Greece Stable For Now; Impact on U.S.?

Europe's Finance ministers have officially given Greece 130 billion euros. As we reported last, Greece was given enough debt relief to help them not default on their bond repayment due in March. Greece is holding steady for the moment, but this in no way fixes their long-term problems. Additionally, the bailout has certainly had an impact on the overall European market. The euro has fluctuated since a whopping 386 billion euros have been spent to rescue not only Greece, but also Ireland and Portugal.

Greece is now forced to abide to these strict austerity measures and economic reforms that come with the deal. Adhering to these rules, however, might prove to be too rigorous for the Greek citizens which could ultimately lead to social unrest and more rioting, something that the Greek politicians do not want to deal with, especially with elections around the corner.

While Greece is currently not defaulting on its debt in March, officials find it unlikely that they can avoid default in the near future. Greece has implemented numerous spending cuts, and adding the austerity measures and the unhappy citizens, the conditions of the bailout may cause more problems to arise in the coming years. Greece will find it hard to stick to the rules, which could be a problem for the market down the road.

The reason we focus so much on Europe's debt crisis is that the US equity market is based everyday on how Europe's market is doing. If their market falters, it will have an affect on our economy. In fact, on the back of Greece's news, the US interest rates slightly rose today. 30-year fixed-rate mortgages (FRM) were averaging at 3.87 percent but are now at 3.95 percent. However, this is not a bad increase. The mortgage markets have held strong despite the weak markets overseas.

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