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Uh, What Greek Bailout? 8:25 AM ECB NOWOTNY: ECB HAS A CLEAR NO-BAILOUT CLAUSE
07:46 02/09 GREECE SPREAD MOVE FOLLOWS MARKET SPECULATION EU BAILOUT TALK
07:46 02/09 GREECE 10-YEAR VS BUND SPREAD TIGHTENS 18BPS TO +345BPS
and yet
08:22 02/09 ECB NOWOTNY: GREECE HAS TO SOLVE ITS PROBLEMS ITSELF
08:23 02/09 ECB NOWOTNY: NUMBER WAYS COOPERATE ON GREECE USING STRUC FUNDS
08:23 02/09 ECB NOWOTNY: GREECE HAS CREDIBILITY PROB - DUE STATS MISREPORT
08:20 02/09 FRANCE FINMIN: WILL WATCH GREECE PROCESS VERY CAREFULLY
08:20 02/09 FRANCE FINMIN: CONFIDENT GREECE WILL DELIVER ON DEFICIT PLAN
08:19 02/09 ECB LIIKANEN: DECISIONS ALWAYS BASED ON CURRENT SITUATION
08:17 02/09 GERMANY V-CHANCELLOR:NOBODY KNOWS HOW GREECE SIT. TO EVOLVE
08:14 02/09 GERMANY V-CHANCELLOR: GREECE NEEDS TO REGAIN CONFIDENCE
08:13 02/09 GERMANY V-CHANCELLOR: EXPECT GREECE DEFICIT PLAN TO WORK
08:12 02/09 LIIKANEN: ECB'S PRIMARY OBJECTIVE IS PRICE STABILITY
08:12 02/09 LIIKANEN: I TRUST GREECE WILL GET CONTROL OF THE SITUATION
08:12 02/09 ECB LIIKANEN: INTEREST RATES AT APPROPRIATE LEVEL
08:11 02/09 GERMANY V-CHANCELLOR:DEFICIT PROBLEMS ALSO ELSEWHERE IN EMU
08:11 02/09 ECB LIIKANEN: EVERY NATION MUST CONTROL FISCAL SITUATION
08:10 02/09 ECB LIIKANEN: NOTES US DEFICIT 'MUCH MORE' THAN IN EUROZONE
07:52 02/09 GERMANY V-CHANCELLOR: GERMANY HAS INTEREST IN GREECE SUCCESS
07:51 02/09 GERMANY V-CHANCELLOR: GREECE KNOWS SERIOUSNESS OF SITUATION
07:51 02/09 GERMANY VICE-CHANCELLOR PRAISES GREECE CONSOLIDATION EFFORTS
And the punchlines:
08:28 02/09 ECB NOWOTNY: NO SPECIFIC MATTER OF CONCERN ON CURRENT EURO FX
08:27 02/09 ECB NOWOTNY: ON BASIS NUMBERS UK MOST IN DANGER OF CONTAGION
08:27 02/09 ECB NOWOTNY: SPAIN, PORTUGAL IN MUCH BETTER SHAPE THAN GREECE
08:26 02/09 GERMANY V-CHANCELLOR: DON'T NEED EU FIN CONTROLLER FOR GREECE
Just released a full preliminary transcript with the Nowotny interview, via FT Alphaville.
Q: I just wonder if that sort of solution [the Vienna Initiative] could be applied to Greece as well. I know the ECB’s been reluctant to call in the IMF but is there something similar that could be done?
A: (Laughing) Well, theoretically yes of course but it is an example of how international cooperation can work. But there are of course also market differences. First, Greece, being a euro country, is under the regime of euro regulations, and so the main policy approach is of course that they have to solve the problems themselves. Second, in most of the countries of the Vienna Initiative, the main problem was the deterioration of the exchange rate. So devaluation that would have caused problems for the banks … This is not a problem for Greece because Greece being a member of the eurozone, does not have an exchange rate problem. Greece has a public finance problem … So it is a bit of a different story, but in principle, of course some kind of cooperation might help – especially for the psychological effects. The really big success of the Vienna Initiative was that it gave assurance to all the investors that the situation was under control. In a very very short time the situation stabilised. So the important thing is to break the negative expectations, and I think this is the task for us, in the case of Greece.
Q: Do you have a game plan at the moment for how to do that?
A: (Laughing) I only can tell you what is the official situation, so that’s from the side of the ECB. [ECB] President Trichet said the ECB has been helpful , or the euro has been helpful to Greece anyhow because being a member of the eurozone meant that you had the advantage of low interest rates and that now it is the turn for the Greece authorities to restore discipline. And I think this is, in any case, the most important first step. One of the big problems with Greece is that obviously they do have a credibility problem after the statistics and all this kind of thing … After this first step there are a number of ways how you could do some cooperation with regards to structural funds.
Q: Is that sort of like a European monetary fund?
A: No. These are the structural funds for the improvement of the economic structure of the member countries. And Greece is, of course, getting structural funds to quite a large amount for expansion of the infrastructure and so on. One has to see that the Greek problems have a number of causes. One of the causes is, of course, that it [does not have] very stable fiscal policies, and the problem of losing competitiveness. The basic problem in Greece is the loss of competitiveness. The main point being development of wages in Greece, and so this is the task to restore competitiveness. There’s the task to restore fiscal stability. And all this of course has been aggravated by the economic crisis. It has two sides, let’s say the terminal side and it has also the external side, where there’s still the effect of the economic crisis. So I think there will be a number of measures that will have to be taken but the prime responsibility now clearly rests with the Greek authorities.
Q: Is there a point at which the ECB would perhaps, or the eurozone members, step in and do something a bit more…
A: This is different. The ECB have a clear mandate. [Under the statute of the ECB] we have a clear no-bailout clause. So the ECB as such cannot intervene. Whether there are some intervention from the side of individual countries, let’s say bilateral or some kind of concerted action, this is a political decision. But it’s not, with regards to the ECB. What is of course now in discussion is the question that the ECB for the time being, as part of our crisis prevention programme, we have lowered the quality requirements for collateral. And we have made the decision that this will be in place until the end of the year. Then of course, we’ll have to decide. But we must be very clear; the policy of the ECB is a policy that has to be oriented towards the totality of the euro area and we cannot take into account specific problems of specific countries, or specific banks. So our task is to look at the euro area and the needs of the euro area totality.
Q: So at the moment you’re still planning to normalise policy towards the end of the year?
A: Yes, the ECB has already started an exit programme but in a very cautious way. So we have a phasing out programme of some of the liquidity programmes – like the one-year operation. And we will do this step by step , always taking into account the economic situation. But the economic situation of the eurozone, as such, not of individual countries. But our policy is very clear, never to pre-commit. So that means we will review the situation whenever we can. At least every quarter…
Q: Does the central bank worry about contagion at all? I mean, it’s fine to say that Greece is one country, but once you throw Spain and Portugal in the mix, if those problems start exacerbating themselves then perhaps the eurozone economic picture will change?
A: Of course contagion is something that has to be taken seriously. But I think it is not founded in economic reality … For instance the Greek debt situation is quite substantially different from the one in Portugal and Spain. The situation in Portugal and Spain is much better compared to Greece. It is not, let’s say justified. The country that would be most in danger would be the UK, if you just look at the numbers. But there is no doubt, a lot of speculation around. So I heard yesterday, around here in London, talking with the bankers, it became quite obvious that hedge funds do play a role and this is something that I think one has to take seriously; and try to take some action against it.
Q: Is there anything the ECB can do about speculation?
A: No, the ECB cannot directly tackle speculation. But the ECB had, in the past, a very successful policy of a ‘steady hand’ approach – not really trying to give signals that could help speculation. But to have a very clear approach…
Q: While we’re on the topic of speculation, is the central bank comfortable with the current level of the euro?
A: Yes, the ECB has a price stability goal. Price stability being defined not as the exchange rate but the rise of consumer prices not above but close to 2 per cent. So this is the main policy goal. The ECB has no exchange rate goal … What we are interested in of course is to avoid abrupt developments. But as the exchange rate as it is just now, there’s no specific matter of concern. You know that there have been fluctuations in the euro dollar exchange rate from 1 to 1.50…
Q: Just going back to something you mentioned earlier about competitiveness gaps – is there a way the ECB can alleviate those going forward?
A: Well in some way the ECB is helping because being a member of the eurozone helps you to have lower debt levels – lower spreads for your public debt – than you’d have to pay otherwise. So this is a very important contribution, especially for the weaker countries of the eurozone. But the main impulse with regard to competitiveness is the wage-price policy in the countries concerned. So that means that there is the need for discipline in the labour markets and we do have of course, also, the huge amount of structural funds of the EU. That also should help to increase competitiveness.
Q: What do you think about the Spanish economy?
In Spain, it’s quite clear that it has been hit very hard by the economic downturn. And especially also with regards to the real estate developments, they had a kind of bubble in some markets. But Spain at least has to restore competitiveness … But the Spanish banks, at least the big Spanish banks, are in a very good position. In fact they’re playing a major role in the world markets, also the UK. And therefore, I see no immediate concerns with regard to Spain. As for the fiscal situation, yes they have a high deficit … but the debt to GDP ratio is I’d say, on average. So there is the threat of some speculative forces, but I don’t think they’re really founded.
Q: What’s the biggest challenge facing the eurozone at the moment?
A:I think this is quite obvious. The biggest challenge is to regain higher growth rates because the recession has ended in Europe. We are at the rate of positive growth but positive growth is still not really very high – between 1.5 and 1.7 per cent and basically to solve the problems of unemployment. But also to have a [solution] for the fiscal problems… To increase economic growth is the biggest challenge. This is something that cannot be achieved , what monetary policy, low interest rates, etc., can do with it, we did. Now it’s a matter of structural policies, of stability, both on the labour markets with regards to competitiveness. So this is for me, the number one challenge.
Q: You know there’s a rumour going around this morning that Trichet has flown back early from Sydney to go to some sort of meeting in Europe, and people are interpreting that as meaning there’s a bailout of Greece imminent.
A: (Laughing) Well, in any case I think his time is much better spent in Europe than in Sydney.
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08:24 02/09 FED BERNANKE: BUY BUY BUY
I don't know why it's surprising. It's all rigged.
Big run-up in US futures. Attributed to possible Greek bailout by EU. Where's the beef? Is the market rational or are the tout's making up reasons when it is just "animal spirits?"
Personally, I don't think Germany will put up the money (and I am not sure Greece is governable). However, I also don't think the Feds can get away with bailing out Calif. (nor do I think Calif. can do what is needed either).
Maybe, I just don't understand how desperate (or stupid) the political class is to put off dealing with the real problems for one more day (making the eventual solution even more painful).
Futures run up will fold before the open.
We are overdue for a rebound. I hope this sucker runs all the way back up to 1100 by the end of the week so that I can reload short positions. All the charts look *bad*.
Trichet returning early from Sydney IS A GIANT FUCKING RED FLAG.
This is exactly how subprime went, "everything is under control. The situation has stabilized. Confidence is being restored" LIKE HELL IT IS.
If this were true, Trichet would still be living it up down under.
That's what I thought. If there were a deal being made he'd be down there finishing it.
I'd like to know if he's in a French jet fighter pulling 3G's, with egg mcmuffin & spilled coffee all over his jumpsuit - saying calmly, "everything's fiiiiiine.... p.s. Please tell my wife the 'buy-gold' plan is a GO".
They should have never retired the Concorde - Trichet will not seem very composed when their is puke all over his nice crisp suit.
+1000
OMG..LOL I was crying on the train reading that this morning. The people around me must have thought I was losing it for 10 straight minutes. Absolutely funniest thing I read in 12 months. I actually constructed that little clip in my head and cannot get that out of my mind..Accents and everything LOL..
+1000 for the Mcmuffin
Goldman downgraded the greek banks today..
Goldman cuts Greek and Italian banks to sellMADRID (MarketWatch) -- National Bank of Greece (NYSE:NBG) and Greek Postal Savings Bank were cut from neutral to sell on Tuesday at Goldman Sachs, which also cut Italian banks Banca Monte dei Paschi di Siena , Banco Popolare (BORSA:IT:BP) and Credito Emiliano (BORSA:IT:CE) from neutral to sell. Goldman said there are now elevated levels of sovereign risk and that will hit bank returns, specifically via higher and diverging cost of equity, mark-to-market impact on bond portfolios, upward pressure on financing costs and downward pressure on volume growth and returns. A bank that is big and diversified will hold up better, said Goldman. Its view on Spanish banks is unchanged with a buy rating on Banco Santander (NYSE:STD) (SIBE:ES:SAN) , and sell ratings on domestic banks.
LMAO!!
Their downgrade will allow them to pull out more collateral from these banks as people run on them!!!!
AHAHAHAHAHAHAHAHAH
Will the ECB cut loose Greece to prove to the "market" that it is a hard money central bank and will not take any shit from pesky sovereigns.
They would use the excuse that Greece was lying about its debt postion - the piis country's would be put under a umbrella / control status on condition that they become debt slaves.
A sacrifice to the bond gods is written in the CDS so they must be satisfied.
a spinning top remains stable at high speeds.
when its starts to slow down, you see wild gyrations
that become more and more pronounced before it topples over.
Hey Joe
Economist Joe Stiglitz, who is advising the Greek government, last night denied that the country would require a bail-out, and urged national authorities to intervene in markets to "teach the speculators a lesson". Likening the situation to the Asian financial crisis, in which even healthy economies were targeted as hedge funds and investors withdrew from the region, he told the Sky's Jeff Randall Live show: "The speculators will always look for the weakest link. What they're doing now is a version of the Hong Kong double play in 1997 /1998.
"What Hong Kong did in response was to raise interest rates and intervene in the stock market. They burnt the speculators and Europe needs to do the same thing."
http://www.telegraph.co.uk/finance/economics/7191113/Greek-crisis-intens...
"Where you going with that gun in your hand?"
This reminds me of the new guy where the set the rope on fire to make him climb it and he cought on fire and the guy was like. "Just roll around. You'll be aight."
So I guess the "Just roll around. You'll be aight." is the official problem solving method to be used.
http://www.youtube.com/watch?v=JFzCbhCnDtg&feature=related
It's either bail out Greece or risk the collapse of the Euro. Simple as that.
What are euro holders going to flock to? Are they actually going to let us spec attack their fringes and pimp them out with dollars?
The STUPIDero?
On RGE's Europe EconoMonitor, Michael G. Arghyrou and John Tsoukalas propose a last-resort plan for devaluation that would prevent moral hazard. The plan involves "the temporary implementation of a two-currency EMU, with both currencies run by the Frankfurt-based ECB. The core-EMU countries will continue to use the present currency, the strong euro. The periphery countries, on the other hand, will adopt, for a certain period of time, another currency, the weak euro. Crucially, the bonds and external debt of the periphery countries will stay in strong-euro terms. Transition from the weak to the strong euro should be made conditional upon meeting a suitably defined criterion referring to the current account balance [rather than the fiscal position], a more accurate indicator of long-term competitiveness developments."
How will that not be exactly the same thing as Argentina?
Just like how Geithner says the US will NEVER lose its AAA rating,this ass is delaying the inevitable.
Poker faces! LOL.
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