The British economists have suggested the Greek government to rescue its economy abandon the euro and declared bankruptcy on its debt of 300 billion euros, says the Times. London-based Centre for Economics and Business Research (CEBR) warned the Greek ministers that will be able to escape the debt trap of the country, unless it devalued its currency to encourage exports. The only way this can happen is to return to Greece its own currency – the coin. Greek politicians rejected the idea of leaving the euro area would lead to disintegration of the single currency. “Leaving the euro would mean that the new currency will be cheaper at least by 15% and as the national debt is measured in euros, it would automatically increase the level of debt of 120% of GDP to 140% of GDP,” said Doug Makuilyams, executive director of the CEBR, during talks in Athens yesterday. “So part of the idea of leaving the euro is Greece unilaterally convert debt into the new local currency. Separation of Greece to the euro would be a disaster for Germany and French banks, which Greece owes billions of euros. However Makuilyams sets this development as “practically inevitable” and added that other eurozone countries could follow suit in Greece.
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The turbulence in the euro area is not over, as Greece remained only “the tip of the iceberg,” warned the professor of economics at New York University Nuriel Rubini. “This front is currently facing the euro area is the second stage of a typical financial crisis,” said Rubies to radio BBC. Approved a rescue package amounting to 750 billion, intended to stop the spread of the crisis in Greece to other EU countries do not calm the markets, as questions remain whether governments are strong enough to make the necessary rigor, stated Rubini. Earlier today it became clear that it is paid the first tranche of EUR 20 billion of aid to Greece. Tomorrow ends the maturity of the Greek bonds 8.5 billion. Markets remain worried about the solvency of some European countries in the euro area as there are significant economic and financial problems, stresses Rubini. Protests in Greece against budget cuts fueling suspicions that European governments can solve such problems, he said.
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Leaders of euro area Member States approved a final plan for the financial support of Greece, that the next three years the country will receive 110 billion loans with interest lower than the market, writes Dnes.bg, citing BTA. 80 billion euros will be allocated by the 16 member states of the Eurogroup, about a third of them must be provided this year. The remaining 30 billion will be allocated by the IMF. Athens is expected to receive the first tranche of aid more in the coming weeks. Disbursement has already been approved by governments. The plan was adopted by the Greek Parliament, despite mass protests in the country against him. “The current situation is exceptional and requires exceptional measures. Approved the final declaration, which includes two parts – for Greece and the current crisis situation,” said a news conference after the meeting of permanent European Union president Herman van Rompoy at whose initiative was convened forum. After the meeting, leaders said the euro area as a priority the maintenance of sound public finances. To this end, the greater surveillance of financial markets, whose transparency must be strengthened. Moreover, much wider will be used criminal procedure in case of excessive government deficits. “We are ready to strengthen rules and procedures for surveillance of member countries of the euro area, including through the strengthening of the Pact for Growth and Stability through the most effective sanctions, stated in the Declaration which was adopted at a meeting in Brussels tonight. Furthermore, the EC will propose specific European common mechanism to maintain stable finances.
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Greek stock market regulator has decided to ban short sales of securities which it may be speculating on falling prices for Greek shares. Decision takes effect today and will be valid until 28th June. The reason for this was the wave of sales that hit Athens Stock Exchange yesterday because of speculation that Greece will not be able to meet payments on its debt. The decision of the international rating agency Standard & Poor’s to lower the rating by three points in Greece quake caused the financial markets yesterday and fell 6 percent main stock index in Athens ASE. Investors had expected such a move because of uncertainties about the rescue plan by the International Monetary Fund for Greece and the euro area and the growing interest on government securities of the party would further hamper the Greek government in its attempts to be financed by issuing government bonds. However, news that the Greek government bond rates have already “junk” led to massive sales of Greek shares Tuesday, which suffered the most financial companies. Shares of Greece’s largest bank National Bank of Greece dropped by 10% and already 45% below their price levels by the end of last year. The ban on short selling is not surprising, given that they contribute to the sharp drop in share prices. They allow market participants who expect the price per share to decline to speculate with it, sell it without first be purchase.
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Greece began with sales of ten-year bonds yesterday after the country has announced plans to significantly cut costs in order to reduce the budget deficit. This government is seeking to win back investor confidence, which drew aside from the financial markets in the country. It is expected that the price of bonds to be such as to bring a serious return to investors, as it is projected to amount to approximately 6,5 per cent, Bloomberg reported before familiar with the situation requested anonymity. For comparison, the yield of the current issue, which is due in July 2019 proposes return of 6,1 per cent. Because of the planned auction price of the instruments, allowing investors to protect the bankruptcy of Greece have risen for the first time in a week. Swaps for bankruptcy protection today to deal with 11 basis points more expensive. Among the measures to combat the deficit were increases in excise duties on tobacco and alcohol restriction on wages in the public sector and others. The plan is the budget deficit, which currently amount to 12,7 percent, to be shrunk to about 4 per cent at the end of the year.
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The Greek government spokesman George Petalotis categorically denied the information that the government is negotiating with the International Monetary Fund (IMF) loan of 35 billion euros, police agency ANA-MPA. “No such initiative and such an agreement,” stresses a spokesman, asked to comment on Replication in the media in this sense. The Government is determined and has the national debt difficult to win the battle to revive the economy, improve the image of Greece abroad and restore confidence in the country, said Petalotis. “In this titanic battle, the government is not seeking services and loans, but need political support from its partners and the necessary time to implement its program to stabilize the economy,” the spokesman further stated. Asked to comment on the pressure of EU countries for the implementation of new restrictive measures, the spokesman said that by 15 March will be assessed a situation which is not yet complete “and that” until an assessment of what has happened so far can not comment more. Petalotis said that the proposal for the establishment of a committee of inquiry to investigate the fraudulent statistics about the state of public finances and over-indebtedness of the country will be tabled for debate in parliament next week probably.
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The price of crude oil increased sharply in the past day and the quotations passed over 77 dollars a barrel. Major role it played for speculation that Greece will not need support from the EU to cope with the limitation of their budget deficits. This led to strong growth in the price of the euro, which restored much of the lost against the U.S. dollar in recent days. The single currency rose to 1,3770 EUR / USD, having risen to 1.28 percent yesterday. However, since November the euro is moving with a decline of 9 percent. For the positive sentiment in the oil market influences and optimistic ending the session on the New York Stock Exchange. Because good news for the region’s manufacturing activity in New York yesterday, the shares registered in the U.S. growth rates. As a result of all this, within yesterday’s trading session in New York, U.S. light crude rose by as much as 3.9 per cent (2.88 dollar) to 77.01 dollars per barrel. Thus was achieved the highest growth of 30 since September last year. Night quotes continued its upward movement this morning and move to more growth of 0,5 per cent to 77.37 dollars per barrel.
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The billionaire investor George Soros said he believes in the ability of Greece to remain in the euro area. He also said that the eyes of market participants are currently targeting the debt problems of several countries, including Greece stands in the foreground. “I believe that Greece will do whatever is necessary to meet the requirements to remain in the euro area,” said Soros told reporters in Jakarta. Among the main reasons the country is fighting for his membership in the euro area is that when the ECB adopts its bonds as collateral for a loan of commercial banks. In the event that the country lost the credit rating, however, its securities will no longer meet the necessary conditions and will not be accepted as collateral. “Support in Greece aims to achieve, I hope the EU, the ECB and the euro area to find a way to finance the country which is not too expensive to support,” said Soros, quoted by Bloomberg.
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The European Union has made clear that Greece will not abandon and leave the growing crisis with the country’s obligations to endanger the eurozone, writes Financial Times. “It is clear that economic policies are not only a national issue, but also Europe, told reporters in Brussels, European Commission President Jose Manuel Barroso. According to senior EU officials in Greece last resort may receive emergency assistance from the governments of the euro area and by the EC, but without the participation of the International Monetary Fund. Euro zone countries and European authorities did not specify how Greece would help, since they fear that it will reduce pressure on Greece to cope alone with their problems and that would confuse an already turbulent financial markets. Immediate priority for the country to show that it is serious in its intention to reduce public spending, improve tax collection, to publish reliable financial and statistical data to deal with corruption, EU representatives stressed.
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The Prime Minister of Greece George Papandreou has denied speculation that the country must be saved with a loan from the European Union. Thus he denied rumors that the union will pour substantial sums to help countries in the fight against serious and crisis. In recent days in the French press, there have been allegations that Brussels is considering a rescue operation to help Greece. The reason is the volatility of the euro, which is largely due to precisely the problems of our southern neighbors. According to Papandreou, however, are all “speculation” and not true. He threw the blame for the problems that face his country and the euro on speculators who wager against the single currency. For this purpose we use a country with difficulties, as is now Greece. They become subject to powerful lobbies and carried out an attack against the currency throughout the euro area, transmits Air Force. Papandreou, however, acknowledged that his country has itself to blame for budget problems there. Therefore not be addressed criticism nor the EU nor the politics of the European Central Bank.
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