Yesterday's market rally on the back of the Greek parliament's decision to move forward with a €78 billion ($105 billion) package of cuts, tax rises and privatisations shows how much investors are hanging out for a resolution of Europe's debt crisis.
Yet it also suggests investors are not too familiar with the classics: the parliamentary vote wasn't a Trojan Horse, but it wasn't a gift from Greece that cured Europe's woes, either.
Last night, the parliament met again amid savage street demonstrations, this time to approve plans for the implementation of the austerity package.
Advertisement: Story continues below
The numbers on the first vote suggested that this, too, would be approved. The second vote clears the way for the payment of another €12 billion to Greece out of last year's first rescue fund and adds momentum to talks about a second bailout package.
It sparked a worldwide share rally yesterday. In Australia, the ASX200 index shot up by 78.5 points to be above 4600 points again. The euro firmed, European bond spreads narrowed as risk tolerance increased and commodity prices and the Aussie strengthened.
The theory is that the Greek vote and the gathering plans for another rescue package head off a Greek government bond default. Such a default could have pitched Europe's other basket cases into crisis. A cascade of defaults could expand beyond the obvious suspects, Ireland and Portugal, into economies with more economic gravitas and financial counterparty risk, notably Spain and Italy.
Several banks and shopfronts were smashed, while a socialist dissenter who backed the government at the last minute, Alexandros Athanassiadis, was briefly assaulted by protesters after leaving parliament on foot.
Smoke billowed from a post office beneath the Finance Ministry before a fire was put out. Rioters set up burning barricades along Syntagma Square, where demonstrators have staged a sit-in for the past month. Streets were littered with chunks of smashed marble and ripped-up paving stones that had been thrown at police.
A burnt-out van remained within yards of parliament more than a day after youths set it alight.
A general strike that began on Tuesday paralysed the country, grounding planes, leaving ferries docked and stranding tourists during the busy summer season.
Police said yesterday that 49 officers had been injured, one seriously when he was hit in the face by a chunk of marble. Forty-three protesters were detained, with 17 arrested. Emergency services said they had treated 99 protesters and passers-by for injuries.
Across Europe, officials hailed the vote as an act of "national responsibility". "That's really good news," German Chancellor Angela Merkel said on her way out of an economic forum in Berlin. Germany is Greece's biggest creditor.
No comments:
Post a Comment