Weekend Bailout – Greece Agrees on EU-IMF bailout with "great sacrifices"

As has been the fashion since the financial crisis began with Bear Sterns, bailouts are worked out during the weekends ,the Greece one also was no exception. The bailout will require “great sacrifices” according to the Greek PM . The EU-IMF plan will lead to severe unemployment,GDP decrease and some economists suspect that this will eventually require debt restructuring anyway as the Greek economy contracts due to the harsh austerity measures .This restructuring which would require “sacrifices” to be made by the Greek people and not by the financial institutions . I wonder if Germany,France and other EU members really bailed out Greece or they bailed out their own financial sectors which had a significant Greek  exposure. Guess who will be the main winners/losers of this bailout script. As usual Winners – Financial Institutions , Losers – Common people  . Note there is a separate package to rescue Greek banks as well but not much of a package for the Greek people for whose ostensible benefit this package is designed to be.

Greece Agrees to EU, IMF Bailout as Papandreou Sees `Big Sacrifices’ Ahead- Bloomberg

About two-thirds of the funds will come from Greece’s 15 euro-area partners, which must still sign off on the disbursement by a unanimous decision. The European Commission said today it approves of Greece’s request for aid. The International Monetary Fund will provide the rest of the funds.

The financial lifeline will last three years and will force Greece to cut its budget deficit below the EU’s limit of 3 percent of gross domestic product by the end of 2014. That’s one year later than originally planned. The shortfall was 13.6 percent in 2009.

The scale of the budget cuts has prompted some economists to speculate that Greece will have to restructure its debt because the strains placed on the economy will be too great. The government now expects the economy to shrink 4 percent this year and 2.6 percent in 2011 before expanding 1.1 percent in 2012 and almost double that in the following two years. In January, it forecast a 0.3 percent contraction for 2010.

Greece Bailout Plan to Include Support Fund for Domestic Banks, EU Says – Bloomberg

Greece accepted an unprecedented bailout from the European Union and International Monetary Fund valued at more than 100 billion euros ($133 billion) to prevent default, agreeing to budget cuts that unions called “savage.”

The measures are worth 30 billion euros, or 13 percent of gross domestic product, and include wage cuts and a three-year freeze on pensions, Finance Minister said in Athens today. Greece’s main sales tax rate will rise to 23 percent from 21 percent. The exact bailout amount will be agreed by euro-region finance ministers currently meeting in Brussels. Germany will provide 28 percent of the euro region contribution.

Greece to cut deficit by 30 bn euro in three years – Economic Times

“Every Greek will be called upon to make great sacrifices to avoid disaster,” he added.

The bailout deal, which is aimed at containing a debt crisis that has shaken markets worldwide, would be ratified later Sunday, Papandreou said.

“It is an unprecedented support package for an unprecedented effort by the Greek people.”

The package, expected to total up to 120 billion euros ($160 billion) over three years, will be the first such rescue of a member of the 16-nation eurozone.