Global stock markets bounced back on Friday after European Union leaders reached agreement on a €120bn (£105bn) bailout for Greece. Most Asian markets were up, with the Nikkei in Tokyo gaining 0.85% to 9678.71 and Hong Kong's Hang Seng rising 1.6% to 22,115.24. The FTSE 100 index in London opened 75 points higher. On Thursday, it closed down 98.61 points at 5674.38 after downbeat comments on the state of the economy from the US Federal Reserve chairman, Ben Bernanke. European leaders agreed on Thursday night to launch a fresh bailout of Greece, assuming the country passes an austerity package next week. Britain is to be spared from taking part in the rescue after leaders accepted David Cameron's argument that the bailout should be borne by the eurozone. The rescue will be provided by Greece's "euro partners and the International Monetary Fund", meaning that Britain is exempt from the European part of the package. Germany had been insisting that the bailout should be partly funded by all 27 EU members, but backed off. Without the final tranche of last year's €110bn bailout – €12bn from the eurozone and the IMF – Greece would be broke by mid-July. Brent crude oil rebounded by more than a dollar to $108.70 a barrel on Friday morning, after tumbling 6% on Thursday when the International Energy Agency announced the release of 60m barrels of emergency oil supplies on the market in an attempt to stem soaring petrol and other energy prices. US crude climbed to $92.34 a barrel. It is only the third time in the 37-year history of the IEA that oil has been released in this way and follows repeated calls on Opec to turn on the taps and bring down the price of oil.

Much of Europe is now engaged in achieving quick reduction of public deficits through drastic reduction of public expenditure and it is crucial to scrutinise realistically what the likely impact of the chosen policies may be, both on people and the generating of public revenue through economic growth. The high morals of "sacrifice" do, of course, have an intoxicating effect. This is the philosophy of the "right" corset: "If madam is at all comfortable in it, then madam certainly needs a smaller size." However, if the demands of financial appropriateness are linked too mechanically to immediate cuts, the result could be the killing of the goose that lays the golden egg of economic growth. This concern applies to a number of countries, from Britain to Greece. The commonality of the "blood, sweat and tears" strategy of deficit reduction gives some apparent plausibility to what is being imposed on more precarious countries like Greece or Portugal. It also makes it harder to have a united political voice in Europe that can stand up to the panic generated in the financial markets. In addition to a bigger political vision, there is a need for clearer economic thinking. The tendency to ignore the importance of economic growth in generating public revenue should be a major item for scrutiny. The strong connection between growth and public revenue has been observed in many countries, from China and India to the US and Brazil. There are lessons from history here, too. The big public debts of many countries when the second world war ended caused huge anxieties, but the burden diminished rapidly thanks to fast economic growth. Similarly, the huge deficits that President Clinton faced when he came to office in 1992 melted away during his presidency, greatly aided by speedy economic growth. The fear of a threat to democracy does not, of course, apply to Britain, since these policies have been chosen by a government empowered by democratic elections. Even though the unfolding of a strategy that was not revealed at the time of election can be a reason for some pause, this is the kind of freedom that a democratic system does allow the electorally victorious. But that does not eliminate the need for more public discussion, even in Britain.

The International Finance Corporation (IFC), member of the World Bank Group, and the European Bank for Reconstruction and Development (EBRD) granted a 114.8 million euros loan to Cernavoda Power company to co-finance the construction and exploitation of the 138 MW wind farms Cernavoda I and II, reads a release issued by the two banking institutions. EBRD and IFC each grant a 57.4 million euros loan for Cernavoda Power, whose majority shareholder is EDP Renovaveis, to finance the construction and exploitation of the wind farms.
This is the first "project finance"-type of investment of EBRD and IFC in the renewable energy sector in Romania.
"Supporting the projects devoted to renewable energy is one of the key priorities of EBRD. The Cernavoda-based wind farm will make a major contribution to expanding the capacity to generate wind energy in Romania and to reaching the EU renewable energy standard figures," said Nandita Parshad, EBRD head of power and energy utilities.
The Cernavoda-based wind farm located in the south-eastern region of Dobrogea will become one of the largest wind parks in Romania. Cernavoda I is operational now generating already 69 MW while Cernavoda II will be put into operation soon only to generate another 69 MW. Its total capacity will represent the fourth part of the total capacity of generating wind energy in Romania. AGERPRES

Greece's embattled prime minister has survived the first of a trio of tests that could sink the Greek economy and lay waste to Europe's single currency by winning a parliamentary vote of confidence in his reshuffled government. George Papandreou must now try to drive through a package of savage spending cuts and national assets sales in order to secure a new EU bailout. With the complex effort to stave off a Greek sovereign default moving towards a climax and anti-government and anti-EU protesters laying siege to central Athens, Papandreou won the vote by 155-143 in the 300-seat chamber. Brussels and other EU capitals anxiously watched the drama in Athens prior to a crucial summit of EU leaders. "Good news for Greece and for the EU as a whole," said Jose Manuel Barroso, the president of the European commission. Papandreou's victory removed "an element of uncertainty from an already very difficult situation. His government can now focus all efforts on building support in parliament for the ambitious series of fiscal measures and privatisations." The vote kicked off a crucial three weeks that could make or break the euro. Leaders in Brussels spoke of the worst crisis in Europe since the second world war, the International Monetary Fund (IMF) set ultimatums before the 17 countries of the single currency, and international ratings agencies classified the bailout terms for Greece as a likely default. In order to secure an immediate €12bn lifeline and then EU agreement on a second bailout running to more than €100bn over three years, Papandreou now has to persuade parliament to back a radical programme of spending cuts, tax increases, and a mass assets sell-off by the end of next week

Euro Has Become Greatest Threat to Continent's Future - Finland is a country that is often held up as a successful model for other European countries, but the success of the right-wing populist "True Finns," who captured 20 percent of the vote in April's parliamentary elections, came as a wakeup call to the political establishment in Brussels. As the skeptics gain ground throughout the EU, anti-European sentiments are growing in even the core countries of the union, like France and Germany. The euro, created with the aim of permanently uniting Europe, has become the greatest threat to the continent's future. A collapse of the monetary union would set Europe back by decades, dealing it a blow from which it might never recover, especially with Europe's position already threatened by the fast-growing Asian economies. How is a fragmented Europe to prevail against this new competition? This is why Europe's politicians want to defend the euro at all costs, and why they are approving one bailout package after the next. They are playing for time, hoping that the markets will settle down and the reforms will take hold. The business community is supporting their efforts, too. In a major advertising campaign scheduled to run in leading publications this week, top German business executives, including ThyssenKrupp Chairman Gerhard Cromme, Siemens CEO Peter Löscher and Daimler CEO Dieter Zetsche, promote the monetary union and insist: "The euro is necessary." They argue that ailing member states must be assisted financially, and that the common currency is "absolutely worth this commitment."

The rising cost of buying insurance through so-called credit default swaps (CDSs) on Greek debt came amid continued prevarication among eurozone finance ministers about releasing bailout funds to the indebted country and a warning that Italy's credit rating might be cut. According to Gavan Nolan, credit analyst at Markit, to insure €10m (£8.8m) of Greek debt would cost €2m every year for five years. No other country is as expensive to insure. Venezuela is the next most expensive, but even then is almost half the cost. The Greek government faces a confidence vote on Tuesday, which is adding to anxiety among investors, particularly as European finance ministers have said the bailout needs to be accompanied by austerity measures. Stock markets in Europe were weak on the opening, but a strong start by Wall Street helped to contain losses among European shares, with the FTSE 100 and the German stock market both ending 0.3% lower. However, the Italian market was down further as investors reacted to a warning by Moody's that it might downgrade the country's debt rating. With the cost of insuring against a Greek default rising, City sources were pointing to the potential controversy about whether the country's debt would be tackled in a such a way as to avoid the insurance sold through CDSs paying out. Some sources said they were concerned that if holders of CDSs became entitled to payouts it would cause the institutions that sold the insurance to make multimillion pound payments.

Theon Sunday as a crucial ally of Silvio Berlusconi demanded that the government cut taxes, despite the serious implications that this would have on Italy's public finances. Umberto Bossi, the Northern League leader and arbiter of the prime minister's fate, brushed aside concerns that Italy could go the way of Greece when he told cheering supporters in Pontida that the tax burden in Italy had gone "beyond all limits". Bossi, Berlusconi's partner in Italy's rightwing coalition government, has been under huge pressure from his party's rank and file since local elections last month showed a sharp fall in the league's support. Tax cuts would offer both men the promise of regaining their lost popularity, but could widen the budget deficit of a country that has the eurozone's biggest public debt. On Friday, the rating agency Moody's warned it could downgrade Italy's credit ratings because of concerns that the crisis in Greece could increase eurozone interest rates and derail Italy's already precarious economic recovery. The finance minister, Giulio Tremonti, has been urging prudence on his cabinet colleagues and was reported by La Repubblica to be planning a mini-budget that would include deficit reduction measures totalling €40m (£35m). But Bossi told his supporters: "Tremonti says that we risk ending up like Greece. But, whatever, something has to be done to bring down taxes." While the latest flare-up of the crisis in Europe seems like a summer repeat from 2010, one element is conspicuously absent: doomsday forecasts for the euro. Last spring, as Greece first teetered on the brink, there were rising expectations that the euro would by now have plunged against the U.S. dollar, with some forecasters looking for declines approaching 20%. Talk that the crisis would lead to a breakup of the euro zone added to the gloom. From May to June 2010, analysts on average cut their midyear 2011 euro forecasts to $1.1950 from $1.2920, according to Consensus Economics. threat of a new crisis on the eurozone's southern flank loomed

Saturday 6/18/2011

GERMANY - Chancellor Angela Merkel of Germany has sued for peace with the European Central Bank (ECB), following weeks of feuding over how to rescue Greece from the devastating debt crisis threatening the future of the euro single currency. Merkel announced on Friday that the decisions on a new three-year bailout package for Greece, tipped to run to €120bn (£106bn), would need to be agreed with the ECB. At a Berlin summit with the French president, Nicolas Sarkozy, Merkel softened her terms for the Greek bailout, urged a quick decision, stressed that any participation by private creditors in the rescue should be voluntary, and insisted that a new package with Greece would be agreed together with the ECB. Her climbdown was welcomed by the financial markets, as the prospect of Greece suffering a catastrophic disorderly default receded. The euro rallied strongly, gaining more than one cent against the dollar. Europe's major stock markets also closed higher as traders took a more positive view of the Greek situation. The German media, though, promptly predicted that Merkel's olive branch could cost her politically at home. "For the German government, this is a remarkable shift," said the liberal Sueddeutsche Zeitung. "The chancellor has backed off from a central German demand," said the conservative Frankfurter Allgemeine Zeitung. In a research note, JP Morgan said that Berlin seemed to be dropping its insistence on a bond swap by Greece's private creditors, the central factor that the ECB feared would cause the country to be declared in sovereign default. The Berlin summit came at the end of a week of intense political and market turbulence, with riots on the streets of Athens, a Greek government on the brink of collapse, and bad-tempered disarray among EU leaders. And despite the apparent progress, it remains to be seen how the second Greek bailout in a year will be structured .

The International Monetary Fund for the first time on Friday publicly called on the private sector to help finance Greece and other European peripheral countries, warning that failure to help fund the ailing economies could force sovereign-debt defaults and risk derailing the global recovery. After weeks of brinksmanship over Greece, Germany gave ground Friday, improving the chances that the struggling country will avoid a messy debt default this year that could threaten the stability of the euro currency area. German Chancellor Angela Merkel dropped her government's insistence on forcing a rescheduling of Greek government bonds, ending a six-week standoff that threatened to halt any more loan payouts to Greece. Instead, she said was open to a voluntary rollover of the country's debt. The move came as the Greek prime minister reorganized his government, naming a new finance minister to help overcome public resistance and push an austerity package into law. Greece's financial future appears to be in good hands for the next month as Germany and France have agreed on a plan to handle Greek debt. WSJ Brussels bureau chief Stephen Fidler discusses with the News Hub panel. AP Photo/Ferdinand Ostrop . The focus of the Greek discussions now shifts to Luxembourg on Sunday and Monday, where European finance ministers are due to hold talks. A new aid package for Greece would stave off the threat of a Greek debt default in the short term. But it wouldn't address the bigger challenge facing Europe: the likelihood that Greece won't be able to repay all of its debt, and the difficulty of cutting Greece's debt burden without sparking capital flight from other struggling countries around the euro. Personally, I have no doubt that the European oligarchy will do everithing possible to rescue the ill conceived "euro" ...a burden for all the europeans.

German Chancellor Angela Merkel and French President Nicholas Sarkozy will meet in Berlin Friday - Event Risk - The Greek cabinet was reshuffled on Friday and will face a vote of confidence by Tuesday night. The political moves could be another potential flashpoint in a country already beset by fierce anti-austerity strikes. But some analysts said the euro was holding up well despite the uncertainty as the market held out hopes a solution could be reached and a new three-year bailout plan would be decided in July. "It's difficult keeping up with the event risks but policymakers are whittling down a timetable," said Tom Levinson, FX strategist at ING, adding euro/dollar at $1.4100 could turn out to be good value if progress is made. "This Sunday they should agree on another aid tranche for Greece and in July they should be agreeing the main aid package. Unless something major goes wrong with either the confidence vote or Germany does not soften its terms I think the euro will do better." Investor risk appetite was also hampered on Friday by weak U.S. regional manufacturing data that cemented concerns about a soft patch in the U.S. economy, causing prices in Asia to slump. Economic and Monetary Affairs Commissioner Olli Rehn said euro zone finance ministers will decide at a meeting on Sunday to disburse the next tranche of emergency loans to Greece in early July and decide on the new three-year bailout on July 11. Friday's and Sunday's meetings will be watched closely by the market for reassurance the Greek debt crisis can be resolved. "As an investor I would be quite nervous," said Ankita Dudani, G10 currency strategist at RBS. "There is a lot of uncertainty out there over what Germany wants and it is quite hard to see them coming up with something that works for everyone." Discord between the euro zone's paymaster Germany and the European Central Bank, backed by France, has spooked investors across asset classes, with the European stock index on track for its longest run of weekly declines since January 2008. Germany is insisting banks, pension funds and insurance firms that hold Greek debt swap their bonds for new ones with longer maturities.But fearful this solution could create a "credit event" and prompt rating agencies to label Greece in default, the ECB, European Commission and France all favour a softer option under which holders of Greek bonds would be asked to buy new Greek debt as their holdings mature.

"French for a change"

«Faire preuve d'esprit de responsabilité et de sens du compromis.» Nicolas Sarkozy a lancé jeudi un appel solennel aux Européens pour sauver la Grèce. Attendu ce matin à Berlin, le président français sait qu'il devra déployer des trésors d'imagination et de persuasion pour faire bouger Angela Merkel. Alors qu'Athènes, plongé dans une crise politico-financière, est au bord de la faillite, la chancelière est saisie d'un nouvel excès d'attentisme. Confrontée à une fronde au sein de sa majorité, Merkel irrite ses partenaires européens en faisant monter la pression: elle s'obstine à conditionner toute nouvelle aide financière grecque à une participation des créanciers privés afin de leur faire partager le fardeau des contribuables allemands. La position de Berlin s'est toutefois un peu assouplie ces dernières heures. Le gouvernement allemand, qui se heurte à une fin de non-recevoir de la Banque centrale européenne (BCE), réclamerait désormais un report au mois de septembre de la décision concernant une rallonge à la Grèce, initialement attendue au Conseil européen de la semaine prochaine. Jouer la montre lorsqu'il y a urgence, pour tenter d'infléchir le débat: Berlin avait déjà usé de cette tactique dans le premier acte de la crise grecque, en mai 2010, en rechignant à mettre la main à la poche pour Athènes. (source Le Figaro)

BUCHAREST - Greek banks, which control 17% of Romanian banking assets, have not withdrawn financing lines from local subsidiaries ahead of time so far, central bank officials said. Banks controlled by Greek investors have sufficient liquidity and are not under pressure to borrow heavily from the market, says Nicolae Cinteza, head of the Supervisory Department of the BNR, the Romanian central bank. The Greek hold 17% of Romanian banking assets and have a similar share of the deposit segment, with funds attracted from local customers amounting to around EUR6 billion. "I speak with officials in Greece at least on a weekly basis, we are in permanent contact with them. There have not been early repayments of resources attracted from Greece so far, only of loans that reached maturity," Cinteza told ZF.

A combination of more austerity, haircuts for creditors and further soft loans from rich countries will probably be what eventually solves the euro zone crisis. But the region would get there faster if everybody admitted their own guilt. Simply making everyone share the blame doesn't solve the huge problem of Moral Hazard. The show just goes on.
As far as I can see, the idea of a split-Euro had been dismissed as too confusing. But it would answer the following point - all would share the consequences, pain would be less and nobody will be responsible fo nothing - how convenient for the Brussels pimps and prostitutes populating the European Parliament . Italy, Greece's etc could work their way out with a weakened currency. The Northern banks would hold a weaker denomination, but money would initially flow in the northern direction (gov't officials leading the race, no doubt), so the northern banks would arguably gain and be happier to support a leaner south. The south could, over a number of years, begin to act honestly (i.e. collect taxes) and a balance would be achieved.
A southern Euro would not be drastically different, and in theory could eventually catch up.

Last week saw real progress in reaching a solution to the Greek, Portuguese and Irish debt crises. It is now recognized that these countries can never, ever, repay their debts, certainly not on time, and more than likely not in full. A default by any other name is a default. It might doff its name, as Juliet thought Romeo might do, and choose "repositioning," or "soft restructuring," or "voluntarism," but it remains a default. If the renaming permits banks to continue the fiction that Greek paper is worth what is inscribed in their ledgers, so be it: sooner or later reality will catch up with them just as it has with the profligate governments now at the mercy of their euro-zone benefactors. No need to rehearse the arithmetic that has appeared in this and other columns. It is enough to point out that the bailouts assumed that the recipient governments would be able to return to the financial markets after a period of reliance for cash on the European Central Bank, the International Monetary Fund, and their euro-zone partners. In short, the eurocracy devised a plan for coping with a liquidity crisis when these countries were facing a solvency crisis. Diagnose the disease incorrectly, and the prescribed medicine will make the disease worse by prolonging the period before which a proper diagnosis is developed.

BUCHAREST- ROMANIA - The National Federation of Romanian Agricultural Producers (FNPAR) warned that the unfavorable weather conditions and lack of agricultural strategies will force up food prices in the upcoming period. Data show the rye production will decrease by 22.9% this year compared to 2010, the rape production will drop 22% and the oleaginous plant production by 7.6%, FNPAR leader Vorel Matei said in a press release. He pointed out that the country's irrigation system is not functional. The federation called on the ministry to draw up viable agricultural strategies to help the agriculture sector and prevent food prices from rising. Agriculture Minister Valeriu Tabara said in April there is no reason why food prices should go up significantly this year. Tabara said prices will remain more or less constant, since producers are able to cover their costs and turn a profit. The shelf prices of food, he said, might go down if Romania can build an integrated farming system.

The European Bank for Reconstruction and Development Friday revised upward its forecast for Romanian economic growth to 1.8% in 2011, from 1.1% previously, saying it expects harsh austerity measures implemented under a multilateral financial program will pay off. "In Romania, the government has managed to complete successfully the IMF program by implementing harsh austerity measures that will keep the fiscal accounts under control," EBRD said in its Regional Economic Prospects report. The bank said the southeast Europe continues to lag behind other regions in terms of the pace of recovery from the crisis, with the exception of Turkey, where growth is now proceeding at a rapid pace. "The one bright spot is the external sector, where exports in most countries are growing rapidly reflecting both a base effect from the deep slump in 2009 and renewed global demand for key exports from the region," the report noted. However, except in Turkey and Romania, domestic demand remains sluggish as financial systems continue to unwind imbalances after the pre-crisis boom and consumer and investor confidence stays low, EBRD said. For 2011, EBRD expects the economy will pick up to 2.2% in the region, up from a growth of 1.9% previously predicted.

BRUSSELS - BERLIN: Eurozone governments are considering a plan to prevent a Greek default under which private investors would be asked to maintain their exposure to its debt and Athens would receive a new package of EU/IMF aid, eurozone sources said. Sources spoke of the new strategy on Thursday after ECB raised the stakes in its bid to prevent a restructuring of Greek debt by telling governments it would refuse to accept the bonds as collateral in the event of such a move. The threat, made by ECB executive board member Juergen Stark at a conference in Athens on Wednesday came after European finance ministers raised the possibility of a "soft restructuring" via debt maturity extensions earlier this week. One source with insight into European discussions on Greek debt said any "soft" or "hard" restructuring that might trigger a "credit event" - or the payout of default insurance contracts - was now off the table. Instead of a maturity extension, which might decrease the value of bonds and trigger such an event, banks would be encouraged to maintain their holdings of Greek debt and buy new bonds to replace issues as they matured, the source said. This would be done in combination with a new package of Greek reforms and austerity, as well as more EU/IMF money to secure Greece's funding needs through 2014. "We hope to have an agreement by the end of June," the source said.

IMF - press release

Strauss-Kahn Resigns - In a letter to the board, Mr. Strauss-Kahn said: "I deny with the greatest possible firmness all of the allegations that have been made against me." The letter said Mr. Strauss-Kahn, being held in a New York jail on sexual-assault charges, would resign with immediate effect. "I want to protect this institution which I have served with honor and devotion, and especially—especially—I want to devote all my strength, all my time, and all my energy to proving my innocence," the letter said. The IMF, which released the letter just after midnight Thursday, said it "will communicate in the near future on the Executive Board's process of selecting a new Managing Director." It added that John Lipsky remains as the acting head. The resignation brings a quick end to the paralysis that has gripped the IMF since Mr. Strauss-Kahn was arrested several days ago. The IMF is in the midst of negotiations about the next steps to take in resolving Greece's financial problems and his absence from the talks has been seen as a major problem. His resignation will put in high gear the global search for a replacement. By tradition, a European is selected to head the IMF and French Finance Minister Christine Lagarde is considered the front runner.

Romania went up four places to 50th in the annual IMD World Competitiveness report, with a total score of 57.497 out of 100 points possible.

Romania Up 4 Notches In IMD 2011 World Competitiveness ReportHong Kong and the USA were tied for number, as both received a score of 100, followed by Singapore, with 98.6 points.In Central and Eastern Europe, Estonia is ranked best, on the 33rd spot, followed by Poland (34th), Turkey (39th) and Lithuania (45th).The IMD's report ranks 59 states in terms of global competitiveness.

Buxelles on Greece - While Juncker's and Rehn's statements marked a significant shift in official comment on Greece's predicament, there was apparent disagreement among other senior officials about whether such a move was the right thing to do, although that may have reflected the confusing array of phrases used. "Restructuring, rescheduling -- off the table," French Economy Minister Christine Lagarde said late on Monday, after Juncker had hinted at a "reprofiling" of Greek debt, a way of extending the maturities on its loans without going through a more fundamental restructuring process. "A restructuring or a rescheduling, which would constitute a default situation, what we would call a credit event, are off the table for me," she said. European Central Bank governing council member Ewald Nowotny told Austrian radio that a "soft restructuring" was not on the cards, insisting that Greece needed to shore up its finances. While all EU officials have rejected the idea of a full-on default, they have now introduced at least three terms to refer to the possibility of some alteration in the repayment schedule of Greek debt: restructuring, rescheduling and reprofiling. From the financial markets' point of view, there may be little difference among them. The manager of a debt fund in the United States joked that the only time he had heard the word "reprofiling" used was in reference to a nose job. But sovereign debt analysts draw a distinction between restructuring, which involves enforced losses, and "reprofiling," when bondholders are asked to exchange short-term debt for longer-dated bonds with a similar coupon, thereby altering the profile of the yield curve and effectively giving the debtor more time to repay the loan.