Market faith in Greece wabbles (but look at Ireland)
Buyers of a 5bn euro Greek bond on Monday sold off larger than expected quantities of the government paper yesterday, leading yields to rise from 5.9 percent to 6.3 percent, representing a 3.5 point spread with German bonds. The re-opening of a 12-year bond also fared poorly. Greek analysts said the poor sentiment was largely temporary.
Ireland faced more spectacularly bad news with the discovery that the country's banks faced a 32 billion euro cash shortfall, largely due to bad real estate loans- the equivalent of a fifth of the economy. The government could be liable to cough up 24bn of that, becoming the majority shareholder of every bank bar one.
http://www.ft.com/cms/s/0/abbc5f4a-3c21-11df-b40c-00144feabdc0.html
http://www.ft.com/cms/s/0/9b667690-3c07-11df-9412-00144feabdc0.html
Wednesday, 31 March 2010
Tuesday, 30 March 2010
EU safety net fails to lower Greek spreads
Greece went to the money markets yesterday for the first time since a European emergency credit mechanism was set up on March 25. It successfully raised a bond issue of five billion euros, but failed to restrain interest rates, continuing to borrow at high rates. The interest Greece will pay on that money is 5.9 percent.
http://www.ft.com/cms/s/0/b1699ebc-3b1d-11df-a1e7-00144feabdc0.html
Greece went to the money markets yesterday for the first time since a European emergency credit mechanism was set up on March 25. It successfully raised a bond issue of five billion euros, but failed to restrain interest rates, continuing to borrow at high rates. The interest Greece will pay on that money is 5.9 percent.
http://www.ft.com/cms/s/0/b1699ebc-3b1d-11df-a1e7-00144feabdc0.html
Monday, 29 March 2010
Athens explosion kills one
An explosion in Athens has resulted in the death of a man and is being investigated as a possible terrorist attack. Police say the explosion is almost certainly the result of a bomb rather than an accident. Their main lead is the body of the dead man, who is dismembered from the waist up and whose facial features are indistinguishable. Police believe he may have been carrying the bomb or been an unlucky passer by. Injured in the attack were a mother and her ten year-old daughter, both allegedly of Afghan origin. Police say their lives are not in danger. The explosion took place outside a government building, although it's not known if that was intentional. The area is heavily populated by immigrants from south Asia and Africa. There was no warning via telephone. A warning is standard practice for terrorist organisations in Greece. The last terrorism-related death in Greece was that of British Brigadier Stephen Saunders at the hands of 17 November in July 2000.
An explosion in Athens has resulted in the death of a man and is being investigated as a possible terrorist attack. Police say the explosion is almost certainly the result of a bomb rather than an accident. Their main lead is the body of the dead man, who is dismembered from the waist up and whose facial features are indistinguishable. Police believe he may have been carrying the bomb or been an unlucky passer by. Injured in the attack were a mother and her ten year-old daughter, both allegedly of Afghan origin. Police say their lives are not in danger. The explosion took place outside a government building, although it's not known if that was intentional. The area is heavily populated by immigrants from south Asia and Africa. There was no warning via telephone. A warning is standard practice for terrorist organisations in Greece. The last terrorism-related death in Greece was that of British Brigadier Stephen Saunders at the hands of 17 November in July 2000.
Saturday, 27 March 2010
EU approves emergency financing for Greece. Now comes the hard part
Following a German-French compromise proposal, the Council of European Union heads of government yesterday approved an emergency financing package for Greece, extendable to other member states. It is to consist of contributions from the International Monetary Fund and bilateral loans from EU members.
The statement they issued made it clear that this mechanism is to be used only if a member cannot finance itself on open money markets, and is meant only as a stopgap measure:
"This mechanism, complementing International Monetary Fund financing, has to be considered ultima ratio, meaning in particular that market financing is insufficient.... The objective of this mechanism will not be to provide financing at average euro area interest rates, but to set incentives to return to market financing as soon as possible."
Greek Prime Minister Yiorgos Papandreou declared it a victory for the EU as well as a national victory. "The European Union today found itself before an enormous challenge and stood up to it," Papandreou said on Thursday, which was Greece's independence day.
Greece has lobbied for this safety net since a summit convened on February 11-12 to discuss the Greek economic crisis, which has seen the country's spreads wander to record distances from the German bund and brought market opprobrium onto the euro. The March 25-26 summit was the third convention of EU leaders this year to deal almost exclusively with Greece.
Of perhaps equal importance to the EU decision was the announcement from European Central Bank President Jean-Claude Trichet of a one-year extension to Greek government bonds' acceptability as collateral. The bonds would have ceased to hold that status at the end of 2010, leaving many Greek banks in danger of a downgrade. Roughly half of Greece's 300 billion euros of public debt has been bought by high street banks.
With the emergency finance mechanism in place, Greek and EU attention will now focus on the root of the problem: the high cost of Greek government, which keeps producing deficits. Slimming administration and boosting private sector production are the difficulties that now lie ahead, and are likely to produce great social and political difficulties for the reformist government of Papandreou.
EU statement: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113563.pdf
Papandreou statement: http://www.primeminister.gr/2010/03/25/1420
Following a German-French compromise proposal, the Council of European Union heads of government yesterday approved an emergency financing package for Greece, extendable to other member states. It is to consist of contributions from the International Monetary Fund and bilateral loans from EU members.
The statement they issued made it clear that this mechanism is to be used only if a member cannot finance itself on open money markets, and is meant only as a stopgap measure:
"This mechanism, complementing International Monetary Fund financing, has to be considered ultima ratio, meaning in particular that market financing is insufficient.... The objective of this mechanism will not be to provide financing at average euro area interest rates, but to set incentives to return to market financing as soon as possible."
Greek Prime Minister Yiorgos Papandreou declared it a victory for the EU as well as a national victory. "The European Union today found itself before an enormous challenge and stood up to it," Papandreou said on Thursday, which was Greece's independence day.
Greece has lobbied for this safety net since a summit convened on February 11-12 to discuss the Greek economic crisis, which has seen the country's spreads wander to record distances from the German bund and brought market opprobrium onto the euro. The March 25-26 summit was the third convention of EU leaders this year to deal almost exclusively with Greece.
Of perhaps equal importance to the EU decision was the announcement from European Central Bank President Jean-Claude Trichet of a one-year extension to Greek government bonds' acceptability as collateral. The bonds would have ceased to hold that status at the end of 2010, leaving many Greek banks in danger of a downgrade. Roughly half of Greece's 300 billion euros of public debt has been bought by high street banks.
With the emergency finance mechanism in place, Greek and EU attention will now focus on the root of the problem: the high cost of Greek government, which keeps producing deficits. Slimming administration and boosting private sector production are the difficulties that now lie ahead, and are likely to produce great social and political difficulties for the reformist government of Papandreou.
EU statement: http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113563.pdf
Papandreou statement: http://www.primeminister.gr/2010/03/25/1420
Wednesday, 24 March 2010
Why many Republicans cannot stand Obama
"Beyond the health reform’s effect on the medical system, healthcare reform is the centerpiece of Obama's deliberate effort to end what historians have called the age of Reagan."
http://www.nytimes.com/2010/03/24/business/24leonhardt.html?hp
EU G-to-G credit mechanism still a possibility this week
Eurozone leaders battled it out last night over whether to extend a credit mechanism, consisting of bilateral loans, to ailing Greece. At the centre of the debate was German insistence on this being offered only as a last resort, not as a source of cheap credit, and being tied to rules of iron fiscal discipline. Germany, like the European Commission, also seems willing to have the IMF involved.
Economist: http://www.economist.com/blogs/charlemagne/2010/03/letting_greece_sink_bit_deeper
FT: http://www.ft.com/cms/s/0/ae54db14-3673-11df-8151-00144feabdc0.html
Comment: http://www.bbc.co.uk/blogs/thereporters/gavinhewitt/
Barroso insists on a deal this week
European Commission President Jose Manuel Barroso urged EU member states to agree on a credit mechanism for ailing governments this week, saying that the process begun on February 11 had gone non long enough. "I hope Member States will take determined and coordinated action. I urge them to take some decisions," he told the FT in an interview yesterday.
"No bail out does not mean no help," Barroso said. He points out that under EU rules there have already been bilateral loans across the Union to several countries, most recently Latvia. "I know Chancellor Merkel. She is a committed European, and I have no doubt that she will, if needed, be in favour of providing financial assistance to Greece," he said.
Why bilateral loans and not a eurozone system? "From consultations taken so far, and we have been working on this for some time now, it seems that coordinated financial loans is the more appropriate mechanism. It is fully compatible with the no bailout clause. It can be implemented with strict conditionality."
Interview: http://www.ft.com/cms/s/0/4da90494-35f0-11df-aa43-00144feabdc0.html
Transcript: http://www.ft.com/cms/s/0/36484548-35c4-11df-963f-00144feabdc0.html
"Beyond the health reform’s effect on the medical system, healthcare reform is the centerpiece of Obama's deliberate effort to end what historians have called the age of Reagan."
http://www.nytimes.com/2010/03/24/business/24leonhardt.html?hp
EU G-to-G credit mechanism still a possibility this week
Eurozone leaders battled it out last night over whether to extend a credit mechanism, consisting of bilateral loans, to ailing Greece. At the centre of the debate was German insistence on this being offered only as a last resort, not as a source of cheap credit, and being tied to rules of iron fiscal discipline. Germany, like the European Commission, also seems willing to have the IMF involved.
Economist: http://www.economist.com/blogs/charlemagne/2010/03/letting_greece_sink_bit_deeper
FT: http://www.ft.com/cms/s/0/ae54db14-3673-11df-8151-00144feabdc0.html
Comment: http://www.bbc.co.uk/blogs/thereporters/gavinhewitt/
Barroso insists on a deal this week
European Commission President Jose Manuel Barroso urged EU member states to agree on a credit mechanism for ailing governments this week, saying that the process begun on February 11 had gone non long enough. "I hope Member States will take determined and coordinated action. I urge them to take some decisions," he told the FT in an interview yesterday.
"No bail out does not mean no help," Barroso said. He points out that under EU rules there have already been bilateral loans across the Union to several countries, most recently Latvia. "I know Chancellor Merkel. She is a committed European, and I have no doubt that she will, if needed, be in favour of providing financial assistance to Greece," he said.
Why bilateral loans and not a eurozone system? "From consultations taken so far, and we have been working on this for some time now, it seems that coordinated financial loans is the more appropriate mechanism. It is fully compatible with the no bailout clause. It can be implemented with strict conditionality."
Interview: http://www.ft.com/cms/s/0/4da90494-35f0-11df-aa43-00144feabdc0.html
Transcript: http://www.ft.com/cms/s/0/36484548-35c4-11df-963f-00144feabdc0.html
Tuesday, 23 March 2010
Papandreou defends Greece's ability to pull through the crisis
Prime Minister Yiorgos Papandreou yesterday said that Greece would pull itself through recession without external help. "I assure you that we Greeks will make it, and we will make it on our own," he told parliament in a speech supporting a new tax bill. "We've got to the point where we're hearing fantastic scenarios about leaving the euro," he said. "It's a joke."
Amid intense speculation yesterday about a possible expulsion of Greece from the eurozone, European Central Bank president Jean-Claude Trichet also felt it necessary to issue a denial of such an eventuality. "There is no legal way for it to happen," he said.
Papandreou blamed "certain politicians and media, playing on the prejudices of their people, to make Greece the scapegoat for everyone else's problems."
Papandreou also alluded to the "second, greater battle" that lies ahead - of resurrecting the Greek economy on the basis of a perceived social justice and equality before the law.
"I've said it before - corruption and deceit are not in our DNA. Greeks manage to distinguishe themselves in every corner of the world, as long as they get a chance - the right environment, the right institutions. As long as they are not disappointed by any sort of unfair treatment."
He called the crisis "a great opportunity" to set Greece to rights, and his government's tax bill "a true revolution".
The debate over Greece also raged in Brussels yesterday, with European Commission President Jose Manuel Barroso going up against German Chancellor Angela Merkel on aid to Greece.
“I know Chancellor Merkel. She is a committed European and I have no doubts that she will, if needed, be in favour of providing financial assistance to Greece,” Mr Barroso told the Financial Times. Merkel, who leads a fragile coalition, has been under pressure not to commit financial resources to bail out Greece. An FT poll on Sunday confirmed the overwhelmingly anti-bailout popular feeling in Germany.
Partly as a result of German opposition to a safety net for eurozone defaulters, European Union members have become increasingly supportive of an IMF intervention towards Greece if necessary. Barroso openly supported the idea yesterday.
A scheduled meeting yesterday of MEPs with Trichet and Eurogroup President Jean-Claude Juncker focused exclsuively on Greece. The European parliament's press office reported as folows: "Mr Juncker refrained from detailing instruments to help Greece, saying that current commitments from the Member States were enough for the moment. Mr Trichet added that financial backing for Greece must take the form of a loan, not a subsidy, and should be provided only if worsening conditions cause a problem for the eurozone as whole."
Papandreou: http://www.primeminister.gr/2010/03/22/1375
Barroso: http://www.ft.com/cms/s/0/4da90494-35f0-11df-aa43-00144feabdc0.html
MEPs: http://www.europarl.europa.eu/news/expert/infopress_page/008-71099-081-03-13-901-20100322IPR71098-22-03-2010-2010-false/default_el.htm
Prime Minister Yiorgos Papandreou yesterday said that Greece would pull itself through recession without external help. "I assure you that we Greeks will make it, and we will make it on our own," he told parliament in a speech supporting a new tax bill. "We've got to the point where we're hearing fantastic scenarios about leaving the euro," he said. "It's a joke."
Amid intense speculation yesterday about a possible expulsion of Greece from the eurozone, European Central Bank president Jean-Claude Trichet also felt it necessary to issue a denial of such an eventuality. "There is no legal way for it to happen," he said.
Papandreou blamed "certain politicians and media, playing on the prejudices of their people, to make Greece the scapegoat for everyone else's problems."
Papandreou also alluded to the "second, greater battle" that lies ahead - of resurrecting the Greek economy on the basis of a perceived social justice and equality before the law.
"I've said it before - corruption and deceit are not in our DNA. Greeks manage to distinguishe themselves in every corner of the world, as long as they get a chance - the right environment, the right institutions. As long as they are not disappointed by any sort of unfair treatment."
He called the crisis "a great opportunity" to set Greece to rights, and his government's tax bill "a true revolution".
The debate over Greece also raged in Brussels yesterday, with European Commission President Jose Manuel Barroso going up against German Chancellor Angela Merkel on aid to Greece.
“I know Chancellor Merkel. She is a committed European and I have no doubts that she will, if needed, be in favour of providing financial assistance to Greece,” Mr Barroso told the Financial Times. Merkel, who leads a fragile coalition, has been under pressure not to commit financial resources to bail out Greece. An FT poll on Sunday confirmed the overwhelmingly anti-bailout popular feeling in Germany.
Partly as a result of German opposition to a safety net for eurozone defaulters, European Union members have become increasingly supportive of an IMF intervention towards Greece if necessary. Barroso openly supported the idea yesterday.
A scheduled meeting yesterday of MEPs with Trichet and Eurogroup President Jean-Claude Juncker focused exclsuively on Greece. The European parliament's press office reported as folows: "Mr Juncker refrained from detailing instruments to help Greece, saying that current commitments from the Member States were enough for the moment. Mr Trichet added that financial backing for Greece must take the form of a loan, not a subsidy, and should be provided only if worsening conditions cause a problem for the eurozone as whole."
Papandreou: http://www.primeminister.gr/2010/03/22/1375
Barroso: http://www.ft.com/cms/s/0/4da90494-35f0-11df-aa43-00144feabdc0.html
MEPs: http://www.europarl.europa.eu/news/expert/infopress_page/008-71099-081-03-13-901-20100322IPR71098-22-03-2010-2010-false/default_el.htm
Monday, 22 March 2010
German poll confirms anti-bailout position
An FT/Harris poll of European countries on a bailout for Greece yesterday confirmed overwhelming opposition from Germans to the idea. Sixty percent of Germans were opposed, while only about 20 percent were supportive. About a third of Germans felt Greece should temporarily leave the eurozone, while 40 percent felt Germany would itself be better off outside the single currency. In answer to the question, "Would you support your government helping Greece cope with its budget deficit?" the most positive country in the poll was Spain, with just over 40 percent.
http://www.ft.com/cms/s/0/ee055e82-3529-11df-9cfb-00144feabdc0.html
Tenured position in the public sector 'not a given'
Greek Interior Minister Yannis Ragousis says in an interview with To Vima that civil servants with court condemnations for bribery will in future be dismissed from the public sector, thanks to a new legislative amendment.He also wants to discuss and draft a new ethical code that will introduce "substantial procedures" to weed out bad apples.
Ragousis is the second cabinet member to suggest that Pasok will take a different attitude to public tenure. Deputy Prime Minister Theodoros Pangalos had dropped a cryptic comment to that effect in an interview with Ta Nea earlier this year.
Ragousis also said that he has submitted to parliament a long-awaited bill to reduce the country's municipalities by two thirds. The so-called "Kallikratis" plan was among Pasok's electoral promises and is designed to reduce the cost of public administration. The government wants to vote the bill into law during May, giving the interior ministry time to implement it well ahead of local elections in November. It would reduce the country's 1,000-odd municipalities to 370, and get rid of, or conflate, over 4,000 boards of directors of municipal companies.
In the spirit of economy, Ragousis says, the government has reduced this year's contract workers by 35 percent, while the hiring freeze, announced earlier this year, has spared the public payroll 35,000 new employees.
http://www.tovima.gr/default.asp?pid=2&ct=32&artId=321370&dt=21/03/2010
An FT/Harris poll of European countries on a bailout for Greece yesterday confirmed overwhelming opposition from Germans to the idea. Sixty percent of Germans were opposed, while only about 20 percent were supportive. About a third of Germans felt Greece should temporarily leave the eurozone, while 40 percent felt Germany would itself be better off outside the single currency. In answer to the question, "Would you support your government helping Greece cope with its budget deficit?" the most positive country in the poll was Spain, with just over 40 percent.
http://www.ft.com/cms/s/0/ee055e82-3529-11df-9cfb-00144feabdc0.html
Tenured position in the public sector 'not a given'
Greek Interior Minister Yannis Ragousis says in an interview with To Vima that civil servants with court condemnations for bribery will in future be dismissed from the public sector, thanks to a new legislative amendment.He also wants to discuss and draft a new ethical code that will introduce "substantial procedures" to weed out bad apples.
Ragousis is the second cabinet member to suggest that Pasok will take a different attitude to public tenure. Deputy Prime Minister Theodoros Pangalos had dropped a cryptic comment to that effect in an interview with Ta Nea earlier this year.
Ragousis also said that he has submitted to parliament a long-awaited bill to reduce the country's municipalities by two thirds. The so-called "Kallikratis" plan was among Pasok's electoral promises and is designed to reduce the cost of public administration. The government wants to vote the bill into law during May, giving the interior ministry time to implement it well ahead of local elections in November. It would reduce the country's 1,000-odd municipalities to 370, and get rid of, or conflate, over 4,000 boards of directors of municipal companies.
In the spirit of economy, Ragousis says, the government has reduced this year's contract workers by 35 percent, while the hiring freeze, announced earlier this year, has spared the public payroll 35,000 new employees.
http://www.tovima.gr/default.asp?pid=2&ct=32&artId=321370&dt=21/03/2010
Friday, 19 March 2010
Germany shifts on IMF aid to Greece
Germany may be inching closer to acquiescence of an IMF assistance package for Greece, should the country fail to raise money on world markets, the Financial Times reports. The shift is apparently due to both legal and political concerns about allowing a euro-area bailout. A day ago, the FT reported that Italy, Finland and the Netherlands were now openly supportive of IMF assistance to Greece. It is worth noting that the FT and The Economist have, in editorials and Op/Ed pieces, supported IMF involvement in the eurozone, in contrast to continental European political positions.
http://www.ft.com/cms/s/0/3943e114-327f-11df-bf20-00144feabdc0.html
Yesterday was a bad day for the euro and the Athens Exchange: "The FTSE All-World equity index fell back 0.4 per cent from eight-week highs and the euro came under heavy pressure. The costs of insuring eurozone so-called peripheral economies against default were pushed sharply higher, and the Athens stock market fell 3.4 per cent."
FT article: http://www.ft.com/cms/s/0/414787b0-3259-11df-bf20-00144feabdc0.html
http://www.ft.com/cms/s/0/7b74f8ba-32da-11df-a767-00144feabdc0.html
New tax bill
Kathimerini reports on the new tax bill unveiled yesterday in parliament.
http://www.ft.com/cms/s/0/7b74f8ba-32da-11df-a767-00144feabdc0.html
Germany may be inching closer to acquiescence of an IMF assistance package for Greece, should the country fail to raise money on world markets, the Financial Times reports. The shift is apparently due to both legal and political concerns about allowing a euro-area bailout. A day ago, the FT reported that Italy, Finland and the Netherlands were now openly supportive of IMF assistance to Greece. It is worth noting that the FT and The Economist have, in editorials and Op/Ed pieces, supported IMF involvement in the eurozone, in contrast to continental European political positions.
http://www.ft.com/cms/s/0/3943e114-327f-11df-bf20-00144feabdc0.html
Yesterday was a bad day for the euro and the Athens Exchange: "The FTSE All-World equity index fell back 0.4 per cent from eight-week highs and the euro came under heavy pressure. The costs of insuring eurozone so-called peripheral economies against default were pushed sharply higher, and the Athens stock market fell 3.4 per cent."
FT article: http://www.ft.com/cms/s/0/414787b0-3259-11df-bf20-00144feabdc0.html
http://www.ft.com/cms/s/0/7b74f8ba-32da-11df-a767-00144feabdc0.html
New tax bill
Kathimerini reports on the new tax bill unveiled yesterday in parliament.
http://www.ft.com/cms/s/0/7b74f8ba-32da-11df-a767-00144feabdc0.html
Thursday, 18 March 2010
Split appears on IMF aid to Greece
Three eurozone members are increasingly veering towards supporting a direct application by Greece to the IMF, the Financial Times reports. Italy, Finland and the Netherlands are apparently supportive of IMF emergency intervention in the euro area - something that France and Germany consider a loss of credibility to the euro currency and the European project.
http://www.ft.com/cms/s/0/bc84626a-31fd-11df-a8d1-00144feabdc0.html
Greek Prime Minister Yiorgos Papandreou said on Wednesday that an application to the IMF was still on the cards, but he hoped for a European solution after meeting with European Commission President Jose Manuel Barroso.
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_17/03/2010_329029
On Tuesday Papandreou had expressed some disappointment that the Eurogroup, meeting the previous day, had "taken a step forward, without reaching a final decision." He made the remark in a joint press conference with Hungarian Premier Gordon Bajnai in Budapest.
http://www.primeminister.gr/2010/03/16/1289
Today Papandreou will address the European Parliament on the economic and financial crisis.
Three eurozone members are increasingly veering towards supporting a direct application by Greece to the IMF, the Financial Times reports. Italy, Finland and the Netherlands are apparently supportive of IMF emergency intervention in the euro area - something that France and Germany consider a loss of credibility to the euro currency and the European project.
http://www.ft.com/cms/s/0/bc84626a-31fd-11df-a8d1-00144feabdc0.html
Greek Prime Minister Yiorgos Papandreou said on Wednesday that an application to the IMF was still on the cards, but he hoped for a European solution after meeting with European Commission President Jose Manuel Barroso.
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_17/03/2010_329029
On Tuesday Papandreou had expressed some disappointment that the Eurogroup, meeting the previous day, had "taken a step forward, without reaching a final decision." He made the remark in a joint press conference with Hungarian Premier Gordon Bajnai in Budapest.
http://www.primeminister.gr/2010/03/16/1289
Today Papandreou will address the European Parliament on the economic and financial crisis.
Wednesday, 17 March 2010
Greece avoids S&P downgrade
Standard and Poor's on Tuesday said it would not further downgrade Greece from BBB+ status - the result of two downgrades last year - but that the country would retain its negative outlook. The prospect of further downgrades therefore remains.
FT news article: http://www.ft.com/cms/s/0/96c374ce-30dd-11df-b057-00144feabdc0.html
Guardian comment: http://www.guardian.co.uk/business/2010/mar/16/greece-ratings-standard-poors-doubts
No financial aid package yet..
The Eurogroup failed to announce specific measures on Tuesday to assist Greece and other troubled eurozone economies should the need arise, pushing its deadline to March 25. This was in contrast to a statement the previous day by the Eurogroup president, Jean-Claude Juncker, to the effect that the group had come up with an emergency mechanism that could be activated when needed. Greek Finance Minister Yiorgos Papakonstantinou expressed satisfaction at the prospect of a package, but the Greek government is still worried that its cost of borrowing remains too high compared to the rates of other eurozone members.
Juncker press conference: http://tvnewsroom.consilium.europa.eu/media/render-summary-list/vocabulary_id/tags/term_id/246
Monday Eurogroup comment: http://www.reuters.com/article/idUSTRE62E58620100315
Standard and Poor's on Tuesday said it would not further downgrade Greece from BBB+ status - the result of two downgrades last year - but that the country would retain its negative outlook. The prospect of further downgrades therefore remains.
FT news article: http://www.ft.com/cms/s/0/96c374ce-30dd-11df-b057-00144feabdc0.html
Guardian comment: http://www.guardian.co.uk/business/2010/mar/16/greece-ratings-standard-poors-doubts
No financial aid package yet..
The Eurogroup failed to announce specific measures on Tuesday to assist Greece and other troubled eurozone economies should the need arise, pushing its deadline to March 25. This was in contrast to a statement the previous day by the Eurogroup president, Jean-Claude Juncker, to the effect that the group had come up with an emergency mechanism that could be activated when needed. Greek Finance Minister Yiorgos Papakonstantinou expressed satisfaction at the prospect of a package, but the Greek government is still worried that its cost of borrowing remains too high compared to the rates of other eurozone members.
Juncker press conference: http://tvnewsroom.consilium.europa.eu/media/render-summary-list/vocabulary_id/tags/term_id/246
Monday Eurogroup comment: http://www.reuters.com/article/idUSTRE62E58620100315
Sunday, 14 March 2010
Greek economy forecast to shrink up to 4% this year
Deutsche Bank predicts a 4 percent drop in the size of the Greek economy this year in a report released on Wednesday - far more than the 0.3 percent contraction predicted by the Greek stability and growth plan. A European Commission report on the Greek economy forecasts a smaller contraction of 2.25 percent, according to media that have seen leaked versions. The Greek government revised its own original forecast last week and expects the economy to shrink by 0.8 percent of GDP.
Whichever is closer to the mark, the larger-than-expected negative growth gives rise to fears that Greece's fiscal adjustment of four points of GDP this year cannot be realised since GDP will also change. Even so, the Commission apparently says that measures taken so far "appear sufficient to safeguard the 2010 budgetary targets."
The Financial Times reports that members of the eurozone are working out a financial assistance package for Greece to be announced at the meeting of the currency's 16 finance ministers on Monday and Tuesday. It would likely take the form of bilateral loans from other eurozone members backed by state guarantees. Tuesday is also the day when Greece is scheduled to make public a study into how to save its social security system, while a new tax bill goes to parliament on Wednesday.
http://news.kathimerini.gr/4dcgi/_w_articles_economy_100016_13/03/2010_393925
http://www.bloomberg.com/apps/news?pid=20601068&sid=aFP9NpGWixSo
http://www.ft.com/cms/s/0/9a9beaee-2e13-11df-b85c-00144feabdc0.html?nclick_check=1
Comment: The FT's Brussels Blog opines that German conditions towards the rest of Europe stand in the way of a European Monetary Fund:
http://blogs.ft.com/brusselsblog/2010/03/german-ambiguities-underlie-confusion-over-eu-monetary-fund/#more-3636
Deutsche Bank predicts a 4 percent drop in the size of the Greek economy this year in a report released on Wednesday - far more than the 0.3 percent contraction predicted by the Greek stability and growth plan. A European Commission report on the Greek economy forecasts a smaller contraction of 2.25 percent, according to media that have seen leaked versions. The Greek government revised its own original forecast last week and expects the economy to shrink by 0.8 percent of GDP.
Whichever is closer to the mark, the larger-than-expected negative growth gives rise to fears that Greece's fiscal adjustment of four points of GDP this year cannot be realised since GDP will also change. Even so, the Commission apparently says that measures taken so far "appear sufficient to safeguard the 2010 budgetary targets."
The Financial Times reports that members of the eurozone are working out a financial assistance package for Greece to be announced at the meeting of the currency's 16 finance ministers on Monday and Tuesday. It would likely take the form of bilateral loans from other eurozone members backed by state guarantees. Tuesday is also the day when Greece is scheduled to make public a study into how to save its social security system, while a new tax bill goes to parliament on Wednesday.
http://news.kathimerini.gr/4dcgi/_w_articles_economy_100016_13/03/2010_393925
http://www.bloomberg.com/apps/news?pid=20601068&sid=aFP9NpGWixSo
http://www.ft.com/cms/s/0/9a9beaee-2e13-11df-b85c-00144feabdc0.html?nclick_check=1
Comment: The FT's Brussels Blog opines that German conditions towards the rest of Europe stand in the way of a European Monetary Fund:
http://blogs.ft.com/brusselsblog/2010/03/german-ambiguities-underlie-confusion-over-eu-monetary-fund/#more-3636
Friday, 12 March 2010
President Papoulias in second swearing in
Greek President Karolos Papoulias was scheduled to be sworn in at 11:30 on Friday morning for a second term. The question of his re-election in parliament triggered a general election last autumn, after then-opposition Pasok said it would not vote for him. The conservative government in power at the time needed socialist support to gain a two-thirds majority. The New Athenian wrote extensively about the constitutional question raised by the socialists at the time.
http://www.in.gr/news/article.asp?lngEntityID=1114985&lngDtrID=244
New strike paralyses Greece
The third one-day strike this year in protest against austerity measures was probably the widest-reaching, with transport, schools, the public sector and even landfills shut down. Anarchists also made their presence felt chiefly in the Athens Polytechnic area, their traditional haunt. Three bank branches and four hotels suffered damage, as well as shops, according to reports.
http://www.nytimes.com/2010/03/12/world/europe/12greece.html?scp=2&sq=greece&st=cse
http://www.enet.gr/?i=news.el.ellada&id=140408
Scandal file goes missing
A key government file that could shed light on a scandalous land exchange between the last conservative government and Vatopaidi Monastery has gone missing, Kathimerini reports. The file, thought to contain over 1,500 documents, was requested from the agricultural ministry by a parliamentary committee of inquiry now underway into the New Democracy government's economic management. The ministry's general secretary, Yiorgos Kanellopoulos, told Skai television that a now retired civil servant, a Ms. Manteli, took the file home by her own admission, in order to defend herself against charges in the case. The scandal involved the exchange of valuable parcels of public land in Attica and the Halkidike peninsula in northern Greece for land nominally held by Vatopaidi around Lake Vistonida in Thrace, but disputed by farmers in the area.
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_12/03/2010_328026
ECHR ruling boosts Turkish-Cypriots
For many years, Greek-Cypriots have been taking their claims for land compensation to the European Court of Human Rights and winning. The claims concern properties seized by a Turkish invasion in 1974, which continues to occupy more than a third of the island. A new ruling by the court now forces Greek-Cypriots to apply first to a Turkish-Cypriot property commission, the Economist reports. The commission has the power to restore property or award compensation.
http://www.economist.com/world/europe/displayStory.cfm?story_id=15663646&source=hptextfeature
Greek President Karolos Papoulias was scheduled to be sworn in at 11:30 on Friday morning for a second term. The question of his re-election in parliament triggered a general election last autumn, after then-opposition Pasok said it would not vote for him. The conservative government in power at the time needed socialist support to gain a two-thirds majority. The New Athenian wrote extensively about the constitutional question raised by the socialists at the time.
http://www.in.gr/news/article.asp?lngEntityID=1114985&lngDtrID=244
New strike paralyses Greece
The third one-day strike this year in protest against austerity measures was probably the widest-reaching, with transport, schools, the public sector and even landfills shut down. Anarchists also made their presence felt chiefly in the Athens Polytechnic area, their traditional haunt. Three bank branches and four hotels suffered damage, as well as shops, according to reports.
http://www.nytimes.com/2010/03/12/world/europe/12greece.html?scp=2&sq=greece&st=cse
http://www.enet.gr/?i=news.el.ellada&id=140408
Scandal file goes missing
A key government file that could shed light on a scandalous land exchange between the last conservative government and Vatopaidi Monastery has gone missing, Kathimerini reports. The file, thought to contain over 1,500 documents, was requested from the agricultural ministry by a parliamentary committee of inquiry now underway into the New Democracy government's economic management. The ministry's general secretary, Yiorgos Kanellopoulos, told Skai television that a now retired civil servant, a Ms. Manteli, took the file home by her own admission, in order to defend herself against charges in the case. The scandal involved the exchange of valuable parcels of public land in Attica and the Halkidike peninsula in northern Greece for land nominally held by Vatopaidi around Lake Vistonida in Thrace, but disputed by farmers in the area.
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_12/03/2010_328026
ECHR ruling boosts Turkish-Cypriots
For many years, Greek-Cypriots have been taking their claims for land compensation to the European Court of Human Rights and winning. The claims concern properties seized by a Turkish invasion in 1974, which continues to occupy more than a third of the island. A new ruling by the court now forces Greek-Cypriots to apply first to a Turkish-Cypriot property commission, the Economist reports. The commission has the power to restore property or award compensation.
http://www.economist.com/world/europe/displayStory.cfm?story_id=15663646&source=hptextfeature
Monday, 8 March 2010
Papandreou in DC after Berlin, Paris
In DC on Monday:
The head of the International Monetary Fund believes Greece will resolve its debt crisis without an IMF bailout, and today dismissed fears that other European nations will be engulfed by the crisis. "The eurozone wants to deal with the problem itself, and I can understand that," Dominique Strauss-Kahn said. "I think they can do it … and we're just here to help."
http://www.guardian.co.uk/business/2010/mar/08/greece-will-come-through-crisis-imf
In Paris on Sunday:
At a joint press conference in Paris, Sarkozy expressed his unequivocal solidarity with Greece, saying that his finance minister, Christine Lagarde, had already drawn up legislation to help the European Union's most indebted member extricate itself from its worst fiscal crisis in decades.
"Should Greece need financial help, the eurozone will stand by it," the French president said. "That's what partners are for."
http://www.guardian.co.uk/business/2010/mar/07/nicolas-sarkozy-support-greek-economy
In Berlin on Friday:
Angela Merkel, the German chancellor, on Friday pledged to do “everything in order to stabilise the euro, our common currency”, after meeting George Papandreou, the Greek prime minister.
http://www.ft.com/cms/s/0/f635351e-287c-11df-a0b1-00144feabdc0,dwp_uuid=2b8f1fea-e570-11de-81b4-00144feab49a.html
Thank you!
The New Athenian started in August 2009 as an experiment in whether an online venue could build up visitors without money or mass advertising. It has been promoted solely through a periodic round-robin email to 1,200 recipients, a few sites that have chosen to link to it and word of mouth.
Your visits to The New Athenian have helped drive the site to its highest numbers yet for the month ending March 7:
935 unique visitors
1,576 visits
2,145 page views
44 countries
1:08 minutes average times on site
46 percent new visits
89 members
The head of the International Monetary Fund believes Greece will resolve its debt crisis without an IMF bailout, and today dismissed fears that other European nations will be engulfed by the crisis. "The eurozone wants to deal with the problem itself, and I can understand that," Dominique Strauss-Kahn said. "I think they can do it … and we're just here to help."
http://www.guardian.co.uk/business/2010/mar/08/greece-will-come-through-crisis-imf
In Paris on Sunday:
At a joint press conference in Paris, Sarkozy expressed his unequivocal solidarity with Greece, saying that his finance minister, Christine Lagarde, had already drawn up legislation to help the European Union's most indebted member extricate itself from its worst fiscal crisis in decades.
"Should Greece need financial help, the eurozone will stand by it," the French president said. "That's what partners are for."
http://www.guardian.co.uk/business/2010/mar/07/nicolas-sarkozy-support-greek-economy
In Berlin on Friday:
Angela Merkel, the German chancellor, on Friday pledged to do “everything in order to stabilise the euro, our common currency”, after meeting George Papandreou, the Greek prime minister.
http://www.ft.com/cms/s/0/f635351e-287c-11df-a0b1-00144feabdc0,dwp_uuid=2b8f1fea-e570-11de-81b4-00144feab49a.html
Thank you!
The New Athenian started in August 2009 as an experiment in whether an online venue could build up visitors without money or mass advertising. It has been promoted solely through a periodic round-robin email to 1,200 recipients, a few sites that have chosen to link to it and word of mouth.
Your visits to The New Athenian have helped drive the site to its highest numbers yet for the month ending March 7:
935 unique visitors
1,576 visits
2,145 page views
44 countries
1:08 minutes average times on site
46 percent new visits
89 members
Friday, 5 March 2010
Greek protests turn violent
What started as a peaceful protest march turned suddenly into a pitched battle between riot police and a small group of protesters in central Athens. Police say the group emerged from a section of the march sponsored by the Left Coalition, a breakaway communist party that has been accused of giving safe haven to anarchists. The group set upon about a dozen riot police guarding the Council of State, one of Greece’s highest courts. Witnesses say they managed to isolate and badly beat up one officer. They also tore up marble steps for ammunition, and smashed plate glass windows on central avenues. A strike today shut down schools and hospitals, state media, public transport and at least one ministry. Flights were grounded for four hours. Labour unions and left wing parties, responsible for the protests, are scheduling more strikes against what they see as one-sided deficit-reduction measures victimising workers.
View the Irish Times article.
View the Irish Times article.
Thursday, 4 March 2010
New austerity measures bite the Greeks
THE GREEK government says it will effectively axe one in 14 annual salaries from the public payroll and raise VAT as part of an ongoing effort to cut its budget deficit by four points in 2010.
Public servants have gone on strike twice this year, complaining that a 10 per cent cut in their benefits already amounted to the loss of one salary. Yesterday those benefits, which can sometimes double nominal salary, were cut by a further two percentage points. Pensions are being frozen.
Greece has pledged to bring its deficit to 8.7 per cent of GDP in 2010 and was under pressure from the European Union in recent days to make good a €4.8 billion shortfall in its initial plan.
Half of the pain is in public-sector cuts, but the other half is in new revenue. This comes in part from higher value added tax, the top bracket of which now rises from 19 to 21 per cent. Inflicting further pain on household budgets will be a 10 cents a litre hike on unleaded fuel, a 65 per cent consumer tax on cigarettes and a further tax hike on alcohol. Even electrical power will suffer a fee of €5 per megawatt hour.
Preparing public opinion for the latest tranche of measures on Tuesday, prime minister Yiorgos Papandreou said: “We are today in a state of war against the worst-case scenario for our country.”
That scenario, by his description, was a cost of borrowing so prohibitively high that the state would be unable to pay salaries and pensions, which represent 52 per cent of its outlay. “Today, when we borrow €5 billion, we pay €750 million more than Germany does in interest,” Mr Papandreou said. “How can we ever compete with the German economy?”
He is facing increasingly stiff opposition at home, however. These measures would deepen the recession, said conservative leader Antonis Samaras, who rejected the salary cut and VAT and fuel tax rises. He accused Mr Papandreou, who came to power in October, of waiting five months to cut the cost of government.
If he had acted sooner, he said, the cuts would have been softer and less painful. The government’s indecisiveness was expensive.
The governing council of the European Central Bank (ECB) and European Commission chief José Manuel Barroso backed the new measures, each of them underlining the importance of public-sector pay cuts.
In a statement last night, the ECB’s policy-making body said it welcomed the “convincing additional and permanent” measures and said it appreciated that Mr Papandreou’s administration planned to implement them very swiftly.
“Importantly, cutting public expenditure and adjusting public sector wages is a key signal both for the long-term fiscal sustainability and for substantially enhancing the price and cost competitiveness of the Greek economy,” the council said.
Read the full version of this story in The Irish Times.
The full tranche of yesterday's measures is as follows:
1. New revenue
- VAT (or sales tax) rises from 4.5 percent to 5 percent, from 9 percent to 10 percent and from 19 percent to 21 percent, to bring in 1.3 billion euros.
- A series of consumer taxes aim to bring in a further 1.1 billion euros, including:
- 8 cents on the litre for regular unleaded fuel, and 3 cents for diesel (heating oil remains as is)
- Tax on cigarettes rises from 63 percent to 65 percent
- Tax on alcohol rises to 20 percent
- The Public Power Corporation loses its exemption from tax on oil, and a new consumer tax is levied on electric power
- Cars with a retail value above 35,000 euros, pleasure craft, private helicopters, precious stones and metals and furs and leather will sustain a new luxury consumer tax
Total new revenue: 2.4 billion euros
2. New cost cuts:
- Public sector Easter, summer and Christmas bonuses are cut by 30 percent. These three bonuses amount to two monthly salaries, so public servants lose 60 percent of their 14th salary.
- Benefits above salary to public workers are cut by 2 percent, further to the 10 percent cut announced last month
- The salaries and benefits of all employees working in state-owned or state-controlled companies is cut by 7 percent across the board
- Pensions are frozen
- The state will reduce its outlay to the pension funds of the Public Power Corporation (DEI) and the Hellenic Telecommunications Organisation (OTE) by 10 percent
So far, the measures save 1.7 billion euros.
- The public investments programme is cut by 500 million euros
- The public investment programme in education is cut by 200 million euros
Total savings: 2.4 billion euros
Key 10-year bond sale goes well
Greece's sale of a 5 billion euro bond issue was going well on Thursday, a day after the austerity measures were announced, with the FT reporting an oversubscription of 2 billion euros.
Ireland overhauls pensions radically
Ireland has just announced an overhaul of its pension system that includes many of the ideas currently being discussed in Greece. The retirement age will rise to 66 in four years' time, and eventually to 68. Pensions will be calculated on average career earnings, not just the last few years of work. And young entrants into the labour market will be obliged to participate in a second pillar scheme in the private sector, where they will contribute four percent of salary, their employer two percent and the government two percent.While the state pension plan will remain a defined-benefits plan, with the state guaranteeing 35 percent of average industrial earnings, the private scheme will be a defined-contribution one where benefits may fluctuate according to fund earnings.
Read the full story in The Irish Times.
Public servants have gone on strike twice this year, complaining that a 10 per cent cut in their benefits already amounted to the loss of one salary. Yesterday those benefits, which can sometimes double nominal salary, were cut by a further two percentage points. Pensions are being frozen.
Greece has pledged to bring its deficit to 8.7 per cent of GDP in 2010 and was under pressure from the European Union in recent days to make good a €4.8 billion shortfall in its initial plan.
Half of the pain is in public-sector cuts, but the other half is in new revenue. This comes in part from higher value added tax, the top bracket of which now rises from 19 to 21 per cent. Inflicting further pain on household budgets will be a 10 cents a litre hike on unleaded fuel, a 65 per cent consumer tax on cigarettes and a further tax hike on alcohol. Even electrical power will suffer a fee of €5 per megawatt hour.
Preparing public opinion for the latest tranche of measures on Tuesday, prime minister Yiorgos Papandreou said: “We are today in a state of war against the worst-case scenario for our country.”
That scenario, by his description, was a cost of borrowing so prohibitively high that the state would be unable to pay salaries and pensions, which represent 52 per cent of its outlay. “Today, when we borrow €5 billion, we pay €750 million more than Germany does in interest,” Mr Papandreou said. “How can we ever compete with the German economy?”
He is facing increasingly stiff opposition at home, however. These measures would deepen the recession, said conservative leader Antonis Samaras, who rejected the salary cut and VAT and fuel tax rises. He accused Mr Papandreou, who came to power in October, of waiting five months to cut the cost of government.
If he had acted sooner, he said, the cuts would have been softer and less painful. The government’s indecisiveness was expensive.
The governing council of the European Central Bank (ECB) and European Commission chief José Manuel Barroso backed the new measures, each of them underlining the importance of public-sector pay cuts.
In a statement last night, the ECB’s policy-making body said it welcomed the “convincing additional and permanent” measures and said it appreciated that Mr Papandreou’s administration planned to implement them very swiftly.
“Importantly, cutting public expenditure and adjusting public sector wages is a key signal both for the long-term fiscal sustainability and for substantially enhancing the price and cost competitiveness of the Greek economy,” the council said.
Read the full version of this story in The Irish Times.
The full tranche of yesterday's measures is as follows:
1. New revenue
- VAT (or sales tax) rises from 4.5 percent to 5 percent, from 9 percent to 10 percent and from 19 percent to 21 percent, to bring in 1.3 billion euros.
- A series of consumer taxes aim to bring in a further 1.1 billion euros, including:
- 8 cents on the litre for regular unleaded fuel, and 3 cents for diesel (heating oil remains as is)
- Tax on cigarettes rises from 63 percent to 65 percent
- Tax on alcohol rises to 20 percent
- The Public Power Corporation loses its exemption from tax on oil, and a new consumer tax is levied on electric power
- Cars with a retail value above 35,000 euros, pleasure craft, private helicopters, precious stones and metals and furs and leather will sustain a new luxury consumer tax
Total new revenue: 2.4 billion euros
2. New cost cuts:
- Public sector Easter, summer and Christmas bonuses are cut by 30 percent. These three bonuses amount to two monthly salaries, so public servants lose 60 percent of their 14th salary.
- Benefits above salary to public workers are cut by 2 percent, further to the 10 percent cut announced last month
- The salaries and benefits of all employees working in state-owned or state-controlled companies is cut by 7 percent across the board
- Pensions are frozen
- The state will reduce its outlay to the pension funds of the Public Power Corporation (DEI) and the Hellenic Telecommunications Organisation (OTE) by 10 percent
So far, the measures save 1.7 billion euros.
- The public investments programme is cut by 500 million euros
- The public investment programme in education is cut by 200 million euros
Total savings: 2.4 billion euros
Key 10-year bond sale goes well
Greece's sale of a 5 billion euro bond issue was going well on Thursday, a day after the austerity measures were announced, with the FT reporting an oversubscription of 2 billion euros.
Ireland overhauls pensions radically
Ireland has just announced an overhaul of its pension system that includes many of the ideas currently being discussed in Greece. The retirement age will rise to 66 in four years' time, and eventually to 68. Pensions will be calculated on average career earnings, not just the last few years of work. And young entrants into the labour market will be obliged to participate in a second pillar scheme in the private sector, where they will contribute four percent of salary, their employer two percent and the government two percent.While the state pension plan will remain a defined-benefits plan, with the state guaranteeing 35 percent of average industrial earnings, the private scheme will be a defined-contribution one where benefits may fluctuate according to fund earnings.
Read the full story in The Irish Times.
Tuesday, 2 March 2010
Further austerity announcements expected tomorrow
Following yesterday's announcements by European Monetary Affairs Commissioner Olli Rehn, the Greek press awaited tomorrow's new austerity announcements. To Vima carried a story predicting a 20 percent cut to above-salary benefits, which will be equivalent to a whole salary, for government employees. It also predicts a fuel, alcohol and tobacco hike. Employment Minister Andreas Loverdos has already frozen pensions for three of the largest funds.
http://www.in.gr/news/article.asp?lngEntityID=1111847&lngDtrID=244
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_02/03/2010_325994
Further austerity measures in sight for Greece
European Monetary Affairs Commissioner Olli Rehn yesterday called on Greece to implement further measures to ensure its deficit reduction target of four percent this year.
“The measures outlined in the Greek stability plan over January and February certainly go in the right direction, but … additional measures of fiscal consolidation are necessary so that the deficit reduction target for this year can be met,” Rehn told journalists in Athens. He described meeting this target “the one single most important thing for the moment”.
Greece has pledged to reduce its yawning 2009 deficit of 12.7 percent of GDP to 8.7 percent this year. It has so far reduced public salaries by 4-6 percent and raised petrol tax. But EU, European Central Bank and International Monetary Fund auditors who visited the Greek finance ministry last week reportedly found a 4.5 billion euro shortfall in the execution of the stability plan.
Even after implementing the first tranche of measures, Greece came away empty-handed from an informal European Union summit in early February to discuss a possible aid package. Asked repeatedly whether the EU was considering a a financial assistance package, Rehn said cryptically, “We are ready to put in place a plan for co-ordination and the euro area has the means to ensure the stability of the euro area as a whole.” He flatly denied that Prime Minister Yiorgos Papandreou and senior cabinet members, whom he met, had asked for “direct financial support”.
France and Germany are reportedly working on extending to Athens loan guarantees or bond purchases, but only in the event that Greece cannot sell its bonds on international markets.
The further austerity measures, due to be announced later this week, could take several forms. For the general public, the government is widely expected to escalate last month’s petrol tax hike. It is also reportedly mulling over a VAT increase. For public servants, who last week went on strike in protest at the especial pain reserved for public servants, there could be another cut in benefits above salary. Those benefits can add between 30 and 90 percent of salary over again. On Greek talk shows there is panicked discussion of the possible elimination of the Christmas bonus from government salaries.
In the longer term, the government is under pressure from the European Union to reform its pension entitlements. Greece is an ageing society, with 2.7 million retirees supported by 4 million workers, one quarter of whom work for the government and whose salaries are thus tax-supported.
Many Greek commentators have decried the lack of more concrete support to Greece as a lack of solidarity. “The euro is based on solidarity that goes both ways,” said Rehn. “It is based on respect for the common rules. No member of the euro can live permanently beyond its means. Either you control your debt or your debt starts controlling you.”
You can read this story in the Irish Times.
http://www.in.gr/news/article.asp?lngEntityID=1111847&lngDtrID=244
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_02/03/2010_325994
Further austerity measures in sight for Greece
European Monetary Affairs Commissioner Olli Rehn yesterday called on Greece to implement further measures to ensure its deficit reduction target of four percent this year.
“The measures outlined in the Greek stability plan over January and February certainly go in the right direction, but … additional measures of fiscal consolidation are necessary so that the deficit reduction target for this year can be met,” Rehn told journalists in Athens. He described meeting this target “the one single most important thing for the moment”.
Greece has pledged to reduce its yawning 2009 deficit of 12.7 percent of GDP to 8.7 percent this year. It has so far reduced public salaries by 4-6 percent and raised petrol tax. But EU, European Central Bank and International Monetary Fund auditors who visited the Greek finance ministry last week reportedly found a 4.5 billion euro shortfall in the execution of the stability plan.
Even after implementing the first tranche of measures, Greece came away empty-handed from an informal European Union summit in early February to discuss a possible aid package. Asked repeatedly whether the EU was considering a a financial assistance package, Rehn said cryptically, “We are ready to put in place a plan for co-ordination and the euro area has the means to ensure the stability of the euro area as a whole.” He flatly denied that Prime Minister Yiorgos Papandreou and senior cabinet members, whom he met, had asked for “direct financial support”.
France and Germany are reportedly working on extending to Athens loan guarantees or bond purchases, but only in the event that Greece cannot sell its bonds on international markets.
The further austerity measures, due to be announced later this week, could take several forms. For the general public, the government is widely expected to escalate last month’s petrol tax hike. It is also reportedly mulling over a VAT increase. For public servants, who last week went on strike in protest at the especial pain reserved for public servants, there could be another cut in benefits above salary. Those benefits can add between 30 and 90 percent of salary over again. On Greek talk shows there is panicked discussion of the possible elimination of the Christmas bonus from government salaries.
In the longer term, the government is under pressure from the European Union to reform its pension entitlements. Greece is an ageing society, with 2.7 million retirees supported by 4 million workers, one quarter of whom work for the government and whose salaries are thus tax-supported.
Many Greek commentators have decried the lack of more concrete support to Greece as a lack of solidarity. “The euro is based on solidarity that goes both ways,” said Rehn. “It is based on respect for the common rules. No member of the euro can live permanently beyond its means. Either you control your debt or your debt starts controlling you.”
You can read this story in the Irish Times.
Monday, 1 March 2010
Greece begins to undertake further austerity measures
Employment Minister Andreas Loverdos has announced a zero percent raise in pensions this year for 2.7 million retirees, according to Greek press reports. The measure would apparently save the government half a billion euros this year, but the money is unlikelty to go towards holding down the deficit because of health cost overruns.
According to news reports, European Union auditors who visited the finance ministry last week found a 4.5 billion euro shortfall in the execution of the Greek stability plan, which aims to reduce the deficit by four points this year to 8.7 percent of GDP. They are reportedly asking for the equivalent amount in further public cost cuts.
Those further cuts are likely to come in the form of another cut to benefits above salary and suspension of the Christmas bonus for public servants, another fuel tax hike, a VAT hike and a social security adjustment to keep pension costs from rising as a proportion of GDP over the next two decades. The measures as likely to be finalised today following a visit by European Monetary Affairs Commissioner Olli Rehn to Athens to see Finance Minister Yiorgos Papakonstantinou and Andreas Loverdos.
http://www.enet.gr/?i=news.el.politikh&id=136587
http://www.in.gr/news/article.asp?lngEntityID=1111178&lngDtrID=244
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_28/02/2010_325782
The EU assistance thriller over Greece begins to move towards resolution
The Financial Times reports that European leaders are minded to extend Athens financial assistance in the form of loan guarantees or bond purchases but only in the event that Greece cannot sell its bonds on international markets. This is a big improvement on the sentiments being expressed to journalists a week ago, which were that Greece would have to tie its own shoelaces. Greece must sell a 5 billion euro bond this week, which markets see as a critical test of its creditworthiness. And it must refinance 22 billion euros' worth of debt by the end of May.
http://www.ft.com/cms/s/0/f793a8a0-249e-11df-8be0-00144feab49a.html
http://www.ft.com/cms/s/0/a7a677d8-230d-11df-a25f-00144feab49a,s01=1.html
Hedge funds have made money betting on Greece's crisis, the FT reports.
http://www.ft.com/cms/s/0/a6b71b50-249f-11df-8be0-00144feab49a.html
Employment Minister Andreas Loverdos has announced a zero percent raise in pensions this year for 2.7 million retirees, according to Greek press reports. The measure would apparently save the government half a billion euros this year, but the money is unlikelty to go towards holding down the deficit because of health cost overruns.
According to news reports, European Union auditors who visited the finance ministry last week found a 4.5 billion euro shortfall in the execution of the Greek stability plan, which aims to reduce the deficit by four points this year to 8.7 percent of GDP. They are reportedly asking for the equivalent amount in further public cost cuts.
Those further cuts are likely to come in the form of another cut to benefits above salary and suspension of the Christmas bonus for public servants, another fuel tax hike, a VAT hike and a social security adjustment to keep pension costs from rising as a proportion of GDP over the next two decades. The measures as likely to be finalised today following a visit by European Monetary Affairs Commissioner Olli Rehn to Athens to see Finance Minister Yiorgos Papakonstantinou and Andreas Loverdos.
http://www.enet.gr/?i=news.el.politikh&id=136587
http://www.in.gr/news/article.asp?lngEntityID=1111178&lngDtrID=244
http://www.kathimerini.gr/4dcgi/_w_articles_kathremote_1_28/02/2010_325782
The EU assistance thriller over Greece begins to move towards resolution
The Financial Times reports that European leaders are minded to extend Athens financial assistance in the form of loan guarantees or bond purchases but only in the event that Greece cannot sell its bonds on international markets. This is a big improvement on the sentiments being expressed to journalists a week ago, which were that Greece would have to tie its own shoelaces. Greece must sell a 5 billion euro bond this week, which markets see as a critical test of its creditworthiness. And it must refinance 22 billion euros' worth of debt by the end of May.
http://www.ft.com/cms/s/0/f793a8a0-249e-11df-8be0-00144feab49a.html
http://www.ft.com/cms/s/0/a7a677d8-230d-11df-a25f-00144feab49a,s01=1.html
Hedge funds have made money betting on Greece's crisis, the FT reports.
http://www.ft.com/cms/s/0/a6b71b50-249f-11df-8be0-00144feab49a.html
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