Market Overview

Greece Secures Bailout Jackpot


Greece will be breathing a little easier on Tuesday morning, after managing to win a second bailout. With European governments wrangling concessions from private investors, they were also able to tap into European Central Bank profits as they looked to shield Europe from a default that would have sent shockwaves around the world.

The second bailout is an incredible 130 billion euros (approximately $173 billion). According to Bloomberg, finance ministers also managed to engineer a central-bank profits transfer and woo investors into providing more debt relief. It is hoped that this bailout will see Greece safe past the March bond repayment.

However, there are real fears on Wall Street that, in the long-term, the bailout will not fix Greece's problem. Indeed, to many it looks like they are borrowing money to pay off debts they owe. Debt for debt.

Elsewhere, there are concerns over how bondholders will respond to the deal, how the Greeks will respond to yet more austerity, and whether the deal will receive all of the necessary approval from each individual European parliament.

"The deal is a good result for Greece, the euro zone and for the markets, we hope," Italian Prime Minister Mario Monti told reporters, so it would seem that Italy is on board.

“Everybody understood that this was the moment of truth,” Belgian Finance Minister Steven Vanackere told reporters, so that is another one.

When the money spent to bailout Greece, Ireland and Portugal is totaled, it comes to approximately 386 billion euros. Very possibly, it is more than that. It is a figure which proves that more needs to be done to ensure that all of the countries within the euro zone are on the same page. There are many cultural differences between Greece and a country like Germany, and those things have made it difficult for them to work on a par.

But it also seems strange that the rest of Europe is left with little choice but to mop of the mess with dollar bills (or euro notes) when a country like Greece takes a nose dive, for fear of that country dragging the entire European Union down with it.

"All is still pending what the reaction of the private sector will be”, German Finance Minister Wolfgang Schäuble said.

It really seems just a formality to push it through now, and any last minute hitches will surely be temporary.

Posted-In: News Politics Global Markets General Best of Benzinga


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