Optimism over Greek Debt Bolsters Euro
Farmers know the uncertainty over sovereign debt in Europe is wreaking havoc on the commodities markets.
Compiled by staff
Published: Jun 28, 2011
Is it likely that Greece will get the interim help it needs to bolster its debt picture? Looks like that may be the case, and wire services report that because of that optimism, the euro has maintained gains it made in Monday's trade. The hopeful news came as Germany welcomed proposals from French lenders (who also hold a lot of Greek debt) on voluntary participation in the new debt plan.
Greek lawmakers will vote Wednesday on budget cuts and asset sales needed to secure a loan payment and future financing. French banks may be the largest private sector holders of Greek debt.
According to Bloomberg, the Greek Prime Minister called on lawmakers to back tougher austerity measures as they began to debate the budget plan Monday. Failure to pass a proposed $110 billion in cuts and asset sales could lead to a default.
Franch has proposed a debt swap where half the debt held by banks and insurers maturing in the next three years would be swapped for new 30-year bonds, Bloomberg reports. Redemptions from another group would be invested in a special purpose instrument to serve as collateral for the banks. Bloomberg was quoting sources familiar with the plan.
The French move, being called radical by come, was enough to bolster markets. Even Asian markets moved up on the news that Europe may have dodged a debt default bullet. The U.S. stock market even saw a 1% gain Monday.
How the full moves will be received when more details are known remains to be seen. Greeks have rioted over austerity cuts in the past, which has caused lawmakers to back away. Continued worries over debt may force Greece's hand, that remains to be seen.
For farmers, keeping a keen eye on the financial resolution of the Greek crisis will be important. Whether this may strike other euro-based national economies remains to be seen.
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