Greek Debt Crisis Spreading 'Like Ebola' and Europe Must Act Now, OECD WarnsTHE TELEGRAPH:
The Greek debt crisis is spreading “like Ebola” and Europe must act now to protect the stability [of] the financial markets, according to the Organisation for Economic Co-operation and Development.
The Parthenon, Greece. Photograph: The Telegraph“It’s not a question of the danger of contagion; contagion has already happened,” OECD secretary general Angel Gurria said.
“This is like Ebola. When you realise you have it you have to cut your leg off in order to survive,” he added, saying the crisis is "threatening the stability of the financial system".
Alistair Darling, the Chancellor, called for Eurozone countries to "urgently" agree a bail-out for Greece or risk a further decline in stock market confidence.
Mr Darling said it was "absolutely essential" that Greece's problems were sorted out "quickly, effectively and decisively", following a torrid 24 hours for world markets.
Asked on LBC Radio about the drop in the FTSE on Tuesday, the Chancellor said stock markets rise and fall but added: "That's my argument about the situation in Greece – we have got to make sure that it gets sorted out.
"But the primary responsibilities are for the other members of the euro group.
"They know that they have got to sort it out. They have promised money, and what I would say is they need to make that money available as soon as possible."
He added: "If we can sort out the problems in Greece quickly, then that will make people more confident."
The crisis in Greece sent stock markets and the euro reeling for a second day as fears grew that it would not be able pay its debts.
>>> | Wednesday, April 28, 2010
ECB May Have to Turn to 'Nuclear Option' to Prevent Southern European Debt CollapseTHE TELEGRAPH:
The European Central Bank may soon have to invoke emergency powers to prevent the disintegration of southern European bond markets, with ominous signs of investor flight from Spain and Italy.Greece’s fortunes were dealt yet another blow as Standard & Poor’s slashed its credit rating to junk status - BB+ - the first time that has happened to a euro member since the single currency was created, pushing yields on 10-year Greek bonds up to a record 9.73pc.
The credit-rating agency also cut Portugal’s sovereign debt ratings by two notches to A-, as the swirling storm hit the country with full-force.
“We have gone past the point of no return,” said Jacques Cailloux, chief Europe economist at the Royal Bank of Scotland.“There is a complete loss of confidence. The bond markets are in disintegration and it is getting worse every day.
“The ECB has been side-lined in the Greek crisis so far but do you allow a bond crash in your region if you are the lender-of-last resort? They may have to act as contagion spreads to larger countries such as Italy. We started to see the first glimpse of that today.”
Mr Cailloux said the ECB should resort to its “nuclear option” of intervening directly in the markets to purchase government bonds.
This is prohibited in normal times under the EU Treaties but the bank can buy a wide range of assets under its “structural operations” mandate in times of systemic crisis, theoretically in unlimited quantities.
>>> Ambrose Evans-Pritchard, International Business Editor | Tuesday, April 27, 2010
