Entries in Eurozone (19)


Police on Alert as German Chancellor Merkel to Visit Greece 

US State Department(ATHENS, Greece) -- German Chancellor Angela Merkel on Tuesday brings her tough-talking advocacy for austerity to ground zero of the European debt crisis, and police in Athens are so nervous, they are employing over-the-top security measures.
Police have flooded the streets with 7,000 additional officers and hundreds more undercover agents, stationed snipers on rooftops, closed a half dozen subway stations and sent helicopters to hover over the city to help protect the German chancellor from expected massive demonstrations. Police have also banned protests outside Merkel's hotel and along the route she will travel -- effectively creating a 300-foot-wide bubble separating her from the Greek public as she negotiates the future of Greece's finances.
The country where democracy was born has had to go hat in hand to wealthier European neighbors to deal with crippling debt, and nobody has coughed up more than Germany -- to the chagrin of many German politicians and voters, who see the Greek economy as bloated and riddled with corruption.
But in Greece, three years of austerity and six years of recession have pushed unemployment of young workers to above 50 percent, forced middle-class families to soup kitchens, and even brought into parliament Golden Dawn, an anti-immigrant and anti-Euro party that many call fascist and neo-Nazi.
Greek Prime Minister Antonis Samaras, who usually weighs his words carefully, recently warned that Greece's social fabric was on the verge of cracking. He cited Golden Dawn's ascendance as evidence that Greece could suffer the same fate as Germany's Weimar Republic -- whose own economic collapse led to the rise of the Nazi party in the 1930s.
Samaras hopes to convince Merkel and Greece's other creditors that they need to lower demands to cut government spending. The "troika" of the European Commission, the International Monetary Fund and the European Central Bank are withholding a massive loan until the Greek government makes the cuts. Without the funds, Greece admits it will run out of money next month.
But Merkel is expected to reiterate demands the Greek government cut further, and that's why the police are so worried. The country's labor unions have called for protests, as has the main opposition party, Syriza.
"We want to send a message to not only our government but also to Europe that there’s a lot of people here, the majority of society, who can’t stand these measures of austerity, and this is a common fight that we have with other European people in Spain, Italy, Portugal and France, against austerity," Syriza press officer Christos Staikos tells ABC News. "This policy destroyed all the Eurozone."
Samaras and most analysts argue that during a time when governments and people are too weak to spend much money, Merkel needs to help facilitate growth in Greece.
"The economic program that is being proposed is too extreme," Nicholas Economides, a professor of economics at NYU Stern School of Business, argued to ABC News. "The troika is asking for cuts that are way too big given the circumstances, and they would only increase Greece’s recession."
The divide between Merkel, the creditors and much of the Greek public mirrors that between President Obama and Republican challenger Mitt Romney when it comes to the Eurozone crisis. Obama has sent Timothy Geithner to Europe at least a half dozen times to advocate for greater investment and growth. Top Romney advisor Glenn Hubbard, on the other hand, recently argued that Obama's attempts to encourage growth over austerity "reveal ignorance of the causes of the crisis.”

Copyright 2012 ABC News Radio


New Bond-Buying Push Aims to End Euro Crisis

iStockphoto/Thinkstock(FRANKFURT, Germany) -- The president of the European Central Bank, Mario Draghi, announced a new program Thursday to make unlimited purchases of government bonds. The policy is a bold attempt to cut the interest rates of distressed nations, and put an end to speculation of a euro currency breakup.

As the plan was announced, yields of Spanish and Italian debt stayed lower than they were last month. Wall Street gave a thumbs up to the Euro moves -- after the first hour of trading, the Dow Jones index was up more nearly 200 points.

Draghi said the program, called Outright Monetary Transactions, “will enable us to address severe distortions in government bond markets.”  He told journalists the new measures are a “fully effective backstop” against volatility.

The run-up in interest rates, he says, have been caused by “unfounded fears on the part of investors of the reversibility of the euro.”

Speaking in Frankfurt, Germany, Draghi said the size of the bond purchases would be made public every week, while a detailed account by country will be released monthly.

Draghi said European governments needed to continue with deficit reductions and labor market reforms.  Responding to German opposition to central bank bond purchases, he said if a bailed-out country fails to meet its fiscal targets, the bank could stop buying its bonds.

The ECB is forecasting the recession in the eurozone will continue with the economy shrinking by 0.4 percent this year before starting to grow in 2013.

Copyright 2012 ABC News Radio


European Leaders Make New Progress on Debt Crisis

iStockphoto/Thinkstock(NEW YORK) -- After all-night talks, European leaders appear to have come up with a set of measures that may help ease the debt crisis plaguing the region.

Meeting for the 19th time since the crisis first erupted in 2009, leaders of the 17 nations agreed on Friday to loosen the rules of bailout funds that were supposed to help governments make their debt payments.  Now, the money will be sent directly to struggling banks as well.

The leaders collectively decided to create a supervisory body that will oversee banks in the eurozone. The group will be up and running by the end of this year.

In a victory for Spain and Greece, the leaders also agreed to ease austerity requirements for countries that take bailouts.  Germany made concessions in the short term, but leaders of the 27-nation European Union have agreed on a long-term plan for tighter fiscal rules.  

More centralized supervision of national budgets is something Germany has been pushing for.

Copyright 2012 ABC News Radio


Political Football: Greece Takes On Germany

Pixland/Thinkstock(GDANSK, Poland) -- Greece will wiggle itself out from under Germany’s boot heel for at least 90 minutes on Friday, as the international spotlight shifts from the Eurozone’s hottest fiscal feud to an unlikely European Championship quarter-final soccer match in Gdansk, Poland.

Victory against the heavily favored German side, with Chancellor Angela Merkel flying in from Berlin to support her squad, would make for a rare and glorious night in Austerity-blighted Athens.

Tabloids newspapers around the world spent the past four days chewing up the storyline.  

“Rejoice, dear Greeks,” wrote Germany’s Bild newspaper, “your bankruptcy on Friday is on us!”

“Bring us Merkel,” read a headline in Greece’s Goal News, “You will never get Greece out of the euro.”

Players from both sides have downplayed the political angle, with Greek striker Georgios Samaras (no relation to new Greek Prime Minister Antonis Samaras) calling the subplot “a bad thing,” and declaring his team was “going to play and enjoy it because we love it, nothing else.”

German manager Joachim Low sounded a similar note on Tuesday.

“Angela Merkel and the national teams are on very good terms,” he told reporters.  ”We have reached an agreement where she doesn’t interfere with my tactical instructions and, in return, I don’t deal with her political agenda.”

If only it were so simple.  While it’s a touch overwrought to say “soccer explains the world,” there should be little doubt that the sport has a way of synthesizing the politics of the moment and calling up the pain of generations’ past.

Copyright 2012 ABC News Radio


New Greek Ruling Party Works Fast to Form Coalition Government

iStockphoto/Thinkstock(ATHENS, Greece) -- With virtually no time to spare, the head of the New Democracy Party that won Greece's election on Sunday has begun trying to forge a coalition that will keep the country's fragile economy from total collapse.

Voters selected Antonis Samaras' party by a very narrow margin over a leftist bloc that wants to leave the eurozone and return to Greece's old currency.  Economists from around the globe maintained that that scenario would have spelled certain disaster for Greece and the rest of the world's economy.

Samaras should be able to get enough allies on his side to moderate terms of the bailout agreement that Greece reached with the European Union and the International Monetary Fund.

Where things go from there is anyone's guess, with some analysts already saying the point of no-return has already passed and the continent could soon be in the throes of a deep recession.

With Spain and Italy in similar straits, German Chancellor Angela Merkel has told Samaras that the new coalition must abide by its obligations and cannot go back on reform pledges previously made by Greece.

Copyright 2012 ABC News Radio


Greek Protests Slow Ahead of EU Meeting

Hemera/Thinkstock(ATHENS, Greece) -- The Greeks no longer have the heart to protest after the destruction done on Feb. 12 in central Athens by small groups of anarchists — who even set a beautiful neoclassical 19th century listed building on fire — gave a very bad image of the country.

Under a blazing sun, only one thousand trade unionists from the private and public sectors had come to demonstrate in front of the parliament, meeting under a large banner, which proclaimed in Greek: “Politicians require an effort of national unity: but there is no nation where there are only the hungry and the destitute!”

In the crowd, another banner proclaimed in English, for use by television cameras:” We are all Greeks, Merkel and Sarkozy are freaks!”

This protest comes before a crucial meeting of Eurozone finance ministers which should grant Greece a bailout of 130 billion euros, in exchange of huge budget restrictions, salaries and pensions cuts promised by the Greek government.

At Syntagma, the city’s main square, right in front of the Parliament building, 20 to 30 young people threw rocks and flares at the riot police, prompting them to use tear gas to disperse the crowd.

But the protesters do not represent the entire city, and Athens is not the whole of Greece. Walking through the rural areas of the Peloponnese, we see that the population has resigned itself to the effort required by the Troika (IMF, EU, ECB).

“People here realize that Euro-skepticism is leading nowhere and that the exit of the Eurozone would be a disaster for everyone,” Petros Tatoulis, the elected president of the region, who has renounced any political affiliation, told ABC News. “It is for us now to invent a new model of development and export our fine Mediterranean products under the brand name of the Peloponnese, which should be received around the world as a premium brand.”

A recent poll showed that 73 percent of Greeks were in favor of staying in the Eurozone, although only 49 percent of them felt that the country would succeed to do so in the next two years.

The problem now is what political leadership will enact the austerity measures voted by the Parliament on Sunday, February 12. Elections are indeed scheduled for April. But according to another survey, the two major parties of the current coalition government — PASOK and New Democracy — would collect only a quarter of the votes, with the lion’s share going to the extreme left. But leaders of the latter have been careful not to make any commitments in writing to the Troika.

Copyright 2012 ABC News Radio


Which European Countries Will Suffer Credit Downgrades Next?

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- Nine European nations, including France and Italy, recently have seen their credit ratings cut.

Greece's rating was reduced by Standard & Poor's to "CC" -- junk grade -- the lowest given by the rating service to any of the nations that it tracks.  Both S&P and competing credit-rater Fitch say a Greek default now looks likely.

S&P's ratings for Cyprus, Portugal and Spain, and Italy each fell two notches; those for Austria, France, Malta, Slovakia and Slovenia fell by one.  The company said in a Jan. 13 statement that its outlook on all but two of the 16 eurozone sovereigns is now negative.

In all the eurozone, only Germany, Europe's number one economy, retains an AAA rating.

Not everyone, however, is trembling in their boots.  French President Nicholas Sarkozy, for example, brushed off his country's downgrade and dismissed it as irrelevant, telling reporters, "At the core, my conviction is that it changes nothing."

World markets seemed to share his view.  Investor demand for an auction of French debt Monday was solid.  And around the world, markets remained mostly calm -- none dropped precipitously.

Yet investors, especially anyone exposed to sovereign debt, have got to be asking themselves: What nation will be next to be downgraded?  Which, besides Greece, might actually default?

Were Montenegro, say, to default, the damage to the U.S. economy would be small, if any.  But the default of a major U.S. trading partner in Western Europe would be another matter.

The prediction of Peter Morici, a professor at the University of Maryland's Smith School of Business, is bleak.  In his scenario, the euro will collapse, "and chaos will follow."

Such chaos will include defaults by other eurozone governments besides Greece.  As European sovereigns return to their traditional currencies, they will remark their sovereign debt.  The value of European government bonds denominated in dollars will plummet, and any investors left holding such bonds would be better off, quoting Morici, "holding Confederate currency for its collector value."

Morici expects Western Europe to suffer further downgrades and other nations besides Greece to default.  Of S&P's most recent cuts, he says, "They got France right, but they got Germany wrong."

By that he means that France deserved the lower rating, but that Germany should have been cut, too.

As for Italy, Morici says, it, too, is sicker than its newly downgraded rating (BBB+) would suggest.

S&P's "negative" outlook for Italy means there is a 1-in-3 chance the country's debt will be downgraded further in the next three months.

Copyright 2012 ABC News Radio


European Debt Crisis: Leaders Meeting Again to Resolve Turmoil

Hemera/Thinkstock(BRUSSELS) -- European leaders are meeting in Brussels again on Friday to negotiate a way out of their debt crisis and restore the credibility of the euro currency -- or so they hope.  If they fail, economists say the shockwaves could derail the U.S. recovery.

This is the fourth recent European get-together that’s billed as a make-or-break “summit to end all summits,” and the “last chance to save the euro.”  Yet, there’s no doubt that the stakes are high.

German Chancellor Angela Merkel and French President Nicolas Sarkozy have spent the last week talking up the importance of the summit.  Sarkozy, who faces an election next year, has said the very existence of the European Union is under threat.

European leaders are expected to discuss ways of limiting structural deficits and increasing the firepower of the eurozone bailout fund.  The European Union is based on several founding treaties, as well as subsequent amendment treaties, that have been agreed to by all member countries.  Germany and France now say they want changes to those treaties to guarantee budgetary discipline.

The problem is that treaties can take years to negotiate and ratify, and the markets have shown that they’re in no mood to wait.  All 27 E.U. member countries have their own domestic concerns that can make compromises difficult.  The E.U.’s Treaty of Lisbon, for instance, took eight years to negotiate.

As European officials already acknowledge, new rules that come into effect several years down the line aren’t going to do the trick.  So there’s talk of a fast-track “fiscal compact” that won’t require treaty changes.  To further complicate things, discussions are underway to see if reforms can be agreed to by the 17 members that use the euro and without the approval of those E.U. members that retain their national currency.

It remains to be seen if Europe’s leaders can agree on a deal that will help those countries with massive debts, and persuade the markets that they can weather the storm.  The rest of the world, including the White House, will be watching closely, and the outcome of this latest summit will shape European politics for many years to come.

Copyright 2011 ABC News Radio


Obama Says US ‘Stands Ready to Do Our Part’ for Eurozone Crisis

Comstock/Thinkstock(WASHINGTON) -- As the European debt crisis continues to escalate, President Obama urged European Union leaders Monday to act quickly to resolve the eurozone crisis, saying that “the United States stands ready to do our part to help them resolve this issue.

“This is of huge importance to our own economy. If Europe is contracting or if Europe is having difficulties, then it’s much more difficult for us to create good jobs here at home because we send so many of our products and services to Europe; it is such an important trading partner for us,” the president said following an annual meeting between U.S. and EU officials. “We’ve got a stake in their success, and we will continue to work in a constructive way to try to resolve this issue in the near future.”

While Obama did not say what kind of assistance the U.S. would be willing to provide, earlier Monday the White House ruled out any financial contributions from U.S. taxpayers. “We do not in any way believe that additional resources are required from the United States or from American taxpayers,” White House press secretary Jay Carney told reporters.

“This is a European issue, that Europe has the resources and capacity to deal with it and that they need to act decisively and conclusively to resolve this problem,” Carney said.

European Commission President Jose Manuel Barroso reassured Obama Monday that Europe is “determined to overcome the current difficulties” but warned it could take time.

“We are absolutely serious about the magnitude of the challenge, we understand the challenge, but you have to understand that sometimes some decisions take time. But we are in that direction, and we are in fact taking strong measures for unprecedented situations,” he said.

Copyright 2011 ABC News Radio


Greek PM Holds Emergency Cabinet Meeting amidst Resignation Calls

Chip Somodevilla/Getty Images(ATHENS, Greee) -- An emergency Cabinet meeting is underway in Greece as calls for Prime Minister George Papandreou's resignation intensified on Sunday.

Facing a financial crisis, Papandreou says he wants to form a new coalition government before he steps down. Opposition leader Antonis Samaras of the New Democratic Party said the prime minister should resign immediately and it is unclear whether Samaras will attend the emergency meeting to which he was invited.

As the nation's financial woes worsen, so has Papandreou's prospects of completing his four-year term. Greece received a $150 billion bailout in 2010 from the European Union and is set to receive additional funding before the end of the year from the eurozone.

Copyright 2011 ABC News Radio

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