Greek Relief May Be Short-Lived

by Richard Barley

Wall Street Journal
June 30, 2011

Global markets have dodged a bullet. Greece has voted "yes" to more austerity, paving the way for the disbursement of €12 billion ($17 billion) in bailout loans and avoiding a messy default.

The vote in the end was relatively comfortable, with 155 Greek lawmakers in favor, including some who previously had vowed to vote against, and 138 against. But investors can't breathe easy yet. Greece still is a source of risk, and the global picture is gloomy.

For Greece, the focus will move to implementation, with another vote due on Thursday. Meanwhile, the French plan to roll over Greek debt falls far short of being a Brady-style solution for Greece and has yet to receive the ratings firms' blessings. Further negotiations with the euro zone and International Monetary Fund aren't likely to be easy. That might mean a continued twin shortfall on both Greek overhauls and funding.

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