Coalition partners lash out at troika
“The troika’s demands are not structural reforms. They are aimed at razing Greek society, fueling the recession and increasing unemployment,” Kouvelis said. He added that the troika’s insistence on tough changes to labor laws “surpass the ability of Greeks to cope.” According to sources, Kouvelis had been prepared to approve all the measures in a 13.5-billion-euro austerity package but objected to the troika’s proposals for the immediate dismissal of 3,000 civil servants. PASOK leader Evangelos Venizelos meanwhile accused the troika of intentionally delaying negotiations, claiming that foreign creditors were “playing with fire, for Greece and for the eurozone as a whole.” Venizelos stressed that he would support the government but that “this must really be the last package” and not include “horizontal cuts.” The Socialist chief called on Prime Minister Antonis Samaras to seek to bypass the troika envoys and negotiate directly with his eurozone peers and the heads of Greece’s foreign creditors, including International Monetary Fund chief Christine Lagarde. Sources close to Venizelos stressed Tuesday that negotiations on the package of measures should not have been launched before a decision on Greece’s request for a two-year extension for fiscal adjustment and the resolution of the problem of how to reduce the country’s huge debt burden.
and....
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and.....
http://www.infowars.com/greece-is-not-poor-it-actually-has-massive-uptapped-reserves-of-gold-oil-and-natural-gas/
( Greece has to decide whether they will allow the Troika to loot their nation and be damned to vassal state existence - or revolt from the clear robbery in broad daylight.... )
Greece Is Not Poor – It Actually Has Massive Uptapped Reserves Of Gold, Oil And Natural Gas
It turns out that the poster child for the European debt crisis is not actually poor at all. In fact, the truth is that the nation of Greece is sitting on absolutely massive untapped reserves of gold, oil and natural gas. If the Greeks were to fully exploit the natural resources that are literally right under their feet, they would no longer have any debt problems. Fortunately, this recent economic crisis has spurred them to action and it is now being projected that Greece will be the number one gold producer in Europe by 2016.
In addition, Greece is now opening up exploration of their massive oil and natural gas deposits. Reportedly, Greece is sitting on hundreds of millions of barrels of oil and gigantic natural gas deposits that are worthtrillions of dollars. It is truly sad that Greece should be one of the wealthiest nations in all of Europe but instead the country is going through the worst economic depression that it has experienced in modern history. It is kind of like a homeless man that sleeps on the streets every night without realizing that a relative has left him an inheritance worth millions of dollars. Greece is not poor at all, and hopefully the people of Greece can learn the truth about all of this wealth and chart a course out of this current mess.
I have written extensively about the nightmarish economic conditions that Greece is experiencing right now. Just check out this article, this article and this article. Since the depression began in Greece, the Greek economy has contracted by more than 20 percent. In April 2010, the unemployment rate in Greece was only 11.8 percent. Since then it has skyrocketed to 25.1 percent.
The government debt to GDP ratio in Greece is projected to hit 198 percent this year, and there are persistent rumors that Greece will be forced to leave the euro.
But all of this is completely and totally unnecessary. Greece is not actually poor at all. In fact, after you account for untapped natural resources, Greece is actually one of the wealthiest nations in all of Europe.
According to Bloomberg, there is a massive amount of gold in Greece. This recent economic crisis has accelerated the approval of mining activity, and it is now being projected that Greece will soon be the number one gold producing country in all of Europe…
Gold mining is gathering momentum after Greece began what it called a “fast-track” approvals program. The Canadian and Australian companies said their projects will add about 425,000 ounces by 2016, worth $757 million at the Oct. 5 spot price, to the 16,000 ounces the country produced in 2011.“There’s clearly evidence that Greece has woken up to the potential of their mining industry,” said Jeremy Wrathall, chairman of Perth-based Glory Resources. “Politicians increasingly realize that a pro-mining stance is appropriate due to job creation potential.”Greece, which is also fast-tracking state property sales, is set to overtake Finland as the continent’s largest gold producer within four years, as regulators in Athens sign off on mines kept on hold for more than a decade by red tape and environmental rules.
But Greece doesn’t just have gold. Greece is also swimming in oil and natural gas. It turns out that Greece is sitting on the western edge of an absolutely mammoth sub-Mediterranean oil and gas field, and there are also huge deposits of oil and natural gas in the western parts of the country.
A Reuters article back in July discussed how foreign firms are now rushing to exploit these tremendous resources…
Greece has received eight bids by companies to search for oil and natural gas in three blocks in the western part of the country, the energy ministry said on Monday, as debt-laden Athens seeks to save money on energy imports.Greece, which produces almost no oil or natural gas, aims to develop potential hydrocarbon reserves as part of an effort to overhaul its economy and lessen dependence on energy imports.
So exactly how much oil and natural gas does Greece have?
The numbers that are being reported so far are staggering. The following comes from a Greek news source…
Until now the offers for hydrocarbon exploration have concerned three blocks: The first is in the Gulf of Patra, the second off the coast of Katakolo — both in Western Greece — and the third at Ioannina, northwestern Greece.Early estimates suggest that the Gulf of Patra may have 200 million barrels of crude oil, and that there are another 80 million at Ioannina and nearly 3 million off the coast of Katokolo.Furthermore, according to the United States Geological Survey, in the sea between Crete, Cyprus, Israel and Egypt, there are about 15 trillion cubic meters of natural gas and oil just waiting to be extracted.
The truth is that Greece has enough oil and natural gas to be able to pay off all of their debts. The value of the natural gas that they are sitting on alone has been estimated to be worth trillions of dollars. The following is from an article earlier this year by F. William Engdahl…
In December 2010, as it seemed the Greek crisis might still be resolved without the by-now huge bailouts or privatizations, Greece’s Energy Ministry formed a special group of experts to research the prospects for oil and gas in Greek waters. Greece’s Energean Oil & Gas began increased investment into drilling in the offshore waters after a successful smaller oil discovery in 2009. Major geological surveys were made. Preliminary estimates now are that total offshore oil in Greek waters exceeds 22 billion barrels in the Ionian Sea off western Greece and some 4 billion barrels in the northern Aegean Sea. [1]
The southern Aegean Sea and Cretan Sea are yet to be explored, so the numbers could be significantly higher. An earlier Greek National Council for Energy Policy report stated that “Greece is one of the least explored countries in Europe regarding hydrocarbon (oil and gas-w.e.) potentials.” [2] According to one Greek analyst, Aristotle Vassilakis, “surveys already done that have measured the amount of natural gas estimate it to reach some nine trillion dollars.” [3] Even if only a fraction of that is available, it would transform the finances of Greece and the entire region.Tulane University oil expert David Hynes told an audience in Athens recently that Greece could potentially solve its entire public debt crisis through development of its new-found gas and oil. He conservatively estimates that exploitation of the reserves already discovered could bring the country more than €302 billion over 25 years.So unlike several other nations in Europe, things actually look quite promising for Greece in the years ahead if they manage their resources correctly and don’t let foreigners come in and steal all of their wealth.And perhaps this is why there is such hesitation to boot Greece out of the EU. It seems probable that many of the top politicians in Europe know about all of this gold, oil and natural gas that Greece is sitting on.Hopefully the people of Greece will learn about this massive amount of wealth that is just under their feet. If they can figure out a way to get this wealth to start to flow into the hands of the people of Greece, a lot of their problems could be solved rather quickly and they could start to experience a massive economic turnaround.
and....
Moody's Refuses To Junk Spain Ahead Of US Election, Reaffirms Baa3 Rating - Full Text
Submitted by Tyler Durden on 10/16/2012 - 17:18Baseline Scenario Bond Budget Deficit Capital Markets Credit Line Debt Ceiling ETCEuropean Central Bank Fail Financial Regulation Greece Gross Domestic ProductInternational Monetary Fund Rating Agency ratings recovery Tim GeithnerUnemployment Volatility
For those who are curious why Tim Geithner has been invisible in the past 2 months, the answer is he has been manning the phones like a true patriot, and making sure nobody dares to rock the European boat ahead of the US election (as was already disclosed), in this case exemplified by Moody's just released announcement that the rating agency will not downgrade Spain to junk, soaring debt, collapsing GDP and laughable unemployment rate notwithstanding (unless of course the ECB fails in its mission to scare all shorts from approaching within 10 miles of an SPGB, and Spain loses private market access again, in which case Moody's would proceed with a "multiple notch downgrade"). At least not until the US election that is. After that... well, with the fiscal cliff, debt ceiling, Greece vs Troika, etc, etc, buy VIX.
and.....
http://www.zerohedge.com/news/2012-10-16/spain-bailout-lite-rumor-rejected
Spain Bailout Lite Rumor Rejected
First the Greek Troika fiasco, and now the only reason stocks had to ramp today, just got rejected:
- SENIOR GERMAN LAWMAKER SAYS MEDIA REPORT ON SPAIN APPLYING FOR PRECAUTIONARY CREDIT LINE "OVER-INTERPRETED" HIS COMMENTS
- SENIOR GERMAN LAWMAKER SAYS WAS NOT REFERRING TO SPAIN IN HIS COMMENTS TO BLOOMBERG
Watch Simon Potter the market completely ignore this rejection of the catalyst for today's spike and continue levtiating higher as Liberty 33 continues doing what it does best: expanding credit multiples, even as it destroys cash flows.
and.......
http://www.zerohedge.com/news/2012-10-16/greek-troika-talks-end-abruptly-following-complete-disagreement
Greek Troika Talks End Abruptly Following "Complete Disagreement"
What the Spanish rumor of a bailout lite (as a reminder, the full blown Spanish bailout has already been largely priced in, and today's action is a very confused market pricing in a second, bailout-lite) giveth, Greece taketh away.
From ANA via From Bloomberg:
A second meeting between the heads of the EU-IMF troika mission in Athens and Greek Labour Minister Yiannis Vroutsis on Tuesday afternoon ended abruptly a few minutes ago, after the two sides hit deadlock for the second time in the same day.Sources in the labour ministry cited "complete disagreement" between the two sides on the issue of three-year wage maturation periods. They said that the labour ministry had been prepared to continue the talks but the representatives of Greece's creditors had departed.
MSM spin on how this is bullish, and worth at least another 10 ES points (because the one thing that will force Congress to compromise on a Fiscal Cliff is the S&P at all time highs... /sarc) due imminently.
http://www.zerohedge.com/news/2012-10-16/germany-open-mini-spanish-bailout-ball-rajoys-court-now
Germany Open To Mini Spanish Bailout, Ball In Rajoy's Court Now
Curious why the EURUSD has taken off like a stung dog again? The same reason as always: posturing out of Germany that contrary to previous Reuters misreports, it actually is happy with Spain doing a mini-bailout. To wit:
- GERMANY OPEN TO PRECAUTIONARY CREDIT FOR SPAIN, LAWMAKERS SAY
And now the ball is back in Rajoy's court, as Spain will have no choice but to implement this mini-bailout, which is not the full ESM rescue package, but will allow the ECB to buy piecemeal Spanish debt (as opposed to merely dangling the threat it will do so). The bad news is that like QEternity, the open-endedness of the ECB threat to monetize Spanish debt is far more powerful than the actual process. Furthermore, the entire Spanish bailout, not just the partial one, has already been long priced in in its bonds. In other words, this is nothing but posturing, but one meant to push Spain ever closer to requesting not only a small bailout request (one which would not allow the ESM to monetize Spanish debt in the primary market, but will allow ECB to buy Spanish bonds in the secondary market), but a full blown one. Finally, never forget that to Germany this is all a process geared for one simple thing: keeping Europe's biggest and most relatively undercapitalized bank - Deutsche Bank - afloat. If this means rescuing it via the guise of Spain, so be it.
http://www.zerohedge.com/news/2012-10-16/overnight-sentiment-pre-european-summity
Overnight Sentiment: Pre-European Summity
- Bond
- Borrowing Costs
- Credit Line
- European Central Bank
- Eurozone
- fixed
- Germany
- Greece
- headlines
- Italy
- Jim Reid
- Market Sentiment
- Nikkei
- NIM
- Reuters
- SocGen
- Unemployment
If yesterday it was Greece that the market was once again inexplicably enthused about, today it is Spain's turn, which is once again in the open-ended action crosshairs, following an unsourced (are there any other kind these days?) report by the FT, saying the country with the 25% unemployment is prepared for an imminent bailout request (contrary to a previous report by Reuters saying the ETA on this is November). That these are simply more bureaucratic tests to gauge the market's response is by now known to all - the truth is nobody knows what happens even if Spain finally requests a (long overdue and priced in) rescue. Because even with bond yields briefly sliding, they will only ramp right back up, even as the Spanish economic deterioration continues. But that bridge will be crossed only when Rajoy is prepared to hand in his resignation together with a signed MOU to a Troika boarding commission. In other news, Spain sold €3.4 billion in 1 year Bills at a yield of 2.823% compared to 2.835% last, and €1.46 billion in 18 month Bills at a yield of 3.022% versus 3.072% last. Since both of these are within the LTRO's maturity (whose 1 year anniversary, and potential partial repayments, is coming fast in January) the bond was a token exercise in optics. Elsewhere, German ZEW Economic Sentiment rose more than expected from -18.2 to -11.5 on expectations of a -14.9 print, despite the ZEW's Dick summarizing the current Eurozone situation simply as "bad", and adding that "downward risks are more pronounced than upward." Confirming his fears was a government official sited by Bild who said that 2013 growth has been reduced from 1.6% to 1.0%. In all this newsflow, the EURUSD has quietly managed to do its usual early am levitation, and was at overnight highs of 1.3015 at last check.
In other beggars can be choosers news, Spain, which has yet to take the action which the market gave it credit for 3 months ago, is urging Europe to hurry up and make its temporary non-bailout, permanent by endorsing a banking and fiscal union. To wit, and just like in June, Spain calls for EU leaders to work on an “ambitious” calendar to move towards banking and fiscal union at a summit in Brussels on Oct. 18-19. Spain proposes three phases to achieve fiscal union in short term, starting with common bills issuance. Spain says banking union must be achieved in short term. Spanish proposals were distributed to reporters by prime minister’s office in Madrid according to Bloomberg. In other words, Spain is itching for Germany to onboard Spanish fiscal risk indefinitely and asap... and of course to fund all future Spanish capital shortfalls using consolidated debt issuance.
A more complete recap from DB's Jim Reid:
Market sentiment remains supportive overnight and perhaps further bolstered by a FT story which suggested that the Spanish government is prepared to make a rescue request that would trigger ECB’s OMT program. However the issue is being delayed by external factors such as the way it would influence other countries like Italy. According to the FT article, which was published after the US close, European officials are said to be divided over the impact of such a Spanish move would be for Italy. Some argue it would reduce Italy’s borrowing costs and others believing the market would immediately force Rome to request similar assistance. A senior official within the Spanish ministry of economy was quoted as to having said that the country did not require any ESM funding but would be comfortable making a request for a credit line only in order to satisfy the conditions of the ECB to begin buying bonds. This article follows a statement from the Mexican President yesterday, who said after his meeting with Rajoy that the Spanish PM “is confident” of securing an appropriate deal with EU partners so that the country can officially request aid.
Recapping the overnight moves here the KOSPI and ASX200 up +0.7% and +0.3% respectively as well as most of the equity benchmarks in Asia. The Nikkei is outperforming the region (+1.3%) helped by Softbank Corp’s (+10%) announcement to buy a majority stake in US mobile operator Sprint. Credit spreads are also rallying tighter in Asia as technicals remain extremely favourable.
The Asia IG is 1-2bp tighter on the day and new IG deals are generally trading inside re-offer levels. In other developments S&P downgraded 11 Spanish banks, which shouldn’t come as a surprise following the rating agency's double-notch downgrade of the sovereign rating last week.
Back to Citi’s Q3 results the group posted earnings and revenues which were 8% and 4% above Bloomberg consensus respectively. Our equity analyst noted that the result saw upside from strong fixed income trading and higher net interest income. FICC trading rose 31% qoq while NIM rose 5bps. The latter was reassuring in the context of concerns about shrinking NIMs post-Wells Fargo’s results the prior day. Citigroup’s shares finished up 5.5%.
On the data front, September retail sales were much stronger than expected (headline +1.1%mom vs 0.7% expected), particularly given that July and August numbers were both revised upwards.
Speaking of the elections a lot will be at stake in the second US presidential debate today (starts 9pm US EST). Indeed after a strong showing from the Republican leader in the first round latest data shows that Obama and Romney are running neck and neck in the opinion polls. Today’s debate will be a townhall format where the audience are allowed ask question which should make it a very interesting event.
Away from politics, yesterday was a pretty active day for Fedspeak. Dudley reiterated his dovish stance and noted that the Fed’s current stance will remain accommodative “for quite some time”. Speaking overnight, the Fed’s William made similar comments. Dudley also added that he was concerned that the “concentration of mortgage origination volumes at a few key financial institutions” meant that low interest rates were not being passed to borrowers. Bullard, a non-voter, was less dovish, saying that growth will pick up to 3.5% next year and unemployment will fall to 7% and current policy settings will be outcome- based. Lacker reiterated his opposition to QE3, saying that job market weakness in Q2 was only temporary. Gold fell 1% yesterday and in what was the precious metal’s biggest one day decline since July.
It was a relatively quiet session for European markets yesterday. Spanish 10yr bond yields rose 19bps yesterday to 5.82%, reversing all of the gains towards the end of last week. In Greece, PM Samaras said that he expects to reach a deal with the Troika before the Thursday’s EU summit in Brussels. A Greek finance ministry official said that the next tranche of bailout cash will be disbursed by November 15. The statements were echoed by the EU's Olli Rehn who commented that he expects a deal to be reached in the coming days. In contrast, reports from the Ekathimerini suggested that an agreement between Greece and the troika remains some distance away. In other news headlines, the ESM has started buying short-dated SSA paper a week after its inauguration.
And here, from SocGen, is what key events to look out for today:
Outlook
The financial markets started the week on an uncertain note again: at the beginning of last week the Eurogroup meeting closed having reached no conclusions. Will we see the same from the EU summit opening Thursday? We do not expect any advances on Greece: the Minister of Finance yesterday stated that it would be difficult to reach an agreement by Thursday and that an extraordinary summit would likely be required at end-October. In early October the Troika requested Greece review the budget restrictions it is to implement to cover its 2013 and 2014 financing needs, and to apply the 89 measures agreed in March, notably regarding the job market and privatisation programmes. Thus, developments are unlikely on this front. Mr Rajoy remains silent in Spain. Lastly, the long-term budget and banking projects must be addressed: convergence will take time. We note that the October 2011 EU summit, which had addressed Greek PSI for the second bail-out, EFSF leverage and European banking, had been well received by the markets. At the time, the EUR/USD had risen from 1.38 to 1.4228 in two sessions, but had just as quickly reversed as many questions were left unanswered. We remain prudent regarding the outcome of the 2012 meeting and want to see more than announcements before exulting. We find nothing promising in yesterday's draft that has circulated. The news saying that Spain would be ready to ask for a bailout was risk-positive this morning. Let's hope that facts will follow. News flow will be rich today. However, it is unlikely to challenge current market trends.
and......
http://www.guardian.co.uk/business/2012/oct/16/eurozone-crisis-car-sales-spain-greece
( Spain still scheming as to how to game the bailout request... )
SPAIN BELIEVES BAILOUT REQUEST WOULD SEND SHARES SOARING
Spanish officials believe a bailout request would spark euphoria in the markets, with Madrid's stock market shooting up by some 15% the next day and 1.5 percentage points immediately knocked off Spain's borrowing costs.
That would bring the yield on 10-year bonds down to a manageable 4% and, by some estimates, save Spain €9bn a year (or almost 1% of GDP).
That's another key line out of last night's briefing with international media in Spain (see 8.59am). Our Spain correspondent, Giles Tremlett, explains:
More importantly, a senior Madrid official insisted, Spain's request – and its acceptance by the finance ministers of the eurozone - would finally signal to markets that the euro was irreversible.In an ideal scenario, Spain would not even take any money from the credit line offered to it in the soft bailout. The credit line might turn out to be “virtual”, the senior official said, and simply act as a trigger for European Central Bank (ECB) intervention to push borrowing costs down. That would allow Spain to continue funding its deficit and debt on the markets instead.A bailout request might even mean the ECB would not need to buy any Spanish debt, the official said, if markets responded by automatically lowering bond yields to a level that did not require support.
If the scenario is that rosy, why not ask for the bailout immediately? Officials claim the fear is of a “no” to the request, led by Germany. That would provoke immediate disaster, they insisted, with the euro dead by the next morning.By that argument, however, Germany's hand could easily be forced. But the senior official insisted Spain did not want to take risks with “an atomic bomb”.Giles adds that the suspicion still remains that political calculations are a major player – with Spain wanting to wait until after this Sunday's regional elections in Galicia.And, as we flagged up earlier, Spain also hopes the IMF would be involved in setting the bailout conditions, leading to its deficit targets and austerity being eased.As Giles explains:Spain, in short, is still haggling so that it can avoid the death spiral suffered by bailed-out eurozone countries such as neighbouring Portugal. “I think the EU is realising that it has made a mistake in previous programmes,” the official said.
http://www.telegraph.co.uk/finance/debt-crisis-live/9611099/Debt-crisis-live.html
10.54 S&P cut the credit rating on a bunch of Spanish banks this morning, but there are also reports that the sovereign rating will be cut later by Moody's...
10.21 Good news for Spain this morning: it shifted €4.9bn in year-long and 18-month bonds at slightly lower rates. Yields on 12-month debt were 2.82pc, and 3pc on 18-month bonds. The country's borrowing costs are edging down.
09.30 UK inflation (CPI) data is just out, showing that the rate dropped from 2.5pc last month to 2.2pc in September.
09.19 EU car sales figures (a good indicator of economic health) for September are out this morning. It's not good news: last month was the 12th consecutive fall. Demand across the 27 countries was off 10.8pc from the same month last year, with only 1.13m new registrations. However, the UK market grew 8.2pc year-on-year.
09.11 Spain's finance ministry held a press briefing last night and said that a decision on requesting a bail-out is not imminent. We reported yesterday morning that the country could ask for financial aid from the eurozone next month. The wait continues...
08.59 So, we've touched on Portugal and France this morning, now to Greece: Angela Merkel yesterday ruled out letting the debt-laden country default on its debt.
Her statement is being taken as the latest sign that Germany is softening its stance on Greece, ahead of a report from the troika on its efforts to hit austerity targets demanded as conditions of its bail-out.
And it looks as though that change of attitude will come just in time for Greece, which admitted yesterday that it was unlikely to be able to deliver the next €13.5bn in spending cuts which it needed to secure a further €31.5bn in bail-out cash. Without it the country will go bankrupt at the end of November.
08.51 France's business federation has warned that the country is sliding into a grave economic crisis and risks a full-blown “hurricane” asinvestors flee rocketing tax rates. Laurence Parisot, head of employers’ group MEDEF, said:
The situation is very serious. Some business leaders are in a state of quasi-panic. The pace of bankruptcies has accelerated over the summer. We are seeing a general loss of confidence by investors. Large foreign investors are shunning France altogether. It’s becoming really dramatic.
08.39 The German government including Angela Merkel sees David Cameron and the British as standing on the sidelines of Europe and heckling, just like Muppets characters Statler and Waldorf, claims Der Spiegel.
The magazine said the German Chancellor saw "a Europe in which the British are at best spectators in the gallery, like Statler and Waldorf, the two old men on The Muppet Show." Charming.
08.32 Portugal unveiled its 2013 budget yesterday, bringing further austerity measures demanded as conditions for its €78bn bail-out package. Here are some of the key facts and figures:
• Income tax will rise from 9.8pc to 11.8pc
• The budget deficit will be 4.5pc of GDP
• Spending cuts worth €2.7bn will be enacted next year, partly by laying off 2pc of the country's 600,000 public employees
Opposition Socialists called the budget a "fiscal atomic bomb" and 2,000 protesters gathered outside parliament last night. Finance Minister Vitor Gaspar said the budget - one of the most harsh in Portugal's history - was necessary to meet the country's bail-out targets:
We have no room for manoeuvre. Asking for more time would lead us to a dictatorship of debt and to failure.
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