Rolling reaction as the Greek government draws up economic reform proposals to satisfy its international creditors, amid tensions in Athens.Proposals to be sent to Brussels todayAnalysts see more dangers aheadIntroduction: Greece plans tax clampdownFTSE 100 hits highest level since 1999 10.32am GMT The edgy peace between Greece and the EU could also be threatened by political instability in both Athens and Berlin.That the Greece “deal” is the usual Euro area/EU can-kicking fudge goes without saying, the question is whether: a) Syriza’s more restive radical elements can be kept in check by Messrs Tsipras and Varoufakis, and As dust settles, clearer that Friday Greek deal resolves nothing. EMU leaders not remotely off hook, face simmering crisis ad aeternum 10.22am GMT How nervous did Greek bank depositors get last week, as negotiations with the rest of the eurozone threatened to flounder?Well. JP Morgan has estimated that deposit outflows from Greece’s banks accelerated to around €3bn during the week, up from €2bn in the previous seven days. The 50% increase in outflows from the prior wk meant Greek banks were on track to run out of collateral for new loans in 8 weeks- JP Morgan 10.03am GMT Credit Agricole economist Fred Ducrozet predicts several tense months as Greece and its creditors haggle over a long-term deal:Overall implementation risks remain elevated, negotiations will go on for several months while the Greek state cash position remains tight ahead of large summer redemptions. On the bright side, the interim agreement will buy Greece four more months to address the long-term issues and work out the details of a comprehensive deal including new fiscal targets and NPV debt reduction measures. The 3 key charts from my reaction piece on Greece - 4 more months of hope and risks. http://t.co/hj2le2YlP0 pic.twitter.com/FediTcqQGJ 9.46am GMT The relief rally is also pushing down the yields (the interest rates) on eurozone government debt. That means Portugal’s sovereign bonds can now borrow at a lower rate than the United States:Topsy Turvy World... “@YanniKouts: #Portugal 10-year bond yield drops below US', first time since 2007. /via @lemasabachthani #euro” 9.42am GMT The FTSE 100 has dropped back from its record levels, thanks to HSBC’s falling share price (still down 5%).The other European markets are still benefitting from Greek relief....At some stage the Greek debt pile will need restructuring, whether that be amended to include bonds linked to growth or the maturities extended further or even a real actual write down as there is very little chance of Greece repaying its debt as things currently stand. In 2011 I said that a 65% write down was required to give Greece a fighting change. Even after the private debt restructuring that percentage is probably still not far from what is required. One wonders if some of the Eurozone finance ministers now wish they had been slightly more proactive 6 months ago and offered the then Greek PM Mr Samaras an amendment to lower the primary surplus target. 9.21am GMT Greece is also planning to raise its minimum wage “gradually”, the spokesman added. And he’s also pledging that pensions – another ‘red line’ for the new government – will not be cutNote that #Greece raising minimum wage won't affect the budget surplus. BUT it's a violation of the program formerly know as "the program"Greek Govt spox says will not cut pensions, red lines continue to apply. 9.18am GMT Greece’s government spokesman has confirmed that will send its list of economic reforms to Brussels before the end of the day. 9.01am GMT The odds of Greece quitting the eurozone has fallen, says German bank Berenberg this morning.It has cut the chances of a ‘Grexit’ to 25%, after the Athens government and its creditors reached agreement on Friday night. The risk of Grexit falls from 35% to 25%; the chance that prime minister Tsipras completes his required Uturn and stays the reform course (“Samaras II”) rises from 45% to 50%; the probability that his double-populist government falls apart to make way for a less populist and more pro-European government rises from 20% to 25%. The key elements of the deal struck late on Friday are: ● Greece accepts all conditions attached to its EU/IMF bailout programme; Syriza gets real - but will the deal last? #Grexit risk down to 25%, but 4 risks remain http://t.co/3sCjEec264 8.57am GMT The next six months could be gripped with drama:#Greece's Tsipras walks another high wire over next 24h. http://t.co/NFqYlT0CRb pic.twitter.com/sFcjUKx2eY 8.44am GMT Back in the City, shares in banking giant HSBC are falling fast after it reported a 17% drop in pre-tax profits for the last year.HSBC, which is leading the FTSE 100 fallers, also apologised for the conduct of its Swiss Private Bank, following a series of revelations about aggressive tax avoidance.We deeply regret and apologise for the conduct and compliance failures highlighted which were in contravention of our own policies as well as expectations of us.HSBC's shares down 2.3%. Douglas Flint, chairman: "We deeply regret and apologise for the conduct and compliance failure" in SwitzerlandMonday's Guardian front page: Swiss account secret of HSBC chief revealed #tomorrowspaperstoday #bbcpapers pic.twitter.com/pkEKRg40Ja 8.24am GMT Excellent news. The FT’s Peter Spiegel reckons Greece may let us all see its reform programme:Sounds like #Greece submission will indeed be much more than just "tax crackdown", and proposal may be made public. Interesting day ahead. 8.23am GMT FTSE 100 parties like its 1999, FINALLY surpasses record closing level http://t.co/vvxQB1K5rC pic.twitter.com/SBWw3UBNna 8.12am GMT Germany’s DAX has also hit a new record high this morning, jumping 1% in early trading. 8.10am GMT The FTSE 100 has surpassed the record close in intra day trading, but not the intra day high of 6950 (Dec 30th 1999) @LSEplc 8.09am GMT Breaking: The FTSE 100 index of leading blue-chip shares has hit its highest level in 15 years.U.K.'S FTSE 100 SURPASSES RECORD CLOSE IN INTRADAY TRADINGThe positive open comes after news late Friday that Greece and the Eurogroup had reached a tentative agreement for an extension of its bailout for four months.` While the fear of a Greek exit has been avoided for now, it is by no means off the table, and to all intents and purposes nothing much has changed, in Greece, or anywhere else for that matter.Strains still remain with record unemployment, sluggish growth as well as low or negative inflation, confirmation of which is expected to come later this week from Germany, Italy and Spain.#Greece deal only buys 4mths, even if reform programme approved. Hardly game changing - names changed, basic outline still the same. 7.57am GMT In other news, the UK government has trimmed its stake in Lloyds Banking Group -- more than six years after rescuing the bank. More here.Government sells £500m of Lloyds shares in key week for bailed-out bank http://t.co/6J2XvLqsjl 7.54am GMT #FTSE 15 points away from record high of 6930 - now at 6915.20. @guyjohnsonTV on #ThePulse pic.twitter.com/Yx2ObE2wu2 7.46am GMT The Financial Times reckons says the Greek reform programme may be light on specifics:The reforms would be “mainly of a structural nature” and would not include details of projected revenue increases or spending cuts, a Greek government official said. Still, Athens intended to spell out measures to crack down on tax evasion and fuel and cigarette smuggling that could raise about €2bn-€2.5bn this year, the official added.If "crackdown on tax evasion" is sum total of #Greece reform proposals, we may be in for a long week. I suspect there's more, tho. 7.43am GMT Eurozone crisis expert Yannis Koursomitis has tweeted more details of the Greek tax clampdown (and also wonders whether it’ll work):#Greece govt's extra revenue plan: Gasoline smuggling €1.5bn, cigarette smuggling €800ml, rich ppl taxation €2.5bn, tax arrears €2.5bn ~Bild#pt - I'm not convinced these goals are achievable. In any case I wish the Greek gov't good luck. 7.40am GMT Asian investors have driven the Japanese stock market to a 15-year high today, on relief that Greece and its creditors had agreed to extend its bailout by four months. 7.33am GMT Good morning, and welcome to our rolling coverage of Greece’s bailout and other events across the global economy, the financial markets and business.The sticking-plaster agreement hammered out in Brussels on Friday night faces its first test today, as the Greece government outlines the economic reforms it will deliver in return for its four-month bailout extension.“I apologise to the Greek people that I cooperated in this illusion,” “Some claim that as part of a deal you have to back down. First of all, there can be no compromise between the oppressor and oppressed, just as there cannot between the slave and the tyrant, the only solution is freedom.”I just translated the stmnt released by Manolis Glezos, #Syriza MEP & Resistance fig, slamming govt's realistic turn. pic.twitter.com/6YIciTcson Continue reading...
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