Bailout averts Greece default for now
TEXT OF INTERVIEW
Steve Chiotakis: Greece has gotten a lifeline. Finance officials from around Europe have agreed to a three-year bailout. Combined with help from the International Monetary Fund, the rescue package would total somewhere around $146 billion in loans. But in order to get that cash, Greece has to make drastic government cuts. Marketplace’s Stephen Beard is with us live from London to talk about it. Hi, Stephen.
Stephen Beard: Hello, Steve.
Chiotakis: So does this save Greece from default?
Beard: It does mean that Greece won’t default — this month. But there has to be a big question about the longer term. Greece has had to promise some really savage cuts in public spending, big cuts in public-sector pay, for example. And Andrew Hilton of the CSFI think tank says there will be a lot of strikes; the Greek government may not be able to deliver all those cuts:
Andrew Hilton: There are going to be intense street demonstrations. Large parts of the economy are going to be closed down for much of the next month or so. And we’ll see if the government really has the stomach for the fight with the public sector unions that’s required.
Chiotakis: Hey Stephen, we’ve heard this debt crisis might spread, a “contagion.” Does this settle any of those fears?
Beard: Uh, not really, no. There’s even a sense that if the pressure comes off Greece in the short term, the speculators will then turn their fire on other victims — other heavily-indebted eurozone countries like Portugal and Spain. They could be the next major battleground.
Chiotakis: Marketplace’s Stephen Beard joining us from London. Stephen, thanks.
Beard: OK, Steve.
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