We could go up
by Peter Switzer
Wall Street’s negative lead came before the final Greek deal was signed off and that’s why we could go positive today. However, we might need a Wall Street reaction tonight to give our market some guts.
"The IMF executive board has concluded its discussion on Greece and approved a three-year stand-by arrangement for a total amount of SDR 26.4 billion (30 billion euros)," the IMF said in a statement.
So where we stand, eurozone leaders have now agreed to activate the aid package for Greece, offering, along with the IMF, 110 billion euros over the next three years, with euro area members contributing for their part 80 billion euros.
Praise for Greece
In another good sign, the IMF boss gave the Greek Government some scarce praise.
"The Greek government should be commended for committing to an historic course of action that will give this proud nation a chance of rising above its current troubles and securing a better future for the Greek people," said IMF Managing Director Dominique Strauss-Kahn in a statement.
It has been fears of a Greek default that have put a focus on the national debt of other weaker European economies such as Portugal and Spain, eroding the strength of the euro. A European bloc bailout will next be in focus.
Better than last week
Back to Greece and the violent demonstrations at the proposed austerity program to pay back their debts have masked what the general Greek population thinks.
A poll in the To Vima daily showed that 55.2 per cent of respondents would accept austerity measures, while 56.3 per cent prefer wage cuts to national bankruptcy and 71.3 per cent want squabbling Greek political parties to cooperate.
This is the sort of thing we should have seen six weeks ago and if it had happened, we might not have seen the market sell-offs and the rise of the short-sellers and hedge funds, which have been clobbered by the effects of the stronger than expected US economic recovery and solid corporate earnings.
Europe’s problems have not gone away but we are in a better place today than last week.
Finally, the Rudd Government’s idea of tax breaks to attract foreign finance customers should be a help to finance stocks and contrasts with the impact of the Government’s hit on mining companies with its Resource super profit tax.
The market’s reaction to this news should be interesting.
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Published on: Monday, May 10, 2010blog comments powered by Disqus