Greek Austerity Measures February 2012 Pass Amid Violence-Asian Markets React:

Greek lawmakers have passed new austerity measures amid rioting and violence in the country.  The new austerity measures were needed for Greece to obtain new funding from the IMF and creditors offering bailout funds.  Around the country, reports of looting and riots hit media headlines as Greek citizens reacted to the vote from Parliament that will slash the number of government jobs as well as cut the minimum wage by 20 percent.

Greece will now be able to obtain new bailout funding from European creditors and the International Monetary Fund.  Without this funding, the country was sure to default on its debt and would have been forced to leave the euro zone.  Greece will receive euro130 billion ($170 billion) in new bailout funding and although the Greek citizens were unhappy about the austerity vote results, the markets are welcoming some resolution to the country’s debt crisis.

How Will U.S. Markets React To The Passage Of The Greek Austerity Measures?

Very few traders are placing huge bets on Greece right now compared to a few years ago before the crisis began.  Exposure to the Greek debt crisis has been reduced by most large U.S. institutions and it is doubtful that a further unraveling will occur in U.S. markets due to the Greek crisis alone.  Greece isn’t the only country in need of bailout funding and we expect more news from other euro zone nations to make headlines in the short-run.  The Greece austerity measures may have solved the immediate need for funding but structural problems exist in the country and region that haven’t been fully addressed in terms of spending and entitlements which could bring the crisis to a new phase in the future.  Volatility will be important to watch this week as well as the euro/dollar trade.

Asian Markets traded up at 11:30 EST with the Nikkei at 9012.95 up 65.78, the Hang Send Index up 144.70 to 202928.56 and China’s Shanghai Composite Index up 3.21 to 2,355.