Showing posts with label Greece. Show all posts
Showing posts with label Greece. Show all posts

Monday, 27 February 2012

Portuguese storm gathers as EU leaders fight over Greece

The FTSE 100 fell 1.1pc and Germany's DAX was off 1pc, while the iTraxx Crossover index measuring credit risk in Europe jumped 30 points to 637. Yields on Italian 10-year debt rose 21 points to 6.08pc.

The worries over Portugal continued to mount even as German Chancellor Angela Merkel backed away from demands for a European austerity commissioner to take control of the Greek budget, averting an explosive clash with Athens.

"We don't want controversial talks, but a discussion that is successful for the Greek people," she said, insisting that Germany's plan was just one many of options.

The change of tack came after Berlin's allies in the northern creditor bloc warned such heavy-handed diplomacy had become offensive and breached the spirit of the EU project.

"You never stoop to insults in politics. It solves nothing," said Austria's Chancellor Werner Faymann. Luxembourg's foreign minister Jean Asselborn said it behoves Europe's most powerful state to display a "little more caution", advising Germany to "watch out" as passions grow stronger.

The dispute overshadowed the summit, intended to promote EU growth and tackle youth unemployment – now 22pc Europe-wide and 51pc in Greece. Talk of growth at a time when EU austerity has entrenched severe slumps across southern Europe has left markets bewildered.

While EU leaders fleshed out a German-inspired "fiscal compact" to police the budgets of EMU states, Finland called it "at best unnecessary and at worst harmful" while Luxembourg deemed it a "waste of time". The pact has been weakened, allowing a breach of the new structural deficit limit of 0.5pc of GDP in a wider range of circumstances.

On Monday night, 25 of the 27 EU nations signed up to the fiscal compact, with the Czech prime minister joining the UK in staying outside the deal.

While German calls for an EU commissar for Greece are not new, the aggressive tone of the draft shocked EU veterans. It stipulated that Athens must give "absolute priority to debt service", "transfer national budgetary sovereignty", and agree to terms that make it impossible for Greece to "threaten lenders with default". Furious Greek leaders rejected the terms as debt servitude.

Analysts have questioned whether Germany deliberately called for conditions that Athens cannot accept, perhaps to force Greece's withdrawal from the euro and set an example to others.

The softening of the German stance does not in itself settle the Greek crisis – even assuming Athens agrees soon to a deal with private creditors for debt relief near 70pc. Greece will almost certainly need a further €15bn on top of the €130bn package in force, yet Mrs Merkel has warned that Germany will not provide any further funds.

Jacques Cailloux from RBS said there would be a chain reaction if the troika halts payments and sets in motion a Greek default and exit from EMU.

"That would the disaster scenario. Those who think this could be contained don't know what they are talking about. There would be extraordinary contagion, as we are already seeing in Portugal, spreading back to Spain, Italy, and France," he said.

Citigroup thinks Portugal's economy will contract by 5.7pc this year and 3.5pc next year, replicating the downward spiral seen in Greece as austerity began to bite.

While Portugal has delivered on its promises, the task may be Sisyphean with a combined public and private debt of 360pc of GDP – 100 percentage points higher than in Greece. Grit alone cannot overcome the same chronic lack of competitiveness.

Europe's leaders have vowed that they will not inflict a "haircut" on Portugal's creditors, insisting that Greece is a "special case". The relentless exodus from Portuguese debt suggests that investors do not believe them.


View the original article here

Monday, 27 June 2011

The Greek debt crisis: billion will be more pumped to bring relief to the Greece

The IMF said it was "ready to continue to support" for the country, providing that the Government has introduced far-reaching economic reforms. He threatened not to support the Greece, which was to be paid next month, but it is now thought unlikely.

A new package to bail out, the second in 13 months, should be accepted in the next few weeks.

The economic official of the European Union, an Olli Rehn, stated that wait for the EU and the IMF to release a loan of EUR 12 billion in early July to keep solvent Greece.

The Greece has been warned last night that it must introduce austerity cuts and not by default on repayments on its loan of emergency to bail out the as a condition of the new deal.

Fears that the Greece was failing to repay its debts has shaken financial markets yesterday.

At one point, the value of the FTSE 100 had decreased by 1.5 percentage points.

But after the IMF statement, shares began to recover. By the close of trading the FTSE had fallen by 0.76 percentage points to 5,699, a loss of over $ 10 billion to £. The euro fell against other currencies.

Yesterday evening, Greek Prime Minister George Papandreou, announced a cabinet reshuffle and said that he would be for a vote of confidence that he seeks to force by reducing expenditures and tax rises against widespread opposition.

An attempt to form a Government of national unity failed. The country has been marred by strikes and riots this week while several politicians have resigned in protest against the proposed austerity drive.

The Greece credit rating was cut to the lowest in the world and its debts is now considered less secure than those in poor developing countries. There were fears that, if the Greece by default on debt repayments, other countries such as the Ireland could be tempted to follow suit, leading to another financial crisis.

Herman Van Rompuy, President of the European Union, said yesterday evening that the euro would emerge stronger from the crisis.

Mr Rehn admitted that it would take more time to implement a second rescue plan for the Greece because of differences on how to

private investors share the burden.


View the original article here


This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.