While many 'normal' people spent yesterday watching the final round of soccer's Premier League, rugby's Magners League and golf's Players Championship, financial market participants waited with bated breath for the outcome of what they hoped was another 'final round' of summit meetings in Brussels.  And the outcome was, for once, worth the wait.

A lot has changed in the financial markets since my last update yesterday morning.  At that time, markets had shown quite a muted reaction to the EU/IMF rescue package for Greece.  But from around lunchtime yesterday (Tuesday), the market reaction worsened dramatically.

* The EU and IMF approved a joint €110bn funding package for Greece at the weekend, over three years. Although figures like that have been rumoured for the last few days, this was the first formal confirmation of the amount.
* In return, the Greek government agreed a further €30bn package of austerity measures, involving de facto public sector pay cuts and another rise of 2% in the standard VAT rate, among other things.

Today's Budget contained few surprises given the many leaks over the last few days.  Public sector pay was cut by €1bn, other current public spending including social welfare by €2bn, and capital spending by €1bn.  The deficit next year remains at a staggering €19bn. Key features of the Budget are listed below.  A comment on the Budget will follow shortly.

The €4bn of savings in today's Budget are clearly necessary to begin the process of reducing the deficit.  But unfortunately this is only the beginning of a multi-year process, and we are faced with the prospect of another four or more Budgets as tough as this one before we get even close to budgetary balance.  That said, this was a genuinely encouraging start.

Earlier today Reuters eTV carried a feature on the KBCAM Water Fund, including an in-depth interview with Craig Bonthron, investment analyst for the fund.  The interview can be viewed by clicking on the link below.

Craig Bonthron Reuters TV interview

One of the aspects of the NAMA announcements yesterday that has got little attention is the significant changes to the current bank deposit guarantee scheme.  The guarantee on all deposits will generally be extended for another five years.  But some bonds and other debt of the banks will not be guaranteed in future.

Brian Lenihan, Minister for Finance, has just announced the long-awaited costings for NAMA.  NAMA will buy €77bn of problem loans and assets from the five affected banks, and will pay €54bn for those assets, a discount of €23bn or 30% on the value of those assets.  Five percent of the amount to be paid will be risk sharing payments. Both the total amount moving to NAMA and the amount being paid are somewhat lower (tougher) than expected.

The Minister did make some other points of interest:

The report of the Commission on Taxation, of which I am a member, was published today.  Below is a list of the main recommendations related to pensions, and a link to the report. 

Although turning points in economies are rarely noticed at the time, it is my view  that the recession in the US economy has ended, and that the recession in Europe will end soon (click here for a post on this topic). But economists now have to switch attention to the next major issue for the global economy. That issue is surely the generally accepted risk of significant global climate change and the very significant measures that governments around the world are, rightly or wrongly, imple