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Merkel pleased by euro debt solution

The Local · 27 Oct 2011, 07:23

Published: 27 Oct 2011 07:23 GMT+02:00

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“I’m very pleased with the results,” Merkel said after marathon talks in Brussels, adding that European officials had “done the right things for the eurozone.”

Greece's Prime Minister George Papandreou hailed "a new era, a new chapter" for his debt-strapped nation.

IMF chief Christine Lagarde also voiced satisfaction with what she called "significant progress" on Eurozone financial crisis issues.

"I welcome the steps taken today by the eurozone leaders toward establishing a comprehensive framework to address the crisis facing the region, and I am encouraged by the substantial progress made on a number of fronts," she said in a statement released in Brussels.

The Institute of International Finance welcomed a "comprehensive package of measures to stabilize Europe, to strengthen the European banking system and to support Greece's reform effort."

"We welcome the announcement by the leaders of the Euro Area," said Charles Dallara, managing director of the Washington-based global association of financial institutions.

The talks in Brussels included leaders of the eurozone and representatives of banks, which have been forced to share the pain of Greece's debt burden.

Merkel said negotiations with the bankers had been difficult, but that they capitulated after being given a final offer.

That agreement was the last and perhaps toughest chapter to negotiate in a wide-ranging four-point plan to find a lasting solution to Europe's festering debt crisis.

Convincing banks to erase billions in Greek debt was a key part of a grand deal leaders had pledged to deliver at a eurozone summit, along with a bank recapitalisation plan and a beefed-up rescue fund to soothe fears of a global recession.

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The banks had agreed to take a 21-percent "haircut" on the Greek bond holdings as part of a second bailout for Athens agreed at a July summit, but the economic situation has deteriorated since then.

The "haircut" will slice off more than €100 billion from Greece's €350 billion debt.

AFP/DPA/The Local/mdm

The Local (news@thelocal.de)

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Your comments about this article

10:47 October 27, 2011 by Bushdiver
Do you think I might have a chance of getting half of my credit card balance written off?

So instead of Greece not being able to pay off the €350 billion debt they will now not be able to pay off the remaining €250 billion.
12:06 October 27, 2011 by Eastard
Greece could pay off the debt... however it is not in their national demeanor regardless of the amount. While this is a good time to recognize that the politicians have given them what they wanted for tens of years (more than they were affording) and that the blame is attached to the finger pointing... I do not expect they will embrace this historic opportunity to convert from a crybaby population to the respectable intellectuals their ancestors were. To have their unions strike for global recognition is like farting in a elevator... not real impressive. I am pro Greek however they really need to take active responsibility for their debt and how their country's dollars are being spent... Become a success story and beat the odds..
12:07 October 27, 2011 by mos101392
A perfect world is when everyone is Greek and no one has to pay anything.

Now i'm wondering if it is possible to have both American and Greek citizenship?
23:49 October 27, 2011 by Deutschguy
When this debt was issued, some behemoth bank signed off that it was a good enough quality to buy. Which bank was that?

Which private banking companies packaged and sold the debt and then bought the debt?

Somebody somewhere evaluated that it was o.k. to issue it and that it was marketable. And the banks that bought it are supposed to evaluate the risk of it before they buy it.

If I invest in something, it's my responsibility to find out before I fork over money for it, that it's a good investment. Same with a bank and government or private debt issues.
07:54 October 28, 2011 by nolibs
The banks aren't taking a haircut, the taxpayer is....and mostly the German taxpayer. Greece should be kicked out of the EU because I guarantee that they will NOT change their ways.

Once the German people realize what is going on, all hell is going to break loose.
11:59 October 28, 2011 by Deutschguy
@nolibs: You have no evidence that Greece will not "change its ways". You only have a stereotype, which could be applied to banksters and lobbyists in the US. Same goes for war profiteers who blather on about WMDs and bringing "God's gift of democracy" to Iraq or Afghanistan.

The German people are fully cognizant of 'what's going on' and they don't like it, but neither do the private sector Greek families and workers who are suffering more than anyone. Kind of sounds like the same situation in the US of people who lost their jobs and their homes due to Big Banks shenanigans and all the deregulation frenzy since Reagan. Lowered taxes didn't increase employment as promised.

Germans and other EU citizens are going to have to pay attention to what the EU and the ECB do and are about. Otherwise, it's like me only looking at what my state/local governments do, and ignoring the federal government and Congress.
19:17 October 30, 2011 by luckylongshot
This is just throwing good money after bad. Greece borrows, cant repay, so Europe cancels a chunk of what they owe and lends them more!!! and this is clever...we are stuffed!
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