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Showing posts with label Greek. Show all posts
Showing posts with label Greek. Show all posts

Monday, July 13, 2015

Greek PM Tspiras faces party revolt over bailout deal

An anti-EU protester unfurls a Greek national flag next to riot police on the steps in front of the parliament building during a demonstration of about five hundred people in Athens, Greece July 13, 2015.
REUTERS/JEAN-PAUL PELISSIER
Greece's leftwing Prime Minister Alexis Tsipras faces a showdown with rebels in his own party on Tuesday furious at his capitulation to German demands for one of the most sweeping austerity packages ever demanded of a euro zone government.
Just hours after a deal that saw Greece surrender much of its sovereignty to outside supervision in return for agreeing to talks on an 86 billion euro ($95 billion) bailout, doubts were already emerging about whether Tsipras would be able to hold his government together.
The terms imposed by international lenders led by Germany in all-night talks at an emergency summit obliged Tsipras to abandon promises of ending austerity.
Instead he must pass legislation to cut pensions, increase value added tax, clamp down on collective bargaining agreements and put in place quasi-automatic spending constraints. In addition, he must set 50 billion euros of public sector assets aside to be sold off under the supervision of foreign lenders and get the whole package through parliament by Wednesday.
Tsipras himself, elected five months ago to end five years of suffocating austerity, said he had "fought a tough battle" and "averted the plan for financial strangulation".
But to get the accord through parliament by Wednesday's deadline, he will have to rely on votes from pro-European opposition parties, raising big questions over the future of his government and opening the prospect of snap elections.
Leftwing rebels in the ruling Syriza party, and his junior coalition partner, the right-wing Independent Greeks party, indicated they would not tear up election pledges that brought them to power in January.
"We cannot agree to that," Independent Greeks leader Panos Kammenos told reporters after meeting Tsipras. "In a parliamentary democracy, there are rules and we uphold them."
A meeting of the Syriza parliamentary group on Tuesday morning could see Energy Minister Panagiotis Lafazanis and Deputy Labor Minister Dimistris Stratoulis sacked over their opposition to the bailout.
There may also be a battle over parliament speaker Zoe Constantinopoulou, an uncompromising leftwinger who also defied Tsipras over the bailout and who could create serious procedural obstacles for the package.
CONDITIONAL AGREEMENT
If the summit on Greece's third bailout had failed, Athens would have been staring into an economic abyss with its banks on the brink of collapse and the prospect of having to print a parallel currency and exit the euro.

Instead it won conditional agreement to receive a possible 86 billion euros ($95 billion) over three years, provided its European partners are satisfied that the conditions are met.

Saturday, July 4, 2015

'Nai' Or 'Oxi'? What Greece's Landmark Vote May Trigger

LONDON (AP) — On his 10-year trip home, the Greek hero Odysseus at one point had to steer his ship and crew down a narrow stretch of water menaced on opposite sides by two sea monsters, Scylla and Charybdis.
The Greek people are in similar dire straits as they prepare to vote on a future in which they face two painful prospects: the slow grind of years more of austerity cuts or the country's potentially catastrophic exit from the euro.
The question is whether their vote on Sunday can help them escape either. "Yes" to more budget cuts in exchange for a financial aid package for the country? Or reject it in the hope it will not lead the country out of the euro?
The referendum question makes no reference to Greece's future in the currency union. It is on a set of proposals that European creditors say they have withdrawn following the failure to forge a deal with Greece before an end-June deadline.
For the radical left-led Greek government, the proposals were unacceptable. It's urging a "no" vote and says that will have no impact on Greece's euro status.
Proponents of a "yes" vote, including a parade of former prime ministers and the main opposition party, say backing the government will jeopardize Greece's place in the euro. Instead, they argue that by voting "yes" Greece would get a new deal quickly to shore up the economy.
In fact, what might happen in each case is unclear. Analysts in the world's biggest investment banks are putting percentage probabilities to outcomes, such as Greece's exit from the euro, but no one knows for sure.
Here's a look at the events that each vote might trigger.
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IF THE PEOPLE SAY 'NAI'
A "yes" vote backing the reform proposals creditors had made would likely see Greece turn immediately to talks on a new rescue package. Whether that leads to a swift deal that might allow Greece to reopen its banks and restore a semblance of normality to the life of citizens and tourists is another question.
Much would likely depend on what happens on the political front.
The government has said it will respect the verdict.
Greek Finance Minister Yanis Varoufakis has said he'll resign in the event of a "yes" vote and Prime Minister Alexis Tsipras has hinted as much. If the government does not collapse, it could try to build a new coalition with other parties, Varoufakis hinted.
It's not clear, however, if that would involve new elections. That would take time and without financial assistance, Greece would surely go bankrupt.
Greece is no longer in a bailout program since its previous package expired Tuesday. So it would have to negotiate a new one with its creditors that involves more money for the government and the banks and new economic measures.
That is unlikely to be agreed on overnight, meaning the harsh controls on money withdrawals and transfers may remain in place for longer than anticipated. The Greek government had to put those limits when a run on the banks started last weekend and the European Central Bank refused to increase the emergency credit it allows the banks to draw on.
Varoufakis says banks will reopen Tuesday whatever the referendum's outcome. That's unlikely to happen unless the ECB agrees to increase the credit to Greek banks. And the ECB would be under huge pressure not to do so until Greece has a new, comprehensive financial rescue package.
An additional difficulty is that Greece's creditors are singing from different hymn sheets. The International Monetary Fund has said it will not get involved in a third bailout unless it includes substantive debt relief for Greece. The Europeans, on the other hand, have ruled out debt relief until Greece makes its reforms.
"A new agreement will likely take time and the ultimate outcome may require even greater fiscal and structural commitments than the existing proposal," said George Saravelos, a strategist at Deutsche Bank. "The extent to which there is a sufficient political shift in Greece to allow this to materialize remains the key source of uncertainty."
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IF THEY SAY 'OXI'
Despite the Greek government's assertion that a "no" vote will not lead to a euro exit, most people agree it would open up more uncertain outcomes, especially if the ECB calls time on the life-support measures to Greece's banks.
A number of European politicians, including Jeroen Dijsselbloem, the top eurozone official, have said a "no" vote would jeopardize Greece's place in the euro.
Others, such as the leaders of France and Italy, appear to be holding the door ajar for further talks. Even Wolfgang Schaeuble, the tough-talking German finance minister, has said the country could stay in the euro in the event of a "no" vote.
But investors are likely to be worried in case of a "no" vote amid fears it increases the chance of a Greek exit from the euro, or Grexit. Markets will open first in Asia.
The word 'Grexit' has dominated the past months of negotiations on Greece. But the country will not return to the drachma as soon as Monday. Rather, the risk increases the longer there is a deadlock in talks. Without a deal and without money, Greece will default on more of its debt repayments and will not be able to afford the day-to-day spending on salaries and pensions. The banks will run dry, even with the cash withdrawal limits.
In such a case, printing a new currency may be the only option available, which almost everyone thinks will be a short-term disaster for the Greek economy.
"A 'no' will result in Grexit with an uncertain future and high costs to Greek society, at least initially," said Guntram Wolff, director of think-tank Bruegel.
Odysseus got through his ordeal, but Scylla the monster ate six of his men — not a great thought for Greeks seeking to navigate the straits of bankruptcy and national pride.

Wednesday, July 1, 2015

Global shares rise as investors hold nerve after Greek default

Global Shares Greek
A trader sits in front of the computer screens at his desk at the Frankfurt stock exchange, Germany, June 29, 2015.
REUTERS/RALPH ORLOWSKI
European shares and peripheral euro zone bonds rose on Wednesday and the euro held its own as some investors kept faith with expectations that, despite defaulting on an IMF loan, Greece will find a way to stay inside the currency zone.
While an unwelcome milestone for Athens, the default came as no surprise to markets after weeks of debt-talk brinkmanship, and news that the bloc's finance ministers were to hold another teleconference later, show the drama is far from over.
Stocks in London, Paris and Frankfurt as well as Italy, Spain and Portugal opened 0.6 percent to 0.9 percent higher, while the euro hovered just above $1.1110 versus the dollar.
There was plenty of uncertainty though. The failure to reach a deal kept Greece on course for a referendum at the weekend on whether to accept the euro zone/IMF demands for more swingeing spending cuts.
Arguably the biggest focus of the day was whether the European Central Bank would begin cutting the emergency funding it is providing to Greek banks following the missed payment to the IMF.
"It is very difficult to see how one could conclude that banks that are basically closed because they have no access to cash, operating under a government that has just defaulted to the IMF, could possibly be solvent," said Gary Jenkins, chief credit analyst at LNG Capital.
"So it really becomes a political decision as to whether the ECB sticks to its rules or decides to keep everything as it is."
With the feeling that the ECB would not want to deliver the fatal blow to Greece and investors still harboring hopes of a deal at some stage, Italy, Spain, Portugal and Ireland -- the other high-debt countries that were in the crosshairs of the euro zone crisis a few years ago -- saw their bonds hold firm.
Currency markets were also relatively rangebound.
The U.S. dollar index was up 0.08 percent at 95.568, having bounced from Tuesday's low of 94.847. Against the yen, the dollar stood at 122.57, up from a five-week low of 121.93 plumbed on Tuesday.
CHINA ROLLERCOASTER
There was a flurry of European economic data too.
France's manufacturing sector grew in June for the first time since early 2014 while the equivalent data from Spain and Italy dipped as factory growth remained tepid in the euro zone overall.
Underlining Greece's woes, manufacturing activity there shrank for the 10th month in a row, as export orders and production slumped anew.
"The accelerated contraction in goods production in June ended the worst quarter for the Greek manufacturing sector for two years," said data complier Markit economist Phil Smith.
Asia had been generally calmer overnight after two days of wild swings.
MSCI's broadest index of Asia-Pacific shares outside Japan bounced 0.6 percent. Malaysian shares rallied 1.8 percent after Fitch unexpectedly raised the country's outlook to "stable".
Japan's Nikkei added 0.4 percent, a second day of modest gains as it stabilized after Monday's steep fall.
There was unexpectedly upbeat news from the Bank of Japan's latest survey of manufacturers which improved in the three months to June, supporting the bank's view that growth is gathering momentum.
Chinese shares went on another rollercoaster ride. They had looked like they had recovered from another erratic start before a late plunge left them down 5 percent in their fourth fall in the last five sessions.
Data was mixed from China where surveys showed sluggish factory activity but a pick-up in the service sector, a sign the transition to a more consumer-led economy remained on track.
Beijing's efforts to stem recent market selling are struggling to gain traction. A combination of cuts in interest rates, allowing local government pension funds to buy stocks and talk of behind-the-scenes "window guidance" to institutional investors, has yet to calm a skittish mood.

In commodities, safe-haven gold nudged up while oil fell after bouncing strongly on Tuesday to end the second quarter with hefty gains. Brent was quoted down 55 cents at $62.84 a barrel, while U.S. crude eased 89 cents to $58.57.
Source: Reuters

Thursday, June 25, 2015

Greek PM Slams Creditors For Rejecting Reform Proposal As Debt Talks Enter Final Stretch


BRUSSELS (AP) -- Greece was trying to bridge major differences with creditors Wednesday on a plan to make more reforms in the country in exchange for bailout loans it needs to avoid a potentially disastrous default next week.

Leftwing Prime Minister Alexis Tsipras criticized the International Monetary Fund as being needlessly picky about the reforms Greece had proposed, which consisted largely of tax increases.
A Greek official confirmed the IMF was focusing on toning down the tax increases, saying they can hurt businesses. The official, who asked not to be identified because the talks were ongoing, said creditors are demanding, among other things, a freeze on pensions, scrapping some proposed taxes and surcharges on business, and higher sales tax on some goods.

Read more at The Huffington Post

Monday, June 22, 2015

Mood brightens after latest Greek offer to creditors


A new Greek offer for a cash-for-reforms deal raised hopes of an agreement as euro zone leaders prepared for an emergency summit on Monday, with EU officials welcoming the proposals as a "good basis for progress" to avert a default by Athens.

European shares surged and the Greek stock market jumped nearly 7 percent on hopes that the government could finally end months of wrangling that have left the country on the verge of bankruptcy and possibly being pushed out of the euro bloc.

In a sign of the more positive mood music, EU Economic Commissioner Pierre Moscovici said he was "convinced" that euro zone leaders would find a resolution on the basis of the latest proposal by Greek Prime Minister Alexis Tsipras.

The contents of the new offer have not yet been officially divulged, but Greek officials say it acquiesces to some of the demands from Greece's EU and IMF lenders for tax hikes, curbing early retirement and other spending cuts to ensure Athens hits budget targets.

In Brussels, European Union officials said Greece is offering to raise the retirement age gradually to 67 and make value-added tax reforms. A final deal was unlikely on Monday, but this could be a step toward an agreement in the coming days, they added.

Greece must repay a 1.6 billion euro loan to the International Monetary Fund next week but is likely to default without a deal with its creditors.

Tsipras heads into a series of talks with figures including European Central Bank President Mario Draghi and IMF head Christine Lagarde before the summit in Brussels of euro zone government heads at 7 pm.

Underlining the urgent need for a deal on Monday, Greece's central bank last week warned lenders to brace for a "difficult day" on Tuesday if the summit ended without a breakthrough, banking sources have told Reuters.

The country could be forced to impose capital controls within days to stem the outflow of billions of euros from banks by savers fearing they could be stuck with a sharply devalued new currency should Greece be forced out of the euro.


"We are moving in the right direction, we have solid ground for a deal, we just have to consolidate that today," Moscovici told Europe 1 radio, adding Monday would be "decisive". "I think that the political will of everyone to preserve the euro, this common good, to ensure that this single currency is irreversible, will win the day."

There were no immediate long queues or signs of panic outside Greek banks in the capital on Monday. The ECB, which has kept local lenders afloat with infusions of liquidity, raised its emergency funding once more.

"I believe there will be a deal today. This is a normal visit to the bank," said one Greek saver outside a bank branch.

An exit from the euro would create economic dislocation in Greece and severe consequences for its banks' liquidity and solvency, which could lead to the banking system being nationalized, credit ratings agency Moody’s warned in a report on Monday.

TAX-EVADING BILLIONAIRES

Comments by Greek Deputy Labor Minister Dimitris Stratoulis on a morning news show underscored the tightrope Tsipras must walk to reach an agreement that will win over both the creditors and his own leftist Syriza party.

"We are not afraid of blackmail, and our priority is the public interest," Stratoulis, a Syriza hardliner, told Antenna television. "Let's see if there will be a deal tonight."
Syriza stormed to power in January promising to roll back years of austerity it says has worsened Greece's plight. Thousands gathered in central Athens on Sunday to protest against a new round of cuts, which is expected to be countered by a demonstration in favor of staying in the euro later on Monday.

The mood had also hardened among the creditors in recent weeks. Chancellor Angela Merkel of Germany, which has spent more money bailing out Greece than any other country, is under pressure from taxpayers, business leaders and within her own ranks not to go soft on Greece.

"The Greek government needs to finally do something," German Economy Minister Sigmar Gabriel told the mass-selling German newspaper Bild. He added he was sure Merkel would "not sign anything which allows Greek billionaires to continue evading taxes and mean that workers and pensioners in Germany have to pay even more as a result".

Greek Prime Minister Alexis Tsipras waves hand as he gets into a car after a wreath-laying ceremony at the statue of Russian-born founder of modern Greek state Ioannis Kapodistrias in St. Petersburg, Russia, June 19, 2015. Photo by: Reuters/Maxim Shemetov

The chief-of-staff of European Commission President

Jean-Claude Juncker had spoken of a "forceps delivery" as officials worked late into the night on Sunday to produce a deal before the emergency summit.

European ministers had earlier played down the prospect of a final agreement on Monday but hope a political understanding can be reached in time for a full deal by the end of June.

"Lithuania's position is quite strict ... we see a state which wants to be able to feast, and it wants for all others to pay for that feast," Lithuania's president Dalia Grybauskaite told public radio. "Greece is trying to make others help them, but they don't expect to take any responsibility at all."


Source: Reuters

Sunday, June 14, 2015

Greece's Varoufakis says he believes Europe does not want 'Grexit'

Greece does not believe its European partners will ultimately let the country leave the euro zone, Finance Minister Yanis Varoufakis said on Saturday, as the country races to agree a cash-for-reforms deal with its creditors.
Athens is trying to clinch a deal before an end-June deadline to release the final tranche of a 240 billion euro bailout and avert the risk of the country crashing out of the euro zone.
Asked whether it was possible that Greece could leave the single currency, Varoufakis told the BBC he did not think any European official wanted to see that outcome.
"I don't believe that any sensible European bureaucrat or politician will go down that road," he told BBC Radio Four's Today program.

Asked whether the European Union and the International Monetary Fund were bluffing Varoufakis said: "I hope they are."
Source: Reuters