Greece Gets New Bailout

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Alan

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BRUSSELS—Euro-zone leaders agreed Thursday on a new €109 billion ($157 billion) bailout for Greece and new steps to prevent its debt crisis from metastasizing across the Continent—in a plan expected to trigger the first debt default by a nation using the common currency.


The meeting also produced a stark and open-ended declaration: The wider euro zone is committed to financing countries that take bailouts—thus far, Greece, Ireland and Portugal—for as along as it takes them to regain access to private lenders.

The move is a bold bid by Europe's leaders to corral an 18-month-old debt crisis that is veering dangerously out of control. Markets stopped lending to Greece, then Ireland, then Portugal. Fearful that policy makers have no concrete strategy for shoring up the larger economies of Spain and Italy, investors have lately soured on them as well. After months of dithering, European leaders resolved that they had to stop the bleeding.

Still, it remains to be seen whether the tourniquet will hold. Even after the new plan, Greece will have a staggering load of debt.

Thursday's agreement was the fruit of several concessions. European Central Bank Jean-Claude Trichet lost a fight to prevent default. German Chancellor Angela Merkel pried open her reluctant nation's pocketbook to write another check and be on the hook for still more.

French President Nicolas Sarkozy, though he lost a bid to tax banks to pay for the bailout, may have come out the best by urging Ms. Merkel to a more proactive approach to the debt crisis.
Greece's Debt Crisis

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In a declaration crafted here after hours of haggling, and a whirlwind trip Wednesday to Berlin by the French president, the leaders put forward billions more in new loans to Greece. But they extracted a price: Greece's private-sector creditors will accept a bond exchange that gives them less than originally promised.

The euro zone had long insisted that none of its 17 members could contemplate not repaying its debt, and the European Central Bank vigorously fought a default to the very end. Mr. Trichet joined Ms. Merkel and Mr. Sarkozy at their meeting in Berlin on Wednesday to press his case once more. But Greece was reeling under its huge burden, and its woes were threatening to engulf other countries.

To push back against that contagion, the euro zone also agreed Thursday to a wide expansion of its €440 billion bailout fund. That vehicle, once restricted to lending to countries near the brink of collapse, will now be able to buy euro-zone bonds on secondary markets to move prices and lend directly to countries even before they lose access to private funding. That could even include lending money to finance bank recapitalizations.

The leaders also agreed to cut the once-lofty interest rates that the bailout fund charges and extend to as much as 30 years the maturities of the loans it provides.

"We created a solid firewall and better fire-brigade equipment," said Herman Van Rompuy, the European Union president.
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http://online.wsj.com/article/SB10001424053111903554904576459310597648944.html

How many Euros has been spent in total on bailouts so far I wonder :wtf:
 
It doesn't really matter now does it? The Credit Rating Agencies will now classify Greece as a defaulter and they will not be able to loan anything else, putting the entire responsibility back onto the Euro lending zone. It's just a matter of time now until they go belly up, triggering another worldwide recession. It's beyond tipping point and has been for some time now.

http://www.telegraph.co.uk/finance/...default-as-eurozone-agrees-159bn-bailout.html
 
They should have defaulted and restructured their economy independently. Economies will always correct themselves, this will only make more problems in the long term.
 
But then they'd lose their 'progressive' welfare state
 
The Philosopher said:
How is Switzerland faring in all this?
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Switzerland is not part of the EU in the sense that it does not belong to the Euro. It simply has a sort 'privileged trade' status with EU members - sort of like Free-Trade Agreements I'd imagine.

The Crisis will give Germany the Empire its always dreamed of

This advice was finally being taken yesterday – and it is almost impossible to overestimate the importance of the decision which European leaders seemed last night to be reaching. By authorising a huge expansion in the bail-out fund that is propping up the EU’s peripheral members (largely in order to stop the contagion spreading to Italy and Spain), the eurozone has taken the decisive step to becoming a fiscal union. So long as the settlement is accepted by national parliaments, yesterday will come to be seen as the witching hour after which Europe will cease to be, except vestigially, a collection of nation states. It will have one economic government, one currency, one foreign policy. This integration will be so complete that taxpayers in the more prosperous countries will be expected to pay for the welfare systems and pension plans of failing EU states.

This is the final realisation of the dream that animated the founders of the Common Market more than half a century ago – which is one reason why so many prominent Europeans have privately welcomed the eurozone catastrophe, labelling it a “beneficial crisis”. David Cameron and George Osborne have both indicated that they, too, welcome this fundamental change in the nature and purpose of the European project. The markets have rallied strongly, hailing what is being seen as the best chance of a resolution to the gruelling and drawn-out crisis.

It is conceivable that yesterday’s negotiations may indeed save the eurozone – but it is worth pausing to consider the consequences of European fiscal union. First, it will mean the economic destruction of most of the southern European countries. Indeed, this process is already far advanced. Thanks to their membership of the eurozone, peripheral countries such as Greece and Portugal – and to an increasing extent Spain and Italy – are undergoing a process of forcible deindustrialisation. Their economic sovereignty has been obliterated; they face a future as vassal states, their role reduced to the one enjoyed by the European colonies of the 19th and early 20th centuries. They will provide cheap labour, raw materials, agricultural produce and a ready market for the manufactured goods and services provided by the far more productive and efficient northern Europeans. Their political leaders will, like the hapless George Papandreou of Greece, lose all political legitimacy, becoming local representatives of distant powers who are forced to implement economic programmes from elsewhere in return for massive financial subventions.

While these nations relapse into pre-modern economic systems, Germany is busy turning into one of the most dynamic and productive economies in the world. Despite the grumbling, for the Germans, the bail-outs are worth every penny, because they guarantee a cheap outlet for their manufactured goods. Yesterday’s witching hour of the European Union means that Germany has come very close to realising Bismarck’s dream of an economic empire stretching from central Europe to the Eastern Mediterranean.

History has seen many attempts to unify Europe, from the Habsburgs to the Bourbons and Napoleon. This attempt is likely to fail, too. Indeed, a paradox is at work here. The founders of the European Union were driven by a vision of a peaceful new world after a century of war. Yet nothing could have been more calculated to create civil disorder and national resistance than yesterday’s demented move to salvage the single currency.
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It's impossible to unwind a pyramid scheme without somebody taking a haircut. All that's happening now is the hot-potato is being bounced around only to always land at the feet of everyone who holds the currency in cash. They will all pay by devaluation.
 
Another journal entry, debit Greece's bank and credit Loan Account: EU
 
What Europe needs is some 'hope' that somebody will bring about 'change' who'll protect the vulnerable from brutal spending cuts and will not solve the crises by "taking money from old people and screwing students" but by 'taxing the rich'....
 
Well, what i Meant was , how is switzerland doing considering the EU is falling alll around it. I would think they are very stable and not getting any pressure.
 
Greeks should just take a leaf out of Malema's book and tell it's creditors it's none of their business and GTFO.....
 
The Philosopher said:
Well, what i Meant was , how is switzerland doing considering the EU is falling alll around it. I would think they are very stable and not getting any pressure.
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Europe's their major trading partner so there are the typical bleatings about the currency being too strong from the export special interests. If the Swiss ignore this pressure and maintain their status quo they will be in a very good position vis-a-vis the rest of Europe.
 
Chris said:
Switzerland is not part of the EU in the sense that it does not belong to the Euro. It simply has a sort 'privileged trade' status with EU members - sort of like Free-Trade Agreements I'd imagine.

The Crisis will give Germany the Empire its always dreamed of
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Now wouldn't that be ironic... Germany becoming the dominant power in Europe via its economy, after waging and losing two world wars in an attempt to accomplish the same thing?
 
The_Assimilator said:
Now wouldn't that be ironic... Germany becoming the dominant power in Europe via its economy, after waging and losing two world wars in an attempt to accomplish the same thing?
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The PIIGS are bleeding Germany dry. The EMU is hurting Germany, not making it more powerful.
 
The_Assimilator said:
Now wouldn't that be ironic... Germany becoming the dominant power in Europe via its economy, after waging and losing two world wars in an attempt to accomplish the same thing?
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Should have just gone over the border firing rolls of cash from their panzers proclaiming "sit back relax, we'll pay for that"...

They would have conquered Europe in a month lol
 
They are just kicking the can further down the road.
 
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