Estrolabio

enviado por Julio Marques Mota

The crisis is back again in full force

• A bad day for the eurozone’s periphery, as bond markets react to Moody’s latest downgrade of Portugal;
• Portugal’s PM complains about a “punch into the stomach”, as credit default swaps reached an all-time record of 914 points;
• EU government and the European Commission have threatened the rating agencies with reprisals;
• Michel Barnier was mooting the idea of a rating ban for countries subject to a European programme;
• the Paris meeting to improve the conditions of the French rollover plan descended into chaos;
• Wolfgang Schäuble relaunches his controversial bond swap plan given the no-compromise position of the ratings agencies;
• the Institute for International Finance proposes a bond buyback programme;
• George Papandreou sets up a cross-party committee to calm down political tensions;
• Christine Lagarde, in her first appearance as the IMF’s MD, hints at lower interest rates for Ireland;
• she also calls on the Greeks to follow Portugal’s example of a cross-party consensus in favour of reform;
• Schäuble seeks to increase privatisation revenues;
• Guido Bohsem attacks Schäuble for his failure to repair the German budget;
• Jean-Claude Trichet is today expected to announce his last interest rate increase;
• Wolfgang Proissl says ECB is engaged in a poker match to regain its credibility, but with uncertain outcome;
• the case against DSK continues after all;
• the affair is overshadowing Martine Aubry’s presidential bid;
• Manuel Valls says the Socialist party’s election manifesto was unrealistic;
• the Greek government, meanwhile, has invited Germany’s president Christian Wulff to address the Greek parliament.

Eurointelligence Syndicated Column

EIP 1.0 – high time to address macroeconomic imbalances!

By: Guntram Wolff

This column argues that the euro zone has no time to waste for structural reforms given the risk of default of Greece. The new excessive imbalance procedure (EIP) could play a crucial role in fostering such structural reforms. If needed, the Commission should start the EIP procedure as early as September should countries such as Spain not deliver on their reform commitments.

_______________________________

Moody’s downgrade of Portugal was a crucial moment in this crisis. Peripheral bond spreads shoot up yesterday, approaching previous records during this crisis, as default fear has once again gripped the markets. Germany’s decision to relaunch its idea of an essentially involuntary bond swaps for Greek sovereign debt holders did not help improve market sentiment either.

Moody’s downgrade also incited indignant reactions from Portugal.  Prime minister Passos Coehlo called it a “punch into the stomach”, the chairman of Santander Portugal Nuno Amado “inappropriate”, and president Cavaco Silva saw“ not the slighted justification” for this downgrade. Interest rates for all maturities increased, reaching record levels especially at the three year horizon. Credit default swaps, the insurance against a government default, surged to 914 points, the highest value ever.

The political response to Moody’s downgrade and to S&P decision to kill the French debt rollover proposal) was furious. After S&P correctly concluded that a coerced default should be rated like a coerced default, EU governments and the European Commission reacted angrily, and threatened the rating agencies with a loss of their oligopoly in Europe. Michael Barnier went as far as to call for a ban a rating on countries subject to a European bailout programme, while calling on them to “respect EU rules”. (not clear to us which rule had been broken) Reuters reports that Portuguese bankers want the EU to set up its own rating agency, presumably to give policy-compliant ratings. Schäuble said yesterday that the Portuguese downgrade was unjustified because Portugal was way ahead in the implementation of the troika’s recommendations. Speaking – as he does these days - in his unofficial capacity as Portugal’s EU spokesman, Jose Manuel Barroso also wondered yesterday that “it seems strange that there is not a single rating agency coming from Europe. It shows there may be some bias in the markets when it comes to the evaluation of specific issues of Europe."

(The rating agencies have not broken any rules, nor are they anti-European. They have been calling the French rollover scam for what it is. As for Moody’s rating for Portugal, we find it completely coherent that the agencies are taking the cacophonous EU policy process into account when issuing a rating. It is perfectly rational for Moody’s to say that Portugal will eventually need a second loan programme, and that, given German and Finnish politics, you cannot take this for granted. Schäuble’s comment that Portugal was ahead in implementing the measures misjudges what the rating agencies do: they provide an opinion on default probability. We would consider a Ba2 rating as still relatively generous, considering the country’s net external debt. )

Paris meeting descends into cacophony and chaos

Wolfgang Schäuble yesterday put the old German bond swap plan back on the table, under which existing debt would be swapped for longer-dating debt. He was essentially arguing that if the rating agencies say No to everything, we might as well do it properly, and get as much money out of the Greek bondholders as we can. The FT has a very good report on this, and on the parallel process in Paris, where bankers had been discussing changes to the French rollover plan, which is now essentially dead. The meeting in Paris descended into chaos, with everybody reiterating long-held opinions. The FT quotes one participant as saying that the revival of the Schäuble plan was indicative of the fact that the people involved in this process had insufficient technical understanding. The article also makes the point that the Institute for International Finance advocates the idea of a voluntary bond buyback, with EU/IMF money, which in their estimate could raise some €40-50bn. Another round of talks – with a small group of participants – is scheduled for today in Rome, according to the article.

Papandreou sets up cross party parliament committee to calm down tensions

George Papandreou announced on Wednesday the formation of a cross-party parliamentary committee with the aim of rebuilding trust in the country’s institutions and countering cases of extreme behaviour by politicians, protesters and the police, Kathimerini reports. The premier voiced alarm about the increasing number of attacks by voters on politicians, which has caused a row between ruling PASOK and the Coalition of the Radical Left (SYRIZA). The committee is also to scrutinise police conduct, as the police were criticized last week for being overzealous.

Lagarde hints at fairer interest rate deal for Ireland

Christine Lagarde has hinted that Ireland could get a fairer deal with her in the driving seat, the Irish Independent reports. In her maiden address as a new head of the IMF she said ““There is no one category of country that deserves special treatment and another one that will receive harsh treatment." An EU/IMF team is currently in Dublin assessing Ireland’s progress under the programme.

Lagarde asks Greece to imitate Portugal’s political consensus on reform

In this first press conference as the IMF’s new MD, Lagarde also asked Greece to look at Portugal’s cross party consensus for a tough reform program and to be inspired by this, according to Frankfurter Allgemeine Zeitung. Lagarde further announced that the IMF’s executive board will meet on Friday to decide the disbursement of its next loan tranche to Greece.

Schäuble wants to increase privatization revenues

Presenting his budget in the cabinet meeting Wolfgang Schäuble said he wants to increase privatization revenues to €5.1bn, according to Financial Times Deutschland. Potential candidates for a sell-off are Telekom, in which the government still has a 34% stake, Deutsche Post with a public stake of 3.5% via the public KfW bank or the public real estate company TLG. In a separate article the paper reports Schäuble grudgingly agreed to limited tax cuts.

Guido Bohsem attacks Schäuble for his failure to repair the German budget

Writing in Süddeutsche Zeitung Guido Bohsem attacks Wolfgang Schäuble for his failure to use the exceptionally high tax receipts to seriously reduce the debt level and to put the budget back on a sustainable level. Bohsem warns that the planned tax cuts and additional expenditure for reform of the army and the exit of nuclear energy mean very tough future cuts in the budget since Germany will have to respect the tight limit’s of its constitutional debt break.

Jean-Claude Trichet’s last interest rate hike

Les Echos  expects Jean-Claude Trichet to announce his “last interest rate hike” at today’s meeting of the ECB’s governing council before retiring by the end of October. Markets, economists and ECB watchers are unanimous that the ECB will raise its interest rate by 25bp from 1.25% to 1.50%. Bundesbank president Jens Weidmann, who yesterday participated in the German government’s discussion on the 2012 budget, told the cabinet that inflation in Germany was to ease in the second half of 2011, Financial Times Deutschland writes. Lower inflation in the largest eurozone economy would strengthen the thesis that the ECB will be less in a hurry to hike rates further. Meanwhile FTD polled bank economists who in their majority support the view of the Bank of International Settlement that persistently low interest rates in advanced economies were co-responsible for the build-up of speculative bubbles in emerging economies like China, India and Brazil 

Wolfgang Proissl sees the ECB engaged in big poker match to safeguard its credibility

Writing in Financial Times Deutschland Wolfgang Proissl explains that the ECB is engaged in a crucial poker match with the eurozone governments. The central bank’s refusal to accept Greek government bonds should they be downgraded to a default level is intended to force the governments to put up enough money and to design institutional solutions so that the rescue program for Greece will be perceived as credible. The ECB’s aim is to get back some of the credibility it has lost in the past 18 months as a result of its SMP program and its loosening of collateral requirements for Greece and Ireland. But if worst comes to worse, the ECB’s tough stance will turn out to be a bluff because the central bank will continue to be flexible and help saving the euro.

Greek government invites German president to address parliament

The Greek government officially invited German president Christian Wulff to address the Greek parliament, mass circulation daily Bild reports. This political gesture is intended to ease tensions that have arisen between the two countries in the context of the bailouts of Greece. Speaking to Bild the new Greek foreign minister Stavros Lambrinidis asked Greeks and Germans to stop pointing fingers at each other, to shake hands instead and to cooperate.

DSK investigation overshadows Aubry’s presidential bid

The meeting between DSK’s lawyers and representatives of the New York disctrict attourneys did not lead to dropping the charges against the former French presidential hopeful, Le Figaro reports. The DA’s office yesterday published a communiqué saying that the proceedings continued. Le Monde has a story saying that despite the doubts about the victim’s credibility, her first medical examination shortly after the alleged rape seemed to support the rape charges. Meanwhile the lawsuit in the US and the potential rape charges in France totally overshadow the attempts of the Socialist’s party chairwoman Martine Aubry to start her campaign for the Socialists primary elections in October, Le Figaro writes in a separate piece.

Valls questions Socialist’s key electoral promises

Manuel Valls, another Socialist presidential election hopeful, questioned the key promises in the party’s bid for the presidential elections, Les Echos writes. About the pledge to create 300.000 jobs for young people he said: “Obviously I don’t believe it”. On the promise to go back on the retirement age from 62 to 60 years, he commented: “There will be no return to 60 years.” The Socialist’s promises prompted the influential public thinker Alain Minc and others to predict France’s loss of its AAA rating should a socialist win the presidential elections in 2012.

Back in full crisis mode. Portuguese, Irish, Italian and Spanish spreads shoot up after Portugal’s downgrade. Euro down.

Euro bilateral exchange rates:  

Zero Coupon Inflation Swaps

The IMF blinked first: Greece will not default this month. 

• The IMF and the EU agreed to pay the fifth loan tranche to Greece after all, even if there is no agreement on a second loan package;
• financial markets are now betting on a default of Greece, and on a contagious spread of the crisis;
• Spanish 10y-yields have gone up to over 270bp, approaching a previous record, after a disappointing Spanish bond auction;
• the US and China are both putting pressure on the EU to resolve the crisis;
• Germany continues to insist on a large and quantifiable private-sector involvement;
• George Papandreou will announce his cabinet reshuffle today;
• the vote of confidence seems to have been postponed until Tuesday;
• two further Pasok MPs quit yesterday, but were replaced with Papandreou loyalists;
• Reuters says Greece is a nation in denial;
• Mark Mazower writes that Greece got away with defaults in the past, but not this time;
• Le Monde says Greece must be saved at any cost;
• Germany’s Bild, helpful as ever, warns the Greeks not to bite off the hand that feeds them;
• Silvio Berlusconi asks Lorenzo Bini-Smaghi to quit “voluntarily” for the good of the country;
• Merkel and Sarkozy meet today amid the lowest expectations;
• French and German CEOs prepare a joint declaration to save the euro;
• the German finance ministry says rating agencies reinforce the hysteria;
• Parliament and Council have reached an impasse in the negotiations over stability pact reform;
• the ECB, meanwhile, is likely to oppose the Irish plan to impose hair cuts on secured bondholders.

_______________________________

The IMF has now agreed with the EU that the fifth tranche of the loan could be paid in June, which allows the negotiations for the next Greek loan package to be postponed until after the summer. An immediate bankruptcy of Greece has thus been avoided, but the markets now seem to have concluded that Greece will default sooner or later, and that the eurozone will crack up. Bond spreads rose all over the eurozone periphery. Most worrying is Spain, where spreads rose to over 270bp yesterday, approaching the records of last year, a sign that contagion fears are rising. Over the last 30 days, the Spanish spreads went up from 214bp to 274bp. Yesterday’s nervousness was aggravated by poor demand in the latest Spanish bond auction. The rise in spreads reflects the fear in market that the EU is not on top of this problem, as the crisis drags on and on.

The EU is now facing calls from the US but also China to end the crisis, but there is at present no prospect of that happening. Germany still insists on a substantial and quantifiable private-sector involvement, and this holds up negotiations in the Ecofin. It is possible that they might achieve a deal next week, but at least they have a backstop if they don’t.

 Le Monde calls at saving Greece at whatever cost

In a non-signed front page editorial Le Monde calls at saving Greece whatever the cost. The paper describes the deep divisions between Germany and the ECB as well as most of the other relevant European actors on the contentious issue of public sector involvement (PSI). Le Monde sides with the ECB saying that only long term reforms in Greece, that need to be closely monitored and a real economic and budgetary gouvernance of the eurozone show a way out. But the paper is convinced that Greece needs to be saved, whatever the price. “The challenge is not minor: the future of the euro and with it the future of Europe is at stake”.

 Merkel – Sarkozy: Europe’s dysfunctional leadership couple

Papers in Germany and France are full of stories about Angel Merkel and Nicolas Sarkozy who will try to coordinate their positions on Greece this morning at a summit in Berlin. French sources continue to complain about Merkel’s lack of interest and engagement in Franco-German relations. A French source pointed out that the Berlin meeting will be the first bilateral encounter of Europe’s two most leaders in seven months, according to Süddeutsche Zeitung. Many analysts are not optimistic about the Chancellor’s and the President’s ability to find a common ground, as shows an analysis of Le Monde under the title “Merkel and Sarkozy continue to oppose each other”.

 French and German CEO prepare a common declaration to save the Euro

According to Handelsblatt French and German CEO’s are working on a common declaration calling for all efforts to be made to save the euro because the benefits of the common currency by far outweigh its costs. The paper reports the idea came up during a meeting of a Franco-German industrialists club “Circle de l’industrie” with Angela Merkel. German participants included Franz Fehrenbach of Bosch, Rene Obermann of Telekom and Peter Löscher of Siemens among others. The text is supposed to be published next week.

German ministry of finance criticizes rating agencies

The German finance ministry criticizes the role of rating agencies in the current euro crisis. “Rating agencies can be important information agents but at the moment they only reinforce the hysteria”, finance state secretary Steffen Kampeter said according to Frankfurter Allgemeine Zeitung. The paper quotes deputies across the party spectrum in Bundestag agreeing on the negative impact of rating agencies and how it is unacceptable that Europe fate depends on ratings by three private US companies. The all call for the creation of a European rating agency (they don’t explain who should do that exactly) claiming that a European agency might enhance the credibility of the ratings.

ECB likely to oppose Noonan’s haircut plans

The ECB is unlikely to back the Irish government plan to inflict losses on senior bondholders in Anglo Irish Bank. The ECB has not changed its resistance to any measures to impose losses on senior bonds the Irish Times quotes  its source. Michael Noonan  said the Government’s plans were limited to Anglo and Irish Nationwide and Government would not act without the support of European authorities on his plan for burden-sharing.

 Bond Spreads, Forex, and ZC Swaps.

Contagion everywhere. Spanish spreads are approaching 300bp, Italian spreads approaching 200bp, and even the Belgians are back on the radar screens of financial markets. Inflation expectations are now perfectly aligned with ECB’s target.

A ameaças das primeiras bombas sobre a Europa começa a levantar-se na própria Europa e já não era sem tempo. Leia as informações do dia sobre a economia e sobre  os mercados financeiros da União Europeia .

Coimbra, 16 de Junho de 2011

Júlio Mota

• George Papandreou dispõe-se a apresentar a sua demissão, mas as negociações para formar uma grande coligação falharam no meio de críticas mútuas

•  O primeiro-ministro grego procura agora um voto de confiança do Parlamento, o que poderá    abrir a possibilidade para  novas eleições;
• O  ministro das finanças oferece  algumas concessões nos aumentos dos  impostos;
• Especula-se sobre a hipótese de que  Lucas Papademos poderá tornar-se  o próximo ministro das Finanças grego, como parte de uma reorganização mais ampla do governo;

•  A crise política grega ocorre  no dia em que dezenas de milhares de manifestantes desceram às ruas em Atenas;

•  O ministro das Finanças irlandês diz agora que deseja  acabar com os obrigações séniores segurizadas;

• Como os ministros das Finanças discutem o envolvimento do sector privado, os irlandeses parecem ter concluído que este era um bom momento para levantar a questão;

• Ontem houve também violentas manifestações contra as políticas de austeridade  em Barcelona;

• Os  rendimentos de títulos espanhóis dispararam ontem, entre sinais  de que a crise está a espalhar-se;

• A imprensa alemã sugere que a UE poderia adiar a sua decisão sobre um segundo empréstimo à Grécia para depois das férias de Verão;

• O governo  alemão ainda continua a  insistir  no envolvimento do sector privado antes da cimeira da manhã entre  Angela Merkel  e  e Nicolas Sarkozy ;

• Fitch diz que uma Iniciativa tipo da  Viena será considerada como "uma situação de incumprimento restrita", ou seja Restrictive default, continuando os títulos a serem notados como DDD.

• Os franceses estão preocupados com o estado das relações franco‑alemãs;

• O FEEF emitiu a sua segunda emissão de obrigações;

• O comissário responsável pelo  orçamento da UE diz  que a não aprovação  do orçamento iria ameaçar a integração europeia;

• o euro, entretanto, caiu  3 centavos no meio de todo este caos.

Nota:  A  classificação recentemente introduzidas de "RD" (restrictive  Default ) é descrita na classificação da agência de rating Fitch  como sendo  a notação que  esta atribui a um emitente (incluindo soberanos) nos casos em que o emitente é considerado em situação de incumprimento numa   ou mais das suas obrigações financeiras, embora continue a cumprir as restantes obrigações.

Este foi um grande dia para a Irlanda  atirar a sua própria bomba. Numa  entrevista à televisão irlandesa RTE, o ministro das Finanças, Michael Noonan,  disse  que a Irlanda  irá propor um  plano para impor grandes perdas nalguns  detentores de  títulos  seniores  sobre o Banco Anglo Irish Bank e sobre o Irish Nationwide Building Society. O ministro afirmou   que estava à procura de apoio dos detentores de obrigações seniores   ", porque consideramos  que o contribuinte irlandês não deve ter que pagar para resgatar o que se tornou um  investimento especulativo. Eu não acho que  estes investimentos especulativos tenham que ser  resgatados. " O ministro também deu a entender que a mudança  de Jean-Claude Trichet para Mario Draghi  no BCE pode tornar mais fácil para a Irlanda  convencer  o BCE. . Aparentemente ele não tem o apoio  do FMI. Quando se lhe  perguntou  se o FMI estava de acordo  com esta sua posição, o ministro respondeu : "Eu tenho a ideia de que eles entenderam a nossa posição completamente."

Há a ameaça de risco da Irlanda  executar  um corte da sua dívida soberana  sobre os detentores de obrigações seniores

BreakingViews escreve que Michael Noonan, escolheu um momento de alto risco  para encenar um ataque  sobre os credores dos bancos. O movimento é um desafio directo ao Banco Central Europeu. Continuará igualmente a ameaçar os mercados já assustados  por se estar já falar de uma reestruturação da dívida grega. "A Irlanda anteriormente evitou  falar em reduções da dívida   sobre as obrigações   séniores  dos bancos devido à oposição do BCE, o seu principal credor. Pode ser que que o forte conflito público da Alemanha com o BCE tenha dado ao  governo irlandês a confiança necessária para tomar uma posição. Alternativamente, Dublin poderá  estar a jogar  um jogo de grandes  apostas de  poker para obter uma taxa de juro reduzida no seu  próprio resgate, enquanto preserva  o seu regime fiscal vantajoso para as grandes empresas.

Crise difunde-se em Espanha: violentas demonstrações em  Barcelona

Um aspecto da crise que já se espalhou por toda a Espanha são os protestos violentos nas ruas. A primeira página  do El Pais, desta manhã não era sobre a crise, mas sim sobre as violentas manifestações em frente ao Parlamento da Catalunha, em Barcelona, ​​onde manifestantes tentaram bloquear a entrada dos  parlamentares. O jornal afirma  que o Presidente do Parlamento regional teve que ser deslocado  por  um helicóptero. O  mesmo jornal afirma  que os protestos foram dos  mais violentos desde a restauração da democracia.
 
El Pais está preocupado com a crise que se estende por toda a Espanha, onde os spreads dos títulos da dívida subiram para 260 pontos base, ou seja, perto do ponto mais  alto  de todos os tempos. Enquanto a crise se degrada , a UE movimenta-se ao seu próprio ritmo. Todos concordam que a Grécia não deve entrar em colapso, mas ninguém realmente sabe como é que isso se consegue alcançar. O artigo cita um analista espanhol que diz  que todo o mundo está centrado na  política da crise na Alemanha e na Finlândia, mas ninguém pensou na política grega.

Os investidores estão a apostar num  acidente

O Financial Times escreve esta manhã que os investidores estão a apostar  contra um grande acidente, no meio de  sinais de elevadas compras especulativas a  um ano  de CDS, os credit default swaps, que seria accionado no caso de um evento de crédito  "desordenado". Isso faz-se   não porque haja  vários esquemas  em discussão pelos ministros das Finanças. Mesmo o plano Merkel / Schäuble não se qualificaria como um evento de crédito sob esta  definição. Isto significa que os investidores estão a apostar numa desordem  onde se estabeça uma situação de incumprimento em que se  diga e se faça " não posso pagar”  nós “não vamos pagar” . O artigo diz que os investidores só tinha colocado uma pequena quantidade de dinheiro nesses fundos ", mas o simples facto de que eles estão o estão a fazer ilustra  os riscos crescentes para a zona euro."

Os spreads sobre os títulos da dívida grega,  os portugueses e os  irlandeses subiram dramaticamente .

Notícias sobre a Europa do nosso descontentamento, contra os políticos dos nossos  desapontamentos.

Sexta-feira, 10 de Junho de 2011

O Comunicado  Diário  de Eurointelligence

Os ministros das Finanças parecem  não estarem em condições de conseguirem alcançar  um acordo a  20 de Junho

• Há vários desentendimentos entre os ministros, nomeadamente sobre a participação do sector privado, o que pode impedir um acordo Ecofin a tempo do Conselho Europeu;

• Jean-Claude Trichet, lança um  desafio a Wolfgang Schäuble, recusando  qualquer forma de participação obrigacionista voluntária ;

• diz que BCE não iria participar numa troca voluntária de dívida soberana, e que poderá continuar  com as suas regras sobre as políticas de garantias bancárias;

• diz que a UE deveria explorar formas alternativas de participação do sector privado, incluindo as privatizações eo investimento directo estrangeiro ( IDE) ; • Trichet também pré-anunciou um aumento da taxa de juro em Julho;

• A agência  Fitch Ratings, disse que uma troca voluntária é muito pouco credível em momentos difíceis  como este, e ameaçou que poderia voltar a baixar a notação da dívida de alguns  países periféricos;

• Segundo uma informação do   Financial Times blog Alphaville um acordo parece ser a saída mais  provável para o actual impasse;

• George Papandreou  reune o seu Conselho de Ministros  para assinar o programa de  austeridade de médio prazo e de reformas; •A ler  o Relatório da Troika, é claro que  neste a Troika  omite o estudo para a sustentabilidade da dívida, e não faz nenhuma referência ao desejo da UE para se cooptar a oposição grega;

• Os planos do Bundestag para fortalecer a estrutura  do governo alemão, passam por  uma resolução sobre a necessidade de um sector privado participar na resolução do impasse  (bail-in);

• O Financial Times Deutschland  informa que Merkel pode chegar a um acordo sobre a Grécia, mas desde que este seja submetido  a uma votação parlamentar subsequente;

• O Tribunal Constitucional alemão irá realizar uma audição no processo contra o empréstimo à Grécia  e o FEEF a  05 de julho;
• Christine Lagarde, enfrenta novas acusações no escândalo Tapie, e como resultado continua   a incerteza jurídica em torno de sua candidatura para o FMI;

• Nicolas Sarkozy está a ter segundas   ideias  sobre uma emenda constitucional relativamente à obrigação de se ter o  orçamento equilibrado;

• Paul Krugman assinala que os  CDS na Islândia caíram para menos de 200bp, enquanto na Irlanda  se mantêm em cerca  700 pontos base (bp) ;

• um artigo  no jornal Irish Times diz que o governo irlandês mudou de  estratégia quanto ao debate sobre a taxa de juro aplicada com o FEEF, centrando-se já  no próximo programa;

• O ministro das Finanças irlandês disse que não exclui a hipótese de aumentar os  impostos;

• Em Portugal, entretanto, os sindicatos alertam que o programa de reformas económicas acordado  com a UE e o FMI é inconstitucional.

O relatório da  Troika deixa em aberto duas condições importantes para o pacote de resgate da Grécia

O relatório da Troika é omisso quanto a duas condições, da Comissão da  União Europeia, do BCE e do FMI  em que inicialmente insistiram   antes  de se entregar  qualquer parcela adicional do empréstimo concedido , informa o Financial Times  Deutschland. Em primeiro lugar o relatório não contém um estudo da sustentabilidade da dívida, que é normalmente  uma exigência para as novas  entregas de dinheiro. Quando Wolfgang Schäuble pediu  o referido  estudo da sustentabilidade da dívida na videoconferência do Eurogrupo  de  quarta-feira  não recebeu nenhuma  resposta satisfatória. Em segundo lugar, não há consenso bipartidário sobre o programa. O líder do partido conservador Antonis Samaras ainda se  opõe  ao  plano. Este  quer que se diminuia o ritmo da consolidação orçamental e da  redução dos impostos,  receita da Troika considera "irrealista".

Eurointelligence Daily Briefing

Due to a technical glitch, a few of yesterday's email briefings were only sent out this morning. The web version was not affected. We apologise for the confusion.

Greece votes not to default this summer

• Greek parliament votes 155 to 138 for austerity package, and is expected to approve implementation bill today;
• financial markets still expect Greece to default eventually, amid doubts that the government will implement the programme;
• the additional annual burden for an average Greek family will be in the order of one month’s salary;
• violent protests erupted in the centre of Athens after the vote;
• Michael Martens argues that Greece is going to remain a limited democracy for some time to come;
• central banks extend dollar swap lines as an insurance policy in case of a Greek default;
• Jürgen Stark tells Die Zeit that any Brady-plan element in a rollover package would contravene the Art.125 TFEU;
• Germany may include longer-dating Greek debt instruments in the rollover package;
• Merkel and Ackermann clash over the pretence of a “voluntary” rollover;
• the Italian cabinet is due to pass a €47bn four-year austerity plan, with most of the savings earmarked for the time after the next elections;
• Nicolas Sarkozy appoints budget minister Francois Baroin as France’s new finance minister;
• a French legal commission will decide on July 8 whether the Christine Lagarde will be prosecuted;
• Le Monde calls on Lagarde to emancipate herself from Sarkozy;
• Patrick Welter criticises the direction the IMF had taken under DSK;
• the European Commission, meanwhile, proposes a 1% sales tax and a financial transaction levy to boost its own resources.

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In the end, the margin was decisive – 155 to 138 – but few people expect that Greece will be able to implement the package its MPs have voted on. In September, the troika will descend on Athens and investigate whether the programme is still on track. And it will demand that any shortfall will have to be covered by new austerity measures. The expectation is now that the Papandreou government will last until the of the year, and that a debt restructuring is now virtually inevitable.

At yesterday’s vote, all but one of Papandreou’s Socialist MPs, and one New Democracy dissenter, backed the government’s midterm economic program, Kathimerini reports. Panagiotis Kouroublis voted against the program and was ousted from the party, Elsa Papadimitriou voted for the measures, breaking ranks with her party and declaring herself an independent.

Parliament votes on the second bill today. Government and analysts expect it will also pass. The debate in Parliament resumes at 9.30am, the vote is not expected before 2pm, Reuters reports.

The relief about parliament’s approval was only brief and most headlines this morning reflect this. Analysts said the real challenge will come after the bill is voted on and the international money secured. There is a growing concern over whether the government will be able to implement the unpopular cuts in practice to meet a tight schedule imposed by the EU and the IMF. Bloomberg quotes Greek newspaper To Vima calculated the additional burden for an average family of four at €2795 a year, about the same as one month’s income.

Violence escalated in central Athens after Parliament approved the first bill of the new austerity package, with reports of dozens of protesters and police officers being injured in running battles, Kathimerini reports. Those clashes were among the worst Athens has seen in several months, writes the WSJ.

Limited democracy in Greece

After yesterday’s endorsement of the second rescue package in the Greek parliament Frankfurter Allgemeine Zeitung’s Michael Martens takes a look at democracy in Greece and concludes that “for the foreseeable future Greece will only be a limited democracy”. According to the author the Greek government has been stripped of its sovereignty and the elected representatives can no longer take meaningful decisions. Instead they execute what the EU and the IMF tells them to do. Martens dismisses worries of economists that the rescue programs could create moral hazard and constitute an invitation to countries to be fiscally irresponsible. “No prime minister will want to pay the prize that prime minister Papandreou currently has to pay”, he writes.

Central banks prepare for Greek accident by extending Dollar swap lines

The Fed, the ECB, the Bank of England, the Bank of Canada and the Swiss National Bank extended the Dollar swap lines that would have otherwise expired August 1^st, Financial Times Deutschland reports.  Those swap lines were first created at the first height of the Geek crisis in May 2010 because European banks found it increasingly impossible to get short term dollar loans on the credit markets. The Fed therefore offered other central banks the possibility to borrow unlimited amounts of dollars which they in turn lend to their local banks. Since the Fed will not meet before August 9 and an accident in Greece is not excluded the Fed decided at their last FOMC meeting to extend the dollar swap line until August 2012.

Did Jürgen Stark jump the gun and reject the bond rescheduling package?

This is from a Reuters rendition of an interview in Die Zeit, in which Jürgen Stark said an instrument like a Brady bond was explicitly “disqualified” by Art.125 of the Treaty. He was asked about schemes under which banks would exchange their Greek bonds for new paper backed by EU states. The article concludes that this would also apply to the French bond rollover agreement, as one portion of it includes an EFSF issued, or guaranteed, zero coupon bond.

Reuters reports that Germany may include more Greek debt instruments in the package presumably because German banks hold only a relative small amount of short-dated debt. Citing “four people familiar with the talks”, the report said bond maturing up until 2020 might be included.

The FT, meanwhile, has a nice snippet from an ill-tempered conversation between Angela Merkel and Joseph Ackermann. Ackermann: “I am assuming that we will lend our hand to a solution, but not because we are doing it willingly.” Merkel retorted that private creditors should do it “willingly” because they had an interest in doing so.

Austerity comes to Italy

This is budget week in Italy, as Giulio Tremonti prepares the biggest austerity programme in the country’s modern history, but the savings are back-loaded to the end of the parliamentary terms, which may throw some of these measures in doubt. The FT has a good overview of the intrigues within the government that preceded the agreement, which is due to be voted on in the cabinet today.

The total size of the cuts is €47bn by 2014, of which €1.8bn are due this year, €5.5bn in 2013, €20bn in each 2013 and 2014. La Repubblica notes that most of the sacrifices would come after the next elections. The measures include an increase in the retirement age for women to 65 (the same as for men), an increase in health care charges, a tax on fast cars, a tax on financial transaction.

Sarkozy promotes Baroin to become finance minister

Nicolas Sarkozy promotes budget minister Francois Baroin to become finance minister. Baroin was in competition with agriculture minister Bruno Le Maire who was considered by many to be the front runner because he is elaborating Sarkozy’s electoral platform for the presidential elections and he is a German speaker. But Baroin, a former Chirac loyalist who threatened to resign in case he did not succeed to Christine Lagarde, had the support of many UMP deputies in the National Assembly and of the influential UMP chairman Jean-Francois Copé. Education minister Valérie Pecresse will replace Baroin as education minister. Le Maire, whom Sarkozy promised to get the finance ministry as late as Tuesday, gets noting and is considered the big looser. Le Monde, Les Echos and Le Figaro have a good and complete coverage of the government reshuffle. Baroin’s debut will be this Sunday when the Euro finance ministers meet in Brussels to complete discussions about the second rescue package for Greece and the bank’s involvement in paying part of it.

Lagarde’s potential legal worries

Le Figaro and Le Monde explain that Christine Lagarde will take over as the IMF’s new MD on July 5, but a legal commission will only decide on July 8 if Lagarde will be prosecuted in relation to a €1m transfer to the French tycoon Bernard Tapie to settle a year long dispute as a consequence of the Crédit Lyonnais scandal of the 1990s. Should the proceedings continue, Lagarde, who will not be protected by any immunity because all of this happened before she took over the IMF job, could be interrogated as a witness. It may even take years before the French Court of the Republic, a special court for government ministers, issues a ruling. In a nutshell, Lagarde’s handling of the Tapie case is doubtful because she decided against the recommendations of her advisors at the finance ministry in favour ofan arbitration, which ruled that the government should pay more than €200m to Tapie.

Lagarde needs to emancipate herself from Sarkozy

In its unsigned front page Editorial Le Monde criticizes Nicolas Sarkozy for calling Christine Lagarde’s nomination at the IMF a “victory for France”. If Lagarde wants to be effective and gain legitimacy with the emerging countries she needs to “get rid of the influence of the Elysée (the French presidential palace)” and to think what management of the Greek crisis is in the IMF’s best interest. Frankfurter Allgemeine Zeitung’s Patrick Welter explains in a long front page editorial that Lagarde is „not the right person“ to be at the helm of the IMF. Welter considers that DSK has set the IMF on the wrong track with his ambition to make the world’s economic government and central bank. The multiplication of tasks, its huge number of reports and its huge financial means have become a problem.“ The idea to give ever more credit and to act ever more like an insurance company against all risks creates the huge risk that the fund is stumbling from one bail-out to the next”. The IMF’s agenda should be self limitation instead and Lagarde, who sees herself in the tradition of DSK, is unlikely to promote a self limiting agenda.

Commission proposes EU tax in its budget frame work

All European newspapers report on the Commission’s proposal to introduce a 1% sales tax and a levy on financial transactions as part of plans to boost its seven-year budget to almost €1 trillion. The proposed new taxes are designed to reduce the amount EU governments must pay to Brussels, the Commission said, while increasing the block's budget by about 5% to more than €970bn between 2014 and 2020. Germany and seven other net payers ask the Commission for “very substantial savings” in the expenditure on EU officials. They want the Brussels administration to see if retirement age for officials can be raised and if the supplements for working abroad can be reduced.

Spreads, Forex, and ZC Swaps.

Spreads ease after the Greek vote. Italian spreads are back below 2%, Spanish spreads down to 2.6%. Euro strengthens.

Euro bilateral exchange rates:  

Zero Coupon Inflation Swaps