http://www.zerohedge.com/news/2012-10-25/great-victory-windmills
A Great Victory For Windmills
Via Mark J. Grant, author of Out of the Box,
“A hangover is when you open your eyes in the morning and wish you hadn't.”
-Andy Capp
There are two countries that are going to give you a whopper of a headache in the coming months. I am leaving Greece to the side for a moment because that country could provide a heart attack and necessitate bypass surgery as the Troika fiddles while Athens burns. I am just waiting to see what is agreed to for Greece and then how the citizens of that country respond but the home of Democracy is not the only place that could ratchet out of control; keep your eyes on Spain and France. Yes, France, while no one has paid particular attention to the antics in Paris and Monsieur Hollande scurries about siding with the troubled nations and advocating a 75% tax burden and leaving Berlin to wallow in schemes of their own making; they are on the verge of getting in real trouble.
“It is better to open your eyes and say you don't understand, than to close your eyes and say you don't believe.”
-The Wizard
Spain-The Fighting with the Windmills Continues
They have announced that they are going to build their “bad bank” based upon the findings of Oliver Wyman’s stress tests. What we find here is garbage in---garbage out---and a bad bank built upon the garbage dump they have created. Oliver Wyman verified nothing, audited nothing and was paid to sit idly by and accept the data provided by the Spanish banks and the government of Spain. It is good work if you can get it. Then they took the rubbish and constructed complicated economic models based upon them and presented them to the world as factual. What we actually have here is a fairy tale created by the Hermanos Grimm; and the end of the fairytale will be grim indeed if you rely upon their findings. I recall Prime Minister Rajoy’s “A great victory for Europe speech” and I state that the last time Europe had such a victory it was at Waterloo!
Part of the Oliver Wyman presentation touted Spain’s largest bank by assets, Santander, as the unshaken citadel in Madrid. What do we find this morning;profits down 94%, soured earning in the U.K. and Latin America and Real Estate loans that were written down to 65%; or so they claim. I will bet any of you that to achieve even this number that they counted the banos, multiplied them by the empanadas consumed and factored in the rise in the herds of their suckling pigs. Now with property in Spain worth an average of about 40% of what it had been this leaves another 25% to go except that Spain and Oliver Wyman have pulled the usual Southern European trick of informing us that because prices will be higher later that we do not need to worry about the current levels as assets are double booked, contingent liabilities are not counted and Don Quixote has taken over the Parliament once again. If there is an honest politician in Spain he should give a speech; “A great victory for the Windmills.” I would applaud that one!
They say that beauty is in the eye of the beholder, and in my eyes, the finances of Spain are one ugly mess of spoiled tapas.
Spain is facing several regions that may want to secede. They have regional debt that is fifty percent of the nation. Regional governments have now lined up asking for assistance which is more than the total the national government has offered. The EU is trying to force Spain to convert the preference shares of the troubled banks into common stock. The economy in Spain is a sinkhole, their unemployment is the highest in Europe and Germany says they don’t need money because handing capital to Spain has all of the popularity in Germany of handing your soul to the Devil in some Faustian novel. My good friend, Otto Waalkes, is one of the most famous comedians in Germany but I am not sure if even he could get a smile out of Berlin on this matter. Yields are down on Spanish sovereign debt as a result of Mr. Draghi’s “I will save the world” speech but the debt markets are largely closed to the regional borrowersand the municipal borrowers in Spain and the amount of total debt keeps increasing which overtakes the drop in yield by a wide margin. The “Masquerading in Madrid” continues but the time is coming soon when the masks will be removed as Spain is forced into the long line of alms seeking countries.
France---Dancing with Robespierre
Here is the second largest economy in Europe. The land of fashion, elegant cuisine, marvelous wines and an unending supply of Champagne; if you can afford it. However a little investigation reveals that there are little green bugs in the vineyards. France Telecom slashes their dividend this morning. The country decides to back the loans of Peugeot which brings their total loan guarantees to $78 billion which is a figure that is only partially accurate as their assumption of part of the obligations of Dexia could result in a number that is multiples of what is currently known because of the derivatives and guarantees of Dexia that no one, and I mean no one, wants to expose to the public or admit in any manner. It is like so much in Europe these days, brushed under French tapestry until the rot comes bubbling out and infects all of the jovial guests that are meandering around with their 1966 Chateau Lafayette Rothschild in hand.
“If you wish to be a success in the world, promise everything, deliver nothing.”
-Napoleon Bonaparte
Apparently Europe has taken his words to heart.
and...
http://www.zerohedge.com/news/2012-10-25/sovereign-self-interest-versus-european-hegemony
Sovereign Self-Interest Versus European Hegemony
- Bond
- ETC
- European Central Bank
- France
- Germany
- Greece
- International Monetary Fund
- Market Share
- Recession
- Sovereigns
- Volkswagen
Blain's Morning Porridge, via Mint,
“Markets can remain irrational longer than we can remain solvent… “
There were moments yesterday when it felt we stood at the edge of the abyss preparing to take a giant leap forwards.The morning’s fears were palatable –the lack of market direction and escalating concerns setting us up for a tumultuous slide. By the afternoon everything rosy again! Despite miserable German confidence numbers the feared sell-off has not developed. Fear is still there tho! Fed keeping long term rates low should not be a surprise. In Europe, we’re watching how the news flow develops.
Spain – more of the same. Will they, wont they take the OMT bailout? Rumours this morning say a limited Euro 60 bln is being discussed for the banks and regions, but who knows. Spain has completed 2012 funding – so what’s the rush or the need asks the Spain DMO? Perhaps Spain signing up for reasons of “prudency” could provide the market with the kind of leg up it needs to rejuvenate the rally?
Greece is being touted as a crisis averted.If you believe all the guff from yesterday’s list of items on which there is apparent agreement: labour reforms, privatisation, new loans, etc. I shall say it quietly… we’ve heard it all before. Greece is not solved. Just delayed. Germany saying its waiting for Troika report and IMF considering outstanding issues sounds like noise designed for domestic electoral consumption. It’s quite clear Europe is not going to let Greece go – so it’s a question of paying the minimum to keep them in the family photographs.
Apparently Draghi did a great job meeting German legislators yesterday – persuading them that far from bailing out profligate southern spendthrifts, the ECB is acting in German’s best interest by protecting them as Europe’s largest creditor. High circus I’m told! I can just imagine him as snake oil salesman.. or worse.. a bond broker! After all.. didn’t he work for…
However, it does feel the crisis is developing in some new directions. Until recently it’s been about sovereigns and banks – but now we’re seeing corporates struggle. That’s a new dimension when corporate credit spreads are so tight, but names from Peugeot, Iberdrolla, Telefonica, Nokia are now France Telecom all have doubts notched against them. S&P’s warning of further Sovereign and Corporate downgrades to come summed up the mood. As we said yesterday – global recession is a fact and its bound to increasingly impact markets. I suspect a fair amount of the new corporate supply launched over the last 2 month new Issue feeding frenzy could end up back in circulation – we’re seeing it already!
Changing tack for a moment, I’ve not seen that much critical comment on the recent French bank bailouts – they seem to have been pushed under the carpet. But they have important implications for the basis of the Europe crisis.
There is a general consensus France had no choice but the bailout Peugeot’s finance arm PSA. Auto manufacturing is a critical part of the French State’s Industrial-Complex in terms of employment, and without a financing arm it’s questionable if it could remain so. As it is, French auto’s account for a tiny proportion of global auto demand. So compare and contrast French Auto Inc with Volkswagen.
Volkswagen managed to flog 7 mm new cars between Jan – Sept making Euro 145 bln in sales with 80% outside Germany. In the same period Peugeot managed to put only 2mm jalopys on the roads making 45 bln in sales. Moreover while VW is watching profits soar (up 40% this year, and its increased global market share to 12%... well when was the last time your neighbour showed off his new French car? And watch what happens when VW launches its new Golf in a few weeks time. Euro 200 bln in 2013 sales looks nailed on. I aint hearing similar Va Va Voom numbers…
So why are the problems of the French car industry so important for the Euro? If French industrial policy is founded on preserving the country’s manufacturing base is that really something German/Finish/Dutch taxpayers could have been bailing out through a single European banking union. Perhaps not! From this perspective there is little difference in making political decisions to allow hairdressers to retire at 50 and political decisions to preserve manufacturing capacity to placate unions. These are national choices that illustrate sovereign self interest not European hegemony. I simply ask the question how is Europe supposed to move towards closer Union when national interest remains paramount?
and....
http://hat4uk.wordpress.com/2012/10/25/spanish-banks-slog-vindicated-as-santander-releases-disastrous-results/
SPANISH BANKS: Slog vindicated as Santander releases disastrous results.
Five weeks ago The Slog opined that ‘Spain’s banking instability is as important as its poor sovereign access to the bond markets’. Over the last ten days, rumours have been circulating about the fortunes (or more accurately, misfortunes) of the giant Santander Bank. I have to date been unable to stand any of them up, but this morning around 6 am, Banco Santander SA’s third-quarter results displayed a 94% profits tumblefor all to see.
Santander is the eurozone’s biggest bank by some distance. It’s Q3 net profit picture, however, is grisly in the extreme: it was decomated from €1.8 billion a year ago to €100 million now. As I also pointed out in September, it is the Caja (property) disaster in Spain that remains hidden, fudged or just plain misreported: Santander blamed higher than expected property provision in the home country.
Analysts were projecting results of around €1.23 billion, which just goes to show how much notice one should take of the average analyst. Certainly, the Slog’s two main Madrid sources saw this coming a mile off.
So, I might add, did Berlin….whose exposure to all this is also rather more than Geli and Wolfie are suggesting. Stay tuned, this is a building story that will accelerate before too long.
PS After a small ten bucks rally, gold is levelling out again at $1714.30 this morning. Keep an eye on it’s progress below $1700.
http://www.businessweek.com/news/2012-10-24/ecb-said-to-push-spain-s-bankia-to-swap-junior-debt-for-shares
European authorities are pushing Bankia group to impose losses on junior debt holders as Spain purges a banking system clogged with about 180 billion euros ($234 billion) of bad real estate assets, people familiar with the talks said.
The European Central Bank and European Commission want investors including holders of preference shares to swap their securities for new stock to reduce the cost to the taxpayer, according to two people who asked not to be named because the discussions are private. Profit at Banco Santander SA (SAN), Spain’s biggest lender, slumped in the first nine months as it took a 14.5 billion-euro charge on real estate losses.
Confronting the toxic legacy of Spain’s 10-year building boom is imposing political costs on Prime Minister Mariano Rajoy as he faces protests on the streets of Madrid, a separatist challenge in Catalonia and a battle to avoid a full bailout. His European partners are complicating the task as they blanche at putting capital on the line to backstop Spanish lenders.
“They are dragging their feet because there are still question marks over where the money comes from to plug the gaps,” said Olly Burrows, a London-based credit analyst at Rabobank International. “Regardless of whether or not there is a bailout of Spain, we need to clean up the banking system.”
Bonds Fall
Banco Financiero y de Ahorros SA’s 372.25 million euros of subordinated floating-rate notes due October 2016 fell by more than 7 percent overnight. The securities opened at 21 cents on the euro, compared with 22.6 yesterday, and were at 22.25 as of 1:28 p.m. in Madrid, according to Bloomberg generic prices.
The yield on Spain’s 10-year government bond dropped two basis points to 5.55 percent, after exceeding 7.75 percent in July.
European policy makers, who are still to make the first payment of a 100 billion-euro bank rescue agreed in June, insist Rajoy can’t use public money to rescue retail investors who bought preferred shares as part of publicity drives by banks.
German Chancellor Angela Merkel placed new hurdles in Rajoy’s path at a European Union summit in Brussels last week when she said that any bailout loans disbursed before the bloc completes a banking union will stay on the Spanish government’s balance sheet.
Rajoy Stymied
That ties the sovereign more tightly to its ailing banking system, dashing Rajoy’s plans to transfer bailout loans to the EU rescue fund once the banking union starts. Merkel also damped expectations that the bloc will meet its deadline to bring together lenders under a single supervisor by the start of next year as AAA rated sovereigns in northern Europe backed away from a pledge made in June.
“The problem is the decisions are not being made in Spain,” Burrows added. “There’s stalling on the European level.”
The strictures the EU is imposing on Spain’s banking clean- up make it harder for the government to rebuild Bankia (BKIA), which was nationalized in June, by forcing losses on some of its best retail clients. Economy Minister Luis de Guindos has said in Parliament in Madrid that banks should never have sold preferred shares to individual investors.
Sharing Burden
Under EU rules, junior bondholders must share the burden of rescuing lenders to reduce the cost to taxpayers and the exercise typically involves exchanging the notes for cash or new securities at a discounted value.
In a fresh sign of the weakness in Spanish banks, Santander saw net income drop to 100 million euros in the third quarter from 1.8 billion euros a year earlier as it pushed on with the process of recognizing its real estate losses. The bank, which runs retail operations across Europe and the Americas, said the process of purging its balance sheet of real estate losses ordered by de Guindos is 90 percent complete.
Banco Sabadell SA, Spain’s no. 5 bank, said today that bad loans rose to 8.5 percent of its portfolio in the third quarter from 5.7 percent a year ago.
Santander Chief Executive Officer Alfredo Saenz added his voice to those urging Rajoy to trigger ECB bond-buying by asking for financial help from the EU rescue fund.
“It seems clear that it would reduce the risk premium for the sovereign and reduce the spreads that the most important Spanish banks pay,” Saenz said on a call with analysts today.
Toxic Warehouse
Santander’s 1 billion euros of 4 percent senior bonds due 2017 trade at 318 basis points above the mid-swaps rate, a benchmark for fixed-rate debt, according to Bloomberg prices. That compares with the 250 basis-point yield spread the lender paid when it issued the notes in March.
Officials in Madrid are working on plans to fund a bad bank to warehouse toxic assets from lenders bailed out by the government. The EU demanded that as a condition of the bank rescue package and Rajoy, who has until the end of November to establish the bad bank, has said it won’t end up costing taxpayers.
De Guindos, who changed legislation to limit future sales of preference shares to retail clients after Bankia’s collapse, has said the government is seeking a solution for the bank’s investors. EU Competition Commissioner Joaquin Almunia said in June that Spain could use budget revenue to compensate them.
Spokesmen for the ECB and the Spanish Economy Ministry declined to comment yesterday. Antoine Colombani, an EU spokesman, said the terms of Bankia’s restructuring are being discussed with Spanish authorities. A spokesman for Bankia also declined to comment.
and.....
http://www.businessweek.com/news/2012-10-24/spain-s-bad-bank-seen-as-too-big-to-work-mortgages
Spain’s bad bank will struggle to sell the 90 billion euros ($117 billion) of toxic property assets it takes from other lenders because of its size and inability to help buyers finance purchases.
“When managing tens of thousands of assets scattered across the whole of Spain, big is not beautiful, it’s sheer chaos,” said Mikel Echavarren, chairman of Irea, a Madrid-based financial adviser. A large, “clumsy” bad bank will be at a “tremendous” disadvantage and will generate losses that Spaniards will have to pay for.
The country has until the end of next month to establish the institution, a condition for receiving 100 billion euros of external aid for the financial system it requested in June. Premier Mariano Rajoy’s government seeks to purge about 180 billion euros of that the Bank of Spain says are on the balance sheets of lenders. The government has said the bank will be profitable and won’t cost taxpayers.
The bad bank will not take deposits and so won’t be able to provide financing to potential buyers of its assets, Antonio Carrascosa, director general of the state run FROB bank-rescue fund, said in an Oct. 18 interview at a Barcelona conference.
The aim is to place soured real estate loans and other assets in the vehicle for as long as 15 years in the hope that, once cleansed of bad property bets, banks can resume lending and reactivate an economy mired in its second recession since 2009. The bad bank will have to compete with healthier lenders that have set up units to sell their own problem assets and can provide credit, known as vendor financing, to potential buyers.
Financing Agreements
“It won’t be a bank and the only way it may be able to achieve sales with attractive mortgages is by reaching financing agreements with other banks, which will be competing to deleverage their own real estate,” said Fernando Acuna Ruiz, managing partner of Taurus Iberica Asset Management in Madrid.
Acuna, whose company oversees 60,000 foreclosed properties on behalf of 25 banks, said that while the structuring will be in place by December, it will be “mammoth,” with tens of thousands of assets and loans to service and transfer onto its books. “Integrated management won’t be up and running for 12 to 24 months after,” he said.
Known by its Spanish acronym SAREB, it will have as much as 90 billion euros of assets based on their transfer price, initially comprising land, developer loans and residential units that went bad after Spain’s decade-long real estate boom turned to bust, an Economy Ministry official who spoke on condition of anonymity told reporters on Oct. 17.
Transfer Valuations
The Bank of Spain has yet to fix transfer valuations for the assets based on the stress tests of Spanish lenders carried out by management consultants Oliver Wyman and published on Sept. 28. The 90 billion-euro number is based on transfer prices, so the original value of the assets is likely to be higher.
In comparison, Ireland’s National Asset Management Agency, set up in 2009, spent 32 billion euros on mortgages with a face value of 74 billion euros to cleanse its banking system.
Lenders that take state aid will have to transfer to the bad bank foreclosed property of more than 100,000 euros, real estate and builder loans of more than 250,000 euros and controlling stakes in property firms, according to the Economy Ministry official. A decree to regulate the entity should be passed on Nov. 16. It may be amplified in the future to include loans to consumers, small- and medium-sized enterprises and retail mortgages.
‘Consume Capital’
“It will need a legion of lawyers, notaries and debt servicers to ensure properties and loans have no legal issues and change title documents,” Echavarren said by telephone. “By the time they find out what and where the assets are, they won’t have any idea of what they have and what to do with it for at least a year.”
The vehicle won’t have the resources to manage assets, which are like “livestock that consume capital,” he said. Holding the assets cost money in taxes, maintenance and security and will generate losses for Spaniards.
Spain is considering giving tax breaks to the bad bank, two people familiar with the matter said. They asked not to be named because the information isn’t public.
A lack of financing options will also hamper the bank, Echavarren said. “A bad bank can try to compete by slashing prices but as a buyer if you can’t get a loan, and the bad bank won’t be able to provide them, you can’t buy full stop.”
The FROB, which will be a shareholder in the bad bank, is searching for investors to take at least 51 percent of the vehicle, an onerous task, according to analysts including Krista Davies at Fitch Ratings.
and some Greece items .....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_25/10/2012_467375
Ministers push for deal as Democratic Left resists
Labor Minister Yiannis Vroutsis said negotiations with troika were ongoing on Thursday as objections by the Democratic Left, the coalition's junior partner, to labor reforms proposed by foreign creditors continued to pose an obstacle to a final rubber stamp on the deal.
In comments to Parliament's internal affairs committee, Vroutsis said the three parties in the coalition had done their best to minimize the social impact of the austerity measures and called on lawmakers to await the outcome of a Euro Working Group meeting in Brussels where Greece is topping the agenda.
The executive committee of Democratic Left was to reconvene at 5.30 p.m. on Thursday to discuss the thorny issue of labor reforms once again. Although party officials concede that the new agreement on labor reforms achieved by Finance Minister Yannis Stournaras is «improved» they believe that outstanding issues must still be resolved. Party spokesman Nikos Tsoukalis said Democratic Left's stance «represents something different in the political scene and sets out the limits to the negotiation.»
Stournaras, for his part, rebuffed reports that the controversial labor reforms would be revoked.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_25/10/2012_467397
Eurozone seeks to give Greece more time to cut, find more money
Eurozone officials are expected to press ahead on Thursday with plans to give Athens two more years to meet its budget goals as well as examine ways of closing the yawning gap in Greece's finances.
Representatives of the International Monetary Fund, the European Commission and the European Central Bank -- known as the troika -- have been calculating how much more money Athens will need if it is given until 2016 rather than 2014 to reach a primary surplus of 4.5 percent, as agreed in February.
A primary surplus or deficit is the budget balance before the government services its debt. In Greece's case, it would mean government tax revenues exceeding spending, meaning Athens is beginning to get on top of its budget-deficit problems.
The preliminary findings of the troika show that Greece will need 16 to 20 billion euros in additional funding, one euro zone official familiar with the findings said on Thursday, although the final figure will only be known when the troika publishes a full report, probably in the second week of November.
Greek Finance Minister Yannis Stournaras told Reuters on Sept. 25 a two-year extension would require 13-15 billion euros more, while a euro zone official estimated it in late July at about 30 billion. Other estimates are 18 and 20 billion.
The two extra years would give the fast contracting Greek economy some welcome respite, allowing it to return to growth sooner and therefore increasing the chances the country would eventually be able to make its debt sustainable.
Greece, deep in recession and suffering widespread unemployment, has been pushing for more time and announced on Wednesday it had been granted it. Others indicated it may have jumped the gun a bit with the announcement.
But the critical question is where the money can be found to come up with the 16-20 billion euros that is needed.
One option is to further reduce the interest rate on existing loans to Greece and extend the maturities, but while that would reduce the country's financing costs to virtually zero, it would not fill the funding gap. Another option is to bring forward some payments from the IMF that would be granted to Greece at a later date, thereby bridging its immediate funding gap, but again that is not expected to be sufficient. Instead, junior finance ministers and treasury experts are examining other options such as a debt buyback, taking advantage of the deep discount Greek debt is currently trading at. And there is the possibility of further direct funding for Greece from eurozone member states. Any new money would have to come from the eurozone's permanent bailout fund, the European Stability Mechanism, and would likely face opposition from countries such as Finland, the Netherlands and Germany. One snag holding up an agreement on an extension for Athens is the opposition of some parties in the ruling coalition in Greece on labour market reforms, the official said. Stournaras told parliament on Wednesday that Greece had already been granted the two-year extension, but several top eurozone officials, including European Central Bank President Mario Draghi and German Finance minister Wolfgang Schaeuble, said they were not aware of that. "The statement from Greece yesterday was a bit premature,» the official said. If an agreement with Athens is reached in time, a decision on the extra money could be taken at the next meeting of euro zone finance ministers in Brussels on Nov. 12. Despite disagreements over how it will be done, it has become clear in recent days that a two-year extension will be granted and therefore some way will be found to finance it.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_25/10/2012_467340
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and....
http://www.telegraph.co.uk/finance/debt-crisis-live/9632296/UKs-double-dip-recession-is-over-debt-crisis-live.html
13.12 Back in June Spain Prime Minister Mariano Rajoy a €100bn loan to save its ailing banks from being a bailout for the country.
At that time he said that without changes introduced by the government, the decision to agree the loan "would have been an intervention” instead of “the opening of a credit line”.
13.06 More on Spain's request for aid. Reuters is now reporting that Spain will tap €60bn from a €100bn European credit line agreed in June to recapitalise its troubled banks, a draft amendment before Parliament showed, but apparently the government plans to only use €40bn. Here is what Reuters is saying:
The document - an amendment to the draft financial sector reform law - is still in committee and has not gone to the floor for a vote. It was brought by the ruling People's Party, which has an absolute majority in the legislature.
The financial sector reform must be enacted before the end of November as part of the conditions for Spain to get aid for the banks.
A spokeswoman for the economy ministry said that the move was aimed at making sure the government had enough funds to prop up lenders but that it still estimates it will only use around €40bn of the money.
An independent stress test of Spain's financial system published last month showed banks needed around €60 to resist a serious downturn of the economy.
But the figure is expected to come down after real estate assets are transferred into a so-called "bad bank", junior bondholders take a haircut on their holdings and some lenders manage to raise money on their own.
12.13 Staying in Greece where it's another day and another protest.
AFP is reporting that children with special needs have attended a three-hour 'class' at a central Athens square, arranged by their teachers and parents to protest against the austerity measures affecting the transportation to their special schools and the lack of teachers.
They had a slogan which read 'we can't get to our schools, we have a lesson here'.
12.01 You may well remember yesterday that there was a lot of to-ing and fro-ing as to whether Greece's internatonal lenders had given them an extension to meet their deficit targets. First there was speculation Grece had got one after Reuters got hold of a leaked copy of the draft deal, then Greece said they had the extension, then they said they didn't and then a spokesman for the EU said they didn't.
Well here is a link to a copy of the leaked “Memorandum of Economic and Financial Policies”, courtesy of the FT, which points out that, although there are gaps where specific budget targets are to be included, page two and page nine give strong hints of where they are headed.
A paragraph of note, related to the extension says:
The government has programmed more time for fiscal adjustment, to help smooth the recession. By taking an extra two years to reach our fiscal targets, we expect the pace of fiscal consolidation to drop from 3 to 1½ percent of GDP per year.
This will limit the negative growth impacts in 2013-14, when the economy needs to find a firmer footing, while still preserving a good adjustment pace.
There is also another document, an October 14 draft of the official“Memorandum of Understanding on Specific Economic Policy Conditionality”, which the FT says is chock full of austerity and reform commitments Athens is making to get the bailout extension.
11.36 Now over to Greece for the first time today whereekathimerini.com has reported that that the country's finance ministerYannis Stournaras has been taken to hospital where he was diagnosed with a serious viral infection and exhaustion. The website reports:
The minister was discharged at his own request before returning to the Finance Ministry offices for talks with officials ahead of a scheduled meeting with Prime Minister Antonis Samaras.
Stournaras is the latest in a series of Greek government officials to have been taken ill.
Earlier this month, Justice Minister Antonis Roupakiotis underwent an operation to remove a blood clot from his brain.
In June, former National Bank president Vassilis Rapanos turned down the job of Finance Minister, offered to him by Samaras, citing serious health problems.
A few days before that Samaras himself underwent eye surgery. At last Octber's crucial European Union summit, two aides to the then Prime Minister George Papandreou suffered serious health problems. Giorgos Glynos suffered a heart attack ahead of the meeting while Giorgos Zannias developed high blood pressure during the summit and was ordered to stay in his room.
11.10 Leaving the UK briefly to head over to the eurozone where Spain'sbiggest banks, Santander, has said it would view a government request for aid from the EU "positively".
During a conference with analysts, Alfredo Saenz, Santander's chief executive, said:
I believe a situation in which the Treasury funding is being helped by contingency credit lines offered by any international body will produce a fall in the sovereign debt risk premium and, as a consequence, a fall in bank's risk premium.
From this point of view, we view it positively.
Santander announced earlier today that its nine-month net profit had fallen by two thirds to €1.8bn (£1.4bn), hit by writedowns on bad property investments made during Spain's decade-long housing boom.
10.50 It is important to remember that the growth figure for the UK is thefirst estimate and there is a chance the figure could be revised down. The second estimate, which will be based on more data than today's figure, will be released on 27 November.
10.18 More reaction on the GDP figure (see 09.30), which says if the special effects - such as the Olympics and Jubliee - are taken out the figure is less "breath-taking".
Glenn Uniacke, Moneycorp
For the economy to have lurched skyward after such a prolonged slump appears an impressive turnaround.
Much of the boost is due to one-off factors like the Olympics, and the natural rebound effect that follows a quarter in which working days are lost.
So strip out the exceptional factors and the figure is less breathtaking - closer to zero. And after a pitiful start to the year, the annual trend is likely to be largely flat.
With the promised supply side reforms yet to materialise, there's every chance that Q4 will disappoint compared to Q3's surge.
09.43 A graph showing the GDP quarterly change since the start of 2007.
09.39 Now for the nitty-gritty detail.
Industrial output was up 1.1pc and services output was up 1.3pc. However construction service output fell by 2.5pc.
The Telegraph's Graham Ruddick has tweeted that Olympics ticket sales added 0.2pc to growth.
09.30 Britain's double-dip recession is over. Officially. And numbers are better than expected.
In its first estimate, the Office for National Statistics has confirmed that the UK grew by 1 pc in the third quarter, compared with the second quarter.
The return to growth ends nine months of contraction in which the economy shrank 1.1pc as the austerity measures, high inflation and the eurozone crisis took their toll.
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