Unfortunately the restructuring merely signalled the end of the first act. Yes, the €206bn bond exchange - the largest in history - is a step forward with investors agreeing to take a significant haircut. The International Swaps and Derivatives Association belatedly announced that this was a credit event meaning holders of Credit Default Swaps (insurance against this happening) would be paid some $3.2bn. However, the restructuring is only likely to be the first of many.German Finance Minister Wolfgang Schaeuble has said Greece is a "completely unique" event and praised Spain for making "great progress". He stated that "Spain is not the next Greece". He added that the second Greek bailout is to be signed this week and that his goal is a financial transaction tax at EU27 level "The deal has wiped some €105bn off Greece's €350bn debt mountain and secured a next round of financial support. Eurozone finance ministers have already agreed to lend €35bn upon completion of the exchange and may make a further €95bn available. "But the aim of reducing the country debt-to-GDP ratio from 160pc to 120pc by 2020 still looks an impossible task without further write-offs; Greece's economy contracted by 7.5pc in the last quarter of 2011. This comes at a time when the government is pushing through further austerity measures, including spending cuts equal of 1.5pc of output, meaning more job losses. The country may well be in the midst of one of the longest recessions in modern history.German Finance Minister Wolfgang Schaeuble has said Greece is a "completely unique" event and praised Spain for making "great progress". He stated that "Spain is not the next Greece" ....Portugal has already been sacrificed by the eurocrats, I see, as their talk now jumps to "Spain is not Greece"... They're already trying to draw up a defensive line at Spain. Yeah, that'll work - especially after the financial world will have by then already broken two eurozone countries, and is then focusing all its attention on Spain.-----It's going to be a long, hot summer I'm afraid !!
Access Investments-Building Awareness - European Union-ROMANIA
Tuesday, March 13, 2012
Whatever you believe, the latest phase of the rescue should at least allow Greece to repay a €14.4bn bond due in just over a week's time
Unfortunately the restructuring merely signalled the end of the first act. Yes, the €206bn bond exchange - the largest in history - is a step forward with investors agreeing to take a significant haircut. The International Swaps and Derivatives Association belatedly announced that this was a credit event meaning holders of Credit Default Swaps (insurance against this happening) would be paid some $3.2bn. However, the restructuring is only likely to be the first of many.German Finance Minister Wolfgang Schaeuble has said Greece is a "completely unique" event and praised Spain for making "great progress". He stated that "Spain is not the next Greece". He added that the second Greek bailout is to be signed this week and that his goal is a financial transaction tax at EU27 level "The deal has wiped some €105bn off Greece's €350bn debt mountain and secured a next round of financial support. Eurozone finance ministers have already agreed to lend €35bn upon completion of the exchange and may make a further €95bn available. "But the aim of reducing the country debt-to-GDP ratio from 160pc to 120pc by 2020 still looks an impossible task without further write-offs; Greece's economy contracted by 7.5pc in the last quarter of 2011. This comes at a time when the government is pushing through further austerity measures, including spending cuts equal of 1.5pc of output, meaning more job losses. The country may well be in the midst of one of the longest recessions in modern history.German Finance Minister Wolfgang Schaeuble has said Greece is a "completely unique" event and praised Spain for making "great progress". He stated that "Spain is not the next Greece" ....Portugal has already been sacrificed by the eurocrats, I see, as their talk now jumps to "Spain is not Greece"... They're already trying to draw up a defensive line at Spain. Yeah, that'll work - especially after the financial world will have by then already broken two eurozone countries, and is then focusing all its attention on Spain.-----It's going to be a long, hot summer I'm afraid !!
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well received speech at the annual British Venture Capital and Private Equity Association's annual chairman's dinner, Mr Tyrie said the current lull in the single currency's crisis, after last week's Greek bond swap, should be used to engineer a permanent exit for Greece.
The economic and political challenges facing the country if it stays in the eurozone would be too great to be sustainable, he argued.
Mr Tyrie also said increasing the size and fire power of the IMF was essential. But he also warned the body should avoid getting too close to the eurozone in future but should instead "get tough" with the single currency bloc.
Speaking to some of the most powerful investment groups in the UK and Europe, Mr Tyrie said the IMF should not deal with the countries in the eurozone as "partners" but should approach them from "the other side of the table" given it was the "only fire brigade in town".
Mr Tyrie also urged the UK and others to stick with the principles of free trade having come through the worst of the crisis without "beggar thy neighbour" devaluations.
r Spiegel reports:
Greece is particularly keen to change the perception that it is unfriendly to Germans. It filled almost an entire hall with white sheets, Aegean blue posters and friendly ambassadors for the country's myriad sights, especially those outside of the conflict-ridden Athens.
"We want to make sure that whatever bad sentiments there are between the two countries is reversed in the long term," said Pavlos Geroulanos, Greece's Minister of Culture and Tourism amid a white-draped display. What one sees on the news "does not reflect general sentiment among Greeks," insists Geroulanos. "The Greeks are very good to the Germans."
Overall visitor arrivals and tourism revenue were up 10 percent in Greece in 2011, but a dip in early seasonal bookings for 2012 is causing concern. "The Greeks are wringing their hands in despair waiting for holidaymakers," said TUI Germany Chief Executive Volker Boettcher, a day before the trade show started.
"This is a crucial year for us," said Geroulanos. "The best way to help Greece is not with handouts, but by tourism. That makes sure whatever packages are given are working better."
think, we should just see these games with artificial projections of figures in the year 2020 as what they are. Just the same attempt to political pressure, to a rough orientation guide line as the fiscal compact and its maximum annual indebtedness rates.
All is about whether Greece gets back to some sort of growth. If that doesn't happen until 2014 or 2015 or 2016, all projections are futile. And if we witness substantial reforms and a return to at least modest growth, noone will mind if state debt would be at 129%, even not at 131 or 133%.
If markets would get confident about Greece, these numbers won't have that significance.
It's just the same with Rajoy's 5.8% instead of 4.4%. If he wouldn't have retorted bluntly that this was only a sovereign affair of the Spanish state, but instead if he had communicated what is exactly behind his budget figures, showing that he's got a comprehensive, stringent plan to logical restructuring, then possibly the reactions from the outside - the markets, the rest of the EZ leaders - could have been slightly more calmed.
Wanted to add, since Greece, at least in my humble opinion, is only the canary in the coalmine, there are also developments in spain:
Ahead of the general strike planned for 29th of march, about a million people demonstrated against the "labour reform" that is meant to reduce the deficit. About 500.000 people demonstrated in Madrid and there were demonstrations in 60 cities.
One would say this is pretty big news. It is totally absent in our media. Lest we get ideas, I guess.
http://www.lemonde.fr/europe/article/2012/03/11/importantes-manifestations-en-espagne-avant-la-greve-generale-fin-mars_1656203_3214.html (in french)
A good leading article from athensnews. Good to see the lack of absorption of EU structural funds heading up the agenda. (Guardian Economics team: please take note).
Kickstarting the engine
Greece has indeed been caned in the last months with the dreaded stick of austerity, but it is getting a carrot - a small one, but a carrot nonetheless.
The carrot is 12 billion euros in structural funding available to Greece until 2013, but as yet unclaimed, and European Commission President Manuel Barroso vowed this week to speed up the distribution.
The success of this government, and the ones that follow, will be measured by how they can unlock these funds with the least adverse social impact so as to kickstart the economy. And they can only do this if they convince those willing to fill up the tank that they can actually make the car run.
A minor quibble. €12 billion isn't actually a "small carrot". although I don't think the increased take-up of EU structural funds is going to deliver quick results, unless the new government actually brings in EU personnel to get the paperwork in order. Applying for, monitoring and spending EU funding is a very complex procedure.
I'm a bit more hopeful for fast effects from EIB financing to small business. That has bureaucratic hurdles too - the funding is given out on the basis of co-financing. And trying to find a partner to invest in greece at the moment is rather challenging. The EU Taskforce Greece is supposed to report on how to speed that up by the end of the month. I suspect they're going to have to temporarily ditch co-financing
Putting € 130 billion into greece, in this situation, hardly qualifies as "grandstanding and empty rhetoric", does it?
As regards the "joke of a fiscal pact", I suspect that many EZ governments really do see it as a distraction. Just get the ratification out of the way as quickly as possible, and move on.
A big mistake, in my view. As big a mistake as germany breaching the original Stability and Growth Pact, back in 2002. They'll find that Germany and most of the other creditor nations will want to stick to it.
It isn't incompatible with growth, in fact. That's just deficit-addiction speaking, in my view. Though they're probably going to have to up the EU budget to get more grants available.
And here's another interesting bit, from the Sueddeutsche (translation mine):
Proposal from Germany and eight other countries - European countries want to enact financial transaction tax.
Before the middle of the year, the nine european finance ministers want to enact a financial transaction tax. The tax is controversial, the UK and Sweden are against. Nonetheless, the proponents hope all 27 EU countries apply it.
The tax has been subject of debate for years. German finance minister Wolfgang Schäuble (CDU) and eight of his colleagues are now forcing the debate.
In a joint letter to the danish finance minister Margrethe Vestager the nine are requesting an urgent decision. In the letter, known to the Sueddeutsche, it is said: "We are convinced that a transaction tax should be implemented on a european level. The tax would be a critical instrument to secure a just participation of the financial sector to the costs of the financial crisis."
http://www.sueddeutsche.de/wirtschaft/vorstoss-von-deutschland-und-acht-weiteren-staaten-eu-laender-wollen-finanzsteuer-durchsetzen-1.1306300
The countries are Germany, France, Spain, Austria, Belgium, Finland, Portugal, Italy and Greece. Note: 9 countries suffice to introduce such a tax - albeit in those countries alone.
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I would think this is evident. The fact that privatisation, reduction of state employees and labour reform are the first things demanded to solve a crisis that was started by casino capitalism, is preposterous without having stringent re-regulation and such a tax.A minimum tax for big companies that manage to avoid all taxes through financialengineering is also being eyed here in Belgium. Without such measures, there simply will be mayhem. Which, I'm afraid, the powers that be are prepared for / prepared to neglect
The Greek General Election is going to attract a whole load of attention,I guess,because those representing the Troika are not going to allow the Greeks a democratic election.And how would they stop that happening?
At the first sniff of Greeks demanding a real say in all of this,the Bankers'Dictatorship will do anything to stop it.
Who is this "dictatorship"? And what can they do?
Home of democracy!
As I keep pointing out on these threads, all the opinion polls seem to show the Greeks want to stay in the EZ. This deal is the only way they can do that.
When we start to see polls saying the Greeks would rather have a full default and leave the Euro - and we see politicians voting against these wishes, then we can suggest democracy is being undermined.
IMO, what we're really seeing is that it's hard to be both up to your eyeballs in debt and truly free
Greece was able to write off 100 billion euros worth of debt in exchange for a 130 billion rescue package of new debt, of which Greece itself will receive 19%, or about 25 billion, so that it can continue to operate as an ongoing concern. Somehow Greece is in a better position than before, with more debt and less sovereignty and still---by virtue of sharing a common currency---trying to compete toe-to-toe with the likes of Germany and the Netherlands, kind of like being the Yemeni National Basketball team in an Olympic bracket that includes the US, Spain and Germany. At least a "within the euro" default prevented bank runs in Portugal, Spain, Italy et al.
It's pretty clear that Greece is no better off today than it was before the debt deal, however the bankers have maintained their vice like grip and simply exchanged new debt for old and a lien on Greece's gold and other assets of value. I suggest you take a step back and look at the big picture.
One thing I do think on that is the German view on austerity is too stronger medicine for much of the EZ, and ultimately if they carry on with this the whole lot will collapse.
and if they don't carry on with it, german popular support for the Euro (and probably the EU) will collapse. Fiscal Conservatism isn't just a CDU/CSU/FDP value, it's shared by the SPD and Greens too. This is just something that's different about german political culture. Fiscal Conservatism is a vote-winner here.
Peer Steinbrück, the SPD Finance Minister in the grand coalition with Merkel in 2008, and one of the likeliest Chancellors or Finance Ministers after an election in 2013, gave an interview in 2008 to newsweek
Newsweek: What is wrong with the stimulus proposals?
Steinbrück: The speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing. Our British friends are now cutting their value-added tax. We have no idea how much of that stores will pass on to customers. Are you really going to buy a DVD player because it now costs £39.10 instead of £39.90? All this will do is raise Britain's debt to a level that will take a whole generation to work off. The same people who would never touch deficit spending are now tossing around billions. The switch from decades of supply-side politics all the way to a crass Keynesianism is breathtaking.
You might be forgiven for thinking that was George Osborne talking. But that's the SPD finance expert talking about "crass keynesisnism".
All forms of the state have democracy for their truth, and for that reason are false to the extent that they are not democracy.
Marx, Critique of Hegel’s Philosophy of Right (1843)
http://www.marxists.org/archive/marx/works/subject/quotes/index.htm
I don't see how you arrive at the conclusion that protests in Spain are likely to induce higher youth unemployment.
I didn't mean that it would induce higher youth unemployment. I meant that it defends a system that makes high youth unemployment.
If one is a permanent employee in spain, it's extraordinarily difficult and expensive for the employer to make you redundant. But spain has a very high proportion of (almost all young) people on temporary employment contracts, where the contract can either run out, or be terminated at little cost. So they bear the brunt of redundancies and unemployment in any downturn.
I'll give you more detail on this if you want, but basically: the unions are grimly defending a job-market that creates an infrastructure for high youth unemployment.
I agree that an FTT obviously would never be agreed to by the UK government, as it is a wholly owned subsidiary of the City ;-) I am curious to see whether the talk of it by those countries is more than just posturing. However, also looking at current debate here and in France, it is clear that measures along those lines will have to be taken to avoid serious social unrest if more austerity is imposed.
I have very little illusions about who the masters of our politicians are though. Socialists over here have agreed to not having a fullblown parliamentary investigation into the Dexia debacle, which is a Damocles' sword to the tune of tens of billions hanging over our head...
About the german position - I also feel that austerity and the fiscal compact is USED to sell the bailouts to the german people, as a conditio sine qua non. I do not regard the compact as a "detail" or minor thing - it means relinquishing national sovereignty over the budget...and the german high court seems to agree. At this moment, Germany seems to be the only real democracy left in Europe at times.
But reading the comments both at the Sueddeutsche and the Frankfurter Allgemeine - it would seem the average reader is well aware who is being had to the advantage of whom. Very little of the german v greek division to be seen too. They understand the bailout is for (partly their) banks, not the people.
On forums for more popular newspapers however, also over here, people are guided by populism, nationalism and are being played by the artifical us v them in the media.
And those underinformed people are the majority...
It might still be adversely affected depending on how the FTT is designed.
IIRC the Sarkozy/European Commission (or is it parliament or both ?) proposal is that any transaction anywhere in the world would be caught if one of the participants had its HQ in the Euro-zone, or at least one of the countries signing up for it.
Indeed, a UK bank doing a deal in London ( Or a US bank in New York) with a French bank's UK (US) subsidiary is in theory liable also.
Now, I doubt record-keeping will be quite so good as to enable the French regulator to catch all transactions (harder with non EU or Euro-zone domiciled firms) and I'm sure firms will find ways round it - I can think of a few that might work.
In the last resort, a lot of EZ banks HQs could find their way to London, Switzerland or even further afield.
But as London could be affected I reckon the UK has a right to comment on the proposal.
"How much money is really going to Greece?"
Well some is bailing out the Greek banks to stop the whole Greek banking system from collapsing.
I don't know why people think that Greece's upcoming elections are likely to be undemocratic. There is nothing to suggest that at all. Also, those who've made the point that Greeks want to stay in the EU and EZ make a very good point because that's just what most Greeks want.
The problem is that although I do not want Greece to have a disorderly default as I believe it would be catastrophic, the bailout terms are too punitive and will force Greece into a default in the near future anyways.
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