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Global Markets Rally as Hope Emerges for Greek Bailout

September 26, 2011 at 12:00 AM EST
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JEFFREY BROWN: Hope replaced fear, at least for today, as stocks rallied on reports that Europe will try to fix its financial woes. On Wall Street, the Dow Jones industrial average gained 272 points to close at 11,043. The Nasdaq rose 33 points to close at 2,516.

The story was much the same on the other side of the Atlantic.

Ray Suarez begins our coverage.

RAY SUAREZ: European markets were calmer today amid signs of new efforts to stop the debt crisis in Greece from damaging the global economy. At the World Bank in Washington this weekend, the U.S. and other major economies pushed for stronger European action. During an appearance in Mountain View, Calif., today, President Obama spoke about the urgency of the situation.

PRESIDENT BARACK OBAMA: So, they’re going through a financial crisis that is scaring the world, and they’re trying to take responsible actions. But those actions haven’t been quite as quick as they need to be.

RAY SUAREZ: And, today, officials at the European Central Bank confirmed talks are under way on creating a large, permanent rescue fund.

In Greece, the front pages of newspapers and the streets of Athens were abuzz about the possibility of new help for their hard-pressed country.

MAN (through translator): I’m hoping something good will come out of it and they won’t allow us to proceed to bankruptcy.

WOMAN (through translator): Everything is gloomy, gloomy. We can only believe things will be OK.

RAY SUAREZ: All 17 countries in the Euro bloc must approve strengthening the debt rescue package before any such plan can be enacted.

According to reports today, it would be modeled on the TARP program used in the U.S. after the 2008 financial crisis. The existing European bailout fund totals just under $600 billion. By some accounts, it could be increased to $2 trillion.

As things stand, without more bailout funding, Greece could run out of money by mid-October. So the Greek government has been imposing more austerity measures and proposing new taxes to make sure it qualifies for the help.

VANGELIS AGAPITOS, economist: I think our European partners, and Germany in particular, they want additional assurances that Greece will deliver on its promises as agreed on the 21st of July of this year, while at the same time Greece needs to have the comfort that Europe will be on time to provide any further installments.

RAY SUAREZ: But the cutbacks in Greece have also sparked new outrage. In Athens today, metro, tram and suburban rail workers held a 24-hour strike. Bus and trolley service was halted for several hours. The Greek police, faced with personnel cuts, also voiced their frustration. A special guard unit hung a banner on the city’s tallest hill that reads “The Greek police mourn.”

Tomorrow, the Greek Parliament is set to vote on a key part of the austerity package. It’s a new property tax that would be paid through electricity bills.