The EU stepped up to the plate in an emergency weekend meeting to prevent Greece's toxic debt from triggering another 1,000 point stock slide. Strong EU members, such as Germany, and the IMF pledged 720 billion euros ($928 billion) to support weaker economies such as Portugal, Italy, Ireland, Greece and Spain (the PIGS). The action was needed to restore faith in the euro, which slid to a 14-month low against the dollar.
According to Bloomberg, the EU was
... under pressure from the U.S. and Asia to stabilize markets, the European governments gambled that the show of financial force would prevent a sovereign-debt crisis and muffle speculation that the 11-year-old euro might break apart.
The U.S. and China intervened after the European Central Bank triggered a stock sell-off last week by stating it would not rescue Greece. LIBOR rose as banks started to panic, just like in 2008, only this time they were avoiding each others' toxic Greece debt, instead of mortgage-backed securities.
What It Means to You
Hopefully, the bailout will work and the Greece debt crisis will settle down like the Iceland bankruptcy did. However, there's a good chance fear about whether the EU can survive will continue. Bottom line is that Germany is the strongest economy, and many Germans don't want to pay for other countries' bad financial choices. The upcoming election for Chancelor may mean Germany's current leader, Angela Merkel, could lose - adding another element of uncertainty.
The only good news? If you are traveling to Greece, the dollar will buy more than it has in a year.
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