Will these two events be enough to calm wobbling markets?

Ben Bernake has been re-appointed to a second term as Chairman of the Federal Reserve, while from London, reports have come that Europe will bailout Greece as a last resort to halt its financial crisis from damaging the euro.

The two moves, on either side of the Atlantic, have been absorbing more and more attention in markets that have been slowly selling off from their peaks over the last month.

Both moves had desperation written into them: Bernanke’s re-appointment for a second session was seen as maintaining confidence in the administration of the US economy and in President Obama.

And, stopping the escalation of concern about Greece’s financial position (yes it’s only 2.6% of European GDP, but that’s not the point) was vital to protecting the euro’s strength and position as the world’s second most important currency.

Bernanke’s second term was reaffirmed 70 votes to 30 in the second and final vote by the US Senate, ending the possibility that an unlikely coalition of Democrat Senators facing re-election and a group of mavericks and rightwing Republicans could stop his re-appointment as punishment for “causing” the crunch and recession.

That of course ignored their own, inglorious and highly complicit role in the whole collapse, along with others in the US Upper house. Such a move would have sent a tremor through markets.

For all his errors leading up to the crunch, and in the early stages (underestimating the impact of the subprime collapse, for instance) Bernanke helped stabilise the slumping US financial system in later 2008 and early 2009.

In Europe the whole financial system of the eurozone and beyond has been starting to freak at the prospect of Greece going broke and defaulting on its debts.

Yesterday we told you of the improbable story that the Vampire Squid of Wall Street (AKA Goldman Sachs), was trying to raise money from the Chinese Government to bail out the profligate Greeks.

Today the Greek Government vehemently denied that and attacked speculators for spreading stories.

The Financial Times reported at 17.14 London time:

“The Greek prime minister on Thursday rounded on speculators who are selling his government’s debt, blaming those with “ulterior motives” for his government’s difficulties in financing its debt.”

Just over two hours later, at 19.42, the Financial Times reported:

“The European Union made clear on Thursday it would not abandon Greece and let Athens mounting debt crisis jeopardise the eurozone, even as Germany and France played down suggestions they had already formulated an emergency response scheme.”

“According to high-level EU officials, Greece would in the last resort receive emergency support in an operation involving eurozone governments and the Commission but not the International Monetary Fund.”

So the reality is that while the Americans rescued car companies, banks, insurance companies and mortgage insurers, as well as helping make bankers rich, but vilified, the European Commission is heading for the first sovereign bailout. Not even that option was offered to poor old Iceland.

But Iceland was small and outside the inner group of the eurozone, the 17 countries that share the euro. Threaten that, as Greece is doing, with yields on its bonds continuing to rise as more and more holders of its debt sell (someone is buying!) and suddenly the wagons gather and a bailout is offered.

The Financial Times said that:

“Eurozone countries and EU authorities are reluctant to spell out how they would assist Greece, for fear that it would relax pressure on Athens to attack its problems and unsettle rattled financial markets.”

Seeing that Greece is a serial avoider of its financial and other responsibilities and has been forging and fudging its accounts, statistics and other measures since it joined the euro, who is to know the real position of the country. Maybe the only way we will find out for certain is when Greece’s cheques start bouncing.

Bernanke is home and hosed, Greece is a continuing story. The credit crisis might have eased, but it hasn’t gone away.