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Greek Debt Solution Being Presented At Summit

by Jim ONeil on June 28, 2011

in uk banks

Greece needs a lot more than payday loans to get out of its current financial situation. European leaders will spend part of Thursday and Friday presenting a plan to help Greece avoid default. These powers will inform the Greek Prime Minister that 12 billion euros of emergency aid will be released as long as Greece commits to an economic reform.

The two-day summit does not have Greece on its formal agenda but discussion is inevitable. Though no formal decisions will be made regarding the country, financial markets will be monitoring the meeting to decipher messages regarding whether the EU plan will work.

Ben Bernanke, the U.S. Federal Reserve chairman, said the financial system throughout Europe and possibly the world may be impacted if the Greek debt situation is not resolved.

European Commission President Jose Manuel Barroso stated that many residents of Greece are experiencing difficult and uncertain times. To secure ongoing European assistance, Greece must demonstrate its commitment to the IMF and EU reform package.

A Greek Parliament vote on June 28 will determine whether the agreed-upon privatization measures, tax increases, and spending cuts are approved.

Parliament does not seem to be undivided regarding the measures. The issue is with Greek society, which is disappointed, angry, and has lost hope. In the confidence vote, the government was voted against by all opposition politicians.

Outside parliament, 20,000 protesters gathered to chant insults. Even if Greece can take a unified stand and illustrate its commitment, additional loans will be needed.

To meet financial obligations through 2014, Greece may require another 100 billion euro bailout. By that time, the country hopes that financial markets will provide funding. Germany leads the euro zone member states mandating that the private sector be involved in a second aid package. Even such a voluntary rollover may be considered a default.

Pastels

Greek reformists huh? wow.

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