Obama calls European debt deal 'important first step'

Obama touts Europe debt deal
Obama touts Europe debt deal

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Obama touts Europe debt deal 00:48

Story highlights

  • France's president says it was "a mistake" to let Greece in the eurozone
  • U.S. president Obama says factors in Europe affect the U.S.
  • He says plan will calm markets around the world
  • Obama meets with Czech prime minister on defense, economic ties
President Barack Obama said Thursday that a European plan for managing its debt crisis was an "important first step" and would reassure investors.
"The message that they are going to deal with this in a serious way has calmed markets all around the world," Obama said from the White House.
U.S. stocks rallied right out of the gate Thursday, with the major indexes jumping about 3%, after European Union leaders agreed to expand Europe's bailout fund and take major losses on Greek bonds.
The Dow Jones industrial average shot up 340 points, or 2.9%. The S&P 500 gained 43 points, or 3.4%, and the Nasdaq composite surged 88 points, or 3.3%.
Europe reaches a deal on debt crisis
Europe reaches a deal on debt crisis

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Europe reaches a deal on debt crisis 01:27
Explain it to me: Eurozone debt crisis
Explain it to me: Eurozone debt crisis

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    Explain it to me: Eurozone debt crisis

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Explain it to me: Eurozone debt crisis 02:35
The plan includes a 50% reduction in the face value of Greek government bonds, steps to boost bank capital buffers and schemes to leverage an already stretched rescue fund.
The aim is to safeguard the stability of the euro currency by preventing the debt crisis in Greece from engulfing larger economies, such as Italy.
Obama said the "key now is to make sure that it is implemented fully and decisively."
"It will definitely have an impact on us here in the United States," the president said. "If Europe is weak, if Europe is not growing, as our largest trading partner, that's going to have an impact on our businesses and our ability to create jobs here in the United States."
Greece is being crushed by a debt burden equal to about 160% of its overall economy. Under a hard-fought deal with bondholders, the Greek government will have that debt load cut to 120% of economic output over the next decade.
French President Nicolas Sarkozy said Thursday that Greece should never have been allowed in the eurozone, allowing it to adopt the common euro currency and affecting others in the alliance.
"Let's be clear: It was a mistake, because Greece came into the euro with numbers that were false, and its economy was not prepared to assume an integration into the eurozone," he told French television network France 2. "It was a decision that was taken in, I believe, 2001 for which we now are paying the consequence."
Investors welcomed the agreement, but analysts said the initial "sugar rush" response could prove short-lived.
"This only increases the risks of disappointment once the reality of the deal sinks in," said Natascha Gewaltig, chief of European economics at Action Economics in London.
Obama met Thursday afternoon with Czech Republic Prime Minister Petr Necas to discuss economic and defense matters.
According to the White House, goals included reaching a reciprocal defense procurement agreement, establishing a center for civil nuclear cooperation and "implementation of the Open Government Partnership Initiative, which could lead to the establishment of an open government and democracy center in Prague."