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EU agrees on massive Greek rescue package -

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EU agrees on massive Greek rescue package

Broadcast: 10/05/2010

Reporter: Hamish Fitzsimmons

European Union finance ministers have agreed on a rescue deal worth more than 500 billion euros to
stop the financial crisis in Greece from spreading to other fragile EU economies.

Transcript

LEIGH SALES, PRESENTER: The prospect of Greece's financial crisis spreading to other parts of
Europe laden by debt has prompted a bailout package worth $1 trillion.

Two thirds of the money was approved by European Finance ministers early this morning and the
International Monetary Fund is chipping in the rest.

The deal's aimed at quelling fears of another financial crisis and it seems to have helped. The
Euro's made gains against other currencies and markets, including Australia's.

Hamish Fitzsimmons reports.

HAMISH FITZSIMMONS, REPORTER: Fears the Global Financial Crisis of 2008 had a sequel sparked by the
Greek debt crisis eased today thanks to a blockbuster bailout of the Euro.

OLLI REHN, EUROPEAN UNION COMMISSIONER: We have decided on a creation of a financial backstop,
which is a European financial stabilisation mechanism, European stabilisation mechanism to ensure
financial stability in Europe.

HAMISH FITZSIMMONS: The EU and the International Monetary Fund are hoping 750 billion euros will
buy stability and stop the crisis spreading.

Many Greeks have accused the EU of sitting on its wallet for too long while their country suffered
and street protests, sometimes deadly, became a regular event.

THANOS KODARINIS, PROTESTOR: They are inefficient, but they are inefficient on purpose, because
it's a message sent by some, and especially Germany, to all the other countries having similar
problems to Greece: don't dare to go to a situation like Greece is because you will have the same
kind of measures.

HAMISH FITZSIMMONS: The bailout package had an immediate effect: markets gained ground and the Euro
went up against most currencies, jumping an average of 1.7 per cent. The Australian market was no
different, closing 2.66 per cent higher.

PAUL BRENNAN, ECONOMIC & MARKET ANALYSIS CITI GROUP: It' a very positive package. It is better than
we perhaps thought it could've been.

HAMISH FITZSIMMONS: But Greece's problems remain severe. Its budget deficit is 13 per cent of gross
domestic product.

This crisis was sparked by Athens' problems meeting debt repayments. The EU and IMF assistance only
came after a guarantee by the Greek Government to slash spending, raise taxes and cut back its
comparatively big public sector and generous benefits.

CAROLINE ATKINSON, IMF SPOKESWOMAN: The Greek authorities have put in place a strong, difficult,
but ambitious and credible program and the international community has moved very quickly to
support that.

I think the size and speed of the response to the mounting pressures should be reassuring for
markets.

HAMISH FITZSIMMONS: According to Paul Brennan from Citigroup, lessons have been learnt from the
2008 financial meltdown.

PAUL BRENNAN: They have responded much more quickly as this crisis has developed, and yes, last
week was disappointing in terms of the reaction by governments in the ECB, but over the weekend
we've seen now that European governments and the ECB have come back to the table with a very strong
package and the market has responded quite favourably to that today.

HAMISH FITZSIMMONS: Portugal, Italy, Ireland and Spain are considered the other vulnerable
economies in the EU. It's hoped this bailout package will also ease pressure there.

OLLI REHN: So, all in all, the fiscal efforts of EU member states, the financial assistance by the
commission and by the member states and the actions taken today by the ECB proves that we shall
defend the Euro whatever it takes.

HAMISH FITZSIMMONS: But how long those defences will hold is another question.

Hamish Fitzsimmons, Lateline.