Greek Fire, Part 5

The Eurozone stands united to block the flames of Greek Fire.

European leaders have reached a deal to provide aid to Greece, EU president Herman Van Rompuy said on Thursday, in an unprecedented move to stave off a broader crisis in the 16-nation bloc that shares the euro.

"There is an agreement on the Greek situation. We will communicate now the agreement to the other leaders," van Rompuy told reporters gathered at an EU leaders' summit.

The agreement was forged in talks between Van Rompuy, European Commission President Jose Manuel Barroso, French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Central Bank President Jean-Claude Trichet and Greek Prime Minister George Papandreou. 

Polish Prime Minister Donald Tusk told reporters earlier that the aid, which would amount to the first bailout of a euro zone members since the currency was created 11 years ago, was likely to come in the form of loans. 

"It could be voluntary loans from member states. That seems to be the best option," Tusk said.

A Spanish source told Reuters that details of the aid would be worked out at the latest by Tuesday, when EU finance ministers are due to hold a meeting. 

"The general idea is to have broad European assistance with a tighter focus of assistance by euro zone countries," the source said, requesting anonymity. 

Greece now qualifies as Too Big To Fail. It too will be bailed out by the Eurozone, meaning Spain and Portugal will soon be getting aid as well.  As Tyler at Zero Hedge points out however, nobody's really sure where this aid will come from, or what the aid is.

The only thing in this world worse than Hank Paulson showing up in Congress with his initial 3-page TARP proposal giving him unlimited control over the US printing press? 12 non-Hank Paulsons, all of whom speak different languages, all of whom are hell bent on bailing everyone and everything out (just not on their political or physical dime...or 10 eurocents as the case may be), and all of whom have no idea how to bail out others' (and soon their own) economy... oh, and none of whom have access to Hank's reserve currency printer. In short, more than 24 hours after announcing a "bailout" of Greece, nobody in Europe has any idea what they need to do to actually "bail" Greece out. On the verge of tomorrow's summit during which it is widely expected that EU's new president Herman Van Rompuy will announce just what the details of [asset guarantee|debt purchase|IMF (aka US Taxpayer) to the rescue] plan will be, the utter cluelessness and confusion is unprecedented.

And with this morning's announcement...there's still no idea what the details are.  Standing athwart of a raging conflagration yelling "Stop!" is not a plan, folks.  The Greek Fire is just getting started.