September 10th, 2012
06:09 AM GMT
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(CNN) - A new survey shows one in five Spaniards want to quit the euro and return to the peseta.

Spain's "El Pais" newspaper published a poll from Metroscopia Sunday that found 21% want to leave the euro currency, which Spain abandoned a decade ago to join the eurozone.

The poll also found that 72% of those polled believed the Spain, the eurozone’s fourth largest economy, would need a full bailout from the European Union, up from 62% a month ago, Reuters reported.
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September 5th, 2012
08:04 PM GMT
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Ten months into his eight-year term, the man hailed as ‘’Super Mario’’ is facing his biggest test yet.

And though the outcome of the European Central Bank’s latest meeting is by no means a given, what’s sure is his words will resonate far from the region’s shores.

Now into its third year and counting, the single currency’s funding crunch has claimed the scalps of three eurozone countries so far and threatens to engulf others which are ‘too big to bail’ but too big to fail.

What started as a financial crisis has morphed into an existential one and left ECB President Mario Draghi to fill the vacuum of leadership left by the eurozone’s squabbling politicians.

While the ECB will formally be contemplating its interest rate policy on Thursday, Draghi’s most pressing task will be far less mundane: instead investors are relying on him to keep the next troubled members solvent, even if that means creating an artificial market for their debt.

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June 20th, 2012
02:42 PM GMT
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(CNN) - Now that the Greek people have voted and a government will be formed, we need to think about where this crisis will go.

The new Greek government will invariably go to Brussels and ask for some relief; breathing space is the phrase that will be used.

The Europeans will almost certainly grant it - to not do so would be cruel, especially bearing in mind the terrible suffering of people in Greece at the moment.

But outside of Greece what happens now?  Like a balloon that is squeezed, the European crises merely bulge out somewhere else - and that is what is happening now. FULL POST



June 18th, 2012
04:45 PM GMT
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Athens (CNN) - Greece has voted. New Democracy, its pro-bailout party, prevailed in Sunday’s election and still market reaction has been decidedly muted. Much like last week’s market performance following Spain’s aid request, the euphoria fizzled quickly as traders focused instead on the considerable unknowns looming in the distance.

Among the unanswered questions: Will Greece’s New Democracy party be able to form a government? And how much leeway will it have to soften the terms of its Troika-prescribed austerity package?

Writing to clients today, HSBC economists David Bloom and Janet Henry said Greece’s result may offer temporary relief but warned that “major challenges remain.”

“While a coalition of pro-bailout parties would put the idea of a Greek euro exit on the back burner for now, it would not alter the underlying problems in the euro zone itself,” they added. FULL POST



June 17th, 2012
03:29 PM GMT
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London (CNN) – For London’s investment community Sundays are more about talking pizzas than politics.

They’re the last chance to unwind before buckling up for the bumpy ride when the markets open on Monday morning.

But across Europe’s financial hub, traders are keeping an uneasy eye on events in Athens and preparing themselves for what many reckon will be a wild week at work.

Veteran London hedge fund manager Lex van Dam has lived through more than one financial crisis and worked for some of the biggest names on the street, like Goldman Sachs and GLG.

The 43 year-old Dutchman shot to fame three years ago at the height of the credit crunch as the forthright financier on the BBC’s reality show "Million Dollar Traders."

Van Dam now spends his time running Hampstead Capital, a fund with 500 million euros ($630 million) under management, as well as his new initiative: The Lex van Dam Trading Academy, set up to teach would-be dealers how to manage money.

He took time away from his weekend lunch (and 26,000 followers on twitter) to answer five key questions on what the Greek elections mean for the markets.

1. Will Greece leave the euro?

Yes. They will leave very soon unless the Germans change their tune and throw more money at them. It is slightly unfair though as most of the help Europe gives them is to help the Europeans themselves as opposed to helping the Greek people.

2. Is austerity the right answer?

Austerity is not the answer. The Greek economy is absolutely collapsing and the tax base is going down with it. The American and British solution of printing money is not the answer because it will lead to a total lack of trust in the government because paper money will be worthless. The answer is accepting that people in the West need to work harder and longer.

3. Will the euro survive?

The biggest chance is for a two-speed Europe to emerge with Germany leading the euro pact and Italy in the second group. The German euro will be very strong, the Italian euro very weak though.

4. Eurobonds: The perfect cure or recipe for disaster?

The Germans have done a massive amount of austerity at home with a higher retirement age and lower wage inflation than in the southern European nations. They will not write a blank cheque to the south. Eurobonds mean that the Germans will become responsible for the Greek debt. It will not happen unless countries such as Spain and Italy give up part of their sovereignty.

5. Where are you putting your money now?

My money stays in cash and real assets such as property and gold. Shares are not expensive right now but if interest rates go up even a little they could drop a lot.




June 17th, 2012
02:32 PM GMT
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Athens (CNN) - Whichever way the Greek people vote in these elections, there are no easy options for the country. It is almost certain no one party will get a majority – even with the top-up seats given to the front runner.

We are facing days of horse-trading.

Voices of Greece

The best that can be hoped for is that the leaders of New Democracy and PASOK follow through on the noises they are making. That it is time for unity.

They know what that means. That they are going to have to get into coalition with each other. If they do that, Greece carries on.

However, even if these so-called “sensible parties” get into bed with each other, they will still want to renegotiate the deal with Europe.

Cafes buzz with political talk

Europe will not budge on issues such social security, pensions or privatizations. But they might be willing to talk on deficit targets and taxation levels, for example, given the difficulties created by the recession.

There are 1,001 ways that Greece can stay in the euro. But even if the austerity deal is renegotiated, the Greek people face another three to five years of pain.




June 15th, 2012
06:42 PM GMT
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(CNN) – Greece’s financial crisis dates back to December 2009 when its new government came clean about the state of the country’s accounts.

With a deficit more than 4 times the European Union limit and an economy mired in a deep recession, Greece hurtled towards insolvency.

Then-Prime Minister George Papandreou assured the world Greece was determined to confront its fiscal problem.

“We are making deep changes in our economy, our political system, our society, building the conditions for a stable economic environment, a transparent economy, a viable economy,” he said.

But those promises proved futile. FULL POST



June 5th, 2012
08:08 AM GMT
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Hong Kong (CNN) – China is drafting plans on how to deal with the financial fallout if Greece leaves the eurozone and its economic implications for Beijing’s largest trading partner, according to state-run media.

"The government is working on plans for the worst-case scenario of Greece leaving the eurozone later this year," Wang Haifeng, director of international economics at the Institute for International Economic Research, told state-run China Daily Tuesday.

China Daily quotes unnamed sources as saying the ministries of finance and commerce will examine the potential impact of a Greek exit on exchange rate, capital flows and trade.
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May 28th, 2012
05:38 PM GMT
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London (CNN) – You’d be forgiven if the mild bounce in the markets Monday had you dreaming of better times for Greece and the eurozone. Your wakeup call comes to you courtesy Christine Lagarde, head of the International Monetary Fund, former French Finance Minister and the latest establishment figure to heap scorn on Greece.

In a lengthy and wide-ranging interview with the Guardian newspaper, Lagarde may have for the first time uttered in public what some suspect many European politicians are saying behind closed doors. It’s payback time for Greece.
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May 17th, 2012
07:24 PM GMT
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Editor's note: This blog was originally published after talks to form a new government following the May 6 election failed. Greece now faces its second election, on June 17.

 

London (CNN) –  Hello, Greece.

The world is again focusing on you. The economic pain and social unrest has rightly made voters and politicians the world over debate austerity, growth and structural reform.

What you are going through has made it clear that austerity is not an easy solution.

You, the Greek people now have a chance to do something I suspect millions in Europe would dearly love to do - vote on whether to leave the euro. That is what June 17 will now be about, because there will be massive pain for you, Greece, if you stay with the economic reforms, and even more pain if you reject the loans from Europe and the International Monetary Fund. Pain either way.
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