Greek Prime Minister George Papandreou speaks during a press conference at the European Union.
Greek Prime Minister George Papandreou speaks during a press conference at the European Union. - 
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Steve Chiotakis: The Greek Prime Minister, George Papandreou, has formally asked for help. His country is mired in debt and it hasn't been able to borrow to pay off that debt. And the next step here is for the European Union and International Monetary Fund to pull the trigger on a more than $50 billion aid package. Marketplace Europe correspondent Stephen Beard is with us live from London with the very latest. Hi Stephen.

Stephen Beard: Hello, Steve.

Chiotakis: We've been hearing about the Greek troubles now for months and months. So what triggered today's official request?

Beard: The government in Athens had no choice but to request this loan package, which was already agreed. Things have gone from bad to worse for Greece in recent days -- figures out yesterday showed a budget deficit almost 14 percent, much worse than expected. Moody's, the rating agency, cut its credit rating. And the interest rate on 10-year government bonds hit almost 9 percent. Simon Tilford of the Center for European Reform says that's unsustainable:

Simon Tilford: Interest rates of that level are ruinous for Greece. Basically the markets are saying this country is effectively insolvent.

Chiotakis: So Stephen, if they get this money, will that save the day?

Beard: Well if they do get this loan package, Tilford says it'll get Greece through the immediate crisis; Athens will be able to, for the rest of the year, borrow from a lower rate than investors are prepared to lend out. But the fundmental problem remains. Investors want Greece to cut its deficit. The country is cutting public spending to get the deficit down, but that's making the recession worse. That means lower tax revenues and that means bigger budget deficit. The country's caught in a vicious cycle; it's a downward spiral, which Tilford says can only end in default.

Chiotakis: All right. Marketplace's Stephen Beard with that, reporting live from London this morning. Thanks Stephen.

Beard: OK, Steve.