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Sunday, December 2, 2012

Merkel Softens on Write-Off as Greece Prepares Buyback


TheChronicleHerald.ca

Merkel Softens on Write-Off as Greece Prepares Buyback
Businessweek
Chancellor Angela Merkel opened the possibility that Germany may ultimately accept a write-off of Greek debt, as policy makers this week attempt to engineer a buyback that's crucial for Greece to receive more funding. With Greece preparing to open bids ...
German chancellor Merkel does not rule out forgiving some of Greece's debt ...Washington Post
Merkel urges Germans to believe Greece will use bailout to progressTheChronicleHerald.ca
Merkel does not rule out future Greek debt "haircut"Reuters
The Associated Press -The Guardian
all 420 news articles »

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Boehner 'flabbergasted' by Treasury secretary's plan to avoid fiscal cliff

Tim Geithner joins House speaker in taking US economic debate to Sunday morning talk shows as sides struggle for agreement

Republican leader John Boehner said Sunday he was "flabbergasted" by Treasury secretary Tim Geithner plan to save the nation from the fiscal cliff, in the latest show of brinkmanship over a deal to avert the year end budget crises.

His statement came as Washington leaders took to the airwaves amid an escalation in the clash over how to avert the automatic triggering of massive spending cuts and the expiration of across-the-board tax cuts.

Geithner went on a media blitz Sunday to defend president Barack Obama's position over the fiscal cliff. With less than a month to go, Geithner said he could not promise Congress would find a solution. If the tax rates expire and cuts are imposed as they stand, the Congressional Budget Office calculates the US will be plunged back into recession and unemployment will spike to 9.1%.

"That's a decision that lies in the hands of the Republicans that are now opposing an increase in tax rates" for the wealthiest Americans, Geithner told Fox News Sunday.

Geithner told CBS's Face the Nation: "Just remember to extend those tax cuts costs $1tn dollars over 10 years. There is no way we can get back to a balanced plan that put us back on the path to living within our means, protects Medicare, invests in things we need, if you extend those tax cuts."

Boehner, speaker of the House of Representatives, renewed his stand against increased tax rates for the rich. "Here's the problem," Boehner told Fox. "When you go and increase rates, you make it more difficult for our economy to grow." Boehner said if Republicans agreed to give Obama a proposed $1.6tn in new tax revenue, "He's going to spend it," not reduce the deficit.

Last week, Obama said he believed the two sides would reach an agreement before Christmas. "We're nowhere," Boehner said Sunday. The president's advisers have set out a plan that calls for the expiration of tax cuts for those earning over $250,000 as part of a plan to raise $1.6tn more in tax revenues over the next 10 years. In exchange, Obama agreed to $400bn in savings from entitlement programmes over the next 10 years but pushed those talks into next year with no guarantees.

On CBS, Republican senator Lindsey Graham slammed Obama's plans to tackle the debt crisis by imposing higher taxes on the most wealthy. He said Obama's plans failed to address entitlement reform – cuts in social security and Medicare benefits. Graham championed a plan first put forward by failed presidential candidate Mitt Romney to cap the size of deductions that the rich can take.

"If you raise tax rates you get $400bn in revenue and you hurt job creation. If you limit reductions to about $40,000-$50,000 per person, you protect the middle class and you get about $800bn in revenue," he said. "And 100% of Americans are going to lose everything we know as America if we don't fix entitlements. We are becoming Greece because of out-of-control entitlements."

"I think we are going over the cliff. It's pretty clear to me they have made a political calculation," said Graham.

Geithner said he still believed a deal was possible and that the "political theatre" could be a sign of progress. "I actually think that we're gonna get there," he said on ABC's This Week. "I think we're actually making a little bit of progress, but we're still some distance apart."

The row comes amid signs that political deadlock is harming the US economy. Business leaders have said they are holding back on hiring as they deal with the uncertainty created by the fiscal cliff. On Friday, the US releases its latest non-farm payroll figures, the key monthly jobs report which may give a fuller picture of the fiscal cliff's true impact.


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Greek PM says pension funds will not join buyback


The West Australian

Greek PM says pension funds will not join buyback
Taipei Times
Greek pension funds will not take part in a debt buyback that is a key part of the country's international bailout, Greek Prime Minister Antonis Samaras said in a newspaper interview. Greece must conduct the deal by Dec. 13, before it receives more ...
Greek Pension Funds Will Not Take Part in Bond Buyback -Prime MinisterWall Street Journal
Greek premier: Pension funds won't be included in bond buyback schemeWashington Post
Greek Coalition Uneasy Over Taxes, ImmigrantsGreek Reporter
Fox Business
all 87 news articles »

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Angela Merkel hints at future writedown of Greek debt

German chancellor's comments likely to bolster critics who accuse her of concealing the full cost of Greece's latest aid deal

Angela Merkel has given her clearest signal yet that eurozone governments may have to take losses on the Greek debt they own, but only if Athens sticks to a painful programme of economic reforms.

Fresh from a bruising victory in the Bundestag over Greece's aid plan, the German chancellor told the Bild am Sonntag newspaper that a "haircut" could be considered for Greece in two years.

"If Greece one day again manages with its revenue without getting new debt, then we must look at and assess the situation," she said. "That is not the case before 2014-15 if everything goes according to plan."

The comments may bolster her critic who claim that she has concealed the full cost of Greece's latest aid deal.

Merkel added that she was also pushing for tougher sanctions on eurozone members who failed to meet budget targets to be agreed with the European commission (EC), as part of the push for closer fiscal ties within the single currency region.

Merkel's authority as chancellor took a knock on Friday when 23 members of her coalition voted against a motion approving a two-year extension to Greece's aid programme, and the advance of €44bn of loans to Athens. But the support of MPs from other parties meant it passed comfortably.

Eurozone finance minister are due to discuss the aid programme on Monday at a meeting in Brussels, where Greece's Yannis Stournaras will present details of a bond buyback scheme that must succeed before Athens receives its next tranche of rescue funding.

Last week saw some progress in the eurozone crisis, with ministers finally reaching agreement on Greece and the EC approving a €37bn restructuring of Spain's banks. Experts warn that the crisis will continue to rumble on this week.

"It is unlikely that any sustainable solution to the Greek problem will be found," said Sony Kapoor of the Re-Define thinktank. "While progress will be made in Spain we will not be hearing the end of problems in Spanish banks anytime soon."

Spain's prime minister admitted over the weekend that Madrid might miss its deficit targets for 2012. Mariano Rajoy told the La Razon newspaper that cutting borrowing to 6.3% of GDP this year was "very complicated" and "very difficult", adding: "Our goal is to do things well and we will see what will happen at the end of the year."


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Merkel does not rule out Greek haircut after 2014





BERLIN (AP) — Germany no longer rules out the possibility of forgiving Greece some of its debt once the country's finances are in order, Chancellor Angela Merkel said, signaling a softening of her government's tough stance on Greece.

Merkel's government had previously ruled out forgiving debt, arguing that Greece must implement the agreed-upon austerity measures and structural reforms in return for its bailout loans.

Merkel's comments came only two days after Germany's parliament voted in favor of granting Greece more lenient terms on its bailout program, clearing a necessary hurdle for disbursing a €44 billion ($57 billion) rescue loan payment in December that Athens needs to avoid bankruptcy.


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Euro Zone Finance Ministers to Meet Again on Greek Bailout


Livemint

Euro Zone Finance Ministers to Meet Again on Greek Bailout
New York Times
BRUSSELS — They meet yet again. And once more, the agenda will be dominated by a looming deadline on the unfinished business of Greece. Euro zone finance ministers are to gather in Brussels on Monday for their fourth meeting in four weeks. Last week ...
Hedge Funds May Hold Back Greek Bond Plan, Nomura SaysBloomberg
Analysis: Greek deal puts euro zone in slow recovery roomFox Business
In the End, Greek Crisis Will Hit TaxpayersWall Street Journal
Reuters -Times of Oman -Forbes
all 148 news articles »

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Global water crisis: too little, too much, or lack of a plan?

For most of history, thirsty humans made do with what moisture fell from above: The sun warmed the salty seas, pure water evaporated into the air and then cooled and fell to the earth as precipitation. There it clung to glaciers, froze and thawed in lakes, was absorbed by plant roots, coursed through fractured bedrock, and seeped slowly through soil, into aquifers. Most of it returned to sea and sky all over again. There is as much of that water on the planet today as when the first amphibian flopped ashore; as much as when the ancient Greeks divined the future in the babble of brooks.

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Greek Generals Fired Over PKK Book Airing


Greek Generals Fired Over PKK Book Airing
Greek Reporter
Greek Defense Minister Panos Panayotopulos has discharged the head of the War Museum and three other generals following the presentation of a book by Murat Karayilan, a senior member of the Kurdistan Workers' Party (PKK) which is listed as a terrorist ...


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High police support for Greece's Golden Dawn

Polling data suggest a high percentage of uniformed officers voted for the far-right Golden Dawn party.

READ THE ORIGINAL POST AT www.aljazeera.comhttp

German chancellor Merkel does not rule out forgiving some of Greece's debt ...


German chancellor Merkel does not rule out forgiving some of Greece's debt ...
Washington Post
BERLIN — Germany's chancellor is not ruling out the possibility of forgiving Greece some of its debt once the country's finances are in order. Angela Merkel told German Sunday tabloid Bild am Sonntag that the question of debt forgiveness, or a so ...


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Merkel does not rule out Greek haircut after 2014

BERLIN (AP) — Germany's chancellor is not ruling out the possibility of forgiving Greece some of its debt once the country's finances are in order.

READ THE ORIGINAL POST AT hosted2.ap.org

Merkel urges Germans to believe Greece will use bailout to progress


TheChronicleHerald.ca

Merkel urges Germans to believe Greece will use bailout to progress
TheChronicleHerald.ca
BERLIN — Chancellor Angela Merkel said she understands the frustration felt by many Germans over the repeated bailout programs for debt-ridden Greece, but insisted they are in her country's self-interest because they help stabilize the eurozone as a ...
Merkel does not rule out future Greek debt "haircut"Reuters
Merkel acknowledges Germans' frustration on GreeceThe Associated Press
Greece to demand bond buyback from banks, not pension fundsThe Voice of Russia
Greek Reporter
all 240 news articles »

READ THE ORIGINAL POST AT thechronicleherald.ca

Greek Coalition Uneasy Over Taxes, Immigrants


Greek Coalition Uneasy Over Taxes, Immigrants
Greek Reporter
Greek Prime Minister Antonis Samaras' uneasy coalition government is showing signs of strains again, barely days after it won pending approval of the release of a series of $56.7 billion in loans from international lenders, with disputes over ending ...

and more »

READ THE ORIGINAL POST AT greece.greekreporter.com

Greek deal puts euro zone in slow recovery room


Moneycontrol.com

Greek deal puts euro zone in slow recovery room
Reuters India
By Paul Taylor. PARIS | Sun Dec 2, 2012 3:36pm IST. PARIS (Reuters) - The euro zone is in the recovery room now the danger of a Greek default has been averted for a couple of years, but it is not yet safe from a Japanese-style "lost decade". The currency ...
Hedge Funds May Hold Back Greek Bond Plan, Nomura SaysBloomberg
Europe's Avoidable Collision CourseNew York Times
Greek buyback looks destined to succeedReuters
Forbes -Financial Times -Times of Malta
all 135 news articles »

READ THE ORIGINAL POST AT in.reuters.com

Analysis: Greek deal puts euro zone in slow recovery room


Wall Street Journal

Analysis: Greek deal puts euro zone in slow recovery room
Reuters
PARIS (Reuters) - The euro zone is in the recovery room now the danger of a Greek default has been averted for a couple of years, but it is not yet safe from a Japanese-style "lost decade". The currency area's escape route hinges more on the pace of ...
PM says Greek pension funds won't join debt buy-backChicago Tribune
EU's reluctant rescue package will prevent a Greek tragedy – for nowIrish Independent
Hedge Funds May Hold Back Greek Bond Plan, Nomura SaysBloomberg
New York Times -Wall Street Journal -Business Insider
all 135 news articles »

READ THE ORIGINAL POST AT www.reuters.com

Greece relieves four generals of duties over PKK book


Press TV

Greece relieves four generals of duties over PKK book
Press TV
Greece has discharged four military officials over presentation of a book written by a senior member of the Kurdistan Workers' Party (PKK) in the War Museum of the Greek Defense Ministry in Athens. Greek Defense Minister Panos Panayotopulos discharged ...


READ THE ORIGINAL POST AT www.presstv.ir

Business News Dec 2: Keystone Pipeline; Germany, Greece; China Index Grows


Business News Dec 2: Keystone Pipeline; Germany, Greece; China Index Grows
WTVY, Dothan
In an interview released Saturday, Merkel told Sunday tabloid Bild am Sonntag: "I obviously feel many citizens' skepticism, and partly understand it, because Greece has often disappointed its partners in the past." The chancellor stressed in the ...

and more »

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Merkel Does Not Rule Out Future Greek Debt 'Haircut'

German Chancellor Angela Merkel said on Sunday that Greece's creditors may look at writing down more of its debt but not before the current bailout program has run its course. Last Tuesday euro zone finance ministers and the IMFÂ approved a package of measures including interest rate reductions and an extension of repayment periods aimed at cutting Greece's public debt to 124 percent of national output by 2020. Germany insists a writedown of Greek debt held by euro zone governments would be illegal, though Finance Minister Wolfgang Schaeuble has also recently signaled that some kind of debt 'haircut' for official lenders might be needed eventually. "If Greece one day handles its revenues...

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Greece delays bank results ahead of debt buyback


New Europe

Greece delays bank results ahead of debt buyback
The News International
ATHENS: Greece's finance ministry on Friday announced a new delay in the release of six-month bank results as it prepared to launch a bond buyback programme to bring the country's runaway debt under control. Finance Minister Yannis Stournaras ...
After Greece: Ireland's next moveIrish Times
European leaders agree on aid package to cut Greece burdenTimes of Malta
Greece rescued againNew Europe
Quartz -Reuters -New York Times
all 135 news articles »

READ THE ORIGINAL POST AT www.thenews.com.pk

Greece bailout: How the crisis fuels the arts in Athens


Greece bailout: How the crisis fuels the arts in Athens
BBC News
It may not have the grandeur of Paris or Vienna but Athens has its own oddly shabby beauty. Beneath the magnificent archaeological sites, tree-lined streets hide pockets of elegance. However, the city is also drab and unsightly in large areas ...


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How crisis is fuelling the arts in Athens

Athens' artists driven by Greece's economic crisis

READ THE ORIGINAL POST AT www.bbc.co.uk

Osborne faces reckoning as fiscal rules come back to haunt him

Amid sluggish growth and fears over Britain's AAA credit rating, the chancellor has difficult questions to answer – over his own pledges on the deficit

When Gordon Brown was in No 11 Downing Street, last-minute tweaks and late-night dashes to the printers were part of the ritual in the runup to a major outing for the chancellor at the dispatch box.

But having tied his own hands by setting up the independent Office for Budget Responsibility (OBR), run by ex-Institute for Fiscal Studies director Robert Chote, Osborne can't get away with the skin-of-the-teeth decision-making favoured by the Treasury's movers and shakers in the Labour years.

Instead, Osborne and his aides now have to present any tax and spending changes they plan to make to the OBR well in advance, so that it can make its own projections of the impact on the public finances.

Just because the numbers are already inked in, though, it won't make the chancellor's mathematics any easier. When he delivers Wednesday's autumn statement, Osborne will have to explain why his austerity drive has failed to kick-start growth, a full two-and-a-half years after the government came to power. He is also likely to be forced to concede that at least one of his cherished fiscal rules will have to be torn up.

Setting up the OBR and drafting two new rules to replace Gordon Brown's discredited fiscal framework in 2010 enshrined the chancellor's deficit-cutting plans at the heart of government policy, after an election campaign in which the Tories had raised the spectre of a Greek-style economic death spiral if the public finances were not brought under control.

More importantly, the new regime tied Osborne's hands, preventing the Treasury from massaging its economic forecasts to make the public finance projections add up – something Brown was repeatedly accused of when he was in Downing Street.

However, the OBR's independence from government is no guarantee that its forecasts are any better than those of the Treasury (or the Bank of England). Chote's team has repeatedly overestimated the strength of the economy – and, some experts argue, the likely impact of the deepest cuts in a generation on the UK's growth rate.

Since Osborne delivered his 2010 budget, the economy has plunged back into a double-dip recession, while growth has repeatedly undershot expectations. On Wednesday, when it publishes its latest projections, the OBR is likely to have to cut this year's growth rate from 0.8% to something around zero, and next year's from 2% to something closer to 1%.

"The growth forecasts that the OBR had made in March looked optimistic at the time and are now well above other economists' forecasts," says Simon Wells, UK economist at HSBC.

Such large cuts in growth forecasts mean billions of pounds in lost tax revenues, and more costly welfare bills – putting the public finances way off track. This year alone, most analysts believe the latest official figures, covering the first seven months of the fiscal year, suggest that the deficit will be at least £10bn larger in 2012-13 than the £121bn the OBR was projecting in the spring.

In last year's autumn statement, the chancellor extended his austerity plans for two years beyond the next general election in 2015, so that he could still say that his "fiscal mandate", of eliminating the structural budget deficit over the coming five years, would be met.

The IFS now believes he may need to repeat that trick, promising relentless austerity until 2018. "Austerity is going to be longer and harder than was envisaged even a year ago," says Wells.

The chancellor is also likely to provide more detail on how he will achieve the drastic cuts pencilled in for 2016 and 2017, an extremely fraught subject since his suggestion that he would demand £10bn of cuts to the benefits bill provoked fury among the Liberal Democrats, who would like to see a heavier tax burden on the wealthy in return.

Much will depend on whether Chote and his colleagues have decided the worse-than-expected state of the economy is a temporary blip or a permanent hit. Crucially, the Treasury's target aims at eliminating the "structural" deficit – the underlying gap between taxation and spending once the short-term impact of booms and busts in the economic cycle is taken into account. That means it is deliberately drawn up to be flexible in difficult times.

As Bank of England governor Sir Mervyn King put it earlier this year, "the plan did allow for the fact that if the economy were to grow slowly, then taxes would not rise as quickly and spending would be higher – so the deficit would be bigger … The plans said 'don't attempt to bring that deficit down if it's the result of slow growth in the economy'."

If the OBR thinks that the UK is just suffering a temporary shortage of demand, so that growth – and revenue – will bounce back strongly once it's over, it could still declare that Osborne's target will be met.

But economists are fiercely divided about how much of the shortfall in growth is temporary, and how much reflects a more fundamental shift in how strongly the economy is able to expand over the long term.

Even if Osborne scrapes through that tough test, City experts believe there is a much stronger risk that the Treasury will miss its second, "supplementary" target, which requires debt to be falling, as a percentage of GDP, between 2014-15 and 2015-16. This rule, which Osborne said in 2010 would "place our fiscal credibility beyond doubt", is harder to wriggle out of, since it involves a specific year.

Philip Shaw of Investec says: "As things stand, the deterioration in the public finances makes it difficult to see how the debt ratio could turn downwards as early as 2015-16, and on a 'do nothing' scenario the danger is that the OBR will conclude that this rule will be missed."

Osborne granted himself one potential get-out-of-jail card last month, when he insisted that the payments on the bonds bought by the Bank of England under the quantitative easing programme, worth about £35bn, be held on the Treasury's books, instead of being paid to Threadneedle Street.

But the IFS – which was widely considered the best independent check on the public finances before the OBR came into being – has insisted that these revenues will only flatter the finances temporarily and may not offset the losses that the Bank will sustain when it sells the bonds back into the market. For that reason, it says they should just be ignored for the purposes of the public finances.

"He used to accuse Gordon Brown of moving the goalposts on the golden rule, and this would smack of the same thing," says Howard Archer of consultancy IHS Global Insight.

In that case, Osborne will have to admit that the carefully crafted rules meant to be the key test of whether he is bringing the Treasury's finances under control have been breached. Wells at HSBC warns that that may provoke alarm at the ratings agencies, which have so far given their backing to the chancellor's approach.

"There is no doubt that the UK had a plan, which many western economies didn't, and because of that the rating agencies have been giving us the benefit of the doubt so far," Wells says. "But there's only a certain number of times you can accept the pain being pushed down the road."


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