At long last the EU has embraced Grecian Formula 16, a product guaranteed to enhance credit ratings, hair color, stock rallies, debt offerings, and improve one’s libido.
News on Grecian Formula 16 is everywhere you look this weekend. Please consider …
EU Readies Formula 16 Bazooka
The Wall Street Journal is reporting Europe Bankrolls Greece
Euro-zone finance ministers agreed Sunday that if heavily indebted Greece were to get a bailout, it could receive as much as €30 billion in loans this year at about 5% interest from fellow euro nations.
The move puts Greece closer to a bailout as it heads into a week headlined by an auction of Greek treasury bills Tuesday. That is seen as a crucial test of whether Greece can still borrow from capital markets. If it can’t, it would likely have to turn to the European Union package.
The ministers didn’t decide to give Greece the aid; that step would require the unanimous assent of euro-zone leaders. But they laid out terms—especially an interest rate—in an attempt to convince wary financial markets that the European Union does indeed have a plan in place.
Sunday’s decision, said Jean-Claude Juncker, the Luxembourg premier and the head of the council of euro-zone countries, “shows that there is money behind this.”
Still undisclosed is precisely what set of circumstances would be enough to trigger the bailout. Mr. Juncker said it would come “if needed”; reluctant German officials have said Greece needs to try, and fail, to borrow on financial markets before it gets help.
Please note the EU did not actually apply formula 16. However, the EU proudly put a bottle on the table for everyone to see.
Huge Bottle of Formula 16 Unveiled
After months of denial about unwillingness to offer below market pricing on formula 16, the EU stepped up to the plate with a gigantic $61 billion subsidized offering.
Please consider Greece Wins EU45 Billion Aid Pledge to Blunt Crisis
European governments offered debt- plagued Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates in a bid to stem its fiscal crisis and restore confidence in the euro.
Forced into action by a surge in Greek borrowing costs to an 11-year high, euro-region finance ministers said yesterday they would offer as much as 30 billion euros in three-year loans in 2010 at around 5 percent. That’s less than the current three- year Greek bond yield of 6.98 percent. Another 15 billion euros would come from the International Monetary Fund.
“This is a huge amount,” said Stephen Jen, managing director at BlueGold Capital Management LLP in London and a former IMF economist. “This is more than a bazooka. They have gone nuclear on the issue of Greece. In the short run the market is short Greek assets so we’ll get a rally in those.”
Greek Bonds, Stocks May Rally on Formula 16 Pledge
Bloomberg is reporting Greek Bonds, Stocks May Rally on 45 Billion-Euro EU Aid Pledge
Greek bonds and stocks may climb after European governments put an aid package together worth as much as 45 billion euros ($61 billion) to ensure the cash- strapped nation avoids defaulting on its debt.
The gains may cut the yield premium investors demand to hold Greek 10-year debt instead of benchmark German bunds. Finance ministers from the 16 euro countries agreed they would offer three-year loans at an interest rate of about 5 percent, Luxembourg Prime Minister Jean-Claude Juncker said yesterday at a press conference in Brussels. Part of the total will come from the International Monetary Fund, he said.
Greece Denies It Needs Formula 16
Now that a bottle of formula 16 is finally on the table, Greece Denies It Needs EU Aid.
Greece has no immediate plans to trigger the European Union rescue plan hammered out yesterday and will go ahead with planned debt sales.
European governments offered debt-burdened Greece a rescue package worth as much as 45 billion euros ($61 billion) at below-market interest rates as they try to restore confidence in the euro. Greek Prime Minister George Papandreou is hoping the agreement, which he called a “loaded gun on the table,” will halt a rise in borrowing costs, providing the government with time to implement its austerity plans.
“Our goal is, and we believe we can, to continue to borrow smoothly from the markets,” Finance Minister George Papaconstantinou told reporters yesterday. “The Greek government hasn’t asked for this mechanism to be activated, even though it is already immediately available.”
With the huge bottle of formula 16 sitting unused on the table, the US dollar is taking a hit this evening, down .80 to 80.45. Let’s see what happens if and when the bottle needs to be opened.
Mike “Mish” Shedlock
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