Greece – Euro Zone Summit

With eyes turned to Euro Zone Summit and holding their breath Greeks monitor the overwhelming developments in Brussels, lurk for the slightest official or off the record comment that could hind or imply a positive or negative development for the Greek debt crisis. The aim is to reduce the massive Greek debt, to help Greek banks in order to avoid the collapse of the national economy that would cause an uncontrolled default. Euro zone member leaders are meeting in Brussels to help Greece with a second bailout rescue package.

Last night French President Nicholas Zarkozy and German Chancellor Angela Merkel spent seven hours together and reached an agreement in the early morning hours of Thursday, with the presence of ECB-Chief Jean-Claude Trichet.

From what is leaked to international media the second bailout package will be similar in size to the first one (€110 billion), and will include buying back of bonds, extension forepayment (15-30 years), lower interest rates at 3,5%. It will also include the participation of the private sector for some 10-30 billion euros, an option that may lead Greece to ‘selective default’ status by rating agencies. insuchcase,the ECB will continue to provide with liquidity the Greek banking system according to some Greek media.

The option of imposing an annual  bank tax levy  is most likely off the table as bankers threatened to go to court.

This morning Jean Claude Trichet implied that a selective default possibility should not be excluded:

“I am not in charge of explaining if yes or no there will be a selective default,” Junckertold reporters on Thursday. “You can never exclude such a possibility, but everything should be done in order to avoid such a possibility.” (Capital)

Also the Dutch Finance Minister Jan Kees de Jager implied the ‘selective default’ option saying that “Germany and France are agreed that a selective default on Greek debt is possible, enabling private sector involvement to solve Greece’s debt crisis” (Reuters)

Greece Prime Minister George Papandreou and Finance Minister Evangelos Venizelos held a meeting this mroning with Angela Merkel.

As the developments are continuous and news are falling like rain, I decided to do a sort of Live Blogging  from Athens in order to avoid small separate posts. Time explanation: 14:00 = 2 p.m.

14:00

President of Greece Central Bank Giorgos Provopoulos and Chairman of Greek Bankers Association Vasilis Rapanos are flying to Brussels after an unexpected invitation of Prime Minister George Papandreou.

15:00

Greece delegation has  defined the red lines of  a solution: sustainability of the Greek debt, costs reduction of the loans, ensuring banks liquidity, saving the Greek households.

15:26

The meeting between German Chancellor Angela Merkel, French President Nicolas Sarkozy, ECB J-C Trichet, IMF Christine Lagarde and George Papandreou. Also EC president J. M. Barroso and European Council president Herman van Rompuy are expected to join the meeting.

15:35

Athens Stock Exchange on the rise; 1,210,41 points and +2.20%

Spreads of Greek bonds down at 1.400 b.p.

15:44

from EU Greece rescue package: repayment extension 15 years, interest rates 3,5% , (unconfirmed info; Greek state NET TV)

16:31

The draft agreement on the table Thursday to be discussed by euro-zone heads of state and government on a second bailout package for Greece will “probably” lead to a ‘selective default’ (French source to Dow Jones )

16:32

Selelctive default here, selective default there, we most pobably have a Black Friday tomorrow….

17:05

EU Draft on Greece Bailout Leaked

“Eurozone governments have agreed to a new aid package for Greece and an overhaul of its rescue fund, Dow Jones Newswires reported, citing a draft on conclusions of European Union Summit.

According to the draft, the European Financial Stability Facility will charge rates as low as 3.5%, while the maturities of the loans it makes will be extended from an average of 7.5 years to at least 15 years.

Regarding private participation, the draft provides a menu of options” on how to help finance Greece΄s debt in the coming years, including debt exchanges, roll-overs or buy-backs.

Earlier, Bloomberg reported that EU leaders governments may guarantee Greek bonds to make it easier for the European Central Bank to accept a default of the indebted nation after months of opposition to such a move, according to two officials familiar with the talks.

Policy makers would aim to keep any period of default as short as possible, said an EU government official, who spoke on condition of anonymity because deliberations before today’s Brussels summit were confidential” (source: capital.gr)

 18:00

More and more details of the 14 points rescue package are leaked, a solution 5 minutes before 12 is on the Greek horizon. And yet! Without detailed elaboration and quick implementation we can proudly speak of a “Tragicomedy of Europe and the Greek Crisis“. Read our KTG-guest post sent by a Greek economics professor!

18:36

The full draft of the Rescue Package for Greece has been leaked to the press. Read ” Greece Rescue Draft: 14 Points Marshall Plan or Merkel Doctrine“

18:40

What will happen if we have an agreement  tonight that rating agencies will rate it as  “selective default“?

From what I hear, it will take some days until the decision is taken which bonds will not be paid. The Greek government had declared last week that it would ask the bonds currently in the hands of the Greek Insurance and Pensions Funds to be excluded. Furthermore it should be a decision will be needed on the length of the SD. Just days? Weeks? A couple of months?

The long Greek hot summer will definitely continue…

18:54

According to Bloomberg, there is a discussion on reducing the Greek debt by 20% or even 30%. By an official debt estimated at 350 billion euro (bailouts excluded) that could be 70 billion euro. In return the austerity will torture Greeks for many years to come.

19:29

Eurozone Summit Draft on Greek bailout – annotated by ft.com Alphaville

19:31

Athens Stock Exchange closed at +2.54, Greek banks jumped at 7.7%

If the prospect of ‘selective default’ is welcomed by the markets, I don’t know why I should have to worry.

I heard there is talk to celebrate next year the July 21st as national holiday and have markets traders and bankers parade at Syntagma Square.

20:12

‘Selective default” will last hours or days – Decision to be taken within the next weeks (Brussels correspondent, Greek ALTER TV)

20:43

Read Greek High Ranking Banking source revealed 8 points from the Eurozone “Greek Deal ; broadcast in Greek private TV at prime time news

Alternate Finance Minister : there will be no suspension of payments.

21:30 

ECB J C Trichet and Deutsche Bank CEO Joseph Ackermann negotiate with ratign agencies on ‘selective default’.

 22:00

Euzone summit ended

 22:08

French President Nicholas Sarkozy told reporters “It is a political decision, it concerns only Greece and not other countries”.

Sarkozy: Greece will save 30 billion euro from interest rates reduction.

22:16

First time a Eurozone country proves unable to pay its duties even temporary.

EU Doctors agreed on medicine for Greece – patient in coma even for short period of time (selective default)

 22:24

Listening to Rompuy, Barroso & the other kids: should I cry or just feel humiliated? Should I sream or just stay in the corner and feel ashamed? Or should I feel proud for saving the Euro and the Eurozone?

22:45

New Greek Bailout: 109 billion euro! not even 110…. do we have to pay them back?

 

 

 

 

 

 

 

 

 

 

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