The European Union has approved another round of bailouts for the Greek government, but it’s looking more like a short-term solution than a long-term fix. Initial market enthusiasm for the deal turned to uncertainty as details about the plan were given time to sink in.
News that the plan, reached in Brussels on July 21, won’t include a bank tax, initially prompting a surge in European bank stocks. But sentiment about the bailout cooled quickly, sending European stocks on a slide.
Despite resistance in Congress, the U.S. has agreed to participate in this latest Greek loan on fear that a Greek collapse will spread across the world economy. The U.S. is the largest shareholder in the IMF, so Washington’s approval is an important component of bailout.
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