Greece Gets Bailout Deal

Eurozone nations, IMF agree to $155B deal
By Newser Editors and Wire Services
Posted Jul 21, 2011 5:42 PM CDT
IMF chief Christine Lagarde addresses the media after the eurzone meeting.   (AP Photo/Geert Vanden Wijngaert)

(Newser) – Eurozone leaders today agreed to a sweeping deal that will grant Greece a massive new bailout and radically reshape the currency union's rescue fund, allowing it to act pre-emptively when crises build up. The deal resolves a political deadlock between Europe's top economic authorities over how to save Greece that had investors worried the debt crisis would spin out of control. The eurozone countries and the IMF will give Greece a second bailout worth $155 billion, on top of a similar bailout last year.

Banks and other private investors will contribute some $71 billion to the rescue package until 2014 by either rolling over Greek bonds that they hold, swapping them for new ones with lower interest rates, or selling the bonds back to Greece at a low price.
Initial reaction from markets and analysts to the deal was cautiously positive. (Expectation of a deal helped lift the Dow.) The euro, which had rallied sharply on expectation of the deal, rose further to gain 1.2% against the dollar. The deal on involving private creditors is widely expected to be considered a "selective default" by the ratings agencies, making Greece the first euro country to ever be in default—if likely only for a short period of time.

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