Global markets relieved by Greece bailout

2011-07-22 12:56

Relief at a bailout package for Greece drove global shares higher today after European leaders made sweeping changes to a rescue fund in an effort to seal larger economies off from the continent’s debt crisis.

News of the €109-billion (R-trillion) package of loans for Athens caused the yields, or interest rates, on the country’s bonds to fall sharply.

The plan promised to reduce Greece’s overall debt burden – crucial to helping it beat a path out the cycle of borrowing.

But the most radical part of the deal announced yesterday is that it allows countries to tap rescue funds before their borrowing costs reach a critical level, a plan that leaders hope will mean they can shore up faltering economies preventively and stop the march of the crisis.

Those steps were broader than expected, and the rally that began as the deal took shape yesterday continued strongly a day later.

The euro also continued its surge, moving to $1.4407.Greece’s mountain of debt “in itself will be sufficient to cast a long shadow over the country’s efforts to stabilize its debts these next few years and its efforts will be hostage to the fortunes of the global economy and some fairly optimistic growth projections,” said Neil Mellor of Bank of New York Mellon.

And the question still remains whether Greece will be the last country dragged into the crisis.

So far Ireland, Portugal and Greece have all needed bailouts because investors who considered them bad risks demanded exorbitant rates to lend them money.

The fear has been that Italy and Spain could fall into the same trap, and that trying to bail out the eurozone’s third- and fourth-largest economies would bankrupt the union.

The yields on Italian and Spanish slid again today and were well below the threshold 6% mark they had reached earlier.

Still, Benjamin Reitzes, a senior economist with BMO Capital Markets, said that there “appears that there’s little here to keep markets from eventually putting renewed pressure on Italy or Spain, if they run into any speed bumps”.

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.