Greece to activate EU-IMF loans

Source: BBC News

Greek Prime Minister George Papandreou has asked for activation of an EU/IMF debt rescue mechanism, to help pull the economy out of its current crisis.

It follows negotiations with eurozone nations and International Monetary Fund over the details of an emergency rescue package.

It comes a day after data showed a worse-than-expected budget deficit of 13.6% of gross domestic product.

Credit rating agency Moody's also cut its rating on Greek debt on Thursday.

Read more: http://news.bbc.co.uk/1/hi/business/8639440.stm

but it does buy them some time to work them out. It also will help stabilize the world markets.. at least for now.

LONDON -- Pushed to the brink of bankruptcy, Greece on Friday officially requested a massive, $56 billion rescue from European nations and the International Monetary Fund aimed at preventing a financial meltdown in the heart of Europe.

Prime Minister George Papandreou made the request Friday morning. The desperate move, potentially locking Greece into fresh rounds of austerity cuts that could worsen public unrest, came as investors lost faith in the accuracy of financial reporting by the Mediterranean nation and flight of capital was threatening to undermine the Greek banking system.

The news helped lifted stock markets from London to Frankfurt, and invigorated the euro, lifting it up from one-year lows against the dollar as fears ebbed that Greece -- one of the 16 nations that use the principle common currency -- would be forced into a catastrophic debt default.

...

Other large nations, including the United States, that carry increasing levels of debt have worried that the Greek crisis could be a small-scale sketch of their own future. Sovereign debt is coming under increasing scrutiny by global markets, and many analysts fear that U.S. government bonds are not as attractive as they once were.

Wall Street traders have referred to the months-long Greek debt crisis as the "Greece fire": It has been messy, noxious and hard to put out. Each time a solution has appeared close at hand, new revelations emerge from Greece, fanning the flames.

On Thursday, new data showed that the current Greek administration, like its predecessor, had underreported its debt in order to hide problems from outsiders. The European Union's statistical office said the government's 2009 budget deficit was $44.3 billion, 13.6 percent of Greece's gross domestic product, which is significantly higher than the 12.7 percent previously reported. In the United States, the figure is about 10 percent.

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