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A Greek Deal, but What Is the Deal?

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The euro bounced, stocks rallied shortly after 8 a.m. ET on word that Greek political leaders had reached an agreement on the terms of the bailout package.

They have reached an agreement — but is it just among themselves? Is it the deal the “troika” wanted?

Greek unemployment is now 21 percent; half of all Greek youth are unemployed.

Loose money — very loose. The European Central Bank , as expected, held interest rates steady at 1 percent. But ECB chief Mario Draghi is continuing the policy of making it as easy as possible for European banks to finance their operations. He is allowing banks to post a broader array of assets (read: lower quality) as collateral for loans.

Good for banks, but the ECB is taking on more risk.

This greatly increases the probability that the second long-term repo operation (LTRO) on Feb. 29 will be much bigger than the estimated 400 billion euros ($532 billion) being thrown around; many have been talking about 1 trillion euros ($1.3 trillion).

And what will Draghi do to help Greece? He would not say — even though he was informed that an agreement had been reached.

Draghi wants to see exactly what they have agreed to. Smart move.

Elsewhere:

1) Weekly initial jobless claims dropped to 366,000 from 377,000, a bigger drop than expected...the four-week average moved down to 366,250, the lowest since May 2008.

2) More lousy European bank numbers. Credit Suisse tumbles 2.3 percent after the European bank posted a fourth-quarter loss driven by charges for winding down risky assets and leaving certain investment banking businesses. The bank slashed its dividend and announced its cutting bonuses 41 percent, with top management taking a 57 percent cut.

Like most euro banks, the investment banking business — mainly trading in fixed income — were awful. Revenues in investment banking were half of the previous quarter.

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