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Merkel Allies Signal Germany Backs Off Greek Restructuring Push
By Tony Czuczka and Brian Parkin - May 10, 2011 12:00 AM GMT+0200 Mon May 09 22:00:55 GMT 2011
The parliamentary finance and budget spokesmen have both endorsed steps to avoid a restructuring before a meeting today of lawmakers from Merkel’s Christian Democratic bloc to discuss Greece. Merkel may give her own view on the matter when she briefs foreign journalists in Berlin at 11 a.m.
The comments in recent days contrast with the position of German officials as recently as last month, when Deputy Foreign Minister Werner Hoyer said a Greek debt restructuring “would not be a disaster.” Finance Minister Wolfgang Schaeuble referred to restructuring Greece’s debt in an interview in Die Welt newspaper published on April 14. He subsequently said his remarks had been misinterpreted. A Merkel economic adviser, Lars Feld, has called it unavoidable.
“It’s inevitable that Greece will have to restructure its debt” given the level of debt relative to the economy, Ben May, an economist at Capital Economics in London, said in a phone interview. “You can delay that by offering bailouts. It may well be in the rest of Europe’s interest to delay restructuring to give their own banking sectors time to prepare for that.”
French and German lenders accounted for almost two-thirds of lending to Greek public and private debtors as of Sept. 30, according to the Bank for International Settlements. French banks held $59.4 billion and German banks $40.3 billion, followed by U.K. and Portuguese lenders to Greece.
Banks Pushing ‘Hard’
German banks are pushing “hard to avoid a default,” Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said by phone.
The urgency of Germany’s deliberations was underlined yesterday as Greece’s credit rating was cut two levels to B by Standard & Poor’s and Moody’s Investor Corp. warned of a downgrade.
Greece plans to sell 1.25 billion euros ($1.78 billion) of 26-week Treasury bills today. It has only sold 26-week and 13- week bills since getting the European Union-led bailout in May 2010. Greece’s last sale of 26-week bills, which raised 2 billion euros, were priced to yield 4.8 percent, more than Germany pays to borrow for 30 years.
The yield on Greek 10-year bonds rose 12 basis points yesterday to 15.6 percent, more than twice the level of a year ago when Greece accepted a bailout.
‘Even Bigger Problem’
Germany would consider more help for Greece to avoid restructuring, which would risk “maneuvering ourselves into an even bigger problem than we have already,” Michael Meister, the parliamentary finance spokesman for Merkel’s Christian Democratic Union, said yesterday by phone.
In return for steps that might include lower interest rates and longer maturities on aid, Greece must accelerate its state asset sales program to convince creditors it’s serious about cutting debt, Meister said.
“There’s no alternative to keeping afloat the idea that we need to help Greece help itself,” Norbert Barthle, CDU budget spokesman in parliament, said by phone on May 7. “We’ll just have to bite the bullet and go along with it, for believe me, the appetite for restructuring the country’s debt is not there.”
The premium investors demand to hold Greek 10-year bonds over equivalent German debt rose by nearly 3 percentage points since April 14 to 1,261 basis points yesterday.
A year after Greece received a 110 billion-euro bailout that aimed to stem the spread of the region’s sovereign crisis, the measure isn’t working. Euro-area finance ministers held an unannounced meeting on May 6 in Luxembourg to work on a new aid package for Greece.
Euro Tumbles
The euro tumbled the most in a year that day after Spiegel magazine reported that Greece was considering to leave the euro area and return to the drachma.
As with the Greek bailout a year ago, Merkel’s government is again beholden to Germany’s political calendar as it presses for a solution to the latest flare-up of the Greek crisis.
“I’m not sure that Germany has a fixed plan, but they want some clarification about the Greek issue before parliament votes on the ESM,” the post-2013 European Stability Mechanism for indebted euro-area states, said Holger Schmieding, London-based chief economist at Joh. Berenberg Gossler & Co.
That’s “very different from saying Germany has concluded Greece needs a haircut and is now executing its devilish plan,” he said in a phone interview.
(Bloomberg)
By Tony Czuczka and Brian Parkin - May 10, 2011 12:00 AM GMT+0200 Mon May 09 22:00:55 GMT 2011
The parliamentary finance and budget spokesmen have both endorsed steps to avoid a restructuring before a meeting today of lawmakers from Merkel’s Christian Democratic bloc to discuss Greece. Merkel may give her own view on the matter when she briefs foreign journalists in Berlin at 11 a.m.
The comments in recent days contrast with the position of German officials as recently as last month, when Deputy Foreign Minister Werner Hoyer said a Greek debt restructuring “would not be a disaster.” Finance Minister Wolfgang Schaeuble referred to restructuring Greece’s debt in an interview in Die Welt newspaper published on April 14. He subsequently said his remarks had been misinterpreted. A Merkel economic adviser, Lars Feld, has called it unavoidable.
“It’s inevitable that Greece will have to restructure its debt” given the level of debt relative to the economy, Ben May, an economist at Capital Economics in London, said in a phone interview. “You can delay that by offering bailouts. It may well be in the rest of Europe’s interest to delay restructuring to give their own banking sectors time to prepare for that.”
French and German lenders accounted for almost two-thirds of lending to Greek public and private debtors as of Sept. 30, according to the Bank for International Settlements. French banks held $59.4 billion and German banks $40.3 billion, followed by U.K. and Portuguese lenders to Greece.
Banks Pushing ‘Hard’
German banks are pushing “hard to avoid a default,” Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said by phone.
The urgency of Germany’s deliberations was underlined yesterday as Greece’s credit rating was cut two levels to B by Standard & Poor’s and Moody’s Investor Corp. warned of a downgrade.
Greece plans to sell 1.25 billion euros ($1.78 billion) of 26-week Treasury bills today. It has only sold 26-week and 13- week bills since getting the European Union-led bailout in May 2010. Greece’s last sale of 26-week bills, which raised 2 billion euros, were priced to yield 4.8 percent, more than Germany pays to borrow for 30 years.
The yield on Greek 10-year bonds rose 12 basis points yesterday to 15.6 percent, more than twice the level of a year ago when Greece accepted a bailout.
‘Even Bigger Problem’
Germany would consider more help for Greece to avoid restructuring, which would risk “maneuvering ourselves into an even bigger problem than we have already,” Michael Meister, the parliamentary finance spokesman for Merkel’s Christian Democratic Union, said yesterday by phone.
In return for steps that might include lower interest rates and longer maturities on aid, Greece must accelerate its state asset sales program to convince creditors it’s serious about cutting debt, Meister said.
“There’s no alternative to keeping afloat the idea that we need to help Greece help itself,” Norbert Barthle, CDU budget spokesman in parliament, said by phone on May 7. “We’ll just have to bite the bullet and go along with it, for believe me, the appetite for restructuring the country’s debt is not there.”
The premium investors demand to hold Greek 10-year bonds over equivalent German debt rose by nearly 3 percentage points since April 14 to 1,261 basis points yesterday.
A year after Greece received a 110 billion-euro bailout that aimed to stem the spread of the region’s sovereign crisis, the measure isn’t working. Euro-area finance ministers held an unannounced meeting on May 6 in Luxembourg to work on a new aid package for Greece.
Euro Tumbles
The euro tumbled the most in a year that day after Spiegel magazine reported that Greece was considering to leave the euro area and return to the drachma.
As with the Greek bailout a year ago, Merkel’s government is again beholden to Germany’s political calendar as it presses for a solution to the latest flare-up of the Greek crisis.
“I’m not sure that Germany has a fixed plan, but they want some clarification about the Greek issue before parliament votes on the ESM,” the post-2013 European Stability Mechanism for indebted euro-area states, said Holger Schmieding, London-based chief economist at Joh. Berenberg Gossler & Co.
That’s “very different from saying Germany has concluded Greece needs a haircut and is now executing its devilish plan,” he said in a phone interview.
(Bloomberg)
tommy271
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Lo spread inizia ad essere ad essere "realistico" a partire dalle 9,00 (ora locale di Atene)...
tommy271
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Greece needs to get finances in order-Nowotny
VIENNA | Tue May 10, 2011 1:31am EDT
VIENNA May 10 (Reuters) - It is primarily up to Greece to get its financial house in order and restructuring of the euro zone country's debt has to be avoided, European Central Bank Governing Council member Ewald Nowotny told Austrian radio.
Asked in an interview on Tuesday whether Greece would get fresh loans, Nowotny said: "The first step has to be on Greece's side. Only when we have a clear view here can we consider whether the existing programme must be rounded out, but that is something one can judge only in the weeks ahead."
He reiterated his opposition to restructuring Greece's debt. "This is something that is ruled out by the EU, the ECB and also in the interests of Greece," he said.
VIENNA | Tue May 10, 2011 1:31am EDT
VIENNA May 10 (Reuters) - It is primarily up to Greece to get its financial house in order and restructuring of the euro zone country's debt has to be avoided, European Central Bank Governing Council member Ewald Nowotny told Austrian radio.
Asked in an interview on Tuesday whether Greece would get fresh loans, Nowotny said: "The first step has to be on Greece's side. Only when we have a clear view here can we consider whether the existing programme must be rounded out, but that is something one can judge only in the weeks ahead."
He reiterated his opposition to restructuring Greece's debt. "This is something that is ruled out by the EU, the ECB and also in the interests of Greece," he said.
tommy271
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Greek determination to exit debt crisis grows with attacks of speculators: PM
Greece's determination to exit its acute debt crisis grows with the attacks of speculators against the Greek national economy and the euro, said Prime Minister George Papandreou on Monday.
"As their greed grows, so does our will and determination to change Greece. There is no return for us. We will move forward," said Papandreou while addressing a forum of Transparency International Greece on corruption.
The Greek premier reiterated the strong will of his government to fight corruption in Greece, while also criticizing corruption within the global financial system, which caused the international economic crisis.
"This system taught fraud, selling toxic bonds with the blessing of international credit rating agencies," said Papandreou, shortly after Standard and Poor's once again downgraded Greece and Moody's warned of a similar move in the near future.
"We all witnessed the latest criminal propaganda against our country and the euro by servants of speculators who undermine our efforts, aiming at gains through a Greek default and euro collapse, " he added, obviously referring to a report by German magazine " Der Spiegel" on Friday about an imminent withdrawal of Greece from the eurozone.
The report was firmly rejected by Greek and European officials, and the Greek judiciary has launched a probe to determine whether to press charges against the magazine for spreading false information.
Source: Xinhua
(Agenzia Nuova Cina)
Greece's determination to exit its acute debt crisis grows with the attacks of speculators against the Greek national economy and the euro, said Prime Minister George Papandreou on Monday.
"As their greed grows, so does our will and determination to change Greece. There is no return for us. We will move forward," said Papandreou while addressing a forum of Transparency International Greece on corruption.
The Greek premier reiterated the strong will of his government to fight corruption in Greece, while also criticizing corruption within the global financial system, which caused the international economic crisis.
"This system taught fraud, selling toxic bonds with the blessing of international credit rating agencies," said Papandreou, shortly after Standard and Poor's once again downgraded Greece and Moody's warned of a similar move in the near future.
"We all witnessed the latest criminal propaganda against our country and the euro by servants of speculators who undermine our efforts, aiming at gains through a Greek default and euro collapse, " he added, obviously referring to a report by German magazine " Der Spiegel" on Friday about an imminent withdrawal of Greece from the eurozone.
The report was firmly rejected by Greek and European officials, and the Greek judiciary has launched a probe to determine whether to press charges against the magazine for spreading false information.
Source: Xinhua
(Agenzia Nuova Cina)
Ultima modifica:
tommy271
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EURO GOVT-Bunds dip but well supported on Greek woes
LONDON | Tue May 10, 2011 2:15am EDT
LONDON May 10 (Reuters) - German government bonds edged lower on Tuesday but remained well supported, with bonds issued by the euro zone's most debt-laden nations set to come under pressure again after credit rating agencies hammered Athens.
Senior euro zone policymakers acknowledged on Monday that Athens will need a second bailout package soon to avert a disorderly overhaul of its debt obligations but Standard & Poor's -- cutting the country's rating to B -- suggested more radical measures would be needed, implying large losses for investors.
Moody's followed, threatening to downgrade Greece by several notches.
June Bund futures FGBLc1 were 8 ticks lower at 124.20, but close to their highest since early March and with the next resistance at February's high of 124.60.
"The ramifications of some sort of Greek collapse or restructuring are not fully in the price of Bunds so they should remain well supported," said a trader.
European Central Bank Executive Board member Lorenzo Bini Smaghi warned on Tuesday that a default or restructuring of Greek debt would bring the banking system to its knees.
Two-year bond yields DE2YT=TWEB were 2 basis points higher at 1.709 percent, with 10-year yields DE10YT=TWEB up a basis point at 3.108 percent.
Ten-year yields have retreated from a recent peak of 3.5 percent as talk of a Greek restructuring escalated and are approaching the important 3.08 resistance level, corresponding to the 38 percent retracement of the 2008-2010 fall in yields.
"It's very hard to call where we go from here. If you look at the German data you can argue yields are too low but the situation in Greece and beyond will probably overshadow anything else," said the trader.
The euro EUR= was near three-week lows.
Greece will auction 1.25 billion euros of T-Bills, while the Netherlands will sell up to 3 billion euros of reopened July 2021 bonds with the pick-up in demand for core paper set to support the sale.
UniCredit's Chiara Cremonesi said the bond also looks interesting as it is the cheapest bond on the Dutch curve in asset swap until the January 2037.
"In particular, it looks interesting versus the January 2023 and January 2028... and particularly interesting vs the German curve (offering) around 28 basis points of yield pick-up versus the July 2021 Bund, which is almost the maximum that can be obtained at the moment."
LONDON | Tue May 10, 2011 2:15am EDT
LONDON May 10 (Reuters) - German government bonds edged lower on Tuesday but remained well supported, with bonds issued by the euro zone's most debt-laden nations set to come under pressure again after credit rating agencies hammered Athens.
Senior euro zone policymakers acknowledged on Monday that Athens will need a second bailout package soon to avert a disorderly overhaul of its debt obligations but Standard & Poor's -- cutting the country's rating to B -- suggested more radical measures would be needed, implying large losses for investors.
Moody's followed, threatening to downgrade Greece by several notches.
June Bund futures FGBLc1 were 8 ticks lower at 124.20, but close to their highest since early March and with the next resistance at February's high of 124.60.
"The ramifications of some sort of Greek collapse or restructuring are not fully in the price of Bunds so they should remain well supported," said a trader.
European Central Bank Executive Board member Lorenzo Bini Smaghi warned on Tuesday that a default or restructuring of Greek debt would bring the banking system to its knees.
Two-year bond yields DE2YT=TWEB were 2 basis points higher at 1.709 percent, with 10-year yields DE10YT=TWEB up a basis point at 3.108 percent.
Ten-year yields have retreated from a recent peak of 3.5 percent as talk of a Greek restructuring escalated and are approaching the important 3.08 resistance level, corresponding to the 38 percent retracement of the 2008-2010 fall in yields.
"It's very hard to call where we go from here. If you look at the German data you can argue yields are too low but the situation in Greece and beyond will probably overshadow anything else," said the trader.
The euro EUR= was near three-week lows.
Greece will auction 1.25 billion euros of T-Bills, while the Netherlands will sell up to 3 billion euros of reopened July 2021 bonds with the pick-up in demand for core paper set to support the sale.
UniCredit's Chiara Cremonesi said the bond also looks interesting as it is the cheapest bond on the Dutch curve in asset swap until the January 2037.
"In particular, it looks interesting versus the January 2023 and January 2028... and particularly interesting vs the German curve (offering) around 28 basis points of yield pick-up versus the July 2021 Bund, which is almost the maximum that can be obtained at the moment."
tommy271
Forumer storico
Forex, euro crolla sotto 1,43 dlr dopo Bini Smaghi e Nowotny
martedì 10 maggio 2011 08:21
TOKYO, 10 maggio (Reuters) - L'euro è crollato sotto quota 1,43 dollari, appesantito dai commenti del membro del board Bce Lorenzo Bini Smaghi e del governatore centrale austriaco Ewald Nowotny.
Entrambi si sono opposti all'idea di una ristrutturazione del debito greco.
La moneta unica ha toccato in seduta il minimo di 1,4267 dollari. Alle 8,20 circa l'euro vale 1,4288/90 dollari EUR= dalla precedente chiusura newyorkese a 1,4351, e 115,02/06 yen EURJPY= da 115,21. Il dollaro/yen JPY= si attesta invece a 80,47/50 da 80,27.
martedì 10 maggio 2011 08:21
TOKYO, 10 maggio (Reuters) - L'euro è crollato sotto quota 1,43 dollari, appesantito dai commenti del membro del board Bce Lorenzo Bini Smaghi e del governatore centrale austriaco Ewald Nowotny.
Entrambi si sono opposti all'idea di una ristrutturazione del debito greco.
La moneta unica ha toccato in seduta il minimo di 1,4267 dollari. Alle 8,20 circa l'euro vale 1,4288/90 dollari EUR= dalla precedente chiusura newyorkese a 1,4351, e 115,02/06 yen EURJPY= da 115,21. Il dollaro/yen JPY= si attesta invece a 80,47/50 da 80,27.
tommy271
Forumer storico
China backs Europe amid debt crisis
14:24, May 10, 2011
It may be an uncomfortable anniversary to celebrate. The sovereign-debt crisis continues to cloud the euro zone's prospects a year after EU finance ministers agreed on a 750 billion euro bailout package to prevent the spread of the Greek debt crisis and safeguard the euro.
Now China seems to face a dilemma: to bail out the euro and offer a real alternative to its dollar-based reserve system, or to cut its euro investment as the crisis persist.
Investment at stake?
While Greek and EU leaders have denied mounting speculation concerning a restructuring of Greece's debt, uncertainties are still hanging over the markets as to whether the country would be able to pull itself out of the debt quagmire.
Eurostat, EU's statistical office, released data in late April, showing the Greek fiscal deficit stood at 10.5 percent of the country's gross domestic product (GDP) last year. The deficit was much lower than the 15.4 percent in 2009 but markedly above a previous forecast of 9.6 percent.
Meanwhile, Greece's public debt reached 328.6 billion euros ($479.2 billion), accounting for 142.8 percent of the country's GDP, the highest among the 17-member eurozone, according to the data.
Other weak eurozone members are also suffering grave debt problems. Ireland, the second eurozone country after Greece to seek a bailout, saw its deficit-to-GDP ratio rising to 32.4 percent last year. Portugal's public debt accounted for 93 percent of its GDP last year, a 10 percent jump compared with that of 2009.
The deficit-to-GDP ratio in eurozone economies is predicted to keep growing in the coming years and the debt-ridden EU members are unlikely to see the ongoing crisis ease until 2014 or 2015, said Chen Xin, director of economic studies at the Institute of European Studies of the Chinese Academy of Social Sciences.
Additional investment could be at stake on a weakening euro, especially when some sovereign debt holders will have to take losses for defaults under a new bailout mechanism which is to take effect in 2013.
In recent years, China has been seeking to diversify some of its foreign exchange reserves away from the US Treasury debt and into other investments, including euro-dominated debt.
Though not very optimistic about the European economy, China Investment Corporation, China's sovereign wealth fund, will continue to invest in Europe, the fund's chairman Lou Jiwei told the Boao Forum for Asia held in Hainan in April.
Lou added that investment returns from the economic bloc so far was "not bad."
Stabilizer for win-win results
Lou's remarks were seen as renewing China's promise to purchase debt from these troubled EU members, as Chinese leaders have repeatedly voiced backing for their EU counterparts over the past two years.
Since the outbreak of Europe's debt crisis in 2009, China has been buying bonds from Spain and other European nations, according to China's commerce ministry.
"China has served as a stabilizer for the world's finances and economy in the past two years," said Li Daokui, a member of the monetary policy committee of the People's Bank of China, the country's central bank.
Chinese leaders have said on many occasions that they want to see a stable eurozone and a dynamic euro. China has bought European government bonds as part of its efforts to help alleviate the crisis.
During visits to a number of European nations earlier this year, Chinese
-Premier Li Keqiang said China, as a long-term and responsible player in the bonds market, has not reduced its holdings and even increased its buying activity amid European debt concerns.
Chinese Premier Wen Jiabao reinforced the message during a meeting with visiting Spanish Prime Minister Jose Luis Rodriguez Zapatero in April, reiterating that China would continue to buy Spain's government debts.
China's efforts have won wide applause in Europe. Although China has not said how much debt it is buying, the mere promise to buy debt has already made it difficult for investors to bet against the euro.
Zapatero lauded China's swift and firm support when his country, the fourth largest economy in the eurozone, was hit hard by the global financial crisis.
"The support helped build up Spain's confidence and capability to prevail over difficulties and ensure the stability and development of Spanish and European economies," Zapatero said.
"Chinese leaders' commitment to aiding the eurozone by buying bonds of certain European countries in difficulty in 2010 came at specific times in the crisis and has been credited by specialists with having tremendous symbolic benefits in Europe at the time," said David Fouquet, director of Brussels-based Asia Europe Project Information Service.
Meanwhile, China extending a helping hand to Europe also helps itself in curbing losses on its growing financial investments in Europe and will cheer up the EU market, now its largest trading partner.
Violability in the euro would not have a significant impact on China's strategy of diversifying its foreign exchange reserves, analysts say.
"I believe that this is China's gradual and prudent policy over a longer period of time that also fits in with its announced objective to lessen the world's dependence on the US dollar as the sole global reserve currency and begin a shift toward a more multipolar reserve system, still to be specifically defined," said David Fouquet.
China's foreign exchange reserves hit a historic record of $3.04 trillion by the end of March, according to data from China's central bank.
Chen Xin said China should not base its strategy of foreign reserve management merely on short-term considerations.
"China can still diversify its bond portfolio by buying government bonds in Europe. There are plenty of European governments that are not at risk of defaults and whose bonds are safe investments," said Fredrik Erixon, Director of European Center for International Political Economy (ECIPE).
"The eurozone crisis may expand to more countries than we have seen so far, but it will still be limited to a couple of countries in the European periphery," Erixon added.
Chen also said the crisis provides China with an opportunity to learn more about the EU bond markets, which is quite different from and more diversified than the Treasury bond-dominated US market.
Economic interdependence
In late April, a fleet of 172 Chinese King Long buses, dubbed "Big Golden Dragon", were delivered to Malta.
The buses were designed for European markets by manufacturer King Long Corporation based in China's southern city of Xiamen.
This is the biggest order for King Long since its entry into the EU market in 2005, also one of the biggest orders for exports of Chinese buses and coaches.
As the European market has become the largest destination for Chinese exports, a sharply weaker euro has inevitably increased cost pressure for Chinese exporters, while dwindling European demand has also dragged down China's exports, a main driving force behind China's development.
In 2009, China's exports to Europe posted a drastic decline of 19.4 percent.
Meanwhile, Europe is becoming increasingly reliant on exports to emerging markets, China in particular, said Lou Jiwei.
Bucking the trend amid a sluggish global economic recovery, China-EU trade is staging a quick and remarkable comeback as Europe is grappling with the crisis.
China is now the EU's second-largest trading partner. EU exports to China remained on the rise in 2009 when its exports to other destinations saw declines across the board.
During the crisis, China-EU trade registered a rapid recovery, reaching 433.88 billion dollars in the first 11 months of 2010, a year-on-year increase of 33.1 percent.
And China's economy grew at a faster-than-expected 9.7 percent in the first quarter of this year.
China and the EU are economically complementary and their interests closely interwoven, Li Keqiang stressed during visits to Europe.
"It stands to reason that each must strive to reinforce the others in order to draw maximum benefit, or risk the negative consequence of a collapse anywhere. That's what interdependence is all about," said David Fouquet.
Broader partnership
A tour of Spanish grid operator Red Electrica de Espana was one of the highlights during Li's visit to Spain in January.
Li suggested that China and Spain should further expand cooperation in trade, investment and new energy as a way of fighting the global financial crisis and achieving common development.
Two months later, State Grid, China's leading power grid operator, announced it has reached an agreement with Red Electrica de Espana.
According to the agreement, the two sides will work together closely to strengthen cooperation in developing grid-access technologies for renewable energies, as well as extra-high-voltage power transmission which is a top priority of the State Grid in the coming five years.
The ongoing crisis offers opportunities for cooperation in new energies, high-tech areas and other industries as well as economic restructuring, said Chen Xin.
As the two sides have already realized, a stronger and broader China-EU relationship serves their common interests.
"Both China and the EU share a strong will to boost bilateral ties," Foreign Ministry spokesperson Jiang Yu told a regular press briefing last week, ahead of the second round of the China-EU high-level strategic dialogue.
The two sides should seize the opportunities brought about by China's 12th Five-Year Program and European 2020 strategy, so as to expand bilateral cooperation, said Jiang.
"Every crisis is an opportunity, and there is certainly room for much better relations between China and Europe. It is also clear that this is a good moment for them individually to offer global economic leadership," said Fredrik Erixon.
The reform of the international monetary system will also be high on the agenda of this year's G20 summit, whose rotating chair is currently held by France.
China is ready to strengthen joint studies and deliberations with the European countries, dedicating itself to the perfection of the global monetary system, pushing for the diversification of international reserve currencies and contributing to the formation of a stable reserve currency system, said Yi Gang, deputy governor of China's central bank.
(Il Quotidiano del Popolo - Pechino)
14:24, May 10, 2011
It may be an uncomfortable anniversary to celebrate. The sovereign-debt crisis continues to cloud the euro zone's prospects a year after EU finance ministers agreed on a 750 billion euro bailout package to prevent the spread of the Greek debt crisis and safeguard the euro.
Now China seems to face a dilemma: to bail out the euro and offer a real alternative to its dollar-based reserve system, or to cut its euro investment as the crisis persist.
Investment at stake?
While Greek and EU leaders have denied mounting speculation concerning a restructuring of Greece's debt, uncertainties are still hanging over the markets as to whether the country would be able to pull itself out of the debt quagmire.
Eurostat, EU's statistical office, released data in late April, showing the Greek fiscal deficit stood at 10.5 percent of the country's gross domestic product (GDP) last year. The deficit was much lower than the 15.4 percent in 2009 but markedly above a previous forecast of 9.6 percent.
Meanwhile, Greece's public debt reached 328.6 billion euros ($479.2 billion), accounting for 142.8 percent of the country's GDP, the highest among the 17-member eurozone, according to the data.
Other weak eurozone members are also suffering grave debt problems. Ireland, the second eurozone country after Greece to seek a bailout, saw its deficit-to-GDP ratio rising to 32.4 percent last year. Portugal's public debt accounted for 93 percent of its GDP last year, a 10 percent jump compared with that of 2009.
The deficit-to-GDP ratio in eurozone economies is predicted to keep growing in the coming years and the debt-ridden EU members are unlikely to see the ongoing crisis ease until 2014 or 2015, said Chen Xin, director of economic studies at the Institute of European Studies of the Chinese Academy of Social Sciences.
Additional investment could be at stake on a weakening euro, especially when some sovereign debt holders will have to take losses for defaults under a new bailout mechanism which is to take effect in 2013.
In recent years, China has been seeking to diversify some of its foreign exchange reserves away from the US Treasury debt and into other investments, including euro-dominated debt.
Though not very optimistic about the European economy, China Investment Corporation, China's sovereign wealth fund, will continue to invest in Europe, the fund's chairman Lou Jiwei told the Boao Forum for Asia held in Hainan in April.
Lou added that investment returns from the economic bloc so far was "not bad."
Stabilizer for win-win results
Lou's remarks were seen as renewing China's promise to purchase debt from these troubled EU members, as Chinese leaders have repeatedly voiced backing for their EU counterparts over the past two years.
Since the outbreak of Europe's debt crisis in 2009, China has been buying bonds from Spain and other European nations, according to China's commerce ministry.
"China has served as a stabilizer for the world's finances and economy in the past two years," said Li Daokui, a member of the monetary policy committee of the People's Bank of China, the country's central bank.
Chinese leaders have said on many occasions that they want to see a stable eurozone and a dynamic euro. China has bought European government bonds as part of its efforts to help alleviate the crisis.
During visits to a number of European nations earlier this year, Chinese
-Premier Li Keqiang said China, as a long-term and responsible player in the bonds market, has not reduced its holdings and even increased its buying activity amid European debt concerns.
Chinese Premier Wen Jiabao reinforced the message during a meeting with visiting Spanish Prime Minister Jose Luis Rodriguez Zapatero in April, reiterating that China would continue to buy Spain's government debts.
China's efforts have won wide applause in Europe. Although China has not said how much debt it is buying, the mere promise to buy debt has already made it difficult for investors to bet against the euro.
Zapatero lauded China's swift and firm support when his country, the fourth largest economy in the eurozone, was hit hard by the global financial crisis.
"The support helped build up Spain's confidence and capability to prevail over difficulties and ensure the stability and development of Spanish and European economies," Zapatero said.
"Chinese leaders' commitment to aiding the eurozone by buying bonds of certain European countries in difficulty in 2010 came at specific times in the crisis and has been credited by specialists with having tremendous symbolic benefits in Europe at the time," said David Fouquet, director of Brussels-based Asia Europe Project Information Service.
Meanwhile, China extending a helping hand to Europe also helps itself in curbing losses on its growing financial investments in Europe and will cheer up the EU market, now its largest trading partner.
Violability in the euro would not have a significant impact on China's strategy of diversifying its foreign exchange reserves, analysts say.
"I believe that this is China's gradual and prudent policy over a longer period of time that also fits in with its announced objective to lessen the world's dependence on the US dollar as the sole global reserve currency and begin a shift toward a more multipolar reserve system, still to be specifically defined," said David Fouquet.
China's foreign exchange reserves hit a historic record of $3.04 trillion by the end of March, according to data from China's central bank.
Chen Xin said China should not base its strategy of foreign reserve management merely on short-term considerations.
"China can still diversify its bond portfolio by buying government bonds in Europe. There are plenty of European governments that are not at risk of defaults and whose bonds are safe investments," said Fredrik Erixon, Director of European Center for International Political Economy (ECIPE).
"The eurozone crisis may expand to more countries than we have seen so far, but it will still be limited to a couple of countries in the European periphery," Erixon added.
Chen also said the crisis provides China with an opportunity to learn more about the EU bond markets, which is quite different from and more diversified than the Treasury bond-dominated US market.
Economic interdependence
In late April, a fleet of 172 Chinese King Long buses, dubbed "Big Golden Dragon", were delivered to Malta.
The buses were designed for European markets by manufacturer King Long Corporation based in China's southern city of Xiamen.
This is the biggest order for King Long since its entry into the EU market in 2005, also one of the biggest orders for exports of Chinese buses and coaches.
As the European market has become the largest destination for Chinese exports, a sharply weaker euro has inevitably increased cost pressure for Chinese exporters, while dwindling European demand has also dragged down China's exports, a main driving force behind China's development.
In 2009, China's exports to Europe posted a drastic decline of 19.4 percent.
Meanwhile, Europe is becoming increasingly reliant on exports to emerging markets, China in particular, said Lou Jiwei.
Bucking the trend amid a sluggish global economic recovery, China-EU trade is staging a quick and remarkable comeback as Europe is grappling with the crisis.
China is now the EU's second-largest trading partner. EU exports to China remained on the rise in 2009 when its exports to other destinations saw declines across the board.
During the crisis, China-EU trade registered a rapid recovery, reaching 433.88 billion dollars in the first 11 months of 2010, a year-on-year increase of 33.1 percent.
And China's economy grew at a faster-than-expected 9.7 percent in the first quarter of this year.
China and the EU are economically complementary and their interests closely interwoven, Li Keqiang stressed during visits to Europe.
"It stands to reason that each must strive to reinforce the others in order to draw maximum benefit, or risk the negative consequence of a collapse anywhere. That's what interdependence is all about," said David Fouquet.
Broader partnership
A tour of Spanish grid operator Red Electrica de Espana was one of the highlights during Li's visit to Spain in January.
Li suggested that China and Spain should further expand cooperation in trade, investment and new energy as a way of fighting the global financial crisis and achieving common development.
Two months later, State Grid, China's leading power grid operator, announced it has reached an agreement with Red Electrica de Espana.
According to the agreement, the two sides will work together closely to strengthen cooperation in developing grid-access technologies for renewable energies, as well as extra-high-voltage power transmission which is a top priority of the State Grid in the coming five years.
The ongoing crisis offers opportunities for cooperation in new energies, high-tech areas and other industries as well as economic restructuring, said Chen Xin.
As the two sides have already realized, a stronger and broader China-EU relationship serves their common interests.
"Both China and the EU share a strong will to boost bilateral ties," Foreign Ministry spokesperson Jiang Yu told a regular press briefing last week, ahead of the second round of the China-EU high-level strategic dialogue.
The two sides should seize the opportunities brought about by China's 12th Five-Year Program and European 2020 strategy, so as to expand bilateral cooperation, said Jiang.
"Every crisis is an opportunity, and there is certainly room for much better relations between China and Europe. It is also clear that this is a good moment for them individually to offer global economic leadership," said Fredrik Erixon.
The reform of the international monetary system will also be high on the agenda of this year's G20 summit, whose rotating chair is currently held by France.
China is ready to strengthen joint studies and deliberations with the European countries, dedicating itself to the perfection of the global monetary system, pushing for the diversification of international reserve currencies and contributing to the formation of a stable reserve currency system, said Yi Gang, deputy governor of China's central bank.
(Il Quotidiano del Popolo - Pechino)
Ultima modifica:
tommy271
Forumer storico
Minister questions government's, PM's effectiveness
Loverdos suggests more warriors are needed on the frontline
Prime Minister George Papandreou will hold a cabinet meeting on Tuesday, a few days after Greece’s future in the eurozone was questioned, and with doubts growing about his own future at the helm of the government.
Papandreou’s leadership came under increased pressure on Monday when Health Minister Andreas Loverdos held a news conference to call for the government to be more coordinated and decisive. Many commentators saw this as an attempt to question the effectiveness of the prime minister and several members of his team and a move to position himself as a potential successor to the prime minister.
Loverdos, whose opinion poll ratings are the highest of all the cabinet members, suggested that the government needed to improve its work and avoid more “confused and contradictory policies.” The health minister said he would resign otherwise. He also suggested that it was time for a cabinet reshuffle.
“There is no room for mixed messages and the warriors must return to the front line today,” said Loverdos, who also proposed that the whole Cabinet should sign any agreements the government strikes with the European Commission, the European Central Bank and the International Monetary Fund, collectively known as the troika.
In perhaps his most controversial proposal, Loverdos said that all significant draft laws should require a qualified rather than simple majority in favor to pass through Parliament. This suggestion was in direct contradiction to Papandreou’s position, which has been not to ask for 180 votes as this would require the support of New Democracy.
Loverdos’s bullish briefing seemed to stun the government. Spokesman Giorgos Petalotis said that it was “productive” for a minister to question his government’s policies. Privately, Papandreou and his aides debated whether the prime minister should react to what his minister had to say or even if he should consider ousting him.
Loverdos’s move comes at a testing time for the premier, whose government is coming under growing pressure for failing to meet the targets set by the troika. Speculation over the last few days about whether Greece would need further loans or might even quit the euro has only added to the strain being felt by Papandreou and his team.
ekathimerini.com , Monday May 9, 2011 (22:46)
***
La discussione interna al Pasok.
Loverdos suggests more warriors are needed on the frontline
Papandreou’s leadership came under increased pressure on Monday when Health Minister Andreas Loverdos held a news conference to call for the government to be more coordinated and decisive. Many commentators saw this as an attempt to question the effectiveness of the prime minister and several members of his team and a move to position himself as a potential successor to the prime minister.
Loverdos, whose opinion poll ratings are the highest of all the cabinet members, suggested that the government needed to improve its work and avoid more “confused and contradictory policies.” The health minister said he would resign otherwise. He also suggested that it was time for a cabinet reshuffle.
“There is no room for mixed messages and the warriors must return to the front line today,” said Loverdos, who also proposed that the whole Cabinet should sign any agreements the government strikes with the European Commission, the European Central Bank and the International Monetary Fund, collectively known as the troika.
In perhaps his most controversial proposal, Loverdos said that all significant draft laws should require a qualified rather than simple majority in favor to pass through Parliament. This suggestion was in direct contradiction to Papandreou’s position, which has been not to ask for 180 votes as this would require the support of New Democracy.
Loverdos’s bullish briefing seemed to stun the government. Spokesman Giorgos Petalotis said that it was “productive” for a minister to question his government’s policies. Privately, Papandreou and his aides debated whether the prime minister should react to what his minister had to say or even if he should consider ousting him.
Loverdos’s move comes at a testing time for the premier, whose government is coming under growing pressure for failing to meet the targets set by the troika. Speculation over the last few days about whether Greece would need further loans or might even quit the euro has only added to the strain being felt by Papandreou and his team.
ekathimerini.com , Monday May 9, 2011 (22:46)
***
La discussione interna al Pasok.
Nobody's
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