Eurozone crisis live: Greek bailout talks delayed again
? PM Lucas Papademos to meet coalition leaders today
? It's Deja EU all over again - meeting postponed again
? Today's agenda
We now know why today's crucial meeting has been delayed (as reported at 10.42am).
The reason, it appears, is that Georgios Karatzaferis, who heads the populist Laos party in the ruling coalition, has still not received a translation of the draft agreement in Greek.
As we reported yesterday, Karatzaferis's command of English doesn't match George Papandreou, the socialist party leader and Antonis Samaras of New Democracy. Unlike that pair, the former boxer-turned-politician was not schooled in an Ivy league college in the US.
A senior government source told Helena Smith in Athens:
They say the transalation won't be ready until 2 PM (12 GMT).
The earliest the meeting could take place is around 4:30 PM and I say that hopefuly. Papademos is hoping it will last two or three hours but it's a heavier package than the leaders expected. I don't think they are intellectually and psychologically prepared for what they have to accept even if, on the other hand, they don't have any other option but to accept it.
They continue to think there are easy fixes. They're only now coming to terms with how bad the figures are.
In another development, the troika has demanded that it holds talks with each leader separately aftere the meeting.
As a result, the cabinet meeting that was due to take place today (to endorse the conditions attached to the ?130bn euro rescue package) is likely to be moved back to much later tonight or tomorrow.....
More Greek drama -- New Democracy officials are now denying that a "fixed time" has been set for today's much-awaited meeting between prime minister Lucas Papademos and the three party leaders backing his coaltion, says Helena Smith in Athens.
Apparently the draft text of the agreement is not 16 pages (as reported by the Greek media) but 50 pages. "We have no received no deadline from the prime minister's office," said one official at the centre-right party.
Antonis Samaras, New Democracy's leader, is in his office with aides right now. The ND official said they are:
reading the text line by line ... we are talking about 50 pages of [austerity] measures. Every line has to be studied carefully because behind it, who knows, there might be another hidden measure.....
The text was meant to arrive at 8am but wasn't in our hands until 9:30am.
A delay? In Greece? Who'd have imagined it.
Helena continues:
Readers will recall that New Democracy has been virulently opposed to the fiscal remedies the troika has meted out to Greece arguing that they have lead to an economic death spiral for the debt-stricken country.
If you missed this last night
? Angela Merkel insisted that Britain must remain a full member of the EU.
During a Q&A covered by my colleague in Berlin, Helen Pidd, the chancellor said:
We want to have Great Britain in the European Union.
We need Britain, by the way.
However, Merkel was less equivical on the Grexit issue. Asked whether it would be "a catastrophe" of Greece left the eurozone, she replied:
As far as I know, Greece has not decided to leave the eurozone. I don't want Greece to leave the eurozone and therefore this question is not relevant. There is no political answer to this question because it's not what is currently occupying us...I am not going to take part in anything which would result in Greece leaving the euro. That scenario would have unpredictable consequences.
The eurozone crisis is hitting the travel industry. Thomas Cook said this morning that the "uncertain economic environment across Europe" has hit bookings. Sales in France are down 28%, for example.
In Germany, though, bookings are up by 20%.
Yesterday, rival airline TUI Travel reported a 27% drop in flights to Greece from Germany, due to "a change in consumer sentiment towards the region". The Sun gave the news its traditional treatment:
German holidaymakers may be alarmed by pictures of their flag being burned outside the Athens parliament....
Today's German trade data painted a mixed picture of the state of Europe's biggest economy
German exports piled through the ?1 trillion mark for the first time ever in 2011, giving it a trade surplus of ?155bn. While exports jumped by over 11% during the year, imports rose even more ? by 13.2% ? suggesting that German consumer spending is helping other economies.
However, there was a definite slowdown in December - when exports dropped by 4.3% on a seasonally-adjusted basis ? the fastest rate since January 2009.
That follows yesterday's surprisingly steep decline in German industrial output. Put together, analysts say, this is a clear sign that the German economy shrank in Q4 2011, and might still be shrinking.
Christian Schulz of Berenberg Bank told Reuters:
Together with falling industry orders and weak production, it shows that the German economy contracted in the fourthe quarter and could be facing a recession.
The latest economic news from Paris was clearer to read -- The Bank of France admitted this morning that the French economy is likely to stagnate in the first three months of 2012.
Latest word from Athens is that the talks will begin at 3pm local time, or 1pm GMT.
(sorry for the radio silence just then - technical issues, now fixed by our crack developers).
We're hearing that the three Greek political leaders received their draft agreements ? all 16-pages worth ? at 9.30am local time.
As Helena Smith, our correspondent in Athens, reports, this was just a few hours after Lucas Papademos completed another night with the country's troika of foreign lenders (talks ended at 4 AM)
Helena writes:
The end result? Not the best for Greeks, the local media is reporting this morning. After days of seeing deadlines pushed back and missed, officials from the EU, ECB and IMF were not in the best moods.
"All of the 'red lines' that we were told would never be crossed have been crossed," an economics reporter told Flash News. "We have just received the text of the agreement and there are cuts all round."
The latest word is that today's meeting to seek consensus on the cost-cutting plans will begin "around lunch-time."
Helena continues:
Wage and pension cuts in the private sector appear to be at the heart of ongoing wranging - even at this 11th (some might says 12th) hour. "One of the scenarios that apparently will have to be approved by party heads is a reduction of the minimum wage by 22% and a simultaneous 15% cut in supplementary pensions," the well-informed Ta Nea newspaper said.
The backlash from trade unions and employers groups is likely to be swift and sharp. Pame, the communist-backed labour force, hit back saying it was preparing to step up "our battle."
"In every factory, business and sector workers must reject measures that cut wages, day pay and pensions," it said.
Pame also called on Greeks to join a mass protest rally on Thurday.
Gary Jenkins of Swordfish Research points out that we are "finally entering the endgame"* of the Greek talks. The ECB's agreement to cut a deal on its Greek bonds (see 8.33am) means "all the elements are in place" for a deal.
Jenkins writes:
With an election around the corner and protests against the severity and breadth of the cuts required the politicians want to show the electorate their mettle by pushing the deal to the wire, but ultimately it is difficult to see how they can do anything other than agree a deal.
After all, the alternative is a disorderly default which could lead to a much deeper economic depression and potential civil unrest.
* - a chess reference. Would that make Merkel and Sarkozy the queen and king (her the most powerful piece on the board, him trying to avoid being checkmated in the presidential election)? Not sure who the other pieces would be (clearly Fred Goodwin couldn't be a knight!)
An interesting development overnight - the European Central Bank has agreed to take part in the Greek debt restructuring.
Up to a point, anyway. The ECB is still refusing to join private creditors in a 70% haircut on the estimated ?40bn of Greek debt on its books. However, it will exchange the Greek government bonds it purchased in the secondary market last year at a price below their face value (details here on the WSJ).
That will reduce Greece's total liabilites. It also seems only fair, as the ECB would have acquired these bonds for something less than their full face value (as nervous creditors ditched their holdings). Analysts reckon the ECB probably got a 25% discount.
Elisabeth Afseth of Investic pointed out that the ECB will still not take an actual loss:
It seems the exchange would involve the ECB getting EFSF bonds (with a lower face value) in return for its Greek bonds with the EFSF selling the bonds back to Greece at the price it paid the ECB for them.
This could free up around ?10bn -- valuable, as there are fears that Greece's second bailout is around ?15bn too small, and should be increased to ?145bn.
New polling data released this morning shows that the Greek people are losing faith in the political leaders.
A survey by Kathimerini/Skai found that 91% of people believe the country is 'following the wrong track', with 13% believing that Greece is no longer a functioning democracy [having seen a former European Central Bank vice president installed as their prime minister).
However, 70% of those polled believe it would be a mistake to return to the drachma, suggesting that they still support membership of the eurozone.
The poll also found that Lucas Papademos's approval rating has dropped to 46%, from 55% last November.
Seperate polling from Greece has shown that New Democracy would win the most votes in an election, but probably not enough for an outright majority. Support for Pasok ? which was in power until last November ? has plummeted.
The postponement of last night's talks is being blamed on a problem with delayed paperwork, which didn't give the three coalition leaders enough time to prepare for last night's crunch meeting.
As we blogged yesterday, the draft agreement was due to be translated into Greek -- to allow George Karatzaferis of the Laos party to read it.
A reminder: Antonis Samaras of New Democracy, George Papademos of Pasok and Karatzaferis represent the three major Greek political parties, who form the coalition government run by technocratic PM Lucas Papademos since last November.
They are being asked to sign up to new austerity measures in return for a second Greek bailout, worth ?130bn [which was agreed in principle back in October]. Those measures include billions of euros in government spending reductions, and cuts to pensions and wages.
Those measures are deeply unpopular in Greece - as demonstrated by yesterday's general strike and marches in Athens.
Greek newspaper Ekathimerini is reporting that Papandreou refuses to accept cuts to the basic pension, while New Democracy would not allow the minumum wage to be cut for existing workers (rather than new hires). With elections looking, all sides are focused on political considerations.
http://ekathimerini.com
Here's today's agenda:
?The Greek bailout talks -- they are due to start at 10am 11am GMT / noon 1pm local time (but could slip....)
? Greek cabinet meets tonight to approve the draft agreement (assuming the three party leaders agree).
? French budget balance - 7.45am GMT
? Spanish industrial output - 8am GMT
? Bank of England begins two-day monetary policy committee meeting
In the bond markets, Germany is aiming to sell ?4bn of five-year bobls, and the US is also auctioning 10-year Treasuries tonight.
Good morning all, and welcome to another day of rolling coverage of the eurozone crisis.
Later today, Greek PM Lucas Papademos will hold talks with the leaders of Greece's three political parties over the country's second bailout. That sounds terribly familiar, doesn't it? These are the talks that were scheduled to take place last night ? but were once again postponed until today.
Deja vu? Deja EU, more like.
On the economic front, we have trade data from Germany to digest, along with France's latest budget balance and industrial output from Spain.
Source: http://www.guardian.co.uk/business/2012/feb/08/greece-bailout-talks-eurozone-crisis-live
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posted by pension333 @ 03:03
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