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| Eurozone crisis live: Greece braced for bailout protests | Eurozone crisis live: Greece braced for bailout protests |
| (40 minutes later) | |
| 10.33am: It's not only in Greece that the protests against the second Greek bailout are mounting: Spiegel-Online reports that the chairman of the Bundestag's home affairs committee, Wolfgang Bosbach, will vote against when the package comes up for approval - probably on February 27. | |
| Bosbach says it's a huge step towards a mutual liability union "burdening future generation s with risks" that are "intolerable." The German taxpayers' federation is calling on deputies to reject the package, claiming German taxpayers are liable for up to €320bn - "and an exit of Greece from the euro should not be taboo". Werner Hoyer, former Liberal (FDP minister, now president of the European Investment Bank, says Greece needs a new Marshall Plan as well as a savings programme. | |
| None of this is helped, say Spiegel, by news from the Greek parliament that the budget deficit this year will be 6.7% rather than the original forecast/planned 5.4%. Further proof, if any were needed, that austerity equals recession equals more debt equals a third rescue package - or bust.... (my colleague David Gow writes) | |
| 10.17am: Union leaders are expecting a large turnout at this afternoon's demonstrations (details here), even though it's raining in Athens. | |
| Adedy spokeswoman Tania Karayiannis told Helena that: | |
| If the weather doesn't prevent people from coming we expect the demonstration to be big. | |
| Karayiannis added that this afternoon's protests, which will converge on the Athens parliament, will be followed by many more. | |
| This is just the beginning. There will be lots of strikes and protests and we are in the process of deciding exactly when they will take place. | |
| 10.12am: After this morning's disappointing PM data, some better news on the eurozone industrial sector. | |
| New industrial orders across the region jumped by 1.8% in December, reversing November's 1.1% fall. Capital goods orders (which includes heavy duty machinery) jumped by 4.2%, while the only big fall was for 'durable consumer goods', which dropped by 2.7%. | |
| I don't believe there's a country-by-country breakdown, though. | |
| 9.55am: News in from Athens where Helena Smith, our correspondent, says unions have gone on the war path barely a day after Greece's new rescue program was announced. | |
| Mass protests are planned for 4pm (2pm GMT) local time outside the Greek parliament – around the time it will vote on controversial legislation that will further erode wages and pensions (we blogged the timings here). | |
| Helena explains: | |
| The Greek Federation of workers (GSEE), which represents the country's largest work force and Adedy, the civil serrvants' union, have announced demonstrations in what is set to be a new wave of protests against a new wave of austerity measures that are the trade off for yet aid more for debt-straddled Greece. Pame, the communist-aligned unionist, will stage a separate protest rally at 5pm. The legislation has been submitted as an emergency bill - part of a barrage of reforms that technocrat prime minister Lucas Papademos has pledged to fast track before the next EU summit on March 1. | |
In a statement, the unions attacked: | |
| The demolishment of labour law, the new cuts in principle and supplementary pensions, the demolishment of the welfare state, the eradication of public services … and new lay offs in the public sector constitute the new barbaric measures which the coalition government is hastily voting through to win favour with the troika [EC, ECB and IMF] and lenders. | |
| Helena continues: | |
| Commentators this morning say the "big bet is on" with the passage of a barrage of reforms the prelude to overhauling the way Europe's weakest link works. "We will live in a very different Greece from now. The country is changing. It's a new reality, new era, we all have to change," said news anchor Nikos Evangelatos. The big question was not so much whether the country would meet its debt repayments, now that it had secured emergency funds, but whether with the internal devaluation it was going through Greeks would be "saved" by prices also going down. | |
| 9.34am: Breaking – two members of the Bank of England's MPC wanted a bigger quantitative easing injection this month. | 9.34am: Breaking – two members of the Bank of England's MPC wanted a bigger quantitative easing injection this month. |
| Minutes from the meeting, just released, showed that the committee was split 7-2. Adam Posen and David Miles wanted the electonic money-creating programme increased by £75bn, but the rest of the committee voted for a £50bn increase. | Minutes from the meeting, just released, showed that the committee was split 7-2. Adam Posen and David Miles wanted the electonic money-creating programme increased by £75bn, but the rest of the committee voted for a £50bn increase. |
| The news has sent the pound falling 0.7 of a cent, to $1.5705. | The news has sent the pound falling 0.7 of a cent, to $1.5705. |
| My colleague Simon Goodley explains: | My colleague Simon Goodley explains: |
| The news is likely to re-open the debate about whether the central bank will add further QE in May, especially as the minutes showed that other MPC members saw a case for doing no further stimulus at all this month. | The news is likely to re-open the debate about whether the central bank will add further QE in May, especially as the minutes showed that other MPC members saw a case for doing no further stimulus at all this month. |
| Miles and Posen argued there was a risk of a prolonged period of depressed demand causing inflation to fall materially below target in the medium term. Moreover, extra QE now would reduce the risk of a spiral of increasing unemployment and scrapping of capacity by firms. | Miles and Posen argued there was a risk of a prolonged period of depressed demand causing inflation to fall materially below target in the medium term. Moreover, extra QE now would reduce the risk of a spiral of increasing unemployment and scrapping of capacity by firms. |
| However, most MPC members argued a bigger increase than £50bn "risked sending a signal that the committee thought the economic situation was weaker than it was". | However, most MPC members argued a bigger increase than £50bn "risked sending a signal that the committee thought the economic situation was weaker than it was". |
| The MPC members who voted for 50 billion more QE were not wholly united. "For some members ... a case could be made for maintaining the stance of policy at this meeting," the minutes said. | The MPC members who voted for 50 billion more QE were not wholly united. "For some members ... a case could be made for maintaining the stance of policy at this meeting," the minutes said. |
| 9.16am: The latest economic data from the eurozone is a disappointment. | 9.16am: The latest economic data from the eurozone is a disappointment. |
| The Composite PMI (a survey of purchasing manager conducted by Markit) came in at 49.7, down from the 50.4 recorded in January. That covers the region's manufacturing and services sectors. | The Composite PMI (a survey of purchasing manager conducted by Markit) came in at 49.7, down from the 50.4 recorded in January. That covers the region's manufacturing and services sectors. |
| A figure below 50 shows a contraction, and will fuel fears that the eurozone will officially fall into recession this quarter. | A figure below 50 shows a contraction, and will fuel fears that the eurozone will officially fall into recession this quarter. |
| More to come (news meeting calls) | More to come (news meeting calls) |
| 9.05am: Three seperate rallies are scheduled to take place in Athens today. Here's the details, via Living In Greece. | 9.05am: Three seperate rallies are scheduled to take place in Athens today. Here's the details, via Living In Greece. |
• Insurance Fund employees to rally at 12:00 EET (10am GMT) outside OEK Patission and Solomou in Athens. • PAME Communist workers group will begin a rally at 17:00 EET (3pm GMT), starting from Omonia and converging with union protest outside Parliament in Athens • A second rally is being organised in Thessaloniki begins at 18:30 EET (4.30pm GMT) at the Venizelos | • The ADEDY and GSEE unions (the two biggest in Greece) have called a rally set for 16:00 EET (2pm GMT) outside Parliament in Athens. • Insurance Fund employees to rally at 12:00 EET (10am GMT) outside OEK Patission and Solomou in Athens. • PAME Communist workers group will begin a rally at 17:00 EET (3pm GMT), starting from Omonia and converging with union protest outside Parliament in Athens • A second rally is being organised in Thessaloniki begins at 18:30 EET (4.30pm GMT) at the Venizelos statue. |
| 8.52am: Grzegorz Kolodko, the former deputy prime minister and minister of finance of Poland, has come out firmly against the €130bn package today. | 8.52am: Grzegorz Kolodko, the former deputy prime minister and minister of finance of Poland, has come out firmly against the €130bn package today. |
| Kolodko, who now teaches at Kozminski University in Warsaw, is the latest senior politician to argue that Greeces's economy cannot return to strong growth in the face the measures that are being piled on. Society is being pushed to its limits: | Kolodko, who now teaches at Kozminski University in Warsaw, is the latest senior politician to argue that Greeces's economy cannot return to strong growth in the face the measures that are being piled on. Society is being pushed to its limits: |
| In three years of austerity Greece's debt has risen from 113 per cent of gross domestic product to 163 per cent. Homelessness has jumped by 25 per cent. Unemployment has risen to 21 per cent, among the highest in the industrialised world, with 48 per cent of young people out of work. It is naïve to think they will watch TV, not demonstrate or fight in the streets. This policy is senseless. | In three years of austerity Greece's debt has risen from 113 per cent of gross domestic product to 163 per cent. Homelessness has jumped by 25 per cent. Unemployment has risen to 21 per cent, among the highest in the industrialised world, with 48 per cent of young people out of work. It is naïve to think they will watch TV, not demonstrate or fight in the streets. This policy is senseless. |
| Kolodko advocates wiping out 80% of Greece's external debt, plus an EU loan at zero interest rate.: | Kolodko advocates wiping out 80% of Greece's external debt, plus an EU loan at zero interest rate.: |
| The easiest solution would be for the European Central Bank to buy new issues of Greek government bonds, but its hyper-liberal statutes and German ethos will not allow it to do so. The ECB has off-balance sheet resources of €3.3tn, equivalent to the current value of its seigniorage. If it is only used properly, the issue of eurozone sovereign debt can be resolved. | The easiest solution would be for the European Central Bank to buy new issues of Greek government bonds, but its hyper-liberal statutes and German ethos will not allow it to do so. The ECB has off-balance sheet resources of €3.3tn, equivalent to the current value of its seigniorage. If it is only used properly, the issue of eurozone sovereign debt can be resolved. |
| The full comment piece is here. | The full comment piece is here. |
| 8.41am: Europe's stock markets opened flatly this morning, with the FTSE 100 down 9 points at 5919 in London. Other markets are more or less flat. | 8.41am: Europe's stock markets opened flatly this morning, with the FTSE 100 down 9 points at 5919 in London. Other markets are more or less flat. |
| Traders say that the uncertainty over whether the Greek pacakge will a) be agreed, and b) work, means shares aren't heading higher (despite the Dow Jones index hitting its highest level since 2008 last night) | Traders say that the uncertainty over whether the Greek pacakge will a) be agreed, and b) work, means shares aren't heading higher (despite the Dow Jones index hitting its highest level since 2008 last night) |
| Chris Weston of IG Index explained: | Chris Weston of IG Index explained: |
| The sights of the market are firmly fixed on the level of private sector involvement and how the market will take the prospect of hedge funds or investment banks claiming insurance from their credit-default swaps held over Greek debt if they aren't one of the potential 66% that are going to participate on a 'voluntary' basis. | The sights of the market are firmly fixed on the level of private sector involvement and how the market will take the prospect of hedge funds or investment banks claiming insurance from their credit-default swaps held over Greek debt if they aren't one of the potential 66% that are going to participate on a 'voluntary' basis. |
| We actually feel that the use of the CAC (collective action clauses) and subsequent triggering of CDS (credit default swaps) would not be that negative, and would show the system actually works. | We actually feel that the use of the CAC (collective action clauses) and subsequent triggering of CDS (credit default swaps) would not be that negative, and would show the system actually works. |
| 8.27am: "Whatever eurozone finance ministers were smoking in their all-night marathon talks it must have been something strong". | 8.27am: "Whatever eurozone finance ministers were smoking in their all-night marathon talks it must have been something strong". |
| That's the verdict of m'learned colleague Larry Elliott this morning. Our economics editor says that it's theoretically possible that the rescue package. After all: | That's the verdict of m'learned colleague Larry Elliott this morning. Our economics editor says that it's theoretically possible that the rescue package. After all: |
| It is all so simple: for a new wonder economy to arise in the Aegean what has to happen is for Greece's recession to end immediately, for the economy to have six consecutive years of strong growth from 2014 onwards; for the Greeks to submit to their eurozone partners' humiliating terms; for the bailout to be given the thumbs-up by the sceptical parliaments in Germany, Finland and the Netherlands, and for the assorted hedge funds, banks and insurers that make up Greece's private-sector creditors to accept a 53% "haircut" on their investments. | It is all so simple: for a new wonder economy to arise in the Aegean what has to happen is for Greece's recession to end immediately, for the economy to have six consecutive years of strong growth from 2014 onwards; for the Greeks to submit to their eurozone partners' humiliating terms; for the bailout to be given the thumbs-up by the sceptical parliaments in Germany, Finland and the Netherlands, and for the assorted hedge funds, banks and insurers that make up Greece's private-sector creditors to accept a 53% "haircut" on their investments. |
| And if that happens.... Greece will still have a debt-to-GDP ratio of 120%, the equivalent of Italy today. | And if that happens.... Greece will still have a debt-to-GDP ratio of 120%, the equivalent of Italy today. |
| Larry concludes that Greece will ultimately leave the euro. But, as IfigEusLannuon points out below, he doesn't give a date. Any predictions? | Larry concludes that Greece will ultimately leave the euro. But, as IfigEusLannuon points out below, he doesn't give a date. Any predictions? |
| Elsewhere, the Daily Telegraph's Jeremy Warner is scathing about the Charles Dellara (or Doolally, as he dubs him), for suggesting that Greece will return to growth despite official forecasts showing that the country faces five years of austerity. | Elsewhere, the Daily Telegraph's Jeremy Warner is scathing about the Charles Dellara (or Doolally, as he dubs him), for suggesting that Greece will return to growth despite official forecasts showing that the country faces five years of austerity. |
| Unfortunately, growth is one of the many things the Greeks don't have, and, according to the eurozone's own analysis, are most unlikely to get – in large part as a direct result of the eurozone's own policy prescription of never-ending austerity. | Unfortunately, growth is one of the many things the Greeks don't have, and, according to the eurozone's own analysis, are most unlikely to get – in large part as a direct result of the eurozone's own policy prescription of never-ending austerity. |
| Mr Dallara must surely know that the plan is based on completely unrealistic economic assumptions, and therefore cannot succeed on the terms proposed. | Mr Dallara must surely know that the plan is based on completely unrealistic economic assumptions, and therefore cannot succeed on the terms proposed. |
| 8.15am: Greece's two largest unions have organised demonstrations in Athens this afternoon, beginning at 4pm local time. I'll blog more details in a moment. | 8.15am: Greece's two largest unions have organised demonstrations in Athens this afternoon, beginning at 4pm local time. I'll blog more details in a moment. |
| On the economics front, we're getting new data showing how the eurozone's services and manufacturing sectors performed in January. France's data is already out, showing a surprise upturn. Industrial orders data is also due. | On the economics front, we're getting new data showing how the eurozone's services and manufacturing sectors performed in January. France's data is already out, showing a surprise upturn. Industrial orders data is also due. |
| In the UK, the Bank of England minutes will also show whether its Monetary Policy Committee was unanimous in expanding its quantitative easing programme by another £50bn this month. | In the UK, the Bank of England minutes will also show whether its Monetary Policy Committee was unanimous in expanding its quantitative easing programme by another £50bn this month. |
| Here's today's agenda: | Here's today's agenda: |
| • Bank of England minutes - 9.30am • Eurozone manufacturing+services PMI data - 9am GMT / 10am CET • Eurozone industrial New Orders - 10am GMT / 11am CET • Demonstrations in Athens - from 2pm GMT / 4pm EET | • Bank of England minutes - 9.30am • Eurozone manufacturing+services PMI data - 9am GMT / 10am CET • Eurozone industrial New Orders - 10am GMT / 11am CET • Demonstrations in Athens - from 2pm GMT / 4pm EET |
| 8.00am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis. | 8.00am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis. |
| Greece is still top of the agenda today. Its €130bn financial assistance package may have been agreed yesterday morning, but a growing band of critics are questioning whether the plan will work. | Greece is still top of the agenda today. Its €130bn financial assistance package may have been agreed yesterday morning, but a growing band of critics are questioning whether the plan will work. |
| Protests are expected on the streets of Athens today, at a demonstration organised by trade unions. That should show the depth of public anger over the plan, which will mean years of IMF-directed austerity for Greece. | Protests are expected on the streets of Athens today, at a demonstration organised by trade unions. That should show the depth of public anger over the plan, which will mean years of IMF-directed austerity for Greece. |
| With just nine days to secure the new package, Greece may also open its bond swap with private creditors today. | With just nine days to secure the new package, Greece may also open its bond swap with private creditors today. |