(Yet another) Greek Bail Out - $146 Billion Dollars

Yet another Greek bail out deal was reached:

Euro region finance ministers agreed to a 110 billion-euro ($146 billion) rescue package for Greece to prevent a default and stop the worst crisis in the currency’s 11-year history from spreading through the rest of the bloc.

This is to prevent a sovereign default, which was causing contagion throughout Europe.

The New York Times is reporting larger bail out amounts of €120 billion.

Bloomberg has some horrid numbers in their report:

Greece’s main sales tax rate will rise to 23 percent from 21 percent.

28% of the European contribution is from Germany. Squishing workers:

Other measures include abolishing the 13th and 14th wage payments that civil servants get annually for workers earning more than 3,000 euros per month, he said. Payments for those earning less than that will be capped at 1,000 euros.

Bloomberg seems to be getting the details of the deal right.

Greek bailout merely the first

Harvard Professor Kenneth Rogoff is warning that the IMF bailout of Greece is just the first of many to come.

“It’s more likely than not that we’ll need an IMF program in at least one more country in the euro area over the next two to three years,” Rogoff, a former IMF chief economist who has co-authored studies of financial and sovereign debt crises, said in a telephone interview. “The budget cuts needed in Europe in many countries are profound.”
Portuguese, Spanish and Irish bond yields jumped last week as investors questioned their ability to reduce budget deficits and avoid Greece’s fate....
At 14.3 percent of gross domestic product, Ireland had the euro region’s largest deficit last year. Greece’s was 13.6 percent, Spain’s was 11.2 percent and Portugal’s 9.4 percent.

Are markets pricing in a Greek default?

The bond market concluded that short-term risk on Greece has now hit crisis levels, as Moody's downgraded the country again.

(Bloomberg) -- Greek bonds plunged, driving two- year yields above 11 percent, after the European Union said the nation’s 2009 budget deficit was larger than previously stated and Moody’s Investors Service cut its credit rating one step.

Greek bonds hit 8%

The on-again, off-again bailout of Greece is running out of time, and the markets are getting nervous. This is reflected in the widening gap between yields on German and Greek bonds.

"I wouldn't bet on sharp decreases in Greek bond yields, especially those in the longer end of the maturity spectrum, given that the market will continue to reason that the risk of a default remains, even if the package is activated," he said, speaking by telephone from Amsterdam.

EU agrees to Greek bailout

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.

All Things Greek

Greece is getting a bail out. Well, not really, because they are getting loans, oops, wait, yes really.

The Wall Street Journal notices Greece will pay more in interest than if it had gone to the IMF. According to the Wall Street Journal the two possible rates for the €30 billion in loans is 5.33%, fixed and 4.14% variable.

Either way, the IMF is way cheaper. It uses it’s own interest rate as a base, and it levies different surcharges. The fund’s rate works out to 2.71%, as of last week, for a €10 billion package.

Now Bloomberg is reporting a €45 billion loan package, €30 billion from the Euro-Zone finance ministers and €15 billion from the IMF. Bloomberg is reporting the current Greek bond yield is 6.98%.

But this thing isn't over.