Euro crisis is deepening

BREAKING NEWS:
Eurozone crisis live: Greek president attacks Germany as bailout looks shakier

Greek President Karolos Papoulias

Guardian Live Update,

15 Febraury, 2012

6.35pm: Greece's president launched a fierce defence of his country this afternoon, singling out Germany for criticism over the way Europe's biggest state has approached the crisis.

Karolos Papoulias, fresh from surrendering his salary as a sign of solidarity, took particular aim at Germany's Wolfgang Schäuble for his recent comments that Greece must 'surrender some of its sovereignty'.

Papoulias made his comments at Greece's ministry of national defence – which meant that his attack was made before a backgroup of Greek soldiers. Read into that what you will.

Here's Papoulias remarks:

We all have an obligation to put our shoulder to the wheel in order to overcome the crisis.

I cannot accept that my country should be reviled by Schäuble. I cannot accept this as a Greek.

He went on...

Who is Mr Schäuble to insult Greece? Who are the Dutch?

Eurozone leaders call off Greece talks as crisis deepens

The meeting of eurozone finance ministers that was meant to approve the bailout that Greece needs to avoid defaulting on its debts was called off last night.

the Independant,

15 February, 2012

The Athens government had failed to provide enough detail on its new austerity measures, said the president of the eurogroup, Jean-Claude Juncker, despite the Greek parliament's vote for €3.3bn of further cuts on Sunday.

Mr Juncker said: "I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme." A meeting has been scheduled for next week.

China left Europe's top officials empty-handed yesterday as it refused to pledge more funds to help resolve the eurozone sovereign debt crisis. Speaking at a joint China-EU summit in Beijing, Premier Wen Jiabao promised to co-operate with Europe to improve the situation, but failed to make a specific commitment to invest further in the various pan-European bailout funds.

"China is ready to increase its participation in resolving the European debt problems. We are willing to conduct close communication and co-operation with the EU side," Mr Wen said. But he made no direct pledge to step up China's purchases of the bonds issued by the European bailout funds.

The European Council President, Herman Van Rompuy, and the European Commission President, Jose Manuel Barroso, had both travelled to Beijing in the hope of unlocking more Chinese investment for these funds.

On Monday, Lou Jiwei, the head of China's $410bn sovereign wealth fund, the China Investment Corporation, said that the German Chancellor, Angela Merkel, had requested further Chinese investment in European sovereign debt. Mr Lou said China wanted to invest in Europe by acquiring European companies, not government bonds.

Mr Van Rompuy told his hosts in Beijing that the European crisis was finally coming to an end. "Investors in Europe can be reassured that we have not just navigated a difficult bend, we have turned a corner," he claimed.

However, the Chinese premier said that European nations still needed to do more to solve their own problems before China would make a move.

"We expect those highly indebted countries to strengthen fiscal consolidation, cut deficits and reduce debt risks in light of their national conditions," Mr Wen said. "We hope the EU will soon reach internal consensus, make the political decision and send to the international community a clearer and a stronger message of policy responses."

Mr Rompuy's confident message was contradicted by dire economic data from the eurozone's most troubled state. The Greek statistics office reported yesterday that its economy contracted at an annual rate of 7 per cent in the final quarter of 2011, and shrank by 6 per cent last year, even more than earlier estimates. Official statistics released yesterday also showed that 

Portugal saw its economy shrink by 2.7 per cent annualised in the fourth quarter of last year.

Italy scraps bid to host 2020 Olympic Games

Rome's bid to host the 2020 Olympic Games became the latest victim of the economic storm sweeping across Europe's southern periphery last night.

The Italian government said it could not support the plans because of the country's dire financial straits.

Prime Minister Mario Monti confirmed: "We arrived at the unanimous conclusion that in Italy's current condition the government does not feel able to take on the commitment to offer the [financial] guarantee needed to host the Olympics."

Rome hosted the Olympics in 1960 and planned to use many of the same venues if it was awarded the 2020 Games. Doha, Madrid, Istanbul, Tokyo and Baku have said they will put in a bid. Reuters

Oil near 6-month high on supply risks, Greece eyed

Reuters,

15 Febraury, 2012

Brent oil kept gains near six-month highs on Wednesday, as fears of supply disruptions from Iran, other Middle Eastern producers and Africa outweighed worries about the global economy.

But concerns about the outcome of Greek bailout talks in Brussels among euro zone officials limited the day's rises.

A denial by Iran's oil ministry of a state media report that Tehran had banned oil exports to six European Union countries in retaliation for EU sanctions also pared gains.

Data showing a surprise drawdown in U.S. oil inventories last week, however, helped firm crude futures.

"The oil markets are doing a balancing act between what's happening in Iran and the euro zone, where the Greek bailout deal may still fall apart," said Chris Dillman, analyst at Tradition Energy in Stamford, Connecticut.

For article GO HERE

Greek-German relations at new low as eurozone crisis rumbles on

Hostility levels have reached maximum as savage austerity measures threaten to bring Greece to its knees

the Guardian, 

15 Febraury, 2012

There may never have been much love lost between Germany and Greece but on Wednesday it was clear relations between Europe's paymaster and its most indebted state had reached a new level of hostility.

If there was any doubt that the gloves were off it was removed by Evangelos Venizelos, the Greek finance minister early in the day. "Our country," he said, "is waging a battle of survival within the eurozone. This is because, manifestly, there are now powers in Europe who are playing with fire, who believe not all requirements will be met … and who consequently want Greece out of the eurozone."

Three years into the debt crisis it was clear that any diplomacy that might have dominated attempts to end it thus far had been replaced by anger and exasperation. And not just in the capitals of northern Europe.

Venizelos's outburst, hours before a crucial teleconference with eurozone counterparts over Athens's ability to apply cuts in return for the €130bn in rescue loans it desperately needs to stay afloat, was proof that tempers were being sorely tested in Greece, too.

The debt-stricken country may have delayed delivering the reforms its "troika" of international creditors at the EU, ECB and IMF say are vital to kick-starting its economy. But increasingly officials complain that the goalposts are also being constantly shifted.

"It's quite obvious studying their statements and their leaks," said a government source, referring to officials in Berlin, "that they are pushing for default. They want to get rid of Greece and then Portugal and create a smaller eurozone that will be closer to their interests. They start with leaks and then put them on the table as proposals."

Venizelos, he said, had been apoplectic at the latest leak that EU officials were considering delaying part, or all, of the rescue deal – the country's second bailout — until after general elections in April.

After weeks of talks between Athens and the troika, the Greek parliament endorsed draconian austerity measures attached to the loan agreement on Sunday, but not without violent street protests and both of the interim coalition government's major parties losing more than 40 MPs who refused to back the policies. An integral part of the deal – a bond swap with private sector holders of Greek debt that will automatically slice €100bn from Greece's €350 debt pile — has to be completed within days if it is to be ready in time.

"We're not going to play the proud Greek and do anything that would jeopardise our situation, but this latest leak that the program might be delayed until after elections made him [Venizelos] really angry," said the insider. "They say these things and then the markets react violently and then we've got another crisis. Every time we try to heal a little wound another one comes along."

"It's rough out there and not very polite," said another Greek official participating in the negotiations. "Our European partners look us straight in the eyes and say 'how can we trust you?'"

The release of a new poll on Wednesday showing a majority of German business leaders felt it was time Greece left the euro added to the sour mood. Although heartened by offerings of support by socialists in Europe, including the French presidential contender, François Hollande, Greek officials say the shock therapy now being administered to Greece after almost two years of savage spending cuts has dramatically hindered any attempt to improve its economic position.

Figures released by the nation's statistics agency this week showed that Greece is going through one of the biggest slumps in western history, with its GDP plunging 7% on an annual basis in the fourth quarter from a year earlier, faster than the 6.8%decline for all of 2011.

"They want sound figures in the economy but with dead citizens," said another insider, saying the austerity Greece was being forced to mete out in return for aid was coming perilously close to killing the patient.