After a brief, and slightly frightening standoff, Greek prime minister George Papandreou said he would drop plans for a referendum over the EU’s Greek bailout plan as long as the opposition helps support budget cuts. EU leaders had said that they would cut off aid to the country until the referendum, and began to question whether Greece should be in the EU at all. That pressure likely forced Papandreou’s hand. The news helped sustain the market’s current momentum, and the Dow was up about 164 points in midday trading.
Officials are also calling on the European Central Bank to buy more sovereign bonds; because the ECB is independent, governments can’t force it to do their bidding, kind of like the Federal Reserve.
U.S. bank stocks, after a brief dip this morning, are generally higher, with Citigroup (C) up 2%.
For more detailed analysis of the situation in Greece, the Wall Street Journal has a live blog devote to the G-20 summit.
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