Top Economics News

The three party leaders of the coalition government in Greece have agreed on a reduction in public spending of 1.5% of GDP in 2012 and will give an answer to the proposal of credit ; the country's international nancial Monday at noon (1000 GMT).

"Political leaders should give an answer in principle tomorrow afternoon (European Union)," he told reporters Panos Beglitis, spokesman for the Greek Socialist Party (PASOK ) on Sunday.

They will then discuss the plan of the troika (International Monetary Fund, European Commission and European Central Bank) at a meeting chaired by Prime Minister Lucas Papademos.

"There will be a meeting of political leaders chaired by Papademos tomorrow afternoon," said Beglitis. 

The chief minister said for his part that the various managers of the government coalition have agreed on a reduction in public spending by an amount equivalent to 1.5% of GDP this year.

This includes measures to reduce salaries and benefits costs to make the Greek economy more competitive, he added.

He also confirmed the meeting of heads of coalition parties on Monday to conclude negotiations on the second aid package of 130 billion euros to be implemented by the mid-March to avoid a collapse of public accounts.

BAROIN OPTIMISTIC

Creditors of Greece had requested a reduction in spending worth one percent of GDP, slightly more than two billion euros for 2012. 

The negotiations on the restructuring of the Greek debt held by the private sector rose "relatively well", said his side the French Minister of Economy and Finance, Sunday .

"I think it progresses smoothly on the part of private sector involvement to be made on a voluntary basis," said Baroin under the "Grand Rendez-Vous "Europe 1-Le Parisien-i> Télé.

"We would not get away from the level at which one must move the Greek debt in 2020, that is to say around 120%," said the French minister. And "it is because we do not withdraw these objectives that the discussions are difficult," he said.

"Anyway, it's later than February 13," continued Baroin.

February 13 is the deadline posed by the euro area to launch the operation, which should bring the Greek debt around 120% of GDP in 2020 against over 160% today.

The private sector should accept a discount of around 70% of its obligations under the exchange program of the Greek debt. This will help to lower than 100 billion euros of debt of Greece.

In exchange for a loan of at least 130 billion euros by 2015, the troika of institutional creditors requires further structural reform and further reforms of austerity authority to clean up its public accounts.

Troika calls including a lowering of wages in companies and supplementary pension, which measures face many political and union resistance.

In the absence of an agreement, Greece is threatened with failure to pay on 20 March, when mature 14.5 billion euros of bonds.

After the loss of triple A, the real estate professionals were inclined rather to an increase in lending rates. But the opposite occurs in February, according to the online broker best rate.

Contrary to the fears widely reported by the loss of triple-A, mortgage rates are down slightly for this month. This is apparent from a study of online broker, Meilleurtaux.com. In February, 45% of banks show declines of 0.15 points on average, 31% have left the stable. Only 24% have made gains. Overall, the average credit rate stood at 4.28% against 4.31% in January.

OAT rates down

"We do not expect this result" surprising Sandrine Allonier, head of economic research meilleurtaux.com. It must be said that the rate of OAT (comparable Treasury obligations), that is to say the rate at which France takes the 10-year bond has not increased. The Hexagon borrows at preferential rates. And on the contrary, it borrows a better rate. "For example, in February it reached 2.89%, whereas before the loss of the triple A, it was 3.40%," says Sandrine Allonier. Second explanation, the rates of the European Central Bank (ECB) and the interbank rate, the interest rate charged between banks themselves, remain stable. Finally, the loss of the AAA had been anticipated by financial markets and banks have rebuilt their capital. Consequently, they can lower their lending rates long and short term.

March, the month in real estate transactions

"Presumably, this slight decline will continue in March, one month is very rich in real estate transactions." Banks are trying to position themselves in relation to competition. Hence their strategy to attract new customers by lower lending rates in the long and short term. "Some had rates at 4.30%, which rose 4% in February. These banks want to take their game," said Ms. Allonier. Before continuing, "the banks are still selective about the cases. All require a contribution of 10%."

Apply for credit up

The increase in the number of credit reports is the second conclusion of the study meilleurtaux.com. A figure up 20% compared with December, while still down 2% year on year. Borrowers do not turn away the real estate market. There are still a safe haven, especially since many of them expect lower prices in 2012, "the order of 5% in some areas," said Sandrine Allonier. However, "there is a caution for future buyers: they are occasionally more likely to assess their borrowing capacity before they have found a property. Those who led a project with a signed sales agreement fell 4% over a year. "

The rapid increase of the debt crisis in the euro area threatens the credit ratings of all European states, warned Sunday the U.S. rating agency Moody's. Moody's in New York.

In a "special comment" on European countries published Sunday, Moody's says it still considers that the euro area will maintain its unity without any fault as that of Greece, but notes that even this' scenario 'positive' carries consequences very negative for the notes "of European countries. The U.S. rating agency, recently warned that France could lose its "triple A" allowing it to borrow at favorable rates in the markets, and clearly indicates that no country, even among those considered most solids, such as the Netherlands, Austria, Finland or Germany, is immune to a lowering of note.

Other countries may need help

While countries such as Italy and Hungary have more and more difficult to obtain financing at rates viable markets, Moody's wrote that "the political momentum to implement an effective solution to the crisis could n ' be found after a series of shocks, which could lead more countries to be deprived of access to funding markets for an extended period. " The agency is referring to countries like Ireland, Greece, Portugal or Hungary, which have benefited from one or more financial rescue from the European Union or the International Monetary Fund. She said other countries may need to use this kind of solution if the EU fails to quickly find an adequate response to the crisis, these countries would then most likely lowered their rating to that of a investment "speculative."

The new Italian Prime Minister revealed the composition of his government. In addition to its status as prime minister, he will take the reins of the Ministry of Economy at a time when the country is under pressure from the markets. Mario Monti.

The new Italian Prime Mario Monti said on Wednesday it would also economy minister, after his team presented to the President of the Republic Giorgio Napolitano. The former European Commissioner, 68, was named to replace Silvio Berlusconi as head of government while Italy is in danger of suffocation from the weight of its debt.

Monti also decided to create a large Ministry of Development, Infrastructure and Transport told the boss that the second national banking group Intesa Sanpaolo, Corrado Passera. Mr.Monti said the combination of these three portfolios within the same department by the "logic" to "put more centrally coordinated initiatives for economic growth."

Other key ministries were entrusted to experienced technocrats: Foreign Affairs to Ambassador Giulio Terzi di Sant'Agata, the Defense Admiral Giampaolo di Paola, the Interior to Prefect Anna Maria Cancellieri. Corrado Clini, Director General of Ministry of Environment in the last 10 years, was appointed minister. The government of Mario Monti has a total of three women who take charge of Justice, Interior and Labour and Social Policy, said Mr Monti.

After the Senate Friday, the Italian Chamber of Deputies adopted late Saturday afternoon the law of financial stability, a step that paves the way for Berlusconi's resignation and the formation of a new government.

Berlusconi, who was unable to obtain an absolute majority Tuesday, promised to resign after the Italian parliament have endorsed the law of financial stability, requested by the European partners of Rome to restore market confidence in public finances Peninsula.

Silvio Berlusconi is expected to recover in the next few hours his resignation to President Giorgio Napolitano. It is the former European Commissioner for Competition Mario Monti should succeed him.

U.S. inventories of crude oil fell against all expectations last week, said Thursday the U.S. Agency for Energy Information (EIA).

Crude inventories fell 1.37 million barrels to 338.09 million. Economists on average had expected a rise of 400,000 barrels.

Gasoline inventories fell 2.11 million barrels (consensus: 300,000), to 204.17 million.

The reserves of distillates, which include heating oil, fell by 6.02 million barrels (consensus: -2.0 million) to 135.87 million.

The rate of capacity utilization of refineries dropped 2.7 points to 82.6%.

Around 3:50 p.m. GMT, U.S. crude reduced its losses, yielding 1.3% to 95.80 dollars a barrel.

Olympus still has the title fell 6.81% Friday, the market value of the Japanese and melted with about 50% since last Friday, the day he announced the dismissal of its chief executive Michael Woodford.

Investors have pushed the action and the manufacturer of cameras and optical instruments of precision to a low of two and a half years, adding to even more pressure on the group to be explained on unusually high consulting fees paid in connection with an acquisition and revealed by the ousted leader.

Olympus acknowledged Wednesday it had paid $ 687 million (498 million) in financial advisors in the purchase of the British manufacturer of medical equipment Gyrus.

These fees represent a third of the price of the acquisition, whereas traditionally they account for only 1% or 2% of the value of a transaction, according to a PriceWaterhouseCoopers study commissioned by Michael Woodford.

POLICE PROTECTION

The latter told Reuters on Thursday it had filed for protection under the British police after submitting new information to investigators British anti-fraud regarding fees.

In the data transmitted to the authorities by Michael Woodford, a former investment banker from Japan appears to be the central figure in the matter of fees.

According to these documents, Hajime "Jim" Sagawa was the owner of AXIS, a financial services company little known American who received the exorbitant fees reported by Michael Woodford.

Olympus, which denies any impropriety, said the fees had been paid to its subsidiary AXIS Axam Investments, a company registered in the Cayman Islands, including Hajime Sagawa was a member of the Board, the report of PricewaterhouseCoopers.

Reuters visited the home of the latter, a former Nomura banker, only to find that his wife, who assured that her husband had done nothing wrong.

INVESTIGATION OF SESC JAPAN

Michael Woodford has also written to the Securities and Exchange Surveillance Commission (SESC), the authority of the Japanese financial markets, asking him to consider the case Olympus.

An investigation by the SESC could take months. Financial Services Minister Shozaburo Jim said the policeman of the financial sector would work, but refused to comment on individual cases.

"Olympus has clearly withheld information to investors. And even if she is not guilty of actions contrary to law, management has breached its obligations vis-à-vis shareholders.It should take responsibility, "said Shigeo Sugawara, manager of Sompo Japan Nipponkoa investments in Asset Management.

Olympus may have to spend significant impairment likely to weaken its balance sheet. And even if, according to manager, many candidates would be interested in the instruments of precision optics group, no one would touch it before the case is improper fees paid.

The company is now worth some $ 4.5 billion.

Brokers have suspended their coverage of Olympus as key shareholders and require that the group be made public links between management and its financial advisors.

France and Belgium flew Tuesday to rescue Dexia, ensuring that both countries would take all necessary measures to ensure its funding while its share price collapsed and the specter of a rollback.

Following a board meeting of an emergency, the Franco-Belgian bank said in the night to consider measures to enable it to strengthen its financial structure, without, however, categorically rule out the scenario of a split, what 'She was still there just a few days.

Dexia shares had lost up to 38% in the morning Tuesday, reaching its lowest historical levels, then some limit its losses by early afternoon.

Around 2:00 p.m., Dexia lost 13.5% to 1.12 euro, while the European index of banks, although affected by the new fears of Greek sovereign debt, limiting its losses to 4.6%.The stock has lost 54% since the beginning of the year, bringing its market capitalization of 2.2 billion euros.

The scenario of a dismantling of Dexia as structural solution to the financial difficulties of the Franco-Belgian bank has not been formally denied by the Belgian or French.

A French government source said, however, "reject" this term, preferring to speak of a major asset disposal.

The group is mainly composed of a retail bank in Belgium, a private bank in Luxembourg, a division of funding for local authorities in France and banking Denizbank in Turkey.

Meeting in Luxembourg for a council of the European Union finance ministers Belgian and French said the two countries brought their guarantee to finance Dexia without specifying the terms of the transaction.

GUARANTEED FINANCING

"We guarantee funding.For the procedures, there are instances, let the time to organize these deliberative bodies (…) All we are saying is that states will meet present as in 2008, "said Baroin to press.

The question of a recapitalization by the States, would constitute a de facto quasi-nationalization has not been formally excluded.

"Everything will depend on the scheme presented by the management of Dexia," said his side the Belgian Minister of Finance.

Speculation about the future of Dexia also include the creation of a "bad bank", a bad bank that would separate confined bond portfolios at risk for the bank.

The creation of a new French bank – which would lean part of the portfolio of loans to local Dexia to those of the Deposit and the Post Bank – also seems likely.

The possibility of a sale to another Dexia European banking group, on the model of Fortis sold to BNP Paribas, has not favored by analysts, investors, stressing that Dexia is not salable as such.

The announcement Sunday that Greece would not take the objectives of fiscal consolidation has aroused the distrust of investors and markets, accelerating the pressure on the most vulnerable groups such as Dexia.

The Greek authorities have promised Sunday drastic measures to avoid non-payment of debt interest payments and get the next tranche of international aid, but have not announced anything new.

George Papandreou, head of government, gave up a visit to the United States to chair a cabinet meeting on the eve of a crucial deadline for the release of this new installment.

His finance minister Evangelos Venizelos will present Monday, as part of a teleconference, the plan of fiscal consolidation to inspectors of the European Union and the International Monetary Fund (IMF), which will decide whether to release the eight billion euros, of which Athens will be needed in October.

After the Council of Ministers, Evangelos Venizelos stressed the need for budgetary targets for 2011 and 2012, and the deficit next year.

"I want to avoid a default.To stabilize the situation, to remain in the euro area (…), we must make strategic decisions, "he said without further detail.

The government will meet again after his meeting with the inspectors to detail the measures adopted.

Fault of payment of that portion of eight billion euros, Greece is insolvent next month.

This week, the government blamed the widening deficit in a recession stronger than expected and decided to impose a new property tax which he expects around two billion euros per year.

The "troika" formed by the inspectors of the IMF, the EU and the European Central Bank (ECB) may, however, that this tax does not change the situation and really requires more information on how the government intends to do it to correct the public accounts.

"The troika believes that the recently announced property tax alone will not bridge the budget deficit and pushed for conservation measures, downsizing and wage in the public sector," said a senior Greek.

OPPOSITION wants to renegotiate

International donors are also concerned about the lack of political consensus on how to implement out of the crisis.The conservative New Democracy, spurred by a growing popular discontent after two years of austerity, propose them, measures to boost growth.

Their leader Antonis Samaras called Saturday for early elections, saying that the path followed so far produced no results despite the sacrifices required of the population.

"A renegotiation with our donors to stimulate the economy is a condition to get out of this crisis," he said Sunday at a news conference.

The Socialist Party of George Papandreou has a majority in parliament, but internal differences associated with radical protests against the austerity could lead to early elections, say some observers.

In an interview with Bild am Sonntag, the German Finance Minister Wolfgang Schäuble considers that Greece must have a clear mind about his future in the euro area.

"Belonging to a currency union is an opportunity but also a heavy burden. The measures to align its very difficult and the Greeks must decide whether to bear this burden," he said.

"No one should kid ourselves: without a positive assessment by the troika of the commitments of Greece, the next installment will be paid.So the Greeks must have numbers proving that they stick to the plan. "

His French counterpart Francois Baroin recalled his part that the plan of aid to Greece was a loan, not a gift, save for the euro.

"The observers are in place, they continue their work.Greece knows what she has to do it we have said, she has commitments, she has duties vis-à-vis its creditors, it has the requirement to provide answers. "

In the meantime, the Greek newspaper Kathimerini writes Athens plans to make the country's banks credit guarantees of up to about thirty billion to enable them to access the emergency stop of the central bank.

Excluded from the interbank market, Greek banks have become dependent on the ECB for their refinancing, borrowing in its operations in the money market, in exchange for guarantees in the form of sovereign bonds and other assets.

American values ​​have appreciated Friday for the fifth consecutive day, on hopes that Europe finally managed to resolve its debt crisis.

Investors, however, warned that a strong back down was to be expected if no concrete solution does not materialize.

Present in Poland at the Ecofin meeting, Treasury Secretary Timothy Geithner urged European leaders to use leverage to multiply the response capacity of the fund "euro area", the EFSF, several sources reported high rank.

However, no agreement has emerged on what to do.

The Dow Jones closed up 0.66% or 75.91 points, to 11.509.09 while the S & P 500 gained 0.57% or 6.90 points at 1216.01.

The Nasdaq was awarded for its 0.58% (15.24 points) to 2622.31.

For the week, the three indices gaining 4.7%, respectively, 5.4% and 6.3%, accounting for the Nasdaq its best week since July 2009.

"Many questions remain unanswered, which means that the situation will remain fluid enough," said Mark Luschin, head of investment at Janney Montgomery Scott in Philadelphia.

"All we have to win the last five sessions may disappear."

As for values, Research in Motion, maker of the BlackBerry, has plunged 18.99% to 23.93 dollars, a day after announcing a sharp drop in quarterly profit.