Tag: Angela Merkel
Greek party leaders seek deal as bankruptcy looms
By NICHOLAS PAPHITIS
ATHENS, Greece (AP) — Greek party leaders on Tuesday will seek a long-delayed agreement on harsh cutbacks demanded to avoid looming bankruptcy, amid intense pressure from its bailout creditors to reach a deal, a general strike disrupting public services and thousands of protesters taking to the streets of Athens.
Heads of the three parties backing the interim government will confer with Prime Minister Lucas Papademos on new income cuts and job losses, which Greece’s eurozone partners and the International Monetary Fund are demanding to keep the country’s vital rescue loans flowing.
A general strike against the impending cutbacks stopped train and ferry services nationwide, while many schools and banks were closed and state hospitals worked on skeleton staff.
Police said up to 14,000 people took part in two peaceful anti-austerity demonstrations in Athens. The separate marches were to converge on central Syntagma Square, outside Parliament, which has been the focus of demonstrations over the past two years of economic pain.
On Monday, Prime Minister Lucas Papademos’ government caved in to demands to cut civil service jobs, announcing 15,000 positions would go this year, out of a total 750,000. The decision breaks a major taboo, as state jobs had been protected for more than a century to prevent political purges by governments seeking to appoint their supporters.
Athens must placate its creditors to clinch a euro130 billion ($170 billion) bailout deal from the eurozone and the IMF and avoid a March default on its bond repayments.
Among the measures the EU and IMF are pressing Greece for is a cut in the euro750 ($979) minimum wage to help boost the country’s competitiveness. This reduction would have a knock-on effect in the private sector – because private companies also base their salaries on the minimum wage – and even unemployment benefits. Unions and employers’ federations alike have deplored the measure as unfair and unnecessary.
“It is clear that there is a lot of pressure being put on the country. A lot of pressure is being placed on the Greek people,” Finance Minister Evangelos Venizelos said during a break in talks with EU-IMF debt inspectors late Monday.
He called on coalition parties to work more closely together.
“To save Greece … will involve a huge social cost and sacrifices,” Venizelos said. “On the other hand, if the negotiations fail, bankruptcy will lead to even greater sacrifices.”
“No one is as strong as Hercules on his own to face the Lernaean Hydra,” a swamp monster in Greek mythology, he said. “We must all, together, fight this battle, without petty party motives and slick moves.”
A disorderly bankruptcy by Greece would likely lead to its exit from the eurozone, a situation that European officials have insisted is impossible because it would hurt other weak countries like Portugal.
But on Tuesday, the EU commissioner Neelie Kroes, in charge of the bloc’s digital policies, said Greece’s exit wouldn’t be a disaster.
Kroes told Dutch newspaper De Volkskrant that “It’s always said: if you let one nation go, or ask one to leave, the entire structure will collapse. But that is just not true.”
Greece has been kept solvent since May 2010 by payments from a euro110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.
As well as the austerity measures, the bailout also depends on separate talks with banks and other private bondholders to forgive euro100 billion ($131.6 billion) in Greek debt. The private investors have been locked in negotiations over swapping their current debt for a cash payment and new bonds worth 50 percent less than the original face value, with longer repayment terms and a lower interest rate.
Greek government officials say they expect private investors to take losses of an estimated 70 percent on the value of their bonds.
The EU-IMF bailout will also provide an estimated euro40 billion ($52 billion) to protect Greek banks from immediate collapse. Domestic lenders and pension funds hold some 34 percent of the country’s privately-owned debt.
However, the bailout has to be secured for the deal with private investors to go ahead as about euro30 billion from the bailout will be used as the cash payment in the bond swap deal.
Greece’s coalition party leaders held a first key meeting on the austerity measures on Sunday, and postponed a second round of talks by a day so Papademos could complete negotiations with EU-IMF debt inspectors that ended early Tuesday.
The leaders have already agreed to cut 2012 spending by 1.5 percent of gross domestic product – about euro3.3 billion ($4.3 billion) – improve competitiveness by slashing wages and non-wage costs, and re-capitalize banks without nationalizing them. But the details remain to be worked out.
Creditors are also demanding spending cuts in defense, health and social security.
European Commission spokesman Amadeu Altafaj Tardio said Monday that Greece was already “beyond the deadline” to end the talks.
Also Monday German Chancellor Angela Merkel warned that “time is pressing,” and “something has to happen quickly.”
While Greece remains cut off from international bond markets – where it would have to pay interest of about 35 percent to sell 10-year issues – it maintains a market presence through regular short-term debt sales.
On Tuesday, the public debt management agency said Greek borrowing costs dropped slightly as the country raised euro812 million ($1.06 billion) in an auction of 26-week treasury bills. The coupon was 4.86 percent, compared to 4.90 percent in a similar auction last month, while the auction was 2.72 times oversubscribed.
Derek Gatopoulos in Athens and Gabriele Steinhauser in Brussels contributed to this report.
German Chancellor Angela Merkel is one of the Euro leaders who appears to be slightly too relaxed about the fact that the Greek government has not yet finalised an agreement with creditors in respect of its Sovereign Debt. Now there is the rumour of a German Government memo indicating that Eurozone Banks are just about ready and able to cope with a Greek default. If that is the case then it would seem that the Greeks have been “played” while Euro reorganisation has been taking place behind their backs. The latest wheeze is the IMF expressing dissatisfaction about Greece’s progress in implementing those draconian austerity measures. That means that Greece’s next tranche of bailout money is nowhere near being agreed. It is now possible that even if Greece does capitulate and agree to everything that the IIF demands, it is still not guaranteed a bailout. Tempus Fugit.
Merkel: All is not well. Referendum?
BERLIN (Reuters) – A leading figure in Germany’s Free Democrats resigned unexpectedly on Wednesday amid a brewing battle for control of the beleaguered party that shares power with Chancellor Angela Merkel’s conservatives.
Christian Lindner, general secretary of the FDP and long seen as the liberal party’s rising star, quit in a dramatic move that exacerbated the party’s leadership crisis and appeared to be linked to a divisive referendum of party members on euro zone rescue moves.
Coalition sources said Lindner wanted to distance himself from besieged FDP chairman Philipp Roesler by lobbing a farewell grenade at his boss, who is under attack for persistent weakness in opinion polls and poor management of the referendum.
Turmoil in the FDP could cause instability for Merkel’s coalition even though the next election is not due until 2013. Speculation is growing that the FDP will dump Roesler and turn to veteran parliamentary floor leader Rainer Bruederle, 66.
Lindner, 32, and Roesler, 38, made brief statements on Wednesday to journalists in Berlin and did not take any questions. There have been rumours of behind-the-scenes tensions between the FDP’s two youthful leaders.
Merkel faced further turbulence from a growing scandal engulfing President Christian Wulff, an ally she nominated for the largely ceremonial post last year. Wulff has denied accusations he misled a regional parliament over a private loan.
Merkel’s spokesman said she had full confidence in Wulff and has no reason to doubt his comments about a private 500,000-euro loan for his house. Bild newspaper reported Wulff obtained the loan from a businessman friend at favourable interest rates.
Wulff told the regional parliament last year when he was state premier he had no business dealings with the friend. Bild said the businessman’s wife had lent him the 500,000 euros. German editorials attacked Wulff for being less than forthright.
“Merkel has full confidence in the person and conduct of Mr. Wulff,” said spokesman Steffen Seibert. “He’s a good president.”
‘BAMBI’ LINDNER LOST HIS NERVE
The Lindner resignation exposed deep splits in the party over whether to support Merkel’s efforts to bolster weak euro zone members. If they widen, it could destabilise her coalition.
“He lost his nerve,” a senior FDP official told Reuters when asked about Lindner’s move.
But a former senior leader in the conservative party said Lindner was attacking Roesler while saving his own skin.
“Roesler’s in over his head and Lindner wanted to get out before it was too late,” he said. “The whole country is fed up with these too-smooth, lightweight amateurs who have run the FDP into the ground. They need someone with experience.”
Lindner had responsibility for organising the referendum which was forced upon the party leadership by a group of eurosceptics within the FDP. Lindner was given the unflattering nickname “Bambi” by a FDP leader years ago and it stuck to the photogenic young man with the baby face.
His departure is the latest setback for the FDP, a pro-business party whose support has fallen to just 3 percent in opinion polls after it won a record 14.6 percent in the 2009 election, helping Merkel secure a second term.
“It’s possible that Lindner wanted to abandon ship before it was too late,” said Gero Neugebauer, political scientist at Berlin’s Free University. “In any event it will exacerbate the FDP’s crisis. The FDP has lost touch with its grass roots.”
The normally loquacious Lindner made a short, terse statement to journalists at FDP headquarters in Berlin, but then left without taking questions, saying only “Auf Wiedersehen.”
“There comes a time when you have to make room to allow for a new dynamic,” said Lindner, a polished speaker who previously worked in the advertising industry. “The events in recent weeks and days have strengthened my belief that this is the case.”
Angry that the FDP leadership was backing Merkel’s euro rescue moves, eurosceptics led by lawmaker Frank Schaeffler led a campaign in recent months to collect signatures within the party for the referendum, which is non-binding.
Their idea was send a signal to the leadership by showing them that grass-roots FDP members opposed euro rescue moves.
The referendum, whose results are expected to be published on Friday, may not pass because Roesler said the required quorum of FDP members is not expected to be reached. Of the 64,000 members of the party, 21,000 needed to take part for it to be valid.
Roesler said in an interview on Sunday the quorum would not be reached and said that was a victory for him. After that thousands of FDP members cast their ballots, FDP officials said.
Lindner married a newspaper reporter in August. He also obtained a license to drive racing cars two years ago.
(Additional reporting by Thorsten Severin, Andreas Rinke and Madeline Chambers, writing by Erik Kirschbaum; editing by Noah Barkin and Alistair Lyon)
After three years, the scales have fallen from our eyes and finally, the light has flooded in. It has been long time coming but suddenly – an Epiphany!
The politicians, bankers, economists and even the Central Bank astrologers have absolutely NO IDEA as to how to deal with the gradually building waves of a massive economic crisis which is about to sweep the world. They’ve been gambling that random fiscal and economic measures would somehow provide a solution and make everything well again!
Money has been printed and distributed, bonds have been issued, promises have been made, false political visions have been shared and yet the self-amplifying problem continues to self-amplify.
Some of us finally realised that the Eurozone had run out of ideas when the German authorities temporarily banned “naked short selling” of Eurobonds. The action had absolutely NO effect. However, it did demonstrate that the politicians (who initially blamed the bankers for the pit of shit that they had help to create) were now turning a rheumy eye on everyone’s new bête noire – the SPECULATORS!
Bankers were greedy bastards with large bonuses but now it was the turn of the “casino-banking” speculators. Spit!
In any crisis, it is always a good idea to look for the root or initial cause. In the case of the Euro and the Eurozone it was an ill-conceived plan which , without tighter integration of fiscal policies between states was doomed to failure.
Make no mistake, the increasingly pathetic bleating of the French and Germans in respect of the looming Greek collapse and default has absolutely NOTHING to do with Greece.
It is all about their joint delusive attempt to prevent the inevitable collapse of their banks – which are holding billions in Greek IOUs. Nothing at all to do with Franco-German altruism.
As the French and Germans intertwine, hug each other and panic, their assault on the “speculators” and the markets , although understandable is also ironic. Why? Because eventually, the Western-European begging bowl will be waved at the markets and the “speculators” – in the vain hope that they will lend the impoverished Eurozone BILLIONS so that the sacred Euro cow can be reprieved.
Biting the hand that could feed you is never a good plan but currently, the markets are dealing with increasingly desperate politicians who have painted themselves into a Euro corner with absolutely NO way out.
Euro and Western economies in general are in debt – both in the public and private sectors. Several countries are bankrupt.
The only REAL solution is GROWTH which unfortunately is NOT achieved by insisting that the weakest economies attempt to restore growth through the unusual and meritless medium of The Austerity Plan.
Austerity gains you a lot of points with the rating agencies, makes it easier for you to borrow more but in the long-term, it is NOT a sustainable strategy – as we in the West are ALL about to discover. Overborrowing is what caused the problem in the first place.
The economic affliction is the mire of public and private sector debt and uncompetitiveness into which the weaker economies of southern Europe have sunk.
The cure should be to create an atmosphere for economic growth.
Unfortunately, the generally accepted (unproved but imposed) speculation is to force broken countries to try and balance their budgets and restore economic growth whilst slashing expenditure and demotivating taxpayers through increased unemployment, inflation and the resultant decimation of tax-revenues.
It will NOT be long before the inevitable wake-up call is heard!
Casino economics does not work.
Between Gold & a Hard Place.
2011 will be remembered as the year when the gold price really took off. It will also be remembered as the year of the PIIGS.
That’s Portugal, Italy, Ireland, Greece, Spain.
So what would happen if we combined the two? What would happen if the PIIGS decided to sell their gold in order to clear their debt? (As recently suggested by Germany’s Vice Chancellor).
And while we’re at it, let’s get away from expressing sovereign debt in percentages of GDP. No-one understands that anyway.
Let’s be different and look at it all in cash terms:
The total gold holding of the PIIGS is about 3250 tonnes. At current prices that’s worth about 132 billion euros. That’s 132,000,000,000 euros.
Unfortunately their combined outstanding sovereign debt is about 3,300 billion euros. That’s 3,300,000,000,000 euros
For instance, Portugal has about 390 tonnes of gold, currently worth about 15 billion euros. That is about 20% of its latest bailout package.
The biggest Eurozone gold hoarder is Italy. It is also the world’s fourth-largest owner of the metal . Italy’s 2,450 tonnes is worth about 95 billion euros at today’s prices. That’s 95,000,000,000 euros.
Italy’s government has $2.45 trillion dollars in debt. That’s 2,450,000,000,000 euros.
It is estimated that as a result of inevitable defaults, banks will LOSE £200 billion euros. That’s 200,000,000,000.
Hence all that nervousness around bank shares.
It’s all theoretical anyway because gold is not the property of the PIIGS’ governments to sell. Gold is part of a country’s Foreign Exchange Reserves which are managed by central banks and cannot be used to finance the public sector – except apparently, in certain Middle Eastern states.
What a mess!
Finally, in case you’re still wondering why the politicians have not actually put into place a plan to sort-out the debt-related issues, it is because they don’t really know what to do. Plus, they are playing the NOMW game.
NOMW? Not On My Watch.
President Sarkozy has an election to fight in 2012 and Bundeskanzlerin Merkel has one in 2013.
Can they possibly keep it all going until then?
Christine Lagarde or Gordon Brown?
The bookies’ favourite for the suddenly vacant IMF Managing Director’s job is the very bright, willowy 55 year-old Christine Lagarde. The only obstacle in her way is the fact that she’s currently French Finance Minister. President Sarkozy needs her.
By training, Christine Lagarde is a lawyer with a Masters in Politics. She has spent time working in America, speaks perfect English and has been voted the best Finance Minster in a G8 country ( Financial Times).
If given the IMF job, she will bring some much-needed glamour and grit to what is arguably the world’s top banking job. She is more of an economist- politician than banker but but has the sort of no-nonsense rod of steel running through her which will doubtless help a worried world through the current economic upheavals.
She is well-liked by the international political and banking communities and has the credibility to talk to them as an equal.
Gordon Brown is an academic, an analytical and a history graduate. During his short tenure as unelected British Prime Minister he demonstrated a total lack of management and organisational finesse. He continues to delude himself that the ‘led the world’ out of the economic wilderness. Here in the United Kingdom, he left a trail of economic destruction which continues to look like the inspiration for the recent Japanese Tsunami – but with a longer recovery time. Brown’s legacy of incompetence and intransigence will continue to reverberate for at least another two generations.
His popularity within his own country plummeted and remains somewhere below the baseline. At the age of 60, he continues (wisely) to exist below the public’s radar. Unlike the roguish but still likeable Tony Blair, Gordon Brown’s name is never mentioned. He has morphed into the Voldemort of British politics.
In his favour though, he is very unlikely to attack a woman in a hotel room – because he comes across as someone who is frightened of women and was extremely lucky to have been chatted up by the sainted Sarah, otherwise, he’d still be ironing his own shirts.
The International Monetary Fund gig requires what one can describe an Economic Showman – a Personality – a ‘Sophisticat’ – a ‘Name’. An economist with a personality. (Sorry, Gordon).
Former Turkish Finance Minister Kermal Dervis, South African Trevor Manuel (we cannot possibly have someone named “Trevor” running the IMF! It’s alomost as bad as “Mervyn”!) and even Singaporean Tharman Shanmugaratnam are in the frame.
Off-stage, the Chinese, Brazilians and Turks are making anti-european noises . (Turkey has competed in the Eurovision Song Contest since 1975 but failed to qualify for this year’s competition)
Meanwhile, German Chancellor Angela Merkel is pushing for former Bundesbank head Axel Weber.
Christine Lagarde is odds-on!!
Goldman Sachs strikes again!!
It was GS who helped Greece to cook their books before Greece’s bid to enter the Euro. They were paid a very large fee for their economic culinary skills. We can all see the fallout of the GS ‘advice’ as Greece is exposed as a Third World economy which is only surviving because of IMF handouts.
Goldman Sachs wields an unfeasible amount of power in the United States Economy: CLICK HERE
Dr Ben Broadbent has just been confirmed as an external member of the Bank of England’s Monetary Policy Committee. His employer? He is senior European economist at Goldman Sachs.
Does the Goldman Sachs strategy include world domination?
That would be surprising, considering the mess that they managed to get themselves into in 2008.