Adriene Hill: After months of wrangling and a marathon meeting yesterday, European finance ministers have agreed on a $170 billion plus bailout for Greece. That’ll save the country from a messy default, but stability can be hard to get too excited about, for Greeks and banks that owned Greek bonds — especially with the harsh terms of the agreement.
For more we go live to Marketplace’s Stephen Beard in London. Good morning.
Stephen Beard: Hello Adriene.
Hill: So let’s start with the Greeks — what’s this mean for them?
Beard: On the plus side, it means they avoid a messy default next month. They get, as you say, new loans worth about $170 billion to tide them over. On the downside, they have more deep public spending cuts: a 22 percent cut in the minimum wage; and job losses in the public sector of around 150,000; and what many Greeks regard as the humiliation of permanent EU/IMF monitors in Athens making sure they comply with all these conditions.
Hill: What’s it mean for the investors that hold Greek bonds?
Beard: They lose a lot of their money. They write off about $140 billion worth of old Greek government bonds. They take a hit of about 75 percent on their holdings. Pretty bad, but better than a messy default in which they might not get anything.
Hill: And what about for Europe? What’s it mean to the eurozone?
Beard: For the eurozone, it means for the time being, at least, the euro has been saved. But not everybody is happy about this. I mean, the main creditor country, Germany, is going to put this through its parliament next week — this package of measures — and there’s likely to be vociferous opposition. The finance minister recently called Greece a “bottomless pit.”
And there’s real bitterness in Greece itself. Constantine Michaelos of the Athens Chamber of Commerce, says the people can’t take any more austerity.
Constantine Michaelos: Social upheaval, social explosion is very near. And then we continuing with austerity upon austerity.
And analysts point out, there is an election in Greece in April, which could produce a government which could renege on the whole deal.
Hill: From our European desk, Marketplace’s Stephen Beard. Thanks.
Beard: OK Adriene.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
