This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.guardian.co.uk/business/2012/may/14/eurozone-crisis-greek-exit-markets
The article has changed 15 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Eurozone crisis live: Markets slide as Greek euro exit looms | Eurozone crisis live: Markets slide as Greek euro exit looms |
| (40 minutes later) | |
| 9.31am: In a sign of the escalating unrest gripping Greece, the country's hardline KKE communist party has announced a major protest demonstration this evening. Helena Smith reports: | |
| Sensing that the announcement of fresh elections is just a matter of time, the country's unreconstructedly Orthodox communist party is getting ready to hit the streets. As I write, officials are already preparing for what is being described as a mass demonstration against the "destructive" one-way policies of the monopolies of capitalist power [the EU and IMF] in Athens pedio tou Areo park. The rally's motto is: "no expectation, no self-deception, so submission." Protestors have been asked to gather at 8:30 PM local time (6.30pm BST) to hear the party's fiery leader Aleka Papariga (at 67 the widow shows no sign of fading into the back ground) address the crowd. In an annoucement the party singled out the country's political parties and the Greek Industrialists' association (SEV) for spreading "deceit and lies" in order to ensure further profits for the capitalist oligarchy. The KKE, like Syriza, have long argued that the threat of bankruptcy and chaos that would grip Greece if it defaulted on its debt has been vastly overblown. "The KKE is directing a rallying cry ... for unremitting battle and readyness to overturn the rotten system," it said. We fiercely denounce this campaign of misinformation and are bent on stepping up our stuggle." | |
| 9.20am: The selloff in Europe is getting worse -- the FTSE 100 is now showing triple-figure losses, down 102 points at 5473. | |
| Lloyds Banking Group, Barclays and Royal Bank of Scotland are all down at least 4%, as bank shares across Europe suffer (several Italian financial stocks are being briedly suspended in Milan after falling sharply). | |
| The dollar is strengthening in the currency markets, as investors dash for the traditional safety of the US currency. That's pushing the euro lower ($1.2864 at pixel time). | |
| 9.11am: Spanish and Italian government debt has fallen in value this morning, driving up their implicit borrowing costs. | |
| The yield (or interest rate) on Spain's 10-year bonds climbed higher to 6.2%, while the Italian equivalent hit 5.8%. This indicates that traders are growing more nervous that the Greek crisis could send dominoes toppling across Europe's preiphery. | |
| Yields in the bond market don't directly affect a country's borrowing costs. However, it's a worrying sign as both Spain and Italy are selling debt today (see here). | |
| Given the dire state of the Spanish banking sector, there are concerns that Spain will need a Greek-style bailout which would involve its bondholders taking losses. That could be one blow that the eurozone could not absorb, as Gary Jenkins of Swordfish Research explains: | |
| The potential outcome would be that investors would immediately withdraw from funding Italy and if Italy goes then the whole Eurozone probably implodes. | |
| 8.52am: Greeks are in brittle and panic-stricken mood this morning, reports Helena Smith from Athens, as the crisis again dominates front pages across Europe. | 8.52am: Greeks are in brittle and panic-stricken mood this morning, reports Helena Smith from Athens, as the crisis again dominates front pages across Europe. |
| Helena reports on the latest political development in Greece: | Helena reports on the latest political development in Greece: |
| The failure of government-building negotiations here in Athens is now seen as certain. The ability of president Carolos Papoulias to act as a deus ex machina in the unfolding drama appears to have floundered on the resolute refusal of the increasingly assertive Syriza, the radical leftist group that yesterday was revealed by Kappa Research, the polling company, to be the most popular force in the land. | The failure of government-building negotiations here in Athens is now seen as certain. The ability of president Carolos Papoulias to act as a deus ex machina in the unfolding drama appears to have floundered on the resolute refusal of the increasingly assertive Syriza, the radical leftist group that yesterday was revealed by Kappa Research, the polling company, to be the most popular force in the land. |
| The small Democrat Left party, headed by the sensible pro-European former lawyer Fotis Kouvellis, knows that participation in a coalition without Syriza would be the equivalent of electoral suicide. Laos, the far right party, did it for a while by agreeing to cooperate in the outgoing "national salvation" government of technocrat Lucas Papademos and its popularity, as a result, plummeted. On May 6th, it didn't even cross the threshold to make it into Athens' 300-seat parliament. Attacking austerity is what gets votes and in that respect Alexis Tsipras, Syriza's leader, couldn't be doing better. New Democracy and Pasok, the parties now widely branded as 'pro-European' for their support of the unpopular austerity and structural reforms demanded by the EU and IMF in return for aid, say Syriza's cooperation (even if it is just tolerating the government) is essential if the new government is not to be constantly obstructed by anti-austerity strikes and protests. | The small Democrat Left party, headed by the sensible pro-European former lawyer Fotis Kouvellis, knows that participation in a coalition without Syriza would be the equivalent of electoral suicide. Laos, the far right party, did it for a while by agreeing to cooperate in the outgoing "national salvation" government of technocrat Lucas Papademos and its popularity, as a result, plummeted. On May 6th, it didn't even cross the threshold to make it into Athens' 300-seat parliament. Attacking austerity is what gets votes and in that respect Alexis Tsipras, Syriza's leader, couldn't be doing better. New Democracy and Pasok, the parties now widely branded as 'pro-European' for their support of the unpopular austerity and structural reforms demanded by the EU and IMF in return for aid, say Syriza's cooperation (even if it is just tolerating the government) is essential if the new government is not to be constantly obstructed by anti-austerity strikes and protests. |
| The leaders – without Tsipras it would seem – will meet around the negotiating table again at 7:30 PM local time. Will they, with the chances of a Greek exit from the euro zone higher than at any other time, finally bite the bullet and go for it? In an ideal world, all three have said they would rather plug the power vacuum in Athens with a coalition government than go to elections again in June. For starters, the country can ill afford the estimated €25 million it will cost to hold another poll. But the answer seems to be 'no.' | The leaders – without Tsipras it would seem – will meet around the negotiating table again at 7:30 PM local time. Will they, with the chances of a Greek exit from the euro zone higher than at any other time, finally bite the bullet and go for it? In an ideal world, all three have said they would rather plug the power vacuum in Athens with a coalition government than go to elections again in June. For starters, the country can ill afford the estimated €25 million it will cost to hold another poll. But the answer seems to be 'no.' |
| "Everyone recognizes there will not be an agreement tonight," said one well-placed insider who has been busy working the phones. "They are just going through the motions. We are going to go to a new round of elections probably on June 17." | "Everyone recognizes there will not be an agreement tonight," said one well-placed insider who has been busy working the phones. "They are just going through the motions. We are going to go to a new round of elections probably on June 17." |
| Meanwhile, he said, "we should expect movement" later in the day on the issue of the outstanding €450m bond repayment Greece must pay by tomorrow. "This has to be paid otherwise we default. The finance ministry is working on it." | |
| 8.40am: Greek banks shares tumbled this morning when trading began in Athens. Piraeus Bank shed 9.7%, with Alpha bank close behind with a 8.1% drop. | 8.40am: Greek banks shares tumbled this morning when trading began in Athens. Piraeus Bank shed 9.7%, with Alpha bank close behind with a 8.1% drop. |
| Greek shares had rallied last week on optimism that a unity government might be formed. Those hopes were firmly dashed last night, when Syriza leader Alexis Tsipras (the rising star in Greek politics), refused to let his coalition become "partners in crime" by forming an administration. | Greek shares had rallied last week on optimism that a unity government might be formed. Those hopes were firmly dashed last night, when Syriza leader Alexis Tsipras (the rising star in Greek politics), refused to let his coalition become "partners in crime" by forming an administration. |
| As our Athens correspondent Helena Smith explained last night: | As our Athens correspondent Helena Smith explained last night: |
| The 38-year-old Tsipras has much to be happy – and immovable – about. An opinion poll published on Sunday, seven days after Greece's electoral earthquake, suggested voters were bent on sending further tremors through the political landscape. The survey, conducted by Kappa Research for To Vima, showed support for Syriza climbing from 16.8% to 20.5%. | |
| 8.29am: Spain's renewed indignado protests, now in their third day, appear to have calmed down - with far fewer people in Madrid's Puerta del Sol square overnight compared to the previous day. | 8.29am: Spain's renewed indignado protests, now in their third day, appear to have calmed down - with far fewer people in Madrid's Puerta del Sol square overnight compared to the previous day. |
| Giles Tremlett reports from Madrid: | Giles Tremlett reports from Madrid: |
Police moved in to clear the square of the final 100 or so indignados at about 6am - with no complaints so far of violence. | Police moved in to clear the square of the final 100 or so indignados at about 6am - with no complaints so far of violence. |
| Tomorrow marks the first anniversary of the the day, last May, when spontaneous camp-outs happened in city squares around the country, setting the example for the occupy movements in Wall Street and London. The impact of this year's protest is clearly less than last year. | Tomorrow marks the first anniversary of the the day, last May, when spontaneous camp-outs happened in city squares around the country, setting the example for the occupy movements in Wall Street and London. The impact of this year's protest is clearly less than last year. |
| The protests began on Saturday, when tens of thousands of Spaniards took to the streets in 80 cities in protest at Spain's deep economic problems. On Sunday, 18 people were arrested at Puerta del Sol after refusing to leave the square. But as the picture above shows, many protesters remained in situ last night. | The protests began on Saturday, when tens of thousands of Spaniards took to the streets in 80 cities in protest at Spain's deep economic problems. On Sunday, 18 people were arrested at Puerta del Sol after refusing to leave the square. But as the picture above shows, many protesters remained in situ last night. |
| 8.14am: This morning's early stock markets losses (see 8.05am) were partly triggered by the news that even members of the European Central Bank's governing council have started discussing the prospect of a Greek eurozone exit. | 8.14am: This morning's early stock markets losses (see 8.05am) were partly triggered by the news that even members of the European Central Bank's governing council have started discussing the prospect of a Greek eurozone exit. |
| Luc Coene, the central bank governor of Belgium, told the Financial Times yesterday that "I guess an amicable divorce – if that was ever needed – would be possible", adding that he'd regret such a break-up. | Luc Coene, the central bank governor of Belgium, told the Financial Times yesterday that "I guess an amicable divorce – if that was ever needed – would be possible", adding that he'd regret such a break-up. |
| Ireland's central bank governor, Patrick Honohan, also claimed that a Greek exit from the eurozone would be "rather destabilising" but not disastrous. Honohan told a conference in the Estonian capital Tallinn this weekend that: | Ireland's central bank governor, Patrick Honohan, also claimed that a Greek exit from the eurozone would be "rather destabilising" but not disastrous. Honohan told a conference in the Estonian capital Tallinn this weekend that: |
| It is not necessarily fatal but it is not attractive. | It is not necessarily fatal but it is not attractive. |
| It's very unusual for senior members of the ECB to speculate about a member leaving the euro. Arguably it simply reflects the political reality in Greece today, where voters rejected the terms of the country's aid deal. Or is it a signal to Athens that the rest of the eurozone would be prepared to see Greece cut adrift? | It's very unusual for senior members of the ECB to speculate about a member leaving the euro. Arguably it simply reflects the political reality in Greece today, where voters rejected the terms of the country's aid deal. Or is it a signal to Athens that the rest of the eurozone would be prepared to see Greece cut adrift? |
| 8.05am: European stock markets have fallen sharply at the start of trading, | 8.05am: European stock markets have fallen sharply at the start of trading, |
| In London, the FTSE 100 has shed 70 points, or 1.2%, to 5503. Every share has lost ground, with banking stock and miners leading the fallers. | In London, the FTSE 100 has shed 70 points, or 1.2%, to 5503. Every share has lost ground, with banking stock and miners leading the fallers. |
| Trading screens across Europe are flashing red. Here's a round-up: German's DAX: down 1.1% French CAC: down 1.5% Spanish IBEX: down 2.3% Italy FTSE MIB: down 1.9% | Trading screens across Europe are flashing red. Here's a round-up: German's DAX: down 1.1% French CAC: down 1.5% Spanish IBEX: down 2.3% Italy FTSE MIB: down 1.9% |
| The growing prospect of a disorderly Greek default is alarming investors, explained Michael Hewson of CMC Markets, who commented: | The growing prospect of a disorderly Greek default is alarming investors, explained Michael Hewson of CMC Markets, who commented: |
| Markets continue to feel the pressure and the stakes continue to rise as what was declared unthinkable a year ago or so now, starts to permeate mainstream thinking in Europe. | Markets continue to feel the pressure and the stakes continue to rise as what was declared unthinkable a year ago or so now, starts to permeate mainstream thinking in Europe. |
| Political developments in Germany were also alarming traders, with Angela Merkel suffering electoral losses in North Rhineland Westphalia (details here). Hewson added: | Political developments in Germany were also alarming traders, with Angela Merkel suffering electoral losses in North Rhineland Westphalia (details here). Hewson added: |
| These defeats could weaken her hand in trying to pass the fiscal compact through parliament at a time when her insistence on fiscal discipline or austerity comes under attack from around Europe. | These defeats could weaken her hand in trying to pass the fiscal compact through parliament at a time when her insistence on fiscal discipline or austerity comes under attack from around Europe. |
| 7.55am: The eurozone crisis will be dominated today by talks in Athens and Brussels, while new industrial production data will show the state of the eurozone economy. Spain and Italy must also test investor confidence with bond sales. | 7.55am: The eurozone crisis will be dominated today by talks in Athens and Brussels, while new industrial production data will show the state of the eurozone economy. Spain and Italy must also test investor confidence with bond sales. |
| Here's the agenda: | Here's the agenda: |
| • Eurogroup finance ministers meet in Brussels: from 12.30pm BST / 1.30pm CEST • Coalition talks resume in Athens: 5.30pm BST / 7.30pm Athens | • Eurogroup finance ministers meet in Brussels: from 12.30pm BST / 1.30pm CEST • Coalition talks resume in Athens: 5.30pm BST / 7.30pm Athens |
| • Spain sell €2bn-€3bn of 12 and 18-month bonds: from 9.30am BST • Italy sells €3.5bn-5.25bn of bonds: from 10am BST • Germany sells €4bn of 6-month bonds | • Spain sell €2bn-€3bn of 12 and 18-month bonds: from 9.30am BST • Italy sells €3.5bn-5.25bn of bonds: from 10am BST • Germany sells €4bn of 6-month bonds |
| 7.45am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis. | 7.45am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis. |
| It's the start of a crucial week. The political crisis in Greece has intensified over the weekend, after attempts to form a unity coalition floundered. Leaders are due to meet again today, but without leftist coalition Syriza -- which yesterday refused to join a multi-party government that would stick to Greece's austerity plans. | It's the start of a crucial week. The political crisis in Greece has intensified over the weekend, after attempts to form a unity coalition floundered. Leaders are due to meet again today, but without leftist coalition Syriza -- which yesterday refused to join a multi-party government that would stick to Greece's austerity plans. |
| If a coalition can't be formed (as appears likely), Greece heads for new elections in a few weeks. | If a coalition can't be formed (as appears likely), Greece heads for new elections in a few weeks. |
| The talk in the financial markets today is that a Greek exit from the eurozone is now a question of when, rather than if. The prospect of a disorderly default is likely to hit markets again today. | The talk in the financial markets today is that a Greek exit from the eurozone is now a question of when, rather than if. The prospect of a disorderly default is likely to hit markets again today. |
| The political vacuum in Greece will dominate the agenda in Brussels later today, where finance ministers from across the eurogroup are meeting. | The political vacuum in Greece will dominate the agenda in Brussels later today, where finance ministers from across the eurogroup are meeting. |