http://www.telegraph.co.uk/finance/financialcrisis/9333729/ECB-ready-to-rescue-struggling-banks-and-hints-at-rate-cut.html
and......
http://www.telegraph.co.uk/finance/debt-crisis-live/9333028/Debt-crisis-live.html
There are serious downside risks here. This risk has to do mostly with the heightened uncertainty.
Germany won’t be persuaded of all those quick solutions.
The extended liquidity and funding for lending schemes are welcome, but limited.
In any case, we must not allow any country to blackmail us with the consequences of contagion.
Greece’s radical leftist leader Alexis Tsipras told a final campaign rally on Thursday night that his party represented the new Europe and German Chancellor Angela Merkel the old.
Moody's Investors Service said on Friday it had taken action against five Dutch banking groups, three French banks and one each from Belgium and Luxembourg.
http://www.zerohedge.com/news/matter-life-and-death-collapsing-greek-health-care-system-critical-condition
Submitted by Tyler Durden on 06/15/2012 07:55 -0400
While by now virtually everyone around the world is intimately familiar with the nuances of Greek electoral law, knows the names of Greek politicians better than of those at home, and is all too aware of the broader media propaganda that unless Greece does as the banks demand the world as we know it will end, one aspect of the Greek collapse into hell has gotten lost: the complete failure of the Greek healthcare system. As the following Reuters report shows, regardless of the outcome on Sunday, it just may be too late to preserve the future of Greek sickcare, and with that, of the entire population: "The country's state hospitals are cutting off vital drugs, limiting non-urgent operations and rationing even basic medical materials for exhausted doctors as a combination of economic crisis and political stalemate strangle health funding. "It's a matter of life and death for us," said Persefoni Mitta, head of the cancer patients' association, recounting the dozens of calls she gets a day from patients needing pricey, hard-to-find cancer drugs. "Why are they depriving us of life?"" They are depriving of you of life, Persefoni, because in old times, when a given country was enslaved, there was a specific aggressor that the people could revolt against. Now, when the slave-master is debt, and thus one's own desire to live beyond their means, it is far more difficult to look in the mirror and to revolt against what one sees. Which is why, one day at a time, the Greek civilization will continue to suffer the terminal consequences of infinite debt serfdom, until finally, after two thousand years, it no longer exists.
By Tom Ellis
The new Greek government that will be elected on Sunday is bound by existing agreements and if it decides to unilaterally opt out of the program, that would mean the end of further financial help to Athens, says Bundesbank President, Jens Weidmann, in an interview with Kathimerini. He calls a one year extension of the program a “political decision” that would have detrimental consequences for the EU, and adds that one must not be blackmailed by a country because of the contagion effects.
In the interview jointly conducted with Corriere della Sera, El Pais and Publico, Dr. Weidmann dismisses the Obama administration’s pressure on Berlin to follow a more expansive policy in order to boost growth.
In Greece, there’s a lot of debate about the need to renegotiate parts of the program. Is there space to make some changes?The key point is that there is an agreement that all involved parties including the Greek government have signed. If the agreements were now seen as being open to renegotiation, then for instance the Portuguese prime minister would have difficulties facing his parliament and explaining that he is to implement reforms. I think that would be a very dangerous strategy. It would harm those countries that are implementing reforms very quietly.
One of the leaders of the two parties that could win says that the Greek government would request a total change of the program. What response would a unilateral move from Greece create?Who will be elected in Greece is a democratic decision that we all have to accept. But also the newly elected Greek government is bound by existing agreements. If it unilaterally opted out of the programme, it would mean that in my view the basis for more financial help will no longer be given. Greece would have taken its decision but would also have to bear the consequences. We will all be affected, but my assessment is that Greece will be worse off than everybody else.Have you prepared any contingency plans for a Greek exit?I don’t talk about contingency plans. I will just reiterate what I have already said. The repercussions of such a decision in Greece would certainly be worse for Greece than for everybody else. The result of potential contagion effects cannot be that one accepts whatever a government has unilaterally decided.
So, if they don’t fulfil the agreement, this leads to an exit?Not fulfilling the agreement leads to the end of funding. And this may have repercussions on their chances of remaining in the euro.
Looking back, do you feel that the introduction of the euro in Greece was a mistake?You certainly remember the very controversial debate at that time, with some scepticism in Germany. But it was definitely a mistake that Greece did not make wise use of the benefits of our common currency. The progress observed especially in public finances in the run-up to EMU proved treacherous.
Some say that Greece can go bankrupt, but stay in the euro. How does the Bundesbank view such a scenario?The fact of the matter is only Greece can decide on leaving the euro, despite this not being foreseen in the EU treaty. As I said before, it will be very difficult for an insolvent country that is cut off from financial support to remain in the EMU.
Is a one year extension of the program acceptable?
That’s a political decision that would have detrimental consequences for the Union at large.
How long should the ECB provide liquidity to the Greek banks?Our statutes say that we provide liquidity to solvent banks against adequate collateral.
In order for the Greek debt to be sustainable, economists say that there will need to be a haircut of the official sector too.The peak of the Greek debt is still to come and it will take a very long time to bring it finally to a sustainable status. But here I have to rely on the debt sustainability analysis that has been carried out by the Troika.
How would you assess the term as PM of Mr Papademos, a former fellow central banker?He is an excellent economist, has a brilliant mind and is somebody I trust. He was instrumental in signalling Greece’s desire to change track and embark on reforms.
How do you asses President Obama's emphasis on the need for growth and a more expansive policy?We have to recognise that the recession we are seeing in many countries is the result of alack of confidence in public finances in combination with an erosion of their competitiveness. There is no easy way out, unless you address the root causes of these problems. And addressing this situation by adding further debt through fiscal stimulus is certainly not the solution. Is the US totally wrong?
Sometimes one has the impression that all of a sudden some realised the importance of growth. But the adjustment programmes are all centred around growth. We have to be honest in this debate. What the protagonists of this discussion mean is publicly financed stimulus packages. And this is something different. Perhaps it will lead to a short-lived expansion. But it will aggravate our problems in the future, because it will create additional debt, and there are already doubts about debt sustainability. Credit-financed excessive demand was part of the problem, for example when we talk about the housing boom in Spain.
Financed by German banks…Financed by whoever. I am not discussing the question of who is to blame. I am saying this is an unsustainable situation
What about the growth compact? The Chancellor has spoken about it.Our problem in Europe is raising the growth potential. If we debate a growth compact it should be focussed on long-term growth and therefore on structural reforms. This is also what Mrs. Merkel has in mind.
And what about project bonds?To do what?
For infrastructure, for example.For infrastructure? I am not convinced that Spain and other countries suffer from alack of infrastructure. What I am missing is an adequate analysis. If there is an impediment to investment, for instance in Greece, there is rather too much red tape and an inefficient tax system. I don`t believe in further stimulus programmes to cushion the adjustment process.
But why not? We have 25% unemployment in some countries.
To give a perspective to the younger generation, you have to tackle the roots of the problem. Spain, for instance, had double-digit unemployment rates before the housing boom. It’s about the structure of the economy, not about some temporary stimulus.
But you don’t have only one country in recession, but many countries and actually the whole euro area. So how can we look for growth in the long run?But look at Portugal's forecast, for instance. It is forecast to have a positive growth rate without any further stimulus.
We can discuss if that is realistic. In Greece and elsewhere, forecasts are changing to the worse.
Some effects from the reforms that have been implemented are already showing – in unit labour costs, in competitiveness, in export growth. I would not endanger this by deviating now from the course and jeopardise the confidence in the long overdue policy change.
But if Greece leaves the euro, what happens to Portugal and the whole euro area? Isn’t that a bigger risk than continuing to finance Greece without conditionality and having the risk of the Portuguese government asking for the same?I think we agree that both risks are substantial. Of course, I don’t want to speculate about any country leaving the Eurozone; we haven’t seen this yet and this would be a very grave event. And that’s why I’m counting on the Greek government to stick to its agreements. That’s my preference.
And which are the other risks?One major risk is that the stability foundation of the monetary union, that we have agreed on and enshrined in the articles of the EU treaty, will erode further. This has the potential to undermine the confidence in the solidity of the monetary union. And it would put monetary policy under pressure even more to inflate away the problems. Already now several voices are asking the ECB to break its rules and bail out with no conditionality.
Does the European Union have enough firewalls in place to deal with a Greek exit?I don’t want to speculate about a Greek exit. The firewalls we have been building and strengthening are there to prevent contagion effects. And I will not be a party to the endless debate on their size. In any case, we must not allow ourselves to be blackmailed by a country because of the contagion effects.
Regarding Portugal, it seems to have the image of the good student in the bailouts program, but it’s also a hostage to what happens in Greece and Spain. What message would you leave to the Portuguese government?The key message from Portugal and Ireland is that adjustment programmes work. The reforms that have been implemented there have contributed to reducing unit labour costs and stopped the decline in competitiveness. We also see the first benefits of this in the current account deficit. And according to our forecasts, growth should pick up again in these countries. No serious forecast sees a downward spiral that doesn’t end anywhere.
There are already talks about a second bailout to Portugal, because the country may not be able to return to markets next year. How do you regard this?We are dealing with a crisis of confidence, and lost confidence cannot be regained overnight. But the important message is that Portugal is on the right track.
But isn’t the whole of the euro at stake?&?nbsp;
Confidence has also been lost in the functioning of monetary union as a whole. This brings us back to the debate about whether we want to return to the Maastricht framework, which relies on national fiscal policies that are responsible only for themselves, or whether we want to take a quantum leap forward, regarding integration. We cannot say that, on the one hand, we rely on national fiscal policies and on the other hand, we progressively communitise risk without control, thereby undermining the existing legal framework. In the end, it’s always a question of the balance between common liability and control.
ECB President Mario Draghi said his bank was ready to step in and fund any viable eurozone bank that gets in trouble, and painted a picture of a deteriorating economy with no inflation danger - conditions for monetary easing.
"There are serious downside risks here," Mr Draghi told the annual ECB Watchers conference in Frankfurt, two days before a Greek vote that could set Athens on a path out of the eurozone and stoke turmoil in financial markets.
"This risk has to do mostly with the heightened uncertainty."
The Bank of England followed up on Thursday's joint announcement with the Government of a £100bn offer of loans to banks by saying it will start next week with a charge of just 0.75pc.
Officials from the G20 nations, whose leaders are meeting in Mexico next week, say numerous central banks are preparing to take steps to stabilise financial markets - if needed - by providing liquidity and prevent any credit squeeze.
European Council President Herman Van Rompuy convened a conference call on Friday afternoon with the leaders of Germany, France, Italy and Britain, officially to discuss preparations for the G20 summit, expected to be dominated by the eurozone debt crisis.
Depending on the depth of any turmoil, an emergency meeting of ministers from the Group of Seven developed nations could be held on Monday or Tuesday during the summit in Los Cabos, Mexico, sources said.
The focal point for all is Sunday's repeat general election in Greece, a knife-edge race that could be won by parties vowing to tear up the harsh economic terms that the European Union and International Monetary Fund imposed as conditions of a bailout for the near-bankrupt state.
Such an outcome could drive Greece into default and possibly out of the eurozone, a prospect that could undermine faith in the currency bloc and add to pressure on the finances of bigger economies such as Italy and Spain.
Madrid's borrowing costs rose above 7pc on Thursday, a level that is widely considered unsustainable. They fell slightly on Friday and European shares and the euro gained on expectations of global central bank response.
"At best, we are going to have a situation that is extremely serious on Monday," Swedish Finance Minister Anders Borg told journalists. "In all likelihood, whatever the outcome, we are going to have a government which is going to find it hard to live up to the agreements they [the Greeks] have signed up to."
In a sign of growing strain between Europe's central powers, German Chancellor Angela Merkel hit out at France on Friday in response to President Francois Hollande's proposals for joint eurozone bonds and a joint bank deposit guarantee scheme.
"Europe must discuss the growing differences in economic strength between France and Germany," Mrs Merkel told German entrepreneurs, two days before the decisive second round of a French parliamentary election.
Responding to Mr Hollande's call for more eurozone solidarity, she said Germany had wanted to give the European Court of Justice the power to reject national budgets that breach EU rules but others had objected. She meant France.
Mr Draghi said the ECB was ready to provide money to solvent banks if they needed it, a clear plan to avoid the kind of credit crunch that occurred during the Lehman Brothers crisis in 2008.
"The ECB has the crucial role of providing liquidity to sound bank counterparties in return for adequate collateral. This is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term - and this is what we will continue to do," he said.
Mr Draghi also said that no eurozone country faces an inflation risk, which is the bank's main concern. That gelled with comments from ECB policymakers a day earlier that the central bank might be open to cutting interest rates.
Britain did not wait for the Greek vote to announce action. Bank of England Governor Mervyn King said on Thursday the country would launch a scheme to provide cheap long-term funding to banks to encourage them to lend to businesses and consumers.
The central bank would also activate an emergency liquidity supply, Mr King said in his annual Mansion House policy speech to London financiers.
Mr King said the eurozone's problems were causing a crisis of confidence in Britain that was leading to a self-reinforcing weaker picture of growth.
"The black cloud has dampened animal spirits so that businesses and households are battening down the hatches to prepare for the storms ahead," he said.
On Friday, the bank said it will hold a first emergency liquidity operation for banks next week with at least £5bn on offer. Loans would be at a minimum of the Bank Rate, 0.5pc, plus an additional 25 basis points.
In Athens, the election was seen as too close to call.
Alexis Tsipras, leader of the main anti-bailout leftist party Syriza, said on Thursday the deal with Greece's international lenders, which has helped push the economy into a depression, would not last beyond the weekend.
"The memorandum of bankruptcy will belong to the past on Monday," Mr Tsipras, who has rapidly emerged from fringe politics to challenge the mainstream for power, told his last campaign rally in Athens.
European leaders, however, have warned that Greece will get no help if it reneges. Officials have also hinted that Athens might be granted more time to achieve its fiscal targets if a new government sticks to the core reforms in the programme.
French President Francois Hollande warned Greek voters about seeking what Mr Tsipras has promised - a future in the euro while ditching the €130bn bailout deal sealed earlier this year and its demands for punishing austerity policies.
Mr Hollande said on Greek TV that he wanted the country to stay in the euro, rather than reviving its drachma currency.
"But I have to warn them, because I am a friend of Greece, that if the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the eurozone which will prefer to finish with the presence of Greece in the eurozone."
Syriza is running neck-and-neck with the mainstream conservatives for Sunday's parliamentary vote, a re-run of an election last month that produced a stalemate in which neither the pro- nor anti-bailout camps was able to form a coalition.
Greek banking stocks soared more than 20pc on Thursday amid market talk that secret opinion polls were showing that a government favourable to the international bailout agreement was likely to emerge after the June 17 election.
and......
http://www.telegraph.co.uk/finance/debt-crisis-live/9333028/Debt-crisis-live.html
12.25 What is the reason for Chancellor Merkel's hostility to new French President Francois Hollande?
It's not just that he hasn't publicly stated that France stands shoulder to shoulder with Germany as his predecessor Nicolas Sarkozy did, or that he hasn't backed the fiscal pact agreed last year, giving greater central control over national budgets to the EU.
Mr Hollande's lack of enthusiasm for austerity means France's AAA credit rating could be at risk from the other ratings agencies who have not followed suit after Standard & Poor's downgrade last year.
If the country did lose its AAA rating altogether, it would put all the euro rescue mfunds, which are based on AAA ratings, and leave Germany carrying the can.
Mrs Merkel has already said this week that Germany cannot support the whole single currency on its own...
12.05 More from Angela Merkel, who seems to be going out all guns blazing today. She has pointed out that her own country's economy is growing at a far stronger pace than France's, taking on new PresidentFrancois Hollande:
If you look for instance at the development of unit labour costs between Germany and France in the past 10 years, then you see that at the start of the millennium Germany looked rather worse or at best as good as our neighbour in a lot of factors, while the differences have now been growing a lot more strongly, also a topic that must be discussed in Europe, naturally.
12.00 Carrefour, the French supermarket giant, is exiting Greece - showing the tough conditions for businesses operating there.
Carrefour will sell its stake in a Greek joint venture to local partner Marinopoulos, which will become its franchisee.
The move follows reports yesterday that French bank Credit Agricole is planning to abandon its Greek business or merge it with a group of local banks if Greece leaves the euro.
11.45 And here's our very own Damian Reece, head of business,questioning whether there is enough demand for the extra £140bn the Bank of England is making available for banks.
11.40 Here's Ed Balls setting out his stall for why the emegency lending plan announced last night shows that the Government's policies for reviving the economy have failed.
11.30 The European Central Bank seems to be setting itself up in diametric opposition to Germany - an uncomfortable position for the rest of the world and especially struggling eurozone nations.
The eurozone economy faces serious risks and politicians must act fast, he said, adding that the ECB stands ready to provide further liquidity to solvent banks, the central bank's president Mario Draghi said.
Speaking at the annual ECB Watchers conference in Frankfurt, he said:
There are serious downside risks here. This risk has to do mostly with the heightened uncertainty.
The ECB has the crucial role of providing liquidity to sound bank counterparties in return for adequate collateral. This is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term - and this is what we will continue to do.
We have reached a contingency where political choices have become predominant over monetary instruments that we can use in the near future.
11.00 Angela Merkel has been speaking at a conference for entrepreneurs in Berlin, and has stuck to the hardline that Germany won't be taking on the rest of Europe's debts and propping them up.
Issuing common euro-area bonds is the "path to mediocrity," she told the conference.
Germany won’t be persuaded of all those quick solutions.
The country will reject any such "quick" crisis solutions at the G20 summit she said. So don't expect any massive action from Mexico in that case...
10.40 But while the markets might be enjoying the help for banks from theBank of England, the Institute of Directors has poured cold water on the whole endeavour:
Graeme Leach, chief economist at the IoD said:
The extended liquidity and funding for lending schemes are welcome, but limited.
The liquidity scheme will need to be massively expanded if break-up and contagion spread across the eurozone. The funding for lending scheme helps the supply of money and the demand for it, by lowering the cost of borrowing.
But the core problem remains. Companies alarmed by the euro crisis will not be eager to borrow regardless of the cost.
10.15 UK bank shares are having a very strong morning after the announcement of more short-term liquidity from the Bank of England.
Royal Bank of Scotland shares are up 7pc to 245.4p, while Barclaysjumped 5.2pc to 202.8p and Lloyds is up 4.8pc to 31.12p.
09.55 Moody's is having a busy week - after downgrading Spain and threatening it with junk status on Wednesday night, today the ratings agency has cut the ratings of 11 European banks and said more downgrades would follow if Greece leaves the eurozone.
Moody's today downgraded five Dutch banking groups, three French banks and one each from Belgium and Luxembourg.
Jens Weidmann, the head of German central bank the Bundesbank and and ECB committee member, told the Greek newspaper Kathimerini:
In any case, we must not allow any country to blackmail us with the consequences of contagion.
He said Greece had to stick to the terms of the €130bn bailout programme agreed in March and he ruled out any extension of the programme's timetable to allow Greece more time to reach its targets.
07.35 The eyes of the world's political leaders and financial markets are all on Greece, but the leader of the country's left-wing coalition party Syriza Alexis Tsipras is not backing down on his rhetoric about ripping up the bail-out agreement if he wins Sunday's election.
Alex Spillius reports from Athens:
Greece’s radical leftist leader Alexis Tsipras told a final campaign rally on Thursday night that his party represented the new Europe and German Chancellor Angela Merkel the old.
Forecasting victory for his Syriza party in Sunday’s election, Mr Tsipras said he would keep Greece in the euro but also boost growth after five years of recession, calling for a "renegotiation" of harsh credit conditions attached to his country’s €130bn bailout.
He said his main rival, New Democracy leader Antonis Samaras, "has guaranteed Merkel's Europe of the past”.
His Syriza coalition is running neck-and-neck with the New Democracy conservatives in an election being watched around the world as it could precipitate Greece's exit from the eurozone and potentially unravel the single currency. Neither party is forecast to win a majority and will probably be required to cobble together a coalition.
and.....
http://www.cnbc.com/id/47823574
Moody's has cut the ratings of 11 European banks and said it would cut again if Greece ditched the euro, kicking off a long-awaited round of downgrades for major European institutions.
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Getty Images
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Investors shrugged off the news after central banks from major economies had indicated they were prepared to take steps, including coordinated action, to stabilise markets in the wake of Greece's election on Sunday.
The benchmark FTSEurofirst 300 index [.FTEU3 993.05 
9.27 (+0.94%) 
] was up 0.7 percent.
9.27 (+0.94%) ] was up 0.7 percent.
Still, the downgrades will only add to pressure on European Union leaders to sort out the region's debt crisis.
Moody's was expected to downgrade some of the world's biggest banks by the end of June, which would widen the gulf in prospects between the strongest banks and weaker rivals.
Bank of America,[BAC 7.66 0.16 (+2.13%) ] Citigroup [C 27.91 0.24 (+0.87%) ] and Morgan Stanley [MS 13.93 0.28 (+2.05%) ] are among those whose ratings could be affected.
0.16 (+2.13%) ] Citigroup [C 27.91 0.24 (+0.87%) ] and Morgan Stanley [MS 13.93 0.28 (+2.05%) ] are among those whose ratings could be affected.
On Friday, Moody's cut four Dutch banks by two notches with one moved a single step lower.
It kept a negative outlook for Dutch bank and insurer ING Bank, one of those cut two notches, meaning the rating could be cut again.
ING shares were up 2.8 percent, while SNS Reaal, whose banking unit was also downgraded, rose 3.9 percent, buoyed by the better tone in the broader market.
Difficult Conditions
"Today's actions reflect Moody's view that Dutch banks will face difficult operating conditions throughout 2012 and possibly beyond," it said.
The agency said there were heightened risks for creditors amidst elevated uncertainty and downside risks to the economic outlook and fragile investor confidence in Europe.
Moody's agency said it had cut the ratings by two notches to Aa2 forRabobank Nederland, to A2 for ING, [ING.AS 4.908 0.212 (+4.51%) ] to A2 for ABN AMRO Bank, and to Baa2 for LeasePlan Corporation.
0.212 (+4.51%) ] to A2 for ABN AMRO Bank, and to Baa2 for LeasePlan Corporation.
The long-term debt and deposit ratings for SNS Bank, owned by SNS Reaal,were cut one notch to Baa2.
Short-term ratings for all the groups were unchanged.
Moody's said while it had factored in an increased risk of Greece leaving the euro area, this was not its central scenario.
"If a Greek exit became Moody's central scenario, further rating actions on European banks could well be needed." Moody's said the negative outlook for ING took into account the bank's funding structure, which relies substantially on wholesale funds and a significant amount of non-domestic deposits.
ING received 10 billion euros in state aid during the 2008 financial crisis.
It was subsequently forced to separate its banking and insurance businesses and sell off various assets to meet European Commission requirements for state aid.
The disposal could also help to raise money to repay state aid.
Moody's also cut ratings for French groups Banque Federative du Credit Mutuel, BPCE and CIC, and also KBC from Belgium, and Banque et Caisse d'Epargne de l'Etat from Luxembourg .
"To date, we have taken actions on banks in Germany, Austria, Spain, Italy, Portugal, Sweden, Norway, Denmark and Finland," it said.
and...
"A Matter Of Life And Death": The Collapsing Greek Health-Care System Is In Critical Condition
While by now virtually everyone around the world is intimately familiar with the nuances of Greek electoral law, knows the names of Greek politicians better than of those at home, and is all too aware of the broader media propaganda that unless Greece does as the banks demand the world as we know it will end, one aspect of the Greek collapse into hell has gotten lost: the complete failure of the Greek healthcare system. As the following Reuters report shows, regardless of the outcome on Sunday, it just may be too late to preserve the future of Greek sickcare, and with that, of the entire population: "The country's state hospitals are cutting off vital drugs, limiting non-urgent operations and rationing even basic medical materials for exhausted doctors as a combination of economic crisis and political stalemate strangle health funding. "It's a matter of life and death for us," said Persefoni Mitta, head of the cancer patients' association, recounting the dozens of calls she gets a day from patients needing pricey, hard-to-find cancer drugs. "Why are they depriving us of life?"" They are depriving of you of life, Persefoni, because in old times, when a given country was enslaved, there was a specific aggressor that the people could revolt against. Now, when the slave-master is debt, and thus one's own desire to live beyond their means, it is far more difficult to look in the mirror and to revolt against what one sees. Which is why, one day at a time, the Greek civilization will continue to suffer the terminal consequences of infinite debt serfdom, until finally, after two thousand years, it no longer exists.
The sad tale continues:
The emergency has grown out of a tangle of unpaid bills, with pharmacists and doctors complaining of being unable to pay suppliers until competing health insurers clear a growing backlog of unfilled state payments.Greece imports nearly all its medicines and relies heavily on patented rather than cheaper generic drugs, making it vulnerable to a funding squeeze that would grow sharply worse if it were forced out of the euro after elections on Sunday.Long queues have been forming outside a handful of pharmacies that still provide medication on credit - the rest are demanding cash upfront until the government pays up a subsidy backlog of 762 million euros, or nearly $1 billion."We're not talking about painkillers here - we've learned to live with physical pain - we need drugs to keep us alive," Mitta, a petite former marathon runner and herself a cancer survivor, said in a voice shaky with emotion.Greeks have long had to give medical staff cash "gifts" to ensure good treatment. Nevertheless the health system was considered "relatively efficient" before the crisis despite a variety of problems including a fragmented organisation and excess bureaucracy, according to a 2009 report for the Organisation for Economic Cooperation and Development.But it has been unable to respond to the growing crisis. The European Union and International Monetary Fund, which provided a 130 billion euro lifeline to Greece in March, have demanded big cuts to the system as part of a wider package of austerity measures.But powerful medical lobbies and unions have resisted fiercely. Caretaker Prime Minister Panagiotis Pikrammenos, in office until a new government is formed after the elections, has pleaded for a solution but been powerless to force a change."It is imperative that this matter is resolved immediately in order to prevent putting people's lives at risk," Pikrammenos said last week.No bed sheets or paper...Outside one of the 133 state hospitals - whose managers have sometimes been appointed as supporters of whichever political party was in power at the time - a banner put up by protesting staff reads "Hospitals Belong to the People". Inside, its gloomy labyrinth of corridors tell a different story.A doctor at the university hospital in the northwestern Athens suburb of Chaidari cites a lack of basic examining room supplies in her own department, such as cotton wool, catheters, gloves and paper used to cover the examining table.The shortage of paper, which is thrown out after each patient has used it, means corners have to be cut on hygiene."Sometimes we take a bed sheet instead and use it for several patients," said Kiki Kiale, a radiologist specialising in cancer screening. "It's tragic but there's no other solution."Kiale, 52, said staff cutbacks and a lack of crucial equipment - including a digital mammography machine - meant some doctors were seeing 40 patients during a shift but many patients were still unable to get treatment.In the chaos, patients can slip through the cracks or turn up for treatment again only when their illness has progressed too far for them to be saved.And it just goes on and on...Because every excess debt-induced binge always has tragic price, no matter what three letter economic schools of voodoo though lead one to believe otherwise.
http://www.athensnews.gr/portal/1/56319
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1. SYRIZA RALLIES The Syriza leader has promised to rip up the conditions attached to the international bailout agreement but keep Greece in the eurozone after Sunday's election. "The memorandum of bankruptcy will belong to the past on Monday," Alexis Tspiras told a party rally on Thursday at Omonia Square in Athens. He dismissed fears that reneging on the accord with the European Union and International Monetary Fund would drive Greece from the single currency, warning "speculators" not to bet on Greece's exit. "We will vote on Sunday with our eyes on Spain," he said, referring to the 100bn euro recapitalisation package offered by the EU to prop up the battered Spanish banking system. "It negotiated and succeeded despite the lenders' threats and blackmail. It is still in the euro, without an austerity plan."
2. SAMARAS WARNS Syriza and its leader is "playing with Greece", the New Democracy leader Antonis Samaras told an audience in Thessaloniki on Thursday. Antonis Samaras added that he believed that there is a minority of countries in the European Union which is waiting for the opportunity to throw Greece out of euro, but stresses that the majority of countries wants Greece in the euro. He warned that if Greece leaves the euro then the ensuing disaster will not be repairable and that there would be no return.
3. PAPARIGA LASHES OUT The Communist Party (KKE) needs to be "strong" in the next parliament and the party needs to organise a "counterattack" aimed at "disengagement" from all the "imperialist" organisations and for the establishment of "popular power", the party's leader told a rally in Thesssaloniki on Thursday. Aleka Papariga said that "a strong KKE in parliament and among the people" can spoil "the plans of the industrialists, the exploiters and their parties".
4. KAMMENOS EYES SYRIZA The Independent Greeks are not prepared to discuss any "renegotiation" of the austerity conditions outlined in the memorandum, party leader Panos Kammenos underlined at a Thursday press conference in the Zappeio Mansion. He also ruled out any cooperation New Democracy and Pasok, saying they were essentially "one and the same". He did not, however, rule out cooperation with Syriza, under certain conditions.
5. LAST DAY OF CAMPAIGN Friday is the last day of campaigning in the repeat election and politicians will hold their final rallies and meetings. New Democracy leader Antonis Samaras will speak at Syntagma Square in Athens at 8.30pm, while Syriza leader Alexis Tsipras heads north to Thessaloniki for an 8.30pm rally. The Communist Party will also hold its final rally at Pedion tou Areos at 8.30pm. Politicians will take a rest on Saturday, ahead of Sunday's poll.
6. SOME TWEAKING POSSIBLE The eurozone will not tear up the main targets of Greece's bailout no matter who wins Sunday's elections, but it might consider giving a new government some leeway on how it reaches them, eurozone officials said. Even that offer would depend on a government being in place that was prepared to stick to the prescribed austerity path and some policymakers are reluctant to go even that far. If Greece rejects the bailout deal it struck in February, all bets would be off and pressure would grow on it to quit the currency bloc. "The headline targets cannot be changed," one senior EU official told Reuters. "There could be some tweaks to the path to get there, but not the goals."
7. BUNDESBANK 'NO' TO 'BLACKMAIL The eurozone can't allow any country to blackmail it with the threat of financial contagion, the chief of Germany's Bundesbank Jens Weidmann said on Friday. "In any case, we must not allow any country to blackmail us with the consequences of contagion," Weidmann, who is also a member of the governing council of the ECB, was quoted as saying in an interview with Kathimerini. He said Greece had to stick to the terms of the 130bn euro bailout programme agreed in March and he ruled out any extension of the programme's timetable to allow the country more time to reach its targets.
8. WINDFARM APPROVED An application for a 498MW offshore wind farm northeast of the eastern Aegean island of Limnos has been approved, the Regulatory Authority for Energy (RAE) announced on Thursday. The 2bn euro project, comprising 81 wind turbines, will be the first of its kind in Greece and the third in size worldwide. City Electric SA (a subsidiary of RF Energy SA) is behind the project, which will be linked to the national energy grid and play an important role in meeting national renewable energy sources (RES) national targets by 2020. The wind farm will have a capacity of 1,692.3 GWh and will supply roughly 500,000 households with electricity. Its operation will contribute to cutting carbon dioxide emissions by roughly 1.7 tons annually.
9. CAR BOOT SALE A car boot sale, with more than 50 exhibitors, takes place at the French School (Chlois and Trikalon sts, Aghia Paraskevi) from 3 to 7pm on Friday. Organised by Athenes Accueil. For more info, email natgreece@otenet.gr
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http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_15/06/2012_447148
Renegotiation of Greek bailout would be dangerous, says Weidmann
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The new Greek government that will be elected on Sunday is bound by existing agreements and if it decides to unilaterally opt out of the program, that would mean the end of further financial help to Athens, says Bundesbank President, Jens Weidmann, in an interview with Kathimerini. He calls a one year extension of the program a “political decision” that would have detrimental consequences for the EU, and adds that one must not be blackmailed by a country because of the contagion effects.
In the interview jointly conducted with Corriere della Sera, El Pais and Publico, Dr. Weidmann dismisses the Obama administration’s pressure on Berlin to follow a more expansive policy in order to boost growth.
In Greece, there’s a lot of debate about the need to renegotiate parts of the program. Is there space to make some changes?The key point is that there is an agreement that all involved parties including the Greek government have signed. If the agreements were now seen as being open to renegotiation, then for instance the Portuguese prime minister would have difficulties facing his parliament and explaining that he is to implement reforms. I think that would be a very dangerous strategy. It would harm those countries that are implementing reforms very quietly.
One of the leaders of the two parties that could win says that the Greek government would request a total change of the program. What response would a unilateral move from Greece create?Who will be elected in Greece is a democratic decision that we all have to accept. But also the newly elected Greek government is bound by existing agreements. If it unilaterally opted out of the programme, it would mean that in my view the basis for more financial help will no longer be given. Greece would have taken its decision but would also have to bear the consequences. We will all be affected, but my assessment is that Greece will be worse off than everybody else.Have you prepared any contingency plans for a Greek exit?I don’t talk about contingency plans. I will just reiterate what I have already said. The repercussions of such a decision in Greece would certainly be worse for Greece than for everybody else. The result of potential contagion effects cannot be that one accepts whatever a government has unilaterally decided.
So, if they don’t fulfil the agreement, this leads to an exit?Not fulfilling the agreement leads to the end of funding. And this may have repercussions on their chances of remaining in the euro.
Looking back, do you feel that the introduction of the euro in Greece was a mistake?You certainly remember the very controversial debate at that time, with some scepticism in Germany. But it was definitely a mistake that Greece did not make wise use of the benefits of our common currency. The progress observed especially in public finances in the run-up to EMU proved treacherous.
Some say that Greece can go bankrupt, but stay in the euro. How does the Bundesbank view such a scenario?The fact of the matter is only Greece can decide on leaving the euro, despite this not being foreseen in the EU treaty. As I said before, it will be very difficult for an insolvent country that is cut off from financial support to remain in the EMU.
Is a one year extension of the program acceptable?
That’s a political decision that would have detrimental consequences for the Union at large.
How long should the ECB provide liquidity to the Greek banks?Our statutes say that we provide liquidity to solvent banks against adequate collateral.
In order for the Greek debt to be sustainable, economists say that there will need to be a haircut of the official sector too.The peak of the Greek debt is still to come and it will take a very long time to bring it finally to a sustainable status. But here I have to rely on the debt sustainability analysis that has been carried out by the Troika.
How would you assess the term as PM of Mr Papademos, a former fellow central banker?He is an excellent economist, has a brilliant mind and is somebody I trust. He was instrumental in signalling Greece’s desire to change track and embark on reforms.
How do you asses President Obama's emphasis on the need for growth and a more expansive policy?We have to recognise that the recession we are seeing in many countries is the result of alack of confidence in public finances in combination with an erosion of their competitiveness. There is no easy way out, unless you address the root causes of these problems. And addressing this situation by adding further debt through fiscal stimulus is certainly not the solution. Is the US totally wrong?
Sometimes one has the impression that all of a sudden some realised the importance of growth. But the adjustment programmes are all centred around growth. We have to be honest in this debate. What the protagonists of this discussion mean is publicly financed stimulus packages. And this is something different. Perhaps it will lead to a short-lived expansion. But it will aggravate our problems in the future, because it will create additional debt, and there are already doubts about debt sustainability. Credit-financed excessive demand was part of the problem, for example when we talk about the housing boom in Spain.
Financed by German banks…Financed by whoever. I am not discussing the question of who is to blame. I am saying this is an unsustainable situation
What about the growth compact? The Chancellor has spoken about it.Our problem in Europe is raising the growth potential. If we debate a growth compact it should be focussed on long-term growth and therefore on structural reforms. This is also what Mrs. Merkel has in mind.
And what about project bonds?To do what?
For infrastructure, for example.For infrastructure? I am not convinced that Spain and other countries suffer from alack of infrastructure. What I am missing is an adequate analysis. If there is an impediment to investment, for instance in Greece, there is rather too much red tape and an inefficient tax system. I don`t believe in further stimulus programmes to cushion the adjustment process.
But why not? We have 25% unemployment in some countries.
To give a perspective to the younger generation, you have to tackle the roots of the problem. Spain, for instance, had double-digit unemployment rates before the housing boom. It’s about the structure of the economy, not about some temporary stimulus.
But you don’t have only one country in recession, but many countries and actually the whole euro area. So how can we look for growth in the long run?But look at Portugal's forecast, for instance. It is forecast to have a positive growth rate without any further stimulus.
We can discuss if that is realistic. In Greece and elsewhere, forecasts are changing to the worse.
Some effects from the reforms that have been implemented are already showing – in unit labour costs, in competitiveness, in export growth. I would not endanger this by deviating now from the course and jeopardise the confidence in the long overdue policy change.
But if Greece leaves the euro, what happens to Portugal and the whole euro area? Isn’t that a bigger risk than continuing to finance Greece without conditionality and having the risk of the Portuguese government asking for the same?I think we agree that both risks are substantial. Of course, I don’t want to speculate about any country leaving the Eurozone; we haven’t seen this yet and this would be a very grave event. And that’s why I’m counting on the Greek government to stick to its agreements. That’s my preference.
And which are the other risks?One major risk is that the stability foundation of the monetary union, that we have agreed on and enshrined in the articles of the EU treaty, will erode further. This has the potential to undermine the confidence in the solidity of the monetary union. And it would put monetary policy under pressure even more to inflate away the problems. Already now several voices are asking the ECB to break its rules and bail out with no conditionality.
Does the European Union have enough firewalls in place to deal with a Greek exit?I don’t want to speculate about a Greek exit. The firewalls we have been building and strengthening are there to prevent contagion effects. And I will not be a party to the endless debate on their size. In any case, we must not allow ourselves to be blackmailed by a country because of the contagion effects.
Regarding Portugal, it seems to have the image of the good student in the bailouts program, but it’s also a hostage to what happens in Greece and Spain. What message would you leave to the Portuguese government?The key message from Portugal and Ireland is that adjustment programmes work. The reforms that have been implemented there have contributed to reducing unit labour costs and stopped the decline in competitiveness. We also see the first benefits of this in the current account deficit. And according to our forecasts, growth should pick up again in these countries. No serious forecast sees a downward spiral that doesn’t end anywhere.
There are already talks about a second bailout to Portugal, because the country may not be able to return to markets next year. How do you regard this?We are dealing with a crisis of confidence, and lost confidence cannot be regained overnight. But the important message is that Portugal is on the right track.
But isn’t the whole of the euro at stake?&?nbsp;
Confidence has also been lost in the functioning of monetary union as a whole. This brings us back to the debate about whether we want to return to the Maastricht framework, which relies on national fiscal policies that are responsible only for themselves, or whether we want to take a quantum leap forward, regarding integration. We cannot say that, on the one hand, we rely on national fiscal policies and on the other hand, we progressively communitise risk without control, thereby undermining the existing legal framework. In the end, it’s always a question of the balance between common liability and control.
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http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_15/06/2012_447203
FT report suggests EU softening renegotiation stance
A report on Thursday suggested that European Union leaders are warming to the idea of softening some of the terms of Greece's bailout package following general elections on June 17 rather than risk incurring greater losses from a disorderly Greek default and a possible expulsion from the eurozone.
The Financial Times reported yesterday that officials in the EU are in the process of putting together a package of incentives for Greece to stick to the current bailout deal, including reduced interest and a longer repayment period for loans already disbursed, though the article does go on to say that the new deal relies on a New Democracy win in Sunday's polls.
“In the scenario where [ND's Antonis] Samaras wins the elections, they would like to see him committing very clearly to his adherence to the memorandum,” an EU official briefed on the discussions, was quoted by the Financial Times as saying. “They would then get together with the new Greek government and say: here is what we can now do to make life a bit sweeter, a bit less harsh.”
The Financial Times also suggests that the officials are pondering the possibility of extending the same deal to Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras in the event that he he is able to form a government, given the leftist's softening stance on the bailout agreement.
The possibility of a better deal for cash-strapped Greece comes in contrast with previous statement by EU officials who earlier this week excluded extending any more help to Athens unless it commits fully to the current agreement with its creditors the European Commission, European Central Bank and International Monetary Fund.
However, according to the Financial Times report, officials said that they remained opposed to making bigger changes to the unpopular memorandum sought by many Greeks.
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http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_15/06/2012_447164
Eurozone finance ministers ready to consult after Greek elections
"A Eurogroup teleconference is possible after the results Sunday evening, but nothing has been decided,» said a source who asked not to be identified. A second source said «preparations have been made to enable a quick teleconference if necessary, as soon as we have the results." But the source added that «there is no decision» for the moment on holding a conference call, a decision which would be made by the head of the Eurogroup, Luxembourg premier Jean-Claude Juncker. The aim of the teleconference would be to agree a joint position on events in Athens to avoid ministers talking out of turn, which has been a problem in the past. Another source said there had been talk about Europe's leaders coordinating their response to Greece's elections as G20 leaders gather in Los Cabos, Mexico, for talks June 18 and 19. Greek radical leftist leader Alexis Tsipras, seen as a likely winner in Sunday's elections, has set himself a 10-day deadline to renegotiate an EU-IMF bailout which he claims is killing the country's weakened economy. In an interview with state television Wednesday, Tsipras said he wanted to «re-examine and replace» the loan agreement with another blueprint to stabilise the economy, wracked by a five-year recession. The Eurogroup ministers last weekend held a two-and-a-half hour conference call that wound up with a pledge to offer a lifeline to Spain's stricken banks worth up to 100 billion euros. Their next talks are scheduled for June 21, ahead of a pivotal June 28-29 summit expected to deepen economic and monetary union.
A draft of conclusions to be adopted at the summit seen by AFP said the leaders will discuss plans for «a full economic and monetary union» and «the working method and the timing to achieve this objective."
"There is a need for more specific building blocks centred around a much stronger banking and fiscal integration, underpinned by enhanced euro governance." That will also be discussed at a scheduled summit of the 17 countries sharing the euro that will follow talks between the EU-27. |
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