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Friday, July 20, 2012

Euro crisis deepens as time starts to run out for Spain's banks and regions

Spain drags the eurozone closer to the edge of collapse despite winning the backing of finance ministers from the single currency's major economies for a €100bn bank rescue fund

Spain dragged the eurozone closer to the edge of collapse despite winning the backing of finance ministers from the single currency's major economies for a €100bn (£77.8bn) bank rescue fund.

Concerns that Madrid is running out of options to bring down the debts of its ailing banks and bankrupt regions sent the country's borrowing costs soaring above 7.2% – a rate seen as unsustainable for a country that cannot devalue its own currency and is suffering a lengthy double-dip recession.

The bank bailout had been supposed to push down the country's borrowing rates, but the country's problems continue to mount. On Friday the region of Valencia was forced to turn to the Spanish central government for cash help.

That move, together with a downgrade of Spanish bonds to junk status by the credit ratings agency Egan Jones, saw the Madrid stock market suffer its biggest one day fall for two years.

Markets in London, Paris and Frankfurt followed suit with the FTSE 100 falling 1% to 5651. The euro crashed to historic lows against several currencies. Against the pound it fell to 77.72 pence, marking its lowest since the aftermath of the Lehman Brothers collapse in October 2008.

The prospect of Spain standing near the exit to the eurozone with Greece and Portugal had seemed outlandish only a few weeks ago, after eurozone leaders agreed to press ahead with more co-operation and a rescue for Madrid that targeted its banks.

Stock markets climbed and solvency fears eased after the summit, which many saw as provided a lengthy breathing space for politicians to work out a broader rescue package. But the shortcomings of the agreement have once again undermined renewed confidence in the eurozone and sent the bond yields of several countries higher, including Spain and Italy.

Comments by German officials added to the febrile atmosphere with hardliners questioning the eurozone's ability to carry on while southern European countries wrestled with major reforms and public spending cuts.

The Spanish government said a predicted rise in GDP next year of 0.4% had proved optimistic, and the economy would suffer another year of recession. The new forecast that the economy will contract by 0.5% shocked analysts, who said a raft of austerity measures would delay a recovery for several years.

Mariano Rajoy, the leader of Spain's right-wing government, has pushed through €65bn (£50.6bn) of spending cuts and tax rises to meet deficit targets set by Brussels, which are widely blamed for pushing the economy back into recession for another year.

Shortly before the bank bailout was agreed by eurozone ministers on Friday, the Valencia regional government admitted it could no longer fund itself on the markets and requested what is, in effect, a bailout by the Spanish government. Regional governments deliver the key parts of the welfare state, including health, education and social services.

Eastern Valencia said it was asking for central government help as it could not refinance loans that must be paid off this year. Regional vice president José Ciscar did not say how much was needed. "Like other regions, Valencia is suffering the consequences of liquidity restrictions in the markets," he said.

It will become the first of Spain's 17 semi-autonomous regions to tap a new, week-old €18bn (£14bn) fund designed to provide them with liquidity. The fund is part-financed with a loan from the state-owned lottery company.

Valencia, which has long been run by Rajoy's PP, is emblematic of Spain's current crisis. A property crash has hit both regional government income and the region's banks, with its three main banks having to be rescued. Local politicians, meanwhile, have a growing reputation for corruption and frivolous spending.

Valencia mopped up a quarter of the €17bn (£13.2bn) of extra money made available by central government in April to pay a backlog of regional government bills.

Just as Rajoy's government refuses to call the European rescue fund money a bailout, so Valencia's government insisted its request for special funding should not be described as one. "Valencia is signing up to a financing mechanism which other regions will also need in the coming days, without any further measures," Ciscar said.

Last year the regions not only failed to meet government-set deficit reduction targets, but actually increased their joint deficit. Rajoy's government has passed legislation allowing it to take direct control of the finances of regions that stray too far off target.

Analysts believe most regions will miss this year's 1.5 percent deficit target. The government last week asked at least eight of them to revise their 2012 budgets, threatening to take over the finances of some of them.

Analysts at Capital Economics said Spain had suffered a debilitating exodus of funds from its banks and a sharp detioration in its own funding position. As the reliance of the Spanish government on its own banks for funding grows (while the banks themselves are relying on the ECB), so the likelihood of Spain requiring a full-blown sovereign bailout grows too.

European leaders pleaded for calm after signing the final agreement to lend Spain €100bn of funds to underpin its banks.

European Central Bank executive Benoît Cœuré said at a conference in Mexico that it was startling to see international investors fearful of getting their money back from members of the single currency.

However, he said the fundamental measures of economic success were stronger in the eurozone than other developed areas. The eurozone's annual deficit in 2012, he pointed out, is expected to be 3% compared to 8% in the US, and 10% in Japan. He said the eurozone's total public sector debt will reach 90% at the end of the year compared to 106% in the US and 235% in Japan.But his comments were largely ignored as Mariano Rajoy's right wing government went back into crisis mode. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds


Greek police break up 9-month steel factory strike

Greek police on Friday broke up a nine-month strike at one of the country's main steel plants, arresting six workers manning a front gate roadblock, the state-run Athens News Agency said.

Following a court order, police intervened before dawn to open the gates of the Hellenic Halyvourgia plant in the area of Aspropyrgos, west of Athens, but met resistance from the small group of strikers.

There was also tension between the strikers and a group of workers who want to resume work and tried to enter the plant.


Online campaign winds down for bullied NY woman

Cleveland News - Fox 8

Online campaign winds down for bullied NY woman
Lexington Herald Leader
GREECE, N.Y. — The online campaign that aimed to raise $5000 to send bullied a New York bus monitor on vacation is winding down - after tallying more than $683000. As the monthlong campaign neared its end Friday, a spokeswoman for the fundraising ...
Bus monitor fundraiser ends soonGreece Post
Fundraiser for taunted bus monitor surpasses $680000 as it nears endCNN International

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Head of Greek privatisation fund resigns: source

The chief executive of Greece's privatisation fund has resigned, his office said on Friday, citing a lack of government support, planning delays and forecasting paltry asset sales this year.

"Without the government's unreserved support it is clearly impossible to rapidly carry out the privatisation programme," the outgoing executive, Costas Mitropoulos, said in a resignation letter to the finance ministry.


Greek privatization chief's departure risks new delays

ATHENS (Reuters) - The head of Greece's privatization agency said on Friday he was forced to resign because its new government blocked his effort to sell off assets, in the latest blow to a program central to Greek hopes of regaining credibility with lenders.


Bill Clinton to visit Athens

Thirteen years after his last visit and eleven years after leaving the White House, former US president Bill Clinton returns to Athens on Sunday 22 July.

The former president is coming to promote a new initiative that seeks to redefine the country’s image abroad by disassociating Greece from its negative perceptions.


Who wants to be a tourist these days?

A terrorist explosion in Bulgaria. Tourist kidnappings in Egypt. Sometimes violent demonstrations in Greece. A coup in Mali. Deadly drug wars in Mexico. Olympic security failures in England.


Outgoing Greek Privatizations Head: New Govt Failed To Support Agency

Greek Reporter

Outgoing Greek Privatizations Head: New Govt Failed To Support Agency
Wall Street Journal
ATHENS--The outgoing chief executive of Greece's privatizations agency accused the country's recently appointed coalition government Friday of failing to actively support it and predicted that revenues from state asset sales this year will fall ...
Greek privatisation agency chief resigns -officialsReuters
Greek Privatisation Agency Chief ResignsGreek Reporter
Head of Greek privatisation fund resigns: -ANSAmed
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Syria crisis: Assad forces retake Midan and border crossing

• Free Syrian Army withdraw from Damascus district
• Thousands of Iraqis evacuated from Syria
• Intelligence chief Hisham Bekhtyar died of wounds
• Bid to extend Unsmis after veto by Russia and China

11.53am: Sander van Hoorn, one of the few international journalists reporting from Damascus, describes the scene at the funeral of defence minster Dawoud Rajha, who was killed in Wednesday's attack.

11.31am: The UN refugee agency says it fears for the safety of 88,000 Iraqi refugees in Syria, after a family of seven was found shot dead in a Damascus apartment.

Agency spokeswoman Melissa Fleming says the family was "murdered" by unknown assailants and three other Iraqi refugees were killed by gunfire last week, AP reports.

She told reporters Friday in Geneva that thousands of refugees, mainly Iraqi, who have been living in the Damascus suburb of Seida Zeinab have fled their homes due to violence and "targeted threats."

Fleming said the agency was told that Iraq sent two planes to retrieve its citizens living in Syria, and plans to send more.

11.27am: Rebels have confirmed they have withdrawn from the Midan district of Damascus, Reuters reports.

"It is a tactical withdrawal. We are still in Damascus," Abu Omar, a rebel commander, said by phone, adding that President Bashar al-Assad's forces backed by armoured vehicles subsequently entered deep into the district and are now in control of its main market area.

11.19am: Interesting remark from Peter Harling of the International Crisis Group, quoted by Roula Khalaf in the Financial Times (subscription):

The regime is shedding layer after layer of what made it a state. The risk now is that it will just shed that last layer that still makes it different from a large militia.

11.07am: From Paris, our correspondent Kim Willsher clarifies the Russian ambassador's remark about President Assad being ready to step down "in a civilised manner" (see 9.47am).

Ambassador Alexandre Orlov was speaking on French RFI radio this morning. When asked if it was over for Assad, he said:

I share your view ... I believe it is difficult for him to remain after everything that has happened ... and he has accepted this in some way.

There was the meeting of the action group in Geneva on June 30 and its communiction that looked ahead to a transition to a more democratic regime. This communication was accepted by Bashir al Assad. He named his representative for discussions about this.

He has accepted he has to go, but to go in a civilised way.

11.03am: The Free Syrian Army is said to be in control of Yarmouk Palestinian camp in Damascus. This is not independently confirmed.

10.56am: Iraq is evacuating hundreds of its citizens from Damascus by air because clashes between Syrian soldiers and rebels have left land routes too dangerous, AP reports citing officials.

Iraqi Airways Capt Saad al-Khafaji said 750 Iraqis have been flown out of the Syrian capital since Thursday. Two more flights of evacuees were expected Friday.

Over the last 24 hours, an estimated 3,000 Iraqis have poured over the main border crossing between Iraq and Syria. Rebels seized control of at least one crossing on Thursday.

Mohammed Fathi, a spokesman for Iraq's western Anbar province, said the Red Cross was setting up tents and distributing medical supplies for refugees Friday at the al-Walid crossing, an estimated 600 kilometers (373 miles) from Baghdad.

10.53am: Yesterday saw the highest total of deaths in Syria since the uprising began, according to activists.

The Local Coordination Committees, which documents civilian deaths, said 217 civilians were killed on Thursday.

The British-based Syrian Observatory for Human Rights documented 206 civilian deaths, plus at least 98 deaths among the regime's forces. The highest civilian tolls were in Damascus countryside (54) and Deir Azzour (51), it said.

As usual, it is difficult to verify these figures because of the Syrian government's restrictions.

10.35am: Turkish journalist Mehmet Aksakal claims the Syrian army has retaken control of at least one Turkish/Syria border point taken by rebels on Thursday.

Speaking by phone from the border area he said:

Yesterday, Bab al-Hawa was under the control of the FSA for a few hours. The senior officers ran away. But later on the Syrian government attacked back, at the border gate, and rebels pulled back. It is unclear what's going on at the gate now because the gate is closed.

It looks like the border is controlled by the Syrian military again, but there are still clashes going on around the border. For a few hours it was under the control of rebels.

Aksakal said it was possible that the checkpoint would fall again to the rebels because the Syrian military is spread thinly in the area.

They are busy fighting in other areas. If they don't send some help the rebels will attack again. But it is really hard to say what will happen.

Yesterday video of the Bab al-Hamal crossing showed rebels tearing down a placard of Bashar al-Assad.

The rebels who have been involved in the clashes are local groups, loosely tied to the Free Syrian Army, he said.

When we ask them where they bring weapons from they say we get them from the Syrian army when we clash with them.

None of the FSA members has so far confirmed that weapons are being smuggled across the border.

There are two main borders between Turkey and Syria, where most of the trade and passengers cross: one between Kilis in Turkey and the rebel controlled town of Azzaz; and another between Cilegozu in Turkey and Bab al-Hawa where rebels were filmed yesterday.

This Google maps shows the main border points into Turkey.

The Cilegozu border has been closed for two weeks, while fighting has raged between rebels and Syrian army in Azzaz, according to Aksakal.

He said there were also many smaller border points into Kurdish areas that don't tend to be used for international crossings. Most have been closed for months.

Jarablus, another border crossing towards the east, is under Kurdish control, he said. Last month the Syrian government withdrew about 95% of the Syrian soldiers stationed in Kurdish areas, Aksakal claimed.

But last week the Syrian army attacked Jarablus with helicopters. Eight rebels and two Syrian soldiers were bought to hospital in Turkey, Aksakal reports.

The Kurdish area is free of the Syria government, he claimed.

Within the last week up to 5,000 refugees have crossed the border. They included at least three generals and other officers.

10.14am: Despite the Russian ambassador's remark (see 9.47am), Assad may not be willing to go after all:

10.07am: Hezbollah's al-Manar TV reports that Hisham Ikhtiar, chief of the Syrian national security bureau, has died. He was said to have been injured in the blast that targeted other senior officials on Wednesday.

Meanwhile, funerals are said to be taking place for other victims of the blast, though apparently they are not being televised in Syria.

9.47am: The Russian ambassador in Paris is reported as saying that President Assad is ready to step down, but "in a civilised manner".

9.40am: Dutch journalist Sander van Hoorn is tweeting from Damascus:

9.30am: Egypt: Omar Suleiman, the former Murabarak regime's intelligence chief – often referred to as "torturer-in-chief" – is to be given a military funeral. Suleiman died in the US yesterday while having medical tests.

The Egypt Independent reports:

The Muslim Brotherhood and the Salafi Nour Party confirmed that they would attend Suleiman's funeral, while the Salafi Front's spokesperson called on people not to attend the funeral or pray for Suleiman.

Salafi Front spokesperson Khaled Saeed told the privately owned Al-Watan newspaper that Suleiman was a criminal who corrupted the nation.

The acting head of the Brotherhood's Freedom and Justice Party, Essam al-Erian, tweeted, "He left our world [taking with him] great secrets."

"I can say nothing at the moment of death except: To Allah we belong and to Him we shall return," he added.

On Twitter, Sarah Carr posted this six-word epitaph:

8.40am: Syrian state-run TV says government troops have recovered full control of the Midan district of Damascus, AP reports.

Damascus activist Khaled al-Shami, said rebels carried out a "tactical" retreat early Friday to spare civilians further shelling after five days of intense clashes between opposition fighters and regime forces.

8.21am: (all times BST) Welcome to Middle East Live.

Here's a roundup of the latest developments on Syria:

Rebel fighters took over the country's border crossings into Turkey and Iraq as diplomacy reached a dead end. The capture of the crossings – reportedly including all into Iraq – appeared to represent a dramatic new challenge to Bashar al-Assad's control and will likely prove crucial in funnelling arms and supplies into besieged rebel areas.

A senior Iraqi government official said Iraqi border forces had witnessed the executions of several Syrian army soldiers at the hands of the rebels, according to the New York Times. Iraqi officials confirmed the seizures of four crossings and said the frontier was shut and additional Iraqi troops sent there as a precaution, it said.

The UK, US and France rounded on Russia and China following the veto of a UN draft resolution on fresh Syrian sanctions, lambasting the move as "inexcusable" and accusing Moscow of buying time for Assad to "smash the opposition". Britain's foreign secretary, William Hague, condemned the two countries vetoing the resolution as "inexcusable and indefensible".

The security council is due to vote on a UK tabled proposal to extend the UN's monitoring mission in Syria for another 30 days. Russia said it is willing to back extending the mission for 45 days under another draft tabled by Pakistan. Both proposals are expected to be put to a vote later today.

"This is a battle that looks, unfortunately, as if it's going to be decided by brute force rather than negotiations that the international community had hoped," says Ian Black in a new Guardian video. Martin Chulov warns of the dangers of more violence if, and when, the regime falls.

In Damascus rebels torched the main police headquarters as law and order continued to break down in the capital. The battle for parts of the capital raged into the early hours of Friday, with corpses piled in the streets. In some neighbourhoods, residents said there were signs the government's presence was diminishing.

Assad has amassed up to $1.5bn (£950m) for his family and his close associates, according to analysts, despite moves in London, Switzerland and the US to freeze the assets of his regime. Many of Assad's assets are held in Russia, Hong Kong and a range of offshore tax havens to spread the risk of seizure, according to London-based business intelligence firm Alaco.

About 20,000 Syrians have travelled across the main border crossing into Lebanon over the past 24 hours, a Lebanese security source working at the border told Reuters. The number of Syrians, many of them day-workers, who travel through the official Masnaa border crossing usually hovers around 5,000 per day, the source said. The US government has mapped the unfolding refugee crisis. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds


Greek Civil Servants Face More Cuts in Pensions, Union Says

Greek Reporter

Greek Civil Servants Face More Cuts in Pensions, Union Says
By Marcus Bensasson - 2012-07-20T10:13:09Z. The Greek government plans to cut lump-sums paid to civil servants on retirement by more than a fifth, according to the civil servants' union, which said it will resist the measure. The one-time pension ...
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Greece wishes it used the Pakistani rupee!

The Express Tribune (blog)

Greece wishes it used the Pakistani rupee!
The Express Tribune (blog)
Moody's, one of the three biggest ratings agencies in the US, recently sent Pakistan's credit rating one grade lower into 'junk' territory. That is the lowest rating ever bestowed on Pakistan's sovereign debt. For a relative comparison, Moody's ranks ...


The Australian pseudo-left and Greece's SYRIZA

The Australian pseudo-left and Greece's SYRIZA
World Socialist Web Site
Throughout the SEP's campaign for the Melbourne by-election, I have been warning that Australia is not immune from the global crisis of capitalism, and that the political lessons from events in countries like Greece and Spain have an immediate ...


Kouvelis Says Greece Could Still Default Yet

San Francisco Chronicle

Kouvelis Says Greece Could Still Default Yet
Greek Reporter
ATHENS – Fotis Kouvelis, leader of the tiny Democratic Left party that is a partner in New Democracy Conservative Prime Minister Antonis Samaras' uneasy coalition with the PASOK Socialists, has warned that Greece may yet default on its loans to ...
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Greece, East Rochester teachers go to summer school, too

Greece, East Rochester teachers go to summer school, too
Rochester Democrat and Chronicle
On Wednesday and Thursday, more than 130 teachers and administrators gathered at the Greece Central School District's Pine Brook Elementary School to participate in a pilot program that hooked them in with a live conference taking place in Maryland.


Amid instability, who wants to be tourist?

A terrorist explosion in Bulgaria. Tourist kidnappings in Egypt. Sometimes violent demonstrations in Greece. A coup in Mali. Deadly drug wars in Mexico. Olympic security failures in England.


UN Security Council extends Cyprus peacekeeping force through 2013

The U.N. Security Council has extended the United Nations Peacekeeping Force in Cyprus through January 2013, and again urged the Greek Cypriot and the Turkish Cypriot leaders to speed up talks aimed at reunifying the divided Mediterranean island nation.