Global Economy

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[url="http://finance.yahoo.com/news/EU-creates-1-trillion-package-apf-644989406.html?x=0&sec=topStories&pos=1&asset=&ccode="]EU creates $1 trillion package to save euro[/url]

The European Central bank will buy government and private debt to keep debt markets working and lower borrowing costs, a crisis measure dubbed the "nuclear option," while the U.S. Federal Reserve joined with other central banks in the effort, reactivating a currency swap program used during the earlier stages of the financial crisis to ship dollars overseas to be pumped into banking systems as short-term credit.



The overnight decision immediately jumpstarted markets worldwide. The euro immediately shot back to life and up to $1.30, recovering from Friday's 14-month low of $1.2523.

Officials acted after ominous slides in world stocks and the euro last week that raised fears that the debt crisis would spread from heavily indebted Greece to other financially weak countries such as Spain and Portugal. It reached the point where President Barack Obama discussed the crisis by phone with German Chancellor Angela Merkel and French President Nicholas Sarkozy.



Policy makers worried it could shake the world economy the way the bankruptcy of U.S. investment bank Lehman Brothers did in 2008, making banks fearful of lending to businesses, hammering stocks and killing off economic recovery.



It also raised long-term worries that the crisis would force a weaker member such as Greece out of the euro.

Euro will depreciated now. It will be par to dollar or may go down.