Saturday, April 23, 2011

Year after Greek debt rescue, markets unconvinced

Associated Press
April 23, 2011

It's an anniversary few are celebrating. A year ago Saturday, with its faltering economy days away from bankruptcy, Greece ended months of speculation and requested bailout loans.

Prime Minister George Papandreou chose the remote island of Kastelorizo, and its tranquil seaside backdrop, to announce the "urgent national need to formally ask our partners to mobilize the support mechanism."

International solidarity, he said in a televised address, would "send a strong signal to markets that the European Union is not to be toyed with, and it will protect our common interests and our common currency."

Twelve months on, there's little indication that that signal has been received.

Greek bonds have been axed to junk status by the three major ratings agencies. And sky-high borrowing costs have roughly doubled, along with the price of insuring debt. Greece would currently have to pay out 15-percent interest on a 10-year bond, compared with the German benchmark of 3.27 percent.

At least 160,000 more people have lost their jobs since April 23, 2010, with government austerity accelerating layoffs and business failures. And the national debt is forecast to exceed the emergency level of 150 percent of gross domestic product in 2011.


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