EU rides to the rescue of Greece

Rick Moran
They may be throwing bad money after worse money, but the European Union has pledged 40 billion Euros (with the IMF expected to kick in 20 billion more) to stabilize the Greek government:

Under the plan, Greece would receive loans at about 5 percent interest, significantly lower than the rate of 7.5 percent that the markets were demanding last week, though not as low as Greece had wanted.Concerns about a potential Greek default had caused anxiety among markets worldwide and raised fears that the euro would be severely undermined if other struggling countries like Spain, Portugal and Italy followed Greece to the financial precipice.

By providing details of the loan package, Europe sought to end the uncertainty it had created through a series a vague reassurances over the last several months. European leaders had engaged in weeks of debate on whether to help Greece and how to do it, and the absence of resolve had prompted investors to demand high rates on loans to the Greek government.

"The solidarity is there," said Silvio Peruzzo, euro area economist at the Royal Bank of Scotland. "That is the most important message from today."

Jean-Claude Juncker of Luxembourg, who heads the group of finance ministers from the euro zone members, said at a news conference in Brussels: "It shows there is money behind this."

In addition to the $40 billion in European Union aid, the government in Athens can expect the International Monetary Fund to offer up to $20 billion in additional funds, probably at an even lower interest rate.

While an impressive sum, one wonders what good it will do unless Greece reforms it's government and economy so that what caused the crisis in the first place will be fixed. Don't hold your breath. Greek government unions will fiercely resist any effort to reduce their number or perks which means that all other unions will probably resist as well.

Prediction; in 3 years, Greece will be back for more.





They may be throwing bad money after worse money, but the European Union has pledged 40 billion Euros (with the IMF expected to kick in 20 billion more) to stabilize the Greek government:

Under the plan, Greece would receive loans at about 5 percent interest, significantly lower than the rate of 7.5 percent that the markets were demanding last week, though not as low as Greece had wanted.

Concerns about a potential Greek default had caused anxiety among markets worldwide and raised fears that the euro would be severely undermined if other struggling countries like Spain, Portugal and Italy followed Greece to the financial precipice.

By providing details of the loan package, Europe sought to end the uncertainty it had created through a series a vague reassurances over the last several months. European leaders had engaged in weeks of debate on whether to help Greece and how to do it, and the absence of resolve had prompted investors to demand high rates on loans to the Greek government.

"The solidarity is there," said Silvio Peruzzo, euro area economist at the Royal Bank of Scotland. "That is the most important message from today."

Jean-Claude Juncker of Luxembourg, who heads the group of finance ministers from the euro zone members, said at a news conference in Brussels: "It shows there is money behind this."

In addition to the $40 billion in European Union aid, the government in Athens can expect the International Monetary Fund to offer up to $20 billion in additional funds, probably at an even lower interest rate.

While an impressive sum, one wonders what good it will do unless Greece reforms it's government and economy so that what caused the crisis in the first place will be fixed. Don't hold your breath. Greek government unions will fiercely resist any effort to reduce their number or perks which means that all other unions will probably resist as well.

Prediction; in 3 years, Greece will be back for more.