Greeces admission in October 2009 that it had a huge black hole in its finances triggered five years of bailouts, market turmoil and protestsThe eurozone crisis didnt emerge from a clear blue sky five years ago. Greeces economic problems were well known; in 2004, it admitted fudging its deficit figures to qualify for euro membership, and a year later Athens brought in an austerity budget to, it hoped, bring down borrowing.But the left-wing Pasok government still shocked the financial markets and its EU neighbours on 18 October. Fresh from winning a general election, it announced that Greeces budget problems were far worse than imagined; a deficit equal to 12% of national output, not the 6% forecast by the previous government.Its a war against workers and we will answer with war, with constant struggles until this policy is overturned, Its about growing the economy. We are a small, resilient, proud people.Trades unions brought parts of Portugal to a grinding halt as a general strike shut down most public transport in protest at cuts being introduced to stave off an Irish-style debt crisis.Most flights in and out of Portugal were cancelled, ferries across the River Tagus remained at their berths, metro stations were closed and only a handful of trams ran as Lisbonites sought other ways to get to work. Angry British tourists were among those left stranded at airports.Portugals situation worsened when the Fitch rating agency downgraded the countrys sovereign debt by two notches, to A- from A+, a move likely to increase its already record borrowing costs. World stock markets have tumbled amid fears that Italy and Spain will be dragged deeper into the euro debt crisis, and that America might be entering a double-dip recession. The FTSE 100 fell 3.43%, or 191 points, and is expected to lose another 100 points on Friday.4.39pm: Ouch! The FTSE 100 has now officially closed, and the blue chip index has fallen 178.04 points to 5,068. Thats a decline of 3.39% today. In a major boost for German leader Angela Merkel, the German parliament has voted overwhelmingly to expand the European Financial Stability Fund (EFSF), the eurozones rescue fund.Addressing the Bundestag before the vote, Merkel said Europe was facing its toughest challenge since the end of the Second World War. If the euro fails, Europe fails, Merkel said.After fisticuffs in parliament the Italians have agreed on a package of the economic reforms demanded by EU leaders. Silvio Berlusconi is arriving in Brussels with a 15-page letter of intent setting out Italys commitments. The firepower of the EFSF bailout fund will be increased to $1.4tn (1tn) Banks agree 50% writedown in the face value of Greek government bonds 8.41am: Apparently, Sarkozy rushed out of the leaders meeting in the wee hours of this morning to be the first to give a press conference. Announcing the enlargement of the bailout fund to $1.4tn, he stressed: $1.4tn - yes I said dollars. Im not giving this information for European markets but for global markets. This is meant to be the firewall leaders have been talking about. At the moment it is looking more like a hay one than a concrete one. @graemewearden it's @benedict_king @BrunoBrussels @SpiegelPeter I can see... This is the press room: pic.twitter.com/VOoiwB4wWaiting for #Eurozone to decide #Greece's fate. The press bar stopped serving beer at 11pm. Thank goodnessEurozone finance ministers have agreed the details of a 130bn financial package for Greece, after 14 hours of negotiations in Brussels. The deal, it says, will cut Greeces debt-to-GDP ratio to 120.5% of GDP by 2020, in line with previous targets. This will be achieved by private creditors taking a deeper cut on their existing Greek bonds, of 53.5% of their face value. The European Central Bank will also contribute, by passing the profits from its Greek bondholdings onto the national central banks, who will then pass it onto Greece.The common message from the electorate is undeniable, reminiscent of a famous line in the 1976 movie Network: Im as mad as hell, and Im not going to take this anymore!Greek election result far more "dangerous" than Francois Hollande.8.00am: Good morning, and welcome to our rolling coverage of the eurozone crisis.Today, the battle to form a new Greek government continues. Alexis Tsipras, leader of Coalition of the Radical Left party (Syriza), will use his mandate to attempt to reach a deal with other parties. But an agreement looks elusive, and it appears that another election will be held soon.For now the two elephants in the room, namely Greece and Spain, have morphed into kittens following the Spanish bailout and newly formed Greek coalition today. Now investors are focusing on the prospect of more money being pumped into the system in a bid to prevent a slump in global growth. Rather worryingly, Spanish and Italian bond yields are back at pre-EU summit levels. The Spanish 10-year yield has broken through the 7% danger mark again, up 25 basis points at 7.038%. The Italian equivalent has risen through 6%, another important level - up 5 bps at 6.046%. Denials right on schedule...RANsquawk: Reports of Finland threatening to quit the Euro are false according to the finance ministryThis weeks cover previews: NA: Americas great debate. Rest of world: The Spanish patient. July 28th August 3rd 2012 pic.twitter.com/WprA7TqaAs I was saying yesterday..., surprised it took so long 2 come "Bundesbank: No to #ESM Banking License and No to Bond buying by the #ECB"Big ARM WRESTLING match going on in EUROPEaerial photo showing the police charge into protesters in Neptuno earlier: pic.twitter.com/nqjx8jWE #hoyes25S via @Danips #watch25s#Foto: Alter Mann mit Kopfwunde und blutverschmiertem weißem Hemd #25s #Madrid #polizeigewalt http://t.co/PY4Wi7aPMeanwhile, the other welcoming event #9ogr pic.twitter.com/20x8XqavHuge cheers as protestors dressed as Nazis drive into Syntagma square on open top Jeep pic.twitter.com/vKgS5G3pTwo protesters dressed in German military uniforms waved a red-black-and-white swastika flag and held out their arms in the Nazi salute.So #Italian and #Spanish 10-year bond yields jump sharply and everyone piles in to German bunds -- it's euro zone crisis redux #elezioniThis is how bad it is in the Italian market today: Most Italian banks were halted automatically before they had a chance to open.The cognoscenti will be focusing on the fact that the Italian election was a clear anti-austerity protest by the people of the eurozones third-largest economy.Austerity delivers an even higher debt levels as it induces perma-recession, so whats the point?#italyvote brussels is struck dumbPlease, someone think of the oligarchs! RT @CarolinCNBC: 'Unfair, Dangerous' Cyprus Deal Whacks Rich Russians http://t.co/RV4SOXOErGIf you're Cyprus & trying to refute the idea your banks have a lot of dodgy Russian money, is an intervention by Putin useful? Not really.@traynorbrussels Speaking of belts, there were two Orthodox priests flying business class on my Rome-Cyprus flight.Chances are Eurogroup agrees a last-minute Cyprus deal, but strange to think the end of the euro zone as we know it may only be hours away.120 for BOC @graemeweardenAt long last, #EU press staff summons photogs and video guys to film start of #Eurogroup. Only 3:45 late. #CyprusAnastasiades objected to a proposal that two Cypriot banks be shut down if Cyprus is to meet the terms of the bailout being offered by the EU and IMF, the official said.He offered to resign, the source said, describing the meeting, which included IMF Chief Christine Lagarde, European Central Bank President Mario Draghi, European Council President Herman Van Rompuy and other top officials, as tense..Seriously, you were elected to lead. So lead.. RT @cigolo: Cypriot president threatens resignation in bailout talks http://t.co/UAlV7zN40QNew meeting of @AnastasiadesCY, @euHvR and @BarrosoEU just started....Sorry...., #eurogroup, #CyprusIt has been another hard days night, he says, adding that he wont say it is a long and winding road.Armed delivery of money to a bank in #Cyprus. We've seen many of these today as they prepare to reopen the banks. pic.twitter.com/9yqDf8nVYIMedia circus definitely ready for #cyprus bank open. Cameras galore #wsjeuro pic.twitter.com/8yAk95j85g Continue reading...
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