Sure glad that’s over.
Suddenly Monday’s downgrade by Standard & Poor’s of Greece’s sovereign debt to junk doesn’t matter anymore.
European stock markets have hauled out the rally monkey today on news that—well, on news that discussions on an aid package for Greece will conclude in the next few days. Details on the package will be available “soon,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told reporters today.
Speculators (since there aren’t any investors playing this trade) looking for a quick profit as the schizophrenic market swung back to hope from despair bid up Greece’s benchmark ASE Index 7.1% today. Shares of National Bank of Greece, the country’s biggest lender, rose 18%.
Greece faces a May 19 deadline to refinance $11.3 billion in government debt. To meet that deadline, bankers say, a deal must be in place by May 6.
Frankly, it’s inconceivable to me that Greece and the European Union will miss that target. The amount of money that it will take to avert this immediate crisis is relatively small.
But solving the immediate crisis leaves the big problem still on the table.
The deal that is still under discussion would put up $60 billion from European Union governments and the International Monetary Fund. That would be enough to get Greece through 2010. But estimates put the bill for a long-term bailout of Greece at $120 billion to $200 billion.
Any deal that gets put together in the next few days merely buys time.
Stock markets around the world will rejoice on the announcement of any deal at all, of course.
But I don’t think the news will stop the maddening swing from optimism to despair and back again that we’ve suffered in the last few weeks.