached," said Commerzbank analyst Ulrich Leuchtmann.
Meanwhile, the Financial Times reported that Greece will launch a multi-billion euro bond issue next week.
Petros Christodoulou, the head of Greece's public debt management agency, told the paper Athens wanted to borrow some 5 billion euros ($A7.32 billion) from the bond markets.
"We would like to return to the market within March," he added.
In Greece, the mass Ta Nea daily said "We can breath again" and the interest rate which Athens must pay to borrow fell sharply.
But Greece is far from being the only EU state to violate euro rules banning deficits over three per cent of output.
A score of EU states are offenders, while several nations are struggling in view of the current economic crisis - notably Portugal, Ireland and Spain.
So despite the euphoria, analysts sounded caution.
"If there's a domino effect, if Portugal, Spain and even Belgium are affected by the winds of panic we so often see on financial markets, the costs will be far higher," said Belgian economist Paul de Grauwe.
Portuguese Prime Minister Jose Socrates said Thursday's unprecedented deal aimed to take fire at "speculation against the euro in Greece", but he denied all comparison between Greece and Portugal.
Jean-Claude Juncker, the Luxembourg Prime Minister who heads the group of 16 nations in the euro, also stated: "There are no countries in a situation comparable to that of Greece."
Under the mechanism agreed by the 27-member bloc, Greece can request combined EU-IMF help as "a last resort" if it fails to find reasonable rates on the market to finance its ballooning deficit and debt.
But a Brussels green-light will depend on unanimous approval from all member states - a condition opening the way to potentially long and thorny negotiations.
Merkel flew into Brussels insisting the EU toughen up sanctions against those who repeatedly offend against the EU's deficit rules. In Berlin commentators said her insistence on bringing in outside financial help could dampen the chances of clinching a far-reaching crackdown deal.
"The compromise means the Greek patient is out of danger for the time being. But the undeniable result is that someone else is now in intensive care: the currency union as a whole," said the Financial Times Deutschland.
Though opposed in principle to outside interference in the eurozone, Jean-Claude Trichet, head of the powerful European Central Bank, applauded the deal as a "workable" response to the currency's future stability.
This is a bailout on a continental scale, and I have a hunch that the Greek financial crisis was rigged from the start by the globalist elite through their banks (even the Greek central bank) and the EU, and it is the same EU that is handing out bailout money to the debt-ridden Greece on a silver platter.
But, is the EU going to put strings on this (prohibiting any more deficit spending) that will cause riots from one end of Greece to the other.
It’s not a bailout, read the agreement, it’s just a trick hoping to lower the borrowing rates for Greece without spending a dime. This supposed agreement, kicks in only if Greece can no longer borrow from the market, and even then Germany and others must agree again.
For example, if Greece can borrow at 10%, no agreement kicks in. Now, at 10% or even 6% Greece will have to call IMF and probably exit EU to avoid their upcoming penalties for deficits.
USA will be begging europe for a bailout sooner rather than later.
Who says hard work(rioting) does pay off!
CBO now admitting that our debt will be 90% of GDP.
Thanks to the maoist who is intent on turning us into a debtor nation on the verge of bankruptcy.
Greece can get all the money they want.....at free market rates, which for a lying, cheating, Bull Sh..tting ‘government’, with no popular support...is a high rate.
Well, basically, Europe and the World governments blinked. Greece held a gun to them, and they folded.
So, the pattern has been set.
This drachma drama is just starting.
Free money, now, in Greece. Line up, everybody.
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