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Greece Greek Parliament starts debate on austerity laws - Page 3

post #41 of 59

BBC Newsnight@BBCNewsnight

 

 

 

 

Paul Mason - just back from Athens - will be here tonight to explain why the eurozone might cut Greece loose. #newsnightBBC2, 10.30

post #42 of 59

 

Eurozone crisis live: Greek president attacks Germany as bailout deadline moves to Monday

 

 

 

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8.10pm: Evangelos Venizelos, Greek finance minister, has announced that Greece's debt swap deal will be announced next Monday if the Eurogroup signs off on the second bailout package.

 

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5.38pm: Wondering what would happen if Greece defaults? As Sir Mervyn King explained this morning, contingency plans are in place…but he wasn't keen to discuss them.Officials in Europe are also reluctant to explain what would happen. Still, 

my colleagues Ian Traynor and Heather Stewart explain here what would occur if Greece quit the euro. They include:
 
Capital controls in Greece - limits on the amount of money that can be taken in and out of the country – while it implemented "drachmatisation".
 
All balances at Greek banks would probably be redenominated at a fixed exchange rate with the new (or rather the old) currency; but banks could be shut, or strict limits placed on withdrawals from cash machines, while the details were worked out.
 
In the UK, The Foreign Office would have to think about how to bring home Britons trapped in Greece without enough funds to get out,
 
And banks which still holding Greek bonds would face losses.
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3.02pm: Speaking of the European Parliament…the British Conservative party's leader in the EP has called for Greece to default on its debts and leave the euro.
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2.45pm: Mario Monti, Italy's technocratic PM, has told the European Parliament thatGermany and France must share the blame for today's crisis.

Monti reminded MPs that Europe's two biggest economies both breached Europe's original fiscal pact, the Stability and Growth Pact (SGP), in the run-up to the crisis.

Monti also offered Greece support, warning that EU states must not be divided into "good" and "bad". He also reiterated his support for euro-bonds, saying they would help to stabilise Europe.

 

 

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1.04pm: Greece is also caught up in another gripping international issue – the growing tensions between the West and Iran.

Iran Iranian state media announced today that it has stopped oil exports to six EU countries -- Netherlands, Greece, France, Portugal, Spain and Italy.

This is a tit-for-tat move in response to the EU's decision to stop importing crude from Iran from July this year, because of concerns that Iran is developing a nuclear bomb.

 

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3pm UPDATE: Tehran has now denied thiese reports – the Oil Ministry says IT will announce any export bans.

Greece's energy suppliers have had earlier moved swiftly to deny speculation that Greece's oil tanks could run dry. Its largest refiner, Hellenic Petroleum, insisted that it can find fresh supplies.

The EC says it has 120 days worth of oil on tap, so local shortages could probably be addressed.

Greece's power situation is rather interesting, though. It can't currently import electricity from Bulgaria because coal deliveries to some Bulgarian power stations were halted in the bad weather.

And, according to local reports, there are fears of gas shortages too – again, due to inclement weather.

 

 

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10.55am: Mervyn King, Bank of England governor, went on to warn that the eurozone crisis remains the biggest threat to the UK economy.

He predicted (at today's Bank press conference) that it will be the top item on the agenda when the G20 meets in Mexico, but admitted that there is not much that anyone can do about a future eurozone disaster until it happens.

 

 

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9.38am: UK unemployment data is out, showing another rise in the number of people out of work and claiming benefits.

The claimant count rose by 6,900 in January to 1.605 million, the highest level since January 2010.

The wide ILO measure found that the number of people officially unemployed was 2.671 million in the three months to December, up from 2.622 million in the previous quarter (but lower than the total in the three months to November).

Vicky Redwood of Capital Economics said the key point is that unemployment is still rising, and is likely to rise "much further" in the months ahead.

Another blow to the UK government? My colleague Andrew Sparrow will be tracking all the political reaction to the unemployment data in hisPolitics Live blog today.

 

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9.12am: The Netherlands has also fallen back into recession. Like Italy, it shrank by 0.7% in the last three months of 2011, following a 0.4% contraction in Q3.

 

Full article: http://www.guardian.co.uk/business/2012/feb/15/eurozone-debt-crisis-greece-eurozone-gdp

 

 

 
post #43 of 59

StockJock-e, 

At this point nothing would depend on what you, me or somebody else from HSM board believe in.  All WE can do, is find some correlations and use them as a tool to foresee market's reaction to our benefit.  Here is something I'm looking at:

1. Back in December 2002 United Airlines file for Chapter 11.  Part of reorganization were: canceling pension funds, reorganization of routs, furloughing thousands of workers (replacing those with cheaper labor of service companies).  As a passenger, NOW you have to pay for everything now and the leg room got much smaller.  There were more changes but I would like to keep it simple.  The main thing that I would like you to look at is cancellation of pension funds.  That took a while in court to happen, but it happen...

1.1  Delta, US Airways, American Airlines follow...  Now you are screwed no matter which airline you fly.  I'm not gonna get in to other changes with other carriers since the impact is to small.

 

Europe:

1. Greece is putting out effort (not going to elaborate) to stay in Eurozone.   The outcome of this effort is ether they stay in or out.  If they stay in, pensions cut, government workers cut, spending cut, ... cut, ... cut, ... cut.  In any case the life will not be the same anymore.

1.1 IF Greece leaves Eurozone and successfully balance their sheets  (budget/ spendings), WILL Italy, Portugal, Spain follow?  Will the union fall a part?  Will Greece have to leave UN to continue receiving oil and gas from countries that are on the Sanction list?  There are a lot of questions that arise at this point.  Just trying to foresee the near future to successfully place my trades. 
 

Quote:
Originally Posted by StockJock-e View Post


It sure does, contrary to what the current market action would lead you to believe.

 



 

post #44 of 59

That happens when you cut expenses everywhere..

 

 

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Armed robbery at ancient Olympia, minister quits

 

http://news.yahoo.com/greek-culture-minister-quits-over-ancient-olympia-theft-084708203.html

 

but to be fair. The Greeks lack with security anyway..

The riot police works well, but all others can be robbed out easily by a grandma with a stick.

 

 

post #45 of 59

 

Eurozone crisis: Greek government claims EU bailout deal is close

 

 

Hopes are rising that the European Union will agree a fresh €130bn (£108bn) bailout on Monday to save Greece from defaulting on its debts after politicians in Athens said they were close to a deal with their single currency partners.

Amid attempts by Brussels to defuse the tension that has been building between Greece and Germany over the past week, it appeared that the austerity stricken southern European country had found the additional budget cuts being demanded by the rest of the eurozone. "We are almost there," one source said.

European markets were closed when news emerged that weeks of increasingly bitter wrangling might at last be coming to an end, but shares on Wall Street rallied strongly after Antonis Samaras, leader of Greece's conservative New Democrats and the favourite to win the forthcoming election, said: "There is no certainty but there is cautious optimism."

The Dow Jones in New York closed up 123 points at 12,904, its highest close in almost four years.

Financial markets in Europe had been unsettled by concerns that the talks would break down completely and by the warning from the credit rating agency Moody's that it was considering downgrading 114European banks, including HSBC, Barclays and Royal Bank of Scotland.

Talks between Greece and the troika of the European Union, the European Central Bank and the International Monetary Fund threatened to collapse earlier this week after Germany and other hardline northern European members of the euro demanded that Athens find an additional €325m of cuts as part of a €3.3bn deficit reduction package.

Despite widespread civil unrest in Greece at the austerity proposals, it emerged on Thursday night that the government led by Lucas Papademos had found the additional savings by trimming the defence budget by €100m, paring about €90m from the public sector wage bill and reducing the budgets for health, labour and interior ministries by €135m.

Greece's economy collapsed in the final three months of 2011, with output 7% lower than in the final quarter of 2010 and there are fears that the new cuts will intensify the recession and make it harder for the country to reduce its crippling debt burden. Monday's deal will involve the new €130bn bailout and an agreement that Greece's private sector creditors take losses of about 70% on their investments, but some analysts believe that even this will not be enough to make the debts sustainable. The European Central Bank, it emerged today, will not be required to take losses on its €50bn holdings of Greek government debt.

Speculation that the two halves of the deal would be severed was quashed on Thursday, despite pressure from the Netherlands for the bailout to await the result of the Greek general election in April.

Jan Kees de Jager, the Dutch finance minister, said: "It would be preferable to wait until after the elections. Then we could negotiate the commitments with the new government."

Dario Perkins, of Lombard Street Research, said: "Euro area politicians cannot seem to decide whether they want Greece in or out. Yet their actions are unequivocal and point firmly to Greek exit.

"Markets are assuming a 'muddle through' scenario for European monetary union, but even that requires a complete EU policy shift."

Relations between Athens and Berlin remain tense: the spokesman for the Greek government curtly rejected a suggestion from the German finance minister, Wolfgang Schäuble, that Greece could delay elections to allow the unelected Papademos to complete his economic reform package. "I have nothing to say in response to Mr Schäuble – it is absolutely up to Greece when to hold elections," Pantellis Kapsis, spokesman for the new coalition government, told reporters.

José Manuel Barroso, the president of the European commission, sought to ease concerns in Athens that attempts were being made to manoeuvre the country out of the single currency. "I would like to salute the courage of the Greek government and the Greek people in these challenging times. And I would hope that member states, the members of the European Union will accept the commitments given by Greece," he said.

 

post #46 of 59

 

Feb. 20, 2012, 11:18 p.m. EST

Second bailout agreed for Greece

By Sarah Turner, MarketWatch

SYDNEY (MarketWatch) — European financial officials have agreed to the terms of a fresh aid package deal for Greece, according to reports out Tuesday citing European officials.

Following a meeting that went into the early hours of Tuesday morning Brussels time, finance ministers and other top officials agreed to release another 130 billion euros ($171.9 billion) to Greece, the reports said.

The country’s debt-to-GDP ratio is expected to fall to just over 120% by 2020, according to the reports, down from around 160% in 2011.

Bondholders will take a final haircut of more than 53% on €200 billion worth of privately-held Greek government debt, the reports said.

That was slightly more than expected, as the writedown for private bondholders was initially expected to cut Greece’s debt load by around €100 billion.

Greece needed to agree to terms on fresh funds with its institutional lenders and reach a deal with its private bondholders in order to head off default as it faces a €14.5 billion bond redemption on March 20.

The euro  jumped after the reports, climbing to $1.3290 in minutes, up from $1.3243 on Monday, though it later eased back slightly to $1.3265.

Prior to the meeting, Luxembourg Prime Minister Jean-Claude Juncker, who chairs meetings of the euro-zone finance ministers, told reporters that he was optimistic a bailout agreement would be finalized.

Euro-zone leaders had agreed in principle to the second Greek bailout last October.

Greece had already received €110 billion in funds from its European partners and the International Monetary Fund when its first bailout was agreed in May 2010.

But Greece’s inability to meet fiscal targets amid a deepening recession caused international creditors to demand a further round of unpopular austerity measures and reforms before they would finally agree to a deal for additional aid

 

 

post #47 of 59

 

Greece needs more help to hit debt target: report

By Sarah Turner

SYDNEY (MarketWatch) -- A report prepared for Greece's institutional lenders indicated that Greece will need extra help to achieve its 120% debt-to-GDP target by 2020, Reuters reported Tuesday. To reach the target, Greece will require more support from the private sector as well as official sector support, according to Reuters. The report for the lenders has as a baseline scenario that Greece will be able to cut its debt-to-GDP ratio to 129% by 2020 but only if it undertakes the structural and cost measures already agreed with the institutional lenders, Reuters reported.

 

post #48 of 59

 

Greece's financial reckoning looms

Next month's deadline of €14.5bn in loan repayments has been hanging like a sword of Damocles over the country

 

For the first time, there was a mood of real fear on the streets of Athens. In Syntagma Square, as the eurozone's finance ministers gathered in Brussels to decide whether Greece would be granted the €130bn bailout needed to avoid bankruptcy and the inevitable chaos that would ensue, the worry of the Greek people was almost palpable.

Athenians agreed this would mark a "historic day". It was hoped, as finance minister Evangelos Venizelos said, the decision would close a protracted period of "uncertainty that had not been to the benefit of either the Greek economy or the euro area".

Next month's deadline of €14.5bn in loan repayments has been hanging like a sword of Damocles over the country. Few are in any doubt that if and when it lifts, Greek prospects remain grim.

"Our economy has collapsed and everybody knows it," said Katerina Freri, a civil servant at the finance ministry until her retirement this year. "Officially we have not gone bankrupt because it is in nobody's interest for us to go bankrupt and in Europe they fear the domino effect," she added as she waited to join other protesters outside parliament on Sunday.

"But, unofficially, bankrupt is what we are. And at some point they will say it and there will be chaos here."

"They want us to do what Pinochet did in Chile, fire civil servants and take very painful steps overnight," said one insider. "If we didn't live in a democracy, we could do that. The fact is, people react, they will resist … our lenders know that. They know our public administration is in a terrible state. They should have given us more time to enact reforms." With unemployment at a record 20.9% and poverty having now engulfed more than a third of the population, the measures are bound to add to the nation's dark mood.

Ordinary Greeks are infuriated, conflicted and confused. "Our politicians lied to us. They never told us the extent of the financial mess we were in and that has made us very angry," said Spyros Papadopoulos, an employee at a cosmetics company. "I read the financial press every day and can see for myself that the numbers don't add up. Default is inevitable and all these sacrifices will be for nothing. When the day comes we'll be more bankrupt then than we are now."

Greeks know salvation will come at a price. With the Dutch finance minister, Jan Kees de Jager, arguing for the Greek economy to be monitored by foreign officials placed in ministries on a permanent basis, they also know that in the birthplace of democracy the greatest price may well be democracy itself as Greeks are gradually forced to give up any say in the running of their own affairs.

The prime minister, Lucas Papademos, was expected to return from Brussels with a deal and then oversee passage of emergency legislation on Wednesday that will further cut pensions and wages. The cuts will be part of a salvo of punishing austerity measures the government must enforce by the end of the month to convince its troika of creditors at the European Commission, ECB and IMF of its willingness to enact reforms before a first tranche of aid is disbursed in March.

In the race against the clock to reach implementation deadlines, thousands of civil servants will also be axed and labour laws overturned. They will come on top of sacrifices that have already seen workers' pay docked by 40 %.

With hope that the second bailout would be agreed, one government economist was emphasising the upside: "The agreement paves the way to normality," he said. "By the summer the banks will have been recapitalised, liquidity will have returned to the market, there'll be optimism and no one will be talking about bankruptcy."

On both the left and right, politicians in Athens's interim government concurred. The reforms foreign lenders were asking in return for rescue funds were not "all bad", MPs told media outlets through the day – seemingly trying to convince themselves as well as their voters. In fact, they said, many were long overdue. Once applied, they would be the death knell of an inefficient, corrupt and bloated state.

But while the bailout may keep bankruptcy at bay, many economists agree the latest rescue plan is unlikely to save Greece. Even with Athens's €350bn debt pile reduced by €100bn following the agreement of private sector investors to accept a "haircut" of up to 70% on Greek government bonds, there is growing consensus that the country has too much debt and too little growth to exit the economic death spiral it is in.

Doubts over its eurozone membership will inevitably grow as its economy worsens. "Everyone is kicking the can down the road," said economics professor Theodore Pelagidis. "Europe is biding with time and Greece is biding for time, too."

post #49 of 59

btw this payment supposedly has their debt to be 120% by 2020

 

that kinda puts things in perspective here.

post #50 of 59

 

 

Quote:

Ordinary Greeks are infuriated, conflicted and confused. "Our politicians lied to us. They never told us the extent of the financial mess we were in and that has made us very angry," said Spyros Papadopoulos, an employee at a cosmetics company. "I read the financial press every day and can see for myself that the numbers don't add up. Default is inevitable and all these sacrifices will be for nothing. When the day comes we'll be more bankrupt then than we are now."

Quote:

 

Originally Posted by mjoke View Post

btw this payment supposedly has their debt to be 120% by 2020

 

that kinda puts things in perspective here.


 

mjoke, you should know better, that numbers do not add up ;)  and it does not matter if it's 2011 or 2015 or 2020

You can not solve your debt by accumulating more debt, the best example is US, where we live and what we can see for ourselves.

post #51 of 59

lol your telling me that?  biggrin.gif known that since day one eh. thumbup.gif

i meant that comment in a negative perspective not a positive.

 

 

post #52 of 59


I know that you know; but I hope, you know that I know. 

 

Quote:
Originally Posted by mjoke View Post

lol your telling me that?  biggrin.gif known that since day one eh. thumbup.gif

i meant that comment in a negative perspective not a positive.

 

 

 

Remind's me of times in US "Refinance your home!!!  Get that money you deserve!!!  You can finally go on vocation!!!  No credit, bad credit - you approved!!!".  Later: knock, knock... "We are here to seize your property under the court order!!!"  A bit later:  "Recession, recession!!!  We are doomed!!!"  rotfl.gif

post #53 of 59


they just got 130 billion euro aid package, so basically, they're being paid to pay their debt.....let's save the banks again
 

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Originally Posted by Matrix2055 View Post

 

Greece's financial reckoning looms

Next month's deadline of €14.5bn in loan repayments has been hanging like a sword of Damocles over the country

 

post #54 of 59

 

Greek bailout not the rescue it seems

 

 

To start with, the bailout is not for Greece, but for German, French and other foreign banks who willfully abandoned due diligence to buy more Greek debt than any financial analyst would have thought the country could sustain.
 
The 130 billion euros ($171.9 billion) in aid agreed to by Europe’s finance ministers in their marathon session will go into a managed account to make sure it goes directly to Greece’s creditors when their bonds fall due.
 
The agreement was made possible when the Greek Parliament a week earlier approved a package of draconian austerity measures, which they, as well as the European finance ministers who insisted on it, know they will never be able to deliver.
 
Antonis Samaras, the leader of the center-right New Democracy party, said as much during the debate when he urged members of his party to go along with the austerity measures in order to get the bailout done — and then they could be renegotiated after Greek elections in April.
 
In the shambles that is Greek politics, Samaras’s party is leading in the polls, though it is not expected to win an outright majority.
 
Even as German Finance Minister Wolfgang Schäuble was leading the charge on Monday to wring more austerity out of the Greeks, one of Germany’s top economists branded the bailout “illusory” and said the type of deflation being exacted of Greece is unrealistic.
 
Asked in an interview on Monday with Spiegel Online whether this new bailout could save Greece, economist Hans-Werner Sinn answered, “No, and the politicians know it can’t.”
 
Sinn, who heads the prestigious Ifo Institute for Economic Research and is a professor at the University of Munich, said the bailout is merely a way of buying time.
 
He thinks the time and money would be better spent helping Greece manage an exit from the euro EURUSD, because the only way the country will restore the competitiveness of its economy is through a massive devaluation –—and for that it needs to have its own currency.
 
The devaluation would be wrenching and cause a good deal of economic pain for a year or two, but that is preferable to the decade of austerity required in the bailout plan, he said. “After a short thunderstorm, the sun will shine again,” Sinn said.
 
This would enable Greece to lower wages and prices to competitive levels, and allow bank debt to depreciate accordingly. This is not possible as long as Greece retains the euro. “The plan to radically restructure Greece within the euro is illusory,” Sinn said.
 
The German economist has no sympathy for the banks who bought Greek bonds. “Greece’s creditors aren’t entitled to have the debt repaid by the international community,” he said. “Everyone has to earn their standard of living themselves, and those who choose to earn money from risk must bear that risk.”
 
The euro patchwork put together this week may unravel even more quickly than many expect. Greek elections in April may lead the country to “renegotiate” (that is, repudiate) the austerity measures, as Samaras intimated.
 
French presidential elections in April and May could jeopardize the fiscal pact recently put in place by the euro-zone countries, since the leading challenger to incumbent President Nicolas Sarkozy, Francois Hollande, has pledged to “renegotiate” it.
 
And German Chancellor Angela Merkel, who is driving the austerity push to save the euro, is growing weaker politically. Her hand-picked choice for Germany’s ceremonial president, Christian Wulff, had to resign last week after less than two years in office due to a probe of possible corruption during his time as prime minister in Lower Saxony.
 
So now she has to accept Joachim Gauck, a former East German pastor, as the new candidate for president. She blocked his election in 2010 and tried to again this time, but the other parties, including her coalition partner, the Free Democrats, forced her hand. It is being viewed in Germany as a major political setback for Merkel.
 
George Orwell’s “1984” described a Newspeak where “peace” means “war” and “freedom” means “slavery.” One is tempted to add the so-called Greek bailout to this dictionary of things that mean the opposite of what they say.
post #55 of 59

 

Germany at odds with Dutch and IMF boss over eurozone bailout fund  

Dutch government and the IMF and its managing director, Christine Lagarde, want the ESM to embrace funds still untouched within the current rescue fund, the European Financial Stability Facility (EFSF)

 

IMF chief, Christine Lagarde, wants the European Stability Mechanism to embrace funds still untouched within the current rescue fund, the European Financial Stability Facility (EFSF). Photograph: Thierry Tronnel/Corbis
Germany threatened to undermine this week's €130bn (£110bn) deal to bail out Greece by refusing to bolster the firewalls set up to prevent the eurozone debt crisis from spreading.
 
As markets dipped all over Europe amid fears that Greece would never be able to meet its debt obligations, Angela Merkel's chief spokesman said Berlin saw "no necessity" to enhance the planned €500bn European stability mechanism (ESM), the new bailout fund due to be in place from July.
 
Highlighting how unpopular aid for Greece is in Germany, opposition to the bailout deal was growing within Merkel's coalition on Wednesday. Several MPs from Merkel's conservatives and her junior partner, the Free Democrats (FDP), said they planned to oppose the package, meaning that she would be unlikely to win next week's parliamentary vote on the deal without the humiliation of relying on her socialist and green opponents .
 
Merkel's weakening domestic position came as her government's stance on the ESM left Germany at loggerheads with not only the Dutch government but also the IMF and its managing director, Christine Lagarde. Both want the ESM to embrace funds still untouched within the current rescue fund, the European financial stability facility (EFSF).
 
It has between €150bn and €250bn left, which would allow the combined funds to total €650-750bn – still well short of the €1 trillion originally forecast, let alone the €2tn demanded by market players. Lagarde favours at least €1tn being set aside – and has further ruffled Berlin by calling for eurobonds to cover not only Greek but also, for example, Spanish and Italian debt in event of a wider crisis.
 
The IMF managing director is refusing – before of next week's G20 meeting in Mexico – to commit the IMF to a specific share of the new €130bn bailout for Greece. Wolfgang Schäuble, the German finance minister, has said it would be €13bn – plus €10bn rolled over from the first €109bn rescue.
 
This would amount to just 10% of the new fund compared with the 27% the IMF contributed to the first one. The Washington-based body is under pressure from the White House to resist European demands for more funds.
 
Jan Kees de Jager, the Dutch finance minister, who helped broker the deal on Greece, has made his support for the package dependent on an enhanced EFSF/ESM combination.
 
Doubts over the proposed Greek bailout spread to the markets and sent shares lower on Wednesday. The FTSE 100 edged lower for the second day running, closing down 11.65 points at 5916.55 after Tuesday's 17-point decline in the wake of the overnight Greek deal. Germany's Dax was down almost 1%, while France's Cac was 0.52% lower. The Athens market fell nearly 6%.
 
Lee McDarby, at Investec Corporate Treasury, said: "Serious reservations about the ability of the Greek government to push through the required fiscal cuts have hampered any positive market reaction so far."
 
Meanwhile the cost of insuring peripheral eurozone government debt against default rose again, with five-year Italian credit default swaps up from 380 basis points on Tuesday to 392. This means it would cost £380,000 to insure £10m worth of Italian debt. Spanish CDS contracts rose from 365 to 372 basis points, while Greece climbed from 70 to 72 basis points, according to data monitor Markit. Greece's five-year bond yield also passed 56%.
 
The French Socialists' abstention in a parliamentary vote on the bailout fund also showed that a possible leftwing presidential election victory in May this year could derail the EU's eurozone rescue efforts.
 
The Socialist party, whose candidate François Hollande leads opinion polls for the April-May election, sat out Tuesday's lower house vote on the creation of a permanent ESM in protest at austerity policies in Europe.
 
President Nicolas Sarkozy's conservative government called the move a "historic error" and berated the Socialists in parliament on Wednesday. Even the left-leaning newspaper Libération was critical in an editorial.
 
The abstention, which did not prevent the bill passing in the conservative-led National Assembly, was in line with Hollande's campaign pledge to seek to amend an EU fiscal compact agreed last month to add clauses on growth and investment.
 
The European commission, meanwhile, flexed its new fiscal surveillance muscles by threatening to suspend almost €0.5bn in structural aid to Hungary for persistently breaching budget deficit rules.
post #56 of 59

 

Greek exposure hammers Europe bank earnings

RBS, Commerzbank, Dexia, Credit Agricole take Greek hit

 

 

By Polya Lesova, MarketWatch

NEW YORK (MarketWatch) — Exposure to Greece’s sovereign bonds has hit the earnings of many European banks, with lenders including Royal Bank of Scotland Group and Dexia revealing fresh details Thursday about the cost they are paying for the debt crisis in Athens.

Euro-zone finance ministers earlier this week reached agreement with Greece’s government on a second rescue package for the nation. As part of the program, private bondholders are being asked to take a nominal haircut of 53.5% on their Greek debt holdings.

“The influence of Greece was apparent in bank earnings published today,” said Gavan Nolan, director of credit research at Markit.

In France, Credit Agricole S.A., which has a stake in Greece’s Emporiki Bank, reported a net loss of 1.47 billion euros ($1.96 billion) for 2011 compared to a profit of €1.26 billion in the previous year. In the fourth quarter of 2011, the bank posted a loss of €3.07 billion.

Credit Agricole took an average writedown of 74% on its Greek bond holdings. In total, the Greek crisis cost the bank €2.38 billion in 2011.

 

“Credit Agricole spent €2.2 billion acquiring a controlling stake in Emporiki Bank of Greece in 2006, a decision that looks more unwise by the day,” Nolan said.

The losses at troubled French-Belgian bank Dexia were particularly heavy. The lender reported a net loss of €11.6 billion for 2011, with total impairments on its exposure to Greece amounting to €4.61 billion last year.

Royal Bank of Scotland, which was rescued by the U.K. government at the height of the financial crisis, also paid a price for its exposure to Greece.

The bank reported Thursday a loss of 1.99 billion pounds ($3.12 billion) for 2011, up from the £1.13 billion loss posted in 2010. RBS took a £1.1 billion impairment on Greek sovereign debt last year. As of Dec. 31, the bonds were marked at 21% of par value, the bank said.

“As a result of the continued deterioration in Greece’s fiscal position, coupled with the potential for the restructuring of Greek sovereign debt, the group recognized an impairment charge in respect of available-for-sale Greek government bonds,” RBS said.

Besides Greece, RBS also holds debt from other euro-zone countries, but it noted that “Ireland, Italy, Portugal and Spain are facing less acute fiscal difficulties and the group’s sovereign exposures to these countries were not considered impaired” at the end of last year.

And in Germany, Commerzbank AG said Thursday it took a €700 million writedown on Greek sovereign bonds in the fourth quarter of 2011. The bank marked down the value of its Greek bonds to 26%. Still, the German lender managed to post a rise in fourth-quarter profit to €316 million from €257 million.

For European banks, “I don’t expect that there could a dangerous reaction or effect [from the disclosure on Greek debt writedowns],” said Stefano Caselli, finance professor at Bocconi University in Milan.

“In terms of capital, it’s not a surprise,” he said. “However, if we discover tomorrow that there is a problem with the bonds of another state, obviously banks will have to recalculate the impact on regulatory capital.”

Caselli noted that this week’s deal between Greece and the euro zone is “enough for avoiding the default of Greece.” “In terms of GDP growth, it’s not enough,” he said. “The gamble — and this is unpredictable — is the plan to reduce the ratio between debt and GDP.”

Greece is going through a severe recession which makes it even more difficult for the nation to meet its debt-reduction goals. Euro-zone officials are hoping that the nation’s debt-to-GDP ratio will fall to 120.5% by 2020, from around 160% in 2011.

post #57 of 59

Germany has run out of patience

Greece has been left in an impossible position – and Wolfgang Schaeuble's finance ministry knows it

 

The German government has run out of patience. It was obvious at the EU summit on Friday when the German delegation let it be known that the second rescue package for Greece must be the final word. If it proves too small, and Greece cannot afford to pay public sector wages, then it must default on its debts.

Talking to senior German negotiators last week, I found a change in attitude that was shocking for its clear and cold-hearted resolution.

Not so long ago Berlin was concerned to be viewed as a champion of European unity. There was a genuine fear that a Greek default would terminate 50 years of building towards a European super state.

Now Greece, in its enfeebled state, fails two tests. First, German officials are convinced it remains riddled with corruption, grift and racketeering such that it is impossible to make any agreements stick. Second, there is a better firewall to protect the eurozone from further shocks. The firewall is the €440bn European financial stability facility and the prospect of accelerated payments by member states into its successor the ESM, which is enough to insure against a Greek bankruptcy when placed alongside the €219bn of sovereign loans by the European Central Bank and €1 trillion in ECB loans to tide the banking system through the worst of the crisis.

With a firewall in place and no confidence Athens can implement a serious reform agenda, Greece is robbed of its negotiating power.

"There is no standing still for Greece. It must either move forward with reforms or leave," said one official.

This leaves Greece in an impossible position. With sky-high debts, a five year recession stretching into at least another two and loan interest to pay, there is no way Athens can meet Brussel's demands.

Even after the deal to write down its private sector debt to 120% of GDP, the economic situation can only improve with the kind of asset fire sale and mass wage cuts that leaves the political situation desperately unstable.

As Terry Smith of money broker Tullet Prebon recently wrote: "Greek budget numbers show government revenue decreased 4.9% in January and spending rose 8%. Revenues fell from €5.122bn to €4.872bn. Spending rose from €4.967bn to €5.362bn. Apparently this is a different budget to the one that the Euro budget police look at."

The German finance ministry under Wolfgang Schaeuble knows it has failed to put Greece in a sustainable position – with a platform from which it can bring forward reforms – but it doesn't care.

In a tragi-comic twist, the view from Berlin echoes that of many Greeks, including Taki, the Spectator's High Life columnist, who took time out in his 25 February article to document his compatriots' faults. He said: "They still believe in the most thieving politicians this side of Nigeria," who, in turn, protect a vast army of overpaid civil servants that operate through patronage and bribes.

The German foreign ministry is of a similar view.

Zsolt Darvas, an economist at the Breugel research institute in Brussels agrees that the Germans have done enough to isolate Greece, but says their argument that the eurozone can now plan for growth is flawed.

There are the Spanish youth unemployment figures, at 49.9%. No wonder prime minister Mariano Rajoy has already told his German counterpart Angela Merkel he needs respite from her demands for cuts. Not for more than a century has medical science recommended bleeding patients to make them better, yet some economic scientists cling to this remedy. Germans, keen to protect their wealth, are slavish adherents.

In Italy, where a clampdown on spending has brought plaudits, unemployment is rising and national politics is becoming more polarised. The technocrat in charge, Mario Monti, has plans to end age-old restrictive practices, but there are plenty of politicians in Silvio Berlusconi's party and the leftist New Democracy waiting to wreck them: not because they are delinquent, but because they represent people who will suffer huge falls in living standards.

Portugal, the Germans reassure themselves, is knuckling down in a way the Greeks can only dream of. Likewise the Irish. Yet while many Irish politicians consider the pain of austerity a much deserved penance for past sins, the Portuguese are clear they have nothing to apologise for.

Willem Buiter, chief economist at Citigroup, points out that weaker members of the eurozone collectively need to borrow some €2tn over the next two years. He argues that the only way to borrow this sum is for a more collective plan. One that entails some form of joint liability for countries' debts. "A proposal from the German council of economic experts for a European debt redemption fund, which would mutualise all eurozone members' debts above 60% of GDP, with strict rules to pay them off over 25 years, is gaining traction in some quarters. Germany itself remains staunchly opposed to anything that smells of Eurobonds, and the current period of calm has only reinforced that resistance."

Everything the Germans want could be undone without a more forgiving attitude. If the EU presses ahead with fines for countries that fail to meet new tough deficit targets, the riots in Barcelona last week could be the first round in a widespread revolt.

 

post #58 of 59

First, lure them into Debt.

 

Second, squeeze them.

 

Third, buy what you want. Cheap.

 

Part 3 begins..

 

http://www.reuters.com/article/2013/06/11/eu-greece-depa-idUSB5N0DH01220130611?feedType=RSS&feedName=financialsSector

 

 

Quote:
(Reuters) - The European Commission would like Greece to have another go at selling the state-run gas firm DEPA as soon as possible after Athens failed to attract any bid for the company by Monday's deadline, Commission spokesman Simon O'Connor said on Tuesday.
post #59 of 59

[Financial Times} Samaras reshuffles Greek cabinet

 

 

Pasok leader Evangelos Venizelos joined the government as deputy premier and foreign minister after backing the reform effort from behind the scenes

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