EU Crafts $962 Billion Show of Force to Halt Crisis

Source: Bloomberg

May 10 (Bloomberg) -- European policy makers unveiled an unprecedented loan package worth nearly $1 trillion and a program of securities purchases as they spearheaded a drive to stop a sovereign-debt crisis that threatened to shatter confidence in the euro. Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, governments of the 16 euro nations agreed to make loans of as much as 750 billion euros ($962 billion) available to countries under attack from speculators.

The ECB will also embark on “very significant operations,” European Union Economic and Monetary Commissioner Olli Rehn told reporters in Brussels after the 14-hour meeting. “The ECB has taken a decision to intervene in the secondary markets of government securities.”

Under pressure from the U.S. and Asia to stabilize markets, the European governments gambled that the show of financial force would prevent a sovereign-debt crisis and muffle speculation that the 11-year-old euro might break apart.

....Under the loan package, euro-area governments pledged to make 440 billion euros available, with 60 billion euros more from the EU’s budget and as much as 250 billion euros from the International Monetary Fund, said Spanish Economy Minister Elena Salgado.

Read more: http://www.bloomberg.com/apps/news?pid=20601085&sid=ap50DW8IqhBo

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NY Times: E.U. Details $957 Billion Rescue Package
By JAMES KANTER and LANDON THOMAS Jr.
Published: May 9, 2010

BRUSSELS — European leaders, pressured by sliding markets and doubts over their ability to act decisively, agreed on Monday to provide a huge rescue package of nearly $1 trillion in a sweeping effort to combat the debt crisis that has engulfed Europe and threatened markets around the world.

In an extraordinary session that lasted into the early morning hours, finance ministers from the European Union agreed on a deal that would provide $560 billion in new loans and $76 billion under an existing lending program. Elena Salgado, the Spanish finance minister, who announced the deal, also said the International Monetary Fund was prepared to give up to $321 billion separately.

Officials are hoping the size of the program — a total of $957 billion — will signal a “shock and awe” commitment that will be viewed in the same vein as the $700 billion package the United States government provided to help its own ailing financial institutions in 2008. The package represented an audacious step for a union that had been criticized for acting tentatively, and without consensus, in the face of a mounting crisis.

Underscoring the urgency of the situation, President Obama spoke to the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, on Sunday about the need for decisive action to restore investor confidence. And in a sign of the spreading anxiety, the United States Federal Reserve, along with the European Central Bank and the central banks of Canada, Britain and Switzerland, announced the re-establishment of instruments known as swap lines through January 2011. The swaps are intended to help ease pressure on the euro, whose value against the dollar has fallen as fearful investors have bought up dollars.
http://www.nytimes.com/2010/05/10/business/global/10drachma.html?src=busln

(Reuters) - The euro firmed and stocks rose on Monday after the European Union agreed on a 500 billion euro ($670 billion) emergency fund as it struggles to keep Greece's debt problems from spreading to other countries.

Major global central banks moved swiftly to support Europe, re-establishing dollar swap facilities used during the 2007-2008 financial crisis to help ease strains on financial markets and ensure there was enough liquidity to keep global credit markets from seizing up.

The euro rose as high as $1.2950 on news of the deal before slipping back after the European Central Bank said it would buy euro zone government and private debt, abandoning resistance to full-scale bond purchases in light of Greece's debt crisis.

By midmorning, the single currency was up 0.6 percent on the day at $1.2828, and was 1.5 percent higher against the yen at 118.55 yen.
http://www.reuters.com/article/idUSTRE6482ZL20100510

Asian Markets Rebound on European Rescue Package
May 9, 2010
By BETTINA WASSENER

HONG KONG — Stock markets in the Asia-Pacific region rallied early on Monday, and the beleaguered euro firmed against other leading currencies, after European leaders agreed to a giant rescue package in a bid to contain the snowballing worries about the debt levels of Greece and other European nations.

The Nikkei 225 index in Japan rose 1.3 percent and the South Korean market gained 1.4 percent, recouping some of the losses they had suffered as the European worries battered financial markets around the globe last week.

The Hang Seng Index in Hong Kong gained 1.3 percent soon after the open, and the benchmark index in Singapore rose 0.5 percent. In Australia, the benchmark S&P/ASX 200 climbed 2.1 percent.

....The euro, which has been mauled on the foreign exchange markets since January, also recovered some ground in the wake of the rescue package announcement on Monday. By mid-morning in Asia, it was trading above $1.29, up from about $1.27 on Friday, and at 120 yen, up from about 117 yen on Friday.
http://www.nytimes.com/2010/05/11/business/global/11iht-markets.html?src=busln

hmmmmmmm

I was in Ireland in 2005 during the peak of the "Celtic Tiger" as it was called. For EU 350,000 you could buy yourself a tiny little crummy old shack of a cottage that needed lots of work. As for land to go with it, not much.

The whole thing has been a farce. It is a mere duplicate but even worse on many levels as to what happened here in the USA.

I do wish all of them the best of luck because they will be needing it!

:kick:

How I would like to see the biggest of them bankrupted by this.

It would be nice to see their names as well.

Shares and oil prices surge after EU loan deal

Monday, 10 May 2010 10:02 UK (BBC) Leading European shares have jumped after European finance ministers agreed measures to try to stop the Greek debt crisis affecting other countries.

The UK's FTSE 100 and Germany's Dax indexes both rose about 4%, while France's Cac 40 surged almost 6%.

The euro rose against both the dollar and pound, and the oil price jumped more than $3 a barrel to $78.

/... http://news.bbc.co.uk/2/hi/business/10104140.stm

I don't think this officially been approved by the countries Governments. We will see how well it goes over later this week.