New York Times
July 22, 2011
Europe’s leaders finally woke up — and not a moment too soon.
After months of costly procrastination and with a multicountry financial meltdown possibly just hours away, the European Union has approved a new Greek bailout loan and agreed to lower interest rates and extend repayment periods for the money it provides to Greece, Ireland and Portugal. Europe’s leaders also persuaded Greece’s creditor banks to provide some added relief through voluntary swaps of Greek debt at discounted market rates.
Until now, Europe had offered only loans, at punishingly high interest rates that added to the overall debt load. Thursday’s agreement will help lower Greece’s currently unsustainable debt-service costs and also provide interest-rate relief to Ireland and Portugal. For all three, it means a little more breathing room.
These steps and several others may, or may not, take the market heat off until Europe’s leaders come back from their summer vacations and try to come up with more far-reaching solutions. If they go back to their usual denial, things will quickly unravel again.