The countries that make up the Euro Zone met with representatives of the Greek government last night and after 12 hours of talks agreed to a $170 billion dollar bailout for the government. This bailout is expected to save Greece from the catastrophe of a default on debt, the effects of which would have been felt all around the world.
The deal is expected to bring Greece’s debt down to 120.5 percent of gross domestic product by 2020. While this is a ridiculous amount of debt to occur by a sovereign nation, the members of the Eurozone and the International Monetary Fund say that this is a sustainable amount of debt.
News of the bailout helped the Euro surge in overnight trading and is expected to push an additional rise today.
The Eurozone leaders rushed to secure the bailout for Greece because a Greek default would have collapsed the Euro, forced Greece to abandon the currency and wreaked havoc on world financial markets.
Greek Premier Lucas Papademos said upon signing the bailout papers,
“It’s no exaggeration to say that today is a historic day for the Greek economy,”
The eurozone countries also agreed to cut interest on the loans Greece is currently paying back by up to two percentage points. National banks from the Eurozone that hold Greek debt have also agreed to forgo any profits earned from Greece to ease the burden on the country and help it grow.
US Financial markets have been watching the talks very closely in order to gauge how the bailout would effect the Euro. Europe in America’s largest trading partner.
Do you think the bailout will hep the Greek Government get back on its feet?