Economics News from the Desk of Elena Panaritis, 30-08-2012 ...

Once more they agree that they disagree

As recession deepens in Greece and time is an enemy for the Greek government, new measures must be taken in order this country to fight its debt crisis effectively. One major problem is the fact that the Greek Prime Minister Antonis Samaras and his coalition partners Evangelos Venizelos and Fotis Kouvelis cannot come to a final agreement.

Yesterday?s meeting among these three coalition partners, about the package of austerity measures of 11.5 billon Euros for 2013 and 2014, ended without a final agreement and this fact costs a lot of time, as no action will be taken. But wasting time is not a luxury for the Greek government that is expecting the Troika next week in Athens.

The point is that the basic structure of the measures had been finalized but further talks must take place for issues of less significance, including the proposals for further wage cuts for certain categories of civil servants, such as military and judicial staff and priests. These issues raised the strongest objections of Mr. Venizelos and Mr. Kouvelis.

Evangelos Venizelos mentioned that more cuts and sacrifices will take place, but in a more fair way. He also added that further talks should be made, in order to examine all the details of the austerity package of measures and protect low-income citizens. On the other side, Fotis Kouvelis also mentioned the need for further talks about the proposed austerity measures and added, once more, that he is categorically opposed to horizontal cuts

For the financial markets, the European Central Bank seems to be the only weapon they have in their fight against the severe debt crisis they face and expect a large-scale bond buying program at the ECB?s policy meeting on September. As a result the bond market is quite unlikely to lead Italy and Spain to breaking point in case the policy makers might need more time to implement their plan.

German Chancellor Angela Merkel expressed her satisfaction for Draghi?s plan but Bundesbank seems to be opposed to this plan. Finally, European Central Bank?s President mentioned that there is the need for exceptional measures at times, in order the ECB to be in place to fulfill its mandate of delivering stable prices.

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10 year Bonds

Country	10 years Bond (current)
Greece	23.75
Cyprus	7.00
Portugal	9.52
Spain	6.54
Germany	1.37
Italy	5.78
United States of America	1.65
Australia	3.05
Canada	1.80
United Kingdom	1.50
Japan	0.80

Source:?http://markets.ft.com/RESEARCH/Markets/Government-Bond-Spreads

http://www.ecb.int/stats/money/long/html/index.en.html

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More News

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Spain, EU in agreement over bad bank terms: minister

The Spanish government and European Union officials are in agreement on the general terms for creating a bad bank to hold toxic real estate assets, Economy Minister Luis de Guindos said on Wednesday?

http://www.reuters.com/article/2012/08/29/us-spain-economy-bank-idUSBRE87S0CS20120829

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ECB?s Mario Draghi too busy to attend Jackson Hole central bankers?gathering

European Central Bank President Mario Draghi cancelled his trip to the annual Jackson Hole symposium this week, citing other engagements?

http://business.financialpost.com/2012/08/28/ecbs-mario-draghi-too-busy-to-attend-jackson-hole-central-bankers-gathering/

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Sources:

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_4506_29/08/2012_458731

http://www.reuters.com/article/2012/08/29/us-markets-reversal-idUSBRE87S0FB20120829

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Prepared and Edited by Thanos Koulopoulos

Source: http://www.prosperityunbound.com/economics-news-from-the-desk-of-elena-panaritis-30-08-2012/

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