How the world sees Greece
Greek ETF, national bank shares gain on improved outlook, credit upgrade MarketWatch (blog) S&P cited the “determination” of the euro zone to support Greece's membership and the Greek government's commitment to fiscal and structural adjustments as reasons for the six-notch upgrade. Also higher on Wednesday were prices on Greek government ... |
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Greece faces 'make or break' year Financial Times Next year will be “a make or break” year for Greece's future as a member of the eurozone, the country's finance minister has said, warning Europe's leaders that Athens still faces “the possible risk” of crashing out of the currency bloc. “We can make ... |
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Greek finance minister wins breathing space Financial Times Yannis Stournaras has won a much-needed breathing space after five months of non-stop negotiations with the troika of officials from the European Commission, European Central Bank and International Monetary Fund overseeing Greece's second ... |
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Greek America Foundation launches relief drive Kathimerini Project Hope for Greece is a new initiative launched by the Chicago-based Greek America Foundation in response to the hardship faced by crisis-hit Greeks. The aim of the campaign is to raise awareness and funds in support of charities and nonprofit ... |
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 RT | S&P upgrades Greece's credit rating RT Amid the continuing downward economic spiral, Standard & Poor's ratings agency has upgraded Greece's credit grade to a B-, the highest since June 2011, although the bonds are still at junk status. The backing of the Eurozone countries to keep Greece ... |
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 Deutsche Welle | Greek bond yields at 21-month low - FT.com Financial Times Greek bond yields fell to the lowest since March 2011 after Standard & Poor's lifted its assessment of Greece's credit rating by six notches, citing the “strong determination” by European policy makers to keep the country in the eurozone. The price of ... Greek credit rating raised S&P boosts its Greek credit rating | News | DW.DE | 18.12.2012 S&P upgrades Greek credit rating and sets outlook to stable |
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 Telegraph.co.uk | Debt Crisis: ECB approves Greek debt as collateral, while protestors flood ... Telegraph.co.uk Greek anti-riot policemen stand in front of protesters demonstrating in front of the parliament building during one of the many strike marches of 2012. 14.25 Meanwhile, in a win for the Italian government, it can now tax real estate owned by the ... |
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Central bank step is move toward normalization as Greece regains credit rating Washington Post FRANKFURT, Germany — The European Central Bank says it will once again accept Greek government bonds as collateral for loans to banks. The move is important because parking such bonds with the ECB in return for loans is an important way for ... |
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 Yahoo!7 News | ECB Eases Greek Banks' Access to Cash as Reform Efforts Rewarded Bloomberg The European Central Bank acted to ease Greek banks' access to funding by accepting the country's bonds in exchange for cash for the first time since July. The Frankfurt-based ECB said today it will take debt instruments issued or guaranteed by the ... ECB restores use of Greek bonds as collateral ECB opens path to cheaper funding for Greek banks Euro crisis: Greek debt now ECB-eligible |
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 Deutsche Welle | Greek public sector cutbacks trigger strike - US News and World Report U.S. News & World Report Most Greek public servants have strong legal job guarantees, in contrast to the private sector, which has seen huge job losses that have helped push the national unemployment rate above 26 percent. The new pay cuts, starting Jan. 1, will be generated ... Greek public sector workers strike over reforms Eurozone crisis live: Greek public sector workers hold anti-austerity strike State Suspensions Trigger Greek Strike |
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 IFR Asia | ECB restores use of Greek bonds as collateral Huffington Post FRANKFURT, Germany — The European Central Bank says it will once again accept Greek government bonds as collateral for loans to banks. The move is important because parking such bonds with the ECB in return for loans is an important way for ... ECB Eases Greek Banks' Access to Cash as Reform Efforts Rewarded UPDATE 1-ECB lifts funding ops collateral ban on Greek debt Euro crisis: Greek debt now ECB-eligible |
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Greek Retailers to See Christmas Sales Slide as Recession Bites Bloomberg Greek retailers will see Christmas and New Year-related revenue decline 18 percent as business is blighted by the country's fifth year of recession, the National Confederation of Hellenic Commerce said. Nationwide spending on food and gifts will fall ... |
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 euronews | Ratings agency hands Greece an upgrade euronews Ratings agency Standard and Poors has raised the credit rating on the country's sovereign debt. Athens is now on “B-minus” instead of selective default. The agency praised the Greek government's efforts to rein back its spending. Experts have described ... |
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 Telegraph.co.uk | Dan Loeb's Third Point hedge fund makes $500m profit from Greek bonds Telegraph.co.uk Mr Loeb has reportedly sold a large part of a $1bn position in Greek debt that soared in value in the wake of the buy-back deal unveiled by Athens on Monday. The trade will stand out as one of the most audacious bets on the eurozone debt crisis so far. |
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 Aljazeera.com | Greece hit by public sector strike Aljazeera.com Greece's other major union, the private sector union GSEE, said it would hold a three-hour stoppage in solidarity and join the march through the streets of central Athens. The Communist-affiliated PAME group was expected to hold a separate rally. State suspensions, salary cuts trigger strike in Greece Greece government given a boost but workers remain unhappy ATHENS, Greece: State suspensions trigger Greek strike - Business Breaking ... |
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 Telegraph.co.uk | Greek credit rating raised Philadelphia Inquirer "The stable outlook balances our view of eurozone member states' determination to support Greece's eurozone membership and the Greek government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing ... Greek bond yields at 21-month low - FT.com Greek Bonds Rally to Post-Restructuring High After S&P Upgrade S&P upgrades Greek credit rating and sets outlook to stable |
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 New Europe | Standards and Poors says Greece is stable New Europe “The outlook on the long-term rating is stable, balancing our view of the government's commitment to a fiscal and structural adjustment against the economic and political challenges of doing so,” the agency underlined. In the same time, Bloomberg ... World's best performing bond market of 2012 |
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Christofias may rail at bankers over Cyprus's bailout, but it was bad governance that let to the country's rapid deterioration
Cyprus should be receiving approximately €17bn from the so-called troika in January, subject to a series of measures that introduce austerity while leaving questions of reform unanswered. This breaks down as follows: €1bn is set to cover the government budget deficit; €6bn is earmarked to rollover short-term debt since the current government refused to borrow long-term (hoping for better interest rates in 2013); and €10bn is needed for the troubled banking sector to be in compliance with ECB requirements on capitalisation.
Although the bailout is far smaller in absolute terms than other eurozone packages (the current tranche given to Greece is far larger), the bank bailout looms large and President Demetris Christofias, who is not running for re-election, rails that this is the bankers' fault, singling out in particular, the former head of the Cypriot central bank, Athanasios Orphanides.
Cyprus reached this sorry state surprisingly rapidly, and despite his protestations, Christofias's government bears most of the blame. First, Christofias wields significant power with very limited constraints. He could and did made decisions without asking parliament, his finance ministers or the former governor of the central bank. He has the right to do this, but it is now mainly his decisions that led us to this crisis: the president's inability to listen to advice was a key factor in the rapid deterioration of Cypriot finances.
His decision to store rather than destroy weapons bound for Hezbollah and confiscated by Cyprus led to the weapons exploding in 2011, taking down the largest Cypriot power station. The large increases in the cost of generating electricity are preventing the recovery of the small business sector, which comprises most of the economic activity in Cyprus. While the president could not predict that the weapon containers would blow up, he must take responsibilty for the decisions made in relation to the economic sector. These have had depressingly predictable results.
Cypriot banks were heavily exposed to the Greek market, in particular to Greek government debt. When the Marfin Laiki bank (now the bank that needs a bailout the most) announced in 2009 that it was moving its central offices to Greece, thus making it subject to Greek rather than Cypriot regulator jurisdiction, Christofias rushed to support the bank president in the bank's disagreement with the central bank governor. The political pressure paid off: the bank stayed and now it requires €3bn of government aid to remain as a going concern.
Close to half of the bank bailout is related to the decision to haircut Greek government bonds at an EU level. The president could have vetoed a resolution on the haircut until Cypriot bank losses were integrated in the Greek financial sector bailout. This measure alone would perhaps ensure the current viability of the banking system. Cyprus was locked out of international markets because of the banking system viability fears, so the government successfully arranged a €2.5bn loan from the Russian government. Yet the loan was spent on regular government expenditure rather than being used to safeguard the banking sector.
In addition, the decision by the current government to move the debt issuance and monitoring department from the central bank to the ministry of finance meant that debt management became political. The then finance minister, Charilaos Stavrakis, borrowed only short-term in order to avoid austerity measures, and €6bn is needed today as a result of that decision. More worryingly this government, like all governments before it, decided to bestow patronage, despite the economy taking a nosedive. In 2009, government expenditure rose by 7.8% even though revenues fell by 8.5%. Despite a sluggish recovery, government expenditure only fell in 2011 when Cyprus entered a double-dip recession: this irresponsible spending led to an unsustainable funding gap which the government created.
As well as the above there are significant and long-term failures of governance that neither this nor any other government of Cyprus has ever attempted to tackle. Here all Cypriot stakeholders have a share of the blame as they all took part: parliament, business, bankers, unions and political parties. The government, health and education sectors are bloated by low-productivity workers, made worse by the fact that the incentive system within government is broken. The payout system of public wages has no relationship to the economic cycle, adding a tremendous strain on government finances in a recession. The largest government union is not working on purely democratic principles, and its stance has made it very difficult for any government to correct a system in desperate need of reform.
The cosy nexus of bank executives and big business produced uncompetitive market outcomes and were allowed to get away with unfair practices by the broader political spectrum. In the end the government of President Demetris Christofias will go, but the long-term failures of governance will remain. That is what Cyprus will need to tackle in order to be competitive again.
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