4. EUROZONE - Greece April 2010 – EU leaders agreed to 30bn Euro bailout for Greece – 3 year loans at 5%. IMF promised 15bn Euro so that Greece has enough liquidity to get through its fiscal adjusting. Also this is a show of solidarity to ward off speculative activity about a possible default. But short term – keep it afloat for now. Economist reckons Greece needs 67bn Euro’s of long term official loans in the next few years as it faces a debt burden of 150% of GDP by 2014. So why bother – is it better to just get defaulting over and done with – not delay what seems inevitable? To stop the crises spreading to the PIGS – EU can’t cope with all of them having debt crises. To protect the EU banking system – Owed 130bn Euros by Greece (70 bn Euros of that is sovereign debt). Greece must: radical tax changes, cuts in public sector pay, pension reforms. Supply side policies to improve competitiveness and encourage growth. Germany can help by boosting its domestic demand. Eurozone Governments must set out a coherent policy for dealing with sovereign debt restructuring within the zone. GREECE MIGHT BE SMALL ENOUGH TO BAIL OUT BUT CAN’T BAIL OUT THEM ALL.