Europe faces Greek debt chaos
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Pastor Dale Morgan
May 8, 2011, 2:02:00 PM5/8/11
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Europe faces Greek debt chaos
From: AFP
May 07, 2011 11:17PM
EUROPE faced the spectre of Greek calls for new financial aid today as Athens' "catastrophic" finances returned to haunt stressed eurozone states, despite efforts to prevent panic.
Greek Prime Minister George Papandreou urged "everyone, inside and outside Greece, in the EU in particular, to leave Greece in peace to do its job."
Finance Minister George Papaconstantinou also warned bailout bosses gathered for unscheduled G20-eurozone talks in Luxembourg Friday that Athens needs "breathing space," Greek media reported.
But at the same time his country's press and specialist financial reports were raising the possibility that the government may yet come calling for fresh European Union funds on top of the 110 billion euros ($160 billion) agreed a year ago.
The resurrection of the Greek debt conundrum comes days after a 78-billion aid package was agreed with Portugal and fresh from a 67.5-billion international rescue for Ireland.
Officials meanwhile denied denied the Luxembourg talks were a crisis meeting on Greece.
Such meetings "take place at irregular intervals", sometimes in person and sometimes in a conference call, a German government source said.
Greece was discussed on Friday but so was market regulation and the situation in Portugal, the source added.
"This was not a 'crisis meeting on Greece,' as presented in some press reports," Amadeu Altafaj, spokesman for European Union Economic Affairs Commissioner Olli Rehn, also said.
Reports said ideas under discussion include postponing the maturity of 65 billion euros worth of Greek bonds this year and next, and pushing back deficit reduction - said to be unacceptable in Berlin.
The Greek public deficit for 2010 was recently revised upwards, from 9.4 percent of gross domestic product to 10.5 percent.
The Kathimerini daily said Athens would need "two to four years" more to meet a three-percent-of-GDP EU ceiling and that Greek bondholders could be offered higher rates in the long term in return for a two-year interest-free "grace period."
"We think that Greece does need a further adjustment programme," said Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, after the Friday night talks in Luxembourg.
"This has to be discussed in detail," he said, indicating the issue will top the agenda at a two-day meeting of eurozone and EU finance leaders in Brussels on May 16 and 17.
A deeper-than-anticipated national recession has combined with brutal cuts in public spending to hack away at Greek tax revenue, with the country's top crimebuster given new orders to focus on fiscal fraud.
Greece was already given eased terms by EU leaders in the spring and a new rejig would leave the issue weighing on EU partners' finances well into the next decade at least.
Athens already owes more than a year-and-a-half of its entire economic output, some 340 billion euros.
The Luxembourg talks again "ruled out any restructuring of Greek debt," Juncker added, while an exit for Greece from the eurozone, essentially the nightmare scenario of default, "would be a stupid option," he underlined.
Greece was due to return to commercial borrowing markets next year, but with current yields on benchmark 10-year bonds hitting 15 percent -- junk level compared to Germany - "it is in a pretty catastrophic situation," according to a source close to the talks.
Propping Athens up beyond 2012 "is a hypothesis on which we have to work, it's blindingly obvious," the source underlined, leaving the EU struggling to close off a sorry chapter at a late-June summit.
The Greek government said the idea it could withdraw or be kicked out was "completely untrue... provocative... (and) highly irresponsible."
"Commission staff, along with ECB and IMF staff, are currently in Athens to carry out the regular review of the implementation of the Greek programme" of cuts and reforms in exchange for the bailout, and would report ahead of the eurozone meeting in Brussels, he underlined.
As well as Juncker, Papaconstantinou and Rehn, the Luxembourg talks brought together Germany's Finance Minister Wolfgang Schaeuble, France's Christine Lagarde, Italy's Giulio Tremonti and Spain's Elena Salgado, along with European Central Bank chief Jean-Claude Trichet.
Read more: http://www.news.com.au/breaking-news/europe-faces-up-to-boomerang-greek-debt-chaos/story-e6frfku0-1226051801463#ixzz1Lmk4K6he
Europe faces Greek debt chaos
From: AFP
May 07, 2011 11:17PM
EUROPE faced the spectre of Greek calls for new financial aid today as Athens' "catastrophic" finances returned to haunt stressed eurozone states, despite efforts to prevent panic.
Greek Prime Minister George Papandreou urged "everyone, inside and outside Greece, in the EU in particular, to leave Greece in peace to do its job."
Finance Minister George Papaconstantinou also warned bailout bosses gathered for unscheduled G20-eurozone talks in Luxembourg Friday that Athens needs "breathing space," Greek media reported.
But at the same time his country's press and specialist financial reports were raising the possibility that the government may yet come calling for fresh European Union funds on top of the 110 billion euros ($160 billion) agreed a year ago.
The resurrection of the Greek debt conundrum comes days after a 78-billion aid package was agreed with Portugal and fresh from a 67.5-billion international rescue for Ireland.
Officials meanwhile denied denied the Luxembourg talks were a crisis meeting on Greece.
Such meetings "take place at irregular intervals", sometimes in person and sometimes in a conference call, a German government source said.
Greece was discussed on Friday but so was market regulation and the situation in Portugal, the source added.
"This was not a 'crisis meeting on Greece,' as presented in some press reports," Amadeu Altafaj, spokesman for European Union Economic Affairs Commissioner Olli Rehn, also said.
Reports said ideas under discussion include postponing the maturity of 65 billion euros worth of Greek bonds this year and next, and pushing back deficit reduction - said to be unacceptable in Berlin.
The Greek public deficit for 2010 was recently revised upwards, from 9.4 percent of gross domestic product to 10.5 percent.
The Kathimerini daily said Athens would need "two to four years" more to meet a three-percent-of-GDP EU ceiling and that Greek bondholders could be offered higher rates in the long term in return for a two-year interest-free "grace period."
"We think that Greece does need a further adjustment programme," said Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, after the Friday night talks in Luxembourg.
"This has to be discussed in detail," he said, indicating the issue will top the agenda at a two-day meeting of eurozone and EU finance leaders in Brussels on May 16 and 17.
A deeper-than-anticipated national recession has combined with brutal cuts in public spending to hack away at Greek tax revenue, with the country's top crimebuster given new orders to focus on fiscal fraud.
Greece was already given eased terms by EU leaders in the spring and a new rejig would leave the issue weighing on EU partners' finances well into the next decade at least.
Athens already owes more than a year-and-a-half of its entire economic output, some 340 billion euros.
The Luxembourg talks again "ruled out any restructuring of Greek debt," Juncker added, while an exit for Greece from the eurozone, essentially the nightmare scenario of default, "would be a stupid option," he underlined.
Greece was due to return to commercial borrowing markets next year, but with current yields on benchmark 10-year bonds hitting 15 percent -- junk level compared to Germany - "it is in a pretty catastrophic situation," according to a source close to the talks.
Propping Athens up beyond 2012 "is a hypothesis on which we have to work, it's blindingly obvious," the source underlined, leaving the EU struggling to close off a sorry chapter at a late-June summit.
The Greek government said the idea it could withdraw or be kicked out was "completely untrue... provocative... (and) highly irresponsible."
"Commission staff, along with ECB and IMF staff, are currently in Athens to carry out the regular review of the implementation of the Greek programme" of cuts and reforms in exchange for the bailout, and would report ahead of the eurozone meeting in Brussels, he underlined.
As well as Juncker, Papaconstantinou and Rehn, the Luxembourg talks brought together Germany's Finance Minister Wolfgang Schaeuble, France's Christine Lagarde, Italy's Giulio Tremonti and Spain's Elena Salgado, along with European Central Bank chief Jean-Claude Trichet.
Read more: http://www.news.com.au/breaking-news/europe-faces-up-to-boomerang-greek-debt-chaos/story-e6frfku0-1226051801463#ixzz1Lmk4K6he
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