Old and still drinking water and eating dry white toast.
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IMF Believes Greece Should Consider Debt Restructuring By 2012
WASHINGTON -(Dow Jones)- The International Monetary Fund believes Greece's debt is unsustainable and has told European government and central bank officials that Athens should consider restructuring by next year, three people familiar with the situation said Saturday.
"The IMF believes the debt situation in Greece is unsustainable," one of those people, who has direct knowledge of the matter, told Dow Jones Newswires. " Senior [IMF] officials have told the parties involved that restructuring should be considered soon," including the European Commission and euro-zone governments.
IMF spokesman William Murray denied the IMF was recommending a restructuring of all Greek debt, including that held by private holders, but the IMF has said the fund has considered extending the loan repayment schedule for Athens, a form of restructuring.
"So far we're working with the program as it has been established," IMF Managing Director Dominique Strauss-Kahn said, speaking at a press briefing at the close of spring meetings here.
"For this program to work, we need two things: We need the country to do exactly as we said in the program, even if it's difficult," Strauss-Kahn said of Greece. "We also need our partners, namely the Europeans, to also do their homework in terms of crisis management."
Greece Finance Minister George Papaconstantinou said Greece isn't looking to restructure its debt. "The pain and cost of restructuring would be bigger than the benefits," he said at the spring meetings of the IMF. "Restructuring is not the position of the Greek government."
A second official familiar with the situation said a number of senior euro- zone officials, including finance ministers, have told the European Central Bank that they believe a restructuring of Greek debt will be necessary, but the response was that "such issues should not be discussed in the open."
"The ECB is flatly against any form of restructuring because of contagion fears. France is also against it," the second official said.
The first official said the IMF believes Greek bond maturities must be " substantially extended as a minimum first step." Reducing the principal that Athens must pay to its creditors may also have to be explored, the official said.
The IMF will most likely extend the repayment period of the around EUR30 billion it gave to Greece from three to seven years to align with the extension granted by the euro zone last month, the second official said.
The IMF has said it is open to moving its Greek loan program from its stand-by lending facility, which usually has a three-year repayment schedule, to its extended fund facility, which is for repayments up to 10 years. The board hasn't voted on the transition, but an IMF official said members are aware of negotiations and open to the proposal.
The extended fund facility was used by Argentina. Such a rescheduling of debt payments is essentially a type of restructuring.
"There is no other policy tool to get the debt sustainable except restructuring, unless you come out of the euro, which is extremely costly," said a second IMF official. He said the situation has gotten to the point where the IMF can no longer sign off on its quarterly review of its Greek program because it is difficult to say whether the debt is sustainable.
"Going into a soft restructuring you have to do it in a way that the Greek banks are still solvent" because they still hold a significant portion--around EUR80 billion--of Greek sovereign debt, as does the ECB, the second IMF official said. But the policy instinct will be to lower the lending rates and reschedule the maturity for both the official-sector debt--including the IMF and European Union loans--and the market's debt to spread the pain around, he added.
This IMF position would be a change from its stance that Greece will be able to recover if it strictly adheres to a multiyear austerity program in return for the bailout it received from the IMF and euro-zone partners last year.
The first official said euro-zone governments believe Greece will likely tap the European Financial Stability Facility next year to service its debt repayments as it will be unable to return to bond markets. Greece has to raise about EUR30 billion through long-term issuance.
Greece's entire debt at the end of last year was about EUR340 billion ($490 billion). About EUR80 billion is held by Greek banks and funds, and EUR50 billion by the ECB. The EU and the IMF so far have given the country about EUR50 billion as part of the EUR110 billion bailout loan.
The scenario to be examined first will involve extending debt repayments by as much as 30 years, the first official said, where private bondholders could be offered new bonds in exchange for old bonds with the same coupon, but with a longer maturity. Another scenario could involve reducing Greece's coupon payments and extending maturity dates.
The European Commission, the EU's executive arm, is conducting a " sustainability review" with the IMF and aims to complete it in late spring or early summer, EU economics commissioner Olli Rehn told Dow Jones on Friday. This review is a normal part of the commission's quarterly economic assessments, but "this time it is of particular importance," Rehn said.
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I'm still holding out for the long term, this is only a minor dip.
I've been busy fighting an epic battle over the last three weeks.....yesterday WE lost our first battle but today WE our preparing to fight the long WAR.
Greece's Alpha sought higher bid from NBG
ATHENS, March 20 (Reuters) - Alpha Bank sought better terms from NBG after rejecting a bid last month by Greece's biggest lender, but there has been no follow up, a banking source close to the talks told Reuters.
National Bank (NBG) surprised markets in February with an all-share bid for Alpha and has since defended its planned takeover as a means to prop up Greece's banking system, which has grown dependent on ECB funding.
Alpha's willingness to bargain for better terms could be a sign that a tie-up is still possible, despite recent comments by its chief operating officer that a deal is dead.
In late February Alpha dismissed NBG's eight-for-11 share offer, which then valued it at 2.95 billion euros ($4.2 billion) as not being in its shareholder interests.
"The weekend that followed, Alpha counter-proposed a share swap ratio of 10 National Bank shares for every 12 Alpha shares, which was turned down in one hour and in a dismissive way according to its management," To Vima newspaper said on Sunday.
Alpha Bank was not available for comment on the newspaper report, while NBG made no comment.
Sources close to the discussions said last month Alpha was concerned about National's bigger exposure to Greek government bonds and felt NBG's offer, coming at a time of depressed shares, did not reflect the bank's real value.
Last week Alpha Bank's chief operating officer Spyros Filateros was quoted as saying that "this deal is dead".
A banking source close to the discussions told Reuters Alpha Bank had made a counter-proposal a day after rejecting NBG's offer but did not pursue it further.
"The counter-proposal, however, was not followed up by Alpha and a sudden withdrawal ensued," said the banker, who did not want to be named.
Market participants say NBG is in a position to improve its offer and do not rule out a deal down the road.
"I believe affairs like this get second, third and fourth thoughts, before one can say it's over, no deal," said Theodore Krintas, head of wealth managemnet at Attica Bank
"It is likely that NBG will come up with a sweeter offer, there is no other way for a deal to go through. This is what the market believes too," he said.
The latest data from Greece's central bank showed that ECB funding to Greek banks almost doubled last year, hitting 97.6 billion euros in December, about 19.5 percent of the Greek banking system's assets.
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MARCH 19,1865 – American Civil War: The Battle of Bentonville begins. By the end of the battle two days later, Confederate forces had retreated from Four Oaks, North Carolina.
MARCH 19,1885 – Louis Riel declares a Provisional Government in Saskatchewan, beginning the North-West Rebellion.
MARCH 19,1916 – Eight American planes take off in pursuit of Pancho Villa, the first United States air-combat mission in history.
Euro zone leaders strike deal on debt crisis
(Reuters) - Euro zone leaders reached a deal in principle on Saturday on making the 440 billion euro ($611 billion) bailout fund more flexible, and also agreed other elements of a comprehensive package to resolve the debt crisis, two EU sources said.
"A deal has been reached to make the EFSF more flexible," one diplomatic source said, referring to the European Financial Stability Facility, set up last year and used to bail out Ireland. Another confirmed that a deal had been struck.
"There is also a deal on other parts of the comprehensive package," said the first source, although he said he couldn't provide details as elements were still being finalized.
He said "technical experts" were drafting a statement for the 17 euro zone leaders and they were expected to sign off on it shortly.
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Can you add it as a sticky....it's gonna take some time to watch.
Greek Tourism Gets Boost From North African Political Turmoil
March 3 (Bloomberg) -- Greece may get a 10 percent increase in tourist arrivals this year because of the political turmoil in North Africa, according to the head of the nation’s hotel association.
Early bookings for the spring and summer season from Britain, which accounted for 14 percent of the 15 million tourists who visited Greece in 2009, were more than 10 percent higher than a year earlier, said Andreas Andreadis, president of the Hellenic Hotel Federation. German reservations rose as much as 5 percent while Russian bookings increased about 20 percent, he said.
“It looks like we’re getting a part of the family business that was going to Egypt and Tunisia,” Adreadis said in a telephone interview yesterday. “Families book relatively early and they’re more affected by the fear of uncertainty or that something might happen.”
Greece is counting on tourism, which accounts for 16 percent of gross domestic product and employs almost a fifth of the workforce, to spur an economy that’s now in its third year of recession. The industry was hit last year as government budget cuts triggered violent protests and strikes at ports and airports.
Income from international tourism dropped 8 percent in 2010 as hoteliers slashed prices, according to figures from the Association of Greek Tourism Enterprises. Discounting helped limit the drop in tourist arrivals to 0.6 percent after a 6.4 percent slump in 2009.
Factors supporting the industry this year include a stronger economic performance in the rest of Europe and a cut in tourism sales tax introduced in January, which is helping prices stay competitive, Andreadis said.
“What we hope is that if the booking trend continues the late booking discounts will not be necessary this year,” he said. “Income could increase, not on a par with the arrival increase, but not very far away.”
Manny Fontenla-Novoa, chief executive officer of Thomas Cook Group Plc, Europe’s second-largest tour operator, said this week that bookings for Greece had seen a “real comeback.”
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Greece: NBG-Alpha tie up would be credit positive- Moody’s
A merger between Greece's largest lender National Bank (NBG) (NBGr.AT: Quote) and Alpha Bank (ACBr.AT: Quote) would help the new entity's credit position, ratings agency Moody's said on Monday.
NBG surprised the market with a bid for smaller rival Alpha Bank earlier in the month, but the move was rejected by Alpha. Greece has called on banks to explore tie-ups to better cope with the country's debt crisis. [ID:nLDE71K07N]
"If the merger proceeds, it would be credit positive for the combined entity, given the opportunities for cost synergies and franchise expansion, especially in southeastern Europe," Moody's said in its weekly credit outlook.
Moody's said challenging operating conditions and possible resistance from labour unions to the merger could trim the projected synergies, but a good portion of the proposed tie-up's goals looked achievable.
It said both banks' ratings were still on review for a downgrade as their domestic franchises faced challenges from asset quality, funding and profitability, mainly stemming from Greece's sovereign debt crisis.
Moody's said the combined entity would be dependent on an estimated 37 billion euros in European Central Bank funding and would have around 25 billion euros of exposure in Greek government bonds, nearly twice its combined Tier 1 capital.
"Despite Alpha Bank's rejection, NBG continues to promote the merger proposal with the market and investors, which in our view suggests that NBG is either pursuing a hostile public offer for Alpha or that it will propose a revised bid," Moody's analyst Constantinos Kypreos said.
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ETE:NBG - PRICE/ADR Conversion
ETE (Athens Market): 7.570 EUR
Conversion based on 1.3698
Dollar: $10.3698
ADR Ratio: 5:1
NBG (US Market): $10.3698 /5 equals $2.07 dollars
ADR Ratio
Euro Rate Graph
I removed them because I thought that it was basis information that nobody cared about...
Euro Aims for $1.40
NEW YORK—A hawkish tone from European Central Bank President Jean-Claude Trichet at the central bank's policy meeting this coming week could push the euro toward $1.40, analysts expect, but the impact of Middle East upheaval on currencies remains a wild card.
The dollar will likely remain under pressure as market participants mull whether the U.S. Federal Reserve could extend its quantitative-easing measures, after some weaker-than-expected U.S. growth data. The Federal Reserve is also likely to keep interest rates low for an extended period, a view that may be underscored by Fed Chairman Ben Bernanke's testimony for lawmakers scheduled for Tuesday and Wednesday.
The end of the week brings the all-important monthly U.S. employment report.
St. Louis Federal Reserve President James Bullard, a nonvoting Fed member this year, said Thursday that a third Fed bond-buying effort isn't off the table, given tensions in the Middle East and rising oil prices as well as ongoing concerns about the financial health of some euro-zone governments, all of which could weigh on global economic growth.
Mideast tensions appear to have simmered, but they could boil over again at any time, weighing on the dollar and perhaps hurting the euro, said analysts. Traders continue to favor the safe-haven currencies of the Swiss franc and yen based on perceived U.S. vulnerability to any squeeze in global oil supplies.
Were Libyan leader Col. Moammar Gadhafi to depart, a potentially unpredictable power vacuum in that country could keep markets on edge for a while, said Paresh Upadhyaya, head of Americas G-10 FX strategy at Bank of America Merrill Lynch.
If the dollar turns out to be more vulnerable to Mideast tumult than the euro, this could prove a key week for the common currency of the 17-nation euro zone. That's because many in the market have already started pricing in interest-rate increases from the ECB starting later this year, analysts said.
This coming week "we'll know whether the euro will finally break the $1.40 mark or whether it will [remain indefinitely] stuck in the same range that it has been all year," Mr. Upadhyaya said. "We've had a lot of hawkish comments from ECB members lately and that has caused market participants to focus on yield differentials," which favor the euro.
Euro-zone debt tensions haven't been resolved, but the common currency has nonetheless plowed ahead this year on the expectation that inflation will trigger rate increases in the currency bloc before the U.S. or Japan.
And while many currency analysts predict ECB rate rises in the fall, others have bet on one much sooner, said Steven Englander, head of G-10 strategy at Citigroup in New York.
"The pricing has been very aggressive [and the market now] has more than a 50% risk of April hikes priced in," he said. "If Trichet uses the same [cautious] language as in previous meetings, there will be big selloff in [the] euro," he said.
The euro traded at $1.3753 late Friday in New York, compared with $1.3802 late Thursday. The euro was at 112.31 yen, from 113 yen. The dollar moved to 81.66 yen from 81.87 yen. The pound weakened to $1.6116 from $1.6138. The dollar moved to 0.9283 franc from 0.9262 franc.
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Greek Ruling Party’s Lead Over Opposition Narrows, Poll Shows
Feb. 27 (Bloomberg) -- Greek Prime Minister George Papandreou’s lead over the opposition slipped to the narrowest in a year as voters grew disenchanted with austerity measures to reduce the country’s budget shortfall, a poll showed.
The Pasok socialist party received 23.2 percent in voter preferences compared with 21.3 percent for opposition New Democracy, according to an MRB Hellas poll of 1,018 people for Real News newspaper.
The 1.9 percentage point difference declined from November, when the difference was 4 percentage points and has fallen steadily since February last year, when Pasok held an 11.4 percentage point lead.
Seventy-eight percent of those asked believed the government’s effectiveness was worsening, while 68 percent said the government had no plan to revive growth in the economy.
More than half, or 54 percent, believed Papandreou would fail to secure better lending and payment terms for Greece, according to the poll. Papandreou hopes European Union leaders will agree at a summit in March to lower lending rates on 110 billion euros ($151 billion) of loans extended by the EU and International Monetary Fund and to extend the maturities to help assuage market fears of a Greek default.
MRB conducted its poll Feb. 23-24. The margin of error is 2.5 percentage points.
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House Prices Fall Further as Greek Economy Struggles
A holiday home on the Greek mainland or islands has long been on many a wish list. The clear blue waters of the Aegean and the Mediterranean, a temperate climate, natural beauty, historical associations, clean beaches and a laid back lifestyle have made Greece a favorite with those looking for relaxation, fun and something different.
And there’s an interesting variety of homes on offer. While celebrities and millionaires buy villas and mansions on the islands or on the coast near Athens, others have lots to choose from among modern apartments as well as quaint rural houses. Prices range from as low as 20,000 euros for a cottage in one of the more remote villages to millions of euros for beautifully located luxury mansions and villas.
But of late, Greece’s economic woes have affected the demand for real estate. Last year as the country found itself in the throes of a sovereign debt crisis, the IMF and the EU approved a bailout to the tune of 110 billion euros on the condition that the government would implement stringent austerity measures in order to slash the country’s high fiscal deficit. The measures, which include public spending cuts, tax increases, privatizations and ways to control tax evasion, have taken their toll on the residential real estate market. Moreover, international media coverage of protesting public sector workers has deterred tourists and potential foreign buyers.
According to the Bank of Greece, the average y-o-y price decline for apartments in Q3, 2010 was 4.3%. In Athens, prices declined by 3.1%, in Thessaloniki, the average price fall was much sharper at around 9.7% and in other cities, average prices fell by 5.9%. Outside the cities, average prices dropped by 2.7%.
Given the uncertainty, prices are not expected to look up in the near future. At the end of 2010, Greece’s fiscal deficit stood at 9.4% of GDP, way above the EU maximum of 3%. Analysts are not optimistic about the government’s ability to trim the deficit to 3% within the stipulated period. Only a convincing economic recovery can stimulate demand for real estate in Greece again.
Also, over the last few years rental returns have fallen considerably, with the average rental yield on a small apartment in the heart of Athens being around 2.8%. Along the periphery of Athens, returns are slightly higher. In Crete, average rental returns on apartments are 3.5%. Investing in rental properties is not a good idea as of now.
There’s a silver lining to all this though. Declining house values could mean opportunity for those who’ve always wanted a holiday home on the Mediterranean. With prices likely to fall further, interested buyers would do well to start looking for bargains. In some places on the mainland and the islands, the prices of luxury homes have fallen by as much as 45% as a result of higher real estate taxes being imposed on high-end properties valued above 400,000 euros. Many properties are on the market but buyers are also reluctant to invest and have begun looking for homes in France or elsewhere. In such a scenario, buyers who are seriously interested have room to negotiate.
Investors, however, might want to look for definite signs of recovery before investing. According to the Greek Finance Ministry, the economy is expected to contract by 2.6% in 2011. Many analysts have expressed doubts about the country’s ability to resume borrowing from financial markets this year. On the whole, the outlook is pretty uncertain. Under the circumstances, investors are wary about the investment potential of Greek real estate.
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Greece Wants 1% Deficit By 2015
ATHENS (Dow Jones)--Greece wants to cut its budget deficit to 1% of gross domestic product by 2015, Finance Minister George Papaconstantinou said Thursday. However, he added that the nation's ability to emerge from its economic crisis will depend on decisions taken by European leaders next month.
Speaking at a news conference, Papaconstantinou said that by the middle of May, the government will announce deficit-busting measures equal to about 8% of GDP, or EUR19.5 billion, to be implemented in the years 2012-14.
He said that two thirds of that total will come from spending cuts, and one third from tax collections.
"We have set as a target to reduce the deficit to 1% of GDP, about EUR3 billion, by 2015," Papaconstantinou said.
Under the terms of a EUR110 billion bailout reached with the European Union and the International Monetary Fund last May, Greece has promised to slash its deficit to 3% of GDP by 2014, down from a record 15.4% in 2009.
Since then, Greece has cut its deficit by six percentage points of GDP, to about 9.4% last year, and is aiming to narrow it further to 7.4% this year.
Papaconstantinou said that those medium term measures will focus on spending cuts in areas such as healthcare spending and public administration, as well further reforms to Greece's tax system.
However, he gave no further details and also said that not all of the measures will be new--some have already been incorporated into the government's ongoing austerity program.
His remarks come a month before a crucial EU summit on March 24-25, at which EU leaders will decide on a comprehensive package of measures to address Europe's debt crisis.
Among the issues being considered is extending the repayment period for Greece to pay back its EUR110 billion loan; a lower interest rate on that loan; as well as a mooted plan to help Greece buy back tens of billions of euros in outstanding debt as a means to cut the country's staggering debt burden.
Greece's public debt is expected to peak at 158% of GDP by 2013 before slowly trending lower. Many investors fear that, despite the ongoing austerity measures, Greece will not be able to repay all of its outstanding loans, something that has kept market yields on Greek government bonds at relatively high levels.
"We have said we will fulfill all our commitments in the program," Papaconstantinou said. "At the same time, we have to say clearly that the path of the economy depends to a large extent, on the decisions that are taken within the framework of the ongoing European Union discussions."
Recent data show that Greece's recession has deepened, with the economy contracting a worse-than-expected 4.5% last year, with few signs of an upturn in sight. Joblessness has risen to 13.9%, while youth unemployment is a staggering 35.6%. Greece's retailers association, ESEE, estimates that 120,000 small businesses will declare bankruptcy this year.
"We all know that the ability of the country to exit more quickly from the crisis and, to a large extent, its ability to manage its debt, depends on those decisions," Papaconstantinou said. "But we still have a long road before us before final decisions are reached."
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No NBG protection needed, I added another 1000 shares on the last NBG dip.