In the wake of this week's deal to prevent a Greek default, Olli Rehn ( the definition of "incompetent"), the EU's economic and monetary affairs commissioner, insisted that a plan to merge two eurozone bailout funds was vital over the next 10 days. Mr Rehn is seeking to fuse the existing European Financial Stability Facility (EFSF) fund, worth €250bn, with a new European Stability Mechanism (ESM), to be created this summer and worth €500bn. "This is very important to show that we have credible instruments to ensure we have financial stability in Europe," he said. "It is also very important to encourage our international partners in the G20 and IMF to move in order to increase the resources of the IMF, which form a global financial firewall but also contribute significantly to the European financial firewall." The issue will dominate an EU summit in Brussels on March 1 and is expected to spark a major political battle when Germany's parliament debates the Greek bailout in Berlin in next week. The body representing Greece's private-sector creditors said Tuesday it recommends they "carefully consider" the new deal. But the Institute of International Finance stopped short of any clearer endorsement of the deal, which will force bondholders to trade their existing bonds for new bonds offering a coupon of 2% until 2014, 3% between 2015 and 2020, and 4.3% thereafter. "This is an unprecedented level of voluntary debt reduction," said Charles Dallara, the IIF's managing director, who headed the talks on behalf of private creditors. Though Mr. Dallara emphasized it is up to individual investors to decide whether or not to accept the deal, he expects a big take-up. "Despite a huge loss of value for investors, it holds a number of positive dimensions," Mr. Dallara said. "Losses will be substantial but they are contained." BRUSSELS (AP) — The countries that use the euro pulled Greece back from an imminent and potentially catastrophic default on Tuesday, when they finally stitched together a 130-billion-euro ($170 billion) rescue they hope also will provide a lifeline to their common currency. But the patchwork of measures — including the implementation of austerity measures in Greece and approval by skeptical German and Dutch parliaments — required to give the rescue even a chance of success means it’s unlikely to be the end of the Continent’s debt crisis.
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European banks, responding to new regulations and wary of lending, are stashing increasingly large sums of money at central banks around the world in a collective flight to safety.
The eight giant European banks that have disclosed their annual results in recent weeks reported holding a total of about $816 billion in cash and deposits at central banks as of Dec. 31, according to calculations by The Wall Street Journal. That is up 50% from a year earlier, when the same banks were holding roughly $543 billion
The big holdings of cash and deposits at central banks are taking a bite out of bank profits. BBVA, Spain's second-largest bank after Santander, said it was holding nearly €31 billion of those funds at the end of last year, up 55% from a year earlier and 45% from last summer. The bulk of the funds were in Europe, but they were also in central banks in Latin America and at the Fed.
BBVA said those assets earned an average yield of 0.99% in the fourth quarter. That compares with the average yield on the bank's overall assets of 4.41%.
It is unclear whether the deposit levels will remain elevated for the foreseeable future. Some bank executives say it is likely a long-term phenomenon as banks adapt to new regulations. Others say banks might find better uses for the funds once market conditions improve.
"There is no need to keep such a huge buffer once things would stabilize and calm down," said BNP's Mr. Bonnafe. "So this is something we are going to manage in order to try and optimize between security and cost."
Deutsche Bank's liquidity reserves "are the highest ever in the history of the bank," CEO Josef Ackermann said earlier this month.
Some European banks acted at the behest of individual regulators. Spain's Santander—which increased the amount it deposited at central banks to €97 billion at the end of December, up 58% from June 2010—said the rise was partly due to tougher liquidity rules in the U.K. and Brazil, where it has major operations.
At times in recent days, a deal had seemed impossible, given the near complete collapse in euro-zone trust in the Greek political class in general and opposition leader—and likely next prime minister—Antonis Samaras in particular. Even now, a deal remains conditional on Greece agreeing to further humiliating sacrifices of sovereignty with bailout money ring-fenced to prioritize payment of debt interest and the euro zone given enhanced powers of scrutiny over Greek affairs
After weeks of brinkmanship, bad blood and missed deadlines, a Greek debt deal may finally be within reach. European finance ministers will meet on Monday to decide whether to approve a €130 billion ($170.9 billion) bailout package designed to bring Greece's debts down to 120% of GDP by 2020.
the euro zone needs to acknowledge that there can be no solution to the euro crisis until the fate of its banking system is separated from that of its sovereigns. That will require the creation of pan-European deposit insurance and ultimately euro bonds to provide banks with an alternative risk-free asset.
Unless this is what euro zone finance ministers have in mind as they sit down on Monday, they should have no business signing the deal. To go ahead with a flawed Greek bailout without a plan to accelerate euro-zone integration and create a functional monetary union would be an act of calculated cynicism that would simply deepen Greek—and European—agony.
Alexis Tsipras, leader of the Radical Left, said the deal was "signed by a government that had neither been elected nor invested with a popular mandate".
Fotis Kouvelis, who heads the Democratic Left, said the package "did nothing to stimulate growth". Instead, it condemned Greece, a country trapped in a fifth year of recession, to an even deeper economic death spiral.
Such dissent might not matter if leftwing parties had not also seen their popularity ratings soar on the back of opposition to austerity. For many Greeks, the left's ascent is the best reflection yet of the anger unleashed by successive waves of cuts and tax increases in a nation whose economy has worsened dramatically under international tutelage.
An overwhelming 90% of Greeks are opposed to the interim government and its decision to tackle the crisis by pursuing a tough regime of austerity reform. Unemployment is nudging a record 21% mostly as a result of the collapse of small business.
Greek elections in April are likely to sweep away the political class tainted by the hated "Memorandum" of the EU-IMF Troika, with the once dominant PASOK party down to 13pc in the latest poll and votes peeling away to the Communists, the Democratic Left, and Syriza.
Alexis Tsipras, the Syriza leader, told the Greek parliament on Tuesday that his country was victim of a "terrorist" assault. "This agreement is binding only on those who signed it. The accord carries the signature of a government with no popular legitimacy. It does not bind Greek democracy, or Greek society, or the Left. Very soon the sovereign people will regain their sovereignty," he said.
Greek nationalists of all stripes are enraged by EU demands for an escrow account to dock Greek revenues at source for debt repayment, with an EU taskforce chief stationed permanently in Athens to enforce reforms. "If Europe keeps adding insult to injury, this is going to turn explosive," said Dimitris Daskalopoulos, head of the Hellenic Federation of Enterprises.
As all the Greek bail-out funds will be paid into an escrow account and applied to debt and interest as a first priority, only the balance will be available for hospitals, doctors, armed forces, teachers, police etc.
The plan assumes a return to 3% economic growth in 2014 (I don't know anyone who believes this is possible; sharp decline is more likely).
If the economic growth/ tax revenue forecast is not achieved and the government has no money, things will get very unpleasant, very nasty indeed.
In these circumstances, desperate people will do desperate things.
However, what will happen in April?
If their is an election as scheduled, then it is likely to elect parties of extreme left and right - neither likely to favour the terms of the bail-out.
If the election is 'verboten', we are into uncharted waters.
Wipeout...
More conspiracy theories from the desperate Europhiles?
Is this another case like Dominic Strauss-Kahn, dethroned from the IMF by international political intrigue - so said the French and other Europhiles.
Now they still show no shame for their self-delusions, even though he has admitted grotesque levels of promiscuity, and the French police are questioning him for alleged 'pimping'.
You may ignore reality, but reality will not ignore you.
Some bond holders who hold the contracts under English law can reject any deal, regardless of any change to Greek law. Indeed, it is more lucrative for them if they do sue for full payment, and it is likely they will.
The ECB and Brussels have set a tyrannical precedent of breaking legal contracts, for their own profit and at the loss to other bond holders; they refuse to pay up fully for their own reckless lending, and encouraging governments to take on irresponsible levels of debt in the EU/euro Project.
There is no workable deal at present, despite all the propaganda spouted by the bankrupt EU/euro/ECB and IMF.
But they have provoked another backlash among disgruntled bond holders - those pension funds, insurers, hedge funds et al.
Litigation can be a lethal weapon in the hands of wealthy clients, armed with a strong evidential line of attack.
Stop the looting.
Start the prosecuting, beginning with the Eurocrat and ECB fraudsters; line up their political collaborators as well.
"Some bond holders who hold the contracts under English law can reject any deal, regardless of any change to Greek law."
That's correct, and I think that the amount of Greek debt governed by English law is around E25bn.
What that means is that the haircuts that cannot be applied to such debt become even more concentrated on the domestic law debt where the Greeks can impose a collective action clause (CAC) retrospectively.
Go back to basics.
Debt cannot be written off.
Debtors must either repay their debts or default.
There is no third way.
Greece has already defaulted on domestic and private debts.
The so called "haircuts" are in reality enforced defaults.
The fact that the banks took this default speaks volumes.
What value Greek debt when taking 26% of the value of the debt now is preferable to holding on to the bonds to maturity.
Europe has overspent. Europe does not have the capacity to support its population with their present standard of living.
The other basic is; No public sector worker or benefits dependent pays sufficient tax to pay either their public sector salary or the state benefits.
All of the debt repayment and all of the cost of servicing the debt and all government expenditure is supported by the private sector and the taxes the private sector pays. The public and the benefits sector contribute nothing.
Europe does not have a big enough, profitable private sector to support its population in the manner to which the people have become accustomed. The readjustment will be long, very hard and extremely painful.
And it hasn't really started yet.
And what is Greece going to do.I guess the extreme right and left will declare default and after that,what are they going to do.There is no eurobond,there are greek bonds that nobody will buy after the haircut.The Bank of Greece can't print euros.They will have to grexit very fast or they will have to live from now on only with what they take in.Let us hope the nationalists(I mean patriots) & communists win and relieve both the Eurozone and Greece by ejecting themselves to the drachma.Schäuble should have stayed hard so that Greece begins with preparations to leave.Now Germany caved in and the other creditors did also-the result Greece is going to wait for the drachma even more.Greece must be axed away.The EU shredded the Lisbon Treaty by converting the ECB to a Anglo-American loose money and cheap credit Anstalt- so they can keep Greece in the EU but outside the euro by simply not taking notion of the Treaty and the law.I hope Greece will grexit in summer,when the EFSF & ESM are both operational and running.They must leave and go back to the drachma.Italy & Spain can't take up guarantees for the greek debt.Make the leave and move on
The one thing that has been missing from all sides of the Greek political class is an acknowledgement that they have taken other peoples money and are now saying they can't pay it back. If they don't like what is happening to them then all they need to do is pay their debts
In effect Greece is in administration, with the EU acting as administrators; the international financial terrorists do not want an official default as this will activate the Credit Default Swaps, insurance policies sold for very,very high premiums to cover such eventualities. These CDSs are floating around the world's financial system to the value of hundreds of trillions of dollars and no one knows exactly where the counter party risk will fall .....what a joke ! When these derivatives blow, it will take the whole global financial system with it....this is why they cannot allow a default and why the Greek people have been sold into bondage.....the save the banksters, again !!
I can smell revolution in the air, those banksters will be hanging from lamposts before too long
Eurosceptics In Denial - Again
"The latest rescue package offers no path out of the crisis"
As Mandy Rice-Davies said:
"Well he would say that, wouldn't he"
The British Chancellor immediately hailed the Greek rescue package as
GOOD FOR BRITAIN.
Eurosceptics have pinned their hopes on tearing down the euro and breaking up the EU on Greece. They have failed dismally, the Eurozone is more united than ever.
Continuing obsessive euroscepticism is cancerous.
No matter what the EU does it is met with yet more scorn.
Eurosceptics need to face reality.
Greece is not leaving the eurozone, nor is it being forced out.
The Greek people are 73% in favour of the Euro
Above all the Greek deal is GOOD FOR BRITAIN.
The only one here in denial is you. This so-called deal will not even come to pass as the bailout funds don't even exist yet. The lawsuits alone will have this "deal" tied up forever. The EU will most likely survive but in a radically different form, and with a much weaker Euro.
You will be making good on your so-called "Challenge" sooner rather than later. Though as a diehard Europhile, I expect you'll continually change the "Challenge" terms, just like your fellow Kommisars have done to Greece - or just not pay out, much like what is going to happen with this so called "bailout".
Greek nationalists of all stripes are enraged by EU demands for an escrow account to dock Greek revenues at source for debt repayment, with an EU taskforce chief stationed permanently in Athens to enforce reforms. "If Europe keeps adding insult to injury, this is going to turn explosive," said Dimitris Daskalopoulos, head of the Hellenic Federation of Enterprises.
Greek finance minister Evangelos Venizelos said the deal had averted the "nightmare" of default in March. "What would have happened today in Greece, in the eurozone, in Europe, and to the world economy if early this morning after 15 hours of talks the Eurogroup didn't approve the programme?" he asked.
His EU colleagues put the best face on the accord, which cuts Greece's debt by about 30pc. Banks, pension funds, insurers, and other private creditors will bear the brunt of the losses, with a change in Greek law if necessary to flush out resisters. The new "haircut" will be 53.5pc on €206bn of bonds, a 74pc writedown with stretched maturities.
Greek elections in April are likely to sweep away the political class tainted by the hated "Memorandum" of the EU-IMF Troika, with the once dominant PASOK party down to 13pc in the latest poll and votes peeling away to the Communists, the Democratic Left, and Syriza.
Alexis Tsipras, the Syriza leader, told the Greek parliament on Tuesday that his country was victim of a "terrorist" assault. "This agreement is binding only on those who signed it. The accord carries the signature of a government with no popular legitimacy. It does not bind Greek democracy, or Greek society, or the Left. Very soon the sovereign people will regain their sovereignty," he said.
Three seperate rallies are scheduled to take place in Athens today. Here's the details, via Living In Greece.
• The ADEDY and GSEE unions (the two biggest in Greece) have called a rally set for 16:00 EET (2pm GMT) outside Parliament in Athens.
• Insurance Fund employees to rally at 12:00 EET (10am GMT) outside OEK Patission and Solomou in Athens.
• PAME Communist workers group will begin a rally at 17:00 EET (3pm GMT), starting from Omonia and converging with union protest outside Parliament in Athens
• A second rally is being organised in Thessaloniki begins at 18:30 EET (4.30pm GMT) at the Venizelos statue.
Here we are less than 36 hours into the Greek Bail-out agreement and it's all starting to unravel.
How much will the IMF contribute? Unknown because it still has to fill the begging bowl at the G20 summit this weekend.....
Will the G20 give more before the EZ build a proper firewall? No.
Will the EZ be able to get the funding in place for the firewall? Not if their electorates have anything to say about it.....
First to go is Sarkozy, who will be the next EZ leader to "get the sack" by his electorate and not the EZ? Apart from Papademos of course......
Next weeks headline "Greek debt Crisis takes a new turn"! It's like a very bad "groundhog day"...... Except there doesn't seem to be a way out of this one.....
I guess all parliaments will vote for the bailout, as in these countries governments will have checked beforehand whether they are covered. The remaining problems are not with the bailors but with the bailee.
The Greek in the street is going to suffer big time and losing 'sovereignty' (what an awful word to depict that you, the loser, are really a hopeless loser) will not sit well with irresponsible politicians and unions. A lack of any plan to instill some vitality in the Greek economy gives you the shivers as to what to expect when a whole society is not prepared to pick up the pieces and start again, but desperately torches everything in sight.
Where is the Greek voice of moderation?
"Greece braced for bailout protests"
I feel so sorry for the ordinary Greek person, it is truly going to be absolute misery for them, but the type of protests will not have much of an impact, as I believe it will not be properly focused. The true villains are the banking elite, they really are and it needs tackling. In a nutshell they are too powerful, they drive the agenda through greed and the ordinary person suffers. More people need to understand that Goldman Sachs fudged the figures to enable Greece to join the euro, it was total madness.
The occupy wall street movement needs a higher profile, otherwise it will run out of steam, have you noticed that the mainstream media have pushed this story into the background, maybe it is because the rich elite control the mainstream media. It is sad that that rich multinational corporations were allowed to get too powerful, the power has been taken away from the people, this is evident in Greece and Italy, they currently have Prime Ministers that have not been elected and it seems that these countries will lose more of their sovereignty. The Greek bailout will not solve the problem, Greece is going to suffer the paradox of thrift due to the severe austerity measures, it simply cannot grow, so in a nutshell, the problem has been kicked further down the road. A default would have been just as bad, but at least the problem would have been faced, rather than a worse default later on.
The western economies face major difficulties following the debt binge. Banks over leveraged, indeed never in the history of banking has so much money been borrowed from tomorrow.
Below is a link to an animated cartoon I have done that tries to explain reality
So basically, Europe just thrown 130 billion pounds away and the people of Greece are likely to suffer financially for many, many years. Another bailout may well be needed and Greece may still even leave the Euro.
Are there any possitives that have come out of last nights deal??
There must have been something? - ideally it needs to be something I can understand too...
is upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal.
I'm glad she got reshuffled. She sounds like a populist and alarmist. There's no measure that covers that of course. She's alluding to the fact that the Bank of Greece was coerced into a loan to nazi germany, during the war, that hasn't been paid pack.
That historical basis has mutated into the nazis stealing the gold from the bank of greece, out on the internet, recently.
Not the case, it was handed over to the retreating british troops in greece, who got it out and freighted it away, in 1941.
That having been said: any gold that the Bank of Greece may have in its vaults is going to be important, should they leave the Euro. As one of the only actual reservoirs of confidence for a new Drachma. It won't be enough, but I'm pretty sure nobody wants to take the stuff.
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