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| Temperatures are expected to reach 41-42C on the mainland on Sunday (Eurokinissi) |
1. SAMARAS, MERKEL “I want Greece to stay in the eurozone” Merkel said at the joint press conference on Friday, without mention of an extension for the memorandum terms. For his part, Samaras emphasised a need for “sips of air”, or an extension coupled with growth measures, in what he called the “long underwater dive” that is adherence to the memorandum. Merkel was prepared to await the troika report in September before taking further action, while Samaras vowed she would not be disappointed by Greece’s efforts.
2. REACTIONS - SYRIZA, KKE “Samaras is giving up everything and getting nothing in return” Syriza said in a press conference following the Berlin meeting. "The Greek people waited, in vain, to hear something that reminiscent of renegotiation. Instead, Samaras promised unwavering implementation of… a socially catastrophic…policy." KKE pointed out that the commitments Samaras and Merkel should not be considered as commitments of the Greek people. “It is in the interests of the people that they proceed with massive mobilisations, to make Greece's disengagement from the EU and write-off of the debt their cause,” the KKE said.
3. REACTIONS - GOLDEN DAWN Golden Dawn blasted talks between Samaras and Merkel in Berlin, charging that Merkel, "like a good loanshark, reiterated that they have given us a lot of money and that they will get back even more", whereas Samaras "did not say a word about the thousands of Greeks who are committing suicide and about the blood that has been shed for the sake of the Memorandum".
4. HEATWAVE Greece is in the grips of yet another heat wave, with temperatures expected to climb to 41C-42C on the mainland, according to the Greek Meteorological Service (EMY). Meteorologists forecast that temperatures will reach 39-40C Friday and Saturday, and peak on Sunday at 41-42C, before finally falling on Monday thanks to strong winds from the north.
5. NEIGHBOURLY GOODWILL Citizen protection minister Nikos Dendias thanked Serbian premier Ivica Dacic on Friday for helping fight the recent wildfire on Mt. Athos. Dacic assured Dendias that Belgrade is prepared to provide assistance again to Greece in the future, if required. Dendias and Dacic further expressed their volition for continued cooperation between the Greek and Serbian governments.
and from Sober Look , a chuckle at the ECb foot dragging.....
http://soberlook.com/2012/08/the-revised-eurozone-chain-of-events.html?utm_source=BP_recent
Another delay from the ECB and the "revised" Eurozone chain of events
What a surprise. The ECB is now signaling it will delay the periphery bond purchases that everyone is waiting for.
Bloomberg: - European Central Bank President Mario Draghi may wait until Germany’s Constitutional Court rules on the legality of Europe’s permanent bailout fund before unveiling full details of his plan to buy government bonds, two central bank officials said.
With the court set to rule on Sept. 12, investors looking for Draghi to announce a definitive purchase program at his Sept. 6 press conference might be disappointed, according to the officials, who spoke on condition of anonymity because the deliberations are not public. The program is still being worked on and staff may not be able to finalize it by then, said the officials, who are familiar with thinking on the ECB Governing Council. An ECB spokesman in Frankfurt declined to comment.
Is this the excuse they are coming up with? Germany’s Constitutional Court is widely expected to approve the ESM, even if it decides to attach some strings to ESM's implementation. But now the ECB's decision is somehow tied to that approval? The reality is that there simply is no agreement on the asset purchase plan. The detail has not been worked out and the ECB is buying time.
Bloomberg: - While Draghi is likely to give a progress report on the bond plan after the Sept. 6 rate decision, the ultimate design of the ECB’s program may depend on the uncertainty over the permanent bailout fund being resolved, so the officials said it makes sense to wait for the German ESM court ruling.
Full details of the ECB’s plan could be a month away, they said. While the Bundesbank opposes ECB bond purchases, it expects to be outvoted, one of the officials said.
Here is JPMorgan's take on the delay:
JPM: - We regard [waiting for German Constitutional Court decision] assomething of a smokescreen. Very few think there is a high probability that the German Constitutional Court will deem the ESM unconstitutional and prevent its progress into law at this stage. While the Court may express some misgivings about the legislation and suggest modifications as it is put into practise, it is most unlikely to be blocked. We would not expect the ECB to delay its actions on the basis on what remains a low probability event at this stage. Rather, we would expect them to take the German Government at its word that it can deliver on the political undertakings it has made, until it discovers otherwise.
The “excuse” of the ruling on September 12 only has any substance to the extent that [the ECB is not ready with the asset purchase plan] is true – that work on the design of the plan is incomplete. The idea that work “is not complete” may also be a euphemism for the fact agreement on the contours of the policy is proving elusive. Even allowing for the summer break in August, an institution with the resources of the ECB has the ability to complete the technical issues in policy design over the period between meetings if it is minded too. Draghi has already “played for time” once with his sketch of policies still to be designed at the last meeting. Ultimately, we suspect Draghi and others at the ECB will recognise that continued delay in finalising its policy decisions contributes to the sense that opinion on the Governing Council is deeply divided, and hence its commitment to any policy intervening in markets will not run deep. That, in turn, could undermine the effectiveness of policy interventions themselves.
How many times have we seen this scenario play out? The Eurozone leadership declares that it has the ultimate solution that ends up failing at the implementation stage. This certainly feels like one of those situations. Here is the "revised" chain of Eurozone events (discussed earlier).
and late day items from The Telegraph liveblog.....
http://www.telegraph.co.uk/finance/debt-crisis-live/9495753/Debt-crisis-as-it-happened-August-24-2012.html
17.47 The ECB may not be ready to announce details of its bond-buying plan until after the German Constitutional Court rules on the legality of the ESM bail-out fund, Bloomberg reports.
Some had been expecting Mario Draghi to announce details on September 6, at a scheduled press conference, but that doesn't look likely according to two central bank officials.
ZeroHedge goes one step further, quoting JPMorgan as saying that waiting for the court ruling seems like an excuse, given that there's unlikely to be a problem clearly the legality of the bail-out fund. It claims that waiting may just be a smokescreen to cover up the fact that work on the plan isn't going as quickly as many hoped...
17.32 A joint statement from Angela Merkel and Antonis Samaras has been released on a Greek government website. In Greek. Google provides us with this surprisingly good translation - occasional odd phrasing is either down to its translation software or a long day of talks taking their toll on the politicians... Merkel said:
I must say that in this financial crisis, I said and I repeat is the aim of the federal government to keep Greece in the eurozone. I would also like to stay and I mean that, despite the problems that exist. That is, if you want, why they move, like moving.
We know that the euro is more than one currency. It's an idea. Idea of an integrated Europe, the idea of a unified Europe. For this reason, we need to move all in one direction.
Within this context, we discussed all the steps that should be done. We discussed the steps together, but explained that in each step and expect a certain result. And I want to reiterate very clearly what it is that we expect.
That what we expect from Greece to implement all those which we have been promised. The words have been heard before. Now we need to follow the action. I hope the new government to move in this direction.
16.34 Spain's government said today that it has delayed by another week its plans to create a "bad bank". This is a fund that will pool much of the financial sector's soured property investments.
Deputy prime minister, Soraya Saenz de Santamaria, said the plan had initially been scheduled for approval at today's cabinet meeting; but, it will now be cleared at the next ministers' meeting on August 31.
Spain's troubled banks are laden with bad real estate loans and other investmentas following the collapse of the property market four years ago. Under the rescue package where Spain's lenders will be able access a loan of up to €100bn from the eurozone, Spain must create the "bad bank" to park these investments.
16.05 There's a little more detail about those market rumours this afternoon that Greek could temporarily exit the EMU, which commentators have given short shrift.
Marc Ostwald at Monument Securities was not won over. He said:
 A 'temporary' exit is the stuff of fantasy, not only because markets in their typical piranha like behavior will chase the next weak links, but also because a "temporary" exit will expose the same chain reaction links that an outright exit would, with the same painful consequences for all.
It is worth noting which countries are purported to 'back the German plan' and one might ask which one of these members might contemplate an exit from the Euro once a Greek precedent was set - Dutch elections likely to be key, the opposition socialists are riding high in polls and are unusually Euro-sceptic.
Merkel is now into a very high stakes "game of nations" play, above all in terms of there still being a colossally long run-in to next year's German federal elections, with the fall-out of this mooted plan being nigh on impossible to contain.
Comparisons to Helmut Schmidt's demise seem partially justified in terms of the internecine warfare in the current coalition, even if there is no Helmut Kohl type figure within the SPD, at least in popular terms.
15.00 Strategists at Bank of America-Merrill Lynch have published their thoughts on the Greek crisis, arguing that the "markets do not fully appreciate the challenges that Greece and the Troika are facing in the next few weeks". They outline the good and bad case scenarios:
The good case (baseline) scenario, for now
A successful conclusion of the review is our baseline scenario. Assuming Greece chooses to implement the required reforms, we believe that the Eurozone will be able to eventually address political constrains for increasing Greek funding once more. For the ongoing program review, the Eurozone governments can give their commitment to cover any funding gap looking forward. To ensure debt sustainability, the Eurozone could provide funds for bank recapitalization directly from the ESM, as they plan to do for Spain. In any case, the decision for the first review tranche will have to take place by early October, as the Greek government could soon run into liquidity problems. What happens after this review will again depend on program implementation.
The bad case scenario
Five things can go wrong in Greece in the next few weeks, in our view. The coalition government could fail to agree on the new austerity package. The Greek Parliament could fail to approve the proposed austerity package. Implementation problems could continue after Parliament approval. Social unrest could get out of control. And some Eurozone members could oppose further commitment to increase funding for Greece. We believe that Greece’s survival in the Eurozone could be at risk if any of these risks lead to a failure of the new program.
Merrill adds that it believes Greece needs more money. The bank calculates that taking into account factors such as the deteriorating growth outlook, Grece will need an additional haircut of at least €40bnto bring the debt path back to the targets set out in Greece's reform programme.
14.24 Yesterday's rumour was that Spanish bailout negotiations were underway. That was scotched today by Spain's deputy prime minister,who said that the country was not in talks with the eurozone over financial assistance to lower its borrowing costs:
The spokesman for Economic Affairs of the European Commission, in case there was any doubt, signalled that the Commission was not maintaining any negotiation with Spain beyond the aid to the banks.
There is no negotiation under way... The spokesman for economic affairs says it and I confirm it today.
14.13 There is talk on the markets this afternoon that the German finance ministry is mulling a temporary exit of Greece from the EMU. Market-watchers, however, are perplexed by such a suggestion:
14.04 All eyes are focused on Greece today, but Open Europe reminds us that there is plenty of action happening elsewhere in the eurozone. In particular, the think tank highlights:
According to a high-ranking official at the Portuguese Finance Ministry quoted by Jornal de Negócios, Portugal (the 'forgotten man' of the euro crisis) will not be able to meet the EU-mandated deficit target of 4.5% of GDP for this year unless new austerity measures are adopted.
The main reason seems to be the sharp fall in tax revenue: -3.6% during the first seven months of the year, as opposed to the 2.6% increase the Portuguese government was betting on for 2012. The alternative, the Portuguese press suggests, would be asking the EU-IMF-ECB Troika to relax the target. Boa sorte with that one, especially since in September we will hit the point where Portugal is within one year of being expected to return to the markets. Remember how the IMF's requirement for a country to be funded for twelve months played out in Greece...
13.28 Following Samaras' talks with Merkel, Jason Manolopoulos tweets that the Greek prime minister did not look particularly optimistic:
12.59 Commentators point out that Angela Merkel's position does not appear to have changed following her talks with Antonis Samaras, and she made clear that the talks with Mr Samaras were a good start, but there was much still to do.
The German chancellor repeated her line about how the crisis will not be solved with "one big bang". Does that mean it will end with a whimper instead, as those lines from TS Eliot's 'The Hollow Men' suggest? "This is the way the world ends/ Not with a bang but a whimper."
12.38 Antonis Samaras is evidently not impressed by talk of a Grexit:
12.31 Mr Samaras repeats his line about Greece needing more time to breathe and says that the country has not asked for more help.
12.29 Mrs Merkel says that she and Hollande are convinced that they must wait for that report from the troika before making decisions on Greece.
12.27 Antonis Samaras says that he is convinced the 'troika' report will show that the new Greek government will get quick results. He adds that Greece is reducing its budget deficit and the country just needs an opportunity to grow.
12.18 Mrs Merkel has said that after meeting the Greek prime minister, she's convinced that the country's government is doing all possible to solve its problems. She also wants Greece to stay in the eurozone and that Greece can expect from Germany that it won't make any premature judgements.
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