European Union To Bail Out Greece
Matt | On 29, Apr 2010
The bailout concept has hopped The Pond and hit the European Union (EU) hard this week.
On Tuesday, Standard & Poor’s gave Greece’s government a “junk” rating on its debt sparking major fears of a U.S.-like financial collapse across Europe. Remember that Greece is a member state of the European Union, home to other major countries (France, United Kingdom, Spain, etc.) in the area. If Greece’s economy was to fail, it’s much like a domino effect on the other nations. When words like (collapsed financial giant) Lehman Brothers are thrown around when describing your economy, umm, it’s time to act IMMEDIATELY!
The European Union is set to provide about 45 billion euros ($59 billion) in loan aid the first year. Greece is going to refinance its public debt with the money because it’s simply carrying too much. For example, the country went way over budget on the 2004 Olympic games. They also suffer from a lot of tax evasion that is keeping their pockets empty.
Long story short, there was lots of spending, but Mama was not making her euros back fast enough. Time to hit the financial reset button!
Other member of the EU, Spain and Portugal, also had their credit ratings downgraded this week, but not as bad as Greece. There was an initial drag on the stock markets in the major cities, but that has calmed down a bit now. The Euro is trading a little higher against the dollar too now that a rescue plan has been announced.
I really hope this financial downturn is teaching the global markets, and us global consumers, about managing debt loads. I’m taking copious notes and trying to change a few things myself!