How the world sees Greece
 AFP | US Treasury's Collyns to travel to Athens, Rome Reuters | WASHINGTON (Reuters) - The United States will dispatch an envoy to Europe this week to discuss the economies of Greece and Italy with senior officials in Athens and Rome, the US Treasury said on Monday. Treasury's Assistant Secretary for ... US Treasury official to visit Athens, Rome this week Copper Settles 2% Lower Bill Clinton Pops Up in Greece as Europe's Woes Worsen |
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 The Guardian | Spain struggles to fund itself CNN By Ben Rooney @CNNMoneyInvest July 23, 2012: 1:56 PM ET Spanish Prime Minister Mariano Rajoy and Minister of Economy Luis de Guindos at a meeting in Madrid earlier this month. NEW YORK (CNNMoney) -- Spain appears to have crossed a red line in the bond ... Euro slumps on mounting Spanish and Greece concerns Euro Hits New Multiyear Lows Fears over Spain's financial crisis flare up |
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 CNBC.com | Bill Clinton Pops Up in Greece as Europe's Woes Worsen Businessweek Is Greece turning into a charity case? One could conclude as much from the visit to Greece this past weekend by former President Bill Clinton who has a habit of showing up in disaster zones and urging the rest of the world to provide help. The Greek ... Germany sounds ready to kick Greece out of the euro Greece Seeks More Cuts as Deadlines Loom IMF says will support Greece in overcoming economic woes |
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Greece: Police in new clashes at steel plant Businessweek ATHENS, Greece (AP) — Riot police have clashed with protesting steel workers outside a factory near Athens, in a labor dispute that has triggered a political spat in the crisis-hit country. Police said they used pepper spray and scuffled with ... |
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 Deutsche Welle | Germany Expects Greek Troika Report Sep Wall Street Journal By FRANZISKA SCHEVEN. Germany expects to receive a report on Greece from the debt-stricken country's international lenders in early September, a government spokesman said in a press conference on Monday in Berlin. The German government ... Greece seeks billions of euros more in cuts: WSJ Troika of EC, ECB and IMF lenders likely to demand more Greek austerity Can Greece still be saved? 23.07.2012 |
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 Examiner.com | 'Greece II' opens in Spain Examiner.com As Greek Prime Minister Antonis Samaras declares the Greek economy to be in a 'Great Depression', Spain is now also spiraling down into social unrest akin to what occurred in Greece. Massive anti-austerity protests have erupted across Spain some ending ... |
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Greece schools considering changes to Code of Conduct Rochester Democrat and Chronicle Students in the Greece Central School District could be allowed to use their cell phones, tablet computers and e-readers in certain areas of their schools, if the school board approves proposed changes to the mobile device policy. But, they won't be ... |
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 AFP | Talk of Greece Exit From Euro Resurfaces Businessweek Greece's troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund -- will arrive in Athens tomorrow amid doubts the country will meet its commitments and reluctance among euro-area ... Roesler questions if Greece can fulfil bailout conditions German Econ Min: Greece Likely Unable To Fulfill MoU Commitments German vice chancellor says idea of Greek euro exit has 'lost its horror' |
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 Telegraph.co.uk | Greece Back at Center of Euro Crisis as Exit Talk Resurfaces Bloomberg Greece's troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund -- will arrive in Athens tomorrow amid doubts the country will meet its commitments and reluctance among euro-area ... Germany's Roesler Says 'Very Skeptical' Greece Can Be Rescued Roesler questions if Greece can fulfil bailout conditions German Econ Min: Greece Likely Unable To Fulfill MoU Commitments |
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ECB president insists the eurozone will not collapse as Murcia becomes latest region to request funding
Spain's regional woes are expected to weigh on financial markets this week after a second local government in three days asked for state aid, increasing fears that the eurozone's fourth largest economy will be forced to seek a full-blown rescue.
On Sunday Murcia became the latest region to admit it needed central government help, after European finance ministers waved through a €100bn (£77.8bn) recapitalisation of Spanish banks on Friday. Several other regions are expected to follow, with Catalonia reportedly unable to pay the interest on €48bn of borrowings.
Murcia's president, Ramón Luis Valcárcel, said he expected the south-eastern region to ask for up to €300m from Madrid as it struggled to refinance debt and cover its deficit.
"Don't imagine they are going to simply make a present of the money," he said, warning that Spain's prime minister, Mariano Rajoy, would impose strict conditions.
Murcia joins the far larger region of Valencia – which flagged up a cash shortage on Friday – on the list of regional governments that have said they will tap an €18bn liquidity fund set up by the central government just 10 days ago.
Several others among Spain's 17 semi-autonomous regions are expected to follow. They include the two biggest regions, Catalonia and Andalucia, as well as central Castilla La Mancha.
Valencia's announcement that it would seek money from the fund, which an increasingly desperate Spanish government has had to partially finance with a loan from the state-owned lottery company, helped send the country's sovereign bond yields soaring on Friday.
New government GDP projections also pushed up yields by forecasting that the Spanish economy would not grow before 2014. Ten-year bond yields rose to a new euro-era record of 7.25% on Friday, a rate widely seen as unsustainable and pushing the country closer to a bailout from the European Union and the International Monetary Fund.
Markets also reacted sharply to the news. On Friday, the Madrid stock market suffered its biggest one-day fall for two years, while markets in London, Paris and Frankfurt also slipped, with the FTSE 100 falling 1% to 5651.
The coming wave of regional bailouts may add further pressure to Spain's bond yields as they threaten to spiral out of control and drive Spain towards a full rescue.
Rajoy's ministers have urged the European Central Bank (ECB) to buy the country's bonds in order to relieve pressure, but ECB president Mario Draghi told Le Monde on Sunday that it had no plans to buy Spanish sovereign debt. He also insisted that the eurozone was "absolutely not" in danger of breaking up.
"We see analysts imagining the scenario of a eurozone blow-up. They don't recognise the political capital that our leaders have invested in this union and Europeans' support. The euro is irreversible," he told the French newspaper.
"All movement towards financial, budgetary and political union is, for me, inevitable and will lead to the creation of new supranational bodies."
Spain's regional bailouts come as senior figures in Catalonia and Murcia admit they will have trouble meeting the 1.5% deficit target they have been set this year by central government.
"There are reasons to doubt how we will be able to reduce the deficit from 4.4% to 1.5% this year," Valcárcel admitted.
Senior figures in Catalonia have also privately admitted that, although they are making every effort to meet the 1.5% target, the region will also struggle to make it. Strict regional deficit targets are a major part of Spain's strategy as it tries to meet the national deficit target it has been set by Brussels, which wants Spain's overall deficit down from last year's 8.9% of GDP to 6.3%.
Last year's high deficit was mainly due to regional governments which, despite demands from central government that they cut back, increased their joint overspend. They run health, education and social services – accounting for 37% of public spending.
Rajoy has introduced tough new laws and designed the liquidity fund in a way that allows it, if necessary, to take direct financial control of regions that fail to curb their deficits – imitating the control Brussels now exerts over southern European economies.
Artur Mas, the nationalist president of the independent-minded Catalonia region, has warned that full intervention would be unacceptable and has threatened to call regional elections if that happens.
"All regional governments run the risk of being intervened by central government, given that, if you do not meet the deficit target, the state will force you to take measures – that is intervention," Valcárcel explained.
Refinancing regional debt does not add to Spain's overall debt, but covering regional deficits does.
There were fresh protests at the weekend as several hundred demonstrators travelled to Madrid from many parts of Spain to protest over the country's near 25% unemployment rate, as well as the stinging austerity measures introduced by the government in a bid to avoid an international financial bailout. Protesters, many of whom were unemployed, carried banners saying "No cuts" and "United, that's enough".
As well as on Spain, markets' eyes will be on the Greek government and banks this week, analysts at Capital Economics note, following the news that the ECB will stop accepting Greek bonds as collateral for its refinancing operations pending a review by the troika.
"Greek banks can still use these bonds to access funds from the Greek National Bank's emergency liquidity assistance," said Jennifer McKeown at Capital Economics. "But such loans are more costly and this development will clearly add to the already intense pressure on the Greek banking system."
The Greek prime minister, Antonis Samaras, said on Sunday that Greece was now in a "Great Depression" similar to the American one in the 1930s. His comments, made to former US president Bill Clinton, who visited Greece as part of a delegation of Greek-American businessmen, came two days before a team of Greece's international lenders arrive in Athens to push for further austerity cuts.
Germany's economy minister, Philipp Rösler, questioned whether Greece could fulfill the conditions for receiving further international aid and said that the idea of the country leaving the euro had "lost its horror."
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