Traders Fear Deficit Crisis will Spread

Will it ever end?

Greece continues to dominate headlines in the UK and other EU nations including Germany – the country which is to hand the largest proportion of aid to Greece as part of the new €110 billion bailout.

The new figure, agreed upon over the weekend, has failed to please traders on the markets; many still fear that the deficit ‘illness’ is going to spread to other troubled Eurozone economies (notably Portugal and Spain).

In order to receive the bailout, Greece first had to receive a ‘rule re-jig’ by the European Central Bank.  The Bank, which had repeatedly announced last year that it was to change its lending rules, has now made a U-turn to enable Greece to keep selling bonds.  In reality, the ECB does not lend to countries rated as ‘junk’ – Greece received this rating from Standard & Poor’s just last week.

While economists complain about the ECB’s lack of resolve and slow reactions, the people of Greece are once again taking to the streets with another 48-hour general strike in reaction to the austerity measures imposed upon them.

This morning the euro slid against the pound and the US dollar on the ECB’s decision.

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