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| Version 1 | Version 2 |
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| Eurozone crisis live: Greek debt swap drags on | Eurozone crisis live: Greek debt swap drags on |
| (40 minutes later) | |
| 8.55am: Dire industial output figures from Spain were published this morning. | |
| Output in January fell by 4.2% compared with the previous year, on a seasonally adjusted basis, as Spain's economic downturn picked up pace. It had dropped by 3.5% year-on-year in December. | |
| Arguably, the slowdown reinforces prime minister Mariano Rajoy's decision to set a less onerous deficit target this year. Rajoy's move, though, has also caused major ructions in Brussels. | |
| In this morning's Financial Times, Martin Wolf warns that EU leaders could cause immense damage if they refuse to help Spain. Here's a flavour of his column: | |
| Spain's fiscal difficulties are a consequence of the crisis, not a cause. The country experienced huge rises in private debt after 1990, particularly among non-financial corporations (see chart). The overhang of residential construction also rules out substantial household borrowing. Given this, a sharp reduction in government borrowing is most unlikely to be offset by more private borrowing and spending. The result is more likely to be a far deeper recession, along with little progress in reducing actual fiscal deficits. At worst, a vicious downward spiral may occur. | |
| Instead of forcing Spain into rapid fiscal retrenchment, it would be far more sensible to give the country the time it needs to let the bold reform of its labour markets work through. This is going to take a number of years. | |
| 8.26am: "It reminds me of the stoning scene from Life of Brian".* | 8.26am: "It reminds me of the stoning scene from Life of Brian".* |
| That's how Gary Jenkins of Swordfish Research describes yesterday's threat from the Athens debt agency to default on any bondholders who refuse to take part in this week's debt swap. | That's how Gary Jenkins of Swordfish Research describes yesterday's threat from the Athens debt agency to default on any bondholders who refuse to take part in this week's debt swap. |
| In a morning research note, Jenkins said Greece was had fired a shot over its creditors' bows yesterday, telling them that: | |
| You better accept the terms of the debt exchange, or you will only make it worse…. | You better accept the terms of the debt exchange, or you will only make it worse…. |
| And in case you've missed the delights of Monty Python, here's the clip (complete with Italian subtitles, in a small nod to our global audience) (the punchline being - "Making it worse, how could it be worse?" | |
| Elisabeth Afseth of Investec said the threat made a mockery of the idea of a voluntary debt exchange: | |
| It's a bit like if someone pulls a knife and asks for your wallet, you don't have to hand it over..... | It's a bit like if someone pulls a knife and asks for your wallet, you don't have to hand it over..... |
| 8.19am: While Europe was sleeping, Australia has added to fears over a global economic slowdown by reporting disappointing GDP data. The eurozone crisis copped the blame. | 8.19am: While Europe was sleeping, Australia has added to fears over a global economic slowdown by reporting disappointing GDP data. The eurozone crisis copped the blame. |
| My colleague Katie Allen reports: | My colleague Katie Allen reports: |
| The Australian economy grew by just 0.4% in the final three months of 2011, just half as fast as economists had predicted. | The Australian economy grew by just 0.4% in the final three months of 2011, just half as fast as economists had predicted. |
| The Australian Bureau of Statistics reported a dip in business spending from record highs and a slowdown in household spending. There was also downward pressure from farm stocks being run down, leaving the growth rate at just half the 0.8% notched up in the third quarter. | The Australian Bureau of Statistics reported a dip in business spending from record highs and a slowdown in household spending. There was also downward pressure from farm stocks being run down, leaving the growth rate at just half the 0.8% notched up in the third quarter. |
| But stronger growth earlier in 2011 meant GDP was up 2.3% on a year earlier. | But stronger growth earlier in 2011 meant GDP was up 2.3% on a year earlier. |
| Treasurer Wayne Swan was quick to blame problems overseas for the slowdown, saying Australia was not immune to outside pressures as the eurozone sovereign debt crisis persists: | Treasurer Wayne Swan was quick to blame problems overseas for the slowdown, saying Australia was not immune to outside pressures as the eurozone sovereign debt crisis persists: |
| Despite our underlying strengths, we always said that global instability would impact our economy, and these headwinds have added to existing pressures from the sustained high dollar and the cautious consumer. | Despite our underlying strengths, we always said that global instability would impact our economy, and these headwinds have added to existing pressures from the sustained high dollar and the cautious consumer. |
| Our low unemployment, sturdy public finances, very low debt, contained inflation, and huge pipeline of investment provide a solid foundation that will help us withstand global turbulence. | Our low unemployment, sturdy public finances, very low debt, contained inflation, and huge pipeline of investment provide a solid foundation that will help us withstand global turbulence. |
| The government sought to stress that Australia's growth still significantly outstripped that in other developed economies in the fourth quarter, when the UK contracted 0.2% and the eurozone shrank 0.3%. | The government sought to stress that Australia's growth still significantly outstripped that in other developed economies in the fourth quarter, when the UK contracted 0.2% and the eurozone shrank 0.3%. |
| 8.11am: As expected, European stock markets opened calmly after yesterday's drama. The main indices are all bobbing around last night's close (with the FTSE 100 posting a 3 point gain, just for the record). | 8.11am: As expected, European stock markets opened calmly after yesterday's drama. The main indices are all bobbing around last night's close (with the FTSE 100 posting a 3 point gain, just for the record). |
| Traders, it seems, are split between booking some profits or holding on for another rally if the Greek debt swap ends well. | Traders, it seems, are split between booking some profits or holding on for another rally if the Greek debt swap ends well. |
| Chris Weston of IG Markets commented: | Chris Weston of IG Markets commented: |
| The world is in arguably better shape from November, and language from different central bankers testify to this, so perhaps a bout of profit taking could be enough to tempt the fundamental/value investors back into the markets, at the right levels. | The world is in arguably better shape from November, and language from different central bankers testify to this, so perhaps a bout of profit taking could be enough to tempt the fundamental/value investors back into the markets, at the right levels. |
| 7.55am: Today's agenda is a little light (shout if I've missed something!). The meeting between Italy's prime minister and Germany's finance minister should be interesting, while the latest US jobs data will be closely watched ahead of Friday's non-farm payroll (America's main unemployment stat). | 7.55am: Today's agenda is a little light (shout if I've missed something!). The meeting between Italy's prime minister and Germany's finance minister should be interesting, while the latest US jobs data will be closely watched ahead of Friday's non-farm payroll (America's main unemployment stat). |
| • Spanish industrial output for January - 8am GMT / 9am CET • German factory orders for January - 11am GMT / noon CET • Mario Monti and Wolfgang Schäuble meet in Rome - from noon GMT / 1pm CET • America's ADP employment report for February - 1.15pm GMT / 8.15am CET | • Spanish industrial output for January - 8am GMT / 9am CET • German factory orders for January - 11am GMT / noon CET • Mario Monti and Wolfgang Schäuble meet in Rome - from noon GMT / 1pm CET • America's ADP employment report for February - 1.15pm GMT / 8.15am CET |
| There are also bond auctions due from the UK, Germany, Sweden and the Czech Republic. | There are also bond auctions due from the UK, Germany, Sweden and the Czech Republic. |
| 7.45am: Good morning, and welcome to another day of rolling coverage of the eurozone debt crisis. | 7.45am: Good morning, and welcome to another day of rolling coverage of the eurozone debt crisis. |
| The clock is ticking. Greece has until tomorrow night to finalise its bond swap deal with its creditors. Despite last night's show of support from the biggest six banks, it's still not clear what the take-up level will be. | The clock is ticking. Greece has until tomorrow night to finalise its bond swap deal with its creditors. Despite last night's show of support from the biggest six banks, it's still not clear what the take-up level will be. |
| We'll be watching the latest developments in Athens. | We'll be watching the latest developments in Athens. |
| In the financial markets, we're not expecting too much drama after Tuesday's selloff, which saw the FTSE 100 lose 109 points. As suggested yesterday, it looks more like a technical correction than the start of a rout. But we'll see … | In the financial markets, we're not expecting too much drama after Tuesday's selloff, which saw the FTSE 100 lose 109 points. As suggested yesterday, it looks more like a technical correction than the start of a rout. But we'll see … |
| We also have disappointing GDP data from Australia overnight (on which more shortly), and a meeting between Italy's Mario Monti and Germany's Wolfgang Schäuble coming up. | We also have disappointing GDP data from Australia overnight (on which more shortly), and a meeting between Italy's Mario Monti and Germany's Wolfgang Schäuble coming up. |