Greece gets a new €109 billion bail out with €37 billion coming from the private sector. Al-Jazeera does a good job in the below video report overviewing the bail out terms. One of the goals was to stop contagion.
The Greek financing package will consist of 109 billion euros from the euro region and the IMF. Financial institutions will contribute 50 billion euros after agreeing to a series of bond exchanges and buybacks that will also cut Greece’s debt load.
They also extended the pay back timeline to 30 years:
Greece and fellow bailout recipients Portugal and Ireland will also have the interest rate on emergency loans pared. Maturities will be lengthened to as long as three decades with a 10-year grace period.
Some writers still see a default can being kicked down the road:
They’ve gone from kicking the can down the road to rolling a larger snowball of potential trouble that just keeps getting larger the farther away it rolls.
They have a point since part of this bail out requires cooperation from the private sector:
Banks will reduce Greece’s debt by 13.5 billion euros by exchanging bonds and “potentially much more” through a buyback program still to be outlined by governments, said the Institute of International Finance, a Washington-based group representing banks.
Investors will have the option to exchange existing Greek debt into four instruments. Three will be fully collateralized by AAA-rated zero-coupon securities and have a 30-year maturity, and the fourth will be for 15 years and partially collateralized by funds held in an escrow account.
Crisis managers are aiming for a 90 percent participation rate from Greek bondholders.
The bail out is also claiming to enact a new Marshall plan, the famous funding which rebuilt Europe after WWII. What exactly is this Marshall Plan to recover Greece? From the actual draft agreement we have this:
All euro area Member States will adhere strictly to the agreed fiscal targets, improve competitiveness and address macro-economic imbalances. Public deficits in all countries except those under a programme will be brought below 3% by 2013 at the latest. In this context, we welcome the budgetary package recently presented by the Italian government which will enable it to bring the deficit below 3% in 2012 and to achieve balance budget in 2014. We also welcome the ambitious reforms undertaken by Spain in the fiscal, financial and structural area. As a follow up to the results of bank stress tests, Member States will provide backstops to banks as appropriate.
Well, well, it's austerity! What a joke! The real Marshall plan rebuilt Europe, including infrastructure and was a Keynesian type of economic policy. It also marshaled in social programs, like universal health care and social security for Europe, which now blow past the United States for health care quality and coverage. The Guardian compares use of the term to seeing a flying saucer. For only up close would one see the necessary loans and investments needed to rebuild Greece.
What's in a word these days? Seemingly a hell of a lot of spin and history rewrite. Sorry talking point architects, Austerity, aka screwing the people and a country is not a Marshall plan.