Greece’s government defies European pressure and insists it will seek a bridging loan, raising fears of a new eurozone crisisLatest: Varoufakis speaks to the GuardianLunchtime summary: Greek crisis escalates David Cameron starts preparing for GrexitGreek bond yields soar, and Athens market slides 2.02pm GMT Germany’s finance minister is maintaining an uncompromising attitude on Greece today.Attending the G20 ministers meeting in Istanbul, Wolfgang Schäuble declared that he didn’t know how the markets would react if Greece abandoned its bailout, adding: “We’ve never forced anyone into a programme.I’m ready for any kind of help, but if my help is not wanted, that’s fine.”"I wouldn't know how markets will handle it w/out a programme, but maybe he knows better." #Schauble on @atsipras http://t.co/Jjsk034Smi 1.51pm GMT Associate Press has the full quote from Yanis Varoufakis to the Athens parliament:“The time has come to say what officials admit when the microphones are turned off and say out in the open. ... At some point someone has to say ‘No’ and that role has fallen to us, little Greece,” 1.19pm GMT After speaking to the Guardian, Varoufakis went on to address the Athens parliament, as the debate ahead of Tuesday night’s confidence vote picks up. The Greek finance minister got a standing ovation as he said: “someone has to say No and that is Greece!”.#Greece Varoufakis: We are not "yes-man" nor "no-man", we are just European citizensGreek Finance Minister Varoufakis "At Eurogroup, I will not be a yes man but I will say "yes" to proposals that makes sense" #Greece 1.07pm GMT Back to Athens, and Yanis Varoufakis has outlined how Greece and its lenders can find a mutually agreed face-saving solution.The key, he told our Helena Smith, is Greece’s proposal of a bridging program for two, or three, or four months “to which we make some undertakings to our partners”.“And why do we want this to have the time and the space to sit down and deliberate? We just want a little bit of time....” 12.52pm GMT The prime minister tweets..Given uncertainty around Greece & the Euro, it was important I chair a meeting to ensure the Government is prepared for all eventualities. 12.50pm GMT Over in Greece our correspondent Helena Smith can confirm that Yanis Varoufakis is in fighting form – and optimistic about the future.“I can’t even begin to imagine what preparation he [Osborne] is putting in. Maybe he has aces up his sleeve that I am not familiar with.”“Greenspan is part of the tradition of Anglo Saxon financiers, economists and central bankers who never believed in the Eurozone construction. I happened to be one of them … back in the 1990s I was writing articles that argued that the way the euro zone was constructed was like removing the shock absorbers from the system [the single currency] and ensuring that when the shock comes it is of maximum [strength].“However, having said that, allowing it to fragment would be catastrophic … it is the moral duty of the critics of the Euro Zone to fix it, to make sure it doesn’t collapse because if it does the cost will be immense not just for the Greeks but the Brits, everyone.” “There is no economist I know in the world who thinks this program has worked, or will work … it couldn’t work. It’s not a question of willpower or intelligence, it simply cannot be done in a depressed economy that has no viable banking system that is properly functioning and giving out loans.”“There has to be continuity but at the same time the argument that the elections don’t change anything and that the government has to adopt a program it was elected to challenge the logic of, is absurd.” 12.40pm GMT The leader of Austria, Werner Faymann, has offered Greece some support after a meeting with prime minister Alexis Tsipras today.Chancellor Faymann told reporters in Athens that both sides must compromise:Faymann: "Greece must stay in euro and we have to find mutually acceptable solutions" #Greece #AustriaFaymann "There must be compromise between previous program and plans that current gov't has" #Greece #AustriaTsipras "Very satisfied by today's discussion. I have a new friend that can help us find viable solution for common European future" #Greece 12.15pm GMT Time for a quick recap, before we hear from the Greek finance minister in under an hour’s time (3pm EET/1pm GMT).Greece’s escalating debt crisis has sent shares sliding across Europe, and triggered a new selloff in Greek bonds. The Athens market is down 6%, as bank shares suffer new double-digit falls. In London the FTSE 100 has lost 54 points.Dare I say it, letting it be known he's prepared for eurocrisis isn't unhelpful for a PM keen to hammer in that he has a long-term econ planGreece just lost Italy ahead of this week's euro group meeting #varoufakis shooting from the lip #berlin 11.57am GMT #Cameron: “We need to be prepared to deal with instability in the markets”; Foreign Office updated PM on political situation in #Greece 11.45am GMT UK officials have dug into their filing cabinets to find the Grexit plan pulled together at the height of the eurozone crisis, tweets Sky’s economics editor Ed Conway.HMT & @bankofengland have had detailed contingency plans for #Grexit since 2011/12. They were dusted off when Syriza won the election. (1/2)Lobby has been briefed on a No 10 meeting on Greece/euro today - though the key work has been going on behind the scenes at Bank/HMT (2/2)My govt sources still convinced everyone in euro (inc Germany) will do all they can to prevent #Grexit. They stared into precipice in 2012 11.42am GMT Here’s a summary of the headlines in today’s Greek newspapers, via Enikos.gr.“Alexis message to the Germans: Hand over the money you owe us from WWII” is the main story in Kontranews.Ethnos says that the Greek PM adopts a tough line in the negotiations with the lenders. 11.40am GMT 11.38am GMT The selloff in Athens is picking up pace, sending the main ATG index down almost 6% today.It’s heading back towards the lows plumbed immediately after Syriza won last month’s election. 11.30am GMT The word from Westminster is that David Cameron chaired a meeting with officials from the finance ministry and the Bank of England this morning, to plan for a possible Greek exit from the euro zone.We’ll have more details very soon. In the meantime, one Treasury source has told Reuters that:“It is not saying that anyone thinks it is going to happen, but it is right that they have a look at the risk of Greece leaving the euro zone. That would create real instability.”Contingency planning; would be more newsworthy if they hadn’t. MT @Peston PM held meeting to plan for+protect UK from poss Grexit. #GreeceIf the Bank of England did not have plans ready for #Grexit before today there should be a national enquiry as to why not?! #BoE 11.28am GMT Heads-up: Greece’s finance minister, Yanis Varoufakis, is expected to hold a press conference this afternoon, around 3pm local time or 1pm GMT. 11.16am GMT Canada’s finance minister has urged Greece and its international creditors to find a compromise.Joe Oliver (in Istanbul for the G20 meeting) told Reuters that both sides need to give ground:“There has to be compromise. It’s clear that Greece has got to be prepared to make some changes, and I think a wholesale repudiation of their debt is not on the cards. But other countries, creditors will have to work with Greece to arrive at a compromise solution.” 11.09am GMT Alexis Tsipras outlined a broad range of measures last night, to unravel the austerity programme that Greece has endured since 2010. 10.51am GMT It’s 2012 all over again - the BBC has learned that David Cameron has met with officials at the Treasury and the Bank of England to discuss the risk that Greece leaves the single currency.Prime Minister held meeting with Treasury and Bank of England to plan for and protect UK from possible Greek exit from euro, I have learned 10.48am GMT Greece’s factory sector was already weakening before the current crisis erupted, new data shows.Industrial production across Greece shrank by 3.8% in December, compared to the previous year, according to statistics body ELSTAT. 10.29am GMT Greece’s finance minister is playing good cop this morning, denying that there’s any dispute between Athens and its creditors.Yanis Varoufakis told reporters gathered outside the finance ministry that:“There is no conflict, there is discussion and consultation as always happens in the European family.” 10.25am GMT The never-ending decline of #Greek banks: -25% in 3 days and 99.15% below 2007 highs... pic.twitter.com/NsMcGk2wsb 10.23am GMT European Commission chief Jean-Claude Juncker has warned Greece this morning that the eurozone can’t simply accept all of Syriza’s programme.Juncker told reporters in Germany that Tsipras’s speech last night had “only partly addressed” Brussels’ concerns about his plans. 10.12am GMT The BBC’s esteemed economics editor is many things, but thick is certainly not one of them....I am obviously being thick but I can't see deal between Athens/Syriza and Berlin/Brussels http://t.co/QOqrqTfIF8 10.08am GMT This chart shows how Grexit worries drove Greek bond yields higher at the start of trading:Doesn't seem the bond market too happy w/@atsipras speech yesterday. Yield on 10-year back about 11%. pic.twitter.com/vtN3rFkYLy 10.02am GMT Another bad morning for Greek bank shares: 9.54am GMT The Greek parliament is starting to debate the programme that was outlined by Alexis Tsipras last night.Twitter user Diane Shugart is watching, and reports that it’s a slow - and confusing - start.first speaker is ND's kyriakos mitsotakis. wants to know if there will be a lunch break. (the answer is yes: 4-6 pm, for prep.)did kasidiaris just ask for a referendum on the euro? (i honestly have trouble following his rambling.) 9.41am GMT The OECD has also highlighted how Greece’s wealth tumbled, relative to rich countries, since the financial crisis began.The OECD report highlights large increases in income inequality and poverty in Greece, alongside other countries hit hardest by the crisis: Iceland, Ireland and Spain. 9.24am GMT The OECD is making another attempt to get finance ministers to take inequality seriously.The thinktank told the G20 finance ministers’ meeting in Istanbul to prioritise growth-friendly measures such as educating low-skilled workers and getting more women into work. 9.11am GMT Tsipras’s speech marked a hardening of tone from the Greek government, points out analyst Wolf Piccoli:Tsipras & Varoufakis alternating between the roles of good/bad cop. Not sure it will be enough to confuse #Greece’s creditors 9.08am GMT The Greek stock market has fallen back to a near one-week low this morning:#Grèce : l'indice #ASE perd plus de 4% #Greece pic.twitter.com/Xc96XgAjfC 9.07am GMT The selloff across European stock markets is picking up pace, sending the main indices deeper into the red.Here’s the damage:“Comments from newly-minted Greek Prime Minister Alexis Tsipras rejecting his country’s EU/IMF bailout – raising the probability of so-called “Grexit” – compounded investors’ dour mood.” 8.56am GMT Greek bonds are tumbling in value this morning, underlining how the crisis has escalated over the weekend.This has driven the interest rate (yield) on its debt sharply higher, reflecting a greater risk of default.* Greek three-year bond yields up more than one percentage point at 19.15 pct - TradewebTsipras favours Greek jobless over creditors in defiant policy speech http://t.co/Gp4XqZvkR2 http://t.co/JvxTjf48ff 8.46am GMT LNG’s Gary Jenkins adds:In my view the possibility of Greece leaving the eurozone has increased with this speech from 35% to 50%. This Wednesday’s meeting of finance ministers will give us a good indication of whether or not Greece will remain in the eurozone. 8.44am GMT Over in Athens, the Greek stock market has opened with a rush of selling, sending the AGT index down over 4%.#Greece Athens stock exchange -4.15% after minutes in session, banks -8%Greek assets seeing selling in early trade - ASE now down 4% and banking sector 8% aft PM rejected international bailout extensionI think it is fair to say that the speech given by the Greek Prime Minister Mr Tsipras to his parliament was a long way from being conciliatory. He said that ‘Our government’s irreversible decision is to implement in full our pre-election pledges,’ and that ‘Our government is not entitled to ask for a bailout extension. We are not entitled to ask for an extension of a mistake.’ He added that ‘We will fulfil the Eurozones’s rules but we will not agree to unreasonable budgetary primary surpluses.’Just for good measure he added that he would ask for World War II reparations from Germany and increase the minimum wage. 8.38am GMT While Greece flails under the yoke of austerity, Germany has exported more goods than ever before.German seasonally-adjusted exports hit a record high in December, up by 3.4% month-on-month, data released this morning showed.#Germany| 2014 FULL-YEAR TRADE SURPLUS REACHES RECORD €217B pic.twitter.com/1tnoWbet29 8.29am GMT Italian Finance Minister Pier Carlo Padoan opens remarks at #G20 #IIFistanbul saying pleasure2be here "in a new capacity, same old problems" 8.24am GMT The next nine days are crucial for Greece. The government must win a confidence vote on Tuesday, then sell short-term debt on Wednesday. There are then three meetings with political leaders before next Wednesday, when the ECB decides whether to keep providing emergency liquidity to its banks.Greece’s calendar: confidence vote (10); T-Bills auction (11); Eurogroup (11); EU summit (12); Eurogroup (16); ECB/ELA review (18).Could some Greek concessions be forced from the inside? Syriza very popular, but I guess this could always change if things go sour. 8.21am GMT The Mayor of London’s top economic advisor, Dr Gerard Lyons, has endorsed the Greek government’s plan to abandon the fiscal targets set by the Troika.Varoufakis is game theorist & taking it to wire but his demand for 1.5% primary surplus reasonable. Current situation is not sustainable.Economist Paul Ormerod wrote excellent piece last week in @CityAM on Game Theory & Greek strategy. Seems like it turned up notch yesterday. 8.13am GMT European stock markets have fallen at the start of trading, as Greek crisis fears eat away at confidence.The French CAC, Spanish IBEX and Italian FTSE MIB all shed around 1% at the open, while the FTSE 100 dropped 37 points, or 0.55%, to 6817 points..@Presa_Diretta Debito italiano solido e sostenibile. Dichiarazioni @yanisvaroufakis fuori luogo.A day of bizarre statements, but the prize goes to Greek Finance Minister announcing Italian bankruptcy 8.03am GMT Over in Istanbul, finance chiefs at the G20 summit are fretting that Greece and its creditors will fail to reach a deal.Timothy D. Adams, the president and chief executive of the Institute of International Finance, warned that time is running out. He told CNBC that both sides must stop playing to the galleries:“I think there is still an opportunity for all sides to have a negotiation but I think (that is) narrowing pretty quickly so let’s hope we can find a way through this,” “I think there is a way through this crisis but it requires cooler heads to prevail, (they need to) tone down the rhetoric and roll up their sleeves and get to work on a solution. I believe there is a solution but the rhetoric doesn’t help.” G-20 leaders plea for 'cooler heads' in Greek crisis http://t.co/VSvv9L39OG #Greece pic.twitter.com/cVkNrqC8xR 7.50am GMT Good morning, and welcome to our rolling coverage of the Greek bailout crisis, the eurozone, the world economy, the financial markets and business.The Greek debt crisis remains the biggest issue on the table this week, after Greece’s prime minister raised the stakes with its creditors by insisting it will not stick to its old bailout deal.“We see hope, dignity and pride returning to Greek citizens. Our obligation and duty is not to disappoint them,” Tsipras told the 300-seat house. “We realise that negotiations [with foreign lenders] won’t be easy … but we have faith in our struggle, because justice is on our side.”Declaring his administration “a government of national salvation”, Tsipras said he would also pursue claims to win back from Germany wartime loans that Greece had been forced to make to Nazi occupiers. “I can’t overlook what is an ethical duty, a duty to history … to lay claim to the wartime debt.”If investors were hoping for a more emollient tone from the new Greek government in light of last week’s events, and the ECB’s intervention in removing its collateral waiver, they were in for a rude awakening as PM Tsipras reinforced his determination to end the bailout at the end of this month, insisting on some form of bridging finance, as well as a determination to “honour and fully implement our pre-election policy commitments, fully respecting the will of the people”Ukraine's set to have a worse week than Greece. But it's close. Continue reading...
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