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Tuesday, October 30, 2012

Greek government gets key backing to pass reforms


Wall Street Journal

Greek government gets key backing to pass reforms
Reuters
ATHENS (Reuters) - An overwhelming majority of Greek Socialist lawmakers have agreed to vote in favor of contested austerity reforms, party officials told Reuters on Tuesday, sharply increasing the odds of securing parliamentary approval for the measures.
Greek Leader Warns of Chaos If Austerity Is BlockedWall Street Journal
Greek PM Says Debt Deal Reached with LendersVoice of America (blog)
Greek Coalition Allies Balk as Samaras Says Austerity Talks DoneBusinessweek
Washington Post -Chicago Tribune -Yahoo! News (blog)
all 351 news articles »

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Greeks Threaten Albanian Classmate With Golden Dawn


Greeks Threaten Albanian Classmate With Golden Dawn
Greek Reporter
An Albanian girl who had achieved the highest grades at a Greek school in Farsala, earning the right to carry the Greek flag in a parade, declined to do so after it was reported her classmates didn't want her to have the honor because she wasn't Greek ...
Greece: fighting back against the Golden Dawn fascistsSocialistworker.co.uk

all 3 news articles »

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This is a European suicide pact | Jonathan Portes

In normal times in the EU, co-ordinated austerity would lower member states' debt. But instead it's making things worse

In the aftermath of the 2008 financial crisis practically all European Union countries opted for the same strategy to put their finances back on track: cut spending; increase taxes; reduce deficits. Research published by economicour thinktank NIESR this week makes the first attempt (to our knowledge) to estimate the impact of this co-ordinated fiscal consolidation across the EU. What we have found won't make for pleasant reading in the treasuries of European governments.

In "normal times" fiscal consolidation would lead to a fall in debt-to-GDP ratios, but in the current circumstances it is likely to be self-defeating for the EU collectively. As a result of the deficit cutting plans now in train, debt ratios will be higher in 2013 in the EU as a whole, rather than lower. This will also be true in almost all the individual states (with the exception of Ireland). Coordinated austerity in a depression is self-defeating. The implication is that the strategy being pursued by individual members, as well as the EU as a whole, is making matters worse.

Why so? There are several reasons one might expect the negative impact of fiscal consolidation on growth to be greater no. Normally, monetary policy offsets some of the impact of fiscal policy. But interest rates are already at exceptionally low levels – and it is far from clear that extraordinary measures, such as quantitative easing and the ECB's outright monetary transactions, are having much impact on the economy. Second, during a downturn, when unemployment is high and job security low, a greater percentage of households and firms are likely to find themselves without access to credit. And finally, with all countries consolidating simultaneously, output in each is reduced not just by fiscal consolidation, but by that in other countries (through trade links). In the EU, such spillover effects are likely to be large.

Fiscal policy started to achieve the opposite of what was intended in 2011, when deep consolidation measures were introduced in Portugal, Ireland and Greece – the three countries on bail-out programmes. Cumulative measures over the three-year period amount to close to 10% of GDP in Greece and Portugal and 8% in Ireland. Consolidation measures amounting to between 5% and 6% of GDP are planned in France, Italy, Spain and the UK, while only a modest adjustment is likely in Germany and Austria.

Our estimates are that in those normal times, fiscal consolidation would have reduced growth, but not by very much except in the bailout countries: the cumulative impact ranging from almost nothing in Germany to 8% in Greece and Portugal. The desired objective of reducing deficits and debt would have been achieved. But taking account of the current environment changes the picture dramatically: the hit to output in Germany is now 2%. In the UK it is 5%; and in Greece 13%. Still more shocking is the impact on debt-to-GDP ratios – the fiscal consolidation was supposed to improve fiscal sustainability; instead, it makes matters worse. And this isn't true just in extreme cases like Greece – fiscal consolidation across the EU has debt-to-GDP ratios in Germany and the UK as well. In both the UK and the euro area as a whole, the result of coordinated fiscal consolidation is a rise in the debt-GDP ratio of approximately five percentage points. For the UK, that means a debt-GDP ratio of close to 75% in 2013 instead of about 70%. We are not running to stand still; we are determinedly heading in the wrong direction.

The policies pursued by EU countries over the recent past have had perverse and damaging effects. Of course, European countries did need to get back on the path of fiscal sustainability, and that does mean cutting spending and raising taxes. But timing is everything, and our research shows 2011 was precisely the wrong time. Waiting until economies were clearly on the road to recovery would have been less painful socially, and much better economically. Growth would have been higher, debt-GDP ratios lower, and the necessary adjustment smoother and less painful.

What we have seen in Europe is the creation of a death spiral of deficit cutting, leading to reduced growth – which leads to reduced revenues and pressure to cut deficits faster. Paradoxically the EU was set up in part to avoid such problems by allowing members to co-operate to secure better outcomes. Co-ordinated EU fiscal consolidation looks less like economic policy co-operation and more like a suicide pact.


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Euro zone ministers to discuss Greece, no decisions seen


FXstreet.com

Euro zone ministers to discuss Greece, no decisions seen
Reuters
BRUSSELS Oct 30 (Reuters) - Euro zone finance ministers will hold a conference call on Wednesday to discuss progress in negotiations of the revised Greek bailout but are not expected to make any decisions yet, two euro zone officials said on Tuesday.
Concerns Regarding Spain and Greece Limit Euro GainsForexyard
USD Firms As Sandy ApproachesAction Forex

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Greek Groundhog Day


Greek Groundhog Day
Wall Street Journal
The Greek Prime Minister announced Tuesday that he'd finally reached agreement with his coalition partners and creditors on the budget cuts and reforms needed to secure its latest bailout loan. Almost immediately, one of the junior parties supporting ...


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Greek union brings TV stoppage after suspensions of 'critical' presenters

Warnings of 24-hour strikes at state broadcaster ERT as lobbyists highlight 'attack on democracy and press freedom'

A work stoppage at Greek state television interrupted broadcasts on Tuesday morning as the conflict between the government and the press about the reporting of the economic crisis spilled on to the screen.

Instead of a chat show at 6am, viewers saw only an announcement by the journalists' union about the action. The stoppage was called over the suspension of the show's two presenters for remarks seen as critical of a minister by the management at the state broadcaster, ERT.

The union warned that if the suspension wasnot rescinded immediately "employees will proceed with continuous 24-hour strikes and other actions to preserve the prestige of ERT … which the management is undermining".

The tension between government and journalists has been raised by the fast-track prosecution of a magazine editor for publishing a "rich-list" of 2,000 Greeks with Swiss bank accounts, whom the finance ministry has so far failed to investigate.

The editor, Kostas Vaxevanis, was arrested on Sunday and put on trial on Monday, in a highly unusual course of events in Greece's normally slow moving judiciary. He wrote on the Guardian's website on Tuesday: "In Ancient Greek mythology, justice is presented as blind. In modern Greece, it is merely winking and nodding."

He said the leaked Swiss bank account list was highly revealing. "Publishers, businessmen, shipowners, the entire system of power is shown to have transferred money abroad. And this is information from only one bank. Meanwhile in Greece people are going through dumpsters for food," he wrote.

The free press advocacy group Article 19 said the developments represented "a direct attack on democracy which must not be tolerated".

The group said on its website: "It is not an appropriate response for a democratic European government to limit press freedom in order to protect political power."

Meanwhile, the Athens Bar Association questioned the government's priorities in so speedily pursuing a journalist while having failed to launch a comprehensive investigation of tax evasion in the two years that the finance minister had had the list.

"These choices send a message to society that democratic institutions in Greece, or whatever remains of them, are applied now to protect the system in power," the association said.

The argument over press freedom comes against a backdrop of continuing political turmoil, with the partners in the coalition government unable to agree on an austerity package to secure new international lending.

The prime minister, Antonis Samaras, was forced to postpone a vote on the package until next week, warning of chaos if a deal were not reached.

Nick Malkoutzis, deputy editor of the Ekathimerini English language newspaper, said: "This coalition government is an unusual construct that is trying to maintain a precarious balance between satisfying lenders and convincing its own followers. And anything that is potentially inflammatory is seen as a threat to that balance.

"What you're seeing at the moment is a political establishment that has been falling apart over the last few years, and it's not clear what will replace it. And in that gap you are getting knee-jerk reactions and the state not acting as the state should."


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Greek Socialist deputies to back austerity, reforms: sources

Leader of Socialist PASOK party Venizelos addresses journalists after meeting government coalition party leaders in AthensATHENS (Reuters) - The overwhelming majority of lawmakers from Greece's Socialist PASOK party, the second-biggest partner in the country's ruling coalition, will support a raft of austerity and reform measures in a parliamentary vote, two lawmakers told Reuters on Tuesday. "We took a majority decision to back the measures," one Socialist deputy told Reuters after the end of a party meeting to decide its stance. All but about four of the party's 33 deputies backed the decision, one of the lawmakers said. ...



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Greece warns of "chaos"

Unemployment has topped 25 percent, with rapidly worsening poverty that has prompted Democratic Left to harden its position



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Greek coalition split delays austerity vote, PM warns of 'chaos'


Wall Street Journal

Greek coalition split delays austerity vote, PM warns of 'chaos'
Fox News
ATHENS, Greece – Greece's coalition government will delay a vote on major new austerity measures by another week, warning Tuesday there would be financial chaos if a deal is not reached. Finance Minister Yannis Stournaras told reporters the austerity ...
Greek Leader Warns of Chaos If Austerity Is BlockedWall Street Journal
Greek coalition allies snub PM's appeal on austerityReuters
Greek PM Says Debt Deal Reached with LendersVoice of America (blog)
Bloomberg -Chicago Tribune -Yahoo! News (blog)
all 321 news articles »

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Greek Socialist says austerity package must be approved

ATHENS (Reuters) - Greek Socialist leader Evangelos Venizelos on Tuesday said austerity measures demanded by international lenders must be approved despite his party's objection to labor reforms.



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Superstorm Sandy delivers disaster movie scenario to New York business | Heidi Moore

With parts of Wall Street underwater on Monday night, New York's reputation as a world business capital has taken a knock

New York underwater is a favorite image of disaster-movie makers. In the Day After Tomorrow, a cruise liner sails by the New York Public Library, while the Statue of Liberty stands largely submerged. In Artificial Intelligence, Jude Law helicopters into an office on the high floors of Rockefeller Center, the rest of the city long buried under sloshing waves for eternity.

Those scenes carry cinematic weight for obvious reasons: New York has an aura of invincibility, the kind of bustling, tough, sharp-elbowed place that stops for nothing.

Part of this has to do with New York's geography. The city has natural advantages – billion-year-old Manhattan bedrock that can hold miles of heavy skyscrapers, a harbor and shipping ports and airports that allowed $85bn of exports from the New York region in 2010: that's over three times the exports of the entire country of Greece. New York is the largest regional economy in the United States, generating a gross metropolitan product of $1.28tn in 2010. New York's economic output – like those of Los Angeles and Chicago – is greater than that of 45 of the 50 states in the union.

So, it is startling, as jarring as it is in disaster movies, to see that Hurricane Sandy caused large swaths of New York to be underwater, without power, and, largely, not doing much business. In a city so bright at all times that the stars are hard to see, the streets and skies were suddenly nearly black for miles. New York has had blackouts before: as recently as 2003, a city-wide blackout shut down operations, albeit without flooding. As SIFMA, a financial-industry group, pointed out:

"This is the first time weather has closed markets in New York for two consecutive days since a blizzard in 1888."

SIFMA is an organization made up of every major financial firm in New York, so it has some power when it recommended that they suspend trading in bonds on Tuesday. It's still up to those firms to decide if they want to; they'll be making a decision between the potential loss of profits and the tremendous inconvenience to employees, many of whom live in areas where power is iffy and transportation sketchy.

It is currently impossible to estimate how the damage from Hurricane Sandy will affect New York. As far as the financial markets go, the NYSE Euronext said that it was on track to re-open on Wednesday, as did the Nasdaq exchange. The exchange's contingency plan calls for a shift to electronic trading – still a difficult proposition, as far as the markets go, because even for electronic trading, the traders currently need access to their desks and computers.

At a minimum, it is impossible for most people to get to work in the city, which affects the locus of several industries, including finance, advertising, healthcare and the arts. The city's transportation lines, bridges, and tunnels were shut down for nearly two days, and at the latest report, the subways may be down well into next week. Footage from the news on Monday night showed water flowing freely, carrying the smell of fuel and burning electricity, into subway tunnels and through the Midtown Tunnel, which carries 80,000 a cars a day into Manhattan from Long Island.

New York Governor Andrew Cuomo suggested that Wall Street should be "online" again by Wednesday. But that is of little comfort if the workers can't get there, and the majority of the 168,700 financial industry employees in New York still take public transportation of some kind.

The stock exchanges were also closed, and the bond markets were largely frozen, though still partially open. JFK airport, a hub for international business travelers, may re-open on Wednesday, but LaGuardia airport, which mostly carries domestic flights in the US, is likely to stay closed as it deals with the aftermath of flooded runways. Barclays Capital analysts called the situation "the Hurricane Sandy standstill".

Goldman Sachs, whose building downtown was one of the few to retain power because of its powerful backup generator, told employees that its downtown headquarters would be closed on Tuesday. The firm still planned to do business with clients, however – depending on staff in London, Salt Lake City, Utah and "other offices around the world"

"Unless otherwise instructed by divisional management, you should plan to stay home," the firm's chief operating officer advised employees who considered coming into the office on Tuesday. Morgan Stanley, likewise, reminded employees that it would move some functions to other offices outside New York, and that many employees could work from home.

"We also expect to be open for business and functioning when the US markets open," the firm said in a statement. HSBC said its branches were closed in in New York State, Connecticut, New Jersey, Pennsylvania, Delaware, Maryland, Washington, DC, and Virginia, with updates on its website. The bank encouraged employees to stay home. Barclays kept all of its New York offices open, with the exception of an office across the river in Jersey City, which was flooded. "All staff with non-essential roles are currently being asked to work from home," a spokesman said. 

Last year, when Hurricane Irene hit, banks like Goldman offered vouchers to employees that they could use with private car services, to get to work even when the subways were out. But this time, with so many roads flooded, it will take time for even car services to get back on the roads.

All of this is likely to hit revenues, at least noticeably, in an industry that can already ill afford it. The financial sector has been shedding jobs – and shrinking salaries – for several years. New York State Comptroller Thomas DiNapoli noted:

"[I]n the first half of 2012, the [financial] industry [in New York] earned $10.5bn and is on pace to earn more than $15bn by year's end, unless adverse developments erode profitability like last year."

Last year, those "adverse developments" were the European debt crisis. It seems unimaginable for Hurricane Sandy to be able to cause the financial industry losses on that scale – but the business interruption certainly does not help. Anthony Peters, a London-based strategist for SwissInvest, confessed that New York's future was the locus of most financial concern, telling clients:

"Monday trading in Europe was totally anticlimactic and I, for one, knocked off early only to go home and watch microphone-bearing news reporters in wet weather gear standing in the open air in New York City telling us that it was getting wetter and windier."

For native New Yorkers, or those who had lived in the city for decades, the damage was unprecedented. New York always keeps going – except this week, when it has largely stopped. Governor Cuomo told New Yorkers that the city needs to update its systems. "We seem to have a 100-year storm every two years," he said in a press conference.

It's hard to imagine the city – and its business centers – going through this that often.


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Greece Vows to Liberalize Fuel Market


Greece Vows to Liberalize Fuel Market
Wall Street Journal
ATHENS--Greece vowed Tuesday to liberalize the country's domestic fuel market after pressure from its international creditors, who have complained that regulations and cartel like practises are costing Greek consumers more than $1 billion a year. Many ...


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Greek coalition allies snub PM's appeal on austerity

ATHENS (Reuters) - The Greek prime minister's appeal for a united front to push through more austerity fell on deaf ears on Tuesday, with one ally promising to vote against reforms and another scolding him for prematurely saying talks had ended.



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Greek Leader Warns of Chaos If Austerity Is Blocked


Wall Street Journal

Greek Leader Warns of Chaos If Austerity Is Blocked
Wall Street Journal
ATHENS—Greek Prime Minister Antonis Samaras sent a stark message to his government's two junior coalition partners Tuesday, calling on them to back a multibillion-euro austerity and reforms package or else see the country plunge into "chaos." Enlarge ...
Greek coalition allies snub PM's appeal on austerityReuters
Greek PM Says Debt Deal Reached with LendersVoice of America (blog)
Greek Coalition Allies Balk as Samaras Says Austerity Talks DoneBusinessweek
Washington Post -Chicago Tribune -Yahoo! News (blog)
all 308 news articles »

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