Greece’s hard road ahead

Bob Moon Feb 9, 2012

After weeks of brinksmanship, missed deadlines, and late-night negotiations, Greek politicians finally signed off on the long-awaited austerity measures demanded by the so-called troika: the European Union, the European Central Bank and the International Monetary Fund. Their reward? A bailout of about $172 billion from the European Central Bank.

Greece avoids default and gets to stay in the eurozone. Big news, right? The markets basically reacted with a shrug.

Douglas Elliot is a senior fellow at the Brookings Institute. He says the markets have seen this deal coming for so long that it had already been priced in. And, more importantly, Elliot says, “[The agreement] isn’t good news. It’s the absence of really bad news.”

Greece is facing a “long and very painful” process. The austerity plan includes wage and pension cuts and lots of layoffs. “There’s going to be a lot of suffering, and that’s kind of the best case,” Elliot says.

The Greek parliament will vote on the austerity measures on Sunday. Greece knows what’s in store for it, but for other struggling eurozone countries — notably Portugal and Italy — the path out of the woods is still somewhat unclear. Greek unions are planning another round of strikes and protests starting tomorrow.

With Greece starting to look in the rearview mirrow, the markets can turn their attention to longer term uncertainties closer to home. Namely, who will the U.S. presidential election in November.

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