Euro is still not out of danger
Despite the EU and the IMF saying it will respond rapidly with the promised €40 to €45bn loan, it could take weeks for the complexities to be ironed out and countries, including Ireland, to put through legislation.
Experts have warned that the uncertainty exposes other countries, and Portugal in particular, to similar attacks from investors.
“The spreads on Portuguese bonds have been increasing as part of the market is betting that Portugal should be next,” according to economist Dr Cinzi Alcidi.
“While the eurozone could cope with bailing out small economies like Greece and Portugal, the real danger would be if the contagion spread to a major economy like Spain,” she added.
The indications, she also suggested, were that Ireland is relatively safe, at least for now, as the Government had acted decisively to get spending under control.
But if Greece does not take similar action to turn around its situation and fails to pay any of its exploding debts on time, the impact on the euro itself would be serious.
Officials from the IMF, the European Commission and the European Central Bank have been working in Athens with the Greeks on the details of the bailout since Wednesday.
They are expected to insist on a five-year programme that will cover the kind of measures the Greeks need to take. Tax-raising and cost-cutting will be top of the list.
The government has already introduced reforms to their lax tax system and cut pay and pensions, but further actions, covering several years will be part of the austerity programme being prepared by the international officials.
The Greeks need to raise €9 billion by the end of May and were yesterday facing massive interest rates of around 10% on 10-year bonds, making it almost impossible for the country to get money.
