http://www.zerohedge.com/news/and-now-lets-play-chicken
And Now... Let's Play Chicken
Submitted by Tyler Durden on 06/17/2012 17:39 -0400
From Mark Grant, author of Out of the Box
And Now - Let's Play Chicken
Let me outline for you the scrub matches. The first is that the apparent winner of the Greek elections, the New Democracy Party, will try to form a colalition with the PASOK Party and this is what everyone is not betting on. The problem is that the PASOK Party has lobbed a grenade into the coalition discussion, announced by Katerina Diamantopoulou that Pasok will not join into a coalition government with the New Democracy Party unless Syriza also joins the coalition. Syriza stated moments ago it would not do this. The question then comes whether ND can form a government (150+ seats) with any of the other remaining parties including neo-nazi New Dawn or the communists. The answer is most likely not,so Greece again, for the moment, is nowhere. Then the New Democracy Party also campaigned on re-doing the terms of the EU bailout which Germany said earlier today would not be happening. The markets may well rally on the headlines but reality will set in soon enough I would think. At the moment, which could change in a Greek heartbeat or the smashing of a plate, Greece is in limbo once again and I would not be betting too heavily or cheering in the marketplacethat everything is resolved; it is clearly not.
Then the next game of chicken is not only will Germany/the EU back up from their position but will they give Greece more money because if they don't the country and the banks more money they both will default. So it is no government in Greece for the moment, playing chicken over the bailout terms, playing chicken over new money for Greece as their economy continues to deteriorate and as they amount they owe now, much less any new money, cannot be paid back under any scenario that anyone can concoct. The headlines may well drive the markets' reaction briefly but "watch out below" will be what takes hold as it must because that assumption is based upon facts and not hype.
and....
Greek elections: Greece returns to the polls - live coverage
• Syriza and New Democracy vying to be biggest party
• Exit polls make make them neck-and-neck
• Election taking place amid severe economic hardship
• Exit polls make make them neck-and-neck
• Election taking place amid severe economic hardship
This page will update automatically every minute: On | Off
one recent poll saying 80% were supportive. However, the opposite is true of the austerity measures proposed by EU leaders which would secure this. One of the biggest tensions in Greece has been the overwhelming desire to stay in the euro zone - with
Radiobubble, has this: Greek web radio and online community,
First results show left-wing Syriza ahead in the following areas: Attiki, Achaia, Kerkyra, Lasithi, Chania, Heraklion, Rethymno.New Democracy along with Pasok can form a coalition government securing 159 seats.
More on that new poll. The Greece interior ministry has put New Democracy on 31.1% and Syriza on 25.4% after 15% of the votes counted. A caveat however - results are more likely skewed to the right because rural areas go first. Athens is likely to push this again towards the left.
Just in from from Helena Smith, our correspondent in Athens, on what happens if the Greeks again return no party with an outright majority.
The inability of any party to win an outright majority, and the strength of the turnout for Syriza, will ensure that Greece's attempt to refind political equilibrium at a time of deepening economic paralysis will be anything but easy. New Democracy may well win and is already discussing who the prime minister of a coalition government will be.
But even if a government is formed by tomorrow evening – and there is almost no Greek who after six weeks of political paralysis does not want to see an administration being sworn in asap – the big question is whether it can fulfill the conditions to keep rescue funds flowing into an economy that is on its knees. Under the terms of the debt-stricken country's latest EU-IMF backed bailout package, Athens must meet a number of deeply unpopular austerity and structural reforms by the end of the month.
A new Greek exit poll is putting New Democracy marginally ahead.
Greece has enough funds to last for public services until the 20th July says Ed Conway, BBC economics editor.
Whatever the outcome of the election, Greece still needs to meet some agreed structural reforms by the end of June.
Sky News reporter says there is a rumour going around the Syriza camp that Alexis Tsipras's wife has just given birth to their second child. A metaphor perhaps?
Greek Skai Television has given its first seats prediction
It looks like the answer to the question I posed in the previous update
Once again, thanks for all the interesting comments below the line.
Here's an interesting one from Aggeliki that perhaps goes some way to explain the surge in support for Syriza among people who did not vote for them in the past and who are not necessarily completely ideologically aligned with them.
1) SYRIZA is a party that has not been tried in government and has virtually no support in the mainstream media. As such, I think SYRIZA is relatively free from the corruption and vested interests that plague Greece's political life.
I am not in Greece today, but if I were I would be voting for SYRIZA.I am not a SYRIZA supporter, in the sense that I have never voted for them and there is plenty about them that I dislike. Like many current SYRIZA voters that I know, this is the first time I have ever even considered voting for them, and I'd like to outline my reasoning:
2) SYRIZA is a left-wing party, with a realistic chance of being in government. On the same reasoning, I would vote for Democratic Left, had it managed to achieve the same momentum.I'd like to expand on the second point a bit. I prefer a left-wing party to a right-wing one, not because I believe there is no value to be found in right-wing ideology - in other words, I am not a blind adherent of any one ideology. I do, however, believe that in this moment in time left-wing politics are more consistent and relevant with regards to: a) explaining the situations we find ourselves in (not only in Greece, but globally), and b) offering solutions with long-term potential. Furthermore, and where in Greece in particular is concerned, I don't believe that at the moment there exists a Greek right-wing option with even minimal merit.The above point about ideology aside, my vote for SYRIZA would primarily be a pragmatic one. I don't expect any party at this point to implement any particular ideology or to strictly stick to any particular manifesto. I am fully aware of the fact that, at this moment in time, any party in government will have to do things incrementally, one step at a time, under unstable circumstances which will guide and shape their actions every step of the way.
One hour to go until the polls close.
Nick Malkoutzis, who is also deputy editor of deputy editor ofKathimerini English Edition, writes that "Europe that has become scared of democracy". Condemning the outside interference in the election, Greek blogger
This is the quid pro quo of the loan deals: Greece receives money in return for certain fiscal measures and structural reforms. Nowhere does the agreement dictate how people should vote in a free election.This hasn't prevented a number of European officials from expressing an opinion about their preferred outcome of Sunday's vote. The latest to do so was Luxembourg Prime Minister Jean-Claude Juncker. "If the radical left wins – which cannot be ruled out – the consequences for the currency union are unforeseeable," said Juncker, who as head of the Eurogroup also holds an institutional role within the European Union, a role that – theoretically – implies neutrality on such sensitive issues as national elections.Juncker's comment is in keeping with repeated interventions by Europeans over the last month. Their comments implied a deep disapproval of potential choices by free citizens. This began in February when German Finance Minister Wolfgang Schaeuble made the incredible suggestion that Greece should hold off elections and allow the interim government led by Lucas Papademos to stay in power for longer. This revealed a Europe that has become scared of democracy, unable to deal with the uncomfortable realities that it can produce.
The whole political landscape that was created after the end of the dictatorship in '74 is now collapsing and I'm talking mainly about the socialist Pasok and the conservative New Democracy. Even if New Democracy manage to win the second round of election, we are talking about completely new political parties than we have seen for the last decade so it's difficult to talk about hope because one way or another, whether pro-memorandum [austerity plan] or or anti-memorandum forces win, we are awaiting a very very difficult period for many months to come. But it is a change and every change can provide some hope. We are saying here in Greece that the old is now dead but the new is yet to be born.I was thinking that the most important part will come after the elections whatever the outcome and it will be the people who decide the decisions on which path to follow. If we have a win for conservative New Democracy, I am sure that unions and many people will demonstrate against the new package of measures, the new austerity measures. If we have Syriza as the first party, first we have to see what will happen, if it will manage to create a government and then it will need support from the people because we know that the climate against the party is really negative.We have seen newspaper articles from Germany saying Tsipras is a populist and you have to avoid him. So we understand that he will receive huge pressure from Brussels, from Berlin and it will all depend on the support he will receive on the streets from people. So it's an interesting day today because of the elections but I think that the following weeks will give us a more clear idea of what is to follow.
News in from Helena Smith, our correspondent in Athens, on the latest unofficial exit polls being conducted on behalf of political parties ahead of the close of the ballot at 7pm local time (5pm BST).
I have just spoken to a senior cadre in the socialist Pasok party where unofficial polling results are being monitored on a two-hourly basis. "The next few hours are crucial as the rush to vote has only just begun among young people," he told me. "From now to the close of the election polling stations are likely to be packed."Latest results, he said, show the conservative "pro-European" New Democracy party in the lead with 29% of the vote closely followed by the anti-bailout far-left Syriza party with 27%. Pasok is in third with 12%. The small European-oriented Democrat Left has around 6%. Support for the neo-Nazi Golden Dawn party, which was catapulted into parliament for the first time since the collapse of military rule in 1974, was also at 6%. Figures for the communist KKE party and anti-austerity Independent Greeks party were not available.Exit polls will be released at 7pm Greek time but with at least 15 % of voters undecided analysts have warned that it won't be before 9:30pm that "a clear result" comes through.
Pasok has been publicly stating that it will not join any coalition without Syriza.
Pro-EU New Democracy on the other hand has been talking on Sky News about a "grand coalition".
Panos Kammenos, leader of the Independent Greeks, a right-wing party that could have been in line to ally with New Democracy has told the press that the party is keen to support a government that will condemn the bailout agreements – that would in effect rule out a deal with New Democracy.
http://www.zerohedge.com/news/pasok-throws-monkey-wrench-coalition-discussions
Pasok Throws A Monkey Wrench Into Coalition Discussions
Submitted by Tyler Durden on 06/17/2012 14:37 -0400
As reported in the previous post, the Greek PASOK party of former PM G-Pap may have thrown a grenade into coalition discussion, following an announcement by Katerina Diamantopoulou that Pasok will not join into a coalition government with ND unless Syriza also joins said coalition. Which Syriza stated moments ago it would not do. The question then comes whether ND can form a government (150+ seats) with any of the other remaining parties (up to and including neo-nazi New Dawn or the communists... why is there no Pirate party in Greece?). The answer is most likely not, but not before some serious horse trading shows that the second Greek elections has achieved nothing, and the world now has to look forward to a 3rd Greek election round, some time in August, and then another, and then another, until no more assets are left to be plundered from the state which will have no head for a long time. Incidentally, just as we predicted on May 3 in "Previewing The FirstOf Many Greek Elections"
As summarized by Keep Talking Greece:
Next Question: What government?
- PASOK official Anna Diamantopoulou said that PASOK would not join a coalition government without SYRIZA.
- PASOK considers citizens have downvoted the party’s policies therefore it can not join a pure ND-PASOK government.
and as far as Democratic Left , hard to see how they could join in a Pasok - New Democracy Coalition unless SYRIZA provided political cover - just look at the platform for Dem Left ..........
http://www.athens24.com/news-article.html?news_id=1705
Democratic Left presents 7-pt plan for unity government
The leader of the Democratic Left, Fotis Kouvelis, has presented a seven-point plan that could serve as the basis for forming a unity government after the June 17 elections.
Democratic Left could end up playing a vital role in the formation of a government after the elections and Kouvelis has pledged that he will make every effort to ensure that Greece is not left ungoverned.
“The first thing that has to happen is for a government to be formed,” he said on Sunday. “The question that dominates and has to be addressed to everyone is: “Since there will be no clear majority, who will you work with?”
“There is a question that precedes this, though: “On which positions will you agree to govern?”.”
The seven positions presented by Kouvelis are: cleaning up the political system, disengaging from the EU-IMF memorandum by 2017, overhauling Greece’s productive capacity, reorganizing agricultural development, ensuring citizens’ safety, tackling illegal immigration, supporting and broadening social security and certain steps on foreign policy issues.
Among the proposals made by Democratic Left are: the introduction of a law allowing the assets of government members and senior civil servants who have served since 1974 to be inspected, scrapping ministerial and parliamentary immunity, reduction in MPs wages and end to pensions for parliamentarians, halving of state funding for parties, introduction of proportional representation, freezing of wage and pension cuts, cancelling of law lowering minimum wage, restoring collective contracts, increasing the tax-free threshold and taxing the Church of Greece’s assets and increasing the length of time unemployment benefits are paid.
Democratic Left could end up playing a vital role in the formation of a government after the elections and Kouvelis has pledged that he will make every effort to ensure that Greece is not left ungoverned.
“The first thing that has to happen is for a government to be formed,” he said on Sunday. “The question that dominates and has to be addressed to everyone is: “Since there will be no clear majority, who will you work with?”
“There is a question that precedes this, though: “On which positions will you agree to govern?”.”
The seven positions presented by Kouvelis are: cleaning up the political system, disengaging from the EU-IMF memorandum by 2017, overhauling Greece’s productive capacity, reorganizing agricultural development, ensuring citizens’ safety, tackling illegal immigration, supporting and broadening social security and certain steps on foreign policy issues.
Among the proposals made by Democratic Left are: the introduction of a law allowing the assets of government members and senior civil servants who have served since 1974 to be inspected, scrapping ministerial and parliamentary immunity, reduction in MPs wages and end to pensions for parliamentarians, halving of state funding for parties, introduction of proportional representation, freezing of wage and pension cuts, cancelling of law lowering minimum wage, restoring collective contracts, increasing the tax-free threshold and taxing the Church of Greece’s assets and increasing the length of time unemployment benefits are paid.
and.....
http://www.zerohedge.com/news/greek-election-cheat-sheet
Greek Election Cheat Sheet
Submitted by Tyler Durden on 06/16/2012 17:19 -0400
Information surrounding the Greek Election, Courtesy of Global Macro Leverage Sales:
- 12:00 EDT/17:00 London Polls close
- 14:00 EDT/19:00 London – 15:00 EDT/20:00 London First official projection
- 17:00 EDT/2200 London Updated projections
- 19:00 EDT/24:00 London another updated projection
- 1:00 EDT/6:00 London (Monday) Final results expected
- The outcome will be too close to call if the difference between the first two parties is less than 2%-3% with strong precedent of exit polls failing to predict the outcome when the race is tight.Where can I follow the results?
- Official results are to be streamed onto the Ministry of Interior website (ekloges.ypes.gr).
- These results will NOT be an accurate representation of the final outcome. Numbers are fed through as they come in and this strongly biases the sample towards the rural regions in the early hours of counting.
- The Ministry of Interior will be releasing more reliable estimates of the final result on Greek TV - this will not be available on the website.
- The international press may also be reporting the unweighted "raw" results rather than the weighted sample - so, care needs to be taken in interpreting these results.
- Who will win?
- Polls released before the blackout period pointed to a moderate lead for New Democracy over SYRIZA, but with a large number of undecided.
- The absence of a TV debate (talks on arranging that broke down one week ago) is likely to have worked in favour of New Democracy leader, Samaras.
- The Spanish bank recapitalization package has not had a major influence on the strength of the political discourse of either SYRIZA or New Democracy, merely strengthening both parties' calls for the need to re-negotiate.
What happens on Monday?- In Greece, coalition talks will begin immediately.
- It is unlikely that any party wins a sufficient number of votes to form an independent government.
- A combined 35-40% of the vote (depending on how many parties cross the 3% threshold to enter parliament) is required to have a sufficient number of MPs (more than 150) to form a government.
- The party leader of the top three parties each has the right to attempt to form a government for three days.
- If these attempts fail, the President of the Republic convenes all leaders to try and generate consensus.
- If this fails, a third election will be called.
Will a government be formed?- If New Democracy comes first, a government with PASOK (and possibly Democratic Left) will be formed in a relatively short period. Participation from the Democratic Left would be a positive as it would broaden the new government's democratic legitimacy and increase its stability.
- If SYRIZA wins, formation of a government would be more difficult. This would likely involve support or "tolerance" from one or more of the Independent Greeks, Democratic Left, PASOK and the Communists, in roughly that order of likelihood.
- Tolerance" would involve the parties abstaining from parliament during the confidence vote. Confidence vote can be obtained (subject to 120 being present in parliament) subject to a majority of MPs present voting in favour.
and since Athens News covered the Bild story today , here is their accounting of what Germany has done now..........
http://www.athensnews.gr/portal/8/56342
Bild issues letter of electional warning | ||
| ||
It seems that the German press has really taken an active interest in these elections. Following in the footsteps of the German Financial Times, it was Bild's turn to turn up the heat on Saturday, with a letter adressed to all Greeks on the eve of the electional battle.
The letter, written in both Greek and German is as follows.
"Dear Greeks,
You are a proud people, a proud nation. Tomorrow (today) you have yet another set of elections.
You say: We're free. Bild says: It's in your hands. There is a difference.
If you did not want our billions, it would have been fine by us for you to vote for any leftists or rightist clown you wanted. But for over two years now, the situation is like this:
Your ATM's continue to give you euros, only because we put them there, the Germans and the other nations that have the euro.
Yet you still, calls us Nazis, which we do not fine funny. But anyway.
But let's be clear on this:
If the elections are won by parties that want to put an end to austerity and reform, breaching every agreement, we will stop paying.
and back to the disappearing money.....
|
http://www.zerohedge.com/news/greek-banks-run-out-safe-deposit-boxes-eerie-calm-takes-over-country-24-hours-d-day
As Greek Banks Run Out Of Safe Deposit Boxes, An Eerie Calm Takes Over The Country 24 Hours Before D-Day
Submitted by Tyler Durden on 06/16/2012 19:01 -0400
A day before the Greek D-Day, which was unexpectedly punctuated with a surprisinglast-minute Greek victory in Euro2012 over Russia, sending the country into the elimination rounds (a Greece vs Germany game would be quite interesting) which may have rekindled patriotic spirits just enough to boost Syriza's chance that little bit more, the Greek bank trot, which was a jog some days ago, has surprisingly not metastazied into a full blown sprint. And with an all too real possibility that Greece may leave the Eurozone in as little as 24 hours, this is somewhat unexpected: after all taking physical possession of electronic money is merely a free put on the return to the Drachma, and currency (and debt) devaluation. On Monday it may simply be too late. Surely, most locals have figured this out.
Spiegel reports: "Joanna Stavropoulos is not proud of what she has done. "I had a guilty conscience when I withdrew my money from Greece," says the 43-year-old. Of course she knew what would happen if everybody does the same: Greece's banks would be threatened with collapse. But she says she had to think of her two-month-old daughter, Josephina, who is currently asleep on Joanna's shoulder. Increasing numbers of Greeks are following Joanna Stavropoulos' example and emptying their accounts. They are afraid that Greece may leave the euro zone and return to the drachma.... Stavropoulos is one of the few people who know very well what this scenario would look like in concrete terms.. She has also lived in Zimbabwe, where three-digit inflation destroyed the currency. Joanna is sure that Greece could face the same thing if it returns to the drachma. "My country is going downhill," she says." And yet instead of taking the cash and converting it into something of real value, what has happened is that the €50 billion now hidden in various homes has led to a surge in home burglaries. As a result, Greeks are forced to worry not only about their currency returning, but about being robbed. End result: take the cash, but park it back at your bank: "Many customers have left their money in the bank itself, Christiana says -- but in a safe deposit box rather than in their accounts. "It's currently impossible to find a free safe deposit box in a Greek bank," she says." We wonder what happens when these same people try to access their "safe deposit boxes" should the entire banking system collapse. Then again, nobody said a currency union disintegrating was a logical, rational and orderly process...
Oddly enough, despite the all too real dangers of a complete lock out by and of the local banks, Greeks refuse to believe that the worst case scenario could realistically happen:
There is still little sign of panic in Greece, and there has not been a stampede to the banks. Nevertheless, people are withdrawing hundreds of millions of euros from the banks every day. In May alone, outflows totaled €5 billion. According to official figures, €80 billion has been withdrawn since the start of the crisis.
Which however is not to say that most people have not already commenced preparations:
Christiana (not her real name) can see the capital flight every day with her own eyes. The 46-year-old, who wishes to remain anonymous, works as an asset manager at a large Greek bank. "It's not just that it is increasing," she says of the withdrawals. It's not only major customers who have been taking out money in recent months, she explains, but all kinds of clients, from account holders with a few hundred euros to the bank's most important private customers. "Naturally, the wealthy ask particularly often what they should do with their money," she says.
Rich Greeks have long been moving billions to countries such as Italy or Switzerland, or buying luxury properties in London. But overall, according to estimates by the Greek central bank, only about one-fifth of the total money withdrawn has gone abroad. Many customers have left their money in the bank itself, Christiana says -- but in a safe deposit box rather than in their accounts. "It's currently impossible to find a free safe deposit box in a Greek bank," she says.
Those customers clearly don't want to be surprised by a currency reform. There has long been speculation over how that could work. The banks could close over a weekend, take stock of the euro holdings in their accounts and prevent further transfers to foreign accounts. Euro bills which are already in circulation would be marked with stamps. The export of unmarked bills would be prevented at the borders. Within a short time, the drachma could be reintroduced.
If it gets that far, Marianna's clients want to be prepared. Like Christiana, she also works as an asset consultant at a Greek bank, And like Christiana, she does not want her real name to be used. Her clients are lawyers, doctors or top managers. "On average, they have between €200,000 and €300,000, which they can withdraw at any time," Marianna says.
Not unexpectedly, the local thieves have figured out what is going on too. And all that physical cash sitting in various homes is just too tempting:
Quite a few wealthy clients also tell Marianna that they are keeping their money at home. Many people are apparently doing the same thing. Greeks now have around €50 billion stashed at home, reports the Greek newspaper Ta Nea, citing the Greek Finance Ministry. Burglaries are increasing as a result. In Crete, they have gone up by 700 percent within two years. Burglars recently stole €50,000 in cash from a house of an old couple in Athens.
The crisis may now increase the social divide in Greece, just as it has done many times in recent years. While members of the upper class have long managed to stash their money in safe places, a possible currency reform and the subsequent devaluation would probably hit many low-income earners unprepared.
In retrospect, the threat of robbery may pale in comparison with the consequences of a coordinated global bank holiday:
Even a cosmopolitan woman like Joanna Stavropoulous has been overwhelmed in her attempts to come up with the right strategy. In 2010, as the signs of Greece's economic crash intensified, she moved her savings to a Spanish bank. Then Spain's economy got into trouble. She moved her money back to Greece -- until the next bout of bad news. She has paid more than €100 ($125) in bank fees alone, she says, due to the constant movement of her money.
When her daughter was born, Stavropoulos paid €12,000 for the birth, a sum that is not considered unusual in private Greek clinics. Now, she has barely any money left. She has now invested the last of her savings in foreign currency, hoping that they will hold their value if Greece returns to the drachma.
Yet the most ironic moment in the Greek denouement will come when fractional reserve lending collapses onto itself:
Stavropoulos and her friends have a new strategy to deal with their daily expenses. "We charge everything to our credit cards," she says. If the Greek banks fail, they won't be able to collect the outstanding debts, she argues. "If they want to mess me around, I will do the same to them."
In other words, Greece is now America, where the vast majority of people also live on credit alone, and have taken up the following motto when dealing with banks: "you pretend to be solvent, we pretend to have money."
At the end of the day, it is all just one big global monetary circle jerk, only this time in reverse, as the snake of fractional reserve banking has finally started to eat its own tail. With people spending money they don't have, and in debt to their eyeballs to a banking system that itself is just as insolvent, is there any wonder that nobody really panics any more over daily threats the grand reset is finally coming?
and.......
http://www.telegraph.co.uk/finance/9335800/Greece-bailout-not-negotiable-says-Angela-Merkel.html
Greece bailout not negotiable, says Angela Merkel
Greece’s bailout will not be renegotiated, German chancellor Angel Merkel has warned.
"That's why it's so important that the Greek elections preferably lead to a result in which those that will form a future government say ‘yes, we will stick to the agreements’,” Mrs Merkel said.
"We will have to speak to any government. I can only warn everyone against leaving the currency union. The internal cohesion of the euro zone would be in danger."
The Greeks vote for a new government tomorrow, facing a choice between the austerity-supporting New Democracy party, or the radical left Syriza party, which wants to reject the punishing terms of the €130bn European bailout
Jean-Claude Juncker, head of the eurozone finance ministers group, warned of serious consequences if Syrisa was victorious
"If the radical left wins - which cannot be ruled out - the consequences for the currency union are unforeseeable," Mr Juncker said.
The election occurring amid calls for further fiscal union in the eurozone.
Benoit Coeure, an executive board member of the European Central Bank (ECB) said that a European banking union could help revive money markets by restoring confidence in the creditworthiness of banks and governments.
Mr Coeure called for closer integration as “uncoordinated national reactions to heightened uncertainty could be collectively lethal to the single market for capital”.
Jose Manuel Barroso, European Commission president, said he believed a banking union could be in place within a year, but Germany says it will not support one unless it is preceded by fiscal union within the eurozone.
Mariano Rajoy, the Spanish prime minister, agrees. In a speech earlier to day he said that the eurozone needs greater fiscal and political union if it is to survive the financial crisis.
Mr Rajoy said that the country’s businesses, banks and regional governments were struggling get access to finance, leading to crippling borrowing costs. He urged further integration in the European banking sector, but did not detail plans.
“Europe has to transmit to the world that the euro is an irreversible project,” Mr Rajoy said. He also accepted that Spain needed to stand firm in reducing its fiscal deficit. “We cannot live beyond our means on a permanent basis," he said. "We cannot have double the number of airports as Germany, for example.”
Spain secured a €100bn (£80bn) rescue lfor its banking system last weekend, but its borrowing costs have continued to rise, prompting fears the country may follow Greece and need a full-blown bailout.
and.....
http://www.guardian.co.uk/business/2012/jun/16/world-bank-euro-collapse-crisis
World Bank warns that euro collapse could spark global crisis
Europe 'facing Lehmans moment' says outgoing head Robert Zoellick as Greeks are warned over key election
The outgoing head of the World Bank, Robert Zoellick, will warn the G20 summit that Europe runs the risk of sparking a Lehman-style global crisis that will have dire consequences for developing nations.
As Greek voters go to the polls in elections that could determine the future of the eurozone, Zoellick told the Observer he was advising emerging nations to ready themselves for the consequences of events in the single-currency area.
The election of an anti-austerity government would spark the most serious crisis for the euro so far, following the apparent failure of a Spanish bank bailout last week. German chancellor Angela Merkel yesterday ruled out renegotiating Greece's bailout, saying the country must stick to its deals with international lenders. Unofficial polls suggest the conservative New Democracy party is ahead of the anti-austerity Syriza by four percentage points — though as much as 15% of the electorate remains undecided.
As all eyes focus on Athens, Zoellick said: "Europe may be able to muddle through but the risk is rising." He added: "There could be a Lehmans moment if things are not properly handled." The bankruptcy ofLehman Brothers in September 2008 proved to be the trigger for the deepest slump in the global economy since the 1930s, and Zoellick said developing countries needed to "prepare for the uncertainty coming out of the eurozone and the wider financial markets". He added: "It will be better if they can avoid piling up short-term debts that can come due in volatile periods and look to the fundamentals of future growth – infrastructure and human capital."
Zoellick, whose five years at the bank has coincided with the financial and economic crisis, retires at the end of the month. Fearing that Europe's sovereign debt problems could have spillover effects, he said the bank had been increasing its lending to support Bulgaria's banking system and acting to prevent a credit crunch in south-east Europe. Steps were also being taken to protect countries in north Africa that were vulnerable to Europe's debt crisis and trade finance facilities were being strengthened for francophone west Africa.
"Uncertainty in markets is now starting to increase costs for developing countries," he said. "The ripple effects are making everybody's life harder." Zoellick said his organisation was concentrating on helping developing countries to prepare projects that could go ahead with the right investment and to protect the most vulnerable if there was a second leg to the global downturn.
"Given the volatility in the world economy, there is a big emphasis on helping developing countries to develop social safety nets that don't bust the budget," he said. Countries such as Mexico and Brazil, he added, had shown they could do this using low-cost, effective targeting, information technology and the right incentives.
While the World Bank's sister organisation, the IMF, has been more directly involved in the rescue operations for Greece, Ireland and Portugal, Zoellick said that the bank had been monitoring events in Europe carefully. Higher interest rates for countries such as Spain and Italy, which have announced big structural reform programmes, were the result both of market uncertainty and the failure of other European countries to provide "the right backing" for the governments in Madrid and Rome.
As the former US trade representative, Zoellick said he was concerned that the prolonged crisis was starting to lead to pressures for protectionism and economic nationalism. "This is not just an economic crisis but a political threat as well," he said. "We must make sure we keep markets open and beware against creeping protectionism. We are starting to see some increase in the use of trade restrictions."
Several European leaders urged Greeks to stick with the euro, including Spain's prime minister Mariano Rajoy and Jean-Claude Juncker, who is Luxembourg's prime minister and head of the group of eurozone finance ministers.
"If the radical left wins [in Greece] – which cannot be ruled out – the consequences for the currency union are unforeseeable," Juncker told the Austrian newspaper Kurier. "I can only warn everyone against leaving the currency union. The internal cohesion of the euro zone would be in danger."
and.....
| |||
|
No comments:
Post a Comment