The agreement will be presented to the other leaders of the 17 member euro zone at the meeting Thursday afternoon, after a week of market turbulence in which borrowing costs spiked in Italy and Spain.THE LAST MINUTE MEETING TOOK 7 HOURS!
Many see the meeting as a moment of truth, particularly for Mrs. Merkel, whose caution has been blamed by some for the region’s failure to stem the crisis.
“Nobody should be under any illusion: the situation is very serious,” José Manuel Barroso, president of the European Commission, the executive arm of the European Union, said earlier in the day. “It requires a response. Otherwise the negative consequences will be felt in all corners of Europe and beyond.”
The commission was arguing for a plan that would have private creditors swap Greek bonds that mature before 2019 for new 30-year bonds, thereby prompting a selective default, according to an official briefed on the negotiations who was not authorized to speak publicly.
The terms of the plan would imply a 20 percent reduction in the value of Greek bonds, the official said, a change that would raise tens of billions of euros to be directed to support the Greek bailout.
In addition, the other countries in the euro area and the International Monetary Fund would contribute 71 billion euros, or $100 billion, to the rescue plan, up to 2014.
THE MARKETS WILL HAVE THE LAST SAY - AND MAY VOTE NO.
STAY TUNED. WE WILL KNOW IN A FEW HOURS IF WE ARE HEADED FOR ANOTHER GLOBAL RECESSION...