November 15, 2024

A European Bank Official, Mervyn King, Sees Darker Outlook

Mr. King, the governor of the Bank of England, urged banks to meet stricter capital requirements by paying out less in bonuses or to shareholders in dividends instead of curbing lending to the real economy. The recent step by the European Central Bank to provide the region’s banks with cheap financing will ease pressures on financial institutions in the medium term but is no long-term fix for a lending market that needs to be revitalized, he said.

“Overall conditions have worsened,” Mr. King said at a news conference in Frankfurt after a meeting of the board. “Dependence on central banks has risen and signs are intensifying that stressed financial conditions are passing through to the real economy.”

“In a climate of extreme risk aversion, investors lack confidence to continue to provide normal level of funding to financial institutions,” Mr. King said.

The E.C.B. on Wednesday pumped nearly $640 billion into the banking system on the Continent in an effort to ease the region’s credit squeeze. The amount was more than some analysts had predicted and helped to lift some concerns among investors that banks could struggle to get adequate financing. Shares in Deutsche Bank of Germany, BNP Paribas of France and other banks in Europe rose on Thursday.

Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh, said he agreed with Mr. King’s assessment that banks were generally more cautious in lending but said the markets were “still a world away from the Lehman situation where there’s a complete withdrawal of credit.”

The recent action by the E.C.B. was probably sufficient to convince investors that “banks won’t pull down their shutters in the first half of next year,” Mr. Milligan said.

Mr. King said the members of the systemic risk board, the European body set up to monitor risks to the region’s financial stability, did not discuss the probability of a member’s leaving the euro zone. Discussions “focused on the stability of the banking system and the pressure on funding,” Mr. King said.

Asked whether the board would expect banks to make contingency plans for the possibility that a country leaves the euro zone, Mr. King said that “all financial institutions are expected to prepare for a wide range of contingencies.”

Mr. King called on banks to work hard to increase their level of capital over the next six months but “not by reducing lending to the real economy.”

“Clearly conditions are difficult and we see that with the funding pressures,” Mr. King said, “but we encourage banks to build up capital when they can.”

Article source: http://feeds.nytimes.com/click.phdo?i=b5054a0e9b5f1fc3f63f32c6c1167525

Greeks Protest Austerity Plan Amid Growing Weariness

The riot police were fanning out. Some stores were beginning to pull down their steel shutters. But even so, like many Athenians who continued to sit in nearby cafes, Mr. Giannopoulos was unimpressed.

The protesters did not represent him, he said, or most Greeks for that matter. Most Greeks, he said, were weary these days, unsure what to think.

“We have become zombies,” he said “What we see ahead is a dead end. There is no way out.”

The protest, which was over in about an hour and a half, drew about 13,000 participants, the police said. Organizers said 20,000. But even the higher number is still about half the rate of participation seen earlier this year — a sign some say of growing resignation in the face of a constant stream of grim developments.

“What can we do?” Mr. Giannopoulos asked. “I don’t see it.”

The march was part of a general strike called by the country’s two main labor unions, the first since last June. The unions, with 2.5 million members, have led resistance to the newest austerity measures, which include additional cuts to civil servants’ pay and pensions as well as a controversial plan to cut 30,000 jobs. They have called for another general strike on Oct 19.

A few brief clashes broke out early between riot police officers and masked youths, some wearing swimming goggles to protect their eyes from tear gas. But the incidents, and a few that carried over into the afternoon, were isolated. For the most part the march was peaceful, with neatly dressed demonstrators sipping iced coffees as they walked and talked or waved banners printed by their unions.

Last summer, the protests were far more lively and spontaneous as many young people — coordinating over the Internet — descended on the square across the street from Parliament. But since then the news has been unrelentingly bad for Greece, and the numbers of demonstrators have dwindled.

Alexandros Zachiotis, 22, a student of mechanical engineering with a part-time job who was one of the participants last summer, said there was still interest in some sort of political activism, but it was not always clear what to do and, for many, depression has set in.

“The problem is that Greeks have lost hope,” he said. “We look into the future but we see black — more poverty, more austerity.”

The latest polls show that political opinions have changed drastically since the beginning of the year. Prime Minister George A. Papandreou, who used to lead in the polls, is now behind. Several recent polls have given the leader of the opposition New Democracy party, Antonis Samaras, an edge of one to five percentage points, but neither has wide support.

One poll found that only 17 percent of the public had faith in Mr. Papandreou, a Socialist, to manage the country’s financial crisis, but just 26 percent believed that Mr. Samaras could do a better job. Of those questioned in several polls, more than 30 percent said they were undecided or would abstain from voting.

Wednesday’s 24-hour strike — which shut down central and local government operations, including schools, courts and airports — comes at a time when Greece is rushing to meet the demands of its international creditors, who are pressing for more reforms before they release a $10.6 billion installment of aid.

Without that money, Greece may be unable to pay its bills next month. But economists say that even that installment, part of a $147 billion rescue package negotiated last year, will not be enough to solve its problems.

Some who joined the march on Wednesday said they hoped that a show of anger would mean something, though many said it was an important way to vent their frustration.

“I wish that more came out to march,” said Mandeou Meropi, a 50-year-old doctor, who had goggles in her handbag. “It’s my personal opinion that if more people don’t show up, then something really violent will happen. Let’s not forget that such a recession is what brought Hitler to power.”

But others were not convinced that another protest would make any difference. “I came because my students don’t have any textbooks this year,” said Irini Karioti, a high school philosophy teacher. “But I really can’t see that these protests do anything.”

Demonstrations have a noted place in Greek history. It was only in the 1970s that street protests helped bring down the military junta.

But Babis Papadimitriou, a political commentator, said that Greeks were feeling protest fatigue.

“They’re bitter and they’re angry, but they’ve realized that demonstrations aren’t an effective way of bringing about change,” he said.

He noted that most of the roughly 20,000 Greeks who walked off the job on Wednesday were civil servants, who are protesting salary cuts and plans for thousands of layoffs in the public sector.

“The other Greeks have to work for a living; they don’t have the luxury of going on strike,” he said.

During the protests, many businesses did their best to stay open. Much about the event seemed choreographed, as onlookers followed unwritten rules. It was understood, for instance, that stepping across the street from the square was a safe zone. One man had even parked an antique car he rents for weddings there, hoping to pick up business.

Vassilis Sarris, 48, who has been driving a taxi for 24 years, was parked on a side street hoping to get a radio call from a nearby hotel. His income is way down this year, he said. He has had to cancel his daughter’s dancing classes, even with his parents lending a hand.

“If this goes on,” he said, “in six months I won’t be here. The bank that is chasing us can have the house. And I don’t see a chance that Greece will get out of this thing. I am not at all optimistic that things will change.”

Article source: http://feeds.nytimes.com/click.phdo?i=d18ab2c19222f8f72242db594211f135