Stock and bond markets have been roiled by news of the Greece financial crisis over the past few weeks. What does it all mean? Firstly it is important o understand the crisis isn’t new and secondly we are a long way from a real viable solution.
Today the Greece Parliament backed the implementation laws to secure the bailout funds which mean the EU officials expect a 12 billion euro loan to be handed over. Without the bailout Greece would have been subject to default. A default is what unnerves financial markets worried about a Lehman style financial collapse.
Germany’s finance minister Schaeuble also announced that German banks and insurers will play part in the bailout. The Greek vote saw the Euro and stocks rise to three-week highs. However markets are still pricing in default as evidenced by credit default swaps.
Greek lawmakers voted 155-136 for the implementing laws for the bailout. This came after the brutal and unpopular 28 billion five-year euro austerity plan voted on the day before. These were the final obstacles to the aid tranche from the European Union and the International Monetary Fund.
Euro zone finance ministers will take the final decision at a meeting on Sunday. The IMF will decide on July 5.
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