Tagged: Greece crisis

Greece struggles to relieve fuel shortage as truckers defy Athens’ orders

Deutsche Welle | 31.07.2010

Greece mobilized military vehicles and vessels Saturday to provide the country with fuel, medicine and food as an ongoing trucker strike left the country crippled and its motorways littered with abandoned cars. Armed forces worked around the clock to supply airports, power plants and hospitals. Most filling stations around the country remained closed, meanwhile, as truckers entered their sixth day of strikes, defying an emergency government order to return to work.

Opening up road freight industry

Greece’s 33,000 protesting truck and fuel-tanker owners walked off the job on Monday to protest against the creation of new trucking licenses after the government stopped issuing new permits 40 years ago. Athens says the move will help liberalize the freight sector and open the industry to more competition by September, a key part of the reforms outlined in the 110 billion euro ($144 billion) European Union/International Monetary Fund bailout for the debt-ridden country. Financial analysts have stressed that opening up Greece’s closed professions, which also include architecture and law, are essential to revitalizing the country’s economy. "It is even more important than fiscal stabilization because it is the operation of the market which is hindered," said Yannis Stournaras of the Athens-based IOBE think tank. "When these markets open, GDP will be much higher," he added.

Truckers fight for the value of their permits

Truckers say the plan is unfair to existing operators, as it would devalue their initial investment; many have paid up to 300,000 euros to buy their permits, and would not be able to recoup this amount when they retire. Strikers continue to defy the emergency back-to-work order the government issued Wednesday, citing public health risks

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ANALYSIS – Greek budget goal too ambitious as austerity hits

Reuters | Fri May 28, 2010 | 9:50pm IST

Academy of Athens Greece will likely miss its budget deficit target for this year as recession wreaks havoc on construction firms and small businesses, leading to lower tax receipts and higher social spending. Research firm Capital Economics expects the deficit to shrink to about 9 percent of GDP from 13.6 percent in 2009, short of an 8.1 percent target set out in Greece’s bailout deal with the International Monetary Fund and the European Union. "While Greece will make significant inroads into its deficit, there remains a strong chance that it will miss its 2010 deficit target," said Capital Economics analyst Ben May. Greece this month received the biggest bailout in financial history, with the IMF and the EU pledging 110 billion euros ($134.8 billion) in 2010-2013 to save the country from default. In return, the debt-laden nation promised to ram through deficit cut measures of a total of 45 billion euros over the same period to narrow its budget gap by an unprecedented 11 percentage points of GDP, to below an EU ceiling of 3 percent.

But early budget figures suggest the planned deficit cut of more than 20 billion euros in 2010 is too ambitious due to an economic contraction seen at 4 percent of GDP, the country’s deepest recession since 1974. "I think the Greek government’s chances of implementing the deficit target this year is 30 percent," said Diego Iscaro, London-based analyst with IHS Global Insight. "This reflects risks both on the tax revenue and on the spending side." Gross tax receipts between January and April rose 6 percent year-on-year, far below an 11 percent target. The finance ministry said on May 25 it had fired 20 heads of regional tax offices for missing their collection targets. "It’s already whispered in finance ministry corridors that the deficit won’t fall below 9.5 percent this year" said George Romanias, an economist with Greece’s main labour union GSEE. 

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Second firm withdraws drugs from Greece over cuts

BBC News | Sunday, 30 May 2010 | 11:09 GMT

Another Danish pharmaceutical company has withdrawn products from Greece in protest at the government’s decision to cut the prices of medicines by 25%. The Leo Pharma Company says it is suspending sales of two popular drugs because the price reductions will cause job losses across Europe. The Greek government is struggling with a debt crisis. It has condemned as unfair the action of Leo Pharma, and another Danish company, Novo Nordisk.

Supply embargo?

The decision by Leo Pharma to suspend distribution of an anti-blood-clotting agent and a remedy for psoriasis takes Greece one step closer towards an all-out boycott by medical suppliers. Kristian Hart Hansen, a senior director of the company, said the 25% price reduction would encourage similar moves in other countries with large debt problems such as Ireland and Italy. He warned that unless the company took action, there would job losses across Europe, including Denmark where the company is based. Earlier this week another Danish company, Novo Nordisk, withdrew sales of its state-of-the-art insulin product from Greece for the same reason. Leo Pharma claims it is owed 244m euros ($300m; £207m) in unpaid bills by the Greek state.

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Global stock markets see sharp falls

BBC NEWS | Tuesday, 25 May 2010 | 8:37 GMT

Global stock markets fell heavily on Tuesday over continued fears about the debt problems in the eurozone. In early trade in Europe the FTSE 100 in London was down by 2.60%, Germany’s Dax index was 2.34% lower, while in France the Cac 40 index slid 2.74%. It came after shares in Asia had seen sharp falls. Stocks in South Korea and Japan had been affected as North Korea reportedly went on to military alert. Japanese stocks fell by 3.1%, and shares in South Korea fell by 2.7%. In London, the FTSE 100 has fallen by more than 10% in little more than a month after hitting a 22-month high in April.

Regional tensions

Earlier in Asia, Australian shares fell by 3%, Taiwanese stocks were down 3.23% and the wider MSCI measure of Asia-Pacific shares outside of Japan fell by 3.6%. Shares in Hong Kong, Singapore, Indonesia, China, India, Thailand and Malaysia all fell too. There were reports in South Korea that North Korea had told its military to prepare for war, but only if the South attacks it first. Tensions in the region have been growing since international investigators blamed the North for torpedoing and sinking a South Korean warship in March, killing 46 sailors.

‘Toxic cocktail’

Other factors increasing pessimism among investors were the weekend rescue of Spanish bank Cajasur by Bank of Spain, only the second time the central bank had saved a regional lender. "The toxic cocktail 

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World stocks turn down, euro hit again

Reuters | Mon May 24, 2010 | 4:46pm IST

World stocks failed to hang on to early gains on Monday, falling as Wall Street looked set for losses, and the euro took another hit, dropping more than 1 percent against the dollar. Global stocks as measured by MSCI were down 0.3 percent, adding to last week’s 4.8 percent loss on worries about a slowing global economy and stresses in the euro zone. Emerging markets stocks were up 0.4 percent, but well off their daily highs. They lost 7.6 percent last week. European trading was thin due to a religious holiday, but most markets were open. The FTSEurofirst 300 turned down as Wall Street futures pointed to losses at the open. It was down 0.5 percent.

"There’s a general risk aversion and there has generally been a move to liquidate positions," Martin Fraenkel, Credit Agricole’s global head of comnmodities and energy, told a Reuters summit in London. Equity markets have been battered recently, first by a fear that some European countries, notably Greece, were heading for a default on their sovereign debt and then due to doubts about the impact of a debt rescue package on growth prospects. Jun Kato, senior manager for investment at Shinkin Asset Management, said while the euro zone’s fiscal trouble was still in focus, "wariness about its impact on the global economy seems to be spreading". Year-to-date, all major broad stock indexes are in the red, although U.S. equities are generally outperforming. This is a reaction both to a flight from Europe and growing signs of U.S. economic recovery.  

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William Hague ‘vindicated’ by euro warning

BBC NEWS | 2010/05/23 | 12:29:34 GMT

Foreign Secretary William Hague has said the euro is "in crisis" but it is not in the UK’s interest for countries to pull out of the single currency. Mr Hague said the weakness of the euro, caused by the debt crisis across Europe, "vindicated" his warnings about the currency when he was Tory leader. But he said he took no "comfort" from the current situation and nations must work hard to reduce their deficits. David Cameron says it is in the UK’s interest for the euro to stabilise. Speaking in Germany on Friday, the prime minister said financial stability in the eurozone – the UK’s largest trading partner – was vital, although he said he would oppose giving any extra powers to EU institutions to try and shore up the euro.

‘Financial confidence’

German Chancellor Angela Merkel has said the prospect of the debt crisis in Greece spreading across Europe has put the future of the euro at risk – although EU countries have agreed billions of pounds of rescue funding. Mr Hague said "the language of crisis" was already present in efforts to deal with the worsening situation. "Well, there is a crisis – of course there is a crisis," he told the BBC’s Politics Show. "We don’t want the euro to be in crisis. I am a long-standing opponent of the Britain joining the euro, but we don’t want the euro to collapse or countries to pull out of it because of course that kind of crisis is very bad for Britain and affects financial confidence across the board."  

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EU ministers seek better economic crisis response

BBC News | Friday, 21 May 2010 | 21:07 GMT

crisis response EU finance ministers have agreed for the need to be tougher on member states’ budgets in the wake of the Greek debt crisis. And following criticism that Europe did too little, too late to defend the euro, they pledged to react quicker and more efficiently in future. At the first meeting of a new EU economic taskforce, they agreed new sanctions were needed to enforce rules. Countries that break deficit limits could lose EU money or voting rights.

‘Draw lessons’

The meeting in Brussels comes at the end of another week of turmoil on the markets as European countries grapple with the aftermath of the debt crisis in Greece. The euro fell to its lowest level for four years against the dollar in the last few days and share markets have seen big sell-offs. With additional concerns about the level of debt in Spain, Portugal and other countries, the fear has been that the crisis could harm the wider European economy. Herman Van Rompuy, European Council president, said member states had agreed four main objectives:

  • greater budgetary discipline
  • to look for ways to reduce the divergences in competitiveness between member states
  • to establish an effective economic crisis management mechanism
  • to strengthen economic governance to be able to act quicker and in a more co-ordinated and efficient manner to deal with any future economic crises   

He said the meeting was "only the start of the process" of putting these policies in place, but that "there was a strong political will among the European Union finance ministers". Finance ministers would now start work 

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Shares hit by German short-selling ban

BBC News | Wednesday, 19 May 2010 | 13:02 GMT

Shares in Europe and Asia fell on Wednesday after a surprise move by Germany to ban some types of short-selling of financial products. Analysts said Berlin’s move had led to uncertainty and had added to fears for Europe’s banks. Key share indexes in London, Paris and Frankfurt lost between 2% and 3% while Japan’s Nikkei 225 closed 0.5% lower. The euro hit another four-year low against the dollar. It fell to below $1.215 before recovering to $1.222. Analysts said comments by German chancellor Angela Merkel that the "current crisis" facing the euro was "the biggest test Europe has faced in decades" were doing nothing to help stop the euro’s falls. Meanwhile oil fell to $68 a barrel, as concern over tighter financial regulation sparked a move away from riskier assets.


The German financial regulator has banned traders in the country from "naked" short-selling of euro-denominated government bonds and of shares in the country’s 10 most important financial institutions. Short-sellers usually borrow shares, sell them, then buy them back when the stock falls and return them to the lender, keeping the difference in price. "Naked" short selling occurs when a trader sells a financial instrument that has not yet been borrowed. BBC business editor Robert Peston said the regulator saw a ban on the shorting of government bonds – or debt – as an attempt to stop "what it would see as mischievous bets by investors that the financial difficulties of the likes of Greece and Portugal will worsen". "It thinks that such bets are what force down the price of Greek and Portuguese government bonds, which then spook investors, and make it much more difficult and expensive for the likes of the Greek and Portuguese governments to borrow vital new money," he added.

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Greece Considering Legal Action against U.S. Banks for Crisis

Bloomberg | May 16, 2010 00:00 | EDT

Greece is considering taking legal action against U.S. investment banks that might have contributed to the country’s debt crisis, Prime Minister George Papandreou said. “I wouldn’t rule out that this may be a recourse,” Papandreou said, in response to questions about the role of U.S. banks in the crisis, in an interview on CNN’s “Fareed Zakaria GPS.” The program, scheduled for broadcast today, was taped on May 13. Neither Papandreou nor Zakaria mentioned any banks by name. U.S. stocks fell and the euro slumped on concern that Europe wouldn’t be able to contain the debt crisis stemming from Greece. The Standard & Poor’s 500 Index declined 1.9 percent May 14, while the euro fell below $1.24 for the first time since November 2008.

Papandreou said the decision on whether to go after U.S. banks will be made after a Greek parliamentary investigation into the cause of the crisis. “Greece will look into the past and see how things went,” Papandreou said. “There are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.”


In the days leading up to the May 10 announcement of a loan package worth almost $1 trillion to halt the spread of Greece’s fiscal woes, European Union regulators were examining whether speculators manipulated the prices of bonds and equities and contributed to the crisis. The Committee of European Securities Regulators said on May 7 it was investigating “exceptional volatility” in the markets and would work with 

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Geithner Sees Europe Managing Crisis Without Fallout for U.S.

Bloomberg | May 15, 2010 | 00:00 EDT

Treasury Secretary Timothy F. Geithner expressed confidence that Europe will resolve the debt crisis buffeting the region and said the U.S. economy is strong enough to withstand any fallout. “Europe has the capacity to manage through this,” Geithner said in an interview on Bloomberg Television’s “Political Capital With Al Hunt,” airing this weekend. “And I think they will.” Geithner, 48, said he doesn’t think the European turmoil will hurt U.S. growth because “our economy is getting stronger. We’re seeing a lot of strength, improvement and confidence.” U.S. stocks fell and the euro slumped on concern that Europe wouldn’t be able to contain the crisis. The Standard & Poor’s 500 Index declined 1.9 percent yesterday, while the euro fell below $1.24 for the first time since November 2008.

The Treasury secretary said the almost $1 trillion package that Europe put together with the International Monetary Fund was “an enormously important step” that will help countries in the region cut budget deficits. Geithner also said a Republican proposal to bar U.S. support for IMF loans to European nations is “absolutely not” reasonable. “We have a big stake in helping Europe manage through these things,” he said. “We’re going to do it in a way that’s sensible for the American economy, the American taxpayer.” The U.S. holds a 17 percent stake in the IMF, an agency created in 1945 to help maintain the stability of the global monetary system. Geithner praised Senate legislation to overhaul financial regulation and said it would help prevent a repeat of the 2008 U.S. meltdown.

Strong Reform

“This is a very strong, the strongest set of reforms we’ve seen the U.S. consider since the Great Depression,” he said. “It’s time to get this done. We want to bring it to earth now so that we can get on to other challenges.” Geithner said he’s confident top Senate negotiators will modify language in the legislation that 

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Volcker Sees Euro ‘Disintegration’ Risk from Greece

Bloomberg | May 14, 2010 | 02:52 EDT

Paul Volcker Former Federal Reserve Chairman Paul Volcker said he’s concerned that the euro area may break up after the Greek fiscal crisis that sparked an unprecedented bailout by the region’s members. “You have the great problem of a potential disintegration of the euro,” Volcker, 82, said in a speech in London yesterday. “The essential element of discipline in economic policy and in fiscal policy that was hoped for” has “so far not been rewarded in some countries.” European leaders pledged a rescue package of almost $1 trillion this week to counter a mounting debt crisis and restore confidence in the currency. Former U.S. Treasury Secretary John Snow said this week the euro may need a common fiscal policy to survive, a comment echoed by Norman Lamont, who was U.K. finance minister when Britain opted out from the euro in 1992.

“Will economic and financial distress finally be resolved by looking toward more integration in a closely integrated Europe, politically as well as economically?” said Volcker, who chairs President Barack Obama’s Economic Recovery Advisory Board. “I do have my hopes, as a believer in the euro.” The aid package also involved the European Central Bank, which intervened in debt markets after a rout in bonds across the euro region’s periphery. The European Commission in Brussels said it would “strengthen” its deficit oversight and “align national budget and policy planning” under a system of economic policy coordination.

Fiscal Union

“For the euro to be able to survive long term, fiscal consolidation of some kind — tax policy consolidation, fiscal policy consolidation — is probably necessary,” Snow said. Bank of England Governor Mervyn King also commented on the crisis, saying two days ago that it is “very clear” that the currency region needs a fiscal  

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Euro Breakup Talk Increases as Germany Loses Proxy

Bloomberg | May 14, 2010 | 11:47 EDT

Romano Prodi, former Italian PM Romano Prodi recalls how he persuaded Germany to allow debt-swamped Italy into the euro: support our membership and we’ll buy your milk, he said. When Prodi toured Germany’s agricultural heartland after becoming Italian leader in 1996, he pitched “a big milk pipeline from Bavaria,” pointing to a three-year, 40 percent plunge in the Italian lira that was hurting dairy sales. “To have Italy outside the euro, a huge quantity of exports from Germany would have been endangered,” Prodi, now 70, said. Germany got the message, allowing entry rules to be bent to create a 16-nation market for its exporters. Now, German taxpayers are footing the bill for that permissiveness as Europe bails out divergent economies lashed to a single currency with little control over national taxes and spending.

The consequences are an 860 billion-euro ($1 trillion) bill for a debt binge led by Greece, sagging confidence in the European Central Bank’s independence and mounting speculation that a currency designed to last forever might break apart. “You have the great problem of a potential disintegration of the euro,” former Federal Reserve Chairman Paul Volcker, 82, said yesterday in London. “The essential element of discipline in economic policy and in fiscal policy that was hoped for” has “so far not been rewarded in some countries.” German-led northern Europe, with its zeal for budget discipline, is attempting to fix the mistakes made by the euro’s founding fathers in the 1990s. It is squaring off against the governments of the south over who will control the euro and the ECB; whether the currency will be used to promote growth or squelch inflation, and ultimately, whether some countries should be disbarred from the monetary union.

European Club

What was conceived as a club for Europe’s strongest economies was expanded for political reasons, leaving the currency union with minimal powers to police deficit spending and no safety net for dealing with countries, like Greece, that veer toward default. “There was no discussion of that at all, of a crisis  

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EU crisis mechanism must be made unattractive – Rehn

Reuters | Sat May 15, 2010 | 5:03pm IST

The European Union’s 750 billion euro crisis mechanism must be made so unattractive that no country will resort to it, EU Economic and Monetary Affairs Commissioner Olli Rehn said on Saturday. "It is essential that we prepare ourselves for the worst case scenario. But of course there is the issue of moral hazard," Rehn told the annual meeting of the European Bank for Reconstruction and Development. "This mechanism must be made so unattractive that no EU leader will resort to it."

Rehn said European Union states with some space in their fiscal accounts should not accelerate in consolidating their public sector deficits to help avoid pushing the 27 member bloc into contraction. He said Europe needed an exit strategy from anti-crisis measures that took into account the differing circumstances of member states and added exit strategies would be the core agenda item for the meeting of G20 rich nations in June.

ECB’s Trichet seeks quantum leap in budget oversight

Reuters | Sat May 15, 2010 | 2:07pm IST

ECB President Jean-Claude TrichetThe euro is not under attack European Central Bank President Jean-Claude Trichet was quoted on Saturday as saying, despite its fall to an 18 month low against the dollar. Europe found itself in the worst situation since World War Two and possibly since World War One, he said in an interview with Germany’s Der Spiegel magazine. But he described as “nonsense” any suggestion euro zone governments had forced the ECB to act this week, sending out a fatal signal on its independence and credibility. Trichet also called for a quantum leap in mutual monitoring of governments’ budgets by their euro zone peers, and said effective sanctions were needed for breaches of the Stability and Growth Pact that is supposed to limit budget deficits but has been widely disregarded.

European governments bore responsibility for the euro’s slide rather than currency markets, Trichet indicated in the Spiegel interview. “It is not a question of an attack on the euro. It is to do with the public sector and hence to do with financial stability in the euro area,” he said. “It’s clear that the chief responsibility of Europeans is to take appropriate measures to counteract the current tensions in Europe.” The euro slid as far as $1.2358 on electronic trading platform EBS on Friday, the lowest since October 2008. Trichet has long urged euro zone governments to reduce their budget deficits and thereby prevent a steep rise in their debt. Failure of the Greek government in particular to take this advice led to a debt crisis that risked spreading to other euro zone countries with similar problems, and beyond. On Monday the ECB began buying government bonds issued by some euro zone governments, reversing its long-standing resistance to such moves to prop up the euro zone debt market.

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RBI: Greek crisis not impacting policy

Reuters | Thu May 13, 2010 | 11:38am IST

The Greek crisis is not having any impact on the Reserve Bank of India’s (RBI) policy approach at present, Subir Gokarn, a deputy governor at the RBI, said on Thursday. The pace of exit from the loose monetary policy takes into account that the global economy is still not stable, he told reporters on the sidelines of a banking conference. The RBI has said it prefers baby steps to normalise monetary policy, but analysts say high inflation could force it to tighten more swiftly and sharply.