06-18-2011, 08:31 PM
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| SPECIAL REPORT: The Fate of Greece
There was huge news coming out of the Euro Zone on Friday. Merkel and Sarkozy appeared together in a press conference saying they were working together on the Greek sovereign debt crisis and they both believe that the Greek debt situation needs to be resolved sooner rather than later. The may sticking point for German agreement was participation of private bond holders. Germany believes private bond holders should be required to rollover their bonds to longer maturities in order to help keep Greek yields down but France, the European Commission and the European Central Bank all opposed this idea. The agreement has been made to allow private bond holders such as pension funds and insurance firms to voluntarily buy more Greek bonds when their Greek bonds mature. This tactic is to avoid rating agencies such as S&P classifying the action as a default.
Greek bailout number 2 is also on the table. We have been discussing this possible bailout for weeks now and it has seemed like a sure thing. There was a rumor floating around on Friday that the second Greek bailout that was previously being discussed as an additional 90B Euro loan would be increased to 150B Euros. The first Greek bailout which Greece is still receiving payments from was finalized at 110B Euros. This would make a total of 260B Euros in loans to Greece as the Greek economy slips farther into recession. The recession shows no signs of stopping as Greek workers choose to strike and protest the strict austerity measures forced upon them rather than working and producing. |
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