Greece Debt Crisis
Get ready for Europe crisis 2.0. The debate between entitlements and government support of the populace versus accepting a bailout or austerity measures from Euro-neighbors, is again in full swing. Greece has been accepting austerity measures from its fellow Euro-zone partners for four years now and that existing agreement runs out on February 28.
Greece's debt, the quality of their bonds, and the agreements with its creditors are again under review and being renegotiated. The aim is to extend terms for an additional four months; an interim funding plan. One hundred and seventy-two billion Euros is on the line. Greece has been trying the patience of the more conservative countries in Northern Europe who have been better money managers.
The country's government is walking a fine-line between those citizens who are anti-austerity and the demands of its creditors. An agreement with the European Central Bank has been in the works during February, with Greece's government looking for the best terms possible to satisfy all stakeholders; as well as voters at home.
The fly in the ointment is that Greece's recently elected left-wing Prime Minister, Alexis Tsipras, and his administration, ran on an anti-austerity platform. Spain is believed to follow Greece's lead during their next elections.
The risk of a deal not being hammered out would mean that Greece would face bankruptcy and internally, would risk a run on the banks.
The proposal, put forth by Greece, has to satisfy the European Commission, European Central Bank and the International Monetary Fund. (together, formally referred to as the troika, now the 'institutions') An earlier attempted proposal by Greece saw rejection, out of hand, by the German finance minister.
A deal in the works
As of February 23, what was known of the deal had European markets reacting positively with Greece's borrowing costs dropping more than two percentage points. Other neighboring countries saw their borrowing costs benefit as well.
Greece may still have periods where it has to come up with funding on its own. The government may be able to auction treasury bills. The only problem with this is that the T-bills