Around the horn in europe.....

http://www.independent.co.uk/news/world/europe/barack-obama-asks-eurozone-to-keep-greece-in-until-after-election-day-8076852.html

The Obama administration will pressure European governments not to let Greece fall out of the eurozone before November's Presidential elections, British Government sources have suggested.

Representatives from the International Monetary Fund, the European Central Bank and the European Commission are due to arrive in Athens next month to assess Greece's reform efforts.

They are expected to report in time for an 8 October meeting of eurozone finance ministers which will decide on whether to disburse Greece's next €31bn aid tranche, promised under the terms of the bailout for the country.

American officials are understood to be worried that if they decide Greece has not done enough to meet its deficit targets and withhold the money, it would automatically trigger Greece's exit from the eurozone weeks before the Presidential election on 6 November.

They are urging eurozone Governments to hold off from taking any drastic action before then – fearing that the resulting market destabilisation could damage President Obama's re-election prospects. European leaders are thought to be sympathetic to the lobbying fearing that, under pressure from his party lin Congress, Mitt Romney would be a more isolationist president than Mr Obama.

The President discussed the eurozone crisis with David Cameron during a conference call on Wednesday and both welcomed statements by the European Central Bank that it was "standing firmly behind the euro".

The ECB is expected to present a plan in the next few weeks to help indebted countries like Spain and Italy by buying their government bonds.

Today, Prime Minister Antonis Samaras will travel to Berlin to meet Chancellor Angela Merkel, and to France tomorrow for talks with President François Hollande. He is asking that Greece be given more time to meet its deficit targets and implement its reforms as its economy is struggling through a fifth year of recession.

But Germany's Finance Minister, Wolfgang Schäuble, said it was only months since creditors drew up a second bailout package and agreed on a massive debt write-down for Greece.

Britain is understood to have pressed the Germans to ensure that if eurozone leaders decide Greece's position is unsustainable the financial "firewall" around Spain and Italy is made stronger. Officials are worried that if Greece was to exit the eurozone, the move could result in dramatic increases in the cost of debt for other weaker eurozone members – making their financial situation unsustainable.

http://www.telegraph.co.uk/finance/debt-crisis-live/9495753/Debt-crisis-live.html

10.21 Stories like this perhaps provide a clue as to why Mr Samaras wants some breathing space in Greece.

Lianna Brinded of the International Business Times has written a story outlining the human cost of the Greek crisis, including poverty, homelessness and suicide:

Times are hard for Greek citizens and suicide rates are on the rise.

Greece used to have one of the lowest suicide rates in the EU but since 2010, the number of people taking their own lives has increased by 40 percent, with a large proportion from the older generation.

...

The situation for Greek citizens is bleak.

According to the Quarterly Review by the European Commission on EU Employment and Social Situation, poverty is a reality for more than two thirds of Greeks.

"In Greece, homeless people are not officially recognised as a group requiring assistance. Homelessness traditionally was taken care of within families," said the report, published in June.

"Only recently has it started being seen as a major social problem as Greece spirals further into crisis with unemployment touching 20 percent, wage reduction (minimum wage reduced by 22 percent and by 32 percent for the young) and cuts in social expenditure.

"Sixty-eight percent of Greece's population living below the at-risk-of poverty rate (ie, having an income below 60 percent of the national median) were spending over 40 percent of their income on rent or mortgage payments," it added.

_{An Athens city centre shelter for the destitute and homeless dispenses some of the 1,200 meals it serves every day.}

10.04 This perhaps isn't what Antonis Samaras wanted to hear before he heads into those talks with Mrs Merkel later this morning.

A spokesman for the German finance ministry has said that a clause in the Greek rescue deal saying a deeper recession could lead to discussion of terms has no legally binding status.

The clause allows for more time for reform targets in the case of a worse-than-expected recession. But, it sounds like that is unlikely to help Mr Samaras.

09.31 As expected, Britain's GDP has been revised up to a -0.5p ccontraction in the second quarter, compared to the previous estimate of a 0.7pc shrink.

The contraction might have been less than previously feared, but it's still the biggest quarterly fall in GDP since the first quarter of 2009.

09.13 The timing of these talks between Merkel and Samaras appear to be a bit of a movable feast; it now appears they will kick off at 10.45 UK time.

Other political events happening today include a Spanish cabinet meeting and Italy's Mario Monti is also meeting with his cabinet to review their new plan to spur economic growth.

08.47 Even though Angela Merkel and Antonis Samaras are meeting for crisis talks today, we're not expecting any decisions to come out of the chinwag.

Earlier this week when the German chancellor visited the Molodvan capital, Chisinau, she said "we won't find solutions on Friday", reiterating that leaders must await a report being drawn up by the troika of Greece's international creditors.

08.34 Even as Angela Merkel meets Antonis Samaras, the German government is reportedly calculating the economic cost of a Greek exit from the eurozone.

A special working group, led by deputy finance minister Thomas Steffen, is working on scenarios in the case that Greece is forced to withdraw from the 17-nation bloc, the Financial Times Deutschland reported today.

"Colleagues are making calculations about the financial consequences [of an exit] and are considering how a domino effect on other euro member states might be prevented," it quoted a finance industry source as saying.

The ten-member working group, which is made up of officials from various departments of the finance ministry, wanted to be fully prepared for a possible "negative scenario," the source added.

08.25 Antonis Samaras might be expected to ask Angela Merkel for more breathing space, but others are urging Greece to press ahead with tough reforms.

Klaus Regling, the head of the European Stability Facility - Europe's bailout fund, has said that Greece's future in the eurozone depends on Athens' ability to implement painful economic reforms. Giving a lecture in Singapore, he said:

Nobody wants to see Greece leave the euro area. It would be the most expensive solution for Greece and for other member states, and I also don't want to see Greece leave.

But it's also true that it depends on Greek action. They must implement the structural and fiscal adjustments they committed to undertake in exchange for receiving financial assistance.

They have to deliver, otherwise financial assistance could stop, not because we want it to stop but two sides of the bargain have to be in place.

and news from Greece.....

Samaras in Berlin hopes to convince Merkel of coalition's intentions

Prime Minister Antonis Samaras will attempt to convince German Chancellor Angela Merkel in Berlin on Friday that Greece is turning a new leaf and deserves the backing of its eurozone partners.
Samaras is due to hold talks with Merkel at 12.45 p.m. Berlin time. Although he will be afforded full military honors, the Greek prime minister is unlikely to be in for a comfortable time during the meeting as skepticism about Greece’s position in the eurozone has grown in Germany and the German chancellor has displayed a reluctance to talk about changes to Greece’s bailout terms.
The premier had a taste of what he can expect when Merkel met with French President Francois Hollande in Berlin on Thursday. Samaras is due to hold talks with Hollande in Paris on Saturday. The German and French leaders stressed the need for Greece to stick with its current EU-IMF program.
“For me, it’s important that we all stand by our commitments, and in particular await the [publication of] the troika report, to then see what the result is,” Merkel said. “But I will encourage Greece to follow the path of reform, which demands a lot of the Greek people.”
Hollande stressed: “I want Greece to remain in the eurozone. That’s my wish. That’s our wish.” But he added that “of course Greece must make the necessary efforts for this to happen.”
Earlier in the day, German Finance Minister Wolfgang Schaeuble said that it was too soon to be talking about changes to Greece’s bailout or a new loan agreement.
“You cannot just say after half a year, all of that is not enough, because then you will never win the confidence of financial markets,” he told Germany’s SWR radio. “So more time is not a solution for the problems. The question is how we win back confidence.”
Before flying to Berlin on Thursday, Samaras spoke on the phone with his coalition colleagues, PASOK’s Evangelos Venizelos and Democratic Left’s Fotis Kouvelis. He also held a meeting with Finance Minister Yannis Stournaras.

SYRIZA criticized Samaras ahead of his trip, claiming he was taking part in the meeting “without any real appetite for negotiation, but only for public relations purposes, which cannot hide the dangerous and catastrophic nature of the new package of measures.”

ekathimerini.com , Thursday August 23, 2012 (22:42)

and....

T-bills provide a lifeline until October By Sotiris Nikas State cash reserves will last until the middle of October, according to the Finance Ministry’s latest projections. This is apparently why Prime Minister Antonis Samaras admitted in a recent interview that if the next bailout installment of 31.5 billion euros is not forthcoming, the country will find itself facing a liquidity problem. The troika’s report, on which the disbursement mainly hinges, is expected by early October. This means that the country’s ability to cover domestic and foreign financial liabilities depends on the issuance of treasury bills. In order to be able to continue paying salaries and pensions until the installment is disbursed, the government is putting a series of other payments due on hold, exacerbating the lack of liquidity in the market and hampering the operation of public departments. Since the beginning of the year, overdue payments to suppliers to the public sector have grown by about 900 million euros, while the government has frozen tax rebates and significantly cut primary expenses to offset a revenue shortfall. It has also used up about 3 billion euros of the Financial Stability Fund. Such moves, however, do not offer any prospect of extricating the economy from the vicious spiral of recession. The 31.5-billion-euro installment would be a potent liquidity booster that would enable the payment of outstanding liabilities and reduce the large amounts which commercial banks devote to covering the T-bill issues. The lenders have done so since the beginning of the crisis, thereby depriving businesses and households of desperately needed operating capital. This month alone, the government has borrowed 6 billion euros through T-bills. The liquidity problem is exacerbated by the slack in revenue collection, the shortfall being 2.2 billion euros at the end of July.

ekathimerini.com , Thursday August 23, 2012 (22:22) and.... Privatization fund urging approval of new officials Members of Greece’s privatization fund, TAIPED, have called on the government to speed up Parliament’s approval of the appointment of the organizations two most senior officials. Takis Athanasopoulos a former chairman of the Public Power Corporation (PPC) was appointed TAIPED’s new chairman last month. Yiannis Emiris, the former head of investment banking at Alpha Bank, was made managing director. However, their appointment still has to be approved by a parliamentary committee, which has yet to convene. The committee will need to provide a two thirds majority for the appointments to be passed. However, legislation does allow the government to deem the selections to be in the national interest if enough MPs do not support the candidates. ekathimerini.com , Thursday August 23, 2012 (15:17) Schaueuble acknowledges Greek difficulties but opposes new deal German Finance Minister Wolfgang Schaeuble said there has to be “understanding” for the difficult situation Greece is in and it’s clear that the country lost time because of repeated elections. Still, giving Greece more time to meet its obligations under the international aid program would not be a solution to its problems and would cost creditors more after they “went to the limits” of what’s economically justifiable, Schaeuble said in comments to SWR2 public radio today that were e-mailed to news outlets by the Finance Ministry. Half a year after conducting a Greek debt writedown, “we can’t simply say that’s not enough,” Schaeuble said. “That way you’ll never gain the trust of the financial markets. And so more time is no solution to the problems. The question is how we win back confidence. But for that we need to wait for the report of the troika that’s due in September.” [Bloomberg] ekathimerini.com , Thursday August 23, 2012 (12:22)