Europe - Economic Data & News 10 (Dec 13 - Jan 15)

Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby behappyalways » Sun Jan 04, 2015 12:31 pm

Greece’s political crisis

Samaras’s failed gamble

The prime minister looks likely to lose a snap Greek election later this month, but it is not clear what government will succeed him

ANTONIS SAMARAS, the centre-right Greek prime minister, lost one election on December 29th. Now he will have to fight another. His New Democracy party’s candidate for president, Stavros Dimas, fell 12 votes short of the required three-fifths majority in a third and final ballot by Greece’s 300 MPs. As the constitution demands, a snap general election will now be held on January 25th. ND is trailing the far-left Syriza opposition, according to the opinion polls. Once again, the prime minister’s chances of victory look slim.

Mr Samaras made two television appeals for lawmakers to back Mr Dimas, a former European environment commissioner, for the ceremonial post. His election would have kept the fragile ND-led coalition in power long enough to negotiate an exit from Greece’s unpopular austerity programme with the European Union and IMF, including a precautionary credit line from the euro-zone bail-out fund. Many independent and opposition lawmakers who rejected Mr Dimas are unlikely to be re-elected, yet not even self-interest persuaded them to back the government.


Such stubbornness heralds a bad-tempered election campaign. Alexis Tsipras, Syriza’s radical leader, calls Mr Samaras “finished”. He plans to renegotiate Greece’s bail-out. Although he no longer threatens to halt debt repayments unilaterally if his party comes to power, he still wants to secure a big write-off. Greece’s creditors would oppose that, and also Mr Tsipras’s proposals to reverse other reforms and launch a €11 billion ($13 billion) welfare package, to be financed by better tax collection. With more than €7 billion of lending suspended until Athens reaches agreement with its “troika” of creditors on more tax, labour and pension reforms, Greece will soon run into trouble. Hard-pressed taxpayers are already struggling; more than €1 billion of income and property tax goes uncollected every month. Mr Tsipras’s promises sound alluring to angry, impoverished Greek voters.

Yet some left-wingers are suspicious. “How can Greece dictate terms to the troika when they control the purse-strings?” asks Lefteris Maniatakis, a former employee of the state electricity company. “Over the past four years we’ve seen every government resist their demands at first, but give in eventually.”


Mr Samaras hopes to shrink and perhaps reverse Syriza’s lead over the course of the campaign. He can cite a modest recovery, with GDP growth likely to reach 0.6-0.8% in 2014 thanks to a successful summer tourist season, improved exports and increased EU subsidies for infrastructure projects. Another tactic will be to stress the risks posed by a hawkish but inexperienced left-wing Syriza-led government. Greek shipowners, worried they could be hit by a new wealth tax, are already pulling deposits out of local banks. Small savers could follow their example, fearing a repetition of the 2013 bail-in of depositors in Cyprus.

Even if Syriza wins on January 25th, it may fall short of an overall majority. Mr Tsipras speaks of a government with Syriza as its “core”. At least four small parties are likely to win more than 3% of the vote and enter parliament, but only the PanHellenic Socialist Movement (Pasok) and To Potami (The River), a new centre-left party led by Stavros Theodorakis, a television journalist, look like possible coalition partners. Mr Tsipras is used to making alliances: he has to keep his own party’s disruptive far-left faction on board. Even so, it could be hard for Syriza to work with either Pasok, which has been ND’s junior coalition partner for two-and-a-half years, or a cocky newcomer like Mr Theodorakis.

In 2012 an inconclusive election was followed by another a month later. This time, the deadlines are tighter: a two-month extension to Greece’s bail-out expires at the end of February, increasing the pressure on the election winner to form a government fast. Greece’s latest political flare-up might yet turn into another extended crisis.

source: The Economist
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby winston » Mon Jan 05, 2015 6:48 am

Greeks look able to cut and run

The German government believes the euro zone will now be able to cope with a Greece exit if that becomes a reality.

Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the region has implemented enough reforms since the height of the regional crisis in 2012 to make any such exit manageable, news weekly Der Spiegel reported.

"The danger of contagion is limited because Portugal and Ireland are considered rehabilitated," the magazine quoted one government source as saying.

In addition, the European Stability Mechanism, a bailout fund, is an "effective" rescue tool, another source added. And big banks will be protected by the banking union.

While it remains unclear how a country can ditch the euro yet remain in the union, Der Spiegel quoted a "high- ranking currency expert" as saying that "resourceful lawyers" would be able to clarify that point.

Berlin is said to consider a Greece exit almost unavoidable if the leftist Syriza party led by Alexis Tsipras wins in a January 25 poll, called after lawmakers failed to pick a president last month.

On the other side is Prime Minister Antonis Samaras' conservative New Democracy, which imposed unpopular budget cuts under a bailout deal.

Syriza's lead over New Democracy has narrowed to about three percentage points in the runup to the vote.

And British Prime Minister David Cameron now says he would like to advance a referendum on membership of the European Union from 2017.

Source: REUTERS
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby winston » Mon Jan 05, 2015 6:48 am

Greeks look able to cut and run

The German government believes the euro zone will now be able to cope with a Greece exit if that becomes a reality.

Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the region has implemented enough reforms since the height of the regional crisis in 2012 to make any such exit manageable, news weekly Der Spiegel reported.

"The danger of contagion is limited because Portugal and Ireland are considered rehabilitated," the magazine quoted one government source as saying.

In addition, the European Stability Mechanism, a bailout fund, is an "effective" rescue tool, another source added. And big banks will be protected by the banking union.

While it remains unclear how a country can ditch the euro yet remain in the union, Der Spiegel quoted a "high- ranking currency expert" as saying that "resourceful lawyers" would be able to clarify that point.

Berlin is said to consider a Greece exit almost unavoidable if the leftist Syriza party led by Alexis Tsipras wins in a January 25 poll, called after lawmakers failed to pick a president last month.

On the other side is Prime Minister Antonis Samaras' conservative New Democracy, which imposed unpopular budget cuts under a bailout deal.

Syriza's lead over New Democracy has narrowed to about three percentage points in the runup to the vote.

And British Prime Minister David Cameron now says he would like to advance a referendum on membership of the European Union from 2017.

Source: REUTERS
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby behappyalways » Mon Jan 05, 2015 9:42 am

Samaras Warns of Euro Exit Risk as Greek Campaign Starts
http://www.bloomberg.com/news/2015-01-0 ... -says.html
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby winston » Tue Jan 06, 2015 6:50 am

TOL:-

Do you really think that Greece, a small insignificant country, can really take down the whole financial system and create a European Contagion ? Anyway, Portugal, Spain and Italy are in better shape than a few years ago.

A bigger threat is whether Russia wants to play with the EU. If you push Russia into a corner where they are suffering economically, they may play with the EU. And do u really think that the EU and the US would like to go to war with Russia ? I'm just waiting for Putin to declare that the economic sanctions to be an act of war ...

==========================================

"GREXIT": The euro crisis could be back

Mario Draghi’s July 2012 pledge to do “whatever it takes” to keep the euro intact has kept speculators at bay for almost three years. Bond yields fell from Dublin to Athens, giving governments room to cut budgets and start revamping their economies.

While it’s not been a period of robust growth, the talk of crisis has abated and even Greece’s six-year recession ended.

What’s not changed is the risk entailed by Greece’s potential departure from the 19-nation currency bloc. What Citigroup Inc.’s Ebrahim Rahbari termed “Grexit” is back in play and it remains the worst possible outcome in the view of economists at Berenberg Bank and ING-DiBa AG.

Leaving the euro would make Greece a pariah in international markets, enforce a devaluation that probably would require capital controls and make banks fresh targets. The economy would probably contract again and the government would be pushed off the deleveraging and deregulatory policies that euro membership demands and which, while painful, have begun to bear some fruit.

To Holger Schmieding of Berenberg, such a backdrop would leave Greece as “Venezuela without oil,” a nod to the Latin America nation already skidding toward default.

After Greece, speculators would immediately size up the next potential victim − from Cyprus to Spain and on to Italy.

Elections Coming

While Europe’s policy defenses and vulnerable economies are now stronger, chances are of a rerun of the contagion of 2011 and 2012 when Portugal, Cyprus, Spain and Ireland all got bailouts. Elections are nearing in Portugal and Spain, while France and Italy are struggling to overhaul their economies.

“It would be a nasty precedent if Greece leaves as it could stimulate others to do the same, making it the first step of euro fragmentation,” said Carsten Brzeski, chief economist at ING-DiBa in Frankfurt. “The fact remains that losing one member of the family would ultimately open Pandora’s box.”

The status quo is worth preserving as Greece would keep getting the aid it needs and other European governments wouldn’t have to explain why prior loans went bad, Commerzbank AG economists led by Joerg Kraemer said in a report today. They put the likelihood of Grexit at less than 25 percent.

The political gamesmanship that marked the first generation of bailout plans has returned: Der Spiegel reported that German Chancellor Angela Merkel is comfortable with Greece leaving the bloc and that any fallout would be manageable.

Read that as a scare tactic aimed at persuading Greek voters not to elect anti-austerity Syriza in a Jan. 25 election. Prime Minister Antonis Samaras is also saying the vote will determine his country’s membership of the euro.

That may be a bluff. According to a report by Marketwatch.com, Barry Eichengreen of the University of California-Berkeley told a conference of economists this weekend that the fallout from Greece leaving the euro would still be “Lehman Brothers squared.”

Source: Bloomberg
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby behappyalways » Tue Jan 06, 2015 11:31 am

Politics is the big risk to the euro
http://www.bbc.com/news/business-30680415
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby behappyalways » Tue Jan 06, 2015 11:52 am

(During the 3rd round of President's election, the independents MP chose to have a parliament election (in which they most probably lose) then to support the on going government and keep their seats(2nd round of election, the govt got 168 votes, 3rd round 168 votes.......no opposition flinched)....I think this time round it is for real....the leftist will win the election.....)

Samaras Faces Greeks Skeptical of His ‘Scare’ Scenarios
http://www.bloomberg.com/news/2015-01-0 ... nings.html
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby behappyalways » Tue Jan 06, 2015 1:52 pm

German inflation hits five-year low as eurozone prepares for QE
http://www.telegraph.co.uk/finance/econ ... or-QE.html
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby winston » Thu Jan 08, 2015 5:52 am

The eurozone slipped into deflation in December for the first time since October, 2009. No doubt, tumbling oil prices and sagging economies are likely to further fuel deflation.

The euro fell sharply against the US dollar to 1.182 yesterday, almost a 12-month low. Whether Greece exits the euro zone depends on the outcome of its January 25 election.

If anticipated poll winner the Syriza party,decides to take Greece out, it is likely to default on debt payment and plunge into severe recession.

A more probable outcome is a victory for Syriza followed by tough negotiations after which Greece stays with the EU, thus preventing any contagion.

Source: The Standard HK
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Re: Europe - Economic Data & News 10 (Dec 13 - Mar 15)

Postby winston » Thu Jan 08, 2015 5:52 am

The eurozone slipped into deflation in December for the first time since October, 2009. No doubt, tumbling oil prices and sagging economies are likely to further fuel deflation.

The euro fell sharply against the US dollar to 1.182 yesterday, almost a 12-month low. Whether Greece exits the euro zone depends on the outcome of its January 25 election.

If anticipated poll winner the Syriza party,decides to take Greece out, it is likely to default on debt payment and plunge into severe recession.

A more probable outcome is a victory for Syriza followed by tough negotiations after which Greece stays with the EU, thus preventing any contagion.

Source: The Standard HK
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