Possible euro debt solution: Partial Greek default, $3 trillion bailout
Share Now on:
Adriene Hill: One of the big problems trying to fix the European debt crisis has been trying to come up with a solution that makes all 17 eurozone countries happy. After weekend meetings of some of the world’s finance ministers, there are reports — rumors — whispers — of a solution.
For more, we go to the BBC’s Andrew Walker in London. Good morning Andrew.
Andrew Walker: Good morning.
Hill: What do we know about this plan right now?
Walker: We don’t know anything for sure — but what we’re hearing is suggestions that a deal is being put together which involves three key elements. One is a 50 percent default by Greece on its government debt — something that’s been denied by the Greek government, but nonetheless, we are hearing that. Recapitalization of European banks — that’s extra money to help them cope with any losses they may suffer. And using the European Central Bank to boost the effective firepower of the European Union’s bailout fund — something called the European Financial Stability Facility — so that it has a total effective firepower of something like 2 trillion euro, something like $3 trillion.
Hill: Now, this has been dragging on for months, and we’ve heard a ton of ideas. Why is the market seem to be responding so positively to this one?
Walker: Well the markets do seem to latch onto almost anything briefly and give it a bit of a welcome if it looks like it’s moving in what they would regard as the right direction. But think maybe there is a difference with this one. And that is, we’ve had lots of little piecemeal things. This does look like — at least it’s intended — to grapple with all the main, fundamental aspects of the crisis.
Hill: The BBC’s Andrew Walker. Thanks so much.
Walker: My pleasure.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.