Asian Stocks Up On Greece Plan - Australia's S&P/ASX 200 Index Leads the Way

A number of factors have Australia's S&P/ASX 200 Index up, as the Australian government recently claimed the economy grew at the best pace in the fourth quarter in close to two years.

The other major element in the mix is the announcement that Greece will be taking significant measures to cut back on its budget, which it can no longer afford to maintain.

As far as the fourth-quarter growth in Australia, the major question is if it primarily came from government money, which it at minimum, partially did, and if it will be sustainable growth, something there is real unsurety about continuing on into 2010.

Greek Prime Minister George Papandreou will reportedly announce the government will cut up to 4.8 billion euros from its deficit by cutting back on outrageous bonuses to public workers, along with increasing taxes, something which has generated protests across the country.

As this is based on unnamed sources at this time, it will depend on whether these assertions are true, and whether investors believe the measures taken are strong enough to curb the excesses in Greece. If not, we could start over again from scratch and see some serious problems emerge as a consequence, and most likely a default by the Greek government.

A final part of the Asian stocks rising is the thought some parts of the world are in economic recovery and that will generate more demand for commodities, which has actually increased in some sectors even with the economic global weakness.

In the short term, the Greece situation will be the major event driving Asian stock prices, and other stock prices as well, and until that's resolved satisfactorily, there will continue to be a shadow overhanging all the global markets until it is.

Then we have the other problems of Portugal, Ireland, Italy and Spain to be concerned with, which are far from being dealt with in a sustainable manner.