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Thread: Beware of Greeks Bearing Bonds

   
   
       
  1. #21
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    Wednesday, 22 February 2012 17:29

    Asian shares mixed after Greek bailout deal





    HONG KONG- Asian shares were mixed Wednesday after US and European markets gave Greece's crucial bailout only a lukewarm reaction.

    Hong Kong was off 0.07 per cent or 15.01 points in morning trade at 21,463.71 but Shanghai was up 0.45 per cent or 10.73 points at 2,392.16, and Tokyo was up 0.65 per cent or 61.53 points at 9,524.55.

    Hong-Kong-quoted Internet shopping portal Alibaba.com rocketed 43 per cent on an offer by its Chinese parent company, itself part-owned by US giant Yahoo!, to take it private at the same price it floated at in 2007.

    On Tuesday eurozone finance ministers agreed on a new 237-billion-euro (US$310 billion) bailout package designed to keep Greece in the single currency in return for tough budget cuts and close oversight of its government.

    But Mitul Kotecha, strategist at Credit Agricole, said in a note: "The fact that the deal was highly expected played a role in the unenthusiastic reaction.

    "But markets may also be cautious given the major tasks that still lie ahead including a tough reform timetable for Greece, parliamentary approvals in various countries and implementation of the (private sector) debt swap."

    In New York on Tuesday the Dow Jones Industrial Average topped 13,000 for the first time since May 2008 before falling back to close nearly flat.

    The blue-chip Dow closed up 0.12 per cent at 12,965.69 while the tech-heavy Nasdaq Composite slipped 0.11 per cent to 2,948.57.
    European stock markets also closed lower Tuesday as initial enthusiasm faded on concerns more will need to be done about Greece.

    In Asian trade the euro failed to build significantly on its gains following the Greek deal, with dealers saying the nation's economy remains in a parlous state and Athens faces a giant task in sticking to tough reforms.

    The single currency was mixed, buying $1.3225 and 105.61 yen in early Asian trade, from $1.3238 and 105.50 yen in New York late Tuesday.

    "While (Greek) austerity measures put in place provide a long-term plan to reduce the nation's budget deficit, it does little to assist growth in the region with potentially years of sub-zero growth on the horizon," Chris Gore, currency analyst at Go Markets in Melbourne said in a note, according to Dow Jones Newswires.
    The dollar rose to 79.85 yen from 79.69 yen.

    New York's main oil contract, West Texas Intermediate crude for delivery in April, shed 41 cents to $105.84 per barrel and Brent North Sea crude for April settlement was down 23 cents at $120.43.

    Gold was at $1,755.10 an ounce at 0330 GMT, from $1,737.10 on Tuesday.
    - AFP


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  2. #22
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    Thursday, 23 February 2012 13:41

    IMF participation in Greek rescue "essential"



    WASHINGTON- An International Monetary Fund official said the Fund's participation in the second Greek bailout is essential to make it work.

    But he also told journalists that the complex 237 billion euro ($314 billion) deal agreed on Tuesday remains at immediate risk to the need to get a large commitment from private sector holders of Greek bonds to participate in a debt writedown.

    "The deal has been... negotiated with private creditors' representatives. So all the cards have been stacked up for it to succeed," said the official, who declined to be identified.

    "But of course there're huge implementation risks over the next few days. And we have to be realistic, it's not yet in the bank."

    The Fund itself also now has to decide its level of participation in the $110 billion euros of official aid being offered in the new rescue package, the official said.

    IMF chief Christine Lagarde is preparing to propose a new financing deal for Greece to the IMF board.

    But she will face concerns among some members that the Fund has already pumped a record 20 billion euros into the country in the first bailout, without succeeding in stabilizing the country's finances.

    The official said the IMF's participation is crucial to make sure both the private sector and EU public sector also join in.

    The IMF plays "a catalytic role" in such deals, he said.

    "The private sector has constantly indicated in these discussions with Greece that they regard it as an essential aspect to give credibility to the financing package, and their contribution to Greece, that the Fund be present as a co-financier."

    "If we are there, both the private sector and the official sector will also come along to support a country. If we are not there, most likely that support will not be forthcoming."

    The official declined to confirm reports that the IMF plans to contribute 13 billion euros, on top of 10 billion euros still not disbursed from the original loan.

    "All in all (it will be) a very, very sizable financial commitment that, again, is important to unlock the private sector involvement and the official sector support from the Europeans."

    He said the plan for banks to write off 53.5 percent of the 206 billion euros in Greek debt they hold still hinges on nearly all of the debt holders signing on to the deal.

    Banks and other investors, like hedge funds, have to decide whether to agree to take partial losses on their debt, or stay out and "run the risk of letting the whole deal fall through and potentially face a full outright default," he said.

    "So if those are the considerations, those investors might be better off in coming in."
    - AFP


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  3. #23
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    Greece will default. They just don't have the discipline to go through with the pain.

    Greece launches long-awaited debt swap offer February 25, 2012
    ATHENS, Feb 25 — Greece formally launched a bond swap offer to private holders of its bonds yesterday, setting in motion the largest-ever sovereign debt restructuring in the hope of getting its messy finances back on track.
    The swap is part of a second, €130-billion (RM520.82 million) rescue package to claw Greece back from the brink of a disorderly default that had threatened to send shockwaves through the financial system and punish other weak euro zone members.

    The complex deal was finalized this week after months of tortuous negotiations between Greece and its bondholders that were complicated by European partners driving a hard bargain, hedge funds holding out for a default and pressure on public creditors like the European Central bank to chip in.

    The swap, in which investors will trade bonds for lower-value debt securities, aims to slice €100 billion off Greece’s over €350 billion euro debt load.

    The head of the International Institute of Finance (IIF), a bank lobby group that negotiated on behalf of the private sector, expressed optimism that the exchange would attract high participation from investors.

    “We remain quite optimistic that once investors study this proposal ... there will be high take up,” Charles Dallara, IIF managing director, said at the G20 meeting in Mexico City.

    Greece’s announcement yesterday confirmed terms of the swap released earlier this week when the deal was struck.

    Banks, insurers and other investors holding about €206 billion of Greek government bonds will take a 53.5 per cent loss in the face value of their securities, with actual losses estimated at 73 to 74 per cent.

    As part of the swap, investors will pocket longer-dated Greek bonds worth 31.5 per cent of their holdings and short-term paper issued by the European Financial Stability Fund (EFSF) equal to 15 per cent of their old bonds.

    The new bonds will carry an average coupon of 3.65 per cent over the 30-year period and be governed by English law.

    Doubts remain

    The debt swap, also known as private sector involvement, is designed to cut Athens’ debt load to 120.5 per cent of its gross domestic product by 2020 from 160 per cent, in the hope that it would open the way for its eventual return to bond markets.

    The debt exchange and the new bailout also buy time to stabilise the 17-nation euro zone currency bloc and shield it against a Greek default, which remains a long-term threat.

    Despite offering some relief to Greeks and policymakers fretting about an imminent bankruptcy, the deal has yet to quell doubts about the viability of Greek debt and whether the stricken nation can get back on its feet.

    The overall bailout package comes at the price of painful austerity measures that ordinary Greeks say have impoverished them. A mix of tax hikes and wage and pension cuts have sent unemployment soaring, shuttered businesses and brought thousands of Greeks out on the streets for near-daily protests.

    Athens has said it wants to conclude the transaction by March 12. Focus now turns to the participation rate in the swap, with Athens also predicting a high take up.

    “There is optimism in the government that there will be big participation in the swap,” a Greek government official said.

    Greece said it was not obliged to carry out the swap unless it had 90 per cent participation. If the participation was below 90 per cent but above 75 per cent, then Greece would consult with its public creditors.

    If the rate was less than 75 per cent and it did not receive required consents, it would not go through with the deal, it said.

    Greece has passed legislation introducing so-called collective action clauses (CACs) that allow it to force all bondholders to proceed with the swap once it has secured a specified level of approval.

    Based on the recently approved law, the exchange will go ahead once 50 per cent of bondholders have responded to the offer and the CACs will be activated once a two-thirds majority of that quorum has voted in favour of the swap.

    “In my discussions ... no decision has been made on whether or not they will activate those collection action clauses,” Dallara said. “Should they decide to activate, of course it does raise concern, including other sovereign issues.”

    Under the deal, investors will also get separate GDP-linked securities which will provide annual payments of up to 1 per cent of the notional amount of the new bonds if the country’s economic growth rate exceeds a certain threshold.

    Greece appointed Deutsche Bank and HSBC to act as closing agents. — Reuters

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  4. #24
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    A Greek default is not a default. Malaysia can do the same.

    March 1, 2012, 8:55 a.m. EST

    No Greek CDS payout on swap, panel says

    Investors will have more opportunities to argue ‘credit event’ occurredBy William L. Watts,
    MarketWatch

    FRANKFURT (MarketWatch) — Greece’s restructuring of privately-held debt so far hasn’t met the threshold of a “credit event,” failing to trigger billions of dollars in payouts on derivative instruments known as credit-default swaps, a panel of bankers and investors ruled Thursday.

    The meeting of the International Swaps and Derivatives Association’s Determinations Committee on Thursday came after an anonymous query was submitted to the trade group requesting a ruling on whether preferential treatment of Greek bonds held by the European Central Bank and some national central banks amounted to a “credit event.”

    ISDA is a global trade group that is the arbiter of whether payouts on CDS contracts have been triggered.

    The panel, which met by teleconference in London and New York, ruled unanimously that the move didn’t constitute such an event. They also ruled that the private debt swap initiated last week as part of the country’s second international bailout hadn’t met the threshold.


    Click to Play

    Has Greece defaulted or not?


    Officials from the International Swaps and Derivatives Association have stated that Greece has not had a "credit event" and will not trigger credit default swap payments. Dow Jones's Jenny Paris and Katie Martin explain why this decision is not clear cut. Photo: AP


    But the panel also noted that the situation in Greece is “still evolving” and that market participants can submit further questions to the body “as further facts come to light.”

    A credit event would require market participants who issued credit-default swaps, or CDS, on Greek government debt to pay out to investors who had bought the derivatives as a hedge against nonpayment or a speculative bet.

    Read about Greek CDS exposure.

    Investors hold net exposure of around $3.2 billion on CDS covering more than $200 billion of outstanding Greek debt, a figure that’s seen as easily manageable.

    Still, markets are likely to keep an eye trained on the deliberations. Strategists at Lloyds TSB in London said a CDS trigger could still “bring contagion fears back to the fore.”

    The market consensus had been that the panel wouldn’t vote to trigger CDS payouts in response to the query regarding the treatment of the ECB, said Gavan Nolan, director of credit research at data provider Markit.

    The euro /quotes/zigman/4867933/sampled EURUSD -0.04% traded at $1.3312 versus the dollar, down 0.1% from Wednesday. European equities traded higher.

    It was widely reported that the ECB moved last month to swap its holdings of Greek government bonds, receiving identically structured paper in return. The new bonds, however, weren’t subject to collective action clauses inserted retroactively by the Greek government into existing debt.

    Those clauses would allow bondholders holding a majority of Greek debt to compel all private bondholders to participate in the debt swap currently under way as part of Greece’s second international bailout.

    Under the swap, private bondholders will take a haircut of 53.5% on the value of Greek bonds, exchanging existing debt for new bonds that pay lower interest rates and carry longer maturities.

    Ratings firm Standard & Poor’s has already declared that the CACs amount to a distressed debt exchange, pushing Greece into selective default.

    Many analysts contend a credit event is likely to be declared if the CAC clauses are triggered. And there’s a high possibility of that occurring since around a quarter of Greek bonds appear to be held by hedge funds and other investors seen as unlikely to be keen to tender their shares in the swap.

    “Uncertainty on the second package will remain until the March 12 deadline when private bondholders will have to decide whether or not to participate in the ‘voluntary’ debt exchange,” said Tobias Blattner, euro-area economist at Daiwa Capital Markets. “Only if the participation rate will be high enough, the package can go ahead as planned and the payout of CDS contracts might be avoided.”

    /quotes/zigman/4867933/sampled

    William L. Watts is MarketWatch's European
    bureau chief, based in Frankfurt








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  5. #25
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    EU Leaders Must Get Past Debt Swap Before Turning Page


    By Patrick Donahue -

    Mar 5, 2012 7:00 PM GMT+0800Mon Mar 05 11:00:04 GMT 2012


    Virginia Mayo/AP
    European Council President Herman Van Rompuy at the EU Summit in Brussels on March 2, 2012.


    The European Union faces a first test in its attempt to turn the page on the two-year debt crisis when Greece’s private creditors decide this week whether to sign off on the biggest sovereign-debt restructuring in history.

    The success of the 106 billion-euro ($140 billion) debt swap, confirmed on the eve of last week’s European Union summit, depends on how many investors agree to the writedown by the March 8 deadline. Euro-area finance ministers will hold a teleconference on March 9 to review the deal’s outcome.

    Play VideoQ


    March 5 (Bloomberg) -- Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc, talks about Greece's debt swap deal and fiscal consolidation in the euro area. He speaks with Owen Thomas and Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)


    Play VideoQ


    March 2 (Bloomberg) -- European Union President Herman Van Rompuy and European Commission President Jose Barroso speak at a news conference in Brussels about the region's bailout fund and economic growth agenda. (Source: Europe by Satellite)


    Enlarge imageEU Leaders Must Pass Debt Swap Before Crisis Ebbs



    A woman walks past a bus in Athens. Photographer: Petros Giannakouris/AP


    Enlarge imageEU Leaders Must Get Past Debt Swap Before Turning Page

    Simon Dawson/Bloomberg

    A European Union flag flies in front of the Parthenon temple on Acropolis hill in Athens.



    A European Union flag flies in front of the Parthenon temple on Acropolis hill in Athens. Photographer: Simon Dawson/Bloomberg

    “The European crisis is not quite over yet,” Erik Nielsen, chief global economist at UniCredit SpA in London, wrote in a note to clients yesterday. He said enough creditors will probably participate in the writedown to avoid triggering so-called collective action clauses, which could be used by Greece to compel investors to participate and roil markets by triggering credit-default swap insurance contracts.

    The Greek government has set a 75 percent participation rate as a threshold for proceeding with the transaction, in which investors will forgive 53.5 percent of their principal and exchange their remaining holdings for new Greek government bondsand notes from the European Financial Stability Facility. Euro-area finance ministers last week authorized the EFSF to issue bonds for the swap.

    Reject Offer

    Germany’s DSW investor protection group advised private sector bondholders to reject the Greek bond offer, according to an e-mailed statement today.

    Leaders of the EU last week said their focus will shift away from budget-cutting to growth measures after completing the details of a second Greek bailout package. Whether that 130 billion-euro package can proceed will depend on the outcome of this week’s swap.

    Italian and Spanish 10-year bonds climbed last week, withItaly’s bonds showing the longest run of gains in 14 years, buoyed by a second round of three-year loans offered by theEuropean Central Bank. Stocks fell today after China announced its lowest economic growth target since 2004 and European services and manufacturing output was revised lower.

    The Euro Stoxx 50 Index fell 0.4 percent as of 4:05 p.m. Frankfurt time. The euro broke a three-day decline, adding 0.2 percent to $1.3223.

    “We’re in calmer waters,” EU President Herman Van Rompuysaid in an interview on Dutch television’s “Buitenhof” program yesterday.

    EU leaders have called Greece’s case unique while vowing to keep the country where the debt crisis originated in the monetary union.

    ‘Sick Child’

    “If you have a sick child in the family, you don’t abandon it, but work on a remedy,” Austrian Finance Minister Maria Fekter said in a March 3 radio interview with state broadcaster ORF. “That’s what we’re currently trying to do with Greece.”

    The Institute of International Finance, which represented private creditors in the negotiations over Greece’s debt swap, yesterday endorsed the final terms of the deal and left it up to its members to choose whether to take part.

    The plan, which private creditors reached an agreement on with Greek and European officials last week, seeks to reduce Greece’s debt to 120.5 percent of gross domestic product by 2020.

    ‘Important Steps’

    “These are important steps towards resolving the Greek debt crisis, addressing the overall fiscal and sovereign debt problems in the euro area, and restoring financial stability, which is essential to foster economic growth and job creation,”the IIF said in an e-mailed statement.

    Luxembourg Prime Minister Jean-Claude Juncker baffled his EU colleagues on March 1 by saying the bloc has a backup “plan B” if the Greek debt swap fails.

    “I have nothing to say about this odd declaration,”French President Nicolas Sarkozy said in Brussels the next day. Finnish Prime Minister Jyrki Katainen said there’s “no plan B. We have chosen the way how to deal with the crisis.”

    Danish Prime Minister Helle Thorning-Schmidt told reporters today that “everyone knows that we’re not completely finished in terms of the Greek situation, but we’ve taken substantial steps.”

    To contact the reporter on this story: Patrick Donahue in Berlin at pdonahue1@bloomberg.net

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  6. #26
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    Is the Greek Debt Problem Really Solved?

    14 March 201216 Comments

    By Greg Hunter’s USAWatchdog.com

    Yesterday, a short but ominous press release was issued at the Commodities Futures Trading Commission. It said, “At the request of CME Clearing Europe Limited (CMECEL), pursuant to Section 7 of the Commodity Exchange Act, the Commodity Futures Trading Commission issued an Order on March 13, 2012, vacating the registration of CMECEL as a derivatives clearing organization.” (Click here for the CFTC press release.) In plain English, the Chicago Mercantile Exchange (CME) no longer wants to be the clearing house for European derivatives. The derivatives market in Europe must have been very lucrative for the company. After all, just the credit default swap (CDS) market is reportedly worth $50 trillion globally. (A CDS is a form of insurance. If there is a default, the debt is paid by the entity that sold the insurance contract.) I ask myself, why would the CME willingly stop being the clearing house for this profitable and large market?

    Just last week, it was reported there was a new Greek debt deal where 95% of the bondholders voluntarily agreed to take nearly a 75% loss on Greek debt. CNBC reported, “Greece successfully closed its bond swap offer to private creditors on Thursday, opening the way to securing the funding it needs to avert a messy default on its debt, according to several senior officials. . . . The biggest sovereign debt restructuring in history will see bond holders accept losses of some 74 percent on the value of their investments in a deal that will cut more than 100 billion euros from Greece’s crippling public debt.” Buried in the CNBC story was this little tidbit that said, “That would potentially trigger payouts on the credit default swaps (CDS) that some investors held on the bonds, an event which would have unknown consequences for the market.” (Click here for the complete CNBC story.)

    Is the CME exiting the European CDS market just when the proverbial CDS contracts are about to hit the fan? This comes just after the CME’s 50 year old CEO, Craig Donohue, announced his retirement earlier in the week. I am sure that is just a coincidence. I know the mainstream media has been telling folks everything is just fine with the Greek debt crisis, but that’s not what a Member of the European Parliament said in an interview yesterday. Nigel Farage said on King World News, “We sort of pretend that it didn’t happen and it wasn’t really a proper credit event, yet we know that various CDS’s are being triggered. We also know that yesterday 110 private bondholders, who had held their bonds through German banks, are now taking legal action. Just to top it all, the thing that almost made me laugh was that yesterday the German Finance Minister said, ‘We must be preparing now, any day, for a third bailout.’ So this idea that the leaders of Europe give that everything is fine, everything is not fine.” The outspoken Farage went on to say. “You can argue that the ECB, by printing money, has staved off the crisis for a few weeks. But the fundamentals haven’t changed one bit, the euro is in deep, deep crisis. . . . They are determined to prop up and keep together this completely failed experiment. But they know as soon as they give in on Greece, the circus will move on to Portugal, Spain and possibly Italy.” (Click here to read and hear the complete Farage interview on King World News.)

    You might think the situation in Greece has stabilized, that everything is getting back to normal and, now, the Greeks can finally meet their debt payments. If you did, you would be in the same delusional state Wall Street is in after a 200 point run-up yesterday. A Testosteronepit.com post about Greece from last Friday said, “Unemployment is veering toward disaster. The overall rate of 21% in December, announced Thursday, was horrid enough, but youth unemployment rose to a shocking 51.1%, double the rate before the crisis. A record 1,033,507 people were unemployed, up 41% over prior year. Only 3,899,319 people had jobs—a mere 36.1% of a total population of 10.8 million!” The story’s conclusion said, “We still don’t have a solution for Greece, so there will be a harder default to come,” predicted Charles Wyplosz, director of the Geneva-based International Center for Money and Banking Studies.” (Click here for the complete post.)

    To me, there are at least two big questions that need to be answered: 1) When will the final Greek default take place? 2) How much exposure do big foreign and domestic banks have to the CDS contracts sold on sour Greek debt? I don’t have the answers, but I am sure we will get them in the weeks and months ahead.
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  7. #27
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    Eurocrats Carry On Up The Khyber, Determined and Delusional, says Farage

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    When the economic situation deteriorates, people look for scape-goats and minority groups, especially immigrants are favoured targets. Likewise the security situation gets worse as desperate people look for money.

    Greek Xenophobia On The Rise

    By Apostolis Fotiadis

    ATHENS - Last January, several pupils coming out of a high school in Kallithea, a central residential neighborhood in Athens, attacked a Pakistani passer-by.

    The nature of the assault alarmed Maria Daneil and Artemis Kalofuri, as well as other teachers in schools around the area, who consider this to be just the latest in a sequence of racially charged confrontations in Greece's economically fraught urban areas.

    "There has been a deteriorating picture including anti-migrant attacks, the attack on a makeshift mosque, harassment of students, as well as the appearance of people flaunting neo-Nazi paraphernalia around the schools. We felt that passive

    observation is not effective anymore, we had to do something," Kalofuri told IPS.


    With support from the local branch of the association of teachers (ELME), the educators formed a student discussion group, where questions on migration, racism and fascism, as well as current social issues arising from those problems, could be raised and analyzed by pupils themselves.


    Kalofuri said, "Between 60 or 70 people showed up the third time we met."
    Daneil believes the attack is further complicated by the fact that the assailants were mostly second-generation migrants themselves.

    "It is socially complicated," she says, "but the pattern involves the radicalization of isolated or less wealthy kids, with family issues, that at some point come in
    contact with radical nationalist groups."

    Both teachers mentioned links between a very small number of pupils and radical nationalist groups as well as the establishment of a culture of fear and silence regarding the issue.


    Fear, particularly, is what Yunus Mohammedi, residing in Greece for over 10 years, has begun to notice among his fellow Athenians, as public aggression has almost become a daily issue.

    In order to alert people, Mohammedi circulated a map of Athens, marking in red the zones where most violent incidents take place. "This is how we used to warn people about the places they ought to avoid in Afghanistan when I worked here for Doctors Without Borders," he recalled to IPS.

    "We explain to newcomers as well as people for who have been in Athens for longer which places to avoid when it gets dark and advise them not to walk around alone if possible."

    A trained pathologist and one of the few Afghans who speak fluent Greek, Mohammedi has become a person with whom many Afghans consult when they are in trouble.


    "Ten years ago things were very different. Back then you had to worry about having a job and making ends meet. Now it is dangerous, we often have to care for people stabbed or violently beaten. I often receive phone calls from people threatening me for getting involved," he said.

    Hardships fuel racial hatred

    The economic crisis has altered significantly the social rules between Greeks and immigrants and asylum seekers, mostly from Asia and Africa.

    Since 2005, Greece has become the main influx point for undocumented migrants, with more than 80% entering Europe coming from Turkey through the Aegean Sea or the Northeast mainland boundary of the river Evros.


    The vast majority of these migrants hope to move towards Northern Europe. However, clauses in the United Nations' Dublin II regulations that dictate the returns of irregular immigrants to the country they entered have effectively condemned scores of immigrants to remain stuck in limbo in Greece.


    This has transformed the country, and Athens in particular, into a depot of hundreds of thousand of irregular immigrants and asylum seekers, who survive
    on below-subsistence incomes won in a vast black market.

    Certain areas of the capital have been morphing slowly into semi-permanent migrant quarters, with the municipality estimating that in certain central areas, Greeks number less than 4% of the population.

    Since 2008, the worsening economic crisis replaced most Greek's passive understanding of migrant workers' plights with xenophobic intolerance.

    According to Eurostat, Greece's economy is retracting at the alarming rate of 7.5%, while unemployment climbed to 21 percent last December.

    Moreover, increasing involvement of migrants in violent thefts and organized criminal activity has inflated antipathies. Greek police have registered an increase in the involvement of migrants in violent crime rates from 24% to 25% in 2000 to over 65% today.

    Lack of employment in the regular and irregular markets has increased antagonisms not only between Greeks and foreigners but also between various migrant groups.


    Far-right groups have capitalized on this situation to increase their popularity and recruit membership around the run-down areas of the city, leading to an explosion of anti-migrant rhetoric and violent attacks against Asian and African migrants.

    Marianna Tzeferakoy, a lawyer with the Greek Council for Refugees (GCR), told IPS, "Many people referring to the GCR for assistance have reported violent behavior, but given that no structure for monitoring the situation is available, we have no picture of the scale of the problem. We know only that it is worsening very quickly."

    Tzeferaku as well as Mohammedi have alleged that Greek police personnel are systematically discouraging migrants from reporting violent incidents.

    Judith Sunderland, a senior researcher at Human Rights Watch, added that a recently completed fact-finding mission in Athens supported fears of a brewing crisis.

    "The testimonies we have collected so far from victims and associations providing services to migrants and asylum seekers suggest that the violence has increased
    significantly over the last several years," Sunderland told IPS.

    "We have collected numerous testimonies indicating that the police have failed to
    intervene rapidly or have discouraged victims from filing official complaints. We are similarly concerned that the government has not yet acknowledged the gravity of the situation. Neither consistent condemnations of attacks, nor a clear plan of action to prevent attacks and punish those responsible, have been
    articulated."

    Greek police spokesman Athanasios Kokkalakis, who has opposed these allegations, told IPS, "Whenever the Greek police has received a detailed report about incidents related to racially motivated violence it has intervened and arrested anyone responsible, even in cases where the accused have been police officers themselves," he said.

    The combination of a relentless migration wave and the deteriorating economic crisis fueled by austerity measures is giving birth to complicated social issues says, Kokkalakis said.

    "Migrants are at the same moment victims and perpetrators of crime. They arrive in a country in which social cohesion is challenged and welfare and social structures that could support them are on the point of collapse. At the same time they are under enormous pressure from international trafficking networks that push more and more of these people into criminal activity."

    Last week, the United Nations High Commission for Refugees completed a three-month-long pilot project of documenting xenophobic aggression.


    A representative told IPS, "It is early to talk about specific results, yet it is obvious that a pattern of violent aggression has started forming in certain areas of the capital."

    After the results are examined the agency will try to put in place a permanent observatory of racial and anti-migrant violence.

    (Inter Press Service)
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  9. #29
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    Greeks vote with wallets in fear of euro zone exit


    http://bit.ly/JxbxBG

    May 17, 2012

    Two men withdraw money from an ATM in central Athens May 16, 2012. — Reuters pic

    ATHENS, May 17 — Greeks are voting with their wallets and pulling euros out of the banks in fear that their country may leave the European single currency despite the declared determination of EU powers Germany and France to keep Athens in the monetary union.Central banking sources said the European Central Bank has stopped lending to some Greek banks because they had not been successfully recapitalised. The sources did not name the banks but said they have to go to the Bank of Greece for emergency liquidity assistance. The ECB declined comment.

    As financial markets shuddered over the deepening turmoil in Athens yesterday, governments of other troubled euro zone states from Spain to Ireland voiced concern about the impact on their own shaky finances.

    Spanish Prime Minister Mariano Rajoy told parliament his country faced trouble financing itself as borrowing costs shoot up to “astronomic” levels. Irish Finance Minister Michael Noonan said Dublin’s plan to return to capital markets in late 2013 might not be achievable because of the uncertainty.

    A chorus of sceptical politicians and central bankers from London to Ottawa predicted the euro could fall apart unless European governments act more decisively to save the currency.

    Greek President Karolos Papoulias told political leaders that citizens were withdrawing their money due to “great fear that could develop into panic” at the risk of a debt default and exit from the euro area, according to minutes of their meetings posted on the presidency’s website.

    He quoted the central bank chief as saying about €800 million (RM3.2 billion) had been taken out in a single day. The head of the International Institute of Finance banking lobby, Charles Dallara, said money was leaving Greece at a growing pace due to political uncertainty.

    “There has been a pick up of deposit flight from Greece but I think that is ‘stabilisable’ once you get a new government in place, if that government reaffirms its intention to remain in the euro zone,” Dallara, who was chief negotiator for private sector holders of Greek bonds, told reporters in Ireland.

    The damage to the rest of Europe if Greece were to leave the euro would be “somewhere between catastrophic and Armageddon”, he said.

    Papoulias, who tried in vain to broker a national unity government, appointed a senior judge, Panagiotis Pikrammenos, as caretaker prime minister yesterday until a second general election in just over a month is held on June 17.

    The failure of his talks to avert a repeat election sent judders around financial markets, hitting global share prices and other riskier assets, although sentiment steadied later.

    Investors turned to the US dollar and safe-haven German bonds while the euro dipped at one point to a four-month low below US$1.27 before recovering slightly. Spanish and Italian bond yields spiked and a key index of European shares fell to its lowest level this year.

    German Chancellor Angela Merkel and new French President Francois Hollande sought to quell talk of a possible Greek departure from the euro zone after their first meeting on Tuesday evening, which focused on ways out of the 17-nation currency area’s debt crisis.

    “We agreed that we want Greece to stay in the euro,” Merkel told a news conference in Berlin, adding that Athens must respect the conditions set in a second international bailout agreement signed in March.

    Nearly two thirds of Greeks voted on May 6 for parties of the radical left and far right which oppose the terms of the EU/IMF assistance programme, which has imposed steep wage and pension cuts, deepening a four-year recession.

    Policymakers from European Union states and the European Central Bank have warned they would stop sending Athens the cash it needs to stay afloat if a new government tears up the plan.

    European Commission chief Jose Manuel Barroso said the Greek people must now make a fully informed decision understanding the consequences for their country’s future.

    “The ultimate resolve to stay in the euro area must come from Greece itself,” Barroso told a news conference.

    But many Greek voters believe they can stay in the euro without abiding by the conditions imposed to obtain the bailouts, as promised by Alexis Tsipras, the charismatic 37-year-old leader of the surging leftist SYRIZA party.

    A second opinion poll showed that SYRIZA, which opposes the austerity conditions attached to the assistance programme, is consolidating gains and is on track to become the biggest group in parliament in a re-run vote, pulling ahead of mainstream pro-bailout centre-left and centre-right parties.

    The determination to keep Greece in the euro spelled out by Merkel and Hollande may be undermined by comments from several EU finance ministers and IMF chief Christine Lagarde, who have publicly envisaged a possible Greek exit.

    Merkel’s office complained to Austria after Finance Minister Maria Fekter suggested this week that Greece could be thrown out of the EU as a result of its economic crisis, the newspaper Oesterreich reported.

    Lagarde said on Tuesday that Greece would either have to be given more time and money to meet its debt reduction targets or else euro zone countries would have to begin planning for its exit.

    In Madrid, Rajoy voiced the alarm of a country that could be next in the firing line if Greece left.

    “I don’t want Greece to exit the euro,” he said, as Spain’s risk premium over benchmark German 10-year bonds rose to more than five percentage points, a euro era high.

    “I believe it would be a major error, it would be bad news and I believe we have to guarantee the sustainability of public debt and then all of us comply with our commitments, which is what we are doing in Spain, what Italy is trying to do and what all the other countries are also trying to do.”

    In a blow to Rajoy’s efforts to clean up Spain’s debt-laden financial sector, shares in recently nationalised lender Bankia tumbled 10 per cent yesterday after it delayed first quarter results, raising fears that the government will have to inject more cash.

    Bankia lies at the core of concerns about Spanish banks’ problems after a 2008 property crash. Many analysts believe Madrid or the EU will have to inject funds to avert a collapse of the financial system, worsening the euro zone debt crisis.

    Italian Prime Minister Mario Monti, whose heavily indebted country is also in markets’ sights despite economic reforms praised by the IMF, said that US President Barack Obama was seriously concerned about the euro zone situation, which will be on the agenda of a G8 summit in Camp David at the weekend.

    The White House said Obama and Monti agreed on the need to intensify efforts to revive economic growth and job creation in Europe, apparently siding with Hollande in his drive to temper German-led austerity policies.

    Among the sceptical chorus, British Prime Minister David Cameron told parliament in London of the euro zone: “It either has to make up or it is looking at a potential break-up. That is the choice they have to make, and it is a choice they cannot long put off.

    Canadian Finance Minister Jim Flaherty, a frequent scourge, said Europeans should abandon the single currency if they were not willing to do more to assist member states in trouble.

    “They have to do the right thing, use some of their taxpayers’ money to bail out some of the weaker members of the euro zone – or start moving away from the euro zone and just say this was an experiment that has not worked,” he told CTV television. — Reuters
    py

  10. #30
    Join Date
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    'Between catastrophe and Armageddon': the cost of a 'Grexit'

    Posted on 20 May 2012 - 01:58pm
    Last updated on 20 May 2012 - 03:34pm
    http://www.thesundaily.my/news/383319

    BERLIN (May 20, 2012): As the spectre looms ever larger of a Greek exit from the eurozone, economists have been making highly complex calculations of how much that bombshell would cost -- with estimates as high as US$1 trillion.

    The approximations vary widely with the one thing most analysts agree on being that the cost of a Greek exit -- or "Grexit" -- is "incalculable" and depends how many knock-on effects are taken into account.

    The direct costs, analysts at German lender DekaBank, relate to the hit other European countries and the International Monetary Fund would have to take on their holdings on Greek debt if Greece were to default and leave the euro.

    Via its bailout fund, the European Financial Stability Facility, the EU has already lent billions of euros to Athens.

    At the same time, the European Central Bank holds an estimated 50-55 billion euros of Greek paper, which would become effectively worthless.

    In addition to this is the so-called Target 2 interbank payments the Greek central bank owes the European Central Bank, which economists at Swiss bank UBS put at 104 billion euros.

    UBS analysts put the total direct costs of a "Grexit" at 225 billion euros, DekaBank at 350 billion euros, of which 86 billion euros would be borne by Germany alone.

    Douglas McWilliams, however, from the Britain-based Centre for Economics and Business Research this week put the figure at US$1 trillion, around five percent of eurozone GDP, if the break-up of the bloc is "unplanned".

    While the direct costs are large enough, what really scares economists is the spillover effects of a Greek departure, especially the "contagion" risks threatening other fragile eurozone economies such as Italy and Spain.

    "The mechanism that worries us the most would be the likelihood of bank runs in the periphery," said Stephane Deo from UBS.

    "If Greece indeed leaves and the drachma loses half of its value, or more, it would become obvious to depositors in other parts of Europe that their deposits are at risk and we thus see a bank run as a possible scenario," he said.

    In such a situation, with the prospect of major social disorder, the ECB and governments would have to step in, offering further billions to the bailouts already agreed to Ireland, Greece and Portugal, economists say.

    Hans-Werner Sinn, president of the respected Ifo institute in Germany, has spoken of the bill for Germany alone being near one trillion euros if the eurozone disintegrates in the wake of a Greece exit.

    No wonder that German Chancellor Angela Merkel and French President Francois Hollande used their first news conference together to stress that they wanted to keep Greece in the club, given the cost of the alternative.

    The president of the European Parliament, Martin Schulz, warned on Friday that the Greek economy "would collapse within days" and require other European countries to plough more billions into Athens in emergency funds.

    "You can always lay out scenarios from the comfort of a research institute ... but the political reality is a bit different," Schulz told German radio while on a visit to Athens.

    But the idea of Greece leaving the eurozone, unmentionable only a few weeks ago, has slipped increasingly into public discourse, with even ECB governing council members such as Belgium's Luc Coene talking of an "amiable divorce".

    And some senior figures even in Berlin have said Europe is in a better position to cope with the fall-out after erecting a "firewall" of close to US$1 trillion.

    Former German economy minister Rainer Bruederle, a close Merkel ally, told Handelsblatt business daily: "Unlike two years ago, the eurozone today could cope with a Greek exit."

    Charles Dallara, who heads the Institute of International Finance, a grouping of leading banks around the globe, decided not to give a precise figure when asked about the costs of a "Grexit".

    He said it would range from "somewhere between catastrophic and Armageddon". – AFP
    py

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