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The American Side of the EU’s Rescue Plan

May 11, 2010

The American media has started analyzing the EU’s massive aid package to prevent Greece’s financial crisis from spilling over to other euro zone members that also have weak finances.  The New York Times ran a piece today about the American influence on the Germany’s decision to support the deal.  According to the article, President Obama personally called German Chancellor Angela Merkel to press for a large response from the EU as he was worried that the crisis was about ready to spread from Greece to Spain and Portugal.  This morning’s NPR Morning Edition also ran a story about the EU’s weekend rescue, but explained how the Greek bailout is similar to the TARP in the U.S.  In both cases, governments and markets were worried of a domino effect, but the piece also interviewed a former IMF official who argued that the EU’s bailout is making the similar mistakes that the U.S. government made by rewarding the banks that had made the mistakes in the first place.  The next question is if this bailout will work.  While the financial markets rallied yesterday, markets already appear to be less impressed today in Europe and Asia.

For a debate about how the Greek financial crisis reached the point where the EU had to promise a $1 trillion rescue package, the PBS Newhour interviewed with Nobel Prize winning Economist, Paul Krugman, and Robert Barbera, chief economist, Investment Technology Group.  While this segment aired on Thursday, May 6, it still shows the magnitude of the Greek situation.  The video is available at:  Greek Crisis Muddies Eurozone Economic Recovery

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