http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_19/11/2012_470694
http://www.zerohedge.com/news/2012-11-19/broke-beggars-again-are-choosers-greece-refuses-comply-latest-troika-demands
Submitted by Tyler Durden on 11/19/2012 14:25 -0500
Sitins continue amid rumors of more layoffs
The demand for 22,000 layoffs next year is said to have been forwarded to the Finance Ministry by International Monetary Fund officials, a report denied by ministry officials. According to the unconfirmed reports, these layoffs would be in addition to the total of 80,000 civil service departures demanded by the troika through 2016. Sources told Kathimerini that the rumors could be a tactic by the IMF in the ongoing diplomatic standoff between the Fund and eurozone officials on the Greek issue. Meanwhile the government was struggling to enforce the induction of 2,000 civil servants into a pre-redundancy scheme by the end of this year, as promised to the troika. The deadline given by the Administrative Reform Ministry to municipalities to provide lists of employees to join the layoff scheme expired Monday with only 20 municipalities reported to have submitted the requested data. Ministry sources said that data would be drawn from a 2010 census of civil servants if local authority managers persisted with their intransigent stance. Sitins continued at ministry buildings and city halls across the country, meanwhile, with municipal workers in Thessaloniki also occupying creches and Citizens’ Advice Bureaus (KEP). In Athens, workers occupied the Health, Agricultural Development and Merchant Marine ministries while similar action may continue on Tuesday. Several mayors, including the capital’s Giorgos Kaminis and Thessaloniki’s Yiannis Boutaris, have been resisting the initiative by central government. |
http://www.zerohedge.com/news/2012-11-19/broke-beggars-again-are-choosers-greece-refuses-comply-latest-troika-demands
Broke Beggars Again Are Choosers: Greece Refuses To Comply With Latest Troika Demands
It has been a while since broke Greece, which has been begging Europe for the 5 month delayed €31.5 billion tranche, which will be used to pay the ECB and other German banks, and not to enter the Greek economy, was a chooser. Today, the little country that could not, has once again stretched its feeble repo'ed muscles:
- GREEK OFFICIAL SAYS GOVERNMENT WON'T ACCEPT NEW TROIKA REQUEST
- GREEK OFFICIAL SAYS TROIKA WANTS 20,000 STATE EMPLOYEE SACKINGS
- GREEK OFFICIAL SAYS COALITION PARTIES TO SET UP C'TEE FOR GOVT
Perhaps Greece forgot to clarify "by email" but certainly by fax, telex, or even carrier pigeon, because once the Troika calls it bluff, the "lost in translation" explanations will commence. Until then, the farce continues.and isn't it interesting Moody's struck right before Eurogroup on Tuesday.....http://www.guardian.co.uk/business/2012/nov/19/eurozone-crisis-greece-aid-programme-imf• Eurozone finance ministers are reportedly ready to give a 'tentative agreement' to advance Greece its next aid tranche, when they meet in Brussels on Tuesday.According to Reuters, the Eurogroup will decide tomorrow to advance Greece its next loan – worth up to €44bn – if it can persuade them that it has met all its demands. Athens and the EC may also sign a new Memorandum of Understanding (see 3.50pm).• News of the plan send shares and the euro rallying, with European markets enjoying their biggest rise in nearly two and a half-months (see 4.52pm).• The report came after the German and Dutch finance ministry's argued that a 'final deal' on Greece could not be hammered out on Tuesday, partly because national parliaments must have their say.• In Greece, the government used 'decrees' to implement new 'reforms' dictated by its Troika of lenders - including automatic cuts on under-performing parts of the public sector. It was also denounced by opposition leader Alexis Tsipras for turning the country into a 'debt colony' (see 3.28pm).• There were also mass protests at municipal buildings across Greece, with at least 200 taken over by local government workers angry at plans to impose job cuts (see 1.30pm for details and photos).• Europe also dominated the UK political landscape. David Cameron insisted that he was being a 'good European' by fighting plans to raise the EU budget, while opposition leader Ed Miliband said it would be a huge mistake for Britain to leave the EU (see 11.23am onwards).and also from The Guardian....Report: 'Tentative agreement' on Greece tomorrow
Just in -- Reuters is now reporting that Eurozone finance ministers will give a "tentative go-ahead" on Greece's aid disbursement tomorrow, when they meet in Brussels.However, the money wouldn't actually be handed over until December 5 – and only then once Athens has confirmed that it has met all outstanding bailout conditions.That suggests that tomorrow's eurogroup meeting will deliver a 'political endorsement in principle' on giving Greece its outstanding aid tranche - which could be worth €44bn.However the 'finally final' decision to hand over the money wouldn't actually be taken until 3 December.Here's the details, hot from the terminal:Once ministers have given their political endorsement, proposals on how to cut Greek debt and provide additional financing can be sent to national parliaments for approval, a step that is expected to be completed by Nov. 30.This will give Athens time to complete the few outstanding "prior actions". International lenders will check if the remaining reforms are in place on Nov. 28 and euro zone finance ministers will make the final decision to pay the next tranche to Athens on Dec. 3, according to the schedule seen by Reuters.So we might get an agreement tomorrow, but not the final deal.
And then this bombshell.....
http://www.zerohedge.com/news/2012-11-19/one-fewer-aaa-club-moodys-downgrades-fraance-aaa-aa1One Less In The AAA Club: Moody's Downgrades FrAAnce From AAA To Aa1 - Full Text
Submitted by Tyler Durden on 11/19/2012 17:12 -0500
After hours shots fired, with Moody's hitting the long overdue one notch gong on France:- MOODY'S DOWNGRADES FRANCE'S GOVT BOND RATING TO Aa1 FROM Aaa
- FRANCE MAINTAINS NEGATIVE OUTLOOK BY MOODY'S
Euro tumbling. In other news, UK: AAA/Aaa; France: AA+/Aa1... Let the flame wars begin
From the release:Moody's decision to downgrade France's rating and maintain the negative outlook reflects the following key interrelated factors:
1.) France's long-term economic growth outlook is negatively affected by multiple structural challenges, including its gradual, sustained loss of competitiveness and the long-standing rigidities of its labour, goods and service markets.2.) France's fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand, and in the longer term due to the structural rigidities noted above.
3.) The predictability of France's resilience to future euro area shocks is diminishing in view of the rising risks to economic growth, fiscal performance and cost of funding. France's exposure to peripheral Europe through its trade linkages and its banking system is disproportionately large, and its contingent obligations to support other euro area members have been increasing. Moreover, unlike other non-euro area sovereigns that carry similarly high ratings, France does not have access to a national central bank for the financing of its debt in the event of a market disruption.RATINGS RATIONALEThe first driver underlying Moody's one-notch downgrade of France's sovereign rating is the risk to economic growth, and therefore to the government's finances, posed by the country's persistent structural economic challenges. These include the rigidities in labour and services markets, and low levels of innovation, which continue to drive France's gradual but sustained loss of competitiveness and the gradual erosion of its export-oriented industrial base.The rise in France's real effective exchange rate in recent years contributes to this erosion of competitiveness, in particular relative to Germany, the UK and the US. The challenge of restoring price-competitiveness through wage moderation and cost containment is made more difficult by France's membership of the monetary union, which removes the adjustment mechanism that the ability to devalue its own currency would provide.Apart from elevated taxes and social contributions, the French labour market is characterised by a high degree of segmentation as a result of significant employment protection legislation for permanent contracts. While notice periods and severance payments are not significantly higher than they are in other European countries, some parts of this legislation make dismissals particularly difficult. This judicial uncertainty raises the implicit cost of labour and creates disincentives to hire. In addition, the definition of economic dismissal in France rules out its use to improve a firm's competitiveness and profitability.Moreover, the regulation of the services market remains more restrictive in France than it is in many other countries, as reflected in the OECD Indicators of Product Market Regulation. The subdued competition in the services sector also has a negative effect on the purchasing power of households and the input costs of enterprises. France additionally faces significant non-price competitiveness issues that stem from low R&D intensity compared to other EU countries.Moody's recognises that the government recently announced measures intended to address some of these structural challenges. However, those measures alone are unlikely to be sufficiently far-reaching to restore competitiveness, and Moody's notes that the track record of successive French governments in effecting such measures over the past two decades has been poor.The second driver of today's rating action is the elevated uncertainty with respect to France's fiscal outlook.Moody's acknowledges that the government's budget forecasts target a reduction in the headline deficit to 0.3% of GDP by 2017 and a balancing of the structural deficit by 2016. However, the rating agency considers the GDP growth assumptions of 0.8% in 2013 and 2.0% from 2014 onwards to be overly optimistic. On top of rising unemployment, France's consumption levels are being weighed down by tax increases, subdued disposable income growth and a correction in the housing market. Net exports are unlikely to drive economic activity in light of reduced external demand, in particular from euro area trading partners such as Italy and Spain.As a result, Moody's sees a continued risk of fiscal slippage and of additional consolidation measures. Again, based on the track record of successive governments in implementing fiscal consolidation measures, Moody's will remain cautious when assessing whether the consolidation effort is sufficiently deep and sustained.The third rating driver of Moody's downgrade of France's sovereign rating is the diminishing predictability of the country's resilience to future euro area shocks in view of the rising risks to economic growth, fiscal performance and cost of funding. In this context, France is disproportionately exposed to peripheral European countries such as Italy through its trade linkages and its banking system.Moody's notes that French banks have sizable exposures to some weaker euro area countries. As a result, despite their good loss-absorption capacity, French banks remain vulnerable to a further deepening of the crisis due to these exposures and their significant -- albeit reduced -- reliance on wholesale market funding. This vulnerability adds to the government's contingent liabilities arising from the French banking system.Moreover, France's credit exposure to the euro area debt crisis has been growing due to the increased amount of euro area resources that may be made available to support troubled sovereigns and banks through the European Financial Stability Facility (EFSF), the European Stability Mechanism (ESM) and the facilities put in place by the European Central Bank (ECB). At the same time, in case of need, France -- like other large and highly rated euro area member states -- may not benefit from these support mechanisms to the same extent, given that these resources might have already been exhausted by then.In light of the liquidity risks and banking sector risks in non-core countries, Moody's perceives an elevated risk that at least part of the contingent liabilities that relate to the support of non-core euro area countries may actually crystallise for France. The risk that greater collective support will be required for weaker euro area sovereigns has been rising, most for notably Spain, whose economy and government bond market are around twice the combined size of those of Greece, Portugal and Ireland. Highly rated member states like France are likely to bear a disproportionately large share of this burden given their greater ability to absorb the associated costs.More generally, further shocks to sovereign and bank credit markets would further undermine financial and economic stability in France as well as in other euro area countries. The impact of such shocks would be expected to be felt disproportionately by more highly indebted governments such as France, and further accentuate the fiscal and structural economic pressures noted above. While the French government's debt service costs have been largely contained to date, Moody's would not expect this to remain the case in the event of a further shock. A rise in debt service costs would further increase the pressure on the finances of the French government, which, unlike other non-euro area sovereigns that carry similarly high ratings, does not have access to a national central bank that could assist with the financing of its debt in the event of a market disruption.Today's rating action on France's government bond rating was limited to one notch given (i) the country's large and diversified economy, which underpins France's economic resiliency, and (ii) the government's commitment to structural reforms and fiscal consolidation. The limited magnitude of today's rating action also reflects an acknowledgment by Moody's of the French government's ongoing work on a reform programme to improve the country's competitiveness and long-term growth perspectives, with key measures expected to be outlined in the National Pact for Growth, Competitiveness and Employment. Moreover, on the fiscal side, the European Treaty on the Stability, Coordination and Governance of the Economic and Monetary Union (TSCG), known as the "fiscal compact", will be implemented through the Organic Law on Public Finance Planning and Governance.RATIONALE FOR CONTINUED NEGATIVE OUTLOOKMoody's decision to maintain a negative outlook on France's government bond rating reflects the weak macroeconomic environment, and the rating agency's view that the risks to the implementation of the government's planned reforms remain substantial. Moreover, Moody's currently also holds negative outlooks on those Aaa-rated euro area sovereigns whose balance sheets are expected to bear the main financial burden of support via the operations of the EFSF, the ESM and the ECB. Apart from France, these countries comprise Germany (Aaa negative), the Netherlands (Aaa negative) and Austria (Aaa negative).WHAT COULD MOVE THE RATING UP/DOWNMoody's would downgrade France's government debt rating further in the event of additional material deterioration in the country's economic prospects or difficulties in implementing reform. Substantial economic and financial shocks stemming from the euro area debt crisis would also exert further downward pressure on France's rating.Given the current negative outlook on France's sovereign rating, an upgrade is unlikely over the medium term. However, Moody's would consider changing the outlook on France's sovereign rating to stable in the event of a successful implementation of economic reforms and fiscal measures that effectively strengthen the growth prospects of the French economy and the government's balance sheet. Upward pressure on France's rating could also result from a significant improvement in the government's public finances, accompanied by a reversal in the upward trajectory in public debt.COUNTRY CEILINGSFrance's foreign- and local-currency bond and deposit ceilings remain unchanged at Aaa. The short-term foreign-currency bond and deposit ceilings remain Prime-1.
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