Angela Calling Update
Well, it seems the EU leadership have finally been able to take a decision on what to lend and what to charge (see original post here). According to initial press reports the German government has decided in principal to participate in loans to Greece at below-market interest rates, dropping its original opposition to the idea. The loans – which are said to total 30 billion euros from the Eurogroup countries at an interest rate of around 5% – will still be priced above the rate charged by the International Monetary Fund, which will also participate in the rescue, and will lend an additional, as yet unspecified, sum, although according to Olli Rehn, EU monetary affairs Commissioner, the IMF contribution is likely to be around 10%. Rehn also said the funds will be available if and when Greece makes a formal request for financial assistance, something it has yet to do.
So now we know how this begins. We have yet to see where and how it will end.
————–
Edward Hugh also blogs at A Fistful of Euros.
And the question that lingers is whether the precedence will also extend to other basket cases in the region.
I don’t think Greece is a precedent. Ireland, Spain and Portugal are all unilaterally undergoing austerity. Spanish president Zapatero is in the press a lot today saying we will make the budget cuts “cueste lo que cueste” i.e. at all costs.