Greece 48 hours from Fatal Eurozone Rupture as Creditor Powers Poised to Pull the Plug

THE TELEGRAPH: Stunned lenders vow not to extend Greece's bail-out and say they are prepared to suffer the consequences of "bombshell" referendum decision


Greece stands on the brink of a banking collapse and disorderly exit from the euro after its creditor powers lashed out at Athens' plans to hold a referendum by vowing to pull the plug on the country in just three days.

Eurozone finance ministers last night withdrew tentative plans to release €15bn to the debtor country, after Alexis Tsipras, the Greek prime minister, said he would put the “humiliating” package of austerity demands to a public vote on July 5. Unless the cash-strapped country can scramble together €1.55bn Tuesday, it will become the first developed country in history to default on its International Monetary Fund loan on June 30. On the same day, it's €240bn rescue programme will also formally expire throwing its banking system into turmoil.

Creditors powers, stunned by Mr Tsipras's audacity to call a public vote, rejected his pleas to extend the programme for a few weeks to allow the vote to be held next Saturday.

The voice of Jeroen Dijsselbloem, the head of the Eurogroup, cracked with emotion as he announced that his 18 colleagues had rejected Greece’s demand.

“We must conclude that however regretful, the programme will expire on Tuesday night,” he said. “It will expire.”

A wounded Mr Dijsselbloem added that even in the event of a yes vote by the Greek people, creditors could no longer cooperate with radical Leftist government due to "grave concerns about credibility". Read on and comment » | Matthew Holehouse in Brussels and Mehreen Khan | Saturday, June 27, 2015

Bailouts Could Have Disintegration Effect on Europe - German MP

Klaus-Peter Willsch »

Witness - Greece: Protesting the Protesters
This unusual take on the Greek protests centres on a small group of 'anti-activists' who think the austerity measures undertaken by the government are in fact a good thing for the crisis-ridden Greek economy. We follow Fotis and his friends in their Liberal Party as they mount their own campaign, while around them the masses gather on the streets for the huge protests that regularly rock the capital.

Portugal Asks for Bail-out Which Could Cost Britain £4.4 Billion
THE DAILY TELEGRAPH: Portugal last night became the third European Union country after Greece and Ireland to formally request an emergency bail–out which could cost Britain £4.4 billion.


The country's caretaker prime minister José Sócrates said the measure had been taken after the stricken nation had run out of options.
Economists last night put the UK's involvement in a Portuguese bail–out at up to a potential £4.4billion.

After months of resisting having to apply for a bail–out from the EU and the International Monetary Fund, Portugal's cost of borrowing has reached unsustainable levels.

Addressing the nation last night Mr Sócrates, said: "I have always said that asking for aid would be the final way to go, but we have reached the moment."

It is understood that the rescue fund could be as high as £70 billion, or €80 billion.

Sources close to the Treasury said last night that Britain would take part in any Portugal–related discussions involving the EU's 27 member states. However, the type of bail–out is yet to be discussed and therefore the extent of the UK's exposure was impossible to gauge, the sources said. » | James Hall | Thursday, April 07, 2011

THE DAILY TELEGRAPH: Spain 'won't follow Portugal' with bail-out: Spain said it will not follow ailing neighbour Portugal in seeking a European bail-out. » | James Hall | Thursday, April 07, 2011

Portugal in Crisis after Prime Minister Resigns over Austerity Measures
THE GUARDIAN: • EU bailout closer after José Sócrates loses crucial vote
 • Political limbo will put pressure on Portuguese bonds

Portuguese prime minister José Sócrates has said he has submitted his resignation to the president after parliament rejected his minority Socialist government's latest austerity measures.

The loss of the vote "has taken away from the government all conditions to govern," Sócrates said. It brings the country closer to needing a bailout.

Sócrates is said he tendered his resignation to President Aníbal Cavaco Silva tonight, leaving the country in a political limbo that would place further pressure on Portugal's record-level bond yields.

Sócrates had said before the vote that he would resign if the measures to cut spending and increase taxes – designed to see off a bailout similar to those taken by Greece and Ireland – were rejected.

The measures had aroused the fury of trade unions, and railway engineers walked off the job in the morning, causing widespread travel disruption. » | Giles Tremlett in Madrid | Wednesday, March 23, 2011

THE GUARDIAN: Portugal bailout 'could cost UK £3bn': Bailout request seen as 'inevitable' following prime minister's resignation in wake of failure to push through austerity measures » | Graeme Wearden | Thursday, March 24, 2011

Barclays Boss Bob Diamond Says Banks Should Be Allowed to Fail
THE DAILY TELEGRAPH: Bob Diamond, Barclays' chief executive, has told a committeee of MPs that badly-run banks should not be bailed out by taxpayers.


"It is not acceptable for taxpayers to bail out banks," Mr Diamond said during questioning by the Treasury Select Committee. He added that "badly managed" banks should be allowed to fail. >>> Louise Armitstead, and Amy Wilson | Tuesday, January 11, 2011

€90bn Irish Bailout Ends in Turmoil – Now Europe Fears Crisis Will Spread
THE GUARDIAN: Brian Cowen defies calls for resignation / Fears that Portugal and Spain may need aid / International rescue plan does little to calm markets / Datablog: how will the bailout be funded and how exposed is each economy?

Markets thrown into ­turmoil amid fears of a collapse in Ireland’s ­government. Photograph: The Guardian
Financial markets were thrown into turmoil today amid fears that an imminent collapse of Ireland's beleaguered government would have a knock-on effect across the eurozone.

The announcement of the potential €90bn international bailout for debt-laden Ireland – of which the UK could contribute up to £10bn – offered only a temporary respite to nervous markets.

By tonight, concerns that Portugal and even Spain might also need their own rescue packages were rising and sent the euro and shares falling while the risk of holding the debt of potentially vulnerable countries rose alarmingly.

After a tumultuous day in Dublin, where protesters tried to storm the parliament building, the prime minister, Brian Cowen, defied calls for his resignation but conceded he would call an election in the new year. The move was forced upon him after the Green party pulled out of his fragile coalition government, unnerving markets on a day which was supposed to restore confidence in Europe's decade-old single currency.

Instead there was a sense of growing unease in the markets amid evidence that investors felt Portugal would not survive without aid., Dealers said sentiment in the markets was reminiscent of the days after the collapse of Lehman Brothers in September 2008. Read on and comment >>> Jill Treanor, Nicholas Watt and Henry McDonald in Dublin | Monday, November 22, 2010

Europe Fears That Debt Crisis Is Ready to Spread
A newspaper vendor in Dublin on Monday. Photograph: The New York Times
THE NEW YORK TIMES: LONDON — European officials, increasingly concerned that the Continent’s debt crisis will spread, are warning that any new rescue plans may need to cover Portugal as well as Ireland to contain the problem they tried to resolve six months ago.

Any such plan would have to be preceded by a formal request for assistance from each country before it would be put in place. And for months now, Ireland has insisted that it has enough funds to keep it going until spring. Portugal says it, too, needs no help and emphasizes that it is in a stronger position than Ireland.

While some important details are different, the current situation feels eerily similar to what happened months ago in Greece, where the cost of borrowing rose precipitously.

European authorities stepped in with a rescue package, expecting an economic recovery and the creation of new European rescue funds to fend off future panics by bond investors whose money is needed by countries to refinance their debt.

But with economic conditions weakening, markets are once again in turmoil. Rescuing Ireland may no longer be enough.

Stronger countries and weaker countries using the common currency of the euro are being pulled in different directions.

Some economists wonder if unity will hold or if some new system that allows countries to move on one of two parallel financial tracks is needed. Read on and comment >>> Landon Thomas Jnr and James Kanter | Monday, November 15, 2010

WELT ONLINE: Deutschland wird zum Zahlmeister der Eurozone: Ein Ausstieg aus dem Euro kommt für die Kanzlerin nicht infrage. Jetzt wetten die Finanzmärkte auf eine Transferunion. Das wird teuer. >>> Autor: D. Eckert und H. Zschäpitz | Dienstag, 16. November 2010

Euro Under Siege After Portugal Hits Panic Button
Euro Under Siege After Portugal Hits Panic Button
THE DAILY TELEGRAPH: The euro is facing an unprecedented crisis after another country indicated that it was at a “high risk” of requiring an international bail-out.

Portugal became the latest European nation to suggest it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.

Greece also disclosed yesterday that its economic problems are even worse than previously thought. Last night, the German Chancellor Angela Merkel raised the spectre of the euro collapsing as she warned: “If the euro fails, then Europe fails.” >>> Bruno Waterfield in Brussels and Robert Winnett | Monday, November 15, 2010

Images: Google Images
Ireland Debt Crisis Worsens as Portugal Warns of Contagion Effect on Europe
THE GUARDIAN: Investors pressure Brussels for solution but Irish officials deny any need for bailout

The Irish debt crisis intensified today, after other high-deficit countries such as Portugal warned about a possible contagion effect, and investors pressured European officials to come up with a solution to calm markets. Irish officials reiterated that they don't need any bail-out.

The crisis moved from trading rooms into the political arena, as European finance ministers are meeting tomorrow and the day after in Brussels. Investors expect them to announce a resolution, or at least to shed some clarity about how much money they would lose were any European country to default.

"The Irish problem is already spreading, but it could get more violent and volatile," said Ashok Shah, chief investment officer at London Capital, a fund management firm. "They have to get this bail-out, they have a period of time before it gets impossible, before nasty things happen. The longer they leave it, the more difficult it will get."

Pressure on the EU escalated after Portugal's finance minister Fernando Teixeira dos Santos said his country was at risk of a possible contagion, as "we are not facing only a national or country problem - it is the problems of Greece, Portugal and Ireland," he said. >>> Elena Moya | Monday, November 15, 2010

Eurozone Debt Crisis: Portugal Admits 'It Could Need EU Bail-out'
THE DAILY TELEGRAPH: Portugal has admitted that it could become the latest European Union country to seek a bail-out as the eurozone debt crisis deepened.

Fernando Teixeira dos Santos warned that the fall out from concerns over Ireland's public finances could spread to its neighbours. Photo: The Daily Telegraph
Fernando Teixeira dos Santos, the Portuguese Finance Minister, has warned that the fall out from concerns over Ireland's public finances could create a contagion effect among its neighbours.

"The risk is high because we are not facing only a national or country problem," he told Dow Jones news wires, in reference to the possibility that Lisbon will need international financial assistance.

“It is the problems of Greece, Portugal and Ireland. This is not a problem of only this country. This has to do with the euro zone and the stability of the eurozone, and that is why contagion in this framework is more likely. >>> Andrew Hough, Bruno Waterfield in Brussels, Robert Winnett and Heidi Blake | Monday, November 15, 2010

THE SUNDAY TELEGRAPH: Europe stumbles blindly towards its 1931 moment: It is the European Central Bank that should be printing money on a mass scale to purchase government debt, not the US Federal Reserve. >>> Ambrose Evans-Pritchard | Sunday, November 14, 2010

Let the Banks Collapse!
THE TELEGRAPH: More taxpayer support is needed to ensure global financial stability despite the billions already pledged, the International Monetary Fund has warned, as banks remain the “achilles heel” of the economic recovery.

Lenders across Europe and the US are facing a $4 trillion refinancing hurdle in the coming 24 months and many still need to recapitalise, the Washington-based organisation said in its Global Financial Stability Report. Governments will have to inject fresh equity into banks – particularly in Spain, Germany and the US – as well as prop up their funding structures by extending emergency support.

“Progress toward global financial stability has experienced a setback since April ... [due to] the recent turmoil in sovereign debt markets,” the IMF said. “The global financial system is still in a period of significant uncertainty and remains the Achilles’ heel of the economic recovery.” Banks' $4 trillion debts are 'Achilles’ heel of the economic recovery', warns IMF >>> Philip Aldrick, Economics Editor | Tuesday, October 05, 2010

THE TELEGRAPH: Warren Buffett says in future Wall Street chiefs should go broke - and their wives: Warren Buffett, the billionaire investor, has hit out at pay practices on Wall Street, attacking the lack of reform despite two years passing since the financial crisis struck. >>> Richard Blackden, US Business Editor | Tuesday, October 05, 2010

Banking Bailout Was Unfair, Mervyn King Tells TUC
Bank of England Governor Mervyn King said he believed it was vital the Government set out a clear plan for reducing the deficit. Photograph: The Independent
THE INDEPENDENT: The Bank of England governor Mervyn King today described the huge banking bailout as "unfair" and appeared to sympathise with calls for multibillion-pound tax evasion to be tackled when he spoke to union activists.

Mr King told the TUC Congress in Manchester that he understood the strength of feeling over the size of bankers' bonuses and said "radical reform" of the UK's financial system was needed.

The 62-year-old faced minor protests from some banner-waving delegates and a walkout by the Rail Maritime and Transport union delegation, who retreated to their exhibition stand to watch children's TV.

He was also told bluntly that bankers were "greedy bullshitters" and that he had failed in his job.

As he waited to speak, delegates called for a high pay commission to investigate the "out of control" wages of executives and other high earners.

The Communication Workers Union said a commission should examine the difference between the highest and lowest pay in leading companies.

General secretary Billy Hayes said: "The blatant double standards in pay for those at the top of companies compared to those at bottom is outrageous and leads to dissatisfaction and a divided society of haves and have-nots." >>> Alan Jones, PA | Wednesday, September 15, 2010

Thanks for the Bailout! Wall Street Bonuses Up 17 Percent: DiNapoli
NEW YORK POST: ALBANY, N.Y. — Wall Street bonuses were up 17 percent to over $20 billion in 2009, the year taxpayers bailed out the financial sector after its meltdown, New York state Comptroller Thomas DiNapoli said today.

Total compensation at the largest securities firms grew beyond that figure and profits could surpass what he calls an unprecedented $55 billion last year, DiNapoli said. That's nearly three times Wall Street's record increase, a rate of growth that is boosted in part by the record losses in 2008 of nearly $43 billion, the Democrat said.

"Wall Street is vital to New York's economy, and the dollars generated by the industry help the state's bottom line," said DiNapoli. "But for most Americans, these huge bonuses are a bitter pill and hard to comprehend. ... Taxpayers bailed them out, and now they're back making money while many New York families are still struggling to make ends meet." >>> AP | Tuesday, February 23, 2010

Barack Obama Imposes Tax on Big Banks
THE TELEGRAPH: President Barack Obama has unveiled a new tax on the country's biggest banks to recoup the money spent bailing the system out, putting the administration on a collision course with Wall Street.

Barack Obama, the US president, is imposing a levy on banks to recoup bail-out costs. Photograph: The Telegraph
The plan, if approved by Congress, would levy the tax on up to 50 financial services companies based on the total size of their liabilities. White House officials estimates it will raise at least $90bn over the next decade and wrest back for the taxpayer the money given the banks as part of the $700bn Troubled Asset Relief Programme (TARP).

Mr Obama said the move is aimed at preventing Wall Street firms from going back to "business as usual" and resuming high-risk lending practices and huge bets on mortgages and other instruments he blames for igniting the financial crisis.

"My commitment is to recover every single dime the American people are owed," said Mr Obama.

"My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at the very firms who owe their continued existence to the American people – have not been made whole, and who continue to face real hardship in this recession."

His announcement comes amid rising public anger in America at the prospect of the titans of Wall Street handing out multi-million dollar bonuses to staff little more than 12 months after the financial system was rescued by the brink. >>> Telegraph Staff | Thursday, January 14, 2010

IMF Warns Second Bailout Would 'Threaten Democracy'
TIMES ONLINE: The public will not bail out the financial services sector for a second time if another global crisis blows up in four or five years time, the managing-director of the International Monetary Fund warned this morning.

Dominique Strauss-Kahn told the CBI annual conference of business leaders that another huge call on public finances by the financial services sector would not be tolerated by the “man in the street” and could even threaten democracy.

"Most advanced economies will not accept any more [bailouts]...The political reaction will be very strong, putting some democracies at risk," he told delegates.

"I do believe that the financial sector needs to contribute both to the costs of the financial crisis and to reduce recourse to public funds in the future," he said.

Mr Strauss-Kahn said that imposing high capital ratio requirements on banks was one price the financial services sector must pay to prevent the threat of further multi-billion dollar bailouts.

He pointed to the debate in the US over the Troubled Asset Relief Programme and said that in many countries, including France and Germany, he doubted that politicians would secure the mandate needed to secure any further bail-outs if banks got in to trouble again, in several years' time.

Europe is in dispute over the spiralling cost of the global economic bailout, with Germany and France calling for a reduction in state support as their economies have shown signs of an upturn. >>> Angela Jameson and Elizabeth Judge | Monday, November 23, 2009

Finger-wagging Is Just Not Enough, Mr President
TIMES ONLINE: Apparently, during his big speech on financial reform last night, there were audible groans on the floor of the New York Stock Exchange when President Obama said that he had “always been a strong believer in the power of the free market”.

This was presumably because that particular element of the President’s audience thinks he is anything but. Applied to their own corner of the US economy, though, why they think as they do is anyone’s guess. One year on from the collapse of Lehmans, it looks to be business as usual on Wall Street, with big bonuses in the offing amid signs that, as Mr Obama said, the lessons of the crisis have been ignored by some.

But for all his finger-wagging, for all his promises to undertake serious financial reform, the President has actually done remarkably little so far.

Apart from trying to convince Americans that big government bailouts of financial institutions have come to an end, last night’s speech was all about trying to get that process back on track, which is why a key element of Mr Obama’s plans — a new consumer protection agency to oversee financial products such as mortgages and personal loans — was again flagged.

Yet the measure looks some way from ever reaching the statute book due to a formidable lobbying effort by the financial services industry.

Other elements of Mr Obama’s proposals, such as measuring and seeking to regulate systemic risk, are even further away. Similarly, while the Administration has tabled proposals which would ensure that many over-the-counter derivatives are traded on regulated exchanges, centrally cleared and more accurately reported, these plans are a long way from being enacted.

Part of the problem is that Mr Obama’s fellow Democrats, despite controlling Congress, seem far more determined to push through healthcare reforms before they ever turn their attention to an overhaul of financial regulation.

All of this is hugely regrettable and helps to explain why so many ordinary folk on Main Street believe that the President is in thrall to Wall Street.

Meanwhile, in fairness to those NYSE traders who groaned at Mr Obama’s comment last night, the President is giving them good reason to doubt his free-market credentials. >>> Ian King, Business commentary | Tuesday, September 15, 2009

The Liberal Economist Who's Become Obama's Chief Critic
THE INDEPENDENT: Forget the Republicans, the biggest thorn in the President's side is Paul Krugman. Stephen Foley reports

Paul Krugman On the bank bailout: 'The plans are a classic exercise in 'lemon socialism': taxpayers bear the cost if things go wrong, stockholders and executives get the benefits if things go right. Photo courtesy of The Independent
His apocalyptic warnings have sent readers flocking to his blog. A viral video of a Californian man literally singing his praises is a hit on YouTube. Tickets to a lecture he was giving in California last night were going for $135 (£91). Newsweek magazine just put him on the cover and dubbed him the head of "the loyal opposition". Paul Krugman is the man of the moment. And Team Obama is rattled.

While the US leader has been entrancing foreign statesmen on a whirlwind tour of Europe and trying to craft an era of bipartisanship back home, his staunchest opponent has appeared from very close quarters – from the left – threatening a crisis of confidence that could capsize his infant presidency.

The Obama administration has been blindsided by the emergence of Mr Krugman – not even a politician, but an economist – as a focus for dissidents who believe it is not doing enough to repair the economy.

On both pillars of Mr Obama's economic strategy – the $800bn package to stimulate the economy and the $1 trillion bailout for the financial sector – the bearded Princeton university professor has been the President's most coruscating critic.

Mr Krugman has been doing his New York Times column for a decade. He has long been a staple on political talk shows and gained new respect last year when he won the Nobel prize for economics for his work on international trade. But in the past few months, he has tapped into the anxiety of a wider audience, which is asking the question of the moment: will the Obama recovery plan work?

His answer is no. The economic stimulus Bill was far smaller than required to combat soaring job losses, which yesterday passed five million since the start of the US recession. Worse, the plan to repair the banking system – lending private investors up to $1 trillion to buy toxic mortgage assets from the country's ailing banks, in the hope of freeing them up to start lending again – is doomed, because it is based on the flawed notion that the major US banks are fundamentally sound. >>> Stephen Foley | Saturday, April 4, 2009

YOUTUBE: The Shortcomings of the Stimulus Plan

Good News! Barack Obama Attacks 'Outrage' of AIG Executive Bonuses
TIMES ONLINE: President Obama expressed outrage today over hefty bonus payments awarded to executives from the stricken insurance giant AIG and said that he had directed his Treasury Secretary to take all legal measures to block them.

The insurer received some $173 billion in government bailout money and is now paying $165 million in employee bonuses, prompting a storm of political protest that has echoes of the row in Britain over Sir Fred Goodwin's pension from RBS[.]

“This is a corporation that finds itself in financial distress due to recklessness and greed,” Mr Obama said of AIG in remarks at the White House.

“Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?”

Mr Obama said he had asked Timothy Geithner, the Treasury Secretary, to use the leverage the government had to pursue “every legal avenue” to push back against the bonus payments. >>> Philippe Naughton and Christine Seib in New York | Monday, March 16, 2009

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$700 Billion Bailout Plan
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