Bloomberg | April 30, 2010 | 07:27 EDT
Greek Prime Minister George Papandreou said the nation’s survival was at stake in talks to win a potential $159 billion European Union-led bailout that included budget cuts denounced by unions as “savage.” “Now, today, immediately, what is at stake is the survival of the nation,” Papandreou said in parliament in Athens today. “This is the ‘red line.’” He said talks with the EU and International Monetary Fund were “tough,” with his government resisting “not in the street with rocks, but in negotiations.” Greek stocks rose and the euro strengthened as an EU spokesman said an agreement on a three-year package may come as soon as tomorrow. Signs of the accord that may require 24 billion euros ($32 billion) in austerity measures ended a bond market selloff across Europe this week. Moody’s Investors Service said yesterday Greece was vulnerable to a “multi- notch” downgrade if measures don’t go far enough.
Greece’s fiscal crisis rippled through Europe this week, sending the euro to its lowest in a year after Germany’s reluctance to approve emergency funds sparked a drop in Greek bonds and Standard & Poor’s cut the country’s credit rating to below investment grade. S&P followed its Greek downgrade with cuts for Portugal and Spain. Papandreou’s budget cuts may include a three-year wage freeze for public workers and eliminating two of their 14 annual salary payments, the ADEDY union said. Greece’s NET Radio reported that cuts could amount to 10 percentage points of gross domestic product. The deficit was 13.6 percent of GDP in 2009.
“We find ourselves before the most savage, unprovoked and unjust attack,” Spyros Papaspyros, head of the ADEDY civil servants union, said in Athens late yesterday after meeting Papandreou. “The answer will be given in the street.” The pending wage cuts will overshadow tomorrow’s annual Labor Day celebrations, usually marked by rallies and picnics, which unions called on Greeks to join before the “coming storm.” The slogan is:
BBC News | Wednesday, 28 April 2010 | 07:53 GMT
Greek regulators have announced a ban on short-selling on Greece’s stock market, following steep falls in bank shares. The ban is designed to prevent investors betting on falls in share prices – believed to undermine confidence in the market. On Tuesday, Greek bank shares fell 9% amid continued concern over Greece’s public finances. The move also follows big falls in Asian markets on Wednesday. Japan’s leading share index, the Nikkei 225, closed down more than 2.5% after steep falls in European stocks on Tuesday. Shortly after opening on Wednesday, stock markets in Frankfurt and Paris were both down by a further 0.5%. The short-selling ban, designed to stabilise the market, only affects stocks listed in Greece, however. Global shares have tumbled after the credit rating agency Standard and Poor’s downgraded Greek debt to "junk" on Tuesday. That means the rating agency views Greece as a much riskier place to invest, and increases the interest rate investors will charge the Greek government for loans.
On Wednesday, that interest rate hit 10.13% for 10-year Greek bonds – another all-time high for a eurozone country. Meanwhile plans to secure a bail-out for the Greek economy will continue later, with the International Monetary Fund (IMF) arriving in Berlin to urge German MPs to agree to a rescue deal. Dominique Strauss-Kahn will travel to Germany along with the president of the European Central Bank, Jean-Claude Trichet, to persuade politicians that giving Greece billions of euros in aid is a "last resort". Progress on a deal to bail out Greece may also help to steady investors’ nerves. During a visit to Tokyo on Wednesday, European Council President Herman Van Rompuy announced a meeting of eurozone heads of state and government would be held on 10 May to discuss the Greek crisis. He insisted negotiations on the aid were "well on track" and that there was "no question about restructuring" Greek debt.
Reuters | Mon Apr 26, 2010 | 4:40pm IST
Uncertainty over an aid package for Greece pushed up its borrowing costs to a 12-year high on Monday, with demands from Germany for further austerity measures before aid is granted heightening the tension. Greece tried to reassure investors on Sunday that aid would arrive in time to avert the euro zone’s first sovereign debt default, despite signs that a 45 billion-euro ($60.49 billion) EU-International Monetary Fund package would have to be bigger. But the premium investors demand to buy Greek government bonds rather than euro zone benchmark Bunds hit a new 12-year high on Monday because of concern over the implementation of the aid package and the conditions attached.
"The market wants to see the cash laying on the table, not in a coffer besides the table," said David Schnautz, strategist at Commerzbank in Frankfurt. The backing of Germany, Europe’s biggest economy, is vital for any aid but Berlin faces public opposition to a financial rescue and is taking a tough line over the terms. "The government has not taken a decision (on aid)," German Foreign Minister Guido Westerwelle told reporters at a meeting of European Union ministers in Luxembourg. "That means that the decision can fall in either direction. Offering money too soon would get in the way of Greece doing its homework with the requisite diligence and discipline." Despite German pressure on Athens, markets kept pressure on Berlin to decide fast by pushing up the cost of insuring Portuguese government debt against default to a record high because of fears that Portugal could be next to debt crisis.
BBC News | Friday, 23 April 2010 | 11:33 GMT
Greek Prime Minister George Papandreou has asked for activation of an EU-IMF debt rescue mechanism, to help pull the economy out of its current crisis. It follows negotiations with eurozone nations and International Monetary Fund over the details of an emergency rescue package. It comes a day after data showed a worse-than-expected budget deficit of 13.6% of gross domestic product. Credit rating agency Moody’s also cut its rating on Greek debt on Thursday.
The BBC economics editor Stephanie Flanders said that during the Greek crisis eurozone finance ministers had been hoping that the promise of support would be enough to reassure investors. But that had not been the case, and our correspondent said the pressure was now on to come up with the fine detail of a deal very quickly. She said that, with very tight economic conditions already in place in Greece, any IMF conditions attached to loans would likely be of an economic nature, such as interest rates, rather than calls for more stringent cost-cutting measures. "Even if Greece, with this money does get through [the crisis], it is still going to hurt for sure," she added.
Mr Papandreou is visiting the Aegean island of Kastellorizo where he made a statement to Greek television. He said the markets had not responded positively to Greece’s austerity measures. That meant it was now a "national and pressing necessity" to access the EU-IMF aid, and that he had asked Finance Minister George
Reuters | Thu Apr 22, 2010 | 9:36pm IST
Greece’s budget gap last year was worse than feared, the European Union’s statistics office revealed on Thursday, as Moody’s Investors Service downgraded its rating of Greek government debt. The news triggered a fresh slide of asset prices in Greece and other debt-choked European countries, and increased pressure on Athens to seek billions of euros of emergency loans from the EU and the International Monetary Fund. Greece will need to refinance 8.5 billion euros of bonds maturing on May 19, and as soaring yields make it ruinously costly for Athens to issue bonds, investors think it may need a bailout to avoid defaulting or restructuring its debt. "It looks like a terrible situation just got worse," said Nick Kounis, economist at Fortis.
The budget figures were announced as tens of thousands of Greek nurses, teachers and other public workers staged a one-day strike to protest against the government’s austerity measures. They demanded that Athens reject any pressure for further spending cuts in crisis talks that it launched this week with the EU and the IMF. The Greek government posted a budget deficit of 32.34 billion euros or 13.6 percent of gross domestic product in 2009, not the 12.7 percent which it had reported earlier, Eurostat said in a review of countries’ deficits throughout the region. It added that the Greek deficit might be revised again, by between 0.3 and 0.5 percentage points of GDP, because of uncertainty about the quality of Greece’s data and accounting procedures. In a brief statement, the Greek Finance Ministry insisted the new numbers would not change its intention to shrink the deficit by four percentage points this year. It said measures already taken would be enough to cut the deficit by six points.
BACKING AWAY FROM TARGET
But both Athens and EU officials appeared to be backing away from a previously announced target for Greece to slash the deficit to 8.7 percent of GDP this year. "The target for 2010 is a four percentage point reduction of the deficit. We did not refer to the starting point or the arrival figure, only the reduction effort,"
BBC News | Wednesday, 21 April 2010 | 15:35 GMT
The Greek government’s cost of borrowing has hit a new high as talks on a joint eurozone and International Monetary Fund (IMF) rescue plan begin. The interest rate on 10-year government bonds hit 8.3% – the highest since the euro was introduced. Rates rose as it became clear that talks over the aid package may not be finished until days before a multi-billion-euro loan is due for repayment. Investors are becoming more convinced that Greece will need to be rescued. Greece’s finance ministry said the talks with the European Commission and the IMF would take about two weeks, with a joint text issued on about 15 May. On 19 May, Greece is due to repay investors an 8.5bn euros (£7.3bn) bond.
The talks cover austerity measures that Greece must take during the next three years to reduce its 300bn-euro debt mountain. If all sides can agree the measures, it should help clear the way for a quick payout of up to 40bn euros on offer from eurozone members and the IMF. In a statement on Tuesday, Greece’s finance ministry said: "The discussions concern a three-year programme of economic policies… which can be supported with financial assistance from eurozone members and the International Monetary Fund should Greek authorities decide to request the activation of the mechanism."
BBC News | Friday, 16 April 2010 | 22:20 GMT
Greek Prime Minister George Papandreou has said his country is making "preparatory moves" to take advantage of a multi-billion euro rescue package. He added, however, that Greece would not necessarily make a formal request for help. On Sunday, the eurozone and International Monetary Fund (IMF) agreed details of a loan package to help debt-ridden Greece. Concerns about Greece’s high levels of debt have put pressure on the euro. The currency fell by 1 cent against the dollar on Thursday, and slipped a further 0.54% on Friday to close at $1.3506.
On Tuesday, Greece successfully raised 1.56bn euros ($2.1bn; £1.4bn) in an over-subscribed issue of bonds, designed to raise money to repay some of its debt. However, the country’s finance ministry said on Thursday that it had written to the European Union, European Central Bank and IMF to discuss the rescue plan. The IMF’s managing director, Dominique Strauss-Kahn, responded to the letter, saying he would send a team to Athens on Monday to begin negotiations.
Reuters | Thu Apr 15, 2010 | 5:34pm IST
World stocks slipped off year highs on Thursday as Wall Street looked set for a poor start despite strong growth in China and upbeat corporate earnings. Greece’s debt crisis continued to simmer, knocking the euro down close to 1 percent against the dollar and yen. MSCI’s all-country world stock index was down slightly, but still at Sept. 2008 levels. The index is up around 6 percent this year. China’s economic growth quickened in the first quarter to 11.9 percent year-on-year, the fastest pace since 2007, benefiting from a low base of comparison last year and the momentum imparted by massive government stimulus.
At the same time, investors are being buoyed by robust earnings announcements on Wall Street. JPMorgan reported quarterly profit that beat forecasts, as investment banking earnings gained and loan losses slowed. Tech bellwether Intel Corp also posted better-than-expected results. But early ardour cooled slightly. "There’s been a pause for breath, with some stocks having been overbought in the rally," said Colin McLean, managing director at fund manager SVM, in Edinburgh. "There’s still some concern about Greece, and southern Europe," he said. The pan-European FTSEurofirst 300 was up 0.2 percent for a year to date gain of nearly 6 percent. Japan’s Nikkei earlier closed up 0.6 percent. Japan has generally been outperforming this year. The Nikkei is up close to 7 percent and the broader TOPIX has gained more than 10 percent since the end of 2009.
Bloomberg | April 12, 2010 | 19:00 EDT
Another day, another episode in the Greek rescue saga. Over the weekend, after five days during which Greek debt took a battering on the markets, the euro area’s governments met, talked, sweated, and then came up with their traditional solution. They dipped their fists into a big pot of euros and threw money at the problem. And yet, to use an image that is appropriate for the subject, the Greek debt crisis is a hydra: a beast with many heads. Chop off one, and a couple more grow in its place. Hercules may have finally defeated the animal. It isn’t likely the current crop of Greek or European officials will achieve anything quite so heroic.
This version of the rescue package isn’t going to work any better than the last one did. All it does is buy more time. The only real solution to Greece’s problems is Irish-style austerity. One way or another, it’s going to happen. The sooner they make a start on it, the better for everyone. Last week, Greek borrowing costs surged to an 11-year high. Bond investors had taken a long, hard look at the last Greek rescue package and decided they didn’t believe a word of it. Greece was promised aid from its fellow euro countries, as well as the International Monetary Fund, but only with money at market rates. The trouble is, Greece can’t afford market rates. That solved nothing.
This time, euro-area leaders compromised. A rescue package worth as much as 45 billion euros ($61 billion) was put together. Funded by the euro area, together with the IMF, the cash will be subsidized, but not by very much. The euro-area loans, if made, will pay about 5 percent, slightly less than Greece has to pay the
Mon Apr 12, 2010 7:32pm IST
The euro zone’s rescue package for Greece is positive but not decisive, Fitch Ratings said on Monday. Fitch senior analyst Chris Pryce said Greece’s government will grab the euro zone rescue line agreed on Sunday if it cannot raise money on the market at around the 5 percent interest rate offered in the 30 billion euro deal. "It is clearly encouraging for the Greek government but it still leaves some questions unanswered," Pryce told Reuters. "Thirty billion should see them through the end of the year, but I would need more information on next year and the year after because this is the focus of our worries." Greece has yet to ask to tap the package, and officials have long said the fleshing out of its details should suffice to calm markets after its borrowing costs spiked to more than double those of euro zone benchmark Germany last month.
Fitch downgraded Greece two notches to BBB-minus, the lowest rung of investment grade, on Friday, and set a negative outlook because of worsening prospects for the contracting economy and higher debt maintenance costs that would hit the budget gap. Greek officials have said they would watch markets in the coming days to assess whether or not they would activate the deal, which includes extra help from the International Monetary Fund. On Monday, yield spreads — the premium investors demand to buy Greek rather than euro zone benchmark German government debt — shot lower after EU officials fleshed out the deal’s details. The spread of the Greek 10-year government benchmark dropped by about 60 basis points to 334 basis points on Monday.
BBC NEWS | 2010/04/12 | 08:42:09 GMT
The euro has jumped sharply against the dollar and the pound after the eurozone agreed details of a multi-billion euro loan package to debt-ridden Greece. The euro rose by more than 2 cents, or 1.5%, against the dollar, to $1.3672. Against the pound, it rose by almost 1 penny to 88.408p. On Sunday, finance ministers of the 16 eurozone nations agreed to provide up to 30bn euros ($41bn; £27bn) in loans. Greece hopes it will not have to ask for the emergency loans. Instead, it hopes that an extensive package of austerity measures will help to cut its debt levels and restore confidence in Greek government debt. This would mean it could raise money itself, rather than relying on financial assistance from the eurozone and the International Monetary Fund (IMF), which is also contributing to the 30bn euro loan package.
The loan deal comprises a three-year financing programme at interest rates of about 5%, based on IMF formulas. An exact interest rate for the loans will only be finalised if Greece formally requests help. The rate is less than the rate the Greek government would have to pay to raise money on the open market. The interest rate on Greek bonds hit a record of 7.5% last week. Luxembourg Prime Minister Jean-Claude Juncker said there were no elements of subsidy in the loan offer. Greece has to find about 11.5bn euros ($15.7bn; £10.2bn) by next month to meet its financial obligations. Its total debt stands at nearly 300bn euros. It intends to auction a 1.2bn euros package of treasury bills on Tuesday.
Reuters | Thu Apr 8, 2010 | 7:15pm IST
Greece is at risk of a rating downgrade if high borrowing costs persist and the government does not manage to address the consequent deviation from its deficit-cutting programme, a Standard and Poor’s analyst said. Asked if the highly indebted country was at risk of default, S&P’s senior analyst for Greece Marko Mrsnik said: "No, at the current rating level, the risk of default is still very low."
Markets pounded Greek bonds and banking stocks on Thursday, driving its borrowing costs to new highs and pushing it closer to tapping a last resort EU-IMF safety net. Mrsnik said Greece’s sovereign rating depends on the full implementation of its austerity programme and on whether growth performance will be robust enough to support the consolidation effort.
"If, however, the high borrowing cost persists and the consequent deviation from the consolidation path is not addressed, this would in our opinion, delay the reversal of the government debt
Reuters | Thu Apr 8, 2010 | 4:50pm IST
Markets pounded Greek bonds and banking stocks on Thursday, driving the debt-stricken euro zone member’s borrowing costs to new highs and pushing it closer to tapping a last resort EU/IMF safety net. The government has failed to reassure investors it can handle the crisis this week, and a dearth of details surrounding the international lifeline has piled pressure on a country already struggling to cover its wide fiscal deficit. The situation worsened on Thursday, with the premium investors demand to buy Greek rather than benchmark German government bonds surging to a record high since Greece joined the euro for the third day in a row. “Spread levels today are insane, they are not levels for a euro zone country,” said Panagiotis Dimitropoulos, treasurer at Millennium Bank in Greece. “It seems Greece is being pushed towards the aid mechanism.”
Greece has insisted it prefers to borrow from markets and will use the European Union/International Monetary Fund safety net agreed last month only as a last resort. It aims to cut its public finance deficit by almost one third to 8.7 percent of gross domestic product this year, and Finance Minister George Papaconstantinou said its fiscal consolidation was proceeding as planned. But on Thursday, the 10-year Greek/German government bond yield spread spiked almost half a percentage point to 456 basis points. The two-year Greek government bond yield surged more than 100 bps to almost 8 percent. Both are levels far above the 7 or so percent that the government says is sustainable.
“I want to repeat, with emphasis, that the country continues and will continue to borrow normally,” Finance Minister George Papaconstantinou told the parliament’s economic affairs committee. “The country has a programme, a plan, and the budget is being executed normally and is within targets.” Germany, too, held
CNN | March 26, 2010 | 7:32 pm EDT
German Chancellor Angela Merkel has described the agreement to secure an economic bailout plan for Greece as important for the stability of Europe’s common currency. "I think Europe proved its capacity for action on a major issue," Merkel told a news conference Friday, in quotes carried by Agence France-Presse. "For all of us it is important that our common currency… remains stable and that’s why yesterday was important for the euro." Greek Prime Minister George Papandreou said It was "an important decision we took today," according to CNN affiliate ERT. "It guarantees the protection of financial stability in the euro zone." The rescue plan, approved by all 16 leaders of the euro zone countries meeting at a summit in Brussels on Thursday, involves funds from both Europe and the International Monetary Fund. EU leaders had been reluctant to accept outside help for one of their own.
According to a joint statement on the EU Web site, a "majority" of the euro zone States would contribute an amount based on their Gross Domestic Product (GDP) and population, "in the event that Greece needed support after failing to access funds in the financial markets." This means that Germany will be the main contributor, followed by France. Although no specific figure was given for the total value of the package, a senior European Commission source was quoted by Reuters.com as saying it would be worth around $26.8 billion. Lorenzo Bini Smaghi of the European Central Bank told CNN that the plan was not the ideal solution but "politically it’s what has been decided and we have to make it work." He added that it was vital the situation was not repeated in future.
BBC News | Thursday, 25 March 2010 | 12:26 GMT
Chancellor Angela Merkel has told Germany’s parliament she will insist that the IMF is involved if debt-ridden Greece needs to be bailed out. Before heading to an EU summit in Brussels, she made clear she would disappoint other countries like France, which want a purely EU bail-out. Mrs Merkel also said she would seek EU treaty changes to stop future crises. Arriving at the summit, Greek Prime Minister George Papandreou urged EU leaders to act to stabilise the euro.
‘Strengthen the eurozone’
The EU’s single currency hit a 10-month low against the dollar on Wednesday after a credit downgrade for Portugal, which is also struggling with heavy debts. The aim should be to ensure "we strengthen the eurozone, we strengthen the euro and we stabilise the euro currency," Mr Papandreou told reporters. Germany blocked a pre-summit meeting of eurozone leaders to discuss the Greek crisis. Berlin apparently believes there is no point in such a meeting because a deal is not imminent. But diplomats said such a meeting could still take place on Thursday evening after the close of official business for the day.