Greece

Mario Monti arrives to unveil his new government at the Quirinale Palace in Rome. Photo: Alberto Pizzoli/AFP/Getty Images 

Mario Monti arrives to unveil his new government at the Quirinale Palace in Rome. Photo: Alberto Pizzoli/AFP/Getty Images

 

Welcome back to the FT’s rolling coverage of the eurozone crisis. By Esther Bintliff and John Aglionby on the world news desk, with contributions from correspondents around the world. All times are GMT.

This post will update automatically every few minutes but could take longer on mobile devices.

Europe’s two new technocratic prime ministers should consolidate their respective grips on power today. Lucas Papademos, in Greece, is expected to win a confidence vote in parliament, while Mario Monti, his Italian counterpart, announces his new cabinet. Eyes will not be far from the markets either, following yesterday’s bruising ride.

 

12.52: Here’s the full list of the new Italian cabinet, courtesy of our reporter Giulia Segreti who is at the Quirinale palace in Rome:

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Mario Monti, Italian prime minister designate – Image Getty

Welcome back to the FT’s live coverage of the eurozone crisis and the global fallout. By John Aglionby and Esther Bintliff in London with contributions from correspondents around the world. All times are GMT.

This post should update every few minutes but might take longer on mobile devices.

Are calm waters finally visible on the horizon of the eurozone? Perhaps – for now. Mario Monti’s first full day as Italian prime minister designate will be marked by a bond auction and his efforts to form a government. A confidence debate starts in Greece on Lucas Papademos’s government. And German chancellor Angela Merkel holds her Christian Democratic Union party annual conference in Leipzig.

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Euro drachma

Josh Chaffin’s piece from the FT’s analysis page: Christos Chanos sits in a conference room at his family’s sun umbrella business in Athens and ponders one of the most pressing questions confronting his crisis-hit nation: should Greece leave the euro?

The head of a company founded by his grandfather in the ancient market stalls of the Monastiraki neighbourhood, he has first-hand experience weathering the destabilising effects of a debt crisis that has held Greece in its grip for nearly two years.

He understands the argument that reintroducing the drachma – which Greece swapped for the euro in 2001 – would enable the country to lower its costs and regain competitiveness. But, like many others, he is reluctant to go down that road. “If you ask me if we never should have entered, I could have a long discussion,” says Mr Chanos. “But at this point, I think it would be a huge distraction. What would happen the day after?”

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A screen in Hong Kong displaying the Hang Seng index’s turbulent day today. Image AP

Welcome back to the FT’s coverage of the eurozone crisis and its global fallout. Curated by John Aglionby, Tom Burgis and Orla Ryan on the news desk in London and with contributions from correspondents around the world. All times are GMT.

This post should update every few minutes, but could take longer on mobile devices.

Market reaction to events in Italy shows that the crisis is now truly global. Markets are looking for more clarity from Rome on timings, particularly of the austerity vote. Meanwhile the saga of finding a new Greek prime minister rumbles on.

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Silvio Berlusconi

Welcome to the FT’s live blog on the eurozone crisis. Curated by Orla Ryan and John Aglionby on the world news desk with contributions from correspondents around the world. In Italy, doubts have emerged that Silvio Berlusconi can remain in power as the country’s borrowing costs continues to rise. Greece is expected to name a new leader after its two largest political parties late on Sunday decided to form a government of national unity. George Papandreou will stand down as prime minister.

This post should update automatically every few minutes, although it may take longer on mobile devices.

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George Papandreou Photo: AFP/Getty

Welcome to the FT’s live blog on the eurozone crisis.

Curated by John Aglionby and Orla Ryan on the world news desk with contributions from correspondents around the world. This post will update every few minutes though it may take longer on a mobile device.

George Papandreou, the Greek prime minister, caused a major surprise on Monday night and re-opened the eurozone sovereign debt crisis when he announced a public referendum to approve the second bail-out thrashed out last week by European leaders. Public opinion polls show a majority of Greeks oppose the bail-out. The PM will hold an emergency cabinet meeting at 4pm UK time on Tuesday. Parliamentary debate on the proposal starts in Athens on Wednesday.

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Anti-austerity protesters in Athens hold up a Greek flag that says "not for sale" on Friday.

Thanks to some help from the European Commission, we have a bit more clarity on where European leaders will be spending the new €130bn in Greek bail-out aid. But the new data we received makes all the more clear that a huge amount is dependant on the still-to-be negotiated details of the 50 per cent Greek bondholder haircut deal, which may not be completed until the end of the year.

Just to remind readers where the confusion lies, of the €130bn in new funding, only €30bn was officially earmarked in last week’s summit communiqué – and that money will go for “sweeteners” to current bondholders so they’ll participate in a bond-swap programme. If they are going to take a 50 per cent cut in the face value of their bonds, they insisted on getting something else in return, and this was the price.

Of the remaining €100bn, fully €30bn will go to bank recapitalisations, not then €20bn we assumed last week. Although EU banking authorities have called for €30bn in new capital for Greek banks, officials tell us this is in addition to the €10bn provided in the first €110bn Greek bail-out.

Which leaves us with only €70bn to actually run the Greek government for the next three years. How did European authorities come to this number? That requires even more detective work, after the jump. Read more

Greek prime minister George Papandreou, right, with his counterparts at Wednesday's summit

Thursday’s early-morning deal on a new €130bn Greek bail-out is different in magnitude and in kind from the July €109bn programme it replaces, but in one respect they’re very similar – European officials have had a hard time explaining what, exactly, the money is for.

The one thing they have announced is that €30bn of it will go to so-called “sweeteners” to convince Greek bondholders to accept 50 per cent haircuts on the face value of their bonds.

How this would work has yet to be negotiated, but in the July plan, such sweeteners were used to create a collateral pool for new, gold-plated Greek bonds that could be used in a bond swap programme. In order to convince bondholders to trade in their current bonds that are about to come due for new bonds that don’t come due for 30 years, these new bonds needed to be extra safe. The collateral “sweeteners” were the means to do that.

How is the remaining €100bn in the new €130bn Greek bail-out going to be spent? A little detective work after the jump. Read more

Welcome to our continuing coverage of the eurozone crisis. Today’s summit in Brussels could, in years to come, be viewed as a turning point in the eurozone crisis. Or, it could be just one more extended meeting at which policymakers tried – and failed – to agree on a plan big enough to calm the storm in Europe’s sovereign debt markets. We’ll bring you news and commentary throughout the day.

All times are London time. By Esther Bintliff on the world news desk in London, with contributions from FT correspondents around the world. This post should update automatically every few minutes, but it may take longer on mobile devices.

13.05: In case you want to know the timetable for tonight’s summit, it’s here. Ominous small print: “The programme may be modified in light of progress of the meeting.”

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During last week’s gathering of European Union finance ministers in Luxembourg, prime minister Jean-Claude Juncker, who chairs the group of euro finance chiefs, announced what the FT had already reported: lenders were going to make “technical revisions” to a key part of Greece’s second €109bn bail-out.

The reopening of the second bail-out was probably inevitable, given Greece’s steadily deepening recession, and the part that needs changing is known as the package’s PSI, or “private sector involvement”. PSI a complicated series of bond swaps and roll-overs which in theory will get current Greek bondholders to delay repayment on €54bn in debt that was to come due between now and mid-2014. Read more

Finland's finance minister Jutta Urpilainen, left, and prime minister Jyrki Katainen

Senior European officials had hoped to finally bang out a deal today on Finland’s demand for collateral from Athens in order to participate in Greece’s new €109bn bail-out. But fellow Brussels Blogger Josh Chaffin reports in from Wroclaw, Poland, that the Finns don’t seem to be in a mood for compromise.

“I think we are going to debate about it, but unfortunately I don’t see that we can find a solution tonight,” Jutta Urpilainen, the Finnish finance minister, said heading into the meeting of her eurozone counterparts in Wroclaw. “We continue to negotiate. I’m optimistic that we can find a solution that everybody can accept.”

European Union officials have grown increasingly exasperated with the Finns, who made the demand for collateral part of the new governing coalition agreement reached after April’s indecisive national electionsRead more

In interviews on the sidelines of the Ambrosetti forum in northern Italy, economists Martin Feldstein and Hans-Werner Sinn say leaving the euro may be the only choice left for Greece. Former Spanish prime minister José María Aznar, though, urges peripheral countries to continue reforms.

Evangelos Venizelos, left, and Jutta Urpilainen, Greek and Finnish finance ministers, last month

The still-roiling dispute over Finland’s insistence on some sort of collateral to guarantee its portion of the new €109bn Greek bail-out only got slightly closer to resolution Friday, and more senior finance ministry officials – this time department deputies – will take up the issue Monday on yet another conference call.

As we reported last week, Friday’s teleconference mulled a proposal to broaden the collateral deal so that non-Finns can participate, and to have the Greek side put up non-cash assets instead of the current bilateral deal, which would have Athens put about €500m cash into a Finnish escrow account.

An official briefed on Friday’s call told Brussels Blog that a consensus appeared to be building around the non-cash plan, which would use Greek government shares in state-owned enterprises or “illiquid” real estate assets as collateral. But time is running short. Read more

Finland's prime minister, Jyrki Katainen, arriving at last month's emergency eurozone summit.

UPDATE: Thanks largely to uncertainty caused by the Greco-Finnish deal, Greek 10-year bonds dropped preciptiously Wednesday, with yields again close to 18 per cent — right where they were before July’s bail-out agreement.

The ongoing dispute between Finland and other eurozone members over the side deal Heslinki struck with Greece as part of Athens’ new €109bn is beginning to make market analysts jittery.

For those unfamiliar with the controversy, Finland has insisted that it get collateral from Greece to guarantee its portion of the new bail-out, and last week struck a deal which would have Athens putting an estimated €500m into a Finnish escrow account. Other countries have begun to cry foul, however, asking why Finland should get special treatment. Talks between eurozone finance ministry officials are expected to resume via teleconference on Friday.

As we reported earlier this week, the Moody’s rating agency has already weighed in with its concerns, saying the Finnish deal could not only delay the Greek bail-out but calls into question eurozone support for all future bail-outs. But other market watchers are beginning to raise similar alarms. Here is a quick cross-section of views that we’ve seen in recent days. Read more

Greek finance minister Evangelos Venizelos visits the IMF in Washington earlier this week

In what appears to be an acknowledgement of the ongoing confusion in the financial markets over last week’s agreement on a €109bn Greek bail-out, the European Commission has just posted some very useful documents on its web page, which we highly recommend for those still trying to get their head around the deal.

Although they go a long way towards explaining things, the documents also reveal an interesting €7bn gap in the programme that’s worth highlighting. Our excavation of the missing €7bn is after the jump. Read more

Like most people who have been following the Greek debt crisis closely, we’ve been spending much of the last few days drilling down to figure out just what eurozone leaders agreed to Thursday night, since even market participants remain confused about certain elements of the deal.

For Brussels Blog, the key question was always the most straight forward one: how big is the hole, and how are you going to fill it? We found out how big the Greek hole was earlier this month, when the European Commission released a report that showed the gap in Greek financing between now and mid-2014 – a whopping €172bn.

But just how they are going to fill that hole has not been publicly acknowledged amidst the conflicting accounts of the plan’s details that emerged in the days since the summit ended. Thanks to a previously undisclosed document obtained by the Brussels Blog – and a little help from a big EU economic brain – we seem to have figured it out. Read more

Greek prime minister George Papandreou, at the end of Thursday's summit in Brussels

All eyes in Brussels will be watching the bond markets in the eurozone’s periphery this week,  particularly in Spain and Italy, where the danger of post-Greek deal contagion is most acute. After a brief relief rally after the bail-out package was agreed Thursday night, things have begun to look a bit shaky again.

Already, Moody’s this morning has joined Fitch in downgrading Greek bonds, citing the “substantial economic losses” Greek debt holders will incur under the plan. But it’s worth looking at a “special comment” Moody’s issued alongside the Greek downgrade, because there’s a bit of good news for European leaders in it. Read more

Josef Ackermann, CEO of Deutsche Bank

UPDATE: According to our crack team in Paris, Baudouin Prot, chief executive of BNP Paribas, is also in Brussels participating in the talks. Read more

Senior eurozone officials – including finance ministry negotiators in the “euro working group” and sherpas to all 17 presidents and prime ministers – have moved their pre-summit meeting in Brussels (originally scheduled for this evening) to 9am tomorrow, a sign they still need more time to hammer out a deal on a Greek bail-out ahead of Thursday’s much-anticipated emergency summit.

But as we reported in today’s paper, after the working group held a teleconference on Friday, the European Commission prepared a “policy options” paper outlining the possibilities they’re looking at (our worthy rivals at Reuters also got their hands on a copy).

As has become our practice, we thought we’d give Brussels Blog readers a bit more insight into what the leaked options paper had to say, after the jump. Read more

Greek taxis block Athens streets during a 48-hour strike. A similar Greek roadblock in Brussels?

If this morning’s media accounts are any indication, European leaders are still scrambling to come up with a deal on a second Greek bail-out ahead of Thursday’s emergency eurozone summit here in Brussels. Read more