Wall Street Journal
July 25, 2011
Frau "nein" becomes Frau "ja," and the euro zone is saved. So we are told by the 17 Heads of State after a meeting that even the tough-minded analysts at Jefferies International concede "exceeded expectations."
Of course, past meetings helped set the expectations bar quite low. Still, let's not quibble: Because German Chancellor Angela Merkel and French President Nicolas Sarkozy decided that some progress had to be made lest Greece bring down Italy, Spain, and perhaps the euro, the Heads put their heads together and staved off—deferred would be a better word—a crisis that was about to burst on the euro zone, primarily because Ms. Merkel won her battle to have private-sector investors share the pain. The reaction of Ms. Merkel, not noted for her taste for irony, humor and displays of chutzpah, to U.S. President Barack Obama's call to remind her of the fragility of the world financial system and her fiscal responsibilities is not recorded.
The deal includes a new €109 billion bailout for Greece, contributed by member states, the International Monetary Fund, and a "voluntary" contribution by the private sector, demanded by Ms. Merkel. Through a variety of means private-sector creditors will share the cost of the bailout, putting Greece in "selective" or "restricted default," repaying some but not all of its loans in full and on time.
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