Tag: Greece

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Euro Crisis Plan in Doubt

The 17 eurozone countries have not reached final agreement on the details of two key elements of the plan — reducing Greece’s massive debts and boosting the firepower of the bailout fund, two European officials said. They spoke on condition of anonymity because the talks were confidential.

Because of that, the 10 EU countries that do not use they euro won’t sign off on a plan to force banks across the continent to raise billion of euros in capital and insisted the meeting of finance ministers be called off, the officials said.

One of the officials said that the eurozone was also still waiting for Italy to take concrete action to control its debts and kick start growth.

“It’s a real mess once again,” the other official said.

via Euro Crisis Plan in Doubt.

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Europe Leaders Debate Severe Options for Accord – WSJ.com

“For the first time, I found the leadership of the euro zone focusing on the fundamentals here in respect to the situation arising from Greece, and the fear of contagion,” said Irish Prime Minister Enda Kenny. “There was clearly an understanding that the world is watching Europe and that there isn’t any point in doing this in a half-hearted fashion.”

The options being debated now are more severe and far-reaching than those under consideration in months past. Last year, when the crisis first threatened the euro zone’s stability, leaders insisted that Greece would not default and that assistance would only be provided to countries on the brink of collapse, and at punitive cost to discourage free-riders.

Now, the question is how big a default Greece will have, and leaders are scrambling to open floodgates of aid to several countries.

via Europe Leaders Debate Severe Options for Accord – WSJ.com.

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Greece: Banks and Pols at Impasse

The debate over how to divide the costs of rescuing Greece is one of the central questions European officials hope to resolve at a weekend summit that comes almost two years to the day after a newly elected government in Athens admitted that the country’s finances were “off the rails.”

……On Wednesday evening, an unexpected gathering of top European officials and IMF Managing Director Christine Lagarde in Frankfurt failed to bridge a divide between Germany, which is footing much of Greek’s bill and supports larger private-sector losses, and France, which is more concerned about the impact of greater losses on its banks.

via Greece: Banks and Pols at Impasse.

My money is on Germany — and a bigger haircut for banks. Then the next headache is how to recapitalize the banks. The cause of the problem: Basel II allowed 50:1 leverage on government (including Greek) bonds.

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Even a Slovak ‘Yes’ will make no difference – Telegraph Blogs

Mr Sulik (Slovakia’s speaker of parliament) is right. The EU-IMF rescue loans have not helped Greece pull out of its downward spiral. They have pushed the country further into bankruptcy. Greek public debt will rise from around 120pc of GDP to 160pc under the rescue programme, and the IMF is pencilling in figures above 180pc.

The rescue loans have rotated into the hands of creditor banks, life insurers, pension funds, and even a few hedge funds. ECB bond purchases have allowed to investors to dump their holdings at reduced loss, shifting the risk to EMU taxpayers. It is a racket for financial elites. A pickpocketing of taxpayers, including poor Slovak taxpayers.

“I’d rather be a pariah in Brussels than have to feel ashamed before my children,” he said.

via Even a Slovak ‘Yes’ will make no difference – Telegraph Blogs.

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The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com

As the stock market moves down into the next daily cycle low and the selling pressure intensifies, this should drive the dollar index much higher. It remains to be seen if gold can reverse this pattern of weakness in the face of dollar strength, especially since the dollar will almost certainly be rallying violently during the intense selling pressure that is coming in the stock market.

via The Next Selling Wave Is About to Begin | Toby Connor | Safehaven.com.

 

When the dollar strengthens, gold normally falls. Except in times of high uncertainty (like the present), when demand for gold as a safe haven overcomes downward pressure from a stronger dollar. Buying gold at current prices is a bet that either Greece will default — a pretty safe bet — or that the Fed is again forced to use its printing press (not quite as certain).

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Does the Euro Have a Future? by George Soros | The New York Review of Books

The German public still thinks that it has a choice about whether to support the euro or to abandon it. That is a mistake. The euro exists and the assets and liabilities of the financial system are so intermingled on the basis of a common currency that a breakdown of the euro would cause a meltdown beyond the capacity of the authorities to contain. The longer it takes for the German public to realize this, the heavier the price they and the rest of the world will have to pay.

via Does the Euro Have a Future? by George Soros | The New York Review of Books.

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Woes at French Banks Signal a Broader Crisis – WSJ.com

Greece will run out of money within weeks if it can’t end a standoff with the International Monetary Fund and the EU. In a last-ditch effort to overcome the impasse with its international lenders, Greece’s government said Sunday that it would impose a new property tax to cover a €2 billion shortfall in budget targets this year. Investors worry that if the dispute goes unresolved, Greece could suffer a messy default, with untold consequences for Europe’s banks.

French banks’ overall exposure to Greece is about €65 billion, according to the Bank of International Settlements.

via Woes at French Banks Signal a Broader Crisis – WSJ.com.

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Good time to buy gold

With Europe awash with stories of the imminent default of Greece, and German banks told to prepare for a 50% haircut on Greek bonds [Bloomberg], this would be a good time to buy gold. Any rupture in current bailout arrangements would cause a flight to safety, driving Treasury yields even lower and gold even higher. Breakout above $1900 would confirm a fresh advance, with a target of 2100*.

AUDUSD

* Target calculation: 1900 + ( 1900 – 1700 ) = 2100

Added in response to question: Reversal below 1800 is unlikely but would warn that the ascending triangle formation has failed.

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Troika Talks on Aid to Greece Stall – WSJ.com

“I expect a hard default definitely before March, maybe this year, and it could come with this program review,” said a senior IMF economist who is keeping close tabs on the situation. “The chances for a second program are slim.”

Failure of Greece to meet its targets, growing reluctance by some euro members to continue lending and the fact that private-sector participation in a second bailout won’t significantly alter Greece’s debt profile are the primary factors, the IMF official said.

via Troika Talks on Aid to Greece Stall – WSJ.com.

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