By Pallavi Aiyar
Investors see Lehman shadow on bankrupt country.
Markets and investors remained nervous on Monday, despite the green signal from eurozone finance ministers for an historically unprecedented bailout of debt-ridden Greece to the tune of 110 billion euros. The euro dropped against the dollar in both Asian and European markets, continuing the currency’s five-month-long downward trend. Since a December high of above $1.50, the euro has fallen more than 12 per cent.
Analysts say that both long and short term concerns remain unaddressed by the much-delayed eurozone-International Monetary Fund (IMF) joint rescue package announced on Sunday. There are serious doubts being expressed over whether Athens can in fact sustain the austerity measures it has committed to in exchange for the aid.
Large-scale protests from unions and workers erupted in Greece over the weekend at the prospect of salary cuts, tax hikes and more stringent work conditions. Greece is aiming to bring its fiscal deficit down to the EU limit of 3 per cent of gross domestic product by 2014, from 13.6 per cent in 2009. Other long-term concerns relate to whether the bailout will be enough to avoid the spread of debt contagion to other bigger European economies like Spain and Ireland. The threat of a similar crisis in Portugal is already imminent.
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