15 demands from the IMF/ECB/EU Troika which could be the Greek Default trigger

According to a letter published in a Greek newspaper VIMA, the EU and European Central bank
has demanded that Greece make 100,000 employees in state controlled companies redundant, in order to get the latest €8bn tranche of its EU/IMF loan.

On Friday European Finance ministers postponed a decision to pay Greece the next €8bn installment from the first EU/IMF bailout until such time as they had seen firm evidence that Greece was slashing its debts.

Now in an apparent email to the Greek government and published by an Athens newspaper, the Troika of EU, ECB and IMF lists 15 measures to be implemented.

They include making 100,000 civil servants redundant by 2014 and starting tomorrow. Pensions and overtime payments are also to be cut, TV stations closed, heating oil taxes raised and privatisations sped up.

The measures could divide the Greek government which is discussing the issue this weekend. Greece already has over 16% unemployment and a rapidly shrinking economy. It’s feared that the severe measures demanded by the Troika could increase the number of protesters on the streets and make default more rather than less likely.

15 Measures


Issuance of ministerial decisions to cut contracts without a fixed term and in all institutions of government (including teachers, to meet the objectives of the Medium Term Plan).


Issue presidential decree / ministerial decisions on the implementation of employment mode, extending the measure to all public bodies and immediate written notice of officials in introducing a system backup.


Issuance of ministerial decisions for equalizing the tax on heating oil and fuel.


Be regulated by the retention as a means for collecting the solidarity surcharge.


Cuts in pensions for beneficiaries of NAT and OTE.


Crop subsidies at the post office for handling the press and issue a ministerial decision to legislate directly.


New legislative framework for the pay status to the State, with cuts in allowances and overtime.


Freeze basic and supplementary pensions by 2015.


Redefinition of the arbitrary fines and immediate adoption of the new Master.


Issuance of ministerial decisions to close / merge 35 agencies described in the Term and closing an additional 30.


Issuance of ministerial decisions to close / merge: CGC, RTD, ODDY, National Youth Agency, EOMECH, IGME, OSB, DEPANOM, Themis, ERT.


Issuance of ministerial decisions on registration of immovable and movable property …. passing under the control of the state.


Issuance of ministerial decisions on a) the determination of all social benefits and health benefits, b) signing of collective agreements (16) private hospitals and health centers c) signing of contracts between hospitals of the NHS and private hospitals for the leasing of beds.


New law to reduce the pensions of OGA


Legislation to establish reductions in drug prices and signing contracts with pharmaceutical companies for immediate application / Introduce ‘insurance’ money for pharmaceutical companies.

My thoughts on this – live reaction on BBC News


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G8 Finance Ministers pledge $38bn in aid to souther and eastern Mediterranean countries such as Libya and Egypt

Finance ministers from the worlds richest countries have been meeting leaders from Arab Spring countries to discuss reconstruction and development. Representatives from Libya, Egypt and Tunisia also met officials from the IMF and European Bank for Reconstruction and Development in Marseille who pledged a package of aid worth $38bn to boost reconstruction and democracy

The G7 group of rich industrialised countries -plus Russia – said it would provide a programme of support to Morocco, Jordan, Egypt and Tunisia. Although Libya wasn’t formally added to that list, its representatives attended today’s meeting in Marseille.

The countries were told that a pool of $38bn in aid would be made available to countries in the southern and eastern Mediterranean aid recobnstruction and the move towards democracy. It’s understood that sum would be funded by multi-national bodies such as the IMF, World Bank and the European Bank for Reconstruction and Development.

The Chancellor George Osborne said he saw the EBRD playing a similar role in the Middle East as it played in eastern Europe after the fall of communism in the early 1990s.

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Why the markets – like teenagers – need a hero

Few of us who covered the financial crisis in the Autumn of 2008 will ever forget it. Banks were collapsing, trillions were lost and the deepest ever recession was initiated.

It looks like we’re back there once again. A lot of the traders who I speak to are very pessimistic. But the difference between them and you or I is that their gloominess has a very real impact on millions of lives as they dump shares for fear of being left holding a valueless asset. A keystroke in a trading room in Canary Wharf can lead tsunami-like to companies on the other side of the world sacking thousands of employees, governments slashing spending or raising taxes and retirement savings for you and me all but evaporating.

Why are they selling? Well like confused teenagers, they are yearning for some sort of leadership to take control of the crisis on either side of the Atlantic.

In Europe, squabbling and procrastination has meant that the Eurozone’s very existence is up for grabs – with all the nasty consequences that entails for all of us. Traders want someone – ideally Angela Merkel -to put her foot on the proverbial ball and make some hard decisions before the single currency becomes an ex currency.

Stateside, it seems as if President Obama’s hands are tied behind his back by his Republican opponents as he tries to get America growing again while cutting its enormous deficit simultaneously

Where will this end?

I fear it wont end soon. Not as long as Europe and America remain open democracies – necessitating the regular blessing of electorates. And unlike 3 years ago when Governments bailed out banks, this time neither banks nor governments have any money.

Which means we all need to hope that this spasm of market fear passes and sensible future-proofed decisions are taken – and soon.

This – alas – is the glass three quarters full scenario.

The real danger is that we have just started a decade of anaemic growth which will relegate Britain, America and the Eurozone to mere spectators as China, Brazil and India take over the reigns of economic power while our standards of living flat-line at best.

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Hacking scandal set to diminish UK Plc

Every year Transparency International publish their Corruption Perception Index. It’s a guide to bribery and graft in every country in the world and based on information from respected organisations such as the World Bank, EU, OECD etc.

For reference purposes, the Index top spot or least corrupt country in the world, usually goes to Canada, New Zealand or a Scandinavian country with Denmark number One as we speak.

Last year Britain came 20th in the world but as recently as 2006, it was 12th.

I’ve spoken to the UK head of TI and he told me that the recent phone hacking and police corruption scandal would almost certainly have a negative impact on Britain’s rating when the next Index is published in November.

This matters since Multi National Corporations (MNCs) look at a whole host of factors before they decide where to open (or close) a factory or investment hub. They look at the obvious stuff such as talent pool, tax rates, transport links, wage costs etc etc. But these highly mobile MNCs also look at esoteric and intangible stuff such as quality of life and the degree of corruption.

If an MNC sees that British police like a quick backhander every now and then or company executives might have their private conversations listened to by nefarious and (hither to) politically unaccountable newspapers, they may just think twice before they park their billions in Blighty.

If Britain was to drop 20 places in the next TI index, it would in theory be more corrupt than Bhutan, Botswana and Mauritius. 19 European countries would stand above it!

This means that UK Inc could suffer in Pound, Euro and Dollar terms when it’s trying to get its record deficit down to a manageable level by encouraging people to invest there.

Here’s the latest survey: http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results

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Clegg: “incredibly worried about Eurozone crisis”

Nick Clegg has said he’s ‘incredibly worried’ about this developing crisis in the Eurozone. Speaking on the BBC the Deputy prime minister said that the situation could have a direct impact on millions of UK jobs.
His words come after a week in which the sovereign debt crisis appears to have spread from Greece and Portugal to much larger Italy.

Nick Clegg said that “the gravity of the growing sovereign debt crisis in America and the Eurozone was immensely serious” and that “people in the UK were mistaken to ignore the issues which could affect millions of people in Britain.”

The deputy Prime minister was speaking ahead of a conference call of Eurozone finance ministers this evening and an emergency summit on Thursday at which the escalating crisis will be discussed.

Last week, the cost of borrowing for Europe’s 4th largest economy, Italy, soared to the kind of levels which forced Greece, Portugal and Ireland into EU and IMF bailouts.

The remaining European Union bailout fund is roughly a third the size of Italy’s £1.4trillion debt mountain.

Many observers believe that some sort of sovereign default is unavoidable.

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Interesting compromise plan doing the rounds to alleviate Greek crisis

There’s a piece in the Figaro today which outlines a suggestion which is supposedly doing the rounds at the EU Council in Brussels on Friday which is gaining a bit of traction according to French media

It contains elements of full payback, partial debt rollover, private sector ‘participation’ and a 30 year time frame for some debt in order not to have to revisit the issue again soon

Based on my French and a bit of help from Google Translate, the plan being proposed by BNP Paribas looks a bit like the following:

It envisages only 70% of the maturing Greek debt being rolled over.

50% of the debt would be allocated to new Greek loans with a maturity of 30 years at interest rates akin to the rate being charged by the Troika (IMF/EU/ECB).
20% being placed in a risk free ‘zero coupon’ bond which would fund itself.

The remaining 30% of maturing bonds would be paid back in full by Greece to senior bondholders as planned.

Feel free to correct my effort

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BIS: Biggest banks must hold even greater capital buffer on top of Basel III

Central banks from the worlds largest economies have agreed on a set of proposals which could force large and heavily interconnected banks to set aside even more capital. Proposals from the Group of Governors and Heads of Supervision hope the … Continue reading

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