Monday, 13 Feb 2012
Germany's biggest program of solar and wind power production has driven European coal prices below South Africa's for the first time in 10 months.
According to IHS McCloskey data, coal in northwest Europe cost USD 3.55 a metric tonne less than supplies from South Africa's Richards Bay yesterday, the widest discount for next-month prices since May 5, 2010. According to Barclays Plc, the difference is likely to keep increasing as European demand weakens and Asia boosts imports from South Africa.
Mr Bevan Jones a general manager at London Commodity Brokers Ltd said that “Producers are asking themselves if this is a seismic shift, and I think this move probably is sustainable.” He said that “Europe remains well supplied by the US, Colombia and Russia, while demand is on its weak side. Meanwhile, demand is consistent in Asia.”
Coal prices in Europe have fallen 7.5% this year as nations increase the amount of energy they get from alternative sources. Germany, the continent's biggest power market, installed a record 3,000 megawatts of new solar panels in December, the Bonn-based Bundesnetzagentur, the network regulator. Coal stockpiles at the biggest storage site in the Netherlands are 6.7% above year ago levels, according to Europees Massagoed-Overslagbedrijf BV, which operates the terminal.
(Sourced from Bloomberg)
Showing posts with label Germany. Show all posts
Showing posts with label Germany. Show all posts
Monday, February 13, 2012
Monday, January 30, 2012
Kloeckner CEO sees Europe steel demand down in 2012
Mon Jan 30, 2012
FRANKFURT Jan 30 (Reuters) - Kloeckner & Co , Europe's largest independent steel trader, expects Europe's demand for steel to drop significantly this year, its chief executive told a German newspaper.
"We are preparing ourselves for a drop in steel demand in Europe of up to 5 percent this year, it could even be worse," Gisbert Ruehl told Financial Times Deutschland in an interview published on Monday.
Europe's debt crisis has undermined consumer confidence, hit industrial output and raised the spectre of recession in the single currency zone, leaving clients reluctant to stock their inventories in a sector that swings swiftly to match economic cycles.
(sourced Reuters)
FRANKFURT Jan 30 (Reuters) - Kloeckner & Co , Europe's largest independent steel trader, expects Europe's demand for steel to drop significantly this year, its chief executive told a German newspaper.
"We are preparing ourselves for a drop in steel demand in Europe of up to 5 percent this year, it could even be worse," Gisbert Ruehl told Financial Times Deutschland in an interview published on Monday.
Europe's debt crisis has undermined consumer confidence, hit industrial output and raised the spectre of recession in the single currency zone, leaving clients reluctant to stock their inventories in a sector that swings swiftly to match economic cycles.
(sourced Reuters)
Thursday, January 5, 2012
Europe bond auctions crucial test for euro crisis
Jan05, 2012,
Lackluster sale of German government debt offers little relief
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — A less-than-thrilling uptake of German government debt on Wednesday put a drag on the euro, kicking off a major theme for the shared currency and other financial markets as Europe’s debt crisis drags into 2012.
Germany sold 4.1 billion euros ($5.3 billion) of 10-year government bonds. The auction, which had aimed to sell up to €5 billion euros of supply, attracted bids totaling €5.3 billion. The Bundesbank, as is standard practice, retained around €900 million of bonds on behalf of Germany’s public debt agency.
“Although today’s auction was an improvement ... it nevertheless highlighted the sense of caution that permeates the European sovereign debt markets as the region faces a massive wave of refinancing over the next few months amid continuing turmoil in its peripheral economies,” said Boris Schlossberg, director of currency research at GFT.
Bids exceeded supply 1.3 times. The yield declined from an already low 1.98% in a November auction to 1.93%.
Technically, November’s auction had been under-subscribed — an outcome that further rattled already panicked European markets as investors feared the debt crisis was beginning to take a toll on the currency’s sturdiest country.
The sale opens a heavy round of funding by European sovereigns in the first quarter, including sales by Spain, the euro-zone’s fourth-largest economy, and Italy, its third largest.
Analysts at RBC Capital Markets last month estimated a total of €220 billion to €230 billion of European government bond supply to be issued in the first quarter alone.
France, which faces worries over the standing of its triple-A rating, is set to issue government bonds on Thursday, while Spain and Italy will tap the market for the first time in 2012 next week.
Read complete article at MarketWatch
Lackluster sale of German government debt offers little relief
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — A less-than-thrilling uptake of German government debt on Wednesday put a drag on the euro, kicking off a major theme for the shared currency and other financial markets as Europe’s debt crisis drags into 2012.
Germany sold 4.1 billion euros ($5.3 billion) of 10-year government bonds. The auction, which had aimed to sell up to €5 billion euros of supply, attracted bids totaling €5.3 billion. The Bundesbank, as is standard practice, retained around €900 million of bonds on behalf of Germany’s public debt agency.
“Although today’s auction was an improvement ... it nevertheless highlighted the sense of caution that permeates the European sovereign debt markets as the region faces a massive wave of refinancing over the next few months amid continuing turmoil in its peripheral economies,” said Boris Schlossberg, director of currency research at GFT.
Bids exceeded supply 1.3 times. The yield declined from an already low 1.98% in a November auction to 1.93%.
Technically, November’s auction had been under-subscribed — an outcome that further rattled already panicked European markets as investors feared the debt crisis was beginning to take a toll on the currency’s sturdiest country.
The sale opens a heavy round of funding by European sovereigns in the first quarter, including sales by Spain, the euro-zone’s fourth-largest economy, and Italy, its third largest.
Analysts at RBC Capital Markets last month estimated a total of €220 billion to €230 billion of European government bond supply to be issued in the first quarter alone.
France, which faces worries over the standing of its triple-A rating, is set to issue government bonds on Thursday, while Spain and Italy will tap the market for the first time in 2012 next week.
Read complete article at MarketWatch
Wednesday, December 7, 2011
Workers strike at ArcelorMittal European sites
Wed Dec 7, 2011
* 24-hour strikes announced in Florange, France and Luxembourg - company
* Unions say 40,000 demonstrators protest closures in Liege, Belgium
* Unions protest steel mill closures in Europe
LONDON/BRUSSELS, Dec 7 (Reuters) - Thousands of workers were staging strikes and demonstrations at European plants of ArcelorMittal, the world's largest steelmaker, on Wednesday in what the European Metalworkers' Federation (EMF) said was a protest against job insecurity.
"There are strikes at Liege in Belgium, Florange in France and some smaller units in Luxembourg," Arne Langner a spokesman for ArcelorMittal said.
"The unions have announced a 24-hour strike. They have started this morning and we don't know yet whether it will be tonight or tomorrow morning that they will start to work again."
The EMF said strikes ranging from two hours per shift to a 24-hour walkout would take place at plants across France.
Stoppages were also expected to take place in Italy, Spain and at some sites in Germany, while rallies are planned in the Czech Republic, Romania, Macedonia and Poland.
Belgian unions said that there were 40,000 people at the demonstration in the Belgian town of Liege on Wednesday.
"There are not just steel workers here today, there are also workers from other sectors, both industry and services, which are on strike," Eric de Deyn spokesman for the BBTK union said.
"All shops in the city centre are closed out of solidarity with the workers of ArcelorMittal."
In October, Arcelor said it would permanently end liquid phase steel production at its site in Liege, given over-capacity and a slow recovery in the European market.
The group also idled blast furnaces in Florange in France and Eisenhuettenstadt in Germany.
The EMF said it would give an update on the walkouts and impact on production at a news conference in London later on Wednesday.
ArcelorMittal spokesman Langner did not comment on what impact the strike would have on the company's production.
The steel producer, which makes between 6 and 7 percent of global steel and has been laying off staff at some plants, said in early November a summer dip in demand is deepening into a second-half slump and customers were increasingly cautious due to economic uncertainties.
* 24-hour strikes announced in Florange, France and Luxembourg - company
* Unions say 40,000 demonstrators protest closures in Liege, Belgium
* Unions protest steel mill closures in Europe
LONDON/BRUSSELS, Dec 7 (Reuters) - Thousands of workers were staging strikes and demonstrations at European plants of ArcelorMittal, the world's largest steelmaker, on Wednesday in what the European Metalworkers' Federation (EMF) said was a protest against job insecurity.
"There are strikes at Liege in Belgium, Florange in France and some smaller units in Luxembourg," Arne Langner a spokesman for ArcelorMittal said.
"The unions have announced a 24-hour strike. They have started this morning and we don't know yet whether it will be tonight or tomorrow morning that they will start to work again."
The EMF said strikes ranging from two hours per shift to a 24-hour walkout would take place at plants across France.
Stoppages were also expected to take place in Italy, Spain and at some sites in Germany, while rallies are planned in the Czech Republic, Romania, Macedonia and Poland.
Belgian unions said that there were 40,000 people at the demonstration in the Belgian town of Liege on Wednesday.
"There are not just steel workers here today, there are also workers from other sectors, both industry and services, which are on strike," Eric de Deyn spokesman for the BBTK union said.
"All shops in the city centre are closed out of solidarity with the workers of ArcelorMittal."
In October, Arcelor said it would permanently end liquid phase steel production at its site in Liege, given over-capacity and a slow recovery in the European market.
The group also idled blast furnaces in Florange in France and Eisenhuettenstadt in Germany.
The EMF said it would give an update on the walkouts and impact on production at a news conference in London later on Wednesday.
ArcelorMittal spokesman Langner did not comment on what impact the strike would have on the company's production.
The steel producer, which makes between 6 and 7 percent of global steel and has been laying off staff at some plants, said in early November a summer dip in demand is deepening into a second-half slump and customers were increasingly cautious due to economic uncertainties.
Tuesday, November 1, 2011
Greek referendum threatens new euro zone crisis
Tue Nov 1, 2011
ATHENS (Reuters) - Prime Minister George Papandreou's shock announcement that he will put Greece's bailout to a referendum threatened to intensify the euro zone crisis, and brought complaints in Germany that Athens is trying to wriggle out of the deal.
Euro zone leaders agreed last week to hand Athens a second, 130 billion-euro ($179 billion) bailout and a 50-percent write-down on its huge debt. The price of the package is a program of harsh state spending cuts that have unleashed a tide of anger among Greeks.
Papandreou, whose ruling Socialist party has suffered several defections as it pushes waves of austerity measures through parliament while protesters rally outside, said he needed wider political backing for the fiscal measures and structural reforms demanded by international lenders.
A leader in German Chancellor Angela Merkel's center-right coalition said on Tuesday he was "irritated" by Papandreou's announcement.
"This sounds to me like someone is trying to wriggle out of what was agreed -- a strange thing to do," said Rainer Bruederle, parliamentary floor leader for the Free Democrats.
"One can only do one thing: make the preparations for the eventuality that there is a state insolvency in Greece and if it doesn't fulfill the agreements, then the point will have been reached where the money is turned off."
Analysts said the latest opinion poll showed a majority of Greeks took a negative view of the bailout deal.
The renewed uncertainty will be likely be an embarrassment for G20 leaders in France this week trying to coax China into throwing the euro zone a financial lifeline.
"If there was to be a referendum, we may reasonably conclude that they may not accept the austerity measures. We may conclude that it will bring the pack of cards tumbling down," Howard Wheeldon, senior strategist at BGC Partners in London, said.
Early reactions to the surprise move ranged from accusations that Papandreou was gambling with the country's future and predictions of default, to questions over the legality of the referendum and statements by lawmakers that a "No" vote would force his resignation and early elections.
Nobel prize-winning economist Christopher Pissarides caught the mood of uncertainty: "It is difficult to predict what will happen to Greece if they reject it. It will be bad enough for the European Union and the euro zone in particular, but it will be far worse for Greece.
"In the scenario of a 'No' vote Greece would declare bankruptcy immediately, they would default immediately. I can't see them staying within the euro," he said.
REFERENDUM ON MEMBERSHIP
"The situation is so tight that basically it would be a vote over their euro membership," Finland's Europe Minister Alexander Stubb told broadcaster MTV3.
Greek Finance Minister Evangelos Venizelos also warned citizens that euro zone membership was at stake. "It's crunch time," he told lawmakers on Monday.
"Citizens will have to answer the question: are we for Europe, the eurozone and the euro?"
Early on Tuesday, Venizelos checked into an Athens hospital with stomach pains but was expected to be discharged later.
Analysts were divided over whether Greek voters would accept the deal, but agreed that a damaging month or two of market volatility lay ahead while pollsters repeatedly took the Greek voters' pulse and European leaders looked on nervously.
The immediate market reaction to the announcement was negative, the euro extending losses against the dollar and tumbling more than 2 percent to a session low.
European shares were seen opening lower on Tuesday.
Opposition New Democracy leader Antonis Samaras will visit President Karolos Papoulias on Tuesday to discuss developments and push for snap elections, party officials said.
"Mr. Papandreou is dangerous, he tosses Greece's EU membership like a coin in the air," party spokesman Yannis Michelakis said. "He cannot govern and instead of withdrawing honorably, he dynamites everything."
UP TO THE VOTERS
Papandreou told the Greek voters it was up to them to decide the country's fate.
"We trust citizens, we believe in their judgment, we believe in their decision," he told Socialist party deputies. "In a few weeks the (EU) agreement will be a new loan contract... we must spell out if we are accepting it or if we are rejecting it."
Papandreou, grappling with Greece's worst financial crisis in 40 years, said the referendum would take place in a few weeks. Finance Minister Evangelos Venizelos told Greek TV it would probably be held early next year.
Opposition parties accused Papandreou of looking for a way out for his embattled party by dragging Greece, which has seen violent clashes between anti-austerity protesters and riot police, through a lengthy period of political instability.
"I never expected Papandreou to take such a dangerous and frivolous decision," said Dora Bakoyanni, former foreign minister and leader of the small center-right Democratic Alliance party. "All the international media will say that Greece itself is putting the EU deal at risk."
Greek newspapers on Tuesday also harshly criticized Papandreou for his choice. "More uncertainty is the last thing that Greece needs right now," said conservative newspaper Kathimerini in its lead editorial.
"The country will certainly paralyze amid endless debates -- the government, the state apparatus and institutions won't work," the newspaper added.
Papandreou also said he would ask for a vote of confidence to secure support for his policy for the rest of his four-year term, which expires in 2013.
Analysts said he was likely to win that, despite dissent among his parliamentary team, and parliament officials said the confidence debate would begin on Wednesday, with a vote on Thursday or Friday.
MONEY RUNNING OUT?
Greece is due to receive an 8 billion-euro tranche in mid-November, but that is likely to run out during January, around the time of the referendum, leaving the government with no funds if there is a "no" vote.
Germany issued a statement saying the EU was working hard to put the second Greek aid package in place by the end of the year and had no comment on the referendum.
Swinging opinion polls would leave markets fluctuating and Greece's EU partners dangling.
A survey carried out on Saturday showed that nearly 60 percent of Greeks viewed the agreement on the bailout package as negative or probably negative.
But David Lea of Control Risks struck a more positive note. "It's all in the question. If he can frame it as a sufficiently apple-pie issue, he stands some chance of winning," he said.
Some parliamentarians questioned the legality of the planned plebiscite under the constitution, which does not allow referendums on economic issues, only on matters of great national importance.
The last time Greeks held a referendum was in December 1974, when they voted to abolish the monarchy shortly after the collapse of a military dictatorship.
To be binding, a referendum result requires a minimum 40 percent turnout on issues of "crucial national importance" and 50 percent on a law that has already been voted on in parliament and "regulates a serious social issue," according to legislation enacted this year. It was not clear which option the government would favor.
"If the referendum answer is no, Papandreou has to resign," said Costas Panagopoulos, an analyst at polling firm Alco.
"In the meantime what will happen with the decisions the EU took last week? I cannot understand what the prime minister wants to do."
(sourced Reuters)
ATHENS (Reuters) - Prime Minister George Papandreou's shock announcement that he will put Greece's bailout to a referendum threatened to intensify the euro zone crisis, and brought complaints in Germany that Athens is trying to wriggle out of the deal.
Euro zone leaders agreed last week to hand Athens a second, 130 billion-euro ($179 billion) bailout and a 50-percent write-down on its huge debt. The price of the package is a program of harsh state spending cuts that have unleashed a tide of anger among Greeks.
Papandreou, whose ruling Socialist party has suffered several defections as it pushes waves of austerity measures through parliament while protesters rally outside, said he needed wider political backing for the fiscal measures and structural reforms demanded by international lenders.
A leader in German Chancellor Angela Merkel's center-right coalition said on Tuesday he was "irritated" by Papandreou's announcement.
"This sounds to me like someone is trying to wriggle out of what was agreed -- a strange thing to do," said Rainer Bruederle, parliamentary floor leader for the Free Democrats.
"One can only do one thing: make the preparations for the eventuality that there is a state insolvency in Greece and if it doesn't fulfill the agreements, then the point will have been reached where the money is turned off."
Analysts said the latest opinion poll showed a majority of Greeks took a negative view of the bailout deal.
The renewed uncertainty will be likely be an embarrassment for G20 leaders in France this week trying to coax China into throwing the euro zone a financial lifeline.
"If there was to be a referendum, we may reasonably conclude that they may not accept the austerity measures. We may conclude that it will bring the pack of cards tumbling down," Howard Wheeldon, senior strategist at BGC Partners in London, said.
Early reactions to the surprise move ranged from accusations that Papandreou was gambling with the country's future and predictions of default, to questions over the legality of the referendum and statements by lawmakers that a "No" vote would force his resignation and early elections.
Nobel prize-winning economist Christopher Pissarides caught the mood of uncertainty: "It is difficult to predict what will happen to Greece if they reject it. It will be bad enough for the European Union and the euro zone in particular, but it will be far worse for Greece.
"In the scenario of a 'No' vote Greece would declare bankruptcy immediately, they would default immediately. I can't see them staying within the euro," he said.
REFERENDUM ON MEMBERSHIP
"The situation is so tight that basically it would be a vote over their euro membership," Finland's Europe Minister Alexander Stubb told broadcaster MTV3.
Greek Finance Minister Evangelos Venizelos also warned citizens that euro zone membership was at stake. "It's crunch time," he told lawmakers on Monday.
"Citizens will have to answer the question: are we for Europe, the eurozone and the euro?"
Early on Tuesday, Venizelos checked into an Athens hospital with stomach pains but was expected to be discharged later.
Analysts were divided over whether Greek voters would accept the deal, but agreed that a damaging month or two of market volatility lay ahead while pollsters repeatedly took the Greek voters' pulse and European leaders looked on nervously.
The immediate market reaction to the announcement was negative, the euro extending losses against the dollar and tumbling more than 2 percent to a session low.
European shares were seen opening lower on Tuesday.
Opposition New Democracy leader Antonis Samaras will visit President Karolos Papoulias on Tuesday to discuss developments and push for snap elections, party officials said.
"Mr. Papandreou is dangerous, he tosses Greece's EU membership like a coin in the air," party spokesman Yannis Michelakis said. "He cannot govern and instead of withdrawing honorably, he dynamites everything."
UP TO THE VOTERS
Papandreou told the Greek voters it was up to them to decide the country's fate.
"We trust citizens, we believe in their judgment, we believe in their decision," he told Socialist party deputies. "In a few weeks the (EU) agreement will be a new loan contract... we must spell out if we are accepting it or if we are rejecting it."
Papandreou, grappling with Greece's worst financial crisis in 40 years, said the referendum would take place in a few weeks. Finance Minister Evangelos Venizelos told Greek TV it would probably be held early next year.
Opposition parties accused Papandreou of looking for a way out for his embattled party by dragging Greece, which has seen violent clashes between anti-austerity protesters and riot police, through a lengthy period of political instability.
"I never expected Papandreou to take such a dangerous and frivolous decision," said Dora Bakoyanni, former foreign minister and leader of the small center-right Democratic Alliance party. "All the international media will say that Greece itself is putting the EU deal at risk."
Greek newspapers on Tuesday also harshly criticized Papandreou for his choice. "More uncertainty is the last thing that Greece needs right now," said conservative newspaper Kathimerini in its lead editorial.
"The country will certainly paralyze amid endless debates -- the government, the state apparatus and institutions won't work," the newspaper added.
Papandreou also said he would ask for a vote of confidence to secure support for his policy for the rest of his four-year term, which expires in 2013.
Analysts said he was likely to win that, despite dissent among his parliamentary team, and parliament officials said the confidence debate would begin on Wednesday, with a vote on Thursday or Friday.
MONEY RUNNING OUT?
Greece is due to receive an 8 billion-euro tranche in mid-November, but that is likely to run out during January, around the time of the referendum, leaving the government with no funds if there is a "no" vote.
Germany issued a statement saying the EU was working hard to put the second Greek aid package in place by the end of the year and had no comment on the referendum.
Swinging opinion polls would leave markets fluctuating and Greece's EU partners dangling.
A survey carried out on Saturday showed that nearly 60 percent of Greeks viewed the agreement on the bailout package as negative or probably negative.
But David Lea of Control Risks struck a more positive note. "It's all in the question. If he can frame it as a sufficiently apple-pie issue, he stands some chance of winning," he said.
Some parliamentarians questioned the legality of the planned plebiscite under the constitution, which does not allow referendums on economic issues, only on matters of great national importance.
The last time Greeks held a referendum was in December 1974, when they voted to abolish the monarchy shortly after the collapse of a military dictatorship.
To be binding, a referendum result requires a minimum 40 percent turnout on issues of "crucial national importance" and 50 percent on a law that has already been voted on in parliament and "regulates a serious social issue," according to legislation enacted this year. It was not clear which option the government would favor.
"If the referendum answer is no, Papandreou has to resign," said Costas Panagopoulos, an analyst at polling firm Alco.
"In the meantime what will happen with the decisions the EU took last week? I cannot understand what the prime minister wants to do."
(sourced Reuters)
ArcelorMittal halts Brazilian rolling mill expansion
Tuesday, 01 November 2011
Luxembourg-based ArcelorMittal has decided to temporarily stop the $1.2 billion expansion of its integrated João Monlevade steel mill in the Minas Gerais state in Brazil as a reaction to weak market conditions. The upgrades at the Brazilian longs mill include a new sinter unit, a new blast furnace, a third rolling line and an overall increase in annual wire rod output to 2.3 million metric tons. If completed, the expansion would double the mill's current crude steelmaking capacity to 2.4 million tons per year.
The decision comes amid other slowdowns/shutdowns at ArcelorMittal's global steelmaking facilities. The company has permanently closed its liquid phase steel production location in Liege, Belgium, temporarily halted production at a mill in Poland, idled a blast furnace in Germany and France, an electric arc furnace and two rolling mills in Luxembourg and an electric arc furnace in Spain. Anemic European steel demand drove ArcelorMittal's decision-making process.
ArcelorMittal also pulled out of the joint venture with Peabody Energy immediately following ArcelorMittal's and Peabody Energy's acquisition of the majority stake in metallurgical coal mining company Macarthur Coal.
Tags: wire rod , Poland , Germany , Belgium , Brazil , France , Spain , Luxembourg , ArcelorMittal , longs , Mediterranean , Europe , North America , South America , European Union , steelmaking , investments , production
sourced steelorbis
Luxembourg-based ArcelorMittal has decided to temporarily stop the $1.2 billion expansion of its integrated João Monlevade steel mill in the Minas Gerais state in Brazil as a reaction to weak market conditions. The upgrades at the Brazilian longs mill include a new sinter unit, a new blast furnace, a third rolling line and an overall increase in annual wire rod output to 2.3 million metric tons. If completed, the expansion would double the mill's current crude steelmaking capacity to 2.4 million tons per year.
The decision comes amid other slowdowns/shutdowns at ArcelorMittal's global steelmaking facilities. The company has permanently closed its liquid phase steel production location in Liege, Belgium, temporarily halted production at a mill in Poland, idled a blast furnace in Germany and France, an electric arc furnace and two rolling mills in Luxembourg and an electric arc furnace in Spain. Anemic European steel demand drove ArcelorMittal's decision-making process.
ArcelorMittal also pulled out of the joint venture with Peabody Energy immediately following ArcelorMittal's and Peabody Energy's acquisition of the majority stake in metallurgical coal mining company Macarthur Coal.
Tags: wire rod , Poland , Germany , Belgium , Brazil , France , Spain , Luxembourg , ArcelorMittal , longs , Mediterranean , Europe , North America , South America , European Union , steelmaking , investments , production
sourced steelorbis
Sunday, October 16, 2011
Angry Europeans stage their own "Occupy Wall Street"
Oct16, 2011 | sourced Xinhua
ROME (Xinhua) -- The Big Apple residents this Saturday saw a loud echo of the "Occupy Wall Street" movement in where many of their ancestors came, as ever-tightening austerity measures to contain the debt crisis have made life harder across the Europe.
Rome witnessed a turbulent day as protests turned violent in many corners of the city. Police used tear gas and water cannons to disperse tens of thousands of protesters. Over 70 people were injured in the clashes.
The mood around the San Jiovanni square turned ugly when protesters torch cars and smashed windows. Large columns of smoke could be seen far away from the square.
At least a dozen or so police cars were seen passing through the area.
Witnesses said angry students have torn down railings and advertisement signs by the streets. They armed themselves with the iron bars obtained at the site to force their ways forward.
At the Colosseum, one of the greatest works of Roman architecture, the police went into clashes with protesting students, and the youngsters attacked the policemen with stones.
In London, thousands of people gathered outside St Paul's Cathedral in central London.
The protestors originally planned to assemble in front of St Paul's Cathedral and then march towards the City of London to "occupy" the Square Mile.
Yet the police immediately blockaded all the exits of lanes and streets nearby the Cathedral, leaving protestors stuck inside "walls of policemen."
"Our Streets!", "We have the right to strike!" a lot of protestors shouted, holding up banners with words like "No cuts," "Fight for every job,", "Bankers got bailout We got sold out," etc.
The "Occupy London" website said the movement is aimed at addressing social and economic injustice in Britain and beyond, as "part of a global movement for real democracy."
Tens of thousands of people flooded streets for demonstrations across Germany.
In capital Berlin, the demonstration started from the Alexanderplatz, a major shopping mall in the eastern city, and then targeted the Chancellor's Office and the Federal Parliament. Thousands of people sit in the square between the two buildings.
Police said some 5,000 people attended a gathering in front of the ECB (The European central bank) building in Frankfurt, a major city in Germany and euro zone's financial center.
Although the Netherlands has one of the lowest unemployment rates of Europe and fares economically well, around 1000 people occupied the financial heart of Amsterdam, which symbolizes for the angry Dutch people the social and economic inequality, corporate greed, and the influence of corporate money on government.
"I think what we all share is the idea that we have one crisis after the other because the model that we have now is based on greed," former Minister of Culture Ronald Plasterk, who is also participating in this demonstration, told Xinhua.
Protests also took place in nine Portuguese cities, with the largest one in Lisbon involving tens of thousands of people.
Else where in Europe, demonstrators swept cities in Sweden, Finland, Hungary, Belgium, Norway and Greece.
In Brussel, the European Union's capital, more than 6,000 protesters marched all the way from the north station to the Cinquantenaire Park, calling for change and better life.
"Starting from the global financial crisis in 2008, Europe has been living in crisis for three years, and policy makers still cannot come with suitable solutions, thus social crisis comes as no surprise," said Rym Ayadi, senior researcher at the Brussels-based Center for European Policy Studies.
Still, experts believe that Saturday's march would hardly have any instant, practical results, as many of the protesters had different demands despite their "common anger".
ROME (Xinhua) -- The Big Apple residents this Saturday saw a loud echo of the "Occupy Wall Street" movement in where many of their ancestors came, as ever-tightening austerity measures to contain the debt crisis have made life harder across the Europe.
Rome witnessed a turbulent day as protests turned violent in many corners of the city. Police used tear gas and water cannons to disperse tens of thousands of protesters. Over 70 people were injured in the clashes.
The mood around the San Jiovanni square turned ugly when protesters torch cars and smashed windows. Large columns of smoke could be seen far away from the square.
At least a dozen or so police cars were seen passing through the area.
Witnesses said angry students have torn down railings and advertisement signs by the streets. They armed themselves with the iron bars obtained at the site to force their ways forward.
At the Colosseum, one of the greatest works of Roman architecture, the police went into clashes with protesting students, and the youngsters attacked the policemen with stones.
In London, thousands of people gathered outside St Paul's Cathedral in central London.
The protestors originally planned to assemble in front of St Paul's Cathedral and then march towards the City of London to "occupy" the Square Mile.
Yet the police immediately blockaded all the exits of lanes and streets nearby the Cathedral, leaving protestors stuck inside "walls of policemen."
"Our Streets!", "We have the right to strike!" a lot of protestors shouted, holding up banners with words like "No cuts," "Fight for every job,", "Bankers got bailout We got sold out," etc.
The "Occupy London" website said the movement is aimed at addressing social and economic injustice in Britain and beyond, as "part of a global movement for real democracy."
Tens of thousands of people flooded streets for demonstrations across Germany.
In capital Berlin, the demonstration started from the Alexanderplatz, a major shopping mall in the eastern city, and then targeted the Chancellor's Office and the Federal Parliament. Thousands of people sit in the square between the two buildings.
Police said some 5,000 people attended a gathering in front of the ECB (The European central bank) building in Frankfurt, a major city in Germany and euro zone's financial center.
Although the Netherlands has one of the lowest unemployment rates of Europe and fares economically well, around 1000 people occupied the financial heart of Amsterdam, which symbolizes for the angry Dutch people the social and economic inequality, corporate greed, and the influence of corporate money on government.
"I think what we all share is the idea that we have one crisis after the other because the model that we have now is based on greed," former Minister of Culture Ronald Plasterk, who is also participating in this demonstration, told Xinhua.
Protests also took place in nine Portuguese cities, with the largest one in Lisbon involving tens of thousands of people.
Else where in Europe, demonstrators swept cities in Sweden, Finland, Hungary, Belgium, Norway and Greece.
In Brussel, the European Union's capital, more than 6,000 protesters marched all the way from the north station to the Cinquantenaire Park, calling for change and better life.
"Starting from the global financial crisis in 2008, Europe has been living in crisis for three years, and policy makers still cannot come with suitable solutions, thus social crisis comes as no surprise," said Rym Ayadi, senior researcher at the Brussels-based Center for European Policy Studies.
Still, experts believe that Saturday's march would hardly have any instant, practical results, as many of the protesters had different demands despite their "common anger".
European debt crisis to end in three years: central bank advisor
Sun, Oct16, 2011 | By xinhua
BEIJING, Oct. 16 (Xinhua) -- The European Union debt crisis will end in three years at the latest, meanwhile the euro will not fall apart and EU countries will be strengthened via reforms, said Li Daokui, a central bank advisor, on Saturday.
Greece and Portugal are sure to default on their debt repayments, and they will have to tackle long-term structural problems imbedded in their economies, Li, a member of the Monetary Policy Committee with the People's Bank of China, said in a forum held by Tsinghua University.
Germany and France are capable of bailing themselves out by pumping liquidity into banks and other financial institutions through fiscal measures, Li said.
The advisor said he is more concerned about the economic crisis in the United States, which he referred to as "long-term" and "political."
The government's deficit was relatively easy to cope with, but social problems, which have stoked the current spate of unrest in the United States, are a thornier issue and more difficult to solve, Li said.
Amid the faltering global economy, Chinese policymakers should deepen economic restructuring and should not do a complete turnaround in macro-economic policies, the advisor said.
BEIJING, Oct. 16 (Xinhua) -- The European Union debt crisis will end in three years at the latest, meanwhile the euro will not fall apart and EU countries will be strengthened via reforms, said Li Daokui, a central bank advisor, on Saturday.
Greece and Portugal are sure to default on their debt repayments, and they will have to tackle long-term structural problems imbedded in their economies, Li, a member of the Monetary Policy Committee with the People's Bank of China, said in a forum held by Tsinghua University.
Germany and France are capable of bailing themselves out by pumping liquidity into banks and other financial institutions through fiscal measures, Li said.
The advisor said he is more concerned about the economic crisis in the United States, which he referred to as "long-term" and "political."
The government's deficit was relatively easy to cope with, but social problems, which have stoked the current spate of unrest in the United States, are a thornier issue and more difficult to solve, Li said.
Amid the faltering global economy, Chinese policymakers should deepen economic restructuring and should not do a complete turnaround in macro-economic policies, the advisor said.
Tuesday, October 11, 2011
Europe warned of systemic crisis over debt
Tue Oct 11, 2011
By Sakari Suoninen and Martin Santa
Frankfurt/Bratislava (Reuters) - Europe's top financial watchdog warned on Tuesday that the euro zone's sovereign debt crisis has become systemic and threatens global economic stability unless decisive action is taken urgently.
European Central Bank President Jean-Claude Trichet issued the dramatic warning as chairman of the European Systemic Risk Board, created to avoid a repeat of the 2008 financial crisis, amid growing fears that Greece will default on its massive debt.
"The crisis is systemic and must be tackled decisively," Trichet told a European Parliament committee in his final appearance before retiring at the end of the month.
"The high interconnectedness in the EU financial system has led to a rapidly rising risk of significant contagion. It threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond."
European banking regulators meanwhile asked banks across the continent to provide updated data on their capital position and sovereign debt exposures to help reassess their need for recapitalisation.
Germany and France, the leading powers in the 17-nation euro zone, have promised to propose a comprehensive strategy to fight the debt crisis at an EU summit delayed until Oct. 23.
But they must first resolve differences over how to recapitalise banks, whether to force a Greek debt restructuring or stick to a voluntary deal with private bondholders and how to use the euro zone's rescue fund.
Trichet was speaking before international lenders were due to deliver a provisional verdict on Greece's troubled reform and austerity programme, while the fate of the euro zone's rescue fund hung in the balance in Slovakia's parliament.
Slovak Prime Minister Iveta Radicova raised the stakes in a battle to win approval for new powers for the European Financial Stability Facility by tying the decision to a vote of confidence in her centre-right government.
The small, liberal SaS party, the only member of the five-party ruling coalition which opposes the EFSF, said it would abstain, depriving the government of the votes needed to pass the motion.
EU diplomats expressed confidence that the EFSF agreement approved by the 16 other euro zone countries would eventually be ratified, noting that the Slovak parliament can hold a second vote if ratification is rejected at the first attempt. However, it may bring down the government in Bratislava.
TORTURED PROGRESS
In Athens, inspectors from the European Commission, the European Central Bank and the International Monetary Fund were due to issue a statement after completing an extended review of Greece's tortured progress on its bailout programme.
Anti-austerity protesters blocked ministries and state workers went on strike as Greeks awaited the verdict on whether international lenders will hand over a vital tranche of aid needed to stave off imminent bankruptcy.
The so-called troika is due to send a detailed report to euro zone finance ministers and the IMF board next week, and it was not clear whether Tuesday's statement would contain a clear recommendation on releasing the 8 billion euros the government needs to pay salaries and pensions in November. Its next major debt redemption is due in December.
Speaking shortly before the statement was due, Finance Minister Evangelos Venizelos told a conference: "Greece is and will always be a member of the euro zone, a member of the euro."
Europe's inability to draw a line under the crisis has caused growing international alarm, with Japan weighing in on Tuesday after the United States and Britain pressed EU leaders to take decisive action.
Japan said it would consult with the United States before it considers buying more euro zone bonds. Finance Minister Jun Azumi urged Europe to restore market confidence in the run-up to a Group of 20 finance leaders' meeting in Paris this week.
Azumi repeated that Japan stood ready to buy more euro zone bonds so long as Europe comes up with a solid scheme to solve a crisis that has resulted in financial rescues for Greece, Ireland and Portugal.
Interbank lending rates in Europe continued to rise amid growing concern over European banks' ability to handle the debt crisis, despite the prospect of massive ECB liquidity support.
Three-month Euribor rates , traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, rose to 1.570 percent from 1.567 percent.
Some European banks voiced concern at the prospect of being forced by governments to raise additional capital some say they do not need, possibly taking public money.
Germany's banking association said Europe should look at recapitalisation on a case-by-case basis rather than taking a blanket approach apparently envisaged by Berlin and Paris.
The director of the BDB association, Michael Kemmer, also told ARD television that politicians should stick to a July agreement on voluntary private bondholder involvement in a rescue plan for Greece.
That deal envisaged a 21 percent writedown on Greek debt for banks and insurers that participate in a bond swap to reduce and stretch out Greece's debt burden.
However, German Finance Minister Wolfgang Schaeuble and the chairman of euro group finance ministers, Jean-Claude Juncker, have said that figure may no longer be sufficient and the talks may have to be reopened.
Speaking on Austrian television late on Monday, Juncker refused to rule out a mandatory debt restructuring for Greece, which many market analysts and economists say is bound to happen in the coming months.
Many analysts see the rush to recapitalise European banks as a prelude to an enforced write-down of 50 percent or more on their Greek debt holdings. (sourced Reuters)
By Sakari Suoninen and Martin Santa
Frankfurt/Bratislava (Reuters) - Europe's top financial watchdog warned on Tuesday that the euro zone's sovereign debt crisis has become systemic and threatens global economic stability unless decisive action is taken urgently.
European Central Bank President Jean-Claude Trichet issued the dramatic warning as chairman of the European Systemic Risk Board, created to avoid a repeat of the 2008 financial crisis, amid growing fears that Greece will default on its massive debt.
"The crisis is systemic and must be tackled decisively," Trichet told a European Parliament committee in his final appearance before retiring at the end of the month.
"The high interconnectedness in the EU financial system has led to a rapidly rising risk of significant contagion. It threatens financial stability in the EU as a whole and adversely impacts the real economy in Europe and beyond."
European banking regulators meanwhile asked banks across the continent to provide updated data on their capital position and sovereign debt exposures to help reassess their need for recapitalisation.
Germany and France, the leading powers in the 17-nation euro zone, have promised to propose a comprehensive strategy to fight the debt crisis at an EU summit delayed until Oct. 23.
But they must first resolve differences over how to recapitalise banks, whether to force a Greek debt restructuring or stick to a voluntary deal with private bondholders and how to use the euro zone's rescue fund.
Trichet was speaking before international lenders were due to deliver a provisional verdict on Greece's troubled reform and austerity programme, while the fate of the euro zone's rescue fund hung in the balance in Slovakia's parliament.
Slovak Prime Minister Iveta Radicova raised the stakes in a battle to win approval for new powers for the European Financial Stability Facility by tying the decision to a vote of confidence in her centre-right government.
The small, liberal SaS party, the only member of the five-party ruling coalition which opposes the EFSF, said it would abstain, depriving the government of the votes needed to pass the motion.
EU diplomats expressed confidence that the EFSF agreement approved by the 16 other euro zone countries would eventually be ratified, noting that the Slovak parliament can hold a second vote if ratification is rejected at the first attempt. However, it may bring down the government in Bratislava.
TORTURED PROGRESS
In Athens, inspectors from the European Commission, the European Central Bank and the International Monetary Fund were due to issue a statement after completing an extended review of Greece's tortured progress on its bailout programme.
Anti-austerity protesters blocked ministries and state workers went on strike as Greeks awaited the verdict on whether international lenders will hand over a vital tranche of aid needed to stave off imminent bankruptcy.
The so-called troika is due to send a detailed report to euro zone finance ministers and the IMF board next week, and it was not clear whether Tuesday's statement would contain a clear recommendation on releasing the 8 billion euros the government needs to pay salaries and pensions in November. Its next major debt redemption is due in December.
Speaking shortly before the statement was due, Finance Minister Evangelos Venizelos told a conference: "Greece is and will always be a member of the euro zone, a member of the euro."
Europe's inability to draw a line under the crisis has caused growing international alarm, with Japan weighing in on Tuesday after the United States and Britain pressed EU leaders to take decisive action.
Japan said it would consult with the United States before it considers buying more euro zone bonds. Finance Minister Jun Azumi urged Europe to restore market confidence in the run-up to a Group of 20 finance leaders' meeting in Paris this week.
Azumi repeated that Japan stood ready to buy more euro zone bonds so long as Europe comes up with a solid scheme to solve a crisis that has resulted in financial rescues for Greece, Ireland and Portugal.
Interbank lending rates in Europe continued to rise amid growing concern over European banks' ability to handle the debt crisis, despite the prospect of massive ECB liquidity support.
Three-month Euribor rates , traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, rose to 1.570 percent from 1.567 percent.
Some European banks voiced concern at the prospect of being forced by governments to raise additional capital some say they do not need, possibly taking public money.
Germany's banking association said Europe should look at recapitalisation on a case-by-case basis rather than taking a blanket approach apparently envisaged by Berlin and Paris.
The director of the BDB association, Michael Kemmer, also told ARD television that politicians should stick to a July agreement on voluntary private bondholder involvement in a rescue plan for Greece.
That deal envisaged a 21 percent writedown on Greek debt for banks and insurers that participate in a bond swap to reduce and stretch out Greece's debt burden.
However, German Finance Minister Wolfgang Schaeuble and the chairman of euro group finance ministers, Jean-Claude Juncker, have said that figure may no longer be sufficient and the talks may have to be reopened.
Speaking on Austrian television late on Monday, Juncker refused to rule out a mandatory debt restructuring for Greece, which many market analysts and economists say is bound to happen in the coming months.
Many analysts see the rush to recapitalise European banks as a prelude to an enforced write-down of 50 percent or more on their Greek debt holdings. (sourced Reuters)
Friday, September 30, 2011
Peabody Energy opens coal trading office in Germany
Sept30, 2011
Peabody Energy announced it has opened an office in Essen, Germany, expanding the company coal trading platform into a growing market for coal.
Mr Richard Navarre Peabody Energy president and chief commercial officer said the decision provides Europe with new alternatives of power.
He said that “Our presence in Essen broadens our sourcing and shipping capabilities to deliver coal from Peabody US operations to European customers who increasingly are turning to coal to displace nuclear generation and high cost natural gas.”
Peabody Essen office will be headed by Mr Juergen Treschan who has been named the director of trading and logistics for Northern Europe. He will be in charge of operations dealing with international trading activities in Germany and neighbouring countries.
Peabody Energy announced it has opened an office in Essen, Germany, expanding the company coal trading platform into a growing market for coal.
Mr Richard Navarre Peabody Energy president and chief commercial officer said the decision provides Europe with new alternatives of power.
He said that “Our presence in Essen broadens our sourcing and shipping capabilities to deliver coal from Peabody US operations to European customers who increasingly are turning to coal to displace nuclear generation and high cost natural gas.”
Peabody Essen office will be headed by Mr Juergen Treschan who has been named the director of trading and logistics for Northern Europe. He will be in charge of operations dealing with international trading activities in Germany and neighbouring countries.
German iron ore import prices in Aug down by 1pct MoM
Friday, 30 Sep 2011
According to a report released by the German Federal Statistical Office, in August this year the import price of iron ore increased by 14.9%YoY in Germany while it decreased by 1.2%MoM as compared to July this year.
In August this year, the import price of pig iron, steel and ferroalloys in Germany rose by 3.3%YoY while it decreased by 0.5% compared to July this year.
(sourced from Steel Orbis)
According to a report released by the German Federal Statistical Office, in August this year the import price of iron ore increased by 14.9%YoY in Germany while it decreased by 1.2%MoM as compared to July this year.
In August this year, the import price of pig iron, steel and ferroalloys in Germany rose by 3.3%YoY while it decreased by 0.5% compared to July this year.
(sourced from Steel Orbis)
Friday, August 26, 2011
Fresh fears of Greek default as Finns hold out in collateral dispute
August 26, 2011
By Riva Froymovich, The Australian
EURO-ZONE policy makers appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a bailout for Greece, raising concerns that Athens may default.
Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week.
Finland, meanwhile, shows no sign of backing down.
German Chancellor Angela Merkel also unexpectedly cancelled a trip to Russia in early September to shepherd through parliament a crucial change to the euro-zone bailout fund.
The cancellation comes at a sensitive time for relations with Russia, and amid growing nervousness about dissent within the ranks of her own party over her handling of the euro-zone debt crisis.
"The date collides with the introduction of the (European Financial Stability Facility) treaty into the Bundestag," a German government official said, adding that the chancellor wants to stay in Berlin due to the significance of the issue.
Yields on Greek two-year bonds rocketed to a record of over 43 per cent, according to Tradeweb, and the cost of insuring Greek government bonds against default also rose sharply.
Greek five-year sovereign credit-default swaps were 1.37 percentage points wider at 22.75 percentage points, according to Markit.
No multi-lateral talks on the collateral issue took place Wednesday or Thursday, a person familiar with the situation said, despite an initial intention to hash out an agreement by the weekend.
However, the person didn't rule out the possibility that bilateral talks are under way.
Euro-zone governments are looking into alternative forms of collateral after a cash deal reached earlier between Greece and Finland was rejected by key member countries, including Germany and the Netherlands.
Under terms of that deal, Greece would pay Finland hundreds of millions of euros from its bailout loans as collateral for those same loans at the expense of other euro-zone countries.
Since Finland is set to contribute just 2 per cent of Greece's total rescue package, guarantees from the richer euro-zone nations would be going directly to Finland.
The collateral dispute, if not resolved soon, could derail a second bailout package for Greece agreed by euro-zone leaders on July 21.
Without support from all 17 euro-zone countries, no funds can be released, while changes to the European Financial Stability Facility, the currency bloc's bailout fund, can't go forward either.
At last month's summit, leaders agreed to expand the fund and make it more flexible, so that it could buy bonds on the secondary market and provide credit lines to countries locked out of markets.
National parliaments across the euro area must approve the changes, however, and the collateral issue must be settled before the final EFSF proposal is written.
The European Commission, the EU's executive branch, has asked that all the details for the EFSF legislation be clarified by the end of August.
German officials have said they expect to approve the new EFSF at a cabinet meeting on Wednesday.
A parliamentary vote is likely to take place September 23.
A commission spokesman said that there is no formal deadline for concluding talks.
Still, "it's good for that to be done toward the end of the month," he said.
Germany insists on a solution acceptable to all euro-zone countries.
The International Monetary Fund, which has been contributing to Greek bailout loans, opposes any deal that would threaten its preferred-creditor status, which ensures the fund is always first to be repaid.
Finland said that it continues discussions with Greece and other euro-zone countries to find a solution. Officials refrained from further comment.
"The issue has become so politicised that no one here at the Finance Ministry wants to talk about it at the moment," said Anita Sihvola, a spokeswoman for the Finnish finance ministry.
On Wednesday, Finnish Finance Minister Jutta Urpilainen reiterated that Finland would not take part in the €110 billion Greek ($150bn) bailout unless it obtained collateral.
Finland's policy is partly the result of April's general election, in which support for the True Finns Party, which opposed the Greek bailout, soared to 19 per cent from 4.1 per cent in 2007.
The True Finns finished third, and the election led to a new government coalition of six parties.
Euro-zone officials have indicated they are exploring other forms of collateral, such as state property or other non-cash assets.
But this option would be anathema in Greece, especially as many of the government's assets are already earmarked for privatisation.
The government has strongly opposed any deals that would involve putting up Greek land or real estate as collateral, viewing the step as a threat to the country's territorial sovereignty.
"It seems that a possible outcome is either collateral for all member states or no country will get it," said a second person familiar with the matter.
By Riva Froymovich, The Australian
EURO-ZONE policy makers appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a bailout for Greece, raising concerns that Athens may default.
Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week.
Finland, meanwhile, shows no sign of backing down.
German Chancellor Angela Merkel also unexpectedly cancelled a trip to Russia in early September to shepherd through parliament a crucial change to the euro-zone bailout fund.
The cancellation comes at a sensitive time for relations with Russia, and amid growing nervousness about dissent within the ranks of her own party over her handling of the euro-zone debt crisis.
"The date collides with the introduction of the (European Financial Stability Facility) treaty into the Bundestag," a German government official said, adding that the chancellor wants to stay in Berlin due to the significance of the issue.
Yields on Greek two-year bonds rocketed to a record of over 43 per cent, according to Tradeweb, and the cost of insuring Greek government bonds against default also rose sharply.
Greek five-year sovereign credit-default swaps were 1.37 percentage points wider at 22.75 percentage points, according to Markit.
No multi-lateral talks on the collateral issue took place Wednesday or Thursday, a person familiar with the situation said, despite an initial intention to hash out an agreement by the weekend.
However, the person didn't rule out the possibility that bilateral talks are under way.
Euro-zone governments are looking into alternative forms of collateral after a cash deal reached earlier between Greece and Finland was rejected by key member countries, including Germany and the Netherlands.
Under terms of that deal, Greece would pay Finland hundreds of millions of euros from its bailout loans as collateral for those same loans at the expense of other euro-zone countries.
Since Finland is set to contribute just 2 per cent of Greece's total rescue package, guarantees from the richer euro-zone nations would be going directly to Finland.
The collateral dispute, if not resolved soon, could derail a second bailout package for Greece agreed by euro-zone leaders on July 21.
Without support from all 17 euro-zone countries, no funds can be released, while changes to the European Financial Stability Facility, the currency bloc's bailout fund, can't go forward either.
At last month's summit, leaders agreed to expand the fund and make it more flexible, so that it could buy bonds on the secondary market and provide credit lines to countries locked out of markets.
National parliaments across the euro area must approve the changes, however, and the collateral issue must be settled before the final EFSF proposal is written.
The European Commission, the EU's executive branch, has asked that all the details for the EFSF legislation be clarified by the end of August.
German officials have said they expect to approve the new EFSF at a cabinet meeting on Wednesday.
A parliamentary vote is likely to take place September 23.
A commission spokesman said that there is no formal deadline for concluding talks.
Still, "it's good for that to be done toward the end of the month," he said.
Germany insists on a solution acceptable to all euro-zone countries.
The International Monetary Fund, which has been contributing to Greek bailout loans, opposes any deal that would threaten its preferred-creditor status, which ensures the fund is always first to be repaid.
Finland said that it continues discussions with Greece and other euro-zone countries to find a solution. Officials refrained from further comment.
"The issue has become so politicised that no one here at the Finance Ministry wants to talk about it at the moment," said Anita Sihvola, a spokeswoman for the Finnish finance ministry.
On Wednesday, Finnish Finance Minister Jutta Urpilainen reiterated that Finland would not take part in the €110 billion Greek ($150bn) bailout unless it obtained collateral.
Finland's policy is partly the result of April's general election, in which support for the True Finns Party, which opposed the Greek bailout, soared to 19 per cent from 4.1 per cent in 2007.
The True Finns finished third, and the election led to a new government coalition of six parties.
Euro-zone officials have indicated they are exploring other forms of collateral, such as state property or other non-cash assets.
But this option would be anathema in Greece, especially as many of the government's assets are already earmarked for privatisation.
The government has strongly opposed any deals that would involve putting up Greek land or real estate as collateral, viewing the step as a threat to the country's territorial sovereignty.
"It seems that a possible outcome is either collateral for all member states or no country will get it," said a second person familiar with the matter.
Monday, August 22, 2011
Greek collateral deals negative for rating - Moody's
Monday 22 August 2011
LONDON (Reuters) - A series of agreements forcing Greece to provide collateral in return for aid from foreign governments would be negative for the credit ratings of Greece and other troubled euro zone states, Moody's ratings agency said on Monday.
The agency also said such deals showed a lack of will in some euro zone countries that put more pressure on Germany and France to take stronger steps to support the euro project.
Austria, the Netherlands and Slovakia said on Friday they wanted collateral on their loans to Greece after Finland secured such a commitment, but Greek officials have said they were not talking to countries other than Finland about such a plan.
Moody's warned that the pursuit of such agreements could delay the next tranche of aid for Greece and threaten to cause a default on payments on its debt.
It said a proliferation of collateral agreements would also limit the availability of funds for future bailout programs, and that for these reasons it expected other euro area members ultimately to reject the Finland-Greece deal.
"The tentative Finnish-Greek collateral accord raises concerns about the willingness and ability of some euro area policymakers to implement measures that may prove necessary to preserve the stability of the European Monetary Union," it said.
"This reticence places greater pressure on Germany and France to stake out a strongly supportive stance towards the euro area, with more concrete and immediate effect than the proposals the two countries made last week, in order to shore up the single-currency project."
LONDON (Reuters) - A series of agreements forcing Greece to provide collateral in return for aid from foreign governments would be negative for the credit ratings of Greece and other troubled euro zone states, Moody's ratings agency said on Monday.
The agency also said such deals showed a lack of will in some euro zone countries that put more pressure on Germany and France to take stronger steps to support the euro project.
Austria, the Netherlands and Slovakia said on Friday they wanted collateral on their loans to Greece after Finland secured such a commitment, but Greek officials have said they were not talking to countries other than Finland about such a plan.
Moody's warned that the pursuit of such agreements could delay the next tranche of aid for Greece and threaten to cause a default on payments on its debt.
It said a proliferation of collateral agreements would also limit the availability of funds for future bailout programs, and that for these reasons it expected other euro area members ultimately to reject the Finland-Greece deal.
"The tentative Finnish-Greek collateral accord raises concerns about the willingness and ability of some euro area policymakers to implement measures that may prove necessary to preserve the stability of the European Monetary Union," it said.
"This reticence places greater pressure on Germany and France to stake out a strongly supportive stance towards the euro area, with more concrete and immediate effect than the proposals the two countries made last week, in order to shore up the single-currency project."
Thursday, August 18, 2011
Coal market not yet hit by low German river levels
Thursday, 18 Aug 2011
A German utility source told Montel that German river levels are still at significantly low levels although, with utility demand muted in the summer period, there is currently no marked impact on coal supply to plants.
German weather service said that river levels across Germany are generally between 5 to 50% below average, although levels on the river Elbe at Torgau are more than 50% below average, with a depth on Tuesday of around 150cm.
The utility coal and freight analyst said that “At the moment, it seems that everything is okay, as utilities are carrying out maintenance at this time of year, so demand is not so strong.”
According to official government forecasts, water levels at Kaub, on the river Rhine below Koblenz, may drop to below 190cm in the week to August 20, after initially rising to more than 200cm in the coming week.
Kaub levels which were last seen at 194cm are an important indicator, as it is one of the widest and shallowest sections of the Rhine. When water levels fall below 200cm, utilities or coal suppliers are liable to pay barge operators a low water premium and levels on some river sections are currently at around 180cm.
(sourced Montel)
A German utility source told Montel that German river levels are still at significantly low levels although, with utility demand muted in the summer period, there is currently no marked impact on coal supply to plants.
German weather service said that river levels across Germany are generally between 5 to 50% below average, although levels on the river Elbe at Torgau are more than 50% below average, with a depth on Tuesday of around 150cm.
The utility coal and freight analyst said that “At the moment, it seems that everything is okay, as utilities are carrying out maintenance at this time of year, so demand is not so strong.”
According to official government forecasts, water levels at Kaub, on the river Rhine below Koblenz, may drop to below 190cm in the week to August 20, after initially rising to more than 200cm in the coming week.
Kaub levels which were last seen at 194cm are an important indicator, as it is one of the widest and shallowest sections of the Rhine. When water levels fall below 200cm, utilities or coal suppliers are liable to pay barge operators a low water premium and levels on some river sections are currently at around 180cm.
(sourced Montel)
Saturday, August 13, 2011
Euro zone crisis reaches France, turns existential
Aug12, 2011 |By Paul Taylor, Reuters
PARIS (Reuters) - It was the week the euro zone debt crisis reached France, one of the twin pillars of the European currency alongside Germany.
As jitters over Paris' prized top-notch AAA credit rating took hold, President Nicolas Sarkozy returned from the beach to order up new austerity measures. Then panic selling of French bank shares and an abrupt halt to economic growth added to France's plight.
The sight of the euro zone's number two economy buffeted by rumours and investor anxiety in the midst of the holiday season raised existential questions about European monetary union that will confront Sarkozy and German Chancellor Angela Merkel when they meet in Paris next Tuesday.
The fragile edifice of support for weaker European states would start to crumble if France, the second contributor to the euro zone's rescue fund, were to face a debt downgrade.
All three major ratings agencies reaffirmed this week that no such downgrade was in the works, but that didn't suffice to calm markets.
Up to now, Sarkozy has projected himself as an energetic statesman orchestrating the rescue of the euro zone. Suddenly he had to turn to crisis management at home.
This week's perfect summer storm wiped 10 billion euros off French banks' market value and left France looking at times like the country in need of help itself.
The disclosure that the economy failed to grow at all in the second quarter, after a healthy 0.9 percent spurt in Q1, amplified concerns about the government's ability to meet its target of cutting the deficit to 5.7 percent of GDP this year.
Worryingly, household consumption fell by the biggest amount in a decade, suggesting consumers are reining in spending because they fear hard times and higher taxes ahead.
UNPALATABLE CHOICES
Just eight months before the first round of a presidential election, Sarkozy faces unpalatable choices between removing more tax breaks to increase revenue and cutting public spending, both of which could further depress anaemic growth.
The centre-right president has tried to upstage his Socialist opposition by proposing to introduce a German-style fiscal rule on deficit reduction in the constitution. Socialist votes would be needed to achieve the required super-majority.
Socialist leaders have refused so far to cooperate with what they call Sarkozy's "trap" and sought instead to blame him for increasing the deficit with tax give-aways for the rich.
The issue is bound to be one of the major battlegrounds of the campaign for the presidential election next April and May.
Sarkozy's approval ratings have improved since Socialist front-runner and former IMF head Dominique Strauss-Kahn was forced out the race after his arrest in New York on sexual assault charges.
But both main contenders for the Socialist nomination, Francois Hollande and Martine Aubry, are still ahead of the president in the polls at the moment.
IRRATIONAL AND RATIONAL
French authorities are still not entirely sure what hit them this week. There were both rational and irrational reasons for the market attack.
When Standard & Poor's knocked the United States off its triple-A perch last Friday, markets started looking for who else might be in line, turning a spotlight on France, with the biggest debt and deficit ratios among the six AAA-rated euro zone countries.
Economist Jacques Attali, a former top aide to President Francois Mitterrand, noted that S&P had specifically compared France with the United States, saying it was the only other AAA country that would have a similar debt ratio in 2015.
"Contrary to what everyone says, we are explicitly singled out," Attali told the daily Le Monde in an interview.
"Hence we must a bring our debt down below 85 percent of GDP by the end of 2013, and get back to 70 percent in this decade. That won't be easy."
The cost of insuring French public debt against default reached a new peak during the week yet by Friday, France's 10-year bond yield had fallen back below 3 percent for the first time since November 2010, hardly a sign of imminent meltdown.
The country does have an Achilles' heel: stress tests have shown that its banks are among the most heavily exposed to debt in the euro zone periphery, particularly Greece and Italy.
The sight of the European Central Bank buying Italian bonds on the secondary market to prevent Rome's borrowing costs rising to unsustainable levels, and reports that Greece's debt swap would be extended to bonds maturing up to 2024, combined with wild market rumours to hit French lenders.
Shares in Societe Generale plunged as much as 23 percent on Wednesday before closing 15 percent lower. BNP Paribas and Credit Agricole suffered lesser hits.
A senior SocGen executive told Reuters the bank was worried that heightened market tensions culd lead to a 2008-type credit crunch in which banks stop lending to one another.
French regulators, joined by their Italian, Spanish and Belgian counterparts, banned short-selling of financial shares on Thursday in a temporary response to try to halt rumour-driven herd behaviour. Bank shares rose modestly on Friday.
A senior risk manager at a large European bank, speaking on condition of anonymity, said one reason for the losses on French and European bank shares was that short sellers were targeting banks instead of government bonds.
"Because it's increasingly difficult to trade CDS on sovereign debt, short sellers take bank shares as proxy for sovereign bonds of the respective countries. If you bet on losses of French sovereign bonds for instance, short selling of French banks is very promising," he told Reuters.
Under cover of anonymity, several traders and government officials suggest hedge funds had shorted French debt in anticipation of a downgrade and turned on the banks when it became clear this was not going to happen.
A French fund manager said he clearly witnessed a "France bashing session" on Wednesday.
He said a U.S. bank had sent a market-wide message citing six reasons to sell shares of a French investment firm. The reasons invoked were "because it is French", six times.
PARIS (Reuters) - It was the week the euro zone debt crisis reached France, one of the twin pillars of the European currency alongside Germany.
As jitters over Paris' prized top-notch AAA credit rating took hold, President Nicolas Sarkozy returned from the beach to order up new austerity measures. Then panic selling of French bank shares and an abrupt halt to economic growth added to France's plight.
The sight of the euro zone's number two economy buffeted by rumours and investor anxiety in the midst of the holiday season raised existential questions about European monetary union that will confront Sarkozy and German Chancellor Angela Merkel when they meet in Paris next Tuesday.
The fragile edifice of support for weaker European states would start to crumble if France, the second contributor to the euro zone's rescue fund, were to face a debt downgrade.
All three major ratings agencies reaffirmed this week that no such downgrade was in the works, but that didn't suffice to calm markets.
Up to now, Sarkozy has projected himself as an energetic statesman orchestrating the rescue of the euro zone. Suddenly he had to turn to crisis management at home.
This week's perfect summer storm wiped 10 billion euros off French banks' market value and left France looking at times like the country in need of help itself.
The disclosure that the economy failed to grow at all in the second quarter, after a healthy 0.9 percent spurt in Q1, amplified concerns about the government's ability to meet its target of cutting the deficit to 5.7 percent of GDP this year.
Worryingly, household consumption fell by the biggest amount in a decade, suggesting consumers are reining in spending because they fear hard times and higher taxes ahead.
UNPALATABLE CHOICES
Just eight months before the first round of a presidential election, Sarkozy faces unpalatable choices between removing more tax breaks to increase revenue and cutting public spending, both of which could further depress anaemic growth.
The centre-right president has tried to upstage his Socialist opposition by proposing to introduce a German-style fiscal rule on deficit reduction in the constitution. Socialist votes would be needed to achieve the required super-majority.
Socialist leaders have refused so far to cooperate with what they call Sarkozy's "trap" and sought instead to blame him for increasing the deficit with tax give-aways for the rich.
The issue is bound to be one of the major battlegrounds of the campaign for the presidential election next April and May.
Sarkozy's approval ratings have improved since Socialist front-runner and former IMF head Dominique Strauss-Kahn was forced out the race after his arrest in New York on sexual assault charges.
But both main contenders for the Socialist nomination, Francois Hollande and Martine Aubry, are still ahead of the president in the polls at the moment.
IRRATIONAL AND RATIONAL
French authorities are still not entirely sure what hit them this week. There were both rational and irrational reasons for the market attack.
When Standard & Poor's knocked the United States off its triple-A perch last Friday, markets started looking for who else might be in line, turning a spotlight on France, with the biggest debt and deficit ratios among the six AAA-rated euro zone countries.
Economist Jacques Attali, a former top aide to President Francois Mitterrand, noted that S&P had specifically compared France with the United States, saying it was the only other AAA country that would have a similar debt ratio in 2015.
"Contrary to what everyone says, we are explicitly singled out," Attali told the daily Le Monde in an interview.
"Hence we must a bring our debt down below 85 percent of GDP by the end of 2013, and get back to 70 percent in this decade. That won't be easy."
The cost of insuring French public debt against default reached a new peak during the week yet by Friday, France's 10-year bond yield had fallen back below 3 percent for the first time since November 2010, hardly a sign of imminent meltdown.
The country does have an Achilles' heel: stress tests have shown that its banks are among the most heavily exposed to debt in the euro zone periphery, particularly Greece and Italy.
The sight of the European Central Bank buying Italian bonds on the secondary market to prevent Rome's borrowing costs rising to unsustainable levels, and reports that Greece's debt swap would be extended to bonds maturing up to 2024, combined with wild market rumours to hit French lenders.
Shares in Societe Generale plunged as much as 23 percent on Wednesday before closing 15 percent lower. BNP Paribas and Credit Agricole suffered lesser hits.
A senior SocGen executive told Reuters the bank was worried that heightened market tensions culd lead to a 2008-type credit crunch in which banks stop lending to one another.
French regulators, joined by their Italian, Spanish and Belgian counterparts, banned short-selling of financial shares on Thursday in a temporary response to try to halt rumour-driven herd behaviour. Bank shares rose modestly on Friday.
A senior risk manager at a large European bank, speaking on condition of anonymity, said one reason for the losses on French and European bank shares was that short sellers were targeting banks instead of government bonds.
"Because it's increasingly difficult to trade CDS on sovereign debt, short sellers take bank shares as proxy for sovereign bonds of the respective countries. If you bet on losses of French sovereign bonds for instance, short selling of French banks is very promising," he told Reuters.
Under cover of anonymity, several traders and government officials suggest hedge funds had shorted French debt in anticipation of a downgrade and turned on the banks when it became clear this was not going to happen.
A French fund manager said he clearly witnessed a "France bashing session" on Wednesday.
He said a U.S. bank had sent a market-wide message citing six reasons to sell shares of a French investment firm. The reasons invoked were "because it is French", six times.
Friday, August 12, 2011
Mongolia picks Macmahon, BBM as contract miners for major deposit
Fri Aug 12, 2011
* Selection could mean India's Mesco Steel out of running
* Macmahon, BBM likely to start operations later this year -Erdenes Exec
ULAN BATOR Aug 12 (Reuters) - Mongolian state-owned miner Erdenes Tavan Tolgoi LLC has selected Australia's Macmahon Holdings Ltd and Germany's BBM Operta as mining contractors for the major East Tsankhi coal deposit, a top company executive told Reuters on Friday.
The government has split the massive Tavan Tolgoi coal field into two sections for development. The east Tsankhi area is owned by Erdenes TT, which is planning an initial public offering worth at least $10 billion to help fund the development of the deposit, while the west Tsankhi block is being auctioned to miners via an international tender.
The tender to pick mining contractors for east Tsankhi had also included India's privately-owned Mesco Steel. Its not clear how much the contract mining agreement is worth.
"Macmahon and BBM Operta have been chosen as contract miners for east Tsankhi," Erdenes MGL Executive Director B.Enebish told Reuters.
"They should be able to start mining operations this year."
Erdenes has said that it plans to produce 15 million tonnes of coal from the east Tsankhi field by around 2015.
To help bankroll the operations, it signed its first-ever term contract from the field with the Aluminium Corp of China Ltd , which will sell some of the coal to Chinese, Japanese and South Korean companies.
* Selection could mean India's Mesco Steel out of running
* Macmahon, BBM likely to start operations later this year -Erdenes Exec
ULAN BATOR Aug 12 (Reuters) - Mongolian state-owned miner Erdenes Tavan Tolgoi LLC has selected Australia's Macmahon Holdings Ltd and Germany's BBM Operta as mining contractors for the major East Tsankhi coal deposit, a top company executive told Reuters on Friday.
The government has split the massive Tavan Tolgoi coal field into two sections for development. The east Tsankhi area is owned by Erdenes TT, which is planning an initial public offering worth at least $10 billion to help fund the development of the deposit, while the west Tsankhi block is being auctioned to miners via an international tender.
The tender to pick mining contractors for east Tsankhi had also included India's privately-owned Mesco Steel. Its not clear how much the contract mining agreement is worth.
"Macmahon and BBM Operta have been chosen as contract miners for east Tsankhi," Erdenes MGL Executive Director B.Enebish told Reuters.
"They should be able to start mining operations this year."
Erdenes has said that it plans to produce 15 million tonnes of coal from the east Tsankhi field by around 2015.
To help bankroll the operations, it signed its first-ever term contract from the field with the Aluminium Corp of China Ltd , which will sell some of the coal to Chinese, Japanese and South Korean companies.
Saturday, July 30, 2011
European coal prices unaffected by SA miners strike - Report
Saturday, 30 Jul 2011 | By Montel
European coal prices have been mostly unaffected by an ongoing strike by South African miners, as stockpiles are healthy and demand low.
A German utility trader said that "At the moment, the impact is negligible." He added that physical prices rose USD 0.50 last week in anticipation of the strike, which started at the weekend.
The German trader said that most South African coal companies have stock to work through. Stocks at the main Richards Bay port terminal are around 3 million tonnes, agreeing the mines themselves held plenty of stock and transport links have not been affected by the strike action. He said that "The situation could get critical after two weeks."
An Iberian trader said that "I think it would have more impact if the strike continues, and China and India start buying." She added that however, there is currently little demand in Europe and very little activity during the summer holiday period in July and August.
She said that coal is currently very correlated with range bound German power and emissions, with no strong coal fundamentals that could move the curve. While the market is flat as a pancake at the moment, attention is being paid to fluctuations in the euro/dollar rate, with a weaker dollar the main reason for a rise in API 2 Cal 12 coal above USD 128 per tonne at the end of last week.
The German trader said that the contract should remain range bound between USD 127 to USD 129 per tonne.
If you believe an article violates your rights or the rights of others, please contact us.
European coal prices have been mostly unaffected by an ongoing strike by South African miners, as stockpiles are healthy and demand low.
A German utility trader said that "At the moment, the impact is negligible." He added that physical prices rose USD 0.50 last week in anticipation of the strike, which started at the weekend.
The German trader said that most South African coal companies have stock to work through. Stocks at the main Richards Bay port terminal are around 3 million tonnes, agreeing the mines themselves held plenty of stock and transport links have not been affected by the strike action. He said that "The situation could get critical after two weeks."
An Iberian trader said that "I think it would have more impact if the strike continues, and China and India start buying." She added that however, there is currently little demand in Europe and very little activity during the summer holiday period in July and August.
She said that coal is currently very correlated with range bound German power and emissions, with no strong coal fundamentals that could move the curve. While the market is flat as a pancake at the moment, attention is being paid to fluctuations in the euro/dollar rate, with a weaker dollar the main reason for a rise in API 2 Cal 12 coal above USD 128 per tonne at the end of last week.
The German trader said that the contract should remain range bound between USD 127 to USD 129 per tonne.
If you believe an article violates your rights or the rights of others, please contact us.
Thursday, July 21, 2011
EUROMETAL: Germany leads the European economy
European association of steel and other metals distributors and service centers (EUROMETAL) has recently released a report on the performance of economy and global steel markets.
The data regarding the change in GDP from 2005 to 2011 in the euro area highlights significant differences among countries. The performance of Slovakia stands out above all, with a +30.1%, followed by Luxembourg (+17.2%), Malta (+14.7%) and Cyprus (+14.4%), while among the weakest countries there are Ireland (-1.2%), Italy (-1%), Greece (unchanged) and Portugal (+0.4%). Germany performed well, with a +8.6%, while the GDP of France and Spain was up 5.6% and 5.3% respectively.
In 2005-2011, the European industrial production showed a very heterogeneous picture as well. Slovakia was in the lead again (+43.3%), followed by Belgium (+14.2%), Austria (+9.4%) and Ireland (+9.3%); in the bottom of the list there are Spain (-16.6%), Greece (-16.1%), Italy (-11.4%), Luxembourg (-10.1%) and France (-7.8%). Germany did well again, with a 4.2% increase.
Focusing on 2011 only, global GDP is estimated to grow by 4.3%, but the world is growing with different intensity depending on the different macro-regions: advanced economies, held back by low consumer confidence, fiscal tightening and government debt, will grow only by 2.2% this year, while emerging countries will grow by 6.5%. In detail, the healthiest countries are China (+9%), followed by India (+8.6%), Argentina, Chile, Indonesia and Turkey (all above 6%). A second group consists of the countries of Central-Eastern Europe and North America: Germany (+3.4%), Poland (+4.2%), Russia (+4.2%), Slovakia (+3.5%), United States (+2.5%) and Canada (+2.9%). Western Europe and Japan grew within limits: -0.6% for the latter, +0.9% for Italy, +0.7% for Spain, +1.5% for the United Kingdom, +2.1% for France. The figure for the 17 European countries was up 1.9%.
Speaking of steel, in 2011 EUROMETAL expects an apparent steel consumption of 157 million mt in the EU-27, up 8% compared with last-year 145 million mt, but still behind the pre-crisis levels (the peak was reached in 2007, with 184 million mt). As for the European production of crude steel, in the first 5 months of this year it was up 4% over the same period of 2010. The figure has to be compared with the 6% increase of the CIS area and the 23% of Turkey, direct competitor of Europe in the Mediterranean.
In the report by EUROMETAL, it emerges once again that the long steel segment is struggling more than any other to come out definitively from the crisis. In the first 5 months of 2011 the output of the European construction sector has declined 1% year on year, while the sales of rebar, beams and profiles distributors were up 7%, though this progress is largely attributable to restocking activities. The situation is far better in the flat steel market: in January-May 2011, service centers' sales increased by 14% year on year, in line with the increase in orders in the mechanical, automotive, appliance, construction and equipment industries.
Saturday, May 7, 2011
ANALYSIS - Costs of any Greek euro exit may be prohibitive
Sat May 7, 2011 2:42am IST
By Noah Barkin and Paul Taylor
BERLIN (Reuters) - The costs to a country of leaving the euro zone would be so high that many analysts think the bloc will do everything in its power to prevent an exit, even if that requires the richest members to keep bailing out weak states.
German magazine Spiegel reported on Friday that the Greek government had raised the possibility of breaking away from the 12-year-old euro area and reintroducing its own currency in talks with the European Commission and other member states in recent days.
The report was vigorously denied by the Greek finance ministry and officials from other member states. Sources did confirm that a small group of euro zone finance ministers were meeting in Luxembourg on Friday to discuss Greece and other pressing matters.
Leaving the currency union would carry huge economic, social, reputational and strategic costs for Greece or any other country. Greece would have to hive off its bank deposits from the rest of the euro zone banking system as it introduced a new currency, risking a run on its banks and huge disruption for its companies.
Banks across Europe would face losses on their Greek debt.
For the bloc as a whole, it would represent a humiliating setback because the common currency is broadly viewed as the culmination of half a century of European integration.
"To me the euro zone is a one-way street," said Gilles Moec, senior European economist at Deutsche Bank. "A breakup would have catastrophic consequences for the country that left. It would precipitate a run on the banks. I can't see how you do it in an orderly way."
Speculation about a possible euro zone breakup reached fever pitch in November of last year, but predictions that the bloc will fracture have come mainly from Anglo-Saxon sceptics.
Last summer, British economist Christopher Smallwood of consultants Capital Economics produced a 20-page paper entitled "Why the euro zone needs to break up" and U.S. economist Nouriel Roubini, nicknamed Dr. Doom, has said euro members will be forced to abandon the shared currency.
DEBT RESTRUCTURING RISK
Greece has struggled to meet the fiscal targets set out for it as part of its 110 billion euro ($160 billion) bailout from the European Union and International Monetary Fund.
Over the past month, markets have priced in the sort of default risk that was once unthinkable for a euro zone state and expectations have risen that Greece will have to restructure its 327 billion euro debt load while other countries will have to provide more aid.
Political opposition in northern Europe to giving Greece more money and rising anger within the country at the tough austerity measures the government has put in place have created a dangerous new dynamic that has convinced more experts an exit may conceivably happen, although probably not for years.
By reintroducing the drachma, the argument goes, Greece could sharply devalue its currency against the euro and keep official interest rates ultra-low, regain competitiveness, and tackle its debt problem without the political and social upheaval associated with years of austerity-fuelled recession.
"I'm not suggesting that these stories are right," said Jonathan Loynes, chief European economist at Capital Economics. "But we have said that we think it's quite likely that there will be some change to the membership of the euro area over the next four to five years and that one possible form will be the exit of a small economy like Greece.
"I don't think the idea is implausible at all."
But U.S. economist Barry Eichengreen, who authored a 2007 paper arguing that the single currency could not be undone, reaffirmed that belief last year as the Greek crisis deepened.
"Adopting the euro is effectively irreversible," he wrote in an article on the economics website Vox.
"Leaving would require lengthy preparations, which, given the anticipated devaluation, would trigger the mother of all financial crises," said Eichengreen, a professor at the University of California, Berkeley.
LEGAL NIGHTMARE
There is no legal procedure for leaving the euro zone and some economists argue that treaty changes would have to take place before an exit could happen.
"You would have to make it legal in order to leave," said Moec of Deutsche Bank. "You would probably have years of litigation on all the debt held outside the country."
Trade flows would probably be severely disrupted. Business costs would become unpredictable, inhibiting investment. Labour unrest and social strife would likely result as citizens faced mass unemployment, inflation and brutal public spending cuts.
That would far outweigh any potential boost to exports or tourism revenues from a devaluation.
"But what if the bank runs and financial crisis happen anyway?" Nobel prize-winning economist Paul Krugman asked on his blog last November.
An exit that is neither planned nor chosen but imposed by irresistible market forces would dramatically reduce the marginal cost of leaving the euro, Krugman contended.
But that economic logic may underestimate the political will that has driven European monetary union since its inception.
(Additional reporting by Emelia Sithole in London; Writing by Noah Barkin; Editing by Ruth Pitchford, sourced Reuters)
By Noah Barkin and Paul Taylor
BERLIN (Reuters) - The costs to a country of leaving the euro zone would be so high that many analysts think the bloc will do everything in its power to prevent an exit, even if that requires the richest members to keep bailing out weak states.
German magazine Spiegel reported on Friday that the Greek government had raised the possibility of breaking away from the 12-year-old euro area and reintroducing its own currency in talks with the European Commission and other member states in recent days.
The report was vigorously denied by the Greek finance ministry and officials from other member states. Sources did confirm that a small group of euro zone finance ministers were meeting in Luxembourg on Friday to discuss Greece and other pressing matters.
Leaving the currency union would carry huge economic, social, reputational and strategic costs for Greece or any other country. Greece would have to hive off its bank deposits from the rest of the euro zone banking system as it introduced a new currency, risking a run on its banks and huge disruption for its companies.
Banks across Europe would face losses on their Greek debt.
For the bloc as a whole, it would represent a humiliating setback because the common currency is broadly viewed as the culmination of half a century of European integration.
"To me the euro zone is a one-way street," said Gilles Moec, senior European economist at Deutsche Bank. "A breakup would have catastrophic consequences for the country that left. It would precipitate a run on the banks. I can't see how you do it in an orderly way."
Speculation about a possible euro zone breakup reached fever pitch in November of last year, but predictions that the bloc will fracture have come mainly from Anglo-Saxon sceptics.
Last summer, British economist Christopher Smallwood of consultants Capital Economics produced a 20-page paper entitled "Why the euro zone needs to break up" and U.S. economist Nouriel Roubini, nicknamed Dr. Doom, has said euro members will be forced to abandon the shared currency.
DEBT RESTRUCTURING RISK
Greece has struggled to meet the fiscal targets set out for it as part of its 110 billion euro ($160 billion) bailout from the European Union and International Monetary Fund.
Over the past month, markets have priced in the sort of default risk that was once unthinkable for a euro zone state and expectations have risen that Greece will have to restructure its 327 billion euro debt load while other countries will have to provide more aid.
Political opposition in northern Europe to giving Greece more money and rising anger within the country at the tough austerity measures the government has put in place have created a dangerous new dynamic that has convinced more experts an exit may conceivably happen, although probably not for years.
By reintroducing the drachma, the argument goes, Greece could sharply devalue its currency against the euro and keep official interest rates ultra-low, regain competitiveness, and tackle its debt problem without the political and social upheaval associated with years of austerity-fuelled recession.
"I'm not suggesting that these stories are right," said Jonathan Loynes, chief European economist at Capital Economics. "But we have said that we think it's quite likely that there will be some change to the membership of the euro area over the next four to five years and that one possible form will be the exit of a small economy like Greece.
"I don't think the idea is implausible at all."
But U.S. economist Barry Eichengreen, who authored a 2007 paper arguing that the single currency could not be undone, reaffirmed that belief last year as the Greek crisis deepened.
"Adopting the euro is effectively irreversible," he wrote in an article on the economics website Vox.
"Leaving would require lengthy preparations, which, given the anticipated devaluation, would trigger the mother of all financial crises," said Eichengreen, a professor at the University of California, Berkeley.
LEGAL NIGHTMARE
There is no legal procedure for leaving the euro zone and some economists argue that treaty changes would have to take place before an exit could happen.
"You would have to make it legal in order to leave," said Moec of Deutsche Bank. "You would probably have years of litigation on all the debt held outside the country."
Trade flows would probably be severely disrupted. Business costs would become unpredictable, inhibiting investment. Labour unrest and social strife would likely result as citizens faced mass unemployment, inflation and brutal public spending cuts.
That would far outweigh any potential boost to exports or tourism revenues from a devaluation.
"But what if the bank runs and financial crisis happen anyway?" Nobel prize-winning economist Paul Krugman asked on his blog last November.
An exit that is neither planned nor chosen but imposed by irresistible market forces would dramatically reduce the marginal cost of leaving the euro, Krugman contended.
But that economic logic may underestimate the political will that has driven European monetary union since its inception.
(Additional reporting by Emelia Sithole in London; Writing by Noah Barkin; Editing by Ruth Pitchford, sourced Reuters)
Greece denies may quit euro, European ministers meet
Sat May 7, 2011 5:58am IST
By Michele Sinner and Dina Kyriakidou
LUXEMBOURG/ATHENS (Reuters) - Top finance officials of the euro zone's biggest economies met to discuss Greece's debt crisis on Friday and Athens denied a media report that it was considering whether to leave the bloc.
Jean-Claude Juncker, head of the group of euro zone finance ministers, said the meeting in Luxembourg was attended by ministers from Germany, France, Italy and Spain. He said there was a broad discussion of Greece and other international economic issues.
Juncker denied a report in Germany's Spiegel Online magazine that the talks were held to discuss the possibility, raised by Athens, of Greece withdrawing from the 17-member euro zone, as well as the idea of restructuring Greece's 327 billion euro ($470 billion) sovereign debt.
"We have not been discussing the exit of Greece from the euro area. This is a stupid idea. It is in no way -- it is an avenue we would never take," he told reporters.
"We don't want to have the euro area exploding without reason. We were excluding the restructuring option, which is discussed heavily in certain quarters of the financial markets..."
But Juncker said a meeting of all euro zone finance ministers on May 16 would discuss whether Greece needed a further economic plan, beyond the 110 billion euro bailout which it obtained from the European Union and the International Monetary Fund in May last year. He did not elaborate.
Greek Finance Minister George Papaconstantinou attended the Luxembourg talks, his finance ministry said. It added that Greece remained committed to repairing its finances and returning to economic growth.
"The minister was invited to exchange views (on issues including) economic developments in Greece," the ministry said. "It is clear that during this meeting it was never discussed or posed as an issue whether Greece would remain in the euro zone."
The Luxembourg talks were also attended by European Central Bank President Jean-Claude Trichet and Olli Rehn, the European commissioner for economic and monetary affairs, Juncker said.
EURO FALL
Earlier in the day, the euro fell nearly 1 percent against the dollar and the cost of insuring Greek debt against default was quoted at a record high in response to the Spiegel report.
"The government has raised the possibility of leaving the euro zone and reintroducing its own currency," Spiegel said without citing its sources.
Despite its international bailout Greece, which joined the euro zone in 2001, has been unable to cut its budget deficit as fast as planned amid a deep recession. It has been raising taxes and slashing spending but is still plagued by tax evasion, corruption and the economy's lack of competitiveness.
Financial markets have been speculating for months that Athens will eventually have to restructure its debt and with the political will for more austerity starting to flag, some Greek politicians have been suggesting a "soft" restructuring which might involve lengthening maturities on the country's bonds.
An exit from the euro zone could help the economy in the long term; Greece would be able to cut interest rates and having its own, weak currency would boost exports and tourism.
But there is no legal procedure for leaving the zone, and the risks and immediate costs of the process -- Greece could face bank runs, and banks around the region could be damaged -- mean the government is likely to fight hard to avoid that option.
Although taxpayers in rich euro zone states such as Germany are becoming increasingly reluctant to fund weak euro zone states, their governments prize the currency union as one of Europe's great political achievements. The EU is currently negotiating a bailout with Portugal, the third state it is rescuing after Greece and Ireland.
A German government official told Reuters on Friday that a Greek exit from the euro zone "is not planned and was not planned", while a spokesman for the Austrian finance ministry said a breakup of the bloc would be "absolutely unthinkable".
Spiegel quoted from what it said was an internal German finance ministry paper that German Finance Minister Wolfgang Schaeuble was taking with him to Luxembourg, which warned that a Greek exit "would lead to a significant depreciation of the domestic currency versus the euro" and increase Greece's debt levels to 200 percent of gross domestic product. Its debt is officially projected to climb to 153 percent of GDP this year.
(Additional reporting by Jan Strupczewski and Luke Baker in Brussels, Andreas Rinke, Matthias Sobolewski and Noah Barkin in Berlin, Lefteris Papadimas in Athens and euro zone bureaux; Writing by Andrew Torchia; editing by Tim Pearce, sourced Reuters)
By Michele Sinner and Dina Kyriakidou
LUXEMBOURG/ATHENS (Reuters) - Top finance officials of the euro zone's biggest economies met to discuss Greece's debt crisis on Friday and Athens denied a media report that it was considering whether to leave the bloc.
Jean-Claude Juncker, head of the group of euro zone finance ministers, said the meeting in Luxembourg was attended by ministers from Germany, France, Italy and Spain. He said there was a broad discussion of Greece and other international economic issues.
Juncker denied a report in Germany's Spiegel Online magazine that the talks were held to discuss the possibility, raised by Athens, of Greece withdrawing from the 17-member euro zone, as well as the idea of restructuring Greece's 327 billion euro ($470 billion) sovereign debt.
"We have not been discussing the exit of Greece from the euro area. This is a stupid idea. It is in no way -- it is an avenue we would never take," he told reporters.
"We don't want to have the euro area exploding without reason. We were excluding the restructuring option, which is discussed heavily in certain quarters of the financial markets..."
But Juncker said a meeting of all euro zone finance ministers on May 16 would discuss whether Greece needed a further economic plan, beyond the 110 billion euro bailout which it obtained from the European Union and the International Monetary Fund in May last year. He did not elaborate.
Greek Finance Minister George Papaconstantinou attended the Luxembourg talks, his finance ministry said. It added that Greece remained committed to repairing its finances and returning to economic growth.
"The minister was invited to exchange views (on issues including) economic developments in Greece," the ministry said. "It is clear that during this meeting it was never discussed or posed as an issue whether Greece would remain in the euro zone."
The Luxembourg talks were also attended by European Central Bank President Jean-Claude Trichet and Olli Rehn, the European commissioner for economic and monetary affairs, Juncker said.
EURO FALL
Earlier in the day, the euro fell nearly 1 percent against the dollar and the cost of insuring Greek debt against default was quoted at a record high in response to the Spiegel report.
"The government has raised the possibility of leaving the euro zone and reintroducing its own currency," Spiegel said without citing its sources.
Despite its international bailout Greece, which joined the euro zone in 2001, has been unable to cut its budget deficit as fast as planned amid a deep recession. It has been raising taxes and slashing spending but is still plagued by tax evasion, corruption and the economy's lack of competitiveness.
Financial markets have been speculating for months that Athens will eventually have to restructure its debt and with the political will for more austerity starting to flag, some Greek politicians have been suggesting a "soft" restructuring which might involve lengthening maturities on the country's bonds.
An exit from the euro zone could help the economy in the long term; Greece would be able to cut interest rates and having its own, weak currency would boost exports and tourism.
But there is no legal procedure for leaving the zone, and the risks and immediate costs of the process -- Greece could face bank runs, and banks around the region could be damaged -- mean the government is likely to fight hard to avoid that option.
Although taxpayers in rich euro zone states such as Germany are becoming increasingly reluctant to fund weak euro zone states, their governments prize the currency union as one of Europe's great political achievements. The EU is currently negotiating a bailout with Portugal, the third state it is rescuing after Greece and Ireland.
A German government official told Reuters on Friday that a Greek exit from the euro zone "is not planned and was not planned", while a spokesman for the Austrian finance ministry said a breakup of the bloc would be "absolutely unthinkable".
Spiegel quoted from what it said was an internal German finance ministry paper that German Finance Minister Wolfgang Schaeuble was taking with him to Luxembourg, which warned that a Greek exit "would lead to a significant depreciation of the domestic currency versus the euro" and increase Greece's debt levels to 200 percent of gross domestic product. Its debt is officially projected to climb to 153 percent of GDP this year.
(Additional reporting by Jan Strupczewski and Luke Baker in Brussels, Andreas Rinke, Matthias Sobolewski and Noah Barkin in Berlin, Lefteris Papadimas in Athens and euro zone bureaux; Writing by Andrew Torchia; editing by Tim Pearce, sourced Reuters)
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