By The Associated Press - Monday, December 3, 2012 - 0 Comments
BERLIN – Germany no longer rules out the possibility of forgiving Greece some of…
BERLIN – 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, signalling a softening of her government’s tough stance on Greece.
The question of debt forgiveness, or a “haircut,” can be revisited after the current bailout program will be successfully concluded and the government in Athens no longer takes on new debt, Merkel said in an interview with the German Sunday tabloid Bild am Sonntag.
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. But the International Monetary Fund and many economists say eurozone nations must also forgive Greece some of its debt to allow the country to overcome its debt crisis.
By The Associated Press - Saturday, December 1, 2012 at 10:26 AM - 0 Comments
BERLIN – Chancellor Angela Merkel said she understands the frustration felt by many Germans…
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 whole.
Merkel’s comments came a day after Germany’s parliament voted in favour 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.
“I obviously feel many citizens’ skepticism, and partly understand it, because Greece has often disappointed its partners in the past,” Merkel told Sunday tabloid Bild am Sonntag in an interview released Saturday. “A lot of what the Greek leadership has promised wasn’t lived up to.”
The new Greek government, however, “finally” shows the necessary resolve “to change the country, to create modern structures,” she said.
A German poll published Friday showed that 46 per cent of 1,300 people polled favoured letting Greece go bankrupt, only 43 per cent thought Greece should receive further rescue loans. A total of 69 per cent of those surveyed for public broadcaster ZDF thought that Greece itself hasn’t done enough to overcome the crisis. The ZDF poll’s margin of error was 3 per cent.
Overly indebted Greece, which is about to enter its sixth consecutive year of a deep recession that has pushed unemployment up to 25 per cent, is being kept afloat with rescue loans from its European partners and the International Monetary Fund in return for implementing harsh budget cuts and structural reforms.
“For the large majority of Greeks this upheaval comes with great sacrifices, especially the poor in Greece go through very hard times,” Merkel told the newspaper.
The chancellor defended assisting Greece as being “in Germany’s interest” because it helps stabilizing the 17-nation eurozone on which her nation’s prosperity depends.
“I will continue to do what is best for Germany and Europe and what keeps the financial consequences as little as possible and does not expose us to unacceptable risks,” she said.
By The Associated Press - Tuesday, November 27, 2012 at 5:58 AM - 0 Comments
PARIS – A new forecast says the world’s economic recovery will be “hesitant and…
PARIS – A new forecast says the world’s economic recovery will be “hesitant and uneven” next year, with Europe’s debt troubles dragging down growth in more vibrant economies.
The Organization for Economic Cooperation and Development says in a report Tuesday that the 17-country eurozone is expected to struggle further next year despite recent positive steps to stabilize the crisis.
It forecasts a 0.4 per cent contraction this year in the eurozone and 0.1 per cent fall next year.
Elsewhere, the OECD is predicting the U.S. economy will grow 2 per cent next year. The global economy is expected to grow 3.4 per cent too.
The Paris-based international agency warned the U.S. and Europe against cutting spending too sharply and too quickly, saying that could further hurt growth prospects.
By Nicholas Paphitis, Pan Pylas, The Associated Press - Tuesday, November 27, 2012 at 5:57 AM - 0 Comments
ATHENS, Greece – Greece has avoided imminent bankruptcy after its international creditors finally agreed…
ATHENS, Greece – Greece has avoided imminent bankruptcy after its international creditors finally agreed to give it the money it urgently needs but the cash-strapped country’s economic distress is likely to drag on for years to come.
After three weeks of negotiations, Greece’s euro partners and the International Monetary Fund agreed to release a vital loan payment and introduce a series of measures designed to reduce the country’s massive debts to a more manageable level within a decade. These include reducing the interest rates Greece has to pay on the loans and a still-vague bond buyback program.
Greek Prime Minister Antonis Samaras hailed the agreement in Brussels early Tuesday as a victory that heralds “a new day for all Greeks,” but the reaction in the markets was a bit more cautious.
Most stock markets in Europe were higher. The Stoxx 50 index of leading European shares was up 0.5 per cent, while the main stock index in Athens rose 0.6 per cent. The euro gave up earlier gains to trade 0.2 per cent lower at $1.2964.
“There remains the potential for this deal to fall apart in the medium term as there are a lot of moving parts and it is a long way away from the permanent fix that the IMF had been insisting upon,” said Gary Jenkins, managing director of Swordfish Research. “Instead it is just one more big kick of the can down the road.”
For three years, Greece has been struggling to convince markets as well as its creditors that it can get a grip on its public finances, which spiraled out of control following the financial crisis of 2008. The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25 per cent.
The so-called troika of the European Central Bank, IMF and the European Commission has twice agreed to bail out Greece, pledging a total of €240 billion ($310 billion) in rescue loans — of which the country has received about €150 billion ($195 billion) so far. In return for its bailout loans, Greece has had to impose several rounds of austerity measures and submit its economy to scrutiny.
Without the bailout money, the country would be staring bankruptcy in the face together with a possible exit from the 17-country eurozone, with potentially chaotic repercussions for the world economy.
This was the third time in the last two weeks that finance ministers from the 17 European Union countries that use the euro had tried to hammer out a deal on the next installment of bailout money for struggling Greece.
The installment will total some €44 billion ($57 billion) but still requires the authorization of a number of Parliaments in Europe.
The main aim of the bailout program is to right Greece’s economy and get it to a point where it can independently raise money on the debt markets. It has been clear for months that the country is far from achieving that goal. The talks have centred on trying to get Greece back on the path to sustainability by reaching an agreement on how the country’s debt load can be reduced.
Tuesday’s meeting reached an agreement where Greece’s debt level would be reduced from the current 150 per cent of its economic output to 124 per cent by 2020 and below 110 per cent by 2022. The IMF had originally insisted on a debt-to-GDP ratio of 120 per cent by 2020.
To reach this level, the meeting agreed on a raft of measures. These included:
—A cut of 100 basis points on the interest rate charged to Greece by other eurozone member states — excluding those that are also receiving bailouts.
—A 15-year extension of the maturities of loans from other countries and the eurozone’s bailout fund, the European Financial Stability Facility, and a deferral of interest payments by Greece on EFSF loans by 10 years.
— A program whereby Greece could buy back some of its debt from private investors. The details of this program are still to be agreed by the eurogroup and IMF.
One of the Parliaments that need to approve the bailout loan is Germany, where patience with repeated Greek rescues has been running low.
However, Rainer Bruederle, the caucus leader of the Free Democrats, the junior coalition partner, said he expects broad approval this time on Thursday.
“Conditions have been put together which maintain a tough mechanism toward Greece, but still save us from a collapse of the Greek economy possibly having consequences that could pull down the whole of Europe,” he said.
Greek newspapers were divided on whether the agreement would give the country breathing space to right its economy, or keep it trapped in years of recession and austerity.
Pylas contributed from London. Geir Moulson in Berlin also contributed.
By The Associated Press - Monday, November 26, 2012 at 10:13 PM - 0 Comments
BRUSSELS – The 17 European Union nations that use the euro have struck an…
BRUSSELS – The 17 European Union nations that use the euro have struck an agreement with the International Monetary Fund on a program to reduce Greek debt and put Athens on the way to get the next installment of its much-needed bailout loans.
The first disbursement is set to take place Dec. 13, said Jean-Claude Juncker, head of the eurogroup of finance ministers, after Tuesday’s decision.
Mario Draghi, President of the European Central Bank, said markets should pay heed. “It will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece.”
This was the third time in the last two weeks that finance ministers from the eurozone had tried to hammer out a deal on the next installment of bailout money — some €44.6 billion ($57.8 billion).
By The Associated Press - Sunday, November 25, 2012 at 7:08 AM - 0 Comments
BERLIN – Germany’s chief financial regulator is backing calls for tougher rules on banks’…
BERLIN – Germany’s chief financial regulator is backing calls for tougher rules on banks’ government debt holdings, but says they shouldn’t be rushed.
Jens Weidmann, the head of Germany’s central bank, last week said banks should have to secure those bonds — viewed before Europe’s debt crisis as a safe asset — with capital of their own and advocated an unspecified limit on banks’ involvement with government creditors. He argued that would help prevent governments and banks amplifying each other’s problems.
Elke Koenig, who heads Germany’s BaFin financial regulator, was quoted Sunday as telling newspaper Welt am Sonntag it’s a problem “that no capital has to be held back for government bonds” and that needs to change long-term. But she added: “The question is, when is the right point to change it?”
By macleans.ca - Monday, June 4, 2012 at 9:37 PM - 0 Comments
First up Tuesday morning, Jim Flaherty says he’ll be on the phone with his…
First up Tuesday morning, Jim Flaherty says he’ll be on the phone with his Group of Seven counterparts to discuss worsening conditions in the eurozone.
Just try to keep the panic on hold.
The finance minister says Canada’s “fundamentals are sound,” and it is ready and able to respond to economic fallout.
“If we needed to take steps in response to a shock from outside Canada . . . we are in a position to do so because we have fiscal room to move,” he told reporters.
“Our situation is imperfect but it’s better. We are in a position to act to protect Canada, but we’re part of the world and we would get buffeted as well as other countries.”
The Canadian Press says Flaherty boasted of another advantage: “We have a government that can act . . .These continue to be sensitive times. We’re not out of the woods yet.”