European leaders are secretly all doing little victory dances. The Eurozone crisis has never looked better. Leaders have agreed new deals that slash Greek debt and increase the main bailout fund to around €1 trillion. They’re basically printing money. Athens will get a new €100 billion bailout early in the new year, and existing bond debt will be cut by 50%.

It would be naïve to think that the crisis is anywhere near from over, but many analysts are agreeing that this will take a lot of pressure off the Eurozone.

Of course not everybody agrees and rating agency, Fitch Ratings, said in a statement earlier that they’d still regard it as a default:

The 50 per cent nominal haircut on the proposed [Greek] bond exchange would be viewed by the agency as a default event under its Distressed Debt Exchange criteria.

European officials yesterday concluded their 14th crisis summit in 21 months in Brussels. They would today be breathing a sigh of relief as German Chancellor, Angela Merkel, and French President, Nicolas Sarkozy, put on brave faces and even seemed to get along for a change.

Surprisingly, Sarkozy has said it had been an error to admit Greece to the Eurozone in 2001, but went on to say he was confident the country could emerge victorious, eventually.

Sarkozy spoke to the press afterwards:

We have reached an agreement which I believe lets us give a credible and ambitious and overall response to the Greek crisis.

Because of the complexity of the issues at stake it took us a full night. But the results will be a source of huge relief worldwide.

According to Barnard Jacobs Mellet Private Client Services, there are three important aspects to the Brussels meeting:

1. Private sector investors in Greek government debt will take a 50% cut in the face value of their bonds, a haircut that is estimated to leave Greek government debt levels at 120% of gross domestic product by the end of the decade.

2. Eurozone banks will be recapitalized to the tune of €106 billion.

3. A leveraging of the European Financial Stability Facility by four or five times. While a final official number was not provided analyst estimates suggest that the funds new fire power will be greater than €1 trillion.

This will at least keep the ball rolling for Europe as a whole, but there is no doubt that Greeks everywhere will breaking plates this weekend.

[Sources: BJM, Reuters]