Samaras pushes for next loan tranche at EU summit but faces tight deadline
Sources said that Samaras stressed to his counterparts in Brussels the need for Greece to receive the 31.5-billion-euro installment soon. He assured fellow leaders that Athens is close to agreeing with the troika the details of the 13.5-billion-euro austerity package for the next two years as well as a series of structural reforms, such as in the labor market.
The government hopes to wrap up talks with the troika at the beginning of next week so that an extraordinary meeting of the Eurogroup can be held on October 29, when eurozone finance ministers will examine the measures and the troika’s progress report.
This would have to be followed by the Greek Parliament giving its approval to the austerity package and the 2013 budget. Following this, a regular meeting of the Eurogroup on November 12 would lead to the disbursement of the loan tranche being approved.
Once this has happened, the eurozone can begin to discuss in earnest plans to make Greece’s debt more viable and how to cover any funding gap that might be created by giving Athens until 2016 to meet its fiscal targets, rather than the current deadline of 2014.
“Financing issues will be discussed between the official lenders and Greece,” the troika said on Wednesday after a round of talks in Athens concluded without agreement.
The Wall Street Journal reported on Thursday night that the eurozone was considering a voluntary debt buyback proposal that would allow Greece to retire some of the 63 billion euros of Greek debt held by private investors.
Samaras is due to meet German Chancellor Angela Merkel this morning, as the second day of the summit gets under way in Brussels.
Merkel and Peer Steinbrueck, her Social Democrat challenger in next year’s general election, clashed on the topic of Greece during their first exchange in Parliament yesterday.
Merkel declared her willingness to take a softer line on Greece, noting that she had been convinced by the determination of Samaras to push through reforms. Steinbrueck accused Merkel of wasting time, and German taxpayers’ money, before suddenly declaring commitment to keep Greece in the eurozone.
“You should have made this speech three years ago,” he said, referring to the time that Athens sought its first bailout.
and....
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http://www.zerohedge.com/news/2012-10-18/chart-day-spanish-bad-loans-hit-new-parabolic-record
Chart Of The Day: Spanish Bad Loans Hit New Parabolic Record
It just refuses to get any better in Spain, whose banks are now aggressively marking down real estate to something resembling fair value. Last month we reported that Spanish bad loans jumped by the most ever, rising by over 1% to just under 10%. Today, last month's number was revised even higher to 10.1%. But the worst news is that the August bad loan total just hit a fresh record of €178.6 billion, or 10.5% of the total €1,698.7 billion in bank loans. Making things worse is that the primary bank funding lifeline - deposits - continues to flow out. That both Spain, and its banking sector are utterly insolvent, is clear to anyone but Oliver Wyman and those who have bought SPGBs (although granted the latter are merely hoping for a quick flip). And the ECB of course. Indicatively, as a % of GDP, this would be equivalent to roughly $2.7 trillion in US bank loans going sour (for more on the collapse of Spanish banking, and the laughable stress test whose worst case has already become the baseline, read here). The chart summarizing this staggering statistic is below.
As for that other marginal peripheral country, Italy, things aren't any better on ther ground there either.
The Italian banking association ABI said overall deposits and bank bonds had risen 0.57 percent year-on-year in September. Deposits held by Italian residents jumped 4.7 percent while bonds bank sold to retail clients fell 6.8 percent.The data showed deposits held by foreigners continued to fall, although at a slower pace than in previous month. In August they declined by 15.4 percent compared with a 17 percent fall a month earlier.Higher overall deposits did not translate in increased bank lending. Loans to non-financial businesses and families fell 2.6 percent, the fifth straight monthly decline and the worst deterioration in at least two years.Also, bad loans rose due to Italy's recession. In September, they totalled nearly 116 billion euros, up 15.6 percent from a year earlier.
and.....
http://www.telegraph.co.uk/finance/debt-crisis-live/9613847/Debt-crisis-EU-summit-live.html
13.48 Skai TV is also reporting the death of a 67-year old man (see 13.26) at today's protests.
13.26 Anthee Carassava reports that one protestor injured this morning has died.
Police said that the 67-year-old died of a heart attack. More as I get it.
13.13 Today's EU gathering isn't the only summit on the agenda. A few Brussels heavyweights gathered for the "Tripartite Social Summit for Growth and Employment" this morning, where they urged leaders to implement measures to promote job creation, particularly for young people. Jose Manuel Barroso, president of the European Commission, said:
12.43 But as Bruno Waterfield explains, there is another issue on the table: what the eurozone's permanent bail-out fund should be used for.
Berlin doesn't want to use it to recapitalise the eurozone's battered lenders. Paris does. And surprise surprise, nothing is likely to be agreed tonight. More from Bruno:
Diplomats predict that tonight's EU summit dinner will not resolve any urgent issues for the eurozone.
This will include prevarication on moves to banking union and the controversial issue of bank recapitalisation.
“All the underlying problems are still there but they won’t go forward because the market pressure is off. I can’t see these arguments going forward,” said a senior diplomat.
Another European diplomat said: “It’s going to be foot-dragging and lowest common denominator summit.”
No decisions on Greece or Spain are expected.
[...] Francois Hollande, the French President, might be talking tough but fears are growing over the state of the eurozone's second biggest economy.
“If you talk to German officials, the big problem for them is not Spain but France,” said an senior EU official.
“If monetary union gets smaller, does it stop at the Alps or the Rhine?”
12.34 Implementing the eurozone's banking union will be top of today's agenda, according to Francois Hollande. The French president told reporters in Brussels:
The subject of the summit isn’t fiscal union but banking union [...] The only decision we have to take, to confirm in fact, is the putting into place of a banking union by the end of the year, notably the first step, which is the banking supervision.
12.23 More scuffles outside parliament, reports Anthee Carassava. Someone/people has/have thrown a petrol bomb(s) at police:
Protesters throw petrol bombs against riot police (Photo: AP).
12.16 Away from Athens, Portugal has a few problems of its own. The government is trying to push through a package of cuts that includes an income tax hike that will see the average rate rise from 9.8pc in 2012 to 13.2pc next year.
However, the junior partner in Portugal's coalition government has promised not to rock the boat when it votes on the budget at the end of the month
The CDS party told Reuters that it "will vote on the budget considering that Portugal cannot afford to have a political crisis which would make its economic and social situation more severe."
Prime Minister Pedro Passos Coelho told reporters this morning:
I do hope this budget will pass in parliament.
The government scrapped previous plans that would have seen a sharp increase in social security payments, following mass protests.Portugal's main unions have already planned another strike.
11.52 In case you missed it last night, Newsnight's Paul Mason reported that some members of the police were "colluding" with the far-right partyGolden Dawn.
You can watch his full report here.
11.34 Anthee reports that the first stun grenades have been fired by police. "We could be kicking off," she adds.
11.23 While our correspondent Anthee Carassava, writes:
Thursday's protest has drawn one of the biggest attendance yet of an anti-austerity demonstration in recent months. Thousands of workers have flooded the city centre, a stark contrast to previous marches with dwindling crowds. Streets in Athens were packed as flows of workers waving banners and chanting "don't bow down, revolt!" marched in front of parliament to voice their opposition to continued austerity. The peaceful march captured an almost carnival atmosphere as street hawkers rolled out carts and mobile grills selling water, soda and kebabs -- even nuts. Watching waves of workers plough through the capital, Anna Tricha, a first-comer to Athenian demonstrations said the action "was too little, too late." We "should have been more forceful from the start; it's like we resigned to austerity out of guilt."
For Chris Kioussis, a 42 year-old graphic designer who frequently attends anti-austerity protests, Thursday's strike marked a success. "People are scared. They fear they will lose their jobs. They cannot afford to lose that day of pay. Protesting has become expensive. But that there are so many hitting the streets, persevering shows that there is a successful drive to change the attitudes of those reluctant to come out."
11.18 Greek journalist Damian Ma Con Uladh tweets:
11.13 Back to Athens, where Greek protesters have reached the parliament building in Syntagma Square:
11.05 According to Mr Van Rompuy, during the good times, countries will pay more into the fund, and during bad times, less - though every member is expected to chip in. The aim is to smooth out some of the economic bumps in the eurosystem.
But Bruno describes it as a "legal minefield":
Merkel's idea of using an FTT to finance it would make joing the tax a necessity for the 8 eurozone counties not in the group of 9 planning to implement it. The UK, EC and others are worried about who will run it - and the idea that it may cause a fracturing of the EU.
11.01 Angela Merkel spoke this morning of creating a new fund - financed by the proceeds of a financial transactions tax - that would create "a new element of solidarity" for troubled states.
The fund would be used to finance individual projects and be limited in time, she added.
Bruno Waterfield, who will be in Brussels all day (and night), has sent along a helpful Q&A published by Mr Europe himself - Herman van Rompuy. Mr Van Rompuy says:
What could be the main functions of a fiscal capacity?A fiscal capacity could perform the following two functions:
- improve the absorption of country-specific economic shocks, through an insurance-type mechanism between euro area countries.
- support structural reforms in relation with an integrated economic policy framework, in which euro area Member States could enter into arrangements of a contractual nature with EU institutions.
10.41 The unions are out in force. Dimitris Asimakopoulos, head of the GSEVEE small business and industry association told AP:
We are sinking in a swamp of recession and it's getting worse [...] 180,000 businesses are on the brink and 70,000 of them are expected to close in the next few months.
10.35 More pictures are coming in from Greece. It's not a quiet day at all:
Members of Greece's Communist party march in Athens (Photo: Reuters)
10.21 Meanwhile, Spanish bad bank loans have hit a fresh high, with more than one in ten borrowers now behind on their payments.
Bad debts (where borrowers are more than three months behind on repayments) climbed to 10.51pc of total lending, according to Bank of Spain data, the highest since records began in 1962.
10.16 Commenting on the auction, Nicholas Spiro at Spiro Sovereign Strategy, said:
1. Sentiment towards Spain has never been more externally driven. Price action has nothing to do with Spain's fundamentals which, notwithstanding a significant improvement in external competitiveness, are deteriorating by the day. Spain's debt market has become a proxy for the perceived credibility of the ECB-backed fiscal backstop for Spain and Italy. Today's auction was well received because the markets believe the key domestic and external pieces for a bond-buying programme for Spain are falling into place. Demand held up well, despite weakening for the 10-year note, and yields fell on all three maturities on offer, with a notable sub-5.5% yield on the 10-year bond.
2. While political pressure on Spain to request a bond-buying programme is mounting, market pressure on Spain is waning. The decision by Moody's not to "junk" Spain has, paradoxically, made it even less likely that the Rajoy government will apply for a bond-buying programme any time soon. Madrid still has serious reservations about the conditions and effectiveness of any bond-buying programme and feels it has more to gain from deferring a request for aid.
10.07 Spain's borrowing costs have fallen sharply at a bond auction this morning. The country sold €1.5bn of four year debt at average yields of 3.977pc. This compares with 4.603pc at a previous auction in September.
It also sold €1.5bn of 10-year debt at average rates of 5.458pc (v.5.666pc), and €1.6bn of three-year bonds at average yields of 3.227pc (v.3.676pc).
Demand waned slightly on the longer-dated bond, with 1.9 bidders for every bond on offer.
The four year bond had a bid-to-cover ratio of 2.6 (v.1.8).
09.52 Anthee Carassava is on the ground in Athens for us. She writes:
Thursday's protests are part of a 24-hour nationwide strike the country's two biggest labour unions have organised as European leaders meet in Brussels to decide the fate of the single currency. It is the second job walk out millions of Greeks have taken to in three weeks; the 20th since the financial crisis here erupted nearly three years ago.
“Just once,” said Yannis Panagopoulos, head of the GSEE private sector union, “the government should reject [international] lenders’ absurd demands. “Agreeing to catastrophic measures means driving society to despair and the consequences as well as the protests will be indefinite.”
From taxi drivers to doctors and diplomats, the strike is expected to paralyze an already suffocating economy. Ships remained docked, hospitals were operating on skeleton staff, and dozens of domestic and international flights face cancellations leaving travelers stranded as air traffic controllers joined the protest, keeping aircraft grounded and the country isolated from the rest of the world for three hours.
At least 4000 police have been deployed in the city centre alone. At least 12 buses of riot police and three water canons were propped outside parliament, shielding the building -- a favourite target of protests -- from militant demonstrators.
09.44 Meanwhile, it looks like a quiet day so far in Athens, where unions have called a general strike:
A pedestrian passes closed shops (Photo: AP).
A man walks in front of trolleybuses parked at a depot on Thursday morning during a 24-hour strike (Photo: Reuters).
09.15 Mrs Merkel added that the "contours" of a stability union were already visible, and that closer financial co-operation was needed in Europe. On a banking union, she said that the quality of supervision came before speed.
09.08 Nevertheless, it's in Greece and Europe's interest that the country remains in the euro. Mrs Merkel also said that Antonis Samaras would present an interim report on the discussions between European debt inspectors and Greek representatives over fresh budget cuts.
The meeting ended yesterday, with all parties stating that the main cuts had been agreed.
09.01 She said that she wanted Greece to remain in the euro, but that too many reforms were being implemented at a "snail's pace".
She also mentioned the need to tackle Greek corruption, and repeated that the country needed to fulfil its promises.
Mrs Merkel said that it would be “fatal” if euro governments were to relax on reforms after the European Central Bank said it was prepared to buy government bonds.
German Chancellor Angela Merkel addresses the German lower house of parliament on Thursday (Photo: Reuters).
08.59 Angela Merkel has addressed parliament ahead of today's meeting, where she has repeated that the crisis won't be resolved overnight and that this week's summit won't be the last to tackle the crisis.
08.51 It's EU summit day. This means one thing: be prepared for a long night.
It all kicks-off at around 4pm when leaders, including David Cameron, arrive in Brussels for their monthly jaw-jaw.
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