Entries in Debt (17)


Italy’s Landmarks Become Billboards to Pay Debt

iStockphoto/Thinkstock(ROME) -- Italy’s financial mess is massive: The country is $2.5 trillion in debt -- bigger than its entire economy.  The Italian government is looking for ways to fund its debts and everything is on the table, including some of the country’s iconic landmarks.

In the past few years, monuments like Michelangelo’s David and the Leaning Tower of Pisa have become billboards.  From the Roman Colosseum to the canals of Venice, nothing appears to be off limits.

The money-making deal wrapping the Bridge of Sighs earned more than $2 million from companies like Bulgari.  The advertisement was recently removed.

To keep things afloat, the country will need to borrow $408 billion next year just to pay the interest on its debt -- that’s the equivalent of selling more than 272,000 monumental ads.

Experts say Italy needs credibility and responsibility in government to get investors back on its side.  Trading in the scandal-ridden Prime Minister Silvio Berlusconi for an economics professor named Mario Monti is the first step, if it happens as expected in the next week.

The next step would be sacrifice: higher taxes and cuts to social programs.  Italians would have to give up some aspects of their “beautiful life” -- job security, long vacations and plush pensions.

But shared sacrifice won’t come easy.  When Berlusconi tried to introduce cuts last month, Italians protested in the streets.

However, the alternative would be much worse: a bankrupt Italy that drags the rest of Europe and the U.S. down with it.

Copyright 2011 ABC News Radio


Italian Prime Minister Holding on to Job for Dear Life

Ian Waldie/Getty Images(ROME) -- Italian Prime Minister Silvio Berlusconi said Monday that reports of his imminent political demise were greatly exaggerated.

The buzz throughout Italy and the rest of the world was that the 75-year-old leader was ready to resign under pressure by those who see him as preventing the country from getting out of its debt.

Berlusconi has been hampered by scandals throughout the year involving alleged sex romps with prostitutes and accusations of corruption.

But the billionaire keeps holding on even amid the worst crisis of his tenure as record Italian bond yields have raised borrowing costs to the point where Italy's economy is now close to the same precarious positions that Greece and Spain are in.

Berlusconi is said to be working feverishly to keep his conservative government from collapsing ahead of Tuesday's parliamentary vote that could force him out.

Copyright 2011 ABC News Radio


Greek PM: Debt Deal is Only Way to Stay in Euro


(ATHENS, Greece) -- One week after European leaders made an agreement to decrease Greece’s debt and avoid financial meltdown in the Eurozone, Greek Prime Minister George Papandreou warned the Greek parliament that the only way to stay in the euro currency is to agree to last week’s deal.

Greece is reportedly softening its opposition to the plan as Papandreou has called off a referendum for the Greek people to vote on the plan, after first announcing the referendum on Monday.

The White House stressed Thursday that, regardless of what happens in Greece, the Eurozone debt deal must be implemented swiftly. On Friday, Papandreou faces a confidence vote in Greece’s parliament.

European leaders have acted quickly to try to avoid a recession. The European Central Bank decreased its benchmark interest rate to 1.25 percent from 1.5 percent on Thursday.

Greece was to receive an installment of 8 billion euros as a loan this month and has said it will run out of money in mid-December otherwise.

The bailout plan would cut in half the privately held Greek sovereign debt, according to Peter Morici, professor at the Smith School of Business, University of Maryland School.

“However, to receive this concession and other aid from richer EU governments, Greeks must accept draconian austerity measures,” Morici, the former chief economist at the U.S. International Trade Commission, wrote in a note. “These would further drive up unemployment, and shrink Greece’s economy and tax base at an alarming pace, placing in jeopardy eventual repayment of Athens’ remaining debt.”

Morici said the Greeks should accept the bailout and continue in the euro “only if they determine the currency serves them well.”

“As currently constituted, a single currency may serve the One Europe designs of France and Germany, but make Greece and the other Mediterranean states nothing more than the victims of a northern conquest,” he wrote.

World leaders, including President Obama, have urged European leaders during the G-20 summit in Cannes, France, to quickly carry out their agreement and resolve Europe’s financial crisis.

Copyright 2011 ABC News Radio


G-20 Summit Begins with Greek Default Looming

David Ramos/Getty Images(CANNES, France) -- No one's going to be watching any movies when world leaders begin their G-20 summit in Cannes, France Thursday.

The big issue, and perhaps the only issue, is what to do about the European debt crisis that was aggravated this week by Greek Prime Minister George Papandreou's decision to put his country's bailout plan to a popular vote.

The European Union was ready to eat half of what's owed to them by Greece in return for its government imposing higher taxes and severely cutting back on social services that have nearly bankrupt the country.  But the Greek people are certain to turn down the referendum that won the backing of Papandreou's Cabinet on Wednesday.

Even before the summit started, German Chancellor Angela Merkel, French President Nicolas Sarkozy and officials from the EU and International Monetary Fund held an emergency meeting with the Greek prime minister and his financial chief to try to reach a compromise.

Should Greece default on its bills, the ripple effect would be devastating since so many European banks hold Greek debt.  The crisis has already affected global markets, including those in the U.S., although there was a modest rally on Wednesday both on Wall Street and abroad.

Copyright 2011 ABC News Radio


Greek PM George Papandreou to Step Down?

Chip Somodevilla/Getty Images(CANNES, France) -- Amid conflicting reports that Greek Prime Minister George Papandreou is preparing to resign, the White House stressed Thursday that, regardless of what happens in Greece, the Eurozone debt deal must be implemented swiftly.

“The steps that need to be taken are clear, again, irrespective of the political personality or situation at any given moment,” Deputy National Security Adviser Ben Rhodes told reporters in Cannes when asked about reports that Papandreou is going to step down. “What needs to be done as it relates to Greece, what needs to be done as it relates to stabilizing the Eurozone, was outlined last week and those steps are going to need to be taken going forward, irrespective of, again, where we are at any given moment in a country’s politics.”

While the Eurozone plan currently lacks specificity, White House aides said the situation in Greece highlights the need for a “firewall” to prevent one country’s troubles from spreading elsewhere in Europe.

“The situation there underscores the need to move rapidly...including having a firewall that is sufficiently robust and effective in assuring that a crisis does not spread from one country to another,” Deputy National Security Advisor for International Economic Affairs Mike Froman said. “That has been a consistent message that the President and Secretary Geithner have shared with their counterparts in Europe.”

Copyright 2011 ABC News Radio


Greek Prime Minister Calls for Surprise Referendum

Hemera/Thinkstock(ATHENS) -- Greek Prime Minister George Papandreou announced late Monday night, the decision to hold a referendum on the bailout approved for Greece last week. This move puts the extremely unpopular austerity measures to a popular vote, which could threaten the financial futures of both Greece and the euro.

If the popular vote is a no, the deal between Greece and the European Union would dissolve, almost certainly guaranteeing Greece would default on its debt by cutting off international funding. A yes vote would shift the responsibility of budget cuts onto the public, enacting the austerity measure and enabling Greece to receive aid from the IMF and the rest of the Euro zone .

This referendum is expected to take place in January.

Already the news has sent shockwaves through the European markets, as the DAX, CAC and FTSE all opened down.

French President Nicolas Sarkozy is holding an emergency meeting today of top government ministers to discuss Greece's surprise decision.

Copyright 2011 ABC News Radio


European Leaders Agree on Greek Debt Deal in Marathon Summit

Michele Tantussi/Bloomberg via Getty Images(BRUSSELS, Belgium) -- Eurozone leaders are drawing closer to restoring the integrity of the euro and resolving the financial crisis in the region.  

After a lengthy meeting in Brussels, European leaders agreed just before 4 a.m. Thursday to a plan that would require banks to absorb 50 percent of Greece's debt, and push Europe's bailout package to 1 trillion euros ($1.4 trillion).  

For Greece, the 50-percent reduction will ultimately cut the country's debt to 120 percent of its gross domestic product by 2020, The New York Times reports.

With the eyes of investors around the world watching, an accord was finally reached between eurozone leaders and banks.  The banks had previously rejected appeals for them to accept a 50-percent loss on loans to Greece.  

"The world's attention was on these talks today," German Chancellor Angela Merkel told reporters, according to Bloomberg. "We Europeans showed tonight that we reached the right conclusions."

The International Monetary Fund has also promised more assistance.

Copyright 2011 ABC News Radio


European Leaders in Last-Gasp Effort to Stop Financial Meltdown

Hemera/Thinkstock(BRUSSELS) -- What happens to the European currency, the euro, may seem a distant and complicated financial issue to many, but doubts about its survival are driving market uncertainty everywhere -- and impeding economic growth in the U.S.

It’s hoped that at Wednesday evening’s European summit in Brussels, a plan will be agreed on to deal with the Euro debt crisis once and for all. But that is looking unlikely.

Several countries in Europe are drowning in debt. Greece is the worst off, living off bailout loans from its European partners and now locked in recession.

But others, including much larger economies like Italy and Spain, are also dangerously indebted. If they go the way of the Greeks, the European single currency project would likely collapse, sparking a massive financial crisis.

The heads of European governments are working on a three-point plan to save the Greek economy from imploding, and the crisis spreading to Italy and Spain:

Point 1 – Forcing banks which have lent money to Greece to accept a write down of their Greek loans of up to 60 percent.  There's been no agreement yet, and the banks, not surprisingly, are resisting.

Point 2 – Providing those exposed banks with a safety net of almost $150 billion to protect them from their huge losses.

Point 3 – Increasing the so-called European Financial Stability Fund so that it can throw up a financial fire wall which will protect the crisis spreading to Spain and Italy.  The International Monetary Fund says this will need around $2 trillion.  There are major disagreements between the French and Germans on how to do this.

Add to this toxic mix Italy and demands from European Union leaders that it must present serious plans for spending cuts in return for financial “protection” from the EU. Opposition to such austerity measures -- like the limiting of generous government-funded pensions and the like -- continue to spark unrest in the streets of several European countries.

But Italy’s Prime Minister Silvio Berlusconi is in real political difficulty over this. He is locked into an unwieldy coalition government in Rome which does not want to respond to the demands of the European Union. Reports in Rome early Wednesday suggested he may even be considering resignation.

An eleventh hour deal in Brussels can’t be ruled out, but the more likely result is a late night statement of principles by leaders, with details being worked out by EU finance ministers in the coming days ahead of next week’s G20 summit in Cannes.

Copyright 2011 ABC News Radio


Greek Prime Minister Cancels US Visit

Chip Somodevilla/Getty Images(ATHENS) -- Greece’s debt crisis has caused a hitch in Greek Prime Minister George Papandreou’s plans to visit the U.S.

Bloomberg News reports that a statement was released Saturday from the Prime Minister’s office saying, “As the coming week is particularly critical for the implementation of the July 21 decisions in the euro area and the initiatives which the country must undertake, Prime Minister George A. Papandreou decided to cancel his scheduled visit to the U.S.”

Papandreou was planning to attend the United Nations General Assembly and IMF meetings slated to take place in the coming week.

Copyright 2011 ABC News Radio


Putin Calls US "A Parasite" After Debt Deal 

ALEXEY DRUZHININ/AFP/Getty Images(MOSCOW) -- Russian Prime Minister Vladimir Putin didn't hold back his feelings about America's debt crisis Monday, reportedly telling a pro-Kremlin youth rally that the U.S. "is not living within its means, shifting the weight of responsibility on other countries and in a way acting as a parasite."

Putin, who has had an adversarial relationship with Washington over the years despite Russia's quasi-democratic government, did have some praise for the bipartisan agreement that keeps the U.S. from defaulting on its obligations for the first time in history.

Yet Putin warned that his country and other world governments should find new reserve currencies to protect against a possible "systemic malfunction" in the U.S.

One of the reasons for Putin's concern is the fact Russia holds a large number of U.S. bonds and securities and if the American economy sinks, so will Russia's.

Copyright 2011 ABC News Radio

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