Tuesday, May 04, 2010

Greece Update

by Calculated Risk on 5/04/2010 11:24:00 AM

A couple of comments from German officials via the Guardian: Greece's €110bn bailout gets lukewarm reception from financial markets (ht Jonathan)

German economy minister Rainer Brüderle added to the uncertainty by telling Reuters that the €110bn package was not intended to cover Greece's entire financial requirements for the next three years. Instead, Brüderle suggested, Greece will need to return to the financial markets in perhaps 18 months to satisfy its borrowing needs.
...
Finance minister Wolfgang Schäuble said that Greece would be plunged into insolvency if it failed to meet its promises to raise taxes across the economy, increase the retirement age to 65, and cut the size of its public sector.

"If there are any violations, payments will be stopped. Then Athens will once again be threatened with bankruptcy," Schäuble told the Rheinische Post newspaper.
The yield on the two year Greek government debt was up 4.2% to 14.5% this morning. Investors still have no confidence ...

And there are still worries of contagion, from Bloomberg:
Spanish Prime Minister Jose Luis Rodriguez Zapatero said speculation of a bailout for Spain is “complete madness” and the nation has “strong solvency.” His remarks came as Greece’s 110 billion-euro ($146 billion) rescue package fails to ease concern that swelling European sovereign debt will derail the economic recovery.