The game of chicken is over. Europe blinked.
European governments have agreed in principle to support struggling euro-zone member Greece and are considering various options, including bilateral aid, a senior German coalition source said on Tuesday.
"The decision on help for Greece has been taken in principle within the euro zone," the source said.
This bailout eliminates the short-term problems with the bond market. However, it creates a huge moral hazard down the road.
Nonetheless, look for a relief rally in global stocks and European bonds.