http://www.telegraph.co.uk/finance/debt-crisis-live/9336591/Greek-election-debt-crisis-and-G20-Summit-Live.html
Even with adjustments to the bailout programme, it still looks virtually impossible for the country to meet the various austerity targets. Missed targets will continue to be a source of disagreement and controversy, particularly inside Germany, while the continued EU/ECB/IMF Troika presence on the ground in Greece means that any delays will come to light quickly. Therefore, Greece’s future in the eurozone remains uncertain. For the single currency as a whole, should a compromise be possible in Greece, the focus of attention will shift back to Spain – whose banks remain a major liability for the euro.
The authorities are running out of hope and bereft of ideas. Every plan involves getting the Germans to pay everyone else's debts. The sheer lack of imagination, the stubborn refusal to engage with or propose any option other than more and more and more bailouts until the thing goes pop, suggests that ultimate disorderly collapse is now more likely than not.
Spain's debt market is teetering on the edge of collapse, auguring badly for this week's auctions. By admitting that it is no longer capable of propping up its banks, the Rajoy government has sent a message to the markets that the sovereign is in need of external support too. In the realm of investor perceptions, Spain has crossed the Rubicon from solvency to insolvency. The markets are treating Spain's bank-focused bail-out as a pregnancy: there's no such thing as a partial one.
I am very relieved by the results of the Greek elections. It's a vote for Europe. What's imperative is that a government is quickly formed that is capable of acting ... it's about more than fiscal discipline, it's about growth and competitiveness. The result of the Greek elections is that there are no concessions because what has been agreed is now what we will implement. There can be no substantial changes to the agreement.
What’s up with the markets? Angela Merkel got what she wanted from the Greek electorate, didn’t she? A win for New Democracy, the mainstream, conservative and pro-bail-out party. Actually plenty of traders were gunning for a Syriza victory, hoping that Alexis Tsipras would stick to his word and tear up the €130bn bail-out agreement today.
Greek election solves nothing, though a referendum on their currency might. Greeks should be given a clear choice to stay in the euro or leave.
In the case of Greece, the best moment to default would not be now, but next year. The country stills runs a primary deficit - before the payment of interest. A default would make more sense for Spain, but not quite yet. It would be easiest for Italy. It has a large pile of debt, but a low deficit. With an interest rate of more than 6pc and a loss of competitiveness, Italy cannot simultaneously remain solvent and inside the eurozone.
13.10 Is the Ireland move the first step to changing Greece's bailoutterms? Surely you couldn't change one without changing them all.
13.04 BREAKING NEWS...
Irish state broadcaster RTE claims that the Troika is considering changing the terms of the Irish bailout to extend repayment schedule from 15 years to 30 years.
13.02 It might be doom and gloom in Europe but at least people at theG20 in Mexico are having "fun":
Here are members of Oxfam wearing masks depicting Indian Prime Minister Manmohan Singh, US President Barack Obama and Brazilian President Dilma Roussef.
Those Oxfam guys really know how to make the most of being in Mexico.
12.48 Samaras now speaking: "We must have a government of national salvation and I want many parties to join. Tsipras won't join. Greece keeps to commitments. Greece needs to have a government soon."
Samaras wants to renegotiate bailout agreement
12.40 The boss of De La Rue has pulled out of the G20 Summit at the last minute due to "personal reasons".
Maybe he needs to print some foreign money?
12.30 Meeting between New Democracy leader Samaras and Syriza leader Tsipras is over.
Tsipras: "I will not join a coalition government. I told Samaras that it would be a catastrophe to continue with cuts to wages and pensions. Democracy must resist violent acts [two hand grenades were thrown at Skai TV building yesterday]. We have very difficult moments until June 28 [EU leaders' summit]. We now have better [bailout] negotiation opportunities. Greece must take advantage of this. We respect the election result.
"A government must be formed based on New Democracy because that is what the people wanted - but they will be judged by the people. Country must have a government tonight. We will be a powerful opposition, we will control government. Whoever takes the responsibility to form a government, takes the responsibility to negotiate [bailout]. We will not use mandate if Samaras fails to form a coalition government.
12.19 RBS says ECB action won't prevent a full bailout of Spain.
12.16 Olli Rehn, EU Commissioner for Economic Affairs, says financial union will be a core part of rebuilt eurozone.
Meanhwhile, Portuguese Economy Minister Alvaro Santos Pereira says his country has liquidity problems.
11.54 Open Europe has updated EU countries' exposure to Greece - it's now €552bn, with the UK holding €13.5bn:
Even with adjustments to the bailout programme, it still looks virtually impossible for the country to meet the various austerity targets. Missed targets will continue to be a source of disagreement and controversy, particularly inside Germany, while the continued EU/ECB/IMF Troika presence on the ground in Greece means that any delays will come to light quickly. Therefore, Greece’s future in the eurozone remains uncertain. For the single currency as a whole, should a compromise be possible in Greece, the focus of attention will shift back to Spain – whose banks remain a major liability for the euro.
11.43 Andrew Lilico, an economist with Europe Economics, has written a blog for the Telegraph on what happens next in Greece:
The authorities are running out of hope and bereft of ideas. Every plan involves getting the Germans to pay everyone else's debts. The sheer lack of imagination, the stubborn refusal to engage with or propose any option other than more and more and more bailouts until the thing goes pop, suggests that ultimate disorderly collapse is now more likely than not.
That path would destroy the euro – the French would have to withdraw because they can't afford it and the Germans would withdraw because tomorrow's Germans wouldn't be prepared to do it. There is, however, still a way out. Each country, each bank, each corporation, each household must be responsible for its own debts. If, at the last, we can still remember this fundamental principle, we can still escape.
11.20 Spanish 10-year bond yields have hit 7.118pc, big jump today.
It's probably at least partly fuelled by this:
Nicholas Spiro at Spiro Sovereign Strategy:
Spain's debt market is teetering on the edge of collapse, auguring badly for this week's auctions. By admitting that it is no longer capable of propping up its banks, the Rajoy government has sent a message to the markets that the sovereign is in need of external support too. In the realm of investor perceptions, Spain has crossed the Rubicon from solvency to insolvency. The markets are treating Spain's bank-focused bail-out as a pregnancy: there's no such thing as a partial one.
11.15 German Foreign Minister Guido Westerwelle:
I am very relieved by the results of the Greek elections. It's a vote for Europe. What's imperative is that a government is quickly formed that is capable of acting ... it's about more than fiscal discipline, it's about growth and competitiveness. The result of the Greek elections is that there are no concessions because what has been agreed is now what we will implement. There can be no substantial changes to the agreement.
10.54 The Telegraph's Louise Armitstead on the market turmoil this morning:
What’s up with the markets? Angela Merkel got what she wanted from the Greek electorate, didn’t she? A win for New Democracy, the mainstream, conservative and pro-bail-out party. Actually plenty of traders were gunning for a Syriza victory, hoping that Alexis Tsipras would stick to his word and tear up the €130bn bail-out agreement today.
Odd for capitalists, perhaps, but their biggest wish at the moment is for the crisis to be brought to a head, even if that’s armaggedon.
New Democracy is a victory for the on-going fudge: Merkel & Co can pretend that it’s fine to keep supporting Greece, there’s no need to discuss a euro break-up.
But for traders, that’s completely wrong. Athens is going to breach the terms of its bail-out agreement, regardless of who’s in power. At the very least, Greece needs an extension - of perhaps two years - to meet its fiscal targets. And that requires funding. So Germany still has to decide whether to cough up for a third Greek bail-out (the second, worth €130bn, was only signed in March) or break-up the eurozone. Brussels’ refusal to face facts is almost more alarming that the facts themeselves. If she insists on putting her head in the sand over Greece, what does that mean for the far bigger problems of Spain and Italy? If you’re a trader, there’s only one thing to do: run.
10.47 The German government has said the Troika will go to Athens to check on current status. Germany says now is not the time to be giving discounts to Greece.
10.33 New Democracy leader Antonis Samaras will meet PASOK leaderEvangelos Venizelos at 4pm. Reuters is reporting that there is the potential for the Democratic Left to form a coalition with New Democracy and PASOK, giving them a 178 majority.
Samaras tells President: "National consensus will bring us all together."
10.30 Nigel Farage, UKIP leader:
Greek election solves nothing, though a referendum on their currency might. Greeks should be given a clear choice to stay in the euro or leave.
10.21 Alex Banbury of Hamilton Capital has put together a list of countries' denials of contagion:
"Spain is not Greece" - Elena Salgado, Spanish Finance minister, February 2010.
"Portugal is not Greece" - The Economist, April 2010.
"Greece is not Ireland" - George Papaconstantinou, Greek Finance minister, November 2010.
"Spain is neither Ireland nor Portugal" - Elena Salgado, Spanish Finance minister, November 2010.
"Ireland is not in ‘Greek Territory’" - Irish Finance Minister Brian Lenihan. November 2010.
"Neither Spain nor Portugal is Ireland" - Angel Gurria, Secretary-general OECD, November 2010.
"Italy is not Spain” - Ed Parker, Fitch MD, June 12, 2012
"Spain is not Uganda" - Spanish PM Mariano Rajoy, June 2012
"Uganda does not want to be Spain" - Ugandan foreign minister, June 13, 2012
09.22 Swedish Prime Minister Fredrik Reinfeldt (below) sayseurobonds are a "very bad idea" and the EU deposit guarantee scheme is the "wrong way".
08.53 Citigroup says the probability of a Greek exit from the eurozone over the next 12-18 months remains unchanged at between 50pc and 75pc.
Chris Beauchamp at IG Index:
08.38 EU will go ahead with Iran oil embargo in July.
07.42 A look at a possible Greek parliament:
Interesting to note that more than 37pc of Greek people did not vote yesterday.
07.28 France has sent European leaders a proposal for a €120bn (£97bn) “growth pact”. The Telegraph's Bruno Waterfield reveals what is wrong with the plan:
06.38 The Financial Times has published an interesting opinion piece byWolfgang Munchau on the continuing woes of the eurozone.
In the case of Greece, the best moment to default would not be now, but next year. The country stills runs a primary deficit - before the payment of interest. A default would make more sense for Spain, but not quite yet. It would be easiest for Italy. It has a large pile of debt, but a low deficit. With an interest rate of more than 6pc and a loss of competitiveness, Italy cannot simultaneously remain solvent and inside the eurozone.
06.24 Germany's deputy finance minister Steffen Kampeter has echoed Chancellor Angela Merkel by saying that his country expects the new Greek government to honour its commitments to the bailout deal. He says the Troika must first check the situation in Greece as further aid hinges on reforms. However, it is clear Greece must not be pushed too much on these reforms.
06.20 World leaders are in Mexico today and tomorrow for the G20 Summit. The event is sure to be overshadowed by the Greek electionyesterday and continuing concerns over the financial health of Spain andItaly. World leaders are set to boost the $430bn (£273.6bn) fund being used as a firewall to support struggling eurozone economies.
06.00 ROUND-UP...
New Democracy has won a closely-fought Greek election with anti-bailout pary Syriza. With almost all votes counted, New Democracycontrolled 129 seats in the 300-seat parliament and the socialist Pasokparty - a likely coalition candidate - secured 33 seats, enough for a workable majority.
Syriza came second, electing 71 deputies. Its leader Alexis Tsipras has ruled out joining a coalition, arguing that the harsh conditions for the bailout deal should be scrapped altogether.
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