Euro Zone Finance Ministers to Vote on Greek Bailout

Euro zone finance ministers are meeting today in Brussels to review Greece's compliance with a number of measures that the country must implement in order to receive its latest round of bailout funds. If the finance ministers are satisfied with the steps Greece has taken since the agreements were made, Greece will be able to receive its rescue package and avoid defaulting on its sovereign debt. Greek lawmakers have been accused of stalling during earlier negotiations and breaking previous promises, as they were faced with the difficult task of balancing the expectations of Greek voters with those of the country's international creditors. The austerity measures that its creditors have demanded are widely unpopular in Greece and many Greeks feel that Greece would be better off by turning its back on its creditors by defaulting on its sovereign debt and possibly exiting the euro zone. Although such an action might be attractive to many Greeks, the country could wind up in worse financial shape than it is now. European finance ministers made it clear in recent negotiations with Greece and media interviews that they will no longer tolerate stalling from Greece. For its part, Greece's leaders seem to be making strides in gaining the European finance ministers confidence by taking steps to meet the harsher demands on Greece. Earlier today, Greek lawmakers pushed through spending cuts for health care and pensions. Passage of the deal is important after all the recent bad news coming out of Europe. Markets have recently had to absorb the news that the euro zone is falling into a recession, with unemployment rising to a record high and inflation creeping back up as well. If Greece and its lenders can't come to an agreement, the financial markets could be hit hard. Italian Prime Minister Mario Monti warned that such an event would not only have a "brutal outcome for Greece" but that it would also put Spain and Italy under more scrutiny, which could drive their borrowing costs higher and put them in the same situation that Greece has been in for the past two years. The finances of Italy and Spain have been under less pressure lately because of cheap loans from the European Central Bank to euro zone banks that the banks have used to buy the two countries' bonds and drive down their borrowing costs. If Greece were to default, enough investors might shun Spanish and Italian debt to offset the actions of the European Central Bank. If Greece is able to pass this obstacle to receiving its bailout funds, the market will probably give a collective sigh of relief but if the euro zone finance ministers feel that Greece is still wavering, the situation could quickly deteriorate. Even if Greece gets its bailout funds, the next Greek government to be elected in a few months could roll back some of the agreed to austerity measures, seek to renegotiate the terms of the previous government's agreements or even choose to leave the euro and default. Investors should pay close attention to polls of Greek voters leading up to the next Greek election to see if the chance of a Greek default will grow despite the country getting is bailout funds.