Eurozone Leaders to Inject Greece with $10.7 Billion Loan
- Posted on November 29, 2011 at 5:07pm by
Becket Adams
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BRUSSELS (AP/The Blaze) – Eurozone leaders scrambled to prevent financial chaos from spreading further and driving Europe’s common euro currency into utter ruin.
The meeting of 17 nations was dominated by attempts to keep Greece afloat and find enough money to coat a veneer of credibility over Europe’s rescue fund. It came on the third straight day that Italy has taken a beating in the bond markets, with investors growing increasingly wary of the country’s chances of avoiding default.
Luckily enough, markets rose for the second day Tuesday on hopes that the enormous pressures on the ministers would produce some results.
Source: Yahoo! Finance
The finance ministers approved the next installment of the Greece’s bailout loan – €8 billion ($10.7 billion). Without that money, Greece would have run out of cash before Christmas, unable to pay employees or provide services.
The installment is part of a €110 billion ($150 billion) bailout package from eurozone nations and the International Monetary Fund (IMF) that has kept Greece afloat since May 2010. The new cash came after the EU demanded, and received, letters from top Greek political leaders pledging their support for tough new austerity measures.
In the latest sign of trouble, Italy was forced to pay an extremely high interest rate on an auction of three-year debt Tuesday. Demand was strong, but the 7.89 percent rate was nearly three percentage points higher than last month, an enormous increase. The auction raised €7.49 billion euros ($10 billion).
“But it’s still worrisome that those yields are past the point which a week ago would have terrified global markets,” said Quincy Krosby, market strategist for Prudential Financial.
Many analysts have concluded that Italy is too big for Europe to rescue. If it defaults on its €1.9 trillion ($2.5 trillion) debt, the fallout could break up the currency used by 322 million people and send shock waves throughout the global economy.
At the meeting, the finance ministers were discussing ideas that until recently would have been taboo: countries ceding additional budgetary sovereignty to a central authority – EU headquarters in Brussels.
Strengthening financial governance is being touted as one way the eurozone can escape its debt crisis, which has already forced Greece, Ireland and Portugal into international bailouts and is threatening to engulf Italy, the eurozone’s third-largest economy.
Aside from the money for Greece, some ministers acknowledged Tuesday they probably wouldn’t reach their more important goal of increasing the leverage power of the European Financial Stability Facility (EFSF). Analysts believe the fund, which is supposed to be a firewall against financial contagion swallowing up nation after nation, needs to be expanded from €440 billion ($587 billion) to something like €1 trillion ($1.3 trillion).
“It will be very difficult to reach something in the region of a trillion,” said Dutch Finance Minister Jan Kees de Jager. “Maybe half of that.”
And the task of agreeing on grand changes that might save the eurozone from splitting up will likely fall to the European presidents and prime ministers attending a Dec. 9 summit in Brussels.
German Chancellor Angela Merkel reiterated her support for changes to Europe’s current treaties in order to create a fiscal union with stronger binding commitments by all euro countries.
“Our priority is to have the whole of the eurozone to be placed on a stronger treaty basis,” Merkel said. “This is what we have devoted all of our efforts to; this is what I’m concentrating on in all of the talks with my counterparts.”
Merkel acknowledged that changing the treaties – usually a lengthy procedure – won‘t be easy because not all of the European Union’s 27 nations “are enthusiastic about it.” But she dismissed reports that the eurozone, or smaller groups of nations, might go ahead with their own swifter treaty.
Countries outside the eurozone heaped on the pressure, fearing drastic consequences if the euro were to fail. Bank lending would freeze worldwide, stock markets would likely crash, European economies would go into a freefall and the U.S. and Asia would take a big hit as their exports to Europe collapsed.
“I will probably be the first Polish foreign minister in history to say so, but here it is,” Radek Sikorski said in Berlin. “I fear German power less than I am beginning to fear German inactivity. . . .The biggest threat to the security and prosperity of Poland would be the collapse of the eurozone.”
Eurozone countries have enormous debts that need to be addressed- with €638 billion ($852 billion) coming due in 2012, of which 40 percent needs to be refinanced in the first four months alone, according to Barclays Capital.
The 17 ministers are also discussing jointly issuing so-called eurobonds – an all-for-one, one-for-all way of having the different countries guaranteeing one another’s debts.
Currently, each nation issues its own bonds, meaning that while Italy pays above 7 percent, Germany pays about 2 percent. Having stronger countries like Germany stand behind the general European debt would lower Italy’s borrowing rates and perhaps help it avoid a debt spiral toward bankruptcy. However, at the same time, it would raise Germany’s borrowing costs.
Of course, one option EU sources said is being is explored is for euro system central banks to lend to the IMF so it can in turn lend to Italy and Spain while applying IMF borrowing conditions, reports TV New Zealand.
“We will discuss with the ECB. The ECB is an independent institution, so we will put on the table some proposals and after that it is for the ECB to take the decision,” Belgian Finance Minister Didier Reynders told reporters.
An even more radical solution was proposed Tuesday by the head of Germany’s exporters association: kick Greece and Portugal out of the eurozone. BGA President Anton Boerner told The Associated Press that’s the only way those two nations can spur the growth needed to overcome their crippling debts.
Analysts were doubtful that new cash for Greece and mere talk about the stability fund would bring the financial relief that Europe craves.
“The marginal impact of these bits of ‘good news’ should be limited at best and investors will still cast a nervous eye towards this week’s bond auctions,” said Geoffrey Yu, an analyst at UBS.
The Associated Press contributed to this report.
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Comments (36)
tadroid
Posted on November 30, 2011 at 8:31amWhat a joke! They’ll blow through $10B in a freakin’ week. Those fat guys in speedos can drink them some wine, brother!!
Report Post »grudgywoof
Posted on November 30, 2011 at 7:06amThey inject and then uninjected it back into the banks they owe money to. It’s just redistribution. They need the money to pay for the debt and the people of Greece don’t benifit from it at all. It’s just being shifted around in a big shell game created by the banking elite.
Report Post »Skee
Posted on November 29, 2011 at 11:44pmPi$$ing in the Grand Canyon won’t fill it.
Report Post »Throwing money in a bottomless pit,
will yeild the same result.
Winkycat
Posted on November 29, 2011 at 10:38pm“The finance ministers approved the next installment of the Greece’s bailout loan – €8 billion ($10.7 billion). Without that money, Greece would have run out of cash before Christmas, unable to pay employees or provide services.”
Report Post »According to this article this loan came after getting promises of tough “austerity measures”. I would really like to know what these “tough” austerity measures are. for it will mean nothing if the basic method of governance does not go through a fundamental change.
Greece like the other European nations still runs a “Nanny state” that ensures her citizens a “cradle to grave” socialist system that led these nations to the current economic crisis. If this is not changed Greece will be back for more or collapse.
RossPoldark
Posted on November 29, 2011 at 9:27pmWhy not have Christina Onasis daughter bail Greece out.
Report Post »lukerw
Posted on November 30, 2011 at 4:39amWith the New Law… that all Citizen Money held in foreign countries be brought back to Greece… she will!
Report Post »Cymry
Posted on November 29, 2011 at 8:52pmGreece, Spain, Portugal, Italy = Money Pit
Report Post »Deutschland wird nicht mehr sagen.
Lady Libertarian
Posted on November 29, 2011 at 8:35pmBailing out Greece again isn‘t going to solve the problems caused by socialist policies that haven’t changed. Watch Germany.
Report Post »RossPoldark
Posted on November 29, 2011 at 9:23pmDeutschland, so ein Schweinerei!!
Report Post »Clifton
Posted on November 29, 2011 at 8:23pmOnly a matter of time before it all goes to pot.
Report Post »Gold Coin & Economic News
Posted on November 29, 2011 at 8:18pmThis is amazing. Euro goon leaders actually think they can keep throwing money at the situation that they created for decades and have it solved. Yea, a few billion here and a few billion there and they just delay things 3 months, 6 months, 9 months down the road. The Euro will collapse, it will happen, and then it will happen to the USA. get ready.
Report Post »http://www.congressinsiders.com/
RossPoldark
Posted on November 29, 2011 at 9:26pmI bet the US was probably the biggest bail out donor in this. Frankly, enough is enough. Charity starts in the home and with our own citizens.
Report Post »Banter
Posted on November 29, 2011 at 7:06pm“At the meeting, the finance ministers were discussing ideas that until recently would have been taboo: countries ceding additional budgetary sovereignty to a central authority – EU headquarters in Brussels. ”
Selling their souls to the NWO!
Report Post »Carefreeflyer
Posted on November 29, 2011 at 6:59pmThe US Taxpayers will soon be on the hook to pay for this insanity. We people who control the IMF and the Federal Reserve are destroying the World.
Report Post »Jaycen
Posted on November 29, 2011 at 7:29pmThe key point above was this: “At the meeting, the finance ministers were discussing ideas that until recently would have been taboo: countries ceding additional budgetary sovereignty to a central authority – EU headquarters in Brussels.”
Yeah, buddy. We’re talking about more central governance. That’s a recipe for success. Look what it’s done for us so far.
Report Post »RedneckJim
Posted on November 29, 2011 at 6:30pmGiving the alcoholics another bottle of Ouzo. Great idea! And tomorrow, the world stock markets will again celebrate the nab of yet another brass ring on the circular ride to nowhere.
Report Post »Ruler4You
Posted on November 29, 2011 at 6:38pmThe best way to ensure the system fails completely is to continue to do the same thing over and over until you are out of resources. Greece is NOT going to change. And ‘recovery’ is NOT going to happen. Especially when the only thing being done is to continue to shovel boat loads of good money after bad into the loo.
Report Post »AZGodGoldGuns
Posted on November 29, 2011 at 6:28pmItaly has the 3rd largest gold reserves in the world, France is Number 4 and many of the EU Nations are in the top 13 of the largest gold reserves.
Why the bailouts, why don’t they sell some of their gold to pay their bills. I believe they are waiting for fiat money to go belly up and they will have gold to fall back on when the new “Gold Standard” takes the world to a new world order.
http://www.conspiracyofcrisis.com
Report Post »Secessionista
Posted on November 29, 2011 at 6:25pm“EUROZONE LEADERS TO INJECT GREECE WITH $10.7 BILLION LOAN”
Sure hope they used a clean needle.
Report Post »opnsrcsurvival
Posted on November 29, 2011 at 6:16pmJust kick’n that can a little further down the road! Perhaps Michael Moore will just come out of the ocean and eat Greece and save us all the trauma of a worldwide collapse,,,,,
Report Post »TheObamanation
Posted on November 29, 2011 at 6:07pm10.7 billion ? Pssfft … Obamanation doesn’t even get out of bed for less than half a trillion. The eurozone are just small time spenders.
Report Post »50BMG
Posted on November 29, 2011 at 6:06pmUntil they fix the real problem – deficit spending, debt, and a pervasive entitlement culture – all of this bailout noise is “full of sound and fury, signifying nothing.” They’re just buying time…very expensive time. The final chapter is still the same.
Report Post »ICANHANDLETHETRUTH
Posted on November 29, 2011 at 5:44pmThey should do what we do………. Print some more CASH ………… Maybe not !!
Report Post »A Doctors Labor Is Not My Right
Posted on November 29, 2011 at 6:09pmGreece’s crash is inevitable, just like America’s. As Ron Paul would say, this bubble WILL burst, as all bubbles do.
And the more money they print to try to bail them out, the worse the crash will be. The markets must be cleared of the malinvestments in order for the economy to recover.
Learn from history, America, because we will not escape the collapse of this credit bubble unscathed, but we can escape the threat of a global management of currency(ies) if we transition away from a fiat money system.
Learn Austrian Economics, before it’s too late.
See here.
Ron Paul: “This real-estate bubble will burst, as all bubbles do” (part 3)
http://www.youtube.com/watch?v=KONpt9a6HrI
And here.
Why You’ve Never Heard of the Great Depression of 1920 | Thomas E. Woods, Jr.
Report Post »http://www.youtube.com/watch?v=czcU*****mnsprQI
(Remove the five asterisks in the above URL)
undercover
Posted on November 29, 2011 at 5:37pm10.7 BILLION – can you hear the flushing sound?
Report Post »JohnnyMidknight
Posted on November 29, 2011 at 5:35pmGreat! More socialist dependency being created… When will Greece learn unless they are allowed to fail? Break up the EU and call it a day. Let Portugal, Italy, Greece and Spain fail! Its what the PIGS deserve. They will learn, our they will fade out like any good race of animal that ever graced the face of this earth.
Report Post »762x51
Posted on November 29, 2011 at 5:25pmIF the Euro fails? Don’t you mean WHEN the Euro fails?
At this point the Euro WILL fail and with it US banks and companies and the US economy. The game is over whether anyone wants to admit it or not.
Report Post »lukerw
Posted on November 29, 2011 at 5:45pmAgreed!
Report Post »hauschild
Posted on November 29, 2011 at 5:23pmTrying to avoid the unavoidable. How pathetic and sad, but how terribly European.
Report Post »lukerw
Posted on November 29, 2011 at 5:23pmThis Delaying Tactict….will fix NOTHING! It just gives the Leaders of the New World Order… more time to assemble thier Administrators!
Report Post »mrsalvage2
Posted on November 29, 2011 at 5:30pmDon’t you mean Kleptocrats?
Report Post »lukerw
Posted on November 29, 2011 at 5:43pmThey already control the Wealth… now they want the Direct Power over the New Surfs!
Report Post »ChiroRef
Posted on November 29, 2011 at 5:19pmCan Germany really be serious about signing up for it‘s own country’s financial suicide in order to give up its own sovereignity as well as bail out Greece and others to be able to retire at 55 while their own people pick up the tab? Sounds like American politician’s thinking.
Report Post »Snowleopard {gallery of cat folks}
Posted on November 29, 2011 at 5:18pmLets see, how will this scenario work…
It is difficult to reach the Trillion mark…hey, Mr Obama, print up a few trillion more for us here…okay when does it get here…thank you…considerate of them, we are doomed and now so are they…
Report Post »