Well, according to the statements, the Greece finance/loan crisis has been defused; according to a more realistic assessment of the latest deal, it has merely postponed it for a while. Greece’s underlying problems will not be helped by this package, merely pushed off into future years for someone else to confront.

The deal by eurozone finance ministers to approve a €30 billion ($US40 billion) emergency aid mechanism for Greece overnight, with an extra €10 billion or so from the International Monetary Fund, will reassure markets that Greece will not implode, for the time being.

Markets showed their appreciation this morning by selling off the US dollar, which fell sharply, while the Australian dollar charged past 93.50 US cents (up nearly one cent on the Sydney close on Friday) and on its way to 95c and beyond.

Greece hasn’t asked for the support package to be started, yet. We will get a better view of market reaction tonight in European financial markets when Greece tries to raise €1.2 billion of three- and six-month money.  Seeing the premium Greek sovereign two-year debt traded at over equivalent German debt peaked at more than 4.5% late last week (but fell to 4% in late trading Friday as news of this latest package was spread), tonight’s auction of debt will provide an ideal test for the strength of market confidence in the latest package.

It will work, in the short term. The markets wanted more detail on the previous agreement, especially numbers. That they got. According to a statement issued by the finance ministers, it is a three-year arrangement, and the €30 billion (and the IMF money), is for the first year alone! That makes it perhaps the biggest multilateral financial rescue ever attempted and dwarfs aid packages to the likes of Mexico, Iceland, Hungary and other countries hit by the crunch.

The cash is not needed right now (though if Greece attempts to use it more quickly than expected, that will trigger another mini-crisis). The interest rate is about 5%, not low as in IMF only refinancings, but not around the market rates that Greece had been forced to pay in its last big fund raising two weeks ago.

Greece needs €53 billion, according to some estimates, for the rest of 2010. It needs to find €11 billion over the next month. It has about €300 billion of foreign debt, and an economy with a annual GDP of €240 billion. While valuable, the €40 billion from the eurozone and the IMF will place additional strains on the country’s already crook finances.

The loans are repayable and contain a rate linked to the market, so it won’t breach EU rules. But no one has so far asked the question, what happens if Greece can’t repay the debt when it falls due.

If the money is drawn down this year, it will become repayable in 2013, and Greece could end up having another crisis then because the repayments absorb all the savings made from cutting deficits and spending and debt over the three-year period. Greece needs to borrow about €11 billion by the end of May to refinance maturing debt and interest charges. Its overall 2010 borrowing requirement is €53 billion.

But for a realistic view of the deal here’s a comment from the Financial Times associate editor Wolfgang Munchau who wrote in the morning edition:  “As I predicted last week, Greece will not default this year. But I am still sticking with my second prediction that Greece will eventually default.

“The numbers simply look too bad. The adjustment effort Greece is asked to make will be one of the largest in history. But unlike other countries that made a similar effort in the past, Greece cannot devalue; it faces a much more challenging global environment; it has a weak fiscal infrastructure; a low consensus in society in favour of deep reforms; and a fragile financial system.

“The agreed bail-out terms do not exactly offer much relief, except in the very short-term. It will become clear very soon that this loan agreement represents a net transfer of wealth from Athens to Berlin — and not the other way round.”

And if Greece does default, the strains already evident inside the eurozone and in the euro will erupt again.