#1 Adnan Darwash
Group: Guests
Posted Today, 10:35 AM
On 4th of July 2011, the US as an independent nation, was established some 235 years ago. In maximising the utilization of its natural and human resources, the USA became a mighty superpower with a colossal economy. But to the hard luck of America, its leaders started to waste valuable assets on non-productive sectors, like weapons, and to fighting wars. While the entire world has been benefiting from the US food production and the highly-developed educational system, many parts of the world have been also suffering from US interference that undermined their sovereignty, exploited local resources and sabotaged the natural course of their political development. Right now, the US government is in$US14 trillion deficit while many observors believe that the US may default before Greece. But if the European Union showed readiness to rescue Greece, albeit temporarily, who will come to rescue America? Is it Red China and making the bones of late President Ronal Reagan to shiver in his grave, or is it the Israelis who have been receiving $trillions in direct or indirect aids. Or is it the Jewish-controlled Wall Street and other financial institutions.
Before this mighty giant collapses, the Americans must put their house in order by stopping their politicians from wasting the nation's resources in order to be re-elected.
Similarly, religions require rescuing too. The message of holy Moses “thy shall not kill” is being translated into torture and assassination of Palestinians by Israeli Rabbis. The message of holy Jesus of “Love and forgiveness” has been converted into killing on industrial scale by American Christians who claim to talk to God. And finally, the message of Mohammed of “equality between people and respect for human dignity” which was thought to be 200 years ahead of its time is being rehabilitated by Muslim fundamentalist into a backward doctrine and preaching practices of 1400 years ago instead of those of the 23rd century. It may be in humanity best interests if America (USA) and all known religions go bankrupt. In General, humanity suffers most when religion and religious people start to control politics in any nation.
Adnan Darwash, Iraq Occupation Times
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MikeyAdmin
32UP
I went to live in Greece in 1991.
When I got off the ferry at Patros, I had to wait in line for a good while, then my car was emptied of everything and searched, plus I was questioned for over one hour.
When I arrived in Crete, I checked at the Bank I had transfered money too, and the Bak Manager called me over. He told me that he had placed my money into an account that supported a 21% interest rate, (and that was not the best)
The talk amonst the Greeks was about entry into the Common Market.
Every Greek I spoke to said the same, non reckoned on them being admitted.
The reason given was the amount of Tax the Gov "did not" collect, which mainly from the holiday Industry.
They had rampant Inflation of over 25% per annum, caused mainly by rising prices of Food and other supplies, coming into Greece to support a fast growing Holiday Industry, with little control over it.
I left in November to have a look round Europe, coming back the next year early March.
By then Greece had entered the CM, and the Greek border guards did not know what to do.
The normal channels for non Greeks where still there, so I drove down to the Customs check and straight to the front, with other cars passing me as I stopped.
One guard looked at me, made a move towards me, stopped looking confused, and just waved me through.
On Crete that year, the talk amongst the Greeks was one of surprise that the Greek Gov had managed to pull off the entry into the CM.
Don't get me wrong, they all welcomed it.
I left Greece 1997 before they entered the Euro, but I kept in touch with several Greeks.
Again they where surprised that they had been allowed entry, as inflation was still not under control, some saying that it would not last long.
Boy oh Boy, did they then take advantage of the change over from the Drachma to the Euro.
With the large majority of tourist being British, every price was rounded up as high as possible, and they made loads of money.
Prices returned to a more realistic levels, but only after the tourists dropped of a bit and their takings dropped.
Prices in the Restuarants and Bars still change year on year, depending how busy it is.
Graft is frequent, with some unlikely palms being greased and even forcibly greased.
Customs raids do happen, to show some sort of control, but every family has someone to draw on.
The Greeks are mainly concerned about noise, so raids are frequent for that (they have a Law of no noise after 11pm, laughable in a Holiday Resort)
The main raids happen in the winter to stop Illegal Gambling, though that is mainly for show. (thousands are won and lost playing a form of Poker)
The Tourist Industry in Greece is probably the largest Money Industry in Greece, but being mainly cash is the easiest to fiddle.
The Greek National pass time has always been, pay as little Tax as possible, so its easy to see that a Cash orientated Industry will not generate the Tax it should do.
To be honest, having lived in Majorca for 2 years in my 20's, Greece is not alone in not gettting its fair/equivilent Tax Revenues from its holiday Industry.
Excluding Ireland the rest of the PIGS are the same, and to a certain extent, every cash Industry in every Country.
While non of us like paying Tax, the way the Greeks can hide/are allowed to hide their buying of what they need to run their businesses, is nothing short of amazing.
With as high as 75% of their purchases not being seen in their books, you can see why they have problems.
Tax rates are high, but with Tax only being paid on a max of 35% of their turnover, that results in a Tax deficit.
The Holiday Industry makes many folks very rich, while those on PAY carry the brunt of the Tax burden. No wonder they complain.
For each of the Southen PIGS, each Gov has got to get some sort of control over their Holiday Industry, to have any chance of a stable Euro Currency.
Mikey.
===
Europe pushes banks to share Greek bail-out pain
Wed 22 Jun, 2011 18:38
By Gernot Heller and Lionel Laurent
BERLIN/PARIS (Reuters) - European governments summoned banks and insurers to urgent meetings on Wednesday, pressing them to share the cost of a second Greek bailout with taxpayers and avoid a market meltdown.
Germany invited private creditors to a meeting, a letter seen by Reuters showed, to discuss their voluntary support for the debt-struck country. Other euro zone countries, including France and the Netherlands, held similar discussions.
"Bondholders should play a substantial role in averting a Greek insolvency ... we're inviting you to a meeting to discuss all options of a concrete contribution," the letter sent from the German Finance Ministry said.
The rollover of a bond at the time it matures is one possibility banks could agree to, the letter said.
And France also began talks with representatives from the financial industry about the plan, a source familiar with the situation said, adding that efforts were being coordinated on a pan-European level.
Euro zone governments are discussing a second bailout package for Greece that would run from 2011 to 2014 and could amount to 120 billion euros (107.3 billion pounds), including up to 30 billion euros from the private sector.
There is rising pressure in countries like Germany, Finland and the Netherlands for aggressive steps to force banks to share the burden of a new aid package, after taxpayers coughed up all of the money in the previous round.
"The process will be voluntary, but it is clear that all the financial institutions have an interest in the stability of the euro zone and Greece," a French government source said, speaking on the condition of anonymity.
The Dutch Ministry of Finance was talking on Wednesday with the country's banks, insurers and pension funds about the extension of debt to Greece, a source familiar with the matter said. The source declined to give further details.
But any suggestion that governments are forcing the banks to pay could be viewed by credit rating agencies as effectively a Greek default or restructuring. That could trigger further catastrophic debt downgrades.
German chancellor Angela Merkel last week softened her tough position on the banks in a meeting with French President Nicolas Sarkozy, and the two agreed that any private sector support should be purely voluntary.
SHADES OF VOLUNTARY
In exchange for their support, German lenders have now demanded "additional incentives" in the form of state guarantees, and the talks will in all likelihood focus on the details of how to make this work.
"It's a matter of semantics. What the EU finance ministers want to avoid is a mandatory rollover because of the implications that might have for Greece's ratings," said Simon Adamson, a senior analyst at Creditsights.
"It has to be voluntary, but there are different shades of voluntary," he said, adding that banks in many countries were in a weak position to negotiate after receiving billions of euros in state support at the peak of the credit crisis.
Private investors are estimated to hold some two-thirds of Greece's approximately 270 billion euros of sovereign bonds. Roughly 90 billion euros of that is held by insurance companies, pension funds and investors such as hedge funds.
Banks in Germany themselves have quantified their exposure at between 10 and 20 billion euros, while insurers estimate their holdings at 6 billion euros, just a fraction of their total invested assets.
Even if Greece defaulted, the impairment charges for banks might not be devastating, some analysts say. However, a Greek default would send markets into a tailspin and spark fears countries such as Spain and Italy are next in line.
Companies including the Gulf's Dubai World, which rescheduled its $25 billion (15.5 billion pounds) debt pile last year, forced outliers to comply through a deal that applied to all if a certain threshold of creditors agreed to it.
But such tactics to coerce bondholders into agreeing a deal normally used in a debt restructuring cannot now be used. Under the current plans, bondholders will be asked to agree to renew any paper they hold when it expires.
And the terms have yet to be decided.
"There is still no proposal. It's a very tough evaluation to make," Corrado Passera, chief executive of Italy's biggest retail bank, Intesa Sanpaolo, told reporters.
(Additional reporting by Douwe Miedema and Sarah White in London, Gilbert Kreijger in Amsterdam, Ian Simpson in Milan and Jean-Baptiste Vey and Emmanuel Jarry in Paris; Writing by Douwe Miedema; Editing by Louise Heavens, Alexander Smith and Jon Loades-Carter)
===
Europe is trying to cure Greece's debt crises with the 'wrong medicine' and a 'bailout is not the solution' but rather a humiliation, a political analyst says.
Press TV interviewed Paolo Raffone, Secretary General of CIPI Foundation in Brussels, regarding the bailout strategy that is supposed to save Greece from its financial depression, and also the affect a default in the country's currency will have on the European Union.
Press TV: Things are looking as if this bailout is not going to work out and it looks like, as one writer put it in an article, the question on the bailout is now changed from will this go ahead with this bailout, to should they go ahead with this bailout. Do you agree?
Raffone: Yes, the problem is that we are trying to cure the sickness with the wrong medicine. The bailout is not the solution. Greece is a small country as it was just said although it is in a huge debt which it can handle for a default, and in then a restructuring, which will be more efficient to the Greek people at the end of the story than the bailout.
The Bailout is a humiliation. This comes to be physically there but governed from somewhere else, notably from the other capitals of Europe, but particularly from Berlin and Paris. And this is something which will not be beneficial to the euro itself. The euro cannot continue as a viable currency without a political union, but a political union cannot be reached using these sorts of imposing tricks as the one for the Greek crisis.
Press TV: Economists are saying Greece's exit from the euro would be disastrous, for French and the German banks especially who are heavily exposed to Greece. That's exactly why they are saying that shouldn't happen, what do you think?
Raffone: Yes it is the truth. The truth is that the French and German banks, but also Belgium banks, have been playing around with the Greek debt for a long time and have been also insuring themselves very heavy commissions on the handling of that debt. And now they are crying that if Greece will decide in a sovereign way, which means declaring default, this will be a tragedy for the other European banks.
Well, I think that each of the European countries should start counting on itself, on its own mistakes, and it is unjust now to charge the Greek population with the fault, which certainly exists in Greece, but have been supported if not exploited by foreign interests.
And now for once more, we want the Greek population to pay a third time for foreign mistakes. And the euro excuse is absolutely ridiculous, I mean, nobody believes in Greece and nobody believes in Germany. The population in Germany is fed up with supporting this euro policy. And we see it with looming perspectives in the election for [German Chancellor] Mrs. [Angela] Merkel.
Press TV: I would like to have your view on what this union currency is going to look like. Centers for economics and business research goes even further than Jack Straw, predicting that the euro zone is almost certain to breakup within five years, if that is the case, what will happen to Europe's unified currency?
Raffone: Well, in fact, we already have a situation where there are certain levels of the euro zone. So, you have the first level, which is the one around Germany and a few other countries around it, and the [second] one around France, and the third one which is the peripheral part of the euro zone.
So, already we are in this situation, and this is very visible, looking at the spread that exists among the interests of the sovereign bonds of different countries which are all admitted in euros, but the cost of interest is different according to who is the government producing them.
So, this gives you the idea that the euro, as it is, is not viable and the only way to save the euro zone is, as I said before, to go very quickly towards a real political union. But I do not see it viable neither, because the differences amongst the European nations are very big and after this economic and financial crisis, which is now being felt socially in Europe, it is very difficult to convince people to give up even more of their sovereign control on governments.
So, I believe that they will ... try to make a patch to the situation, but they do not have any capacity of handling, from a political point of view, what is going on in Europe now.
Press TV: How unified is the euro zone under such dire economic conditions? Do you think that there is any kind of unity now between the euro zone members?
Raffone: No, I would say that there is no unity, and there was no unity even when the euro was created, and we have to remember that the euro issued, out of two treaties which barley past the ratification process in several countries in Europe, and in some cases, where even opposed by public referendum, decided to push ahead anyway to go in this direction, to create a euro zone thinking that this would have obliged the political animosities at national level to converge towards a common system.
Well, this has proven now that it is completely wrong. The political convergence was not reduced. The euro has increased the differences amongst the territories and nations of Europe, and more over, most part of the population has suffered a concrete loss in the pocket, because of the euro.
So, the result of this experience, now, is that there is a strong social mistrust of political choices about Europe, and we do not see much of the possibility of putting it together.
==
Present Taxation for salary and pension income the first EUR €12,000 are tax exempt.
Thats £10,680 before Tax and we are £7,475
http://www.worldwide-tax.com/greece/greece_tax.asp
http://www.lawyers-greece.co.uk/income-and-capital-taxation-in-greece.html
==
Kosmidis & Partners, solicitors
Partnering international businesses in Greece
3842/2010 TAX ACT: Changes to the Current Law on Taxation
The new 3842/2010 Act has introduced numerous amendments to the Greek system of income and capital taxation. This article will summarise the key changes that this Act has brought about.
A. Income Tax
1. New Tax Scale
A new tax scale has been introduced which does not differentiate between the various sources of income. This scale includes more tax categories so as to provide for the more equitable distribution of tax charges. In addition, this scale provides for the biennial adjustment of the scale measurements in accordance with the price index. The tax-free threshold for all taxpayers is set at 12.000 €. The new scale is modified as follows:
Old Law
Income value Rate New Law
Income value Rate
Income (€) Applicable Tax (%) Income (€) Applicable Tax (%)
0 - 12.000 0 0 - 12.000 0
12.001 - 30.000 25 12.001 - 16.000 18
30.001 - 75.000 35 16.001 - 22.000 24
Above 75.000 40 22.001 - 26.000 26
26.001 - 32.000 33
32.001 - 40.000 36
40.001 - 60.000 38
60.001 - 100.000 40
Above 100.000 45
The new scale is effectively shifting focus from the low and middle incomes towards the high incomes. More specifically, tax-relief for incomes up to 40.000€ is now available. To illustrate the above, we note that income of 25.000€ has a reduction of tax by 310€ (-10%), income of 35.000€ has a reduction of tax by 50€ (-1%), while income of 100.000€ has an increase of tax of 1.350€ (7%).
2. Receipts and the Tax-Free Threshold
Incentives have been introduced for the collection of receipts. Furthermore, a segment of the tax-free threshold is guaranteed by the collection of receipts from the market of goods and services. A discount is provided for the declaration of receipts above the requested threshold. Such receipts are for all categories of goods and services except those which relate to goods of substantial value, regular utility bills for telephone service, electricity supply, water supply etc., and up to the extent to which they are accepted for the reduction of income or the tax discount (medical expenses, rent, insurance etc.).
The declaration of receipts of expenditure is not required for personal income up to 6.000€. For income up to 12.000€ the taxpayer is required to declare receipts of up to 10% of his income. For the amount of 12.000 and above he is required to declare receipts up to the value of 10% of his income for the first 12.000 and 30% of the income for the part of the income which is above 12.000€. When the costs exceed the required amount and are up to the amount of 15.000€ for an individual or 30.000€ for a family, the taxpayer is entitled to a tax reduction equal to 10% of the difference between the required amount and the amount that has been declared.
When the costs are less than required amount, the taxpayer is charged with a tax amount equal to 10% of the amount of costs that are outstanding.
3. Calculation of the Minimum Income on the Basis of Evidence
The new bill proposes to calculate the minimum income on the basis of the services and property rights which are used by or are in the possession of the taxpayer. In order to calculate a taxpayer's income, the following will be taken into consideration: homes, automobiles, vessels, aeroplanes, swimming pools, private school tuition fees, employment of housemaids etc.
4. Abolition of Independent Taxation
Independent taxation of income is effectively abolished. Such income is now taxed by reference to the regular tax scale. Interest on bank deposits and Greek government bonds are excluded from this category as they are regulated by the current tax provisions.
The following have been abolished: the independent taxation of various benefits and compensations of employees of the civil service, the income generated from the signing of contracts by professional football players, coaches etc, the salaries of those who are elected to the local administration etc.
5. Abolition of Tax Exemptions
The exemption from income tax or of incomes with certain factors is abolished. Financially vulnerable groups in society are excluded in certain occasions and on the basis of certain income criteria.
6. Determination of Income
As of 1.1.2011 the determination of income according to actual revenue and generated expenses for all professionals will be introduced. Every specialised form of taxation of certain categories of professionals will be abolished. In particular, the determination of the following incomes will be established:
Taxi, Trucks for Public Use, Public Transport Buses, Rooms for Rent, Camping, Mechanics-Architects, Retailers, lottery agencies, Gas Stations, Kiosks etc.
All of the above were up till now taxed based not on their actual revenues and expenses, but with fixed taxes according to certain criteria i.e. the age of the enterprise. In the future they will be taxed according to actual revenues and expenses.
7. Proportional Taxation of Dividends and Overvalued Shares
Dividends and distributed profits collected from natural persons are included in the taxable incomes. Capital gain from short-term trading of shares is taxable while, possible damages also fall under the definition of taxable capital gains.
8. Online Submission of Income Tax Statements
Income tax statements for the year 2011 and after are to be submitted online. A Ministerial decree defines the type of electronic submission which is to be used and the alternative means by which a statement may be filled out and submitted (immediately, via a tax accounting office, via Citizens Service Centres (ΚΕΠ)).
9. Encouraging Repatriation of Capital from Abroad
Deposits with banks abroad which will be transferred within six months to an annual deposit account in Greece are exempt from auditing provided that tax at 5% of the capital value is paid. After the six month period has elapsed the Greek authorities will activate every international or European agreement so as to find out about the deposits made by Greek taxpayers into foreign banks. A certain part of repatriated funds which are invested are returned to the taxpayer.
B. Real Estate Property Tax
10. Replacement of Special Tax of Real Estate Property (ΕΤΑΚ) with a Progressive Tax on Real Estate Property
Special Tax of Real Estate Property is abolished. An annual tax on possession of substantial real estate property is imposed on an individual level on the following scale:
Property Value (€) Tax Factor (%)
Up to 400.000 0
400.001 - 500.000 0,1
500.001 - 600.000 0,3
600.001 - 700.000 0,6
700.001- 800.000 0,9
800.001 and above 1,0
For real estate property above 5.000.000 € a 2% rate will apply for three years.
11. Transfers and Donations
The current tax on the transfer of real estate property also applies during the transfer of shares or company shares which possess and exploit real estate property.
A tax of 5% applies to donations of real estate property and 10% to cash donations made to Legal Persons under Public Law , Legal Persons under Private Law of a non-profit nature and to other persons who were exempt until today.
12. Taxation of Real Estate Property held by Offshore Companies
The tax rate in respect of property owned by offshore companies is increased from 3% to 15% per annum and every tax duty exception is abolished. At the same times, a time limit is established for the transfer of property to a natural person on favourable conditions. Cadastral offices or land registry offices are required to inform the Central Tax Authorities within six months of all the real estate properties within their competence which are owned by offshore companies. They are also required to notify the Central Tax Authorities of any new registration or other modification in their files. Meanwhile, a special authority referred to as the Research & Price Control Service is established in order to collect information in respect of companies situated in tax preferential regimes where companies, in which an offshore company is a shareholder, are screened.
C. Business Tax
13. Distinguishing Taxable Profits into Undistributed and Distributed Profits
The taxation of undistributed profits is steadily decreased from 25% to 20% until the year 2013. In 2010 the tax rate is decreased to 24%. The withholding tax on distributed profits (dividends) occurs on the level of a legal person. Care is taken so that the overall tax burden does not exceed the tax on income generated by employed work.
14. Taxation of Benefits in Kind to Corporate Executives
Due to the fact that certain management staff of companies purchase luxury cars in the name of their company so as not to display such purchases in their personal tax statements, provision is made so that the cost of transportation, maintenance and the salaries which are paid as set out in the company books constitute income of the car user (Managing Director, Administrator, Chairman of the Board of Directors, Executive).
15. Extending the Scope of V.A.T.
The scope of V.A.T. is extended to cover financial activities which are currently not covered or exempted and which are not exempted by the EU directive on V.A.T. Such activities include those of lawyers and notaries whose services were not liable to tax until now.
16. Business Tax Certificates from Statutory Auditors. Certification by Accountants- Tax Consultants
Statutory auditors and, for smaller companies, certified accountants or tax consultancy offices, will confirm the company's tax liabilities. In accordance with the new Act, the statutory auditors will issue a certificate which will include comments and violations in respect of the provisions of the tax legislation. The accountants- tax consultants will verify the accuracy and veracity of the reported statements and confirm whether they conform to the financial data which derive from the information and books of the company. Under a system of targeted inspections, the tax authority will carry out random checks. If such checks reveal tax evasion penalties will be imposed on both the companies as well as the audit firms.
17. Support for Young Entrepreneurs
A three year tax-free scheme is established for the creation and operation of new businesses run by persons up to the age of 35.
18. Environmental Incentives
New incentives are introduced in relation to the protection of the environment such as tax incentives for the upgrading of energy use in buildings and the reduction of the environmental footprint caused by businesses. In addition, incentives and concessions are granted for the protection of the constructed environment with allowances for the preservation of unstructured land which are within city plans in densely constructed areas and for the protection of its architectural legacy.
19. Motives for the Research
There will be an increase in discount on taxable profits for businesses that incur expenditure from technological innovation as decreed by the Minister for Education, Lifelong Learning and Religion.
The portion of the profits which derives from the sale of goods which incorporate an internationally recognized patent of the business are exempt from tax for three financial years.
20. Tax Incentives for the Investment in and Retention of Work Places
The new tax legislation introduces tax exemptions in respect of the preservation of work places for businesses suffering from a decrease in work places.
==
http://greekleftreview.wordpress.com/2010/07/page/3/
This Greek economic theater is nothing new. It replicates an old, recurring pattern of capitalism everywhere. Greek capitalist enterprises and their top shareholders and managers (the rich) evade or avoid most taxes. Meanwhile the problems and contradictions of Greek capitalism drive employers and employees to demand ever more from the government to support their activities.
Eventually, the government can no longer finance its expanding services by raising more taxes from the masses. The masses resist and social movement to tax enterprises and the rich accelerates. Then, Greek capitalists and the rich quickly offer to lend the government more of the money they have saved from taxes.
The government then borrows from them (and often also from capitalists and rich citizens of other countries) to finance some more years of expanding services.
It runs increasing budget deficits and so pays increasing interest to the capitalist enterprises and rich individuals that are the government’s creditors. Eventually, those creditors respond to the accumulated government debt that they helped to create and that they have profited from by saying that further lending has become too risky.
At that point, capitalist enterprises and the rich threaten to stop lending to the government. The leading politicians panic, declare a national crisis, and announce a national solution that requires national austerity. To survive, Greece’s creditors must be coaxed to resume lending.
Because the Greek government fears to tax its own capitalist enterprises and richest citizens, it avoids taking that path. Because the government joined the chorus blaming the crisis on the workers, austerity is its program: reduce public employment, cut public wages, and decrease government services to the people.
The government must decrease borrowing, reduce the national debt, and thereby “regain the lenders’ confidence.”
==
BREAKINGVIEWS-Letter to the Greeks
29 Jun 2011 08:36
Source: reuters // Reuters
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
By Hugo Dixon
LONDON, June 29 (Reuters Breakingviews) -
Dear Greeks,
The anger you feel about your plight is understandable. You are staring at several unpalatable alternatives, all of which will involve big cuts in living standards for years to come. But the options you face are not all equally bad. You must avoid an emotional reaction that leaves you in an even worse state -- and you must ostracise those who resort to violence. (( OSTRACIZE The act of banishing or excluding.
Banishment or exclusion from a group; disgrace.
In Athens and other cities of ancient Greece, the temporary banishment by popular vote of a citizen considered dangerous to the state.))
One option is to persuade your politicians to say "no" (or "ohi") to the euro zone/International Monetary Fund austerity plan.(Austerity: Severe and rigid economy:) The scheme is not perfect. But rejecting it out of hand would be childish. If there is no agreed plan, you will get no money. The consequence isn't just that the government would default on the loans it took out on your behalf. There would be a run on your banks and an even deeper recession. You would probably also lose your remaining friends in Europe who would consider you spoiled brats.
That's not to say you should repay all your debts. Even with Herculean efforts, that won't be possible. But you can probably negotiate an orderly default some time in the next year. An orderly default would be one where your debts were cut, say in half, but in the context of an agreed euro zone/IMF programme which provided you with enough money to survive until you are healthier.
You might ask why you can't have an "orderly" default now. Wouldn't that be better than waiting? The answer would be "yes" if an orderly default could be agreed now. Unfortunately, the rest of Europe isn't yet ready for your default. So they won't agree on one; and that, by definition, means a default now would be disorderly.
Fast forward a few months, though, and the rest of Europe might be in a better shape to withstand a Greek debt restructuring, particularly if they've used the time well and shored up their banks. You, too, might be in a better position to negotiate a new package -- provided you recapitalise your own banks and squeeze your budget deficit so you are less dependent on external money.
There's no denying this course of action would be painful. Your challenge isn't just to cut the deficit but also to restore your economic competitiveness. That means further cuts in living standards.
Is there a short-cut that avoids this pain: bringing back the drachma(The primary unit of currency in Greece before the adoption of the euro.)? Wouldn't that restore competitiveness? The answer is probably no. It's true that you should never have joined the euro. But nobody has yet come up with a way of putting this particular toothpaste back in the tube without creating a giant mess. Again, the weak link is your banks. If your compatriots thought the drachma was about to come back (at what would be a much lower rate), they would be crazy to keep their money in a Greek bank. There would be a panic before the new drachmas were even minted.(A place where the coins of a country are manufactured by authority of the government.)
All this may seem terribly unfair -- and to an extent it is. Politicians of both major parties have let the people down for decades. They presided over a monstrously inefficient public sector, often staffed by friends and clients. They spent too much money, and then cheated on the figures so Greece could get into the euro. Corruption and tax evasion have been rampant -- and gone largely unpunished.
You can also blame foreigners for your plight. Foreign banks were among those that lent you all that money. Some also helped you fiddle your figures. And the rest of the euro zone turned a blind eye when you ran up astronomical debts. But remember: your creditors (both banks and governments) won't get off scot free. When you default, they will pay a hefty price.
You should also realise that you are not blameless. Many of you were evading taxes; many of you were enjoying those highly-paid public-sector jobs; most of you were consuming more than you produced and retiring too early. You also voted for your useless politicians. Actions have consequences. By all means, protest. But focus on the right goals, don't cut off your nose to spite your face by turning away foreign help -- and, what's more, keep it peaceful.
CONTEXT NEWS
-- Anti-austerity protests turned violent in Athens on June 28 as the European Union warned Greek lawmakers the country faces immediate default unless they back an unpopular economic plan this week. Hooded youths throwing stones and wielding sticks set fire to garbage bins and a telecoms truck outside the parliament building. Riot police fired teargas to disperse them. Trade unions began a 48-hour strike against the EU/IMF-imposed measures.
-- Graphics: Greek parliament composition: http://r.reuters.com/zuc42s Euro zone debt package: http://r.reuters.com/hyb65p
-- One of Hugo Dixon's great-grandmothers was Greek.
-- Reuters story: Greek lawmakers seen backing austerity, future unsure
-- For previous columns by the author, Reuters customers can click on
(Editing by Robert Cole and David Evans)
==
Date: Tues, Jun 28 2011 2:04 pm
From: MTnews
Daily Market Commentary for June 28, 2011
U.S. trade officials urged China to further open its markets ahead of
high-level trade talks later in the year. (read more at
Millennium-Traders.Com)
http://www.millennium-traders.com/news/newscommentary.aspx
Investors expressed their optimism over a solution to the debt crisis in
Greece. Dow Jones Industrial Average was hosting a triple digit gain,
mid day. �The only way to avoid immediate default is for parliament to
endorse the revised economic program,� said Olli Rehn. The European
Union commissioner for economic and monetary affairs, in a statement
Tuesday. The European Union warned Greece that passage of a
controversial and unpopular austerity package this week, offers the sole
path for averting a potentially devastating default. The European Union
and International Monetary Fund have made approval of the 78 billion
euros ($111.4 billion) package of additional austerity measures and
accelerated asset sales a prerequisite for the release of a delayed �12
billion tranche of aid(Tranche, the French word for slice, has come to mean in English a portion or a specific class of bonds within a structured finance deal.), for Greece. Approval would move Greece closer to
an additional aid package, which may reach �120 billion. The austerity
and privatization measures �must be approved if the next tranche of
financial assistance is to be released,� Rehn said. �To those who
speculate about other options, let me say this clearly: there is no Plan
B to avoid default.� Main opposition party in Greece has refused to
support the package despite pressure from European officials who have
called for cross-party support. Greek Prime Minister George Papandreou�s
PASOK party holds a five-seat majority in the 300-seat chamber and at
least two PASOK members have threatened to vote against the plan.
Lawmakers are expected to vote on the plan on Wednesday and if passed, a
vote on implementation measures is expected to follow on Thursday.
In June, Consumer Confidence fell to worst levels seen, in eight months.
Continuing concerns over employment situation and income keep confidence
levels at lows. Other readings: Expectations barometer fell to 72.4 in
June from 76.7 in May - lowest since October. Those expecting more jobs
in six months fell to 14.2% in June from 16.7% in May. Those expecting
income to decrease rose to 16.5% from 15.1%. The present-situation gauge
fell to 37.6 in June from 39.3 in May - to strike a three-month low. The
number of those saying business conditions are 'bad' ticked higher as
well as those saying jobs are 'not so plentiful'. Percentage of
respondents that plan to purchase an automobile within six months fell
to 10.7% in June from 13.7% in May. Those with plans to buy a home fell
to 3.7% from 5.5%. Those with plans to purchase major appliances
declined to 47% from 47.9%.
===
S&P warning adds default threat to Greece's bailout
ReutersBy Angeliki Koutantou | Reuters – 1 hr 17 mins ago
ATHENS (Reuters) - Greece would likely be in default if it follows a debt rollover plan pushed by French banks, S&P warned on Monday, deepening the pain of a bailout that one European official said will cost Athens sovereignty and jobs.
European politicians and bankers had expressed confidence last week that the French proposal would not trigger a default, but ratings agency Standard & Poor's said it would involve losses to debt holders, most likely earning Greece a "selective default" rating.
"It is our view that each of the two financing options described in the (French banks') proposal would likely amount to a default under our criteria," S&P said.
French banks, major holders of Greek sovereign debt, proposed voluntarily renewing some of the bonds when they fall due, but on different terms.
S&P cut Greece's sovereign rating to "CCC" last month, from "B," on a view that any restructuring of the country's massive debt load would count as an effective default.
The euro fell from around $1.4550 to a session low around $1.4510 after the latest S&P comment.
Derivatives industry body ISDA said before the French proposal was released in late June that a voluntary agreement to roll over Greek debt would "typically" not trigger payments on credit default swaps.
Greece was already facing an uphill struggle this week to start the process of selling off state-owned assets and reform its tax system to meet European Union and IMF conditions for bailing it out. The deep spending cuts required under the loan terms have sparked angry protests on the streets of Athens.
Eurogroup Chairman Jean-Claude Juncker said Greece will lose sovereignty and jobs to meet those criteria, a comment that has enraged unions. Any suggestion of foreign intervention in running the country is an incendiary political issue that will make implementing reforms even tougher.
Public-sector union ADEDY, which has launched crippling strikes and protests, reacted angrily to his comments.
ADEDY President Spyros Papaspyros said Juncker was out of line: "Mr Juncker interferes in the internal affairs of a country, provokes European rules and is an embarrassment for the country whose government tolerates him."
Juncker's comments could trigger more of the anti-austerity street protests that have roiled the country for months as Greece stays stuck in its worst recession since the 1970s with a youth unemployment rate of more than 40 percent.
"The sovereignty of Greece will be massively limited," Juncker told Germany's Focus magazine in an interview released on Sunday. Teams of experts from around the euro zone would be heading to Athens, he said.
"One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone," Juncker said.
EASIER SAID THAN DONE
Greece last week passed austerity measures worth 28 billion euros ($40 billion) and promised to deliver 50 billion euros in sell-off revenues by 2015, including raising 5 billion euros by the end of this year alone. On the list are public utilities whose sale is sure to prompt public reaction.
"Greece now needs to push faster fiscal adjustments and structural reforms," said EFG Eurobank economist Platon Monokroussos. "On the privatization front, it is of essence the government delivers fast results to send a strong signal to financial markets."
That is easier said than done.
The socialist government, which came to power on a social welfare platform, has yet to launch a single state sale in 18 months in power and must set up a privatization agency within weeks to meet its target.
It must also start to sell state property, estimated at up to 300 billion euros but often entangled in legal complications.
"The 50 billion euro target is not achievable," said Constantinos Mihalos, head of the Athens Chamber of Commerce. "Share values are very low right now because of the recession."
At the same time, Greece needs to deliver on pledges to reform a chronically inefficient tax system that has relied too much on middle class salary earners and let wealthy tax evaders off the hook, producing disappointing revenues this year.
Finance Minister Evangelos Venizelos told Reuters in an interview on Friday that Greece would tap for the first time private-sector expertise but tax offices around the country are notoriously resistant to any change.
"A greater effort is needed to rein in tax evasion and broaden the tax base in a bid to bring the ratio of revenues to GDP closer to euro area average and reduce expenditure and waste in the broader public sector," Monokroussos said.
Investors have feared that default by Greece would send shockwaves through the world finance system with some commentators saying such an eventuality could call the whole euro zone into question.
Another hurdle is the law on a uniform pay scale for the public sector, sure to cut further the salaries of civil servants who have already seen their pay reduced by an average 15 percent as a result of a wave of austerity measures to secure the 110-billion-euro bailout last year.
On Saturday, euro zone finance ministers approved a 12 billion euro loan Greece needs to avert default.
The IMF will meet on July 8 to approve the 12-billion euro loan tranche, which is expected to be handed over by July 15 and allow Greece to avoid the immediate threat of debt default.
But the country still needs the second rescue package, which is also expected to total around 110 billion. EU officials will now look at how private creditors can be involved voluntarily so that rating agencies do not declare the rescue a "credit event."
(Additional reporting by Wayne Cole in Sydney)
(Writing by Dina Kyriakidou and Emily Kaiser; Editing by Louise Ireland, Peter Millership and Neil Fullick)
===
Re: Greek Deal Done
theshipscook
11UP
pay it off with what? Olive Oil, tomatoes and tickets to ride a Donkey up to the Parthenon?
===
Fitch calls default, Greece pledges no let-up on debt
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Eurozone deal on Greek debt
EU details Greek debt solution
By Ingrid Melander and Patrick Graham
ATHENS/LONDON | Fri Jul 22, 2011 1:51pm EDT
(Reuters) - Fitch ratings agency declared Greece would be in temporary default as the result of a second bailout, which Athens said had bought it breathing space.
But the agency pledged to give Greece a higher, "low speculative grade" after its bonds had been exchanged and said Athens now had some hope of tackling its debt mountain, which most economists still expect to force a deeper restructuring in the future.
An emergency summit of leaders of the 17-nation currency area agreed a second rescue package on Thursday with an extra 109 billion euros ($157 billion) of government money, plus a contribution by private sector bondholders estimated to total as much as 50 billion euros by mid-2014.
Under the bailout of Greece, which supplements a 110 billion euro rescue plan by the European Union and the International Monetary Fund in May last year, banks and insurers will voluntarily swap their Greek bonds for longer maturities at lower rates.
"Fitch considers the nature of private sector involvement... to constitute a restricted default event," said David Riley, Head of Sovereign Ratings at Fitch.
"However, the reduction in interest rates and extension of maturities potentially offers Greece a window of opportunity to regain solvency, despite the formidable challenges that it faces,"he said.
The summit agreed the region's rescue fund, the European Financial Stability Facility, will be allowed to buy bonds in the secondary market if the European Central Bank deems that necessary to fight the crisis.
It can also for the first time give states precautionary credit lines before they are shut out of credit markets, and lend governments money to recapitalize banks, both moves which Germany blocked earlier this year.
German central bank chief Jens Weidmann was openly critical of the package, saying it shifted risks onto taxpayers in countries with stronger finances and weakened incentives for governments to keep their finances under control.
"This weakens the foundation for a currency union based on fiscal self-responsibility," said Weidmann, a European Central Bank policymaker, although he conceded the deal could help ease financial market tensions.
As part of the package, the euro zone leaders also made detailed provisions for limiting the damage of a temporary default -- the first in western Europe for more than 40 years.
"There is a great breath of relief for the Greek economy and this will gradually pass on to the real economy," Greek Finance Minister Evangelos Venizelos told reporters. "But by no means does this mean we can relax our efforts."
Riley told Reuters Greece may languish in default for only a few days and would likely get re-rated at single B or CCC.
Among other steps, the leaders agreed to ease terms on bailout loans to Greece, Ireland and Portugal; maturities will be extended to 15 years from 7.5 and interest cut to around 3.5 percent from 4.5-5.8 percent now.
Doubts remain about whether the plan went far enough to assure not only Greece's debt sustainability but that of Ireland, Portugal and other heavily indebted nations.
The package yielded "more than expected but not enough to make us sleep comfortably," Barclays economists said. They were disappointed that European leaders did not agree to expand a euro zone rescue fund.
The wider EFSF role is designed to prevent bigger euro zone states such as Spain and Italy from being shut out of markets because of fears of a weaker country defaulting.
Funds are sufficient so far but the burden could rise substantially. A precautionary credit line for a large country like Italy might total more than 500 billion euros over several years, overwhelming the EFSF's current 440 billion euros.
German Chancellor Angela Merkel said all euro zone debtors had to act decisively to repair their finances.
"Italy's austerity program was absolutely good. But it will be a process and demands further steps in the future," she told a news conference.
DEBT MOUNTAIN
French President Nicolas Sarkozy said the measures would reduce Greece's debt by 24 percentage points of gross domestic product from about 150 percent today.
That still leaves a colossal debt for an economy deep in recession with no recourse to a competitive devaluation.
What is more, the figures are based on what analysts say are optimistic projections for growth and returns from a sweeping privatization program.
"Our estimates suggest that Greek debt/GDP ratios will fall around 25 percentage points over 5 years as a result of these measures but will still be a whopping 120 percent in 2016 even assuming that the full 50 billion euros of privatization measures are implemented," analysts at JP Morgan said.
"We therefore believe that (bond) spreads will widen again as short covering dissipates and reality sinks in."
Greek, Irish and Portuguese bonds jumped before relinquishing their gains and traders said expectations of a larger restructuring down the road were undimmed.
The European leaders' promise of a "Marshall Plan" of European public investment to help revive the Greek economy may help, though details were thin.
Ratings agencies Standard & Poor's and Moody's are likely to follow Fitch's lead since banks and insurers are set to write down the value of Greek bonds by 21 percent, with more losses maybe to follow.
"We have long thought that the most likely outcome for Greek bondholders would be that they would take a small haircut first followed by a larger one at a later date. To give Greece a fighting chance they probably need a write down close to 65 percent," said Gary Jenkins, head of fixed income research at Evolution.
Shares in Europe's banks rose as it became apparent that the major players had limited their losses on Greek bonds to just over 5 billion euros.
The summit accord was based on a common position crafted by Merkel and Sarkozy in late night talks in Berlin on Wednesday with ECB President Jean-Claude Trichet.
The ECB relented and signaled it was willing to let Greece default temporarily as long as it was strictly a one-off.
But Fitch said it would expect similar private creditor involvement in any future help for Ireland and Portugal if they had not stabilized their finances by 2013.
Many economists believe the only way out of the euro zone's debt crisis in the long run may be closer integration of national fiscal policies -- for example, a joint euro zone guarantee for countries' bonds, or issuance of a joint euro zone bond to finance all countries. Germany has opposed this.
Sarkozy, at least, is looking to more sweeping reforms.
He said France and Germany would make proposals by the end of August on how to improve the governance of the bloc, to "clarify our vision of the future of the euro zone."
Merkel said she would not allow a union of automatic transfers from richer to poorer states. "This shall not happen according to my conviction," she told a news conference.
(Writing by Mike Peacock; editing by Janet McBride/Ruth Pitchford, Ron Askew)
====
ECB action boosts European markets
Monday, 8 August 2011
Emergency action to help Spain and Italy has helped put the brakes on falling stocks
Emergency action to help Spain and Italy has helped put the brakes on falling stocks
European markets have pulled out of their nosedive after emergency action to shore up Italy and Spain helped prevent further turmoil.
Traders had been braced for another session of woe after Standard & Poor's historic decision to strip the US government of its prized AAA credit rating.
The FTSE 100 Index initially fell by more than 1% but this was short-lived as London and markets in France and Germany found positive territory.
The respite comes after the European Central Bank (ECB) signalled it would intervene in the markets for Italian and Spanish bonds. Finance ministers from the world's seven biggest economies also broke off from their summer holidays to agree to ensure liquidity to help markets operate smoothly.
Banks were among those reassured by the actions of the ECB, with Lloyds Banking Group and Royal Bank of Scotland both 6% higher after suffering heavy losses last week.
The London market lost 10% of its value last week as nearly £150 billion was slashed from the value of the UK's 100 biggest companies in its worst period of trading since the autumn of 2008.
The continued market turmoil has been bad news for millions of savers who will have seen their pension funds hit dramatically.
Japan's Nikkei finished more than 2% lower as Asian markets caught up with the sell-off seen on European markets on Friday afternoon.
Meanwhile, the safer haven of gold pushed to a new record high of over 1,700 US dollars per troy ounce.
Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers, said: "Turbulence remains likely until such time as there are some concrete debt proposals from the US and the eurozone, where potential contagion remains an issue."
Read more: http://www.belfasttelegraph.co.uk/news/local-national/uk/ecb-action-boosts-european-markets-16033714.html?r=RSS#ixzz1UQWXCIpz
====
Four countries ban short-selling
Related
Sarkozy to meet Merkel as volatile stock markets seek reassurance | 12/08/2011
Pressure on Italy to cut back further comes despite fears for slow recovery | 12/08/2011
EU regulators in talks over banning short selling | 12/08/2011
Markets still tense despite late rally | 12/08/2011
Economic Crisis
External
European Securities and Markets Authority (EMSA)
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or availability of other websites
A ban on short-selling financial stocks in four European countries including France takes effect today in a co-ordinated attempt to restore confidence in a market hit by rumours and higher borrowing costs.
France, Italy, Spain and Belgium imposed the ban, which will vary in detail depending on the country, the European Securities and Markets Authority (EMSA) said in a statement late last night.
European markets have repeatedly moved on rumours about the health and funding needs of indebted euro zone governments, and more recently on some of its major banks.
The DJ Stoxx index of European banking stocks has fallen 37 per cent from a peak in February and touched a 28-month low yesterday. The index is down 17 per cent in August alone.
"It's one of those things that politicians grasp for when they have no other tools left in their arsenal," said James Angel, an associate professor specialising in financial market regulation at Georgetown University's McDonough School of Business in Washington DC.
"All it really does is kick sand in the ears of the market and signals to the world that the leaders are clueless as to what's going on."
European regulators had previously played down the idea of a blanket ban on short-selling, through which an investor borrows shares and sells them on the expectation their price will fall and they can be bought back at a lower price.
EMSA said short-selling combined with rumour-mongering created a strategy that was "clearly abusive."
"Today some authorities have decided to impose or extend existing short-selling bans in their respective countries," it said. "They have done so either to restrict the benefits that can be achieved from spreading false rumours or to achieve a regulatory level playing field."
France will ban short selling on 11 financial stocks for 15 days, Spain will protect 16 stocks for 15 days, while Belgium will ban short selling of four financial stocks for an indefinite period. Details of the Italian ban were not immediately clear.
Banks on the list included France's BNP Paribas and Societe Generale , and Spain's Santander and BBVA .
The European assault mirrors one by the US Securities and Exchange Commission on September 19th, 2008, four days after Lehman Brothers collapsed, to temporarily ban short selling in 799 banks and other financial institutions.
The UK imposed a similar prohibition at that time.
The US move was of questionable value, according to several academic studies. While share borrowing fell during the three-week ban, financial stocks continued to plummet.
It also raised philosophical issues about whether regulators should interfere with the free market and the rights of investors to hedge or speculate. The move was also criticized by at least one former SEC official as a political decision.
In Asia, South Korea banned short-selling in all listed stocks on Tuesday. It already had a rule in place prohibiting the shorting of financial stocks. Hong Kong is bringing in rules forcing investors to disclose short positions above a certain threshold to the market regulator.
Some hedge fund experts said the European ban would likely limit liquidity by shutting out some market participants.
The latest market turmoil focused on speculation about French banks, which are heavily exposed to European countries at the centre of the region's debt crisis. Societe Generale , France's second biggestlender, has especially been in the eye of the storm.
Those rumours sent shock waves through credit markets, pushing interbank borrowing rates higher and triggering a 3-month high of €4 billion in emergency overnight borrowing from the European Central Bank.
The turmoil drove up European banks' borrowing costs to levels not seen since the 2007-2009 global credit crisis and raised the question whether the difficulties may foretell a repeat of the crisis, when arteries of global finance seized up.
The signals from Europe also set off alarm bells in Asia. Banking sources said yesterday that one bank in the region had cut credit lines to major French lenders, while five others were reviewing trades and counterparty risk.
Investors said the latest loss of confidence was a sign that few of the problems that brought bank lending to a halt last time around have really gone away.
Bank of France Governor Christian Noyer said French banks were solid and would not be affected by the market turmoil.
"Their capital levels, boosted by strong equity capital, are adequate, and their medium- to long-term financing programs are being carried out in perfectly satisfactory conditions," Mr Noyer said in a statement.
===============
..Lenders press Greece to shrink state and avoid default
By George Georgiopoulos and Ingrid Melander | Reuters – 1 hr 9 mins ago.........Related Content.
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....ATHENS (Reuters) - International lenders told Greece on Monday it must shrink its public sector to avoid running out of money within weeks, as investors spooked by political setbacks in Europe dumped risky euro zone assets.
Adding to concerns, Standard & Poor's cut its ratings on Italy in a major surprise that threatened to stoke fears of contagion in the debt-stressed euro zone.
Greece is near a deal to continue receiving bailout funds, a Greek finance ministry official said after a conference call with lenders, though "some work still needs to be done."
U.S. stocks recovered some of their losses on the news.
Greek Finance Minister Evangelos Venizelos held what Greece termed "productive and substantive" talks by telephone with senior officials of the European Union and International Monetary Fund after promising as much austerity as necessary to win a vital next installment of aid.
The talks will resume on Tuesday evening after experts meet through the day. Earlier, the IMF's representative in Greece spelled out steps Athens must take to secure the 8 billion-euro loan it needs to pay salaries and pensions next month.
"The ball is in the Greek court. Implementation is of the essence," Bob Traa told an economic conference.
Additional savings measures were required to cut the public deficit to a sustainable level and reduce the public sector's claim on resources -- code for axing jobs and cutting pay and pensions -- while improving tax collection rather than adding further taxes, Traa said.
Venizelos said Greece would do what was needed to get more funds but would not be made a scapegoat by euro zone policymakers who had failed to tackle the region's debt woes.
Greek Prime Minister George Papandreou is considering calling a referendum on euro zone membership as a ways to strengthen the government's hand in dealing with the debt crisis as pressure mounts from all sides, the Kathimerini English language newspaper reported on its website.
A bill to be submitted in parliament, paving the way for such a vote, is to be discussed in coming days, the newspaper added.
European stocks and the euro fell sharply on fears of a Greek default, compounded by the failure of EU finance ministers to agree new steps to resolve Europe's debt crisis at weekend talks, and another regional election defeat for German Chancellor Angela Merkel.
The euro fell about 0.5 percent in early Asian trade on Tuesday after S&P cut its rating on Italy, citing weakening economic growth prospects and a fragile ruling coalition.
In a sign of mounting stress, yields on Italian and Spanish bonds rose further above 5 percent despite six weeks of European Central Bank buying to stabilize them. The cost of insuring peripheral debt against default also rose.
"There will be additional volatility in the global financial markets heading into the end of the month as the pressure to get Greece and others to enact their reforms will be white-hot intense," said Andrew Busch, global currency strategist at BMO Capital Markets in Chicago.
The euro zone debt crisis is now dominating the thoughts of policymakers worldwide with the United States, in particular, pushing for more dramatic action from Europe's leaders.
President Barack Obama and Germany's Merkel spoke by telephone on Monday -- the latest of several calls between the two leaders -- and agreed that "concerted action" would be needed in the coming months to address it.
Emerging economies are also worried about being hurt by a deepening of the crisis in Europe.
A Brazilian official said Brazil will propose this week that it and other large emerging economies make new funds available to the IMF to help ease the crisis in the euro zone.
"A new and larger risk looms. The drop in markets and confidence could prompt slippage in developing countries' investment and a pull back by their consumers too," World Bank chief Robert Zoellick said ahead of Group of 20 talks and an IMF/World Bank meeting in Washington later in the week.
Without its next loan tranche, Athens says it will run out of cash in mid-October.
((Tranche, the French word for slice, has come to mean in English a portion or a specific class of bonds within a structured finance deal. The word made it into the news when CBS Radio decided to sue its former employee, shock jock Howard Stern:
))
A default would threaten contagion to larger euro zone economies such as Italy and hammer European banks with heavy exposure to Greece.
Prime Minister George Papandreou canceled a planned trip to Washington and the United Nations at the last minute and returned home in response to the crisis.
A senior Greek government official told Reuters the EU/IMF inspectors expect a new property tax unveiled last week to yield just half the two billion euros targeted this year.
Greek media published a list of 15 austerity measures it said the troika was demanding the Socialist government implement to receive the next tranche of aid.
They included firing another 20,000 state workers, cutting or freezing state salaries and pensions, increasing heating oil tax, shutting down loss-making state organizations, cutting health spending and speeding up privatizations.
The European Commission said it was not asking Athens to adopt any additional austerity steps on top of what had already been agreed in the Greek reform program.
PUBLIC SUPPORT LACKING
The IMF's Traa acknowledged that the IMF/EU bailout plan lacked public support and said there was plenty of goodwill to give Greece more time for its adjustment program in a weaker-than-expected economy.
He said the economy was set to contract by 5.5 percent this year and 2.5 percent in 2012.
Asked whether Greece would get the next loan tranche, finance minister Venizelos told Reuters: "Yes, of course."
Even if it does, many economists and investors believe Athens will default on its debt mountain -- more than 150 percent of gross national product -- perhaps within months.
Former IMF chief Dominique Strauss-Kahn joined the chorus on Sunday, saying Greece's debt must be cut and government and private creditors should take losses now. "(EU) governments are not solving things, they are kicking the problem down the road, and the snowball is growing...," he told French television.
Uncertainty over Greece was compounded by another political shock in Germany at the weekend.
The sixth regional election defeat this year for Merkel's center-right coalition on Sunday raised questions about the stability of her government and her ability to push through more euro zone rescue measures.
Her Free Democratic (FDR) junior coalition partners crashed out of Berlin's regional assembly with 1.8 percent of the vote, raising pressure from some party activists for a more Euroskeptical line.
Leaders of both the Bavarian Christian Social Union (CSU) and the FDR have raised the prospect of Greece defaulting and possibly having to leave the 17-nation single currency area, ignoring rebukes from the chancellor for alarming markets.
Merkel said on Monday it would send a disastrous political message if euro zone members could be thrown out of the bloc because they faced difficulties. Instead, she advocated tougher rules to force euro states to obey budget discipline.
German lawmakers are due to vote on September 29 on reforms agreed by euro zone leaders in July to allow the European Financial Stability Facility to buy government bonds in the secondary market, give states precautionary loans and lend to recapitalize banks.
Merkel insisted she would win the vote.
In another illustration of the pressures on her, German central bank chief Jens Weidmann told parliament that planned measures to beef up the euro zone's rescue fund would not encourage countries to put their budgets in order.
Last week Treasury Secretary Timothy Geithner pressed euro zone finance ministers apparently in vain to take stronger action to stop the sovereign debt crisis spreading.
One of his predecessors, Lawrence Summers, said in a Reuters column that all nations should pressure Europe to go beyond "grudging incrementalism" to recapitalize banks, and revive economic growth.
=================
UAE: Sharjah’s real estate faces challenging market
- Amina Murtada
Monday, 10 October 2011 10:34
Global Arab Network - Sharjah’s real estate sector is a buyer’s and renter’s market at the moment, with prices falling since the beginning of the year and more residents reporting satisfaction with the affordability of housing. Increased residential and office space competition from neighbouring emirates, however, means that maintaining occupancy rates will be a challenge, at least in the near term, Global Arab Network reports according to OBG.
Sharjah’s property market is to a large extent shaped by supply and demand factors from neighbouring emirates, with a report on the UAE property market from real estate consultancy CB Richard Ellis (CBRE), for example, noting that a 28% drop in rents in Ajman was in part driven by competition from Sharjah, where residential rental prices have fallen by around 21% since the beginning of the year.
Not surprisingly, Sharjah’s renters are pleased with the situation, according to a survey conducted by the Abu Dhabi Gallup Centre (ADGC) that was released at the end of August. The results of the study, which examined the satisfaction levels of UAE nationals on a range of issues, including the affordability of housing, showed that there had been a strong improvement in sentiment among Sharjah residents.
According to the report, 54% of local respondents were happy with the affordability of housing, higher than the national average which was 51%. The 2011 findings for Sharjah were a contrast with the results of the same survey last year, when the satisfaction level was just 33%, and also better than the 48% registered in 2009.
Another factor in favour of Sharjah’s real estate sector is that while rental costs in other emirates may have fallen, they are still high when compared to those elsewhere in the region, and indeed in a global context. Mohamed Younis, a senior analyst at ADGC, told local media that Abu Dhabi and Dubai, for example, continued to be “among the most expensive ‘high-cost-of-living’ cities around the globe”.
But while renters may be pleased with the current situation, property owners are having a tougher time of it. The trend of rent reductions is expected to continue through to the end of the year, CBRE said, as new housing stock appears and owners increase efforts to entice tenants.
“As competition intensifies, many landlords in Sharjah have started to include parking and chiller charges [district cooling charges] within their quoted lease rates,” the report said. “In some cases agent commissions on initial lettings are also being ignored.” The quality of facilities is another area of competition, with the report noting that the expanding inventory of new towers has increased movement away from ageing buildings that lack the latest standard of amenities.
Despite efforts to entice renters, some residents are taking advantage of the reduction in prices in the Dubai market, encouraged by the growing availability of quality accommodation at more affordable prices – at least in comparison to those in the past. According to Matthew Green, the head of research and consultancy for CBRE UAE, “The performance of individual emirates continues to fluctuate widely, with Sharjah and Ajman currently feeling the brunt of Dubai’s overhang of space.”
It is not just residential rents that are declining, with CBRE saying office lease rates in Sharjah fell by 22% in the first six months of the year. Average lease rates are currently in the range of Dh300-Dh700 ($60-$140) per sq metre per year, down from the Dh430-Dh860 ($86-$172) level of the second half of 2010, representing a drop of around 22%, CBRE said.
Though Sharjah’s property owners may see lower rates of returns on their rental units for some time yet, the market should rebound in the medium term, as the UAE and global economies recover. With GDP growth for the year now pegged at 3.3% and 3.8% for 2012, according to the IMF, and a recent report from Citigroup noting that regional unrest may result in “significant tailwinds” for the UAE, that looks likely to happen sooner rather than later. (OBG)
===============
Europe seals new Greek bailout but doubts remain
Tue, Feb 21 19:14 PM EST
image
By Annika Breidthardt and Jan Strupczewski
BRUSSELS (Reuters) - Euro zone finance ministers agreed a 130-billion-euro ($172 billion) rescue for Greece on Tuesday to avert an imminent chaotic default after forcing Athens to commit to unpopular cuts and private bondholders to take bigger losses.
The complex deal wrought in overnight negotiations buys time to stabilize the 17-nation currency bloc and strengthen its financial firewalls, but it leaves deep doubts about Greece's ability to recover and avoid default in the longer term.
After 13 hours of talks, ministers finalized measures to cut Athens' debt to 120.5 percent of gross domestic product by 2020, a fraction above the target, securing a second rescue in less than two years in time for a major bond repayment due in March.
"We have reached a far-reaching agreement on Greece's new program and private sector involvement that would lead to a significant debt reduction for Greece ... to secure Greece's future in the euro area," Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, told a news conference.
Greece will be placed under permanent surveillance by an increased European presence on the ground, and it will have to deposit funds to service its debt in a special account to guarantee repayments.
The 5 a.m. deal (0400 GMT) was hailed as a step forward for Greece, but experts warned that Athens will need more help to bring its debts down to the level envisaged in the bailout and will remain worryingly "accident prone" in coming years.
By agreeing that the European Central Bank would distribute its profits from bond-buying and private bondholders would take more losses, the ministers reduced Greece's debt to a point that should secure funding from the International Monetary Fund.
Italian and Spanish bond yields fell amid relief among investors that a threat to the wider euro zone had been avoided, although expectations of an agreement had been largely priced into foreign exchange and stock markets.
"It's an important result that removes immediate risks of contagion," Italian Prime Minister Mario Monti told a news conference.
"A nightmare scenario was avoided," said Greek Finance Minister Evangelos Venizelos in Athens. "It is maybe the most important (deal) in Greece's post-war history."
While the deal provides time for the euro zone to put new crisis measures in place over the coming months, it means Greece will struggle for years without economic growth.
The austerity measures imposed on Athens are widely disliked among the population and will put pressure on politicians who must contest an election expected in April.
Further street unrest could test politicians' commitment to cuts in wages, pensions and jobs. Greece's two biggest labor unions called a protest in Athens on Wednesday.
An opinion poll taken just before the Brussels deal showed that support for the two mainstream parties backing the rescue had fallen to an all-time low while leftist, anti-bailout parties showed gains.
Anastasis Chrisopoulos, a 31-year-old Athens taxi driver, saw no reason to cheer the deal.
"So what?" he asked. "Things will only get worse. We have reached a point where we're trying to figure out how to survive just the next day, let alone the next 10 days, the next month, the next year."
Conservative leader Antonis Samaras, a strong contender to become next prime minister, said the
rescue package's debt-reduction targets could only be met with economic growth.
"Without the rebound and growth of the economy ... not even the immediate fiscal targets can be met, nor can the debt become sustainable in the long-term," he said during a visit to Cyprus.
Parliaments in three countries that have been most critical of bailouts - Germany, the Netherlands and Finland - must now approve the package. German Finance Minister Wolfgang Schaeuble, who caused an outcry by suggesting that Greece was a "bottomless pit," said he was confident it would be passed.
STUCK IN TRAGEDY
Many economists question whether Greece can pay off even a reduced debt burden, suggesting the deal may only delay a deeper default by a few months.
Swedish Finance Minister Anders Borg said: "What's been done is a meaningful step forward. Of course, the Greeks remain stuck in their tragedy; this is a new act in a long drama.
"I don't think we should consider that they are cleared of any problems, but I do think we've reduced the Greek problem to just a Greek problem. It is no longer a threat to the recovery in all of Europe, and it is another step forward."
Jennifer McKeown, senior European economist at Capital Economics, said: "The austerity measures it will have to implement and increased monitoring by the troika amidst public outrage will make things harder and drive it deeper into recession. There is a risk of a euro zone exit later this year."
A return to economic growth in Greece could take as much as a decade, a prospect that brought thousands onto the streets of Athens to protest on Sunday. The cuts will deepen a recession already in its fifth year, hurting government revenues.
"We sowed the wind, now we reap the whirlwind," said Vassilis Korkidis, head of the Greek Commerce Confederation. "The new bailout is selling us time and hope at a very high price, while it doggedly continues to impose harsh austerity measures that keep us in a long and deep recession."
EXTRA RELIEF
A report prepared by experts from the European Union, European Central Bank and International Monetary Fund said Greece would need extra relief to cut its debts near to the official debt target given the worsening state of its economy.
If Athens did not follow through on economic reforms and savings to make its economy more competitive, its debt could hit 160 percent by 2020, said the report.
"Given the risks, the Greek program may thus remain accident-prone, with questions about sustainability hanging over it," the nine-page confidential report said.
The beefed-up monitoring of implementation of the reforms could bolster accusations among some Greeks of interference in domestic affairs but some critics say that is essential.
Dutch Finance Minister Jan Kees de Jager, one of Athens' most strident critics, told Dutch news agency ANP he had bargained hard for the permanent monitoring mission.
"This program is not something to cheer about," he said.
BOND SWAP
The accord will enable Athens to launch a bond swap with private investors to help put it on a more stable financial footing and keep it inside the euro zone.
About 100 billion euros of debt will be written off as banks and insurers swap bonds they hold for longer-dated securities that pay a lower coupon.
Private sector holders of Greek debt will take losses of 53.5 percent on the nominal value of their bonds. They had agreed to a 50 percent nominal writedown, which equated to around a 70 percent loss on the net present value of the debt.
Juncker said he expected a high participation rate in the deal, a view echoed by the German banking association.
Greece said it would legislate to allow it to enforce losses on bondholders who do not take part voluntarily.
Euro zone central banks will also play their part.
A Eurogroup statement said the ECB would pass up profits it made from buying Greek bonds over the past two years to national central banks for their governments to pass on to Athens "to further improve the sustainability of Greece's public debt."
The ECB has spent about 38 billion euros on Greek government debt with a face value of about 50 billion euros.
The private creditor bond exchange is expected to launch on March 8 and complete three days later, Athens said on Saturday. That means a 14.5-billion-euro bond repayment due on March 20 would be restructured, allowing Greece to avoid default.
The vast majority of the funds in the program will be used to finance the bond swap and ensure Greece's banking system remains stable; some 30 billion euros will go to "sweeteners" to get the private sector to sign up to the swap, 23 billion will go to recapitalize Greek banks.
A further 35 billion or so will allow Greece to finance the buying back of the bonds. Next to nothing will go directly to help the Greek economy.
(Additional reporting by Luke Baker, Julien Toyer, Robin Emmott in Brussels, Daniel Flynn in Paris, Terri Kinnunen in Helsinki, Sarah Marsh in Berlin, Harry Papachristou and George Georgiopoulos in Athens, and Michele Kambas in Nicosia; Writing by Giles Elgood; Editing by Paul Taylor)
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Latin America prepared for US financial bubble to burst
29.02.2012
Latin America prepared for US financial bubble to burst. 46716.jpeg
Latin America is rapidly changing the orientation of the old standards of economic policy dominated by the United States and welcomes the arrival of other world powers. Some time ago, the South American continent was a good friend of Russia, its economic partner and political ally. However, Russia is moving away from it, and for no good reason.
It is hard to imagine that Russia and Latin America may have more in common than large reserves of natural resources. Meanwhile, cultural and spiritual values of the Russians and citizens of many Latin American countries are so close that a single concept of the emerging new world is reflected in the economic and foreign policy. The idea of creating BRICS, though not owned by the followers of a multipolar world, still embodied in the pursuit of post-industrial countries to set their own rules on the international platform.
Brazil is the largest country in Latin America in terms of economic indicators, as well as Argentina. However, recently the latter was in the deepest financial depression, enslaved by the International Monetary Fund. The economic growth that was beginning to show in Argentina suggests that Latin American countries are fed up with neo-liberal capitalism. The reformed economies have not been able to adapt to globalization, and class stratification began to grow exponentially.
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The arrival of alternative, mostly leftist leaders in the region indicates that they welcome an end to the hegemony of the United States on the continent and are waiting for the arrival of other world powers. That is why a positive political dialogue is so important between the South American continent and Russia as it would catalyze the economic and trade ties. Despite the fact that the global financial crisis has caused severe damage to these relations, the trade between Latin America and Russia exceeds eight billion dollars, and before the crisis it was twice the present rate.
However, despite the fact that the countries seized by the idea of national identity strive to form a unified Latin American space, they are far from uniform in terms of their financial indicators.
Brazil, Argentina, Chile and Mexico are countries that follow the path of technological innovation and will continue to grow. Bolivia, Ecuador, Peru and Colombia will continue to languish as "drug lords". This is despite the fact that the natural resources of Bolivia are hardly inferior to those of Venezuela, but the people in this country are among the poorest in the region.
Peru, Chile and Mexico are members of APEC, and Brazil is part of BRICS conglomerate. The insistence with which the Russians and Latinos overcome the difficulties and hardships should cause blatant jealousy of the West, where the population even in the "light savings" mode takes to the streets with protests. But why Russia that also has a large economic weight in the above-mentioned organizations have increasingly moved away from Latin American markets? What are the prospects for cooperation between Russia and the continent of South America at the time when Europe and the United States are in deep crisis? How utopian is the concept of multilateralism based on spatial-territorial proximity?
Utopia:Excellent or ideal but impracticable; visionary: a utopian scheme for equalizing wealth.
Proposing impracticably ideal scheme
multilateralism
An approach to international trade, the monetary system, international disarmament and security, or the environment, based on the idea that if international cooperative regimes for the management of conflicts of interest are to be effective, they must represent a broad and sustainable consensus among the states of the international system. Multilateralism therefore lends itself to issues where clear common interests in the international community are identifiable. It should be thought of in contrast to strictly unilateral or bilateral initiatives.
Many recognized that during the inter-war years the exclusionary nature of bilateral bargains and the frequent resort to unilateral action had contributed to the breakdown of the international economy and the onset of war. Multilateralism therefore became the norm in such post-war agreements as Bretton Woods, the World Trade Organization/GATT, the United Nations, and, more recently, accords on the ozone layer or global warming. On questions of national security states have often proved reticent to accept the constraints of multilateral diplomacy, but there have been notable examples of multilateral action through the UN in the post-war period.
Writer Vladislav Savin suggested the concept of "friendship through a neighbor," and there is certain logic to it. Latin America and Russia never had a common border and, consequently, territorial conflict. This is not to the liking of the United States used to leading the movement against a "common enemy". So far the hegemony is supported by the economic indicators, as well as a number of formally independent organizations - NATO, WTO, World Bank and International Monetary Fund. Here Moscow should try and prepare in advance to enter the region with a competitive advantage when the U.S. financial bubble finally bursts.
On the one hand, the current numbers of the economic relations between Russia and Latin America have surpassed the numbers of the Soviet times, when Russia and the South American continent were mainly connected by virtue of ideological and political and military-strategic reasons. On the other hand, the inertia of the Russian business is a major barrier to unification. Even large corporations like the "Gazprom", LUKOIL, "Aluminum" and "Power Machines" only began to move from talking to specific commercial projects.
If the current trends continue, the trade turnover between the countries of Latin America and Russia by 2017 could exceed $20 billion. It may be higher if Russia manages to keep this area as a major market for weapons after the Middle East currently engulfed in revolutions. The policy of "loose hands" may bring out other types of cooperation, such as the use of the equatorial launch site "Alcantara" in Brazil. The main thing is to be able to bring the relationship to the level of strategic partnership. To do this, both diplomacy and business will have to assess the interests of exporters and investors from other countries that are now firmly seated on the South American continent.
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Greece says 17 firms express interest in gas company sale
Fri, Mar 30 15:04 PM EDT
ATHENS, March 30 (Reuters) - Seventeen firms expressed initial interest in the privatisation of Greek natural gas company DEPA, one of the country's major assets to go on the block to help pay down public debt, its privatisations agency (HRADF) said on Friday.
The agency did not name the interested parties but said the potential buyers came from 12 different countries, seven of which were outside the euro zone.
Greece is considering either a "bundled" sale of DEPA - combining its wholesale, trading and gas supply business with its DESFA networks and liquefied natural gas arm - or an "unbundled" deal in which DESFA would be sold separately.
"The Hellenic Republic Asset Development Fund will evaluate the fulfillment of legal and financial conditions of each candidate and announce which qualified parties will be invited to submit indicative offers," the agency said.
DEPA owns 51 percent of local supply companies which have a monopoly until 2036 to sell natural gas to small industrial, commercial and residential customers. In 2010, the DEPA group reported sales of 1.22 billion euros and net profit of 90.8 million. It has not yet published its 2011 results.
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