Anyone attending an Obama rally over the last few months likely heard the chant, "Four more years." While Obama got his four, fiscally beset Greece is only getting two: two more years to reach its deficit target of 2% of GDP. But on behalf of Greece, and a world of investors anxious for even the tiniest bit of certainty and stability in global markets, let me be among the first to say, "We'll take it."
Attention America: Europe still exists
With the unrelenting, punishing circus that was America's 2012 elections finally over (speaking of feeling a tiny bit of certainty), you may be partially forgiven for forgetting that there's still a European economic crisis at work destabilizing the world economy. There is ... and Greece remains at the forefront of the region's woes, with sovereign debt levels that require a regular influx of money to keep the country solvent.
And the good news is, that's exactly what Greece just got. Athens was able to sell $5.16 billion in one- and three-month treasury bills, allowing it to make this week's debt payments and avoid default. Euro finance ministers also gave the country another two years to hit a 2% of GDP deficit level, ostensibly required by the eurozone to stay in the single currency.
Austerity is so last week
It's "get your deficit to 2% of GDP in two years, or else," right? Or else what? Will Greece be kicked out of the eurozone if it doesn't make its goal? The chance of that is probably less likely now than at any other time in the recent past. There seems to have been an awakening, thanks to reason, that the austerity programs so in vogue over the last few years -- and so pushed by the naturally austere Germans -- haven't come close to solving the region's fiscal problems.
Just the opposite, in fact. There's a case to made that austerity has only made the situation worse, with the resulting cuts in government spending actually having tipped countries like Spain and the U.K. into recession (though the U.K. economy appears to be growing again). So, this bit of slack for Greece to get back on track is a welcome sign that Europe (read: the Germans) is committed to keeping Greece in the eurozone -- which hopefully implies similar thinking toward almost equally fraught Spain -- and, therefore, committed to keeping the single currency in place, period.
Big American banks, like JPMorgan ( JPM -1.81% ), Bank of America ( BAC -2.27% ), Citigroup ( C -1.65% ) and even Goldman Sachs ( GS -1.24% ) all have some level of exposure to European markets. Again, let me be among the first to say that we'll take this small, but potentially telling, sign that if Europe isn't exactly turning into a model of certainty and stability, at the very least, it isn't on a path to get terribly worse.
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