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Wall Street Stutters

November 12, 2012 by Leave a Comment

By the close, the Standard Poor’s 500-stock index was up less than a point and the Dow Jones industrial average added about a point. The Nasdaq composite index lost less than a point.

Trading volume was light, with the American bond market and government offices closed for the Veterans Day holiday.

The S.P. 500 fell 2.4 percent last week, the worst week for the index since June, partly propelled by concerns over the government spending cuts and tax increases set to go into effect early next year unless Congress acts to change the law before then. Though most consider it unlikely that no deal will be reached, analysts fear going over the combination could push the economy back into recession.

“If the ‘cliff’ were to occur, it would be very devastating for the economy, which is why it is hard to think that last week was much of an overreaction,” said Oliver Purshe, president at Gary Goldberg Financial Services in Suffern, N.Y., adding that the odds of Congress and the president failing to reach a deal were “very low.”

Data over the weekend showed that China’s export growth climbed to a five-month high, above 11 percent, beating expectations and adding to recent data suggesting the country’s seven straight quarters of slowing economic growth have ended.

“Any bit of positive news from China will swing things upward here,” Mr. Pursche said. “There’s a little bit of pent-up desire to bounce back today.”

Also overseas, the Greek parliament approved an austerity budget for next year, a necessary step to unblock a new tranche of credit from the European Union and International Monetary Fund before the government runs out of cash. Still, investors remain concerned about whether the European Union and the monetary fund will agree to send the next tranche.

European stocks closed mixed, with the DAX index in Frankfurt up 0.1 percent and the CAC 40 in Paris down 0.4 percent.

In the United States, the homebuilder D.R. Horton reported fourth-quarter earnings that beat expectations, helped by a jump in orders. Shares fell 5.3 percent.

According to Thomson Reuters data through Friday, 63.3 percent of the 449 companies in the S.P. 500 that have reported earnings have topped expectations, but only 38.2 percent of companies have topped revenue expectations, well below the 62 percent average since 2002.

Wall Street stocks rose on Friday, helped by strong consumer sentiment data, but it hardly made a dent in the week’s losses.

Article source: http://www.nytimes.com/2012/11/13/business/daily-stock-market-activity.html?partner=rss&emc=rss

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Euro Watch: Finance Ministers Add to Pressure on Greece Bailout

November 1, 2012 by Leave a Comment

“We called on the Greek authorities to solve remaining issues so as to swiftly finalize the negotiations with the troika institutions,” the so-called Eurogroup of finance ministers said in a statement issued shortly after a scheduled conference call.

The troika, a reference to the European authorities and international lenders supervising the Greek bailout, consists of representatives from the European Commission, the International Monetary Fund and the European Central Bank.

Greece and the troika have been negotiating for weeks over an austerity budget package that would require the approval of the lenders, and be passed by the Greek Parliament, before a loan installment of €31 billion, or $40 billion, can be unlocked. Without that money, Greece could face default by the end of the month.

Greek politics continue to add uncertainty to the process. After the government on Wednesday released details of the austerity package — including raising the retirement age by two years, to 67; cutting salaries and pensions, and increasing taxes — the country’s labor unions responded by announcing a 48-hour strike next week when the parliamentary vote is expected to be held. The Democratic Left, the smallest member of Greece’s shaky three-party coalition government, has said it will not give its full support to the budget package if it includes changes to labor laws that the party opposes.

Adding to the political tension, the Parliament on Wednesday passed only narrowly a bill aimed at speeding the process of raising money by selling publicly owned Greek assets. Several members of Parliament from the Democratic Left and the other coalition partner, the Socialists, voted against the measure, and the leaders of the parties abstained. Afterward the leader of the Socialists, Evangelos Venizelos, hastily convened his party’s members of Parliament for an emergency meeting, in an apparent effort to contain dissent ahead of the vote next week on the budget package.

But Greece, in perhaps the most dire circumstances of the 17 members of the euro zone, is hardly alone in its economic problems. Data released Wednesday by the European Union indicated that euro zone unemployment set another record in September, with 18.49 million people out of work.

The jobless rate in the 17-nation currency union ticked up to 11.6 percent from 11.5 percent in August, according to Eurostat, the E.U.’s statistical agency. The August figure, which had itself been a record level for the euro zone, was revised upward from the 11.4 percent initially reported.

Meanwhile, in Portugal on Wednesday, the Parliament passed the biggest tax increases in modern Portuguese history in an effort to meet the budget targets of its European bailout program. While the nation’s center-right ruling coalition supports the tax increases, the opposition Socialists are challenging them in court.

The Eurogroup finance ministers, in their statement Wednesday on Greece, said any decision to release the next round of money “was subject to the completion of prior actions by the Greek authorities” — a reference to commitments already made by Greece to overhaul labor laws and raise the retirement age.

The group said it hoped to finish assessing Greece’s progress by Nov. 12.

“Even if the troika report has not (yet) been officially released, it seems clear that the euro zone is willing to give Greece somewhat more time for the adjustment,” Carsten Brzeski, an economist at ING Belgium, wrote in a briefing note issued Wednesday. But, he wrote, “Filling the funding gap for Greece will again require some creativity.”

Many economists still contend that without some form of debt forgiveness, Greece will ultimately have to leave the euro union.

The German finance minister, Wolfgang Schäuble, said Wednesday after the Eurogroup conference call that no decisions had been made at the meeting. He said he did not expect the next status report by Greece’s troika of lenders to be issued before Nov. 11. “There are a lot of difficult issues that still need to be resolved,” he said.

At a news conference, Mr. Schäuble said the country’s relatively strong economy and low unemployment would expand Germany’s tax receipts by €29 billion this year, for a total of €602.4 billion.

But in the European unemployment figures released Wednesday it was not Germany, with a jobless rate of 5.4 percent, that had the lowest figure. Austria, at 4.4 percent, had the lowest. Most euro zone nations are faring much worse, particularly Spain, where the jobless rate reached 25.8 percent. Close behind was Greece, at 25.1 percent in July, the most recent month for which data were available for that country.

In contrast, the United States had an unemployment rate of 7.8 percent in September, and joblessness in Britain was at 7.9 percent in the three months through August.

The euro zone economy is expected to have contracted again in the third quarter, after a 0.2 percent quarterly decline in the three months through June. With the global economy showing signs of slowing and European governments cutting spending to balance budgets, economists say the contraction could extend into next year.

David Jolly reported from Paris. Niki Kitsantonis contributed reporting from Athens, and Melissa Eddy from Berlin.

Article source: http://www.nytimes.com/2012/11/01/business/global/euro-zone-unemployment-hit-new-high-in-september.html?partner=rss&emc=rss

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Protests in Greece Over New Austerity Bill

October 20, 2011 by Leave a Comment

But what was different on Wednesday, the first day of a two-day general strike before Parliament voted in the evening to approve new austerity measures, was the scale of the protest — tens of thousands of people — and the range of the demonstrators.

Although the demonstration was organized by leading labor unions, everyone from trash collectors, teachers, retired army officers, lawyers and even judges walked off the job to protest the government-imposed wage cuts and tax increases that they say are squeezing the debt-ridden country into penury.

“There’s no precedent for this,” said Anastasia Dotsi, 70, a retired bank worker who said anger had driven her out to protest. After two years of austerity measures, “we have been crushed as a people,” she said.

She said her son and daughter, who both work in the private sector, had not been paid in months and were struggling to pay their mortgages and support their families.

“I have never been a leftist; I voted for Pasok” — the Socialist Party of Prime Minister George A. Papandreou — “I consider myself a middle-class person,” she said. “But they’ve pushed us to become extremists.”

On Wednesday evening, as garbage fires smoldered in the streets, the Greek Parliament approved the new package of austerity measures — and secured crucial rescue financing — with all 154 governing party legislators in Greece’s 300-seat Parliament voting in favor.

The controversial bill includes cuts in wages and pensions as well as thousands of layoffs in the public sector — once a political third rail in Greece’s welfare state. It also changes collective bargaining rules to make it easier to hire and fire workers, a highly unpopular action that economists say is crucial to liberalizing Greece’s economy but that has little popular support.

The bill will not pass into law until a second vote — on the separate articles of the legislation — on Thursday. The measures are expected to pass, even over the reluctance of the governing Socialist Party, which helped build up the welfare state it is now charged with dismantling.

European Union leaders are preparing to meet Sunday to decide on the release of the next, $11 billion installment of aid to Greece, part of a $150 billion bailout engineered last year. They will also be looking at a much broader European rescue designed to protect the bloc should Greece default. Only that will avert a default next month that could shake the euro zone and reverberate through the global economy.

“The vote will boost our negotiating position; it will give us strength for the E.U. summit,” Mr. Papandreou said this week. The main goal for Greece, he added, is “to stay in the euro zone.”

But as Europe continues to debate the country’s fate, Greece’s government has lost its popular consensus. Economists and Greece’s foreign lenders say the austerity measures are required to modernize its economy, but they are deeply unpopular with Greeks.

“Now the only thing the government has managed to do is get people against them,” said Dimitrios Katsandris, 67, a pharmacist, who attended the demonstration in an elegant tweed jacket. “You see people with different interests, but now they are united against the government.”

On Wednesday, their anger was clear. Once demonstrators reached Syntagma Square, outside Parliament, around noon, some violent protesters transformed the otherwise peaceful demonstration into one of sustained street violence, throwing rocks at the police, setting trash cans on fire and smashing shop windows in nearby streets until well after dark.

The police estimated the crowd size at 80,000 people; some news Web sites put the number at more than 100,000. The authorities said 38 police officers and three demonstrators were hurt in Wednesday’s clashes. The Greek news media said at least six demonstrators were injured. The police said five people were arrested and 28 others detained briefly for questioning.

Shops, bakeries and gas stations closed, while public transportation was scaled back. Tax offices, courts and schools shut down, hospitals were operating with only emergency staff and customs officials walked off the job. Civil servants, who have been the most vociferous in their protests, continued sit-ins at ministries and state agencies.

The question on many minds was how long this state of affairs could last. As she stood at the base of Syntagma Square, Maria Sarrafidou, 53, a psychiatrist, said that she was seeing more patients in her private practice, but that they paid her less.

“Mostly panic disorders,” she said. “In the last two years I’ve seen children and adults. They have no hope for the future. They wait and wait; this is the most difficult part. They don’t know what’s going to happen.”

Article source: http://www.nytimes.com/2011/10/20/world/europe/greek-workers-start-two-day-anti-austerity-strike.html?partner=rss&emc=rss

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Merkel Rallies Wary Coalition Ahead of Vote on Greek Aid

September 27, 2011 by Leave a Comment

With the Greek prime minister, George A. Papandreou, in Berlin for talks, Mrs. Merkel sought to sway public opinion ahead of a vote Thursday in Parliament that some lawmakers have said is her most important legislative test since taking office nearly six years ago.

“Through the euro we are closely bound together and the weakness of one affects us all,” Mrs. Merkel said during a joint news conference with Mr. Papandreou at the Chancellor’s office, which came shortly after the Greek Parliament voted to back a hugely unpopular new property tax — one of a series of new austerity measures that will clear the way for Greece to receive financing it needs to stave off default.

“I know that a lot is being asked of the Greek people,” Mrs. Merkel said, before a dinner with Mr. Papandreou. But she added that she was confident that Greece would fulfill conditions set by international lenders, and promised that Germany would be supportive.

But she tempered her remarks by insisting that Germany was “not available” for further steps like jointly issued bonds guaranteed by all euro zone members — an idea that Germany has staunchly resisted. And the German finance minister, Wolfgang Schäuble, ruled out an increase in the size of the euro zone bailout fund, though not necessarily an increase in its ability to borrow.

Critics have accused Mrs. Merkel of failing to show strong leadership and allowing the debt problems of one small Mediterranean country to grow into a global threat that even prompted a tentative offer of aid Tuesday from worried officials in Japan.

In recent days, European officials have faced intense pressure from concerned counterparts in the United States and Asia to prevent further spread of the debt crisis. The browbeating seems to have had some effect.

During appearances since Sunday, Mrs. Merkel has shown more willingness to risk her political prestige to win over skeptical Germans, whose money and support is crucial to any resolution of the sovereign debt crisis.

But she continued to put much of the onus on Greece. “The all-important thing is — and we will provide every assistance that is wanted from the German side — that Greece wins back confidence; that we get out of this terrible development that there is bad news every month,” she said.

Mr. Papandreou, in recognition that his country’s fate hangs to a large extent on decisions made in Berlin, tried to soothe some of the ill will that has built up between the two countries. Germans resent what they perceive as Greek unwillingness to live within their means, while in Greece the crisis has revived stereotypes of bossy, arrogant Germans.

“We must stop blaming each other for our different weaknesses and unite together with our different strengths,” Mr. Papandreou said during a speech to the same business group that Mrs. Merkel addressed. “Even Germany depends on Europe, its biggest trading partner, for growth and jobs.”

German lawmakers are certain to pass a bill that would bolster the main European bailout fund, known as the European Financial Stability Facility. But it would be a blow to Mrs. Merkel’s waning prestige if dissent in her own coalition required her to seek support from the opposition Social Democrat and Green parties.

“Why a stability program?” Mrs. Merkel told a gathering of her Christian Democratic Union in Karlsruhe, Germany, on Monday. “Not because we want to take over Greece’s debts, but because otherwise the euro would become unstable.”

Lawmakers in Slovenia voted Tuesday to approve their share of the rescue fund’s guarantees. Finland’s Parliament is expected to reluctantly approve the fund measure in a vote Wednesday, despite formidable domestic opposition. All 17 members of the euro zone must ratify the expanded fund, a process that has delayed its implementation.

The fund will have the power to buy European government bonds and recapitalize struggling banks. But some analysts have said the fund needs to be two or three times bigger to remove any doubts about its impregnability.

Article source: http://www.nytimes.com/2011/09/28/business/global/german-leader-reaffirms-backing-for-greece.html?partner=rss&emc=rss

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Greek Parliament Expected to Approve Austerity Plan

June 29, 2011 by Leave a Comment

Stock markets rallied across Europe and much of Asia amid indications that the measures would be approved. Only one member of the governing Socialist Party, Alexandros Athanassiadis, now says he will oppose the package. Thomas Robopoulos, who had previously said he would oppose the measures, declared that he had changed his mind.

Protesters massed outside Parliament shouting “Traitors, traitors!” and the police repeatedly fired tear gas to maintain control after demonstrators knocked down a barrier.

As the vote neared, local media reported that the positions of two or three other party skeptics had softened, and Elsa Papadimitriou, a legislator from the leading opposition party, New Democracy, told Parliament on Wednesday that she would vote for the measures despite the opposition of the conservative leader Antonis Samaras. Calling it the “most difficult but valuable decision of my political career,” Ms. Papadimitriou said she hoped the government would not disappoint her.

Parliament was to vote on tax increases, wage cuts and the privatization of 50 billion euros, or about $72 billion, in state assets. Assuming the measures pass, a second vote will be held Thursday to implement the latest austerity program, with key sticking points expected to include the timing of the privatizations, especially of the state electric utility, Public Power Corporation, whose powerful union has close ties to the Socialists.

The nation’s unions complicated matters on Tuesday when they began a 48-hour general strike — the first time they had walked out for more than 24 hours since democracy was restored to Greece in 1974 after a seven-year military dictatorship. The police were calling in reinforcements to cordon off streets near Parliament to ensure that protesters did not block legislators’ access to the building, with 5,000 police officers on the job.

One protester, who would only give his first name, Theodore, said on Wednesday that Greeks’ lives “are going to change forever” if the measures were approved. “If you belong to the middle class, that doesn’t exist anymore. There’s only rich and poor.”

“What they’re voting on is exactly the opposite of what they were elected to do,” Anastasia Arvanitiki, 57, a pharmacist, said. “They’ll be the worst criminals in history” if the vote goes through, she said. “We want to see them hanged.”

Prime Minister George A. Papandreou has a five-vote parliamentary majority as he tries to push through the austerity plan, which strikes at the heart of his Socialist Party base. The center-right New Democracy opposition party has struck a populist tone and opposes the measures, saying they offer too much austerity and not enough stimulus.

Mr. Robopoulos, told state television on Tuesday that he would support the measures, “putting the national interest above everything else.” Earlier, he had said he would decide “at the very last moment, after I have listened to all the speakers,” referring to the debate in Parliament.

“This is a crucial moment; if the memorandum does not pass we shall go bankrupt,” Mr. Robopoulos added.

He spoke after talks with the new finance minister, Evangelos Venizelos, a longtime Socialist who is regarded as being able to rally the party behind the measures, however unpopular.

As lawmakers debated Tuesday, riot police clashed with protesters.

The protests Tuesday in Syntagma Square in front of Parliament began peacefully but turned violent as groups of youths on the fringes began throwing rocks, firebombs and firecrackers.

The European Union, the European Central Bank and the International Monetary Fund have said they will release $17 billion that Greece needs to pay its expenses through the summer if Parliament passes the measures.

“The only way to avoid immediate default is for Parliament to endorse the revised economic program,” said Olli Rehn, the European Union’s top economic and monetary affairs official. “Let me say this clearly: There is no Plan B to avoid default.”

In Brussels, European Union officials said they were working on contingency plans, including an effort to persuade the Greek opposition leader Antonis Samaras of the New Democracy Party to support the measures.

Last year, Greece’s foreign lenders imposed austerity measures after they provided a first round of aid. Since then, Greece has cut the wages of its 800,000 public workers — a quarter of the work force — by more than 10 percent.

The demonstration on Tuesday was one of the first in which labor unions joined with the younger demonstrators who have gathered in downtown Athens every night for the past month. Security forces fired tear gas to thin out the crowd, sending the demonstrators fleeing into side streets.

A police official said that 23 people were detained, with five later arrested, and that 21 officers were injured, none seriously.

Near Syntagma Square, a 40-year-old woman who gave her name only as Eirini, said she had been a secretary in a construction firm but had been out of work for more than five months.

“I’m here because we have nothing to lose,” she said, pushing down the surgical mask she used to filter out the tear gas. “We know very well that in six months, when they run out of money in the banks, we will be even more broke and hungry.”

She added, “I think that in one year, we are going to go to Syntagma, take out all the grass and plant tomatoes.”

Stephen Castle contributed reporting from Brussels.

Article source: http://feeds.nytimes.com/click.phdo?i=c7f1b2181af224a52ceaac4fe1b03c32

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Rescue Measures for Greece Advance as French Offer to Ease Debt

June 28, 2011 by Leave a Comment

With investor pressure mounting ahead of the vote by the Greek Parliament this week, President Nicolas Sarkozy outlined a proposal under which French banks would give Athens more time to pay back loans as they come due over the next three years.

The banks would share part of the cost of the bailout by extending new loans to Athens as old loans mature, but the banks would not have to forgive the debt itself, a concern of many investors.

“We’ve been working on this with the banks and insurance companies,” Mr. Sarkozy said at a news conference in Paris. “We’re committed to going from a principle — the voluntary participation of the private sector — to concrete reality.” Mr. Sarkozy said he hoped that other European countries would adopt a similar plan.

It comes at a critical moment in the long-running drama over how to prevent a default on Greece’s $467 billion debt.

A vote on Greece’s latest $40 billion austerity package is scheduled for Wednesday, with another vote scheduled for Thursday on separate legislation to carry out the reforms. If the measures pass, the European Union is expected to announce the size and details of a new, second bailout package at a meeting of ministers on Sunday.

If the Greek Parliament were to vote the package down, a chain reaction could engulf global financial institutions.

Investor confidence in the debt of countries on the periphery of Europe like Greece, as well as Portugal and Ireland, has been rapidly eroding. European financial institutions hold more than half a trillion dollars worth of their sovereign debt. Private borrowers in these countries, who would also be hammered by a public default, owe Europe’s banks another trillion, according to the Bank for International Settlements.

The French banks’ willingness to chip in underscores just how vulnerable giants like Société Générale and BNP Paribas would be in a full-scale default, a danger also confronting large institutions in Germany, Belgium and elsewhere. It is also why European leaders have the leverage to extract concessions from banks as part of a broader rescue package for Greece.

With European leaders unable to come up with a concrete plan until now and Greek politicians balking at calls for austerity, the picture for Europe’s banks has been growing dimmer by the week. “Investors think policy makers are kicking the can down the road,” said Philip Finch, a bank analyst with UBS in London.

As a result European bank shares have fallen nearly 25 percent over the last four months, helping bring down the shares of their counterparts in the United States, which have lost 13 percent over the same period.

But unlike American banks, which raised capital and wrote off tens of billions of dollars in bad loans after the financial crisis, European institutions have been much slower to acknowledge the problems they face, analysts and investors said. Even without a sovereign debt default, Mr. Finch said, European banks need to raise $150 billion in capital to bolster balance sheets.

French officials said the proposal announced Monday was the fruit of recent meetings between the Élysée Palace, the French Treasury, the Bank of France and the French banking federation.

The initiative is likely to be supported by Jean-Claude Trichet, the departing president of the European Central Bank, who had stood against plans to automatically impose losses on the face value of Greek debt.

Article source: http://feeds.nytimes.com/click.phdo?i=c4db6b3b37954de1767fe0c75ebeb197

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