Parties backing Greece’s coalition government will hold a second day of emergency talks Monday on a vital austerity deal with rescue creditors, after an intense weekend of negotiations failed to produce a breakthrough needed to avert bankruptcy in March.
Prime Minister Lucas Papademos will meet with negotiators from the eurozone and the International Monetary Fund in the afternoon and then with the leaders of the three parties backing his coalition.
The parties all publicly oppose steep cuts in private sector pay demanded by the eurozone and IMF, but their backing is needed for the government to reach a deal for the bailout, which must be approved by the Greek Parliament.
The new euro130 billion ($171 billion) bailout deal is vital for Greece to avoid bankruptcy next month as it cannot cover a euro14.5 billion ($19.1 billion) bond repayment due March 20 without the rescue funds.
The debt-crippled country has been kept solvent since May 2010 by payments from a euro110 billion ($145 billion) international rescue loan package. When it became clear the money would not be enough, a second bailout was decided last October.
Its implementation depends on the austerity measures but also on separate talks with banks and other private bondholders to forgive euro100 billion ($131.6 billion) in Greek debt, in exchange for a cash payment and new bonds with more lenient repayment terms.
Over the weekend, Greek officials held a conference call with eurozone finance ministers, as well as more talks in Athens with EU-IMF debt inspectors, senior bank negotiators, and Greek political party leaders, to try and hammer out a deal on the new cutbacks.
Greeks have already been subjected to a spate of austerity measures in return for the rescue loans, suffering significant cuts in pensions and salaries coupled with repeated tax hikes and an increase in retirement ages.
Angry at the prospect of new pain after two years of harsh austerity, Greece’s main GSEE labor union and the ADEDY civil servants’ union called a new general strike for Tuesday.
“Together with the GSEE, we have just decided to hold a 24-hour strike tomorrow, to be accompanied by a protest march in central Athens,” ADEDY secretary-general Ilias Iliopoulos told the AP free instant credit score.
An ADEDY statement said the proposed new cutbacks would “intensify the vicious cycle of recession and drive Greek society to despair.”
Greece is in its fifth year of recession, while unemployment has hit record highs of about 19 percent.
“The current policy of austerity … is turning workers into pariahs, jobless people and pensioners into paupers and deprives our youth of any hope,” the statement said. “This policy has already pushed Greeks beyond their limits and must be stopped at any cost.”
An announcement from Papademos’ office late Sunday said agreement had been reached to cut 2012 spending by 1.5 percent of gross domestic product _ about euro3.3 billion ($4.3 billion) _ improve competitiveness by slashing wages and non-wage costs, and re-capitalize banks without nationalizing them.
But the three coalition backers _ Socialist George Papandreou, Conservative Antonis Samaras and George Karatzaferis of the rightwing populist LAOS party _ differed as to what this would mean in detailed proposals.
Party leaders had undertaken to provide an initial response on the demanded cutbacks before their Monday evening meeting with Papademos, a Socialist party spokesman said. However, the prime minister’s office said there was no formal demand for a response, while the conservatives and LAOS said they were not planning to issue one.
“We are in the middle of a major struggle. Right now, the developments are satisfactory,” said Karatzaferis, adding that EU-IMF negotiators had backed away from a demand to ax annual salary installments given to Greek workers as holiday bonuses.
Rescue lenders are also seeking firings in Greece’s large public sector, a drop in the euro750 ($985) gross minimum monthly wage, and cuts in lump-sum retirement payouts, as part of a long list of cost-cutting demands.
Also Monday, left wing opposition parties are planning two separate protest rallies in central Athens at 6:00 p.m. (1600GMT), against the proposed cuts.
Reserve Bank of India Deputy Governor Subir Gokarn said the monetary authority will cut interest rates once it
Portugal has come under heavy pressure in the bond market this week as investors fear the nation could be the next domino to fall in the eurozone debt crisis.
On Thursday, the yield on 10-year government bonds spiked above 15%, the highest level since the euro currency was launched in 1999, while yields on 3-year notes surged to nearly 21%.
Investors have been rattled by the increasingly coercive debt negotiations in Greece, where private sector bondholders are facing losses of up to 70% of their Greek debt holdings. The fear is that Portugal may eventually seek a similar deal to write down some of its €162 billion debt load.
Portugal’s borrowing costs shot up after Standard & Poor’s downgraded the government’s credit rating to speculative grade, or junk, on Jan 13. The ratings agency said investors could lose up to 50% of their holdings if Portugal were to default on its debts.
But investors are also worried about Portugal’s bleak economic prospects and the uncertain outlook for the eurozone in general. The Portuguese economy is expected to shrink 3% this year as austerity measures take their toll and the broader eurozone economy contracts.
"Obviously it is not just the downgrade but the starting debt position, the economic outlook and the possibility that Greece is setting a template for the future that is concerning investors," said Gary Jenkins, a fixed-income analyst at Swordfish Research.
Roubini: Europe needs a ‘bazooka’
While the bond market has turned against Portugal, investors have been primarily worried about larger eurozone economies such as Italy and Spain, which are seen as vulnerable to a full-blown debt contagion.
Borrowing costs for Italy and Spain have backed off recent highs amid a flood of liquidity from the European Central Bank, which pumped nearly €500 billion of long-term loans into the banking system and relaxed its collateral requirements.
Meanwhile, Portugal succumbed to the debt crisis long ago. The nation first tapped a €78 billion bailout from the European Union and International Monetary Fund in Apirl 2011.
In December, the IMF released €2.3 billion from Portugal’s bailout and praised the government for the progress it has made on fiscal reforms, saying the program was "broadly on track."
The IMF expects Portugal to return to the public markets in 2013. But fund officials cautioned that the government needs to do a better job at controlling public spending, especially at the local level and in state-owned enterprises.
IMF cuts growth forecast for all but U.S.
Despite the market pressure and economic challenges, analysts say Portugal is not in immediate danger of default.
"Regardless of the future complications, it is unlikely that the government will opt to default in the next few months," said Antonio Barroso, an analyst at Eurasia Group, a political risk research firm.
However, the government may need to seek additional bailout money in the second half of the year, depending on its progress on fiscal reforms and the outcome of the eurozone crisis, Barroso wrote in a note to clients.
Greece, by contrast, has struggled to implement budget cuts and structural reforms that are a condition of its bailout loans.
The nation has yet to seal a deal with private investors over a proposed 50% reduction in the value of Greek government bonds. The agreement is a key condition of a second €130 billion bailout, the terms of which are now being negotiated.
Athens is facing a €14.5 bond redemption in March that it may not be able to pay without additional bailout funds.
Ireland, which passed its latest bailout review with flying colors last week, has been the most successful bailout recipient. The nation’s borrowing costs have eased this year and Dublin announced a debt swap with private investors on Wednesday.
Vancouver displaced Sydney as the least-affordable housing market after Hong Kong among large English-speaking cities, as home prices rose faster than incomes, a study of 325 metropolitan areas worldwide showed.
Vancouver
When a collection agency contacted Letitia Mika in the summer of 2010 about $5,640 in credit card debt, she agreed to a settlement in which she would make monthly payments on half of it and the rest would be forgiven.
Then about a year later, a different company began calling her to try to collect that same debt. As the Chicago resident began to untangle a confusing web, she discovered that the first agency - P.N. Financial - did not have authority to collect her debt, but the second one did.
Illinois Attorney General Lisa Madigan filed suit against Skokie-based P.N. Financial last week, alleging that the company not only pursued debts it was not authorized to collect, but also broke laws by revealing information about debts to employers and family members and intimidating consumers with fake court case numbers.
Complaints about harassment from debt collectors have spiked nationally in recent years. Part of that may be a reflection of more Americans being unable to pay their debts in these shaky economic times. But consumer advocates also say that collection agencies have become more aggressive in their tactics.
Both states’ attorney generals offices in Missouri and Illinois rank complaints against debt collectors among one of the top consumer complaints they receive every year.
Madigan said she has seen a rise in brash - and illegal - techniques employed by the commission-based industry.
Of the 52 complaints her office received about PN Financial, she said, “Those were among the most egregious of violations that we’ve seen.”
An employee at P.N. Financial on Friday said no one was available to comment on the lawsuit and then hung up.
The Federal Trade Commission, which says it receives more complaints about debt collection than any other industry, logged a 17 percent increase in consumer complaints about debt collection in 2010 for a total of 140,036 complaints. The FTC hasn’t yet published the 2011 figures.
Nearly half of the complaints were about collectors harassing consumers by calling them repeatedly or continuously, which is prohibited under the Fair Debt Collection Practices Act. Another common issue was consumers being contacted about debts they did not owe or that had been discharged in a bankruptcy.
In a recent study and survey by the Better Business Bureau in St. Louis, a third of respondents said they were called at least 20 times by debt collectors.
Another problem flagged by the report was consumers often don’t show up in court to defend themselves in suits and so default judgments are often entered, leading to garnishment of the debtor’s wages payday loans.
So Michelle Corey, the BBB’s president, said it’s important that consumers show up for those court dates, even if they don’t think they owe the debt or else they risk losing some of their wages.
There are a number of collection agencies in the St. Louis region who have a mixed track record. Some of them have an A rating from the BBB all the way down to an F, Corey said.
The BBB report also notes that Missouri is one of few states in the country without its own debt collection law that mirrors the federal law, making it difficult for state law enforcement authorities to take action against debt collectors. Illinois does have such a law.
Mark Schiffman, a spokesman for the trade group Association for Credit and Collection Professionals, said it’s hard to pinpoint exactly why the number of complaints against debt collectors have been on the rise.
“There was a significant volume increase in the amount of debt defaulted on in the last 3 to 4 years through the recession,” he said. “So significantly more volume would result in a rise in complaints.”
And he cautioned that many of the numbers of logged complaints, including those with the FTC, are not verified and are not necessarily about illegal behavior.
According to his group, third-party debt collectors recovered $55 billion and employed 148,000 people in 2010. But despite an increase in volume in the last several years, the amount of recovered debt has not increased much, he added.
“Consumers are struggling with the economy,” he said. “Many don’t have the ability to pay what they owe. It’s not boom time for the collection industry as people might think. Just because there is more volume doesn’t mean you can collect it.”
Rob Swearingen, an attorney at Legal Services of Eastern Missouri, sees a steady flow of complaints come into his office about harassment by debt collectors. One company told a client that a sheriff was on the way to arrest him so he should give them access to his bank account right away, he said.
“Debt collectors will say all kinds of things - there are as many crazy things as you can imagine,” he said. “They frighten people who are the most vulnerable.”
Nobel Prize-winning economist Peter Diamond said U.S. policy makers should focus on fighting long- term unemployment because workers who lose skills present a bigger challenge than the country
The Kansas City Federal Reserve Bank promoted its information technology chief to the bank’s No. 2 post under the institution’s new president, Esther George.
Kelly Dubbert, who has worked at the Kansas City Fed since 1986, will be first vice president at the institution and its chief operating officer, the bank said in a statement on Tuesday.
George took the reins at the bank in October after long-time hawk Thomas Hoenig retired. George’s personal views on monetary policy are not widely known.
Dubbert would participate in discussions at the Federal Reserve’s policy-setting Federal Open Market Committee if George were absent business card design.
Dubbert has a bachelor’s degree from Kansas State University and is a graduate of Harvard University’s Advanced Management Program and the Wisconsin Graduate School of Banking. He had headed the Kansas City Fed’s information technology division since 2006.
U.K. Prime Minister David Cameron pledged more action to deal with
World stocks were mostly lower Wednesday after the Federal Reserve refrained from offering new initiatives to help a slowly recovering U.S. economy.
Benchmark oil hovered below $100 per barrel while the dollar fell against the euro and the yen.
European stocks were mixed in early trading. Britain’s FTSE 100 rose 0.4 percent to 5,447.88. But Germany’s DAX lost 0.9 percent to 5,719.42 and France’s CAC-40 fell 1.1 percent to 3,043.60. Wall Street appeared headed higher, with Dow Jones industrial futures up 0.3 percent to 11,938 and S&P 500 futures rising 0.5 percent to 1,225.80.
Asian shares closed lower. Japan’s Nikkei 225 index fell 0.4 percent to end at 8,519.13, its lowest close in two weeks. South Korea’s Kospi lost 0.3 percent at 1,857.75 and Hong Kong’s Hang Seng shed 0.5 percent to 18,354.43. Australia’s S&P/ASX 200 was flat at 4,190.50.
On mainland China, the benchmark Shanghai Composite Index fell 0.9 percent to 2,228.53, the lowest closing since March 2009. Benchmarks in Singapore, India and Indonesia fell while Taiwan and the Philippines rose.
The Fed on Tuesday said that the U.S. economy, while improving, is still weak. Unemployment remains high, and it remains vulnerable to the European debt crisis, which could push the continent into a recession and slow U.S. growth.
Analysts said markets were disappointed that the Fed refrained from a third round of large-scale purchases of Treasury securities, dubbed quantitative easing III or QE3.
“I think QE3 would be a welcome change to the status quo. I think the market was disappointed,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.
Sentiment also remained fragile amid threats by Standard & Poor’s to downgrade the credit ratings of 15 countries that use the euro because of the region’s debt crisis.
“We are likely to continue seeing some cautious trading as the threat of S&P coming out to issue some downgrades at some stage this week looms,” said Stan Shamu of IG Markets in Melbourne, Australia payday loan lenders.
“Some would argue that this is already priced in, but it will still likely rock the boat should it happen.”
Export shares in Japan were under pressure as the yen strengthened against a shaky euro. Sharp Corp. dropped 2.9 percent while Toshiba Corp. lost 1.2 percent. Honda Motor Corp. slid 2.2 percent.
Chinese property shares dropped after the government signaled that it would maintain price curbs on real estate.
“The government has set a clear tone for reining in runaway housing prices next year,” Wang Yulin of the Ministry of Housing and Urban-Rural Development was quoted as saying by Xinhua news agency.
Hong Kong-listed China Vanke Co. fell 0.6 percent and Evergrande Real Estate Group dived 3.9 percent.
Mainland Chinese shares slumped due to fears over slower economic growth and inflation, which “will make the market unstable in the short term,” said Li Jianfeng, an analyst at Caida Securities, based in Shanghai.
Shanghai Xinhua Media Co. lost 4 percent while Jiangsu Phoenix Publishing & Media Corp. 5.9 percent.
On Tuesday, the Dow Jones industrial average fell 0.6 percent to close at 11,954.94. The Standard & Poor’s 500 index fell 0.9 percent to 1,225.73. The Nasdaq composite fell 1.3 percent to 2,579.27.
Benchmark oil for January delivery was down 16 cents to $99.98 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.37 to finish at $100.14 an ounce on the Nymex on Tuesday.
In currencies, the euro rose to $1.3047 from $1.3043 late Tuesday in New York. The dollar fell to 77.95 yen from 77.97 yen.
___
AP researcher Fu Ting contributed from Shanghai.
Summoned by Congress, Jon Corzine embraced a bold strategy Thursday to distance himself from MF Global’s fall and $1.2 billion in missing clients’ money:
Answer each question. Be courteous. And don’t huddle with your lawyer before replying.
He said very little. Nevertheless, it was a risky strategy, even for a risk-taking financial executive. Anything Corzine might say could be used against him in a courtroom, should he ever be charged in the MF Global case.
Yet the former CEO of the securities firm never declined to answer questions by invoking his Fifth Amendment right against self-incrimination.
The one-time senator and New Jersey governor was subpoenaed by his former colleagues to explain how MF Global collapsed just over a month ago in the eighth-largest bankruptcy in U.S. history. It’s the first time in more than 100 years that Congress has subpoenaed a former senator to testify, according to Senate historian Don Ritchie.
Looking strained and speaking hoarsely during nearly three hours of testimony, Corzine said he never intended to break rules that require firms to safeguard client funds. He said he doesn’t know what happened to the missing money, but added that customers’ losses weigh on his mind “every day, every hour.”
He said several times that he did not become aware of the shortfall in client accounts until Oct. 30, one day before MF Global filed for bankruptcy following its disastrous bets on European debt.
“I’m not in a position, given the number of transactions, to know anything specific about the movement of any specific funds,” said Corzine, who took over as CEO more than a year and a half ago.
In his testimony to the House Agriculture Committee, Corzine sought to deflect blame for the company’s collapse, arguing that he inherited a firm already doomed by his predecessors’ bad financial decisions.
Legal experts said they were surprised by Corzine’s decision to answer each question, however vaguely, given the legal risks. The FBI and federal regulators are investigating MF Global.
It’s hard to see how the testimony will benefit Corzine, said Robert Mintz, a defense attorney in Newark, N.J., who specializes in white-collar cases.
Mintz said Corzine’s answers leave him open to “a barrage of questions about facts and circumstances that will no doubt be the subject of review by prosecutors and regulators.”
Two other congressional panels have also voted to subpoena Corzine.
His testimony provided his first public comments since the firm’s spectacular collapse. A lawyer who handles white-collar criminal cases accompanied Corzine and sat behind him during the hearing. But Corzine never turned to seek his advice.
The hearing wasn’t particularly confrontational, though a few members expressed disbelief that Corzine could be so detached as CEO.
Rep. David Scott, D-Ga., told him it strained belief “for you to sit there and say instant payday loans… you know nothing about” the missing customer money. A lot of farmers in Georgia need to know, Scott said. “The key to this is you. You’re the CEO.”
Corzine said he was confident that others at MF Global were checking daily to ensure that the firm’s money and clients’ fund were being kept separate.
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” he said.
He said MF Global toppled, in part, because of a large quarterly loss caused by his predecessors’ accounting moves. Rating agencies responded to the loss by downgrading the firm’s credit rating, which panicked investors and trading partners.
“The marketplace lost confidence in our firm,” he said.
He disputed media reports that he personally pushed the company to make big, doomed bets on risky European debt using too much borrowed money.
He said he made the high-stakes bets only after discussions with company executives who traded European debt long before he arrived. And he said he reduced MF Global’s investment risks in some ways.
Some outside experts challenged some of his assertions.
Janet Tavakoli, an expert on the transactions MF Global specialized in, said Corzine’s remarks seemed to divert attention from the firm’s fundamental flaw under his leadership: It lacked the cash to cover its bets after investors started to fear that a major European nation would default.
“His entire testimony looks like a very skilled way to try to detract from that key issue,” said Tavakoli, president of Tavakoli Structured Finance.
Lawmakers have heard from farmers, ranchers and small-business owners who are missing money deposited with the firm. Agricultural businesses use brokerage firms to help reduce their risks in an industry vulnerable to swings in oil, corn and other commodity prices.
A Democrat, Corzine represented New Jersey in the Senate from 2001 through 2005. He later served a single four-year term as governor, losing a re-election bid in 2009. Before entering politics, he was CEO of Goldman Sachs.
Several class-action lawsuits on behalf of shareholders have been filed against Corzine and three other top executives, accusing the firm and its leaders of making false statements about MF Global’s stability.
Stephen Gillers, a professor at New York University School of Law, said lawyers typically advise clients in Corzine’s situation not to answer questions.
“When you answer a full day’s worth of questions, you’re committing yourself to a story that could come back to haunt you,” Gillers said.
Mintz added: “It only makes sense if your answers can satisfy those posing the questions. Short of that, the risks far outweigh the benefits.”
Powered by WordPress -- XHTML 1.0