Euro Zone Debt Crisis

Euro Zone Debt Crisis

IT Wed, Nov 9
 

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  • 10:36
    Welcome to the irishtimes.com liveblog on the euro-zone debt crisis. This is Steven Carroll here keeping you updated on the day's developments.
  • 10:40
    It should be an eventful day with Italy's prime minister Silvio Berlusconi saying he will resign as soon as his austerity budget is approved by parliament and Greece set to appoint a new coalition government.
  • 10:44
    Mr Berlusconi's pledge has failed to stop Italian bond yields from rising, with yields on 10-year benchmark Italian government bonds hitting 7 per cent this morning, which many analysts deem unsustainable for the country. The rate on 10-year Italian bonds stood at 7.355 per cent at 10.43am, up .586 per cent this morning.
  • 10:45
    French president Nicolas Sarkozy spoke with Greek prime minister George Papandreou by telephone today to discuss the creation of a unity government in Greece that will implement the October 27th accord reached  with other EU members, Mr Sarkozy's office said in a statement.
  • 10:46
    "Today, the prime minister will meet the president of the republic," Greek deputy government spokesman Angelos Tolkas said on NET radio. "Everything will happen in such a way that after 12 we will have the announcement of the new government."
  • 10:50
    European stocks have dropped this morning following a short-lived rally that had seemingly been sparked by Mr Berlusconi's pledge to step down and hopes that the development might lead to an answer to the debt crisis
  • 11:06
    "We have to give Europe and the world an urgent, strong signal that we are taking things seriously," Berlusconi told an Italian morning television show by phone.
  • 11:08
    In a separate interview with La Stampa newspaper, Berlusconi said he saw an election being held at the start of February and that PDL party secretary and former justice minister Angelino Alfano would be the centre-right's candidate for prime minister.
  • 11:14
    The euro has fallen by 1 per cent against both the dollar and the yen on that news about Italy's bond yield passing 7 per cent.
  • 11:22
    Rumours that former ECB vice-president Lucas Papademos was the leading candidate to lead the Greek government of national unity seem to be just that with sources in both parties telling Reuters the two sides were looking at other options
  • 11:27
    "Italian 10" is trending worldwide on Twitter - as yields on 10 year bonds now up .636 on the day to 7.404 per cent
  • 11:42
    Bloomberg is reporting that the yield on two-year Irish notes has jumped to about 80 basis points above its average of the past two months over the last few days. "After convincing investors and the European Central Bank that it's not Greece, Ireland may find it harder to escape the fallout from Italian turmoil."
  • 11:43
    Greek media is mentioning parliamentary speaker Filippos Petsalnikos and socialist MP Apostolos Kaklamanis as possible new premiers, but both have so far denied that they had been picked.
  • 11:51
    Christine Lagarde, head of the International Monetary Fund, has told a financial forum in Beijing that it was up to rich nations to shoulder the burden of restoring growth and confidence. "Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand... we could run the risk of what some commentators are already calling the lost decade," she said.
  • 12:07
    The ECB has not wasted time trying to shore up Italy's bonds. Reuters is quoting a London hedge fund trader as follows: "The ECB is buying in decent sizes. It makes you wonder how much firepower it has. It's scary. The market was a bit naive when Berlusconi left. Now it realises there's a mountain to climb."
  • 12:14
    More public platitudes from German Chancellor Angela Merkel. She told a science conference in Berlin that Europe must act "swiftly" to tackle the sovereign debt crisis to ensure the bloc remains internationally relevant. "We need to move swiftly because the world is not waiting for Europe," said Merkel.
  • 12:37

    Dr Merkel also said the situation in Europe is so unpleasant now that it is time for changes in the European Union Treaty.

    She said declarations of good intent are no longer good enough and that genuine structural reforms that can be checked are needed. She said the political community will not survive if it is not capable of changing and that countries' responsibilities cannot end at their frontiers.

  • 12:38
    Greek Prime Minister George Papandreou will visit President Karolos Papoulias at 5 pm in Athens today to tender his resigation and announce the formation of a new national unity government, state-run NET TV said.
  • 12:39
    No news yet as to who will replace Papandreou as prime minister...
  • 12:40
    JimW The bond markets clearly don't have a clue what they actually want. Yesterday we were told that Berlusconi was the problem with regard to Italian bond yields. But now when he's confirmed his resignation they've risen to their highest level yet which seems to indicate that he WASN'T the problem. It seems that once the markets get something they want, they then just move to the next thing. They clearly won't be happy until they have brought the whole financial system into ruin.
  • 12:43
    Berlusconi has a history of making colourful remarks, with his tenure coming to a close here's a selection of some of his finest: http://www.irishtimes.com/newspaper/breaking/2011/1109/breaking24.html
  • 12:51
    Dave L Hear hear Jim. What is the solution now? Extensive purchase of bonds by the ECB?
  • 13:08
    British prime minister David Cameron has described the Italian bond yields as “totally unsustainable” and that Britain would only step in to help through the IMF if euro zone leaders were prepared to sort out their own problems.
  • 13:09
    “It’s a lesson for all of us to have sustainable plans to get on top of our debt and our deficits. In terms of Europe, the problems of contagion is that as we agree a decisive write-down of Greek debt, people inevitably start asking questions about other countries,” he said in the House of Commons.
  • 13:09
    Tracy The powers that be won't be happy until Europe is one political and economic and social entity......that's the plan. Merkl has just said so.....she says "no total union, no peace" - is she threatening us?
  • 13:10
    Jim - markets of any sort don't like uncertainty. Berlusconi's departure date hasn't been confirmed, there may or may not be elections in February and who is going to run the country in the meantime? That's what the bond markers are reacting to.
  • 13:17
    Our colleague Ruadhán Mac Cormaic tweets: "France's cost of borrowing on the rise this morning. Passed a euro-era record against German bunds last week"
  • 13:30

    Reuters is reporting that US Treasury debt prices have risen today with the debt crisis in the euro zone driving investors back into US bonds, despite their extremely low yields. The Treasury Department is preparing to auction $24 billion in 10-year Treasury notes at 1pm (6pm Irish time) today

  • 13:46
    Lunchtime market update: European stocks are down sharply this lunchtime over the political uncertainty in Italy and doubts a new administration can tackle its debt mountain. The early rally petered out and Italy's benchmark FTSE MIB index is down 4.1 per cent, with banking heavyweights Intesa SanPaolo and UniCredit , which have high exposure to sovereign bonds, falling 4.4 and 5 per cent respectively. In Dublin the Iseq is down 0.65 per cent and London's FTSE 100 fell 1.78 per cent.
  • 13:46
    JimW Tracy - The convergence criteria for the Euro were that governments should generally run the same economic policies and keep within a certain deficit for spending. The problem was that the political will to do that wasn't there. But if the Euro is to survive then governments are going to have to face up to the issue that they can't just run economic policy as if they are on their own. That's that political debate that has to happen now and it involves sacrifices for Germany just as much as the other Eurozone countries.
  • 13:53
    technopolitics When Germany and France each breached the deficit guidelines in the stability pact, the Union collectively shrugged. That set the tone for how important fiscal responsibility was in the Eurozone. It amplified the scale of the crisis we now find ourselves in. The impotence is borne of a halfway house - no independent currencies, no single coherent currency regime. Either we have full political union, and through that support a currency, or we have no currency union, and revert to a loose coalition of broadly aligned trading partners. Nice experiment, didn't work.
  • 14:07
    Reuters is reporting on Greek attempts to find a "technocrat" to lead the "100 day coalition".

    European Ombudsman Nikiforos Diamandouros, who handles complaints against EU institutions in Strasbourg; the country's representative at the IMF, Panagiotis Roumeliotis and Vassilios Skouris, the president of the European Court of Justice are among the names linked with the job.
  • 15:06

    Some news from the US: After the opening bell in New York, the Dow Jones industrial average dropped 229.17 points, or 1.88 per cent, to 11,941.01. The S&P 500 fell 27.40 points, or 2.15 per cent, to 1,248.52 and the Nasdaq Composite lost 60.76 points, or 2.23 per cent, to 2,666.73.

  • 15:08
    KB Any news on Spanish bonds are they rising as well?
  • 15:09
    Spanish 10-year bond yields opened at 5.63 per cent and are now at 5.82 per cent. Spain's two year bond yield is at 4.55 per cent, up about a quarter of 1 per cent
  • 15:16
    Outgoing Greek prime minister George Papandreou and President Karolos Papoulias are due to meet at 4pm. Still no word on the identity of his successor yet.
  • 15:21
    Back to Italy, here's a gallery of Silvio Berlusconi's tenure as prime minister, with guest appearances from the likes of Obama, Putin and Gadafy: http://www.irishtimes.com/blogs/gallery/2011/11/09/silvio-berlusconi-a-political-career/
  • 15:26
    While we await further developments in Greece and Italy, here is European Correspondent Arthur Beesley's take on the current state of play in the euro zone: http://www.irishtimes.com/newspaper/finance/2011/1109/1224307251958.html?via=rel
  • 15:31
    Dave L Why are we hearing nothing from the ECB or our dear leaders.....
  • 15:35
    A quote from a Reuters report on the developments in Italy suggests the earlier difficulties in the euro zone were mere child's play.
    "In a sense Greece, Portugal, Ireland have been side shows," said Ken Courtis, an investment manager who used to be vice-chairman of Goldman Sachs in Asia. "With Italy, we are moving to the main event. There is simply no way that Italy can conduct the massive refundings it has in the coming weeks with this situation. With these developments, the zone of global risk is set to dramatically increase."
  • 15:36
    Several sources now suggesting the Greek parliamentary speaker Filippos Petsalnikos may be appointed to head an interim government, including the Athens daily nespaper Proto Thema. Finance minister Evangelos Venizelos was also named as a possible choice to become prime minister, the newspaper said.
  • 15:37
    And our man in Greece Damian Mac Con Uladh has been in touch to point out that Reuters is reporting that Greek parliamentary speaker Filippos Petsalnikos is to be the country's next prime minister.
  • 15:44
    German Finance Minister Wolfgang Schaeuble told his cabinet colleagues that Italy should seek assistance from the European Financial Stability Facility (EFSF) if it needs it , according to a Bloomberg report, which cites two people present at the meeting.
  • 15:47
    Italy's president Giorgio Napolitano has issued a statement saying a new government will be formed shortly or parliament will be dissolved. Also states there's no uncertainty over Prime Minister Silvio Berlusconi's pledge to resign and Italy will approve austerity legislation "within a few days."
  • 15:55
    Dow Jones now reporting that the speaker of Italy's lower house of parliament has said that they are aiming for definitive approval of the financial austerity package by Sunday
  • 15:59
    Papandreou is making a statement on TV. He says the Greek political parties have joined together in order to consolidate the obligations under the Greek-EU bailout. Protecting this agreement is a "complete national priority".
  • 16:00
    URGENT: Greek MP's have agreed on house speaker Filippos Petsalnikos to head the country's new coalition government
  • 16:01
    We are just touching the tip of the iceberg: we have to deal with tax evasion, we have money invested overseas and not in our country and the new government needs to work more effectively on these issues to guarantee the social justice that all Greeks desire.
  • 16:06
    In his resignation statement Papandreou thanked all those in the cabinet who had helped Greece to secure the time that was required. “Thanks to your efforts Greece continues to hope and to battle on. I wish every success to the new prime minister and the new government.”
  • 16:13
    Our man in Paris Ruadhan Mac Cormaic (@RuadhanIT) has tweeted: Spread between French and German 10-year bonds has hit a new record of 148 pts. A year ago, it was just 45 #euro
  • 16:15
    Confusion in Athens: Papandreou resigns but hasn't names successor even though it's widely reported to be Filippos Petsalnikos
  • 16:23
    Damian Mac Con Uladh has been in touch from Athens to say Greek MPs have not agreed on the new prime minister. They haven't been asked. The leaders of the country's two main parties have, however
  • 16:33
    More from Damian Mac Con Uladh in Athens: It's hard to believe, but Papandreou didn't explicitly announce his resignation in his address. He is now in the presidential mansion for a meeting with the president, Karolos Papoulias, and other party leaders.
  • 16:34
    Outgoing Greek prime minister George Papandreou addresses the nation during a televised resignation speech this afternoon.
    Outgoing Greek prime minister George Papandreou addresses the nation during a televised resignation speech this afternoon.
  • 16:53
    Bad day for European stocks. Equities fell for the third day in four after the spread between Italian and German bond yields widened to the most since the
    introduction of the euro and Italy's credit-default swaps jumped to a record.    

    HSBC, Europe's largest bank, retreated 6 per cent. Nationalised lender Dexia slumped 11 per cent as the lender said its shareholder equity shrank because the Belgian government nationalized its unit in the country.  The Stoxx Europe 600 Index fell 1.7 percent to 236.48 at the close.

    National benchmark indexes fell in all of the 18 western European markets. France's CAC 40 Index sank 2.2 per cent. Germany's DAX Index  retreated 2.2 per cent. The U.K.'s FTSE 100 Index lost 1.9 per cent.
  • 17:19
    Latest from Damian Mac Con Uladh in Athens: A furious Yiorgos Karatzaferis, leader of the rightist Popular Orthodox Rally (Laos), the country's fourth party, emerges from presidential mansion and says: "In this moment of crisis, Papandreou and Samaras have no right to play tactical games." There had been suggestions that Laos might take some cabinet seats, but that seems unlikely now. It is understood that Karatzaferis rejected the choice of Filippos Petsalnikos, who is a veteran Pasok politician, for the post of PM.
  • 17:31
    Italian finance minister Giulio Tremonti is at the Senate to deliver the austerity bill that must be approved by Parliament before Prime Minister Silvio Berlusconi makes good on his pledge to resign
  • 17:42
    Italy's Senate will vote on the government's proposed austerity bill on Friday, according to Roberto Calderoli, minister for legislative simplification. The legislation won't include a wealth tax, said Calderoli, a member of the Northern League party that's part of the governing coalition
  • 17:57
    Reuters are reporting that German and French officials have discussed plans for a radical overhaul of the European Union that would involve establishing a more integrated and potentially smaller euro zone.

    Speaking to students in Strasbourg today, French President Nicolas Sarkozy said a two-speed Europe - the euro zone moving ahead more rapidly than all 27 countries in  the EU - was the only model for the future.
  • 18:14
    Meanwhile in Greece the president's office has just announced that the meeting between George Papandreou and opposition leader Antonis Samaras has been postponed until tomorrow at 10am (that's 8am Irish time).
  • 18:25
    Silvio Berlusconi's political life is a disaster but his business is also suffering. Mediaset, the broadcaster controlled by Berlusconi, tumbled 12 per cent to €2.21 today.
  • 18:26
    That's it for today's live blog. Events in Greece and Italy will be updated on the website during the evening as events dictate