Why Greece's spillover across euro area will probably be contained this time

[CityFarmer]

The Greek issue is getting attention from US, and now Japan center banks...

BOJ's Nakaso calls for swift Greek bank recapitalization

KUMAMOTO, Japan - Europe should take swift action to recapitalize Greek banks for the sake of economic stability in the region, Bank of Japan Deputy Governor Hiroshi Nakaso said on Monday.

"The situation surrounding Greece remains highly uncertain," Nakaso told a news conference after meeting with business leaders in Kumamoto, southern Japan.

"It's very important that Greek banks that lack capital are quickly recapitalized ... I say this from the precious lessons Japan learned from its past banking crisis," he said. REUTERS
http://www.todayonline.com/business/bojs...talization

[greengiraffe]

Flight to safety ‘gave Germany a €100bn profit from Greek crisis’
DAVID CHARTER THE TIMES AUGUST 11, 2015 7:18AM

Germany has profited from the Greek crisis to the tune of €100 billion, an independent study showed yesterday, as Berlin continued to dig in its heels over signing off a third bailout for the struggling country.

According to the Leibniz Institute for Economic Research, Europe’s biggest economy saved the money via lower interest payments on government borrowing as it benefited “disproportionately” from investor “flights to safety”.

“These savings exceed the costs of the crisis, even if Greece were to default on its entire debt,” the institute said.

Athens and its international creditors, which include Germany, scrambled yesterday to complete a new bailout deal that would help Greece to make a key debt repayment to the European Central Bank and avert default.

A senior Greek finance ministry official close to the talks told The Times that “more than half of the deal had been drafted”, with both sides bent on “pulling an all-nighter if needed” to seal the deal by today. Swift settlement of the anticipated €86 billion loan agreement — the third rescue package for Greece in five years — would allow national parliaments to assess the deal and endorse it, leading eurozone finance ministers to disburse rescue funds to Athens by Friday, to pay off more than €3 billion to the ECB by August 20.

Without the bailout funds, Greece could be pushed to a default or an interim “bridge loan”, which the far-left government in Athens wants to avoid in an effort to end prolonged market instability.

“Progress has indeed been made and we expect further progress throughout the day and beyond as talks continue to resolve the remaining issues,” Annika Breidthardt, the European Commission’s spokeswoman on economics and financial affairs, said.

Experts, she added, were “working day and night” to finalise the text of the formal agreement, plus a controversial list of prior actions — a euphemism for added austerity — that Greek politicians will have to vote on by the end of the week.

Germany, as the key economic powerhouse of the eurozone, has led the way in demanding fiscal discipline and tough economic reforms in Greece in return for consenting to new aid. Wolfgang Schauble, the finance minister, has become a hate figure in Greece for opposing a Greek debt writedown even as the International Monetary Fund swung in favour of one.

The Times

[CityFarmer]

Greece is looking for a debt restructure, and others seems only interested on bailout deals...

Greece, lenders locked in marathon talks for bailout deal

ATHENS - Greece and its international lenders were locked in marathon overnight talks to seal a multibillion-euro bailout deal on Tuesday, racing against a countdown to European Central Bank debt repayments falling due in days.

The indebted country is hoping to wrap up a deal for 86 billion euros ($94.75 billion) in fresh loans by Tuesday so it can get parliamentary and other approvals for aid to flow by Aug. 20, when a 3.2 billion euro debt payment is due to the ECB.

"We are going into the final round of talks, looking at the Memorandum of Understanding from beginning to end," a senior Greek government official said during a brief break in talks in Athens, referring to terms of the bailout accord.
...
http://www.todayonline.com/business/gree...ilout-deal

[thor666]

http://www.fool.co.uk/investing/2015/08/...or-greece/

So it looks like it’s finally happened. The Greek people voted No, their government caved in anyway and agreed to further austerity, and a third bailout for the once-proud democracy has been agreed. At least, that’s the way it’s looking on Tuesday morning, after new Greek finance minister Euclid Tsakalotos confirmed that a broad agreement has been reached, and with the rubber-stamping by Greece’s parliament expected any day now.

What it means in the short term is that Greece should get a new €86bn injection over three years, and will be able to repay the €3.2bn that’s due by 20 August. But will it signal success in the longer term?

One of the key points of contention between Greece and the EU has been the country’s failure to make sufficient headway with its privatisation plans — €50bn was supposed to have been raised from the sell-off of state-owned assets by 2015, but nothing close to that has been achieved. That target has now been reset, to be achieved over the life of the new bailout loan, with the key difference that the sale will now be managed by an independent fund with a degree of EU oversight.

Don’t be fooled

But if you believe this is the turnaround point for the Hellenic Republic and that a rosy future is now assured, think again — at best, it’s only just the start of a very painful road back to economic health.

For one thing, the EU has been revising its economic forecast for Greece, and until the recent crisis it was actually forecasting growth! Now, horrors, the EU admits that Greece might even be back in recession. Of course Greece is in recession, and it’s going to be a hard one — that much is obvious to anyone who can see beyond the stream of deluded gobbledegook that pours out of Brussels.

Greece is now allowed to run a deficit this year (as if it had any alternative), but must target a surplus of 3.5% by 2018 and then sustain it. I’ll repeat that — a sustainable surplus of 3.5%, by 2018. Is there anyone in their right mind reading this who thinks there’s any chance of that happening?

Then there’s the level of Greece’s debt, which is expected to represent around 200% of GDP over the next couple of years. That can simply never be repaid, even though Germany (the country that has benefited from by far the largest amount of debt forgiveness in Europe over the past 100 years) insists on getting every last eurocent back.

Demands like that would condemn generations of Greeks to lives of penury, and it is unreasonable to expect the country to just suck it up while they see their richer Northern neighbours exploiting the eurozone for their own benefits.

More fudge

No, it has been fudged yet again, and unless there are material changes to Greece’s debt (which means writing off a large chunk of it, in whatever face-saving way the EU wants to word it), in another few years we’ll be right back here again with exactly the same crisis unchanged. And that will put yet more pressure on the eurozone — we’ve even started to see divisions between Germany and France over the latest crisis, and they can surely only widen if Germany continues to live its fantasy.

I still reckon it’s only a matter of time before the eurozone is rightfully consigned to history, but the real injustice is that Greece is having to suffer the pain of its death throes.

In the meantime, UK investors should keep their money away from the eurozone, and stick to an investment approach that has brought great long-term rewards for a century and more.



Sent from my D5503 using Tapatalk

[swakoo]

[CityFarmer]

The Greece gov is really flexible, from "rebellion" previously to "cooperation" now, with the same team, over few months

Greece's creditors praise Athens' cooperation before Friday's Eurogroup

BRUSSELS - Greece's creditors praised the government's cooperation during negotiations to clinch a third bailout deal worth 85 billion euros ($94.78 billion) ahead of a meeting of euro zone finance ministers in Brussels on Friday.

On Tuesday, Greece struck a deal with its four creditor institutions - the European Commission, the European Central Bank, the International Monetary Fund and the European bailout fund - to keep the country afloat, its third bailout program in five years.

In a statement from the European Commission, together with the European Central Bank, the four creditor institutions acknowledged the "very good cooperation of the Greek authorities during the review mission, which has made possible this agreement after several months of negotiations."
...
http://www.todayonline.com/business/gree...-eurogroup

[greengiraffe]

Only happens in a drama serial

The Greece gov is really flexible, from "rebellion" previously to "cooperation" now, with the same team, over few months

Greece's creditors praise Athens' cooperation before Friday's Eurogroup

BRUSSELS - Greece's creditors praised the government's cooperation during negotiations to clinch a third bailout deal worth 85 billion euros ($94.78 billion) ahead of a meeting of euro zone finance ministers in Brussels on Friday.

On Tuesday, Greece struck a deal with its four creditor institutions - the European Commission, the European Central Bank, the International Monetary Fund and the European bailout fund - to keep the country afloat, its third bailout program in five years.

In a statement from the European Commission, together with the European Central Bank, the four creditor institutions acknowledged the "very good cooperation of the Greek authorities during the review mission, which has made possible this agreement after several months of negotiations."
...
http://www.todayonline.com/business/gree...-eurogroup

[greengiraffe]

IMF wants plan on Greek debt relief
WILLIAM MAULDIN DOW JONES AUGUST 14, 2015 8:39AM

IMF managing director Christine Lagarde. The body wants decisions on Greece’s debt relief plan. Source: AFP

The International Monetary Fund called a deal to set the terms of a new Greek bailout a “step forward,” but won’t commit to new funding for Athens without a plan for reducing the country’s mounting debt.

“We look forward to working with the authorities to develop their program in more detail and for Greece’s European partners to make decisions on debt relief that will allow Greece’s debt to become sustainable,” the IMF’s mission chief for Greece, Delia Velculescu, said in a statement.

“The IMF will remain closely engaged with the Greek government and the European partners to assist in this process, and will make an assessment of its participation in providing any additional financing to Greece once the steps on the authorities’ program and debt relief have been taken.”

Finance ministers from the 19 countries that make up the euro currency zone are due to debate Greece’s mountainous debt and its third bailout package since 2010 in Brussels tonight (AEST).

Greece’s parliament is today expected to approve the bailout plan, including tough new austerity policies, despite a likely rebellion by some MPs in the ruling Syriza party.

Greece needs billions in financing from Europe to repay bonds that mature on August 20.

A bleak debt forecast for Greece is raising pressure on Europe to grant the country softer loan terms, exacerbating tensions among its creditors as they try to seal a new Greek rescue deal within days.

The new forecast, prepared by European Union officials in a document seen by The Wall Street Journal, predicts sharply higher Greek debt than Europe had previously hoped and shows just how far Greece is from escaping its marathon crisis.

[greengiraffe]

The music still goes on...

Greek debt crisis: Eurozone finance ministers approve new bailout
GABRIELE STEINHAUSER, MARCUS WALKER THE AUSTRALIAN AUGUST 15, 2015 8:03AM


Greek Prime Minister Alexis Tsipras looks at his watch during a parliamentary session in Athens on Friday. Source: AFP
The eurozone approved €86 billion ($US96 billion, $130 billion) in new bailout loans for Greece on Friday, sending the country another lifeline as it hurtles toward new political uncertainty and a battle between its creditors over how to reduce its hulking debt.

The deal marks an end to more than six months of turbulent negotiations between the left-wing government in Athens and its creditors, the other eurozone countries and the International Monetary Fund, that brought Europe’s currency union closer to break-up than before in its almost-six-year-old debt crisis.

“The past six months have been difficult. They have tested the patience of policymakers and they have tested the patience of our citizens even more. Together, we have looked into the abyss. But today, I am glad to say that all sides have respected their commitments,” European Commission President Jean-Claude Juncker said.

But the aid deal still faces major obstacles. Large-scale defections from Syriza party politicians during a parliamentary vote on the agreement Friday morning indicate that Prime Minister Alexis Tsipas may soon call new elections.

That could once again delay the implementation of the austerity measures mandated by the deal as well as action by the other eurozone countries to lower Greece’s debt load.

At the same time, the steep budget cuts Greece has to implement in return for the new bailout are bound to cause more pain for its economy and citizens. The rescue program foresees a 2.3% contraction of Greece’s gross domestic product this year, followed by a 1.3% decrease next year.

The deal also expects that shareholders, junior creditors and senior bondholders in Greece’s battered banks will take losses before the lenders will be recapitalised. That will likely cause further uncertainty for a financial sector already reeling from capital controls that are unlikely to be lifted anytime soon.

“In the end how good this deal is, depends on how Greek society, the Greek state, the Greek economy, how social actors, and economic actors respond to it,” said Greek Finance Minister Euclid Tsakalotos. “Any deal is only as good as what you make of it”

To seal the deal, Greece’s third in just more than five years, its creditors first had to sort through some internal struggles, especially over the role of the International Monetary Fund.

The IMF has long held a more pessimistic view on Greece’s economy and questioned its ability to repay its debts. That is why the fund has refused to commit to new loans for Greece until other eurozone governments have taken measures to reduce that burden, expected to reach more than 200% of GDP in the coming years.

Eurozone governments, led by powerful Germany, have made the participation of the IMF a precondition for their own loans but don’t want to take such steps, including giving Greece more time to pay back loans and interest, until the fall.

To straddle that difference, the IMF and eurozone finance ministers issued statements Friday, each seemingly trying to approach the others’ expectations as far as possible.

“We look forward to working closely with Greece and its European partners in the coming months to put in place all the elements needed for me to recommend to the Fund’s Executive Board to consider further financial support for Greece,” Christine Lagarde, the IMF’s managing director, said.

Meantime, the eurozone finance ministers said: “The Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and repayment periods) aiming at ensuring that Greece’s gross financing needs remain at a sustainable level.”

But in her statement, Ms. Lagarde also warned that Greece will need “significant debt relief, well beyond what has been considered so far.”

Further hurdles to the bailout running smoothly could be set up by snap elections in Greece. Elections this fall are not certain, but government officials are privately hinting at them and many analysts expect them, because Mr. Tsipras has no stable governing majority in parliament to implement the bailout. Elections could bolster or derail Greece’s bailout, depending on their outcome.

Of the 149 politicians in Mr. Tsipras’s Syriza party, 49 have withheld support for the premier in at least one of the three parliamentary votes on bailout measures since Mr. Tsipras agreed with European leaders July 13 to arrange a new financial rescue.

Opposition parties that have helped the government pass the measures despite Syriza’s disarray warned Friday that Mr. Tsipras can’t assume their continued support.

If Mr. Tsipras can win a new majority with a new-look Syriza that is loyal to him and purged of antibailout dissidenters, it could ease the passage of the austerity measures and market-oriented economic overhauls that creditors want.

German Finance Minister Wolfgang Schauble, a harsh critic of the new bailout deal, said he was encouraged that the new program had the support of opposition parties. “I believe this is an opportunity,” Mr. Schauble said

But it is also possible that a new antibailout movement, comprising Syriza’s antibailout faction and possibly other left-wing forces, could win many votes — denting support for the bulk of Syriza that has stayed loyal to Mr. Tsipras and forcing him to seek a broader, and possibly less stable, new governing coalition.

Beyond a possible election, the experience of Greece’s bailouts since 2010 is that enacting tough austerity has eroded public and parliamentary support for every government that tried to comply with creditors’ will. It would be a surprise if the antiausterity Syriza movement proves more stable under the pressure of the difficult bailout effort than previous governments.

National parliaments in some eurozone countries also still need to approve the deal. Mr. Schauble said he expected a vote in the Germany parliament Tuesday or Wednesday and that he has already briefed leading politicians on the decisions.

Additional reporting: Laurence Norman and Stelios Bouras

The Wall Street Journal

[greengiraffe]

Rating agencies are jokes... don't they know that Greek financiers are just rolling over and kicking the can down the road...

Fitch raises Greece’s rating after new bailout deal
AFP AUGUST 19, 2015 6:56AM

Fitch Ratings has raised its credit grade for Greece by one notch to CCC, saying the new bailout deal reached with EU institutions lowered the chance of a new default.

The August 14 deal setting the framework for a third rescue program “has reduced the risk of Greece defaulting on its private sector debt obligations,” Fitch said.

At CCC, the new rating for Greece remains deep in junk-bond territory, reflecting the tenuousness of the €86 billion ($129 billion) rescue deal and the need for official debt relief to render Athens’s finances sustainable over the medium term.

“The risks to the program’s success remain high,” Fitch said in a statement. The rating agency assumed that the deal would be finalised in time for Greece to make a €3.2 billion bond repayment on August 20.

But it noted that “it will take some time for trust to be restored between Greece and its creditors, which increases the risk of delayed program reviews.”

“Meanwhile, the political situation in Greece remains unpredictable.”

Fitch also noted that the participation of the International Monetary Fund in the new program, seen as essential by the European Union creditors, is “uncertain” and tied to “significant” debt relief.

Fitch’s upgrade came as the Greek government revealed it was easing slightly the capital controls imposed on the debt-hit country by allowing individuals to transfer €500 per month abroad.

Almost all transfers from Greek bank accounts to foreign bank accounts had been banned by the capital controls introduced on June 29 to stop a panicked outflow of cash from the country’s banks.

According to the government decree published in the official journal, individuals can also send out of Greece €5000 every three months to their children who are studying in foreign countries and up to €8000 with documents proving those expenses.

At the same time, the limit on weekly cash withdrawals within Greece remains unchanged at €420.

Businesses can transfer money abroad more easily to pay for exports, but still within tight limits and with certain products given priority such as medicines, fuel and food.

The controls however have forced companies to get large bill payments to foreign suppliers approved by a government commission — a process that has slowed things down so much that some frustrated foreign companies have begun demanding payment in advance.

AFP