The ECB left interest rates unchanged at 1% as it published new forecasts underlining the impact of the sovereign debt crisis on activity in the 17 countries that use the single currency. While the bank's president, Mario Draghi, said a deal was "very close", his economic staff said they now expected eurozone growth this year of between -0.5% and 0.3% (down from a previous forecast of between -0.4% and 1%). In 2013, they forecast growth of between 0% and 2.2% (down from between 0.3% and 2.3%) On inflation, the ECB expects the consumer price index to be between 2.1% and 2.7% (from 1.5% to 2.5%). Analysts said that the pick-up in inflation ruled out any further cuts in the cost of borrowing for the time being. Matters will come to a head soon. The IMF must decide by September whether Portugal needs more money and debt relief. If Portugal now spirals into a Grecian vortex, large haircuts loom. This time EU leaders will have to accept that their own taxpayers will suffer losses - avoided until now - or violate their pledge. Bondholders are not waiting to learn whether Europe will keep its word this time. There has been no rally in Portuguese debt since the ECB flooded banks with €1 trillion. Ten-year yields are stuck at 13.2pc. Return to market access is a distant dream. The risk for Europe is that investors will charge a "political risk" premium to invest in any EMU country subject to EU legal whim. The greater risk is that Euroland's crisis rumbles on as fiscal contraction in Italy and Spain plays havoc with debt dynamics, and reforms come much to late to close the North-South trade gap. Europe's handling of Greece has guaranteed that global funds will rush for Club Med exits at the first sign of trouble. The next spasm of the debt crisis will that much dangerous if it ever comes. As the saying goes: Hell hath no fury like an abused bondholder. More than 75% of private-sector creditors have pledged to take part in Greece's €200 billion ($262.98 billion) debt swap, an official said.
Access Investments-Building Awareness - European Union-ROMANIA
Friday, March 9, 2012
An eerie calm seems to have settled across global markets in the lead up to today's decision on a Greek bond swap .
Subscribe to:
Post Comments (Atom)
10 comments:
March 8th-Bloomberg- '' In Germany, factory orders fell 2.7 percent in January, led by a 5.5 percent slump in export demand, the ministry said yesterday.
Global stocks enjoyed their best day in more than two months and the euro rose 1.5 cents against the dollar on hopes recession in the eurozone would be short-lived. The cost of crude was up nearly two cents a barrel in London to just over $126.
Traders said there was relief that Greece had won enough support from its private sector creditors to trigger a second bailout – worth €130bn (£109bn) – from the International Monetary Fund, European Union and European Central Bank.
Lorne Baring, managing director of Swiss-based B Capital Wealth Management, said: "The Greek debt restructuring looks set to be passed and sets the scene for an orderly default whereby debts owed by Athens will fall by 2020 to an estimated 120% of GDP. That's another short-term worry out of the way, despite the overlooked fact that this is the biggest sovereign default in history.
"A managed bust is better than a chaotic one and finally reality over Greece's insolvency dawns on the investors who still own its bonds."
Greek officials reported high levels of take-up by private creditors for the deal. After markets had closed last night one senior government official told Reuters the take-up had been close to 95% an hour before the deadline, more than enough to banish fears that renewed crisis in Greece would hit economic growth and financial markets around the world.
BS,BS,BS ---- Industrial production rose by 1.6pc, following a 2.6pc contraction in the sector in December. Economists had forecast a smaller, 1.1pc increase.
The German industrial sector shrank by 0.2pc in the final quarter of 2011 and the latest figures lifted hopes that the sector will grow in the first quarter of 2012 overall.
Jennifer McKeown, senior European economist at Capital Economics, cautioned however that it was not all good news.
"This does not change the fact that the industrial sector, previously the key driver of the Germany recovery, is weakening. January's rise in output did not fully reverse the previous month's fall and the annual growth rate is now just 1.7pc."
Production in the construction sector rose by 4.3pc, while energy production grew 1.7pc. Manufacturing growth was 1.4pc
1.The Greeks will announce participation between 75% and 90%
2.The CAC clause might be activated/might not but No Credit Event and No Default will be declared by anybody
3.The EU Fin Min will decide Greece had met the conditions and will release the the Greek billions
4.Greece defaults on its official held debt/ECB few months down the road likely before the end of 2012
Easy.
Whatever happens, Greece will get the full 130 Billion bailout - this will go into an escrow account and will pay out the French and German banks that are owed money by Greece.
Greece will default close of business 23rd March, the taxpayers having been ripped off again to bail out the banks.
Fun fun fun. Rinse and repeat for Portugal.
Greece has been edging towards a deal with its private-sector creditors as the hours ticked away towards Thursday's deadline for the agreement required to trigger a fresh €130bn bailout for its troubled economy.
As the standoff between the government in Athens and bondholders reached its climax, the body representing financial institutions in the talks said investors holding more than 40% of Greece's debt had now agreed to accept losses of more than 50% on their bonds.
The Private-Creditor-Investment Committee (PCIC) for Greece said the list of those institutions signed up to the deal included RBS, HSBC, Société Générale and Germany's Deutsche Bank. A statement by the PCIC gave strong backing to the private sector involvement in a Greek debt write-down necessary for it to receive financial help from the IMF, the EU and the European Central Bank.
'Time is Running Out' for Gender Quotas at Work
Debate has been fierce in Berlin following the release of new wage inequality data and an EU threat to enforce a binding gender quota on companies. Amid growing support for such measures, German commentators agree that the dismal situation must change, but doubt that a quota is the best solution.
When it comes to Greece's finances, it's rare that targets are met and things go according to plan.
But this bond deal looks like it's going that way.
Reports suggest Greece is on course to achieve the participation rate it needs for the exchange to pass with fewer problems than expected.
Over 75% of bondholders are said to have signed up; the prime minister said he expected "maximum participation".
The brinkmanship strategy from the government seems to have worked. Greece's Finance Minister warned that bondholders waiting for a better deal would be forced into the swap and would simply not receive the value of their original bonds.
If the deal goes through, there will be a new glint of hope here: a sense that Greece would be in a better position to begin to manage its debt burden.
A small but significant step forward for this recession-stricken country.
Stefanos Manos, a former Greek minister, told Bloomberg TV why the debt swap is good for Greece, but maybe not the EU:
Greece faces fewer interest payments. We got a reprieve. Whether it is good for Europe I have my doubts.
While Greek Government spokesman Pantelis Kapsis said the result was a "vote of confidence" in Greece's ability to carry out deep structural reforms to its stricken economy.
Post a Comment