The game of chicken is over. The EU blinked.
Trying again to halt a debt crisis that has hammered the euro, fellow eurozone governments tossed struggling Greece a financial lifeline Sunday, saying they would make euro30 billion in loans available this year alone — if Athens asks for the money.
The International Monetary Fund stands ready to chip in another euro10 billion, said Olli Rehn, the EU monetary affairs chief.
The loan will be at a 5% interest rate, well below the market rates of nearly 7%.
European Central Bank president Jean-Claude Trichet and German Chancellor Angela Merkel have insisted that Greece not get below-market interest rates amounting to an EU subsidy for its past bad behavior.
"This is certainly no subsidy" to Greece, Rehn told a news conference.
Actually that is exactly what it is.
This bailout comes just a day after Moody's downgraded Greek debt to one step above junk.
Greece hasn't formally asked for this aid, but at the same time it is already hinting that the aid isn't enough.
(Reuters) - It would be logical that the EU/IMF aid for Greece amounts to some 80 billion euros ($107 billion) over the next three years if the mechanism is triggered, a senior finance ministry official said on Sunday.
"40 billions for 2010 is part of a bigger amount for the three-year period. A logical amount for the three-year period would be double than 40 billion," the official told reporters.
This sounds like to me that Greece knows full well that they are Too-Big-To-Fail, and that they already plan on getting more bailouts in the future.
Greece is to the EU what Wall Street banks are to the Federal Reserve.