European leaders closed ranks to defend Greece from the punishment of investors in a pledge of support that may soon be tested.
German Chancellor Angela Merkel and her counterparts yesterday pledged “determined and coordinated action” to support Greece’s efforts to regain control of its finances. They stopped short of providing taxpayers’ money or diluting their own demands for the country to cut the European Union’s biggest budget deficit.
“It’s like Paulson’s bazooka,” said Nielsen, Goldman Sachs’s chief European economist in London. “It’s a difficult balancing act — saying something comforting to the market without committing money and hoping the market will take their word for it.”
After a three-month long plunge in Greece’s bonds amid speculation it was facing the threat of default, euro-region leaders yesterday ordered the country to slash its budget deficit and warned investors they would be willing to defend the country from speculative attack if necessary.
The pledge lacked specifics and officials are now working on measures such as establishing a lending facility for Greece, with each country making a contribution according to its size, an EU official said yesterday on condition of anonymity.
With Ireland forcing public workers to accept pay cuts of as much as 10 percent to meet EU budget rules, Merkel and other leaders are trying to convince voters that Greece won’t get an easy escape after a decade of fiscal profligacy.
Money For Free?
“This is not money for free,” said Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-area finance ministers. “This is a strong commitment imposed on Greece.”
With the Greek crisis testing Europe’s ability to run a common currency with 16 separate national fiscal policies, leaders want to avoid Paulson’s fate. In July 2008, he won power from Congress enabling a government rescue of Freddie Mac and Fannie Mae, calling it a “bazooka in your pocket” that would make a bailout less likely.
With the Greek crisis testing Europe’s ability to run a common currency with 16 separate national fiscal policies, leaders want to
EU Tries Paulson’s Bazooka Ploy; Bazooka Theory vs. Historical Results
by ilene - February 12th, 2010 1:53 pm
EU Tries Paulson’s Bazooka Ploy; Bazooka Theory vs. Historical Results
Courtesy of Mish
In a desperate attempt to rein in problems in Greece, EU leaders once again offered moral support, this time with a Bazooka aimed right at Greece.
Please consider EU Leaders Deploy ‘Bazooka’ to Repel Attack on Greece
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