Eurozone finance ministers approve bailout deal for Cyprus

 

French minister of Economy, Finances and Foreign Trade Pierre Moscovici (R) and International Monetary Fund chief Christine Lagarde (L) chat next to EU Commissioner for Economic and Monetary Affairs Olli Rehn (C) prior to an extraordinary Eurozone meeting on March 24, 2013 at the EU Headquarters in Brussels (AFP Photo / John Thys)

Source: Russia Today

http://rt.com/news/cyprus-eu-imf-bailout-764/

The Eurogroup has approved a deal on a 10 billion-euro bailout for Cyprus, struck early Monday in Brussels. Cyprus avoids exiting the eurozone, but will have its second largest bank closed with heavy losses expected for big depositors.

“The size of financial assistance will amount to 10 billion euro,” Eurogroup president Jeroen Dijsselbloem has announced at a press conference in Brussels after the eurozone finance ministers swiftly endorsed the plan.

“With this agreement we’ve put an end to the uncertainty that has affected Cyprus and the euro area over the last few days,”he added.

The new deal agreed between Cyprus and the Troika of international lenders - the EU, the ECB and the IMF - will set up a "good bank" and a "bad bank" and will mean that the country’s second largest bank Laiki will effectively be shut down.

Deposits below 100,000 euros will be shifted from Laiki to the Bank of Cyprus to create a “good bank.” Deposits larger than 100,000 euros will be frozen and used to resolve debts. It remains unclear how large the write-down on those funds will be.

The decision comes hours before the Monday deadline set by the European Central Bank, following heated talks between President Nicos Anastasiades and the Troika.

Earlier on Sunday the central bank in Cyprus has imposed an ATM withdrawal limit of 100 euros per day for the island's two biggest banks, in order to prevent a run on lenders.

Warren Pollock - market analyst and financial adviser says the financial turmoil in Cyprus is part of a broader crisis.

“In reality this is a global problem which has not been addressed since 2007-2008 and previous to that with the issuance of huge amounts of debt and leverage into the system both in Europe and in the United States,” he told RT.


“And when that debt goes bad, the only recourse which exists is to tap remaining collateral in the system which is the savings.”


Pollock believes that sooner or later this “sort of stealing” of savings may result in popular unrest. “We can definitely see smaller countries being the test to see whether savings could be stolen on a wider scale.”

Cyprus imposes ATM withdrawal limit of €100 per day for island's two largest banks

 

People queue to withdraw their savings at a Cypus Popular Bank (Laiki Bank) ATM in Athens on March 22, 2013. (AFP Photo)

Source: Russia Today

http://rt.com/business/cyprus-bailout-withdrawal-banks-756/

The central bank in Cyprus has imposed an ATM withdrawal limit of 100 euros per day for the island's two biggest banks, in order to prevent a run on lenders.

A spokesman for the country's second largest lender, Cyprus Popular Bank, told Reuters that the new measure began at 1pm local time (11am GMT) and would remain in place until the bank reopens, or until confirmation of continued emergency funding from the European Central Bank. Cyprus Popular Bank had previously limited withdrawals to 260 euros per day.

A government official said the restriction also applied to the Bank of Cyprus.

It was initially reported that the measure was implemented on all banks in Cyprus, although it has now been confirmed that only the island's two biggest banks have been affected.

The news comes after Cypriot President Nicos Anastasiades took part in last-minute crisis talks with international lenders on Sunday, in an attempt to save the country from financial meltdown. The negotiations in Nicosia to seal a bailout from the EU and International Monetary Fund failed to reach a solution.

Anastasiades then headed to Brussels to hold talks with EU, European Central Bank and IMF leaders ahead of a crunch meeting of eurozone finance ministers.

Government spokesman Christos Stylianides said in a statement on Sunday that Anastasiades and his team have a "very difficult task to accomplish to save the Cypriot economy and avert a disorderly default if there is no final agreement on a loan accord."

The news comes just one day after Cyprus and the Troika agreed to a 20 per cent tax on deposits over 100,000 euros at the Bank of Cyprus and 4 per cent on deposits held at other banks.

"Unfortunately, the events of recent days have led to a situation where there are no longer any optimal solutions available. Today, there are only hard choices left," European Union Economic and Monetary Affairs Commissioner Olli Rehn said in a Saturday statement.

Cyprus is scrambling to come up with €5.8 billion by Monday, or face being kicked out of the Eurozone. The cash is a prerequisite for a further €10 billion in bailout funds.

Lawmakers' rejection of a previous proposal to tax all bank deposits prompted the European Central Bank to threaten to cut off emergency funding to Cypriot banks unless a deal was reached by March 25. Banks have been shut all week, and are due to reopen on March 26.

On Saturday, at least 1,000 bank workers in Cyprus hit the streets of the country’s capital of Nicosia. The demonstrators marched against the latest bailout measures taken by the country’s central bank.

Protesters carried banners that read, “Hands off provident funds” and “No to the bankruptcy of Cyprus.”

Turkey sends ‘stern warning’ to Cyprus over gas reserves

Meanwhile, Turkey has warned Greek Cyprus against using hydrocarbon reserves off the island to overcome its debt crisis without the consent of Turkish Cypriots. Ankara says such a move could result in an end to efforts to reunite Cyprus’ Turkish and Greek zones.

Turkey has contacted the US and plans to take the issue to the European Union, Today’s Zaman reported.

Ankara “had to issue a stern warning” regarding attempts to offer natural resources in exchange for foreign loans, a Turkish official said on Sunday.

Turkey has repeatedly warned the Greek Cypriot government against unilateral moves to extract natural gas and oil reserves off Cyprus, saying that Turkish Cypriots also have a say on the reserves.

The dispute recently escalated when reports surfaced that hydrocarbon exploration rights were part of Russia-Greek Cyprus talks last week over a possible deal which includes Russian financial help. However, the talks did not produce an agreement.

Russian Prime Minister Dmitry Medvedev expressed doubt on the inclusion of hydrocarbon reserves as a loan deal, saying there are concerns surrounding commercial viability and questions stemming from Turkish objections.

 

Greece will have to wait for next round of cash - German minister

 

Finance Minister Wolfgang Schaeuble. (AFP Photo / Johannes Eisele)

Source: Russia Today

http://rt.com/news/greece-bailout-german-minister-294/

Germany, the pillar of European economic stability, is skeptical that Athens will receive the next tranche of aid “in the coming weeks,” despite painful new austerity measures adopted this week in Greek Parliament.

­German Finance Minister Wolfgang Schaeuble, one of the main architects of the Greek response team, warned Thursday that it is unlikely that Greece will reach a quick deal with its international creditors on the next credit line.

“At the moment I do not see the decisions being made” that are required for a definitive agreement between the Troika of international auditors examining Greece's finances and the Greek government, he told a conference in Hamburg.

Despite the poor assessment, the minister welcomed Athens' new measures, which were approved on Wednesday, by saying that Greece has “a pro-European majority and it held last night despite demonstrations and a general strike. All is not lost – all is not won either, but we have no use for cynicism… the Greeks want to remain in the euro.”

This is a conclusion with which many Greeks seem to disagree, as massive demonstrations ahead of Wednesday's vote erupted in the capital. At least 100 people were detained as police used tear gas and water cannons to disperse a crowd that voiced anger against a rise in the retirement age to 67, cuts to minimum wage and benefit reductions.

While the rallies pushed forth with their demands, Greek Parliament agreed by a narrow margin to €18.5 billion in budget cuts demanded by creditors.

Now Greece awaits the €31.5-billion tranche of aid from the Troika – the European Central Bank, European Union and the International Monetary Fund, its fourth emergency loan package in three years.

Economics analyst Antonis Vradis says the massive new loan will simply create more debt for the country.

“These packages are moving in the entirely wrong direction. There is a definition of insanity, and according to it, insanity is doing the same thing over and over again and expecting different results. This is what is happening right now. You have a package after which the country's national debt is going to go up from 175% to 190%. The only way to stop this policy of austerity is if people actually stop them,” Vradis, a member of the Occupy London movement, told RT.

 

4 US warships to head to Spain as Madrid joins NATO missile shield

Source: Press TV

http://www.presstv.ir/detail/2012/10/06/265216/four-us-warships-to-head-to-spain/

Four US warships equipped with missile interceptors and Aegis defence systems along with 1,400 American military personnel are set to be deployed at a US naval base in Rota, southern Spain by 2013.

The Spanish government made the announcement on Friday after sealing a deal with the US to participate in NATO’s anti-missile shield.

According to a statement by the government, Spain authorized the signing of the deal at a cabinet meeting on Friday.

"Its principal activity will be to contribute to defending against ballistic missiles," the statement said.

Following the decision, Spain's Deputy Prime Minister Soraya Saenz de Santamaria told a news conference that the deal would help boost the economy in the region.

This comes as the left-wing political coalition in Spain has leveled criticism at the move, saying it makes the country “a military target.”

Leaders of the 28-member NATO alliance expressed their support in 2010 for the Europe-wide ballistic missile shield.

The system will later expand to include land-based interceptors in Romania, Poland, Turkey and The Netherlands.

Spain ready to accept eurozone bailout: EU officials

 

Source: Press TV

http://www.presstv.ir/detail/2012/10/02/264568/spain-ready-to-accept-financial-aid-eu/

Spanish officials are ready to request for a euro zone bailout to help the country pay its debts, European officials say.

"The Spanish were a bit hesitant but now they are ready to request aid,” said a senior European official on condition of anonymity on Tuesday.

On Monday, the European Union Economics Chief Olli Rehn called on Spanish officials to immediately accept the EU bailout to repair the country’s deficit-laden finances.

“The choices will only get harder if they are postponed,” he added.

With an unemployment rate of nearly 25 percent, Spain is under pressure to get its public finances on track amid concerns in the markets over the state of the country’s banks and the wider economy.

The Spanish government has also been sharply criticized over the austerity measures that are hitting the middle and working classes the hardest.

The 2013 budget will freeze public sector salaries for the third year in a row and cut ministerial spending by an average of 8.9 percent. The country’s regions, which pay for health and education, must also scrape up seven billion euros in savings.

The government has confirmed that it will create a new fiscal watchdog to monitor the budgets not only of the central government but also the regional and municipal ones to make sure they comply with Madrid’s efforts to control spending and cut the country’s deficit.

On Friday, hundreds of Spanish nurses, policemen and other public workers took to streets near the Budget Ministry in Madrid to protest against having their pay frozen for the third year.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, destroying millions of jobs.

Spain, Greece, Italy, Cyprus and Portugal are all in recession and all five are receiving financial assistance from European bailout funds.

'Democracy kidnapped!' Spanish protesters surround Congress in Madrid

Source Video: Russia Today

Spain's "indignant" protesters take part in a demonstration to decry an economic crisis they say has "kidnapped" democracy, on September 25, 2012 in Madrid. (AFP Photo / Dominique Faget)

Source: Russia Today

Thousands of activists have begun to congregate in Madrid’s Plaza de Neptune, 100 meters from the Congress building, to protest Spanish austerity measures. The demonstrators pledged to march around the building, and called for new elections.

Watch the protests LIVE

Demonstrators waved banners with the slogan ‘No’ written on them, in reference to the austerity policies of the Spanish government, but so far the protest has been peaceful.

Protesters said that today is a key day to level criticism against politicians and the Spanish government. The city stationed armored police vehicles bumper-to-bumper around the parliament building, and announced that around 1,300 police would be deployed to counter the protesters.

The organizers of the protest dubbed their movement ‘Surround Congress,’ and expressed hopes that thousands would turn out. The protestors called themselves ‘indignants’ and claimed that their democracy had been ‘kidnapped,’ calling for new elections and rallies against the austerity measures enacted by Mariano Rajoy’s government.

Some 200 demonstrators gathered near the city’s main railway station chanting “Rescue democracy,” and “This is not a crisis, it’s a swindle.”

Carmen Rivero – a 40-year old photographer who travelled overnight by bus from the southern city of Granada – said, “We think this is an illegal government. We want the parliament to be dissolved, a referendum and a constituent assembly so that the people can have a say in everything.”

Another 100 protesters were scattered across the city’s main square, the Plaza de Espana.

“This is not a real democracy. This is a democracy kidnapped by the parties in collaboration with the economic powers and the people have no say in it,” said Romula Barnares, a 40-year-old artist wearing sunglasses with a dollar sign on one lens and a euro sign on another.

But Miguel-anxo Murado, a journalist and writer, told RT that he thought their demands are too vague and that they would not be successful, “it seems that they are back with the same very vague and ambitious platform and in-fact they have been over shadowed by a different constitutional challenge, which is for the independence movement in Catalonia, which is more likely to change the constitution, although in a different way, so I’m afraid they will probably not have a huge success today.”

Spain is in the middle of its second recession in two years, and faces a 25 percent unemployment rate.

Madrid introduced the controversial austerity measures in a gesture meant to show that it intends to fix its debt and budgetary shortfalls. The European Central Bank granted Spain a 100 billion euro rescue loan for its banks, but the country has not decided whether to seek another bailout.

Europe’s financial leaders are pleading for Spain to reduce volatility in its markets by deciding whether or not to request the second loan.

During a September 15 protest, waves of some 50,000 anti-austerity demonstrators converged in downtown Madrid, blowing whistles and hoisting banners that read, “They are destroying the country, we must stop them.” Representatives from over 230 civic and professional organizations also turned out amid cries of “lies,” and “enough.”

People gather at the Plaza Espana square before taking part in a demonstration organized by "indignant" protesters to decry an economic crisis they say has "kidnapped" democracy, on September 25, 2012 in Madrid. (AFP Photo / Dominique Faget

Greek party vows to scrap bailout deal

Alexis Tsipras, the head of Greece’s leftist Syriza party (file photo)

Source: Press TV
http://www.presstv.ir/detail/2012/06/12/245915/greek-party-vows-scrap-bailout/

The head of Greece's leftist Syriza party says, if elected in Sunday's parliamentary elections, he will scrap the country’s bailout deal with the European Union and the International Monetary Fund (IMF).

"The bailout deal is already in the past. It will be history for good on Monday," AFP quoted Alexis Tsipras as saying on Tuesday.

"On Monday, the forces of internal corruption and global usury will stop writing [bailout deal] because our people are about to write history," he added.

Syriza, which catapulted to second place behind the conservative New Democracy party in inconclusive parliamentary elections on May 6, could win up to a third of the vote on Sunday, according to opinion polls.

Accordingly, the next government may choose not to keep up with the austerity measures, required to qualify Athens for receiving its second financial aid package, containing EUR hundreds of millions, which is part of the bailout deal.

Greece has been the epicenter of the eurozone debt crisis and is experiencing its fifth year in recession. One fifth of Greek workers are unemployed, banks have become shaky, and pensions and salaries have been slashed by up to 40 percent.

The package is aimed at bailing the cash-stripped South European country out of the worsening crisis.

Syriza’s opposition to the bailout funds has also sparked fears that the country could be forced to leave the eurozone and raised doubts about the single European currency’s future.

Tsipras stated that the country can stay a member of the eurozone, but pointed out, "We will not go to [EU peers] with a sense of bullying. We will go to persuade them that a eurozone country is falling apart from [their] options."

"If a eurozone member is brought to collapse...the fire burning in southern European countries will become an inferno...and will spread to the centre, the eurozone will fall apart," he warned.

Greek euro exit on agenda if bailout deal violated: France

French Finance Minister Pierre Moscovici pictured on May 21, 2012at a press conference in Berlin, Germany

Source: Press TV
http://www.presstv.ir/detail/2012/06/04/244523/greek-euro-exit-on-agenda-france/

French Finance Minister has warned that Greece’s exit from the eurozone will be on the agenda if Greek authorities do not respect the bailout deal after parliamentary elections in mid-June.

"The question would be raised without a doubt.... if the Greeks themselves do not respect their commitments," Pierre Moscovici said on French Television on Sunday.

"We sincerely hope that Greece remains in the eurozone," he said. However, Athens should impose required austerity measures if it planned to remain in the euro bloc, he added.

His remarks were in response to a pledge by the Greek radical left leader, Alexis Tsipras, who promised on Friday to cancel the European Union-International Monetary Fund bailout deal if his party garnered enough votes to form a government.

Moscovici said the situation would be “infinitely more complicated," and admitted that there were “reflections here and there” about the possibility of Athens exiting the single currency area.

Tsipras’s Syriza party came in second on May 6 elections partly due to his pledge to overturn the austerity measures. In the first parliamentary elections, no party could either win a majority of votes or form a coalition government.

Greek voters were outraged at two years of harsh austerity measures, which have been imposed in return for financial assistance. They abandoned the centre-right-centre-left coalition that had governed the country, and voted for more radical parties.

Meanwhile, opinion polls released on Friday showed that Syriza and its rival the conservative New Democracy party could not gain a majority of votes in the repeat elections.

The decisive June 17 votes, could determine whether the country would continue to comply with the austerity measures it agreed to with its European neighbors in exchange for endorsement of the second financial bailout.

Greek parliament endorses multi billion bailout scheme

Greek parliament (file photo)

Source: Press TV
http://www.presstv.ir/detail/232651.html

The Greek parliament has officially approved a second multi-billion dollar bailout scheme worth up to 130 billion euros (USD 170 billion) in a bid to spare the country a debt default over its financial crisis.

The bailout package, endorsed early Wednesday, is provided jointly by the International Monetary Fund (IMF) and the eurozone.

The proposed text gained the approval of 213 socialist and conservative parliament members, while only 79 members from the communist left and far-right opposed it.

According to a finance ministry official, the endorsement came after Greece received a first payout of 7.5 billion euros on Tuesday under its second international bailout.

The payment of EU and IMF loans, on which the Greek economy depends to stay on its feet, will be continued, provided that Athens meets agreed targets to cut the country’s spending and restructure its economy.

This is the second such bailout in two years. The EU and IMF had agreed on a first bailout package worth 110 billion euros in 2010.

Greek Prime Minister Lucas Papademos’s interim government came into existence late last year after Socialist Prime Minister George Papandreou resigned in the midst of the country’s financial crisis.

The government’s main task is to ensure that the country avoids a default before organizing election polls by mid-May for the country’s elections, the date of which is anticipated to be announced next week.

Anti-austerity protests sweep across Europe

Thousands of Czech university students rally in central Prague on February 29, 2012 .

Source: Press TV
http://www.presstv.ir/detail/229280.html

Massive demonstrations across Europe have taken issue with the austerity measures adopted by the European governments against economic adversity.

The protests were held on Wednesday in the Czech Republic, France, Greece, Belgium, and Spain against government economic reforms aimed at dealing with the unprecedented debt crisis plaguing the European Union.

Trade union leaders gathered outside the European Council in Brussels, Belgium to demand an end to austerity measures.

In Spain, protests turned violent as police clashed with anti-austerity protesters in the country’s the second largest city, Barcelona. Police in riot gear beat the protesters with batons and a number of arrests were made.

Students have staged demonstrations and sit-in protests across the country to demand an end to Madrid’s austerity measures, labor market reforms, and police violence.

Thousands of Czech university students rallied in the capital Prague, slamming the country’s Education Ministry for introducing tuition fees and boosting the number of government representatives in academic bodies.

The Czech government says the reforms are necessary to boost educational standards and secure more funding.

In France, main unions gathered forces for a day of protest action against austerity measures being imposed across the European Union.

In Greece, unions staged nationwide walkouts hours after the parliament approved new spending cuts to secure a new EUR 130 billion (USD 170 billion) bailout package promised by international lenders and meant to prevent the country from going bankrupt.

The Greek and French protests are part of a day of action called by European labor organizations to pressure the leaders of the 27-member EU into adopting pro-growth measures when they gather for a summit in Brussels over Thursday and Friday.

The eurozone economy is heading into its second round of recession in just three years. The bloc’s last recession was in 2009, when its economy contracted by 4.3 percent.

The Europe plunged into financial crisis in early 2010.

Amid the debt crisis, the European Commission has predicted that the eurozone currency bloc faces double-dip recession while the wider EU economy stagnates in 2012.

German parliament approves second Greek bailout

German Chancellor Angela Merkel (C) casts her ballot during a session at the Bundestag in Berlin on February 27, 2012

Source: Press TV
http://www.presstv.ir/detail/228993.html

The German parliament has overwhelmingly approved the second bailout package for Greece to help the heavily indebted country stabilize and avert bankruptcy.

On Monday, German MPs voted 496 to 90, with five abstentions, to approve the 130-billion-euro (174.4-billion-dollar) rescue package.

Just before the vote, Chancellor Angela Merkel addressed the Bundestag, or lower house of parliament, warning the lawmakers of the consequences of not coming to Greece's aid.

"The risks of turning away from Greece now are incalculable," Merkel told the 591 MPs of the Bundestag.

"No one can assess what consequences would arise for the German economy, on Italy, Spain, the eurozone as a whole and finally for the whole world,” she added.

The parliament was certain to back the motion after two opposition parties -- the Social Democrats (SPD) and Greens -- said they would support the plan.

Despite the motion's approval, German skepticism about Greece remains.

"The Bundestag will in the foreseeable future be dealing with a third (rescue) package for Greece," said SPD member Peer Steinbrueck, a former finance minister, adding that only strong economic growth would stabilize Greece.

German Interior Minister Hans-Peter Friedrich has openly called for Greece to leave the eurozone, saying it would have a better chance to make its economy competitive if it was outside the monetary union.

According to an opinion poll released on Sunday, 62 percent of Germans opposed the new rescue package for Greece.

The poll was conducted by the Emnid institute for the newspaper Bild am Sonntag.

Greece strives to avoid messy default

Greek Finance Minister Evangelos Venizelos (L) and Greek Prime Minister Lucas Papademos arrive for a joint press conference following a European Union summit at the EU headquarters on January 30, 2012 in Brussels.

Source: Press TV
http://www.presstv.ir/detail/224391.html

The Greek government is frantically looking for the support of all its political leaders in order to implement more stringent austerity measures needed to avoid a disastrous default.

On Wednesday, the government spokesman said Prime Minister Lucas Papademos would meet the conservative, socialist and far-right leaders in a few days to ask them to back his government so it can clinch a deal with international creditors.

"The meeting of the political leaders is crucial," Pantelis Kapsis stated.

The International Monetary Fund (IMF) has warned that the austerity measures are necessary to secure the new bailout package that Athens needs to escape the default.

Later in the day, Athens and IMF officials said negotiations for landmark debt deals would be concluded within days.

Greece is in talks with private creditors to have them take losses on their bondholdings and with its international bailout rescuers to secure new loans.

A deal with private sector creditors to cut Greece's debts by 100 billion euros has almost been concluded, and the government is now racing to complete talks on the 130-billion-euro ($170.18 billion) bailout by the end of the week.

To achieve the bailout package, Athens must first convince the European Union and the IMF that the government will implement long-delayed reforms and make further spending cuts.

Greece's current debts stand at 340 billion euros ($440 billion) -- a sum, which equals around 31,000-euro debt per person in the country of 11 million people. The country has the highest debt burden in proportion to the size of its economy in the entire 17-nation eurozone.

Investors fear a default could mess with the international financial equation and send the global economy into recession.

Merkel opposes increasing rescue fund

German Chancellor Angela Merkel gestures during the opening session of the World Economic Forum annual meeting in Davos, Switzerland on January 25, 2012.

Source: Press TV
http://www.presstv.ir/detail/223108.html

German Chancellor Angela Merkel has refused to increase the eurozone's rescue fund, stressing that the key to reassure European markets is to restore lost confidence in the EU governments' policies.

Merkel told the World Economic Forum in Davos, Switzerland on Wednesday that a 'big rethink' was required for the 17-nation zone to act well within the global economy.

The comments come as the International Monetary Fund (IMF) Managing Director, Christine Lagarde has called for the eurozone financial firewall to be reinforced by combining the European Financial Stability Fund and the European Stability Mechanism.

The IMF wants the sum available for eurozone bailouts to grow beyond EUR 500 billion (USD 647 billion).

"Now they say... 'it should be twice as big'," Merkel said.

“'If it were twice as big, we'd believe you'. Some say 'it should even be three times as big, then we'd really believe you.' And I always ask myself how long is that credible and when is that no longer credible,” the German chancellor added.

In its recently published report, 'World economic outlook,' the IMF said it was expecting a recession for the euro countries as they were struggling to overcome their debt crisis.

There are fears that more delays in resolving the eurozone debt crisis, which began in Greece in late 2009 and infected Italy, Spain, and France last year, could push not only Europe, but also much of the rest of the developed world back into recession.

S&P's lowers EU bailout fund rating

Credit ratings agency Standard & Poor's headquarters in New York, the United States

Source: Press TV
http://www.presstv.ir/detail/221503.html

Credit ratings agency Standard & Poor's has demoted the rating of the eurozone bailout fund as the European debt crisis continues to burgeon.

The credit rating of the Financial Stability Facility (EFSF), the eurozone's rescue package, was lowered to AA+ from AAA on Monday.

The move comes as many eurozone countries have lost their credit worthiness due to their economic downturn.

France and Austria, the latest countries to be examined by the agency, saw their ratings drop from AAA to AA+ on Friday.

In December, the S&P's sounded the 'credit watch negative' alarm regarding the ratings for 15 eurozone countries including France and Germany.

Both the president of France as well as the CEO of the EFSF on Monday dismissed any potential fears caused by the S&P's move.

"We have to react to this with calm, by taking a step back," French President Nicolas Sarkozy said, adding, "At the core, my conviction is that it (the downgrade) changes nothing."

Klaus Regling, the eurozone bailout fund CEO, said that there were no needs to “get overly excited” over the news as the rescue package was only lowered by one notch.

The worsening debt crisis, however, has forced the European governments to adopt harsh austerity measures and tough economic adjustment policies.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe, but also much of the rest of the Western world back into recession.

IMF warns of eurozone downward spiral

David Lipton, First Deputy Managing Director of International Monetary Fund (file photo)

Source: Press TV
http://www.presstv.ir/detail/221419.html

A senior IMF executive has warned that the eurozone could fall into a “downward spiral” of collapsing confidence, stagnant growth, and fewer job, if it fails to get its governance in order.

The International Monetary Fund first Deputy Managing Director David Lipton also said that the European outlook is grim and risks for the global economy are high.

"At the global level, the pace of economic activity is weakening, and the risks for Europe and the world are high," Lipton added on Monday.

Pledging to strengthen ties with Asian governments to minimize spillover risks of the European debt crisis, Lipton called for stronger ties between Asia and the IMF. He added that no country and no region would be immune to the catastrophe.

Lipton's remarks prompted European banks to put away record sums of money in the European Central Bank.

Lipton's comments comes after US-based ratings agency Standard and Poor's downgraded the sovereign credit ratings of nine eurozone countries on Friday, including top-rated France and Austria.

Europe plunged into financial crisis in early 2010. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.

There are fears that more delays in resolving the eurozone debt crisis, which began in Greece in late 2009 and infected Italy, Spain and France last year, could push not only Europe but also much of the rest of the developed world back into recession.

JP Morgan turns guns on Europe

JP Morgan's Chief Executive Officer, Jamie Dimon (file photo)

Source: Press TV
http://www.presstv.ir/detail/221273.html

JP Morgan's Chief Executive Officer, Jamie Dimon says Europe is the largest threat to the global economy, calling for a solution to the economic woes sourced from the continent.

“We urgently need a solution. The longer the problem drags on, the less likely it is we get off lightly,” the CEO of one of the largest banks in the United States said on Sunday.

"I thought Europe would muddle through. I still believe that… The longer the crisis drags on, the more intense the pressure from markets will get,” he added.

Dimon noted that European countries needed to implement more credible austerity measures to solve the crisis.

In addition, he said that the European Central Bank had to provide more liquidity support for countries such as Spain and Italy.

According to Dimon, JP Morgan had already reevaluated all the contracts it held with European partners.

New York-headquartered credit rating agency, Standard & Poor's, recently cut the credit ratings for nine eurozone countries. France and Austria, the latest countries to be examined by the agency, saw their ratings drop from AAA to AA+ on Friday.

In December, the S&P sounded the 'credit watch negative' alarm regarding the ratings for fifteen eurozone nations, including France and Germany.

Europe plunged into deep financial crisis in 2008, which has continued to intensify over the recent months.

Europe anti-austerity rallies turn ugly

Riot police clash with protesters at University Square in the Romanian capital Bucharest during a protest against the government's austerity program and Romanian President Traian Basescu on January 14, 2012.

Source: Press TV
http://www.presstv.ir/detail/221285.html

Police forces have clashed with anti-austerity protesters in Spain, Greece, and Romania, arresting several activists and injuring many others.

During the latest such protests in Spain, police scuffled with demonstrators in the capital Madrid on Sunday, detaining three people and wounding several others.

Scuffles broke out when 'indignant' Spaniards gathered at a Madrid subway station to protest against rises in the cost of public transportation. Dozens of protesters entered the station and refused to pay, shouting slogans such as “I don't pay for your crisis.”

In the Greek capital Athens, riot police attacked around 2,000 demonstrators protesting against job cuts outside parliament, before detaining three and injuring one.

The demonstrators say Athens has failed to decrease its debt, despite massive lay-offs. Last year, the Greek government cut 10,000 jobs and announced plans for further lay-offs in 2012.

Clashes between riot police and demonstrators have also erupted in the Romanian capital Bucharest for a third day in a row.

At least seven people, including a number of police officers, were injured in the confrontations.

The demonstrators chanted slogans against President Traian Basescu, whom they blame for the country's falling living standards, and called on him to step down.

The demonstrations originally started on Thursday in a show of support for Deputy Health Minister Raed Arafat, who resigned earlier in the week, and as a protest against a pension freeze and a 25 percent cut in public sector wages approved by Romania's center-right government in July 2010.

Arafat, a doctor born in Palestine, had harshly criticized a draft healthcare reform bill and entered a dispute with the president, who is a main supporter of the potential law.

World banks brace for euro collapse

Banks are preparing for a possible euro collapse

Source: Press TV
http://www.presstv.ir/detail/217513.html

Banks around the world are preparing for the possible collapse of the euro as fears of the European debt crisis increase.

Several banks are even installing systems capable of coping with trading in old European currencies.

Meanwhile finance firms, corporations, and different governments have also turned to plans that aim at preparing them for harsh times.

Regulators have asked banks in the US and UK to provide updates on readiness levels in case of a possible euro collapse.

Some corporate firms have also started transferring their cash on a daily basis out of European countries, including debt-ridden Greece instead of once every two weeks.

Europe has for months grappled with an economic and financial crisis. Insolvency now threatens in-debt countries such as Greece, Portugal, Italy, Ireland and Spain.

Since its formation, the European Union had been a haven for those seeking refuge from war, persecution and poverty in other parts of the world.

The worsening debt crisis, however, has forced European governments to adopt harsh austerity measures and tough economic reforms. Tens of thousands of Europeans are migrating from their homelands as a result of these difficulties.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe, but also much of the rest of the Western world back into recession.

ECB unable to rescue eurozone

The President of the European Central Bank (ECB) Mario Draghi addresses the European Parliament in Brussels, on December 1, 2011

Source: Press TV
http://www.presstv.ir/detail/213285.html

The European Central Bank (ECB) chief Mario Draghi has insisted that the bank will not act as lender of last resort to struggling eurozone countries.

Draghi told members of the European Parliament on Thursday that despite pressure to resolve euro debt crisis the bank was bound by its mandate and must “act within the treaty”, AFP reported.

"The ECB's monetary policy is constantly guided by the goal of maintaining price stability in the euro area over the medium term," Draghi said.

While some called for the ECB to do more and others wanted it to do less in stemming the sovereign debt crisis, the Frankfurt-based central bank only role is to ensure price stability and to keep inflation fewer than two percent.

Draghi added that governments, individually and collectively, must assume the role of restoring the credibility of their economies as far as the financial markets are concerned, fading the hopes of seeing the bank acting as a firewall.

France have been calling for ECB to become a lender of last resort by purchasing unlimited European bonds to protect debt-ridden eurozone members from falling victim to the bond markets.

However, The ECB itself and Germany are opposed to this, fearing that the central bank ability to print unlimited amounts of money will have catastrophic effects on inflation.

Europe plunged into financial crisis in early 2010. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.

There are fears that more delays in resolving the eurozone debt crisis could push not only Europe but also much of the rest of the developed world back into recession.

Berlusconi announces resignation

Source: Press TV
http://www.presstv.ir/detail/209097.html

Italian Prime Minister Silvio Berlusconi has said that he intends to resign after key economic reforms have been approved.

Berlusconi made the announcement on Tuesday, following a key parliamentary vote on public finance that he won without gaining the absolute majority of 316 seats, which is a precondition for the approval of future budgets, the state-run BBC reported.

In the budget vote, 308 MPs supported Berlusconi and one abstained, but 320 others - the entire opposition - did not vote.

The European Union has been putting pressure on Italy to carry out long-promised major economic reforms in order to improve its financial situation.

There is growing fear among EU leaders that Italy might be drawn into the crisis that has already claimed Greece, Ireland, and Portugal.

Italy faces a nearly two-trillion-euro debt that is 120 percent of its Gross Domestic Product. A 60-billion-euro austerity package to balance the budget by 2013 was passed in August.

“Once this engagement is fulfilled, the prime minister will hand in his mandate to the head of state, who will proceed with appropriate consultations, paying close attention to the positions and proposals of all political forces,” President Giorgio Napolitano said in a statement.

Berlusconi had shown “his awareness of the implications of the results of today's vote” as well as “concern for the urgent need to give prompt answers to the expectations of European partners,” Napolitano added.

The 75-year-old prime minister's popularity rating recently slipped to a record low of 22 percent as his team was unable to address the fiscal crisis and he faced legal battles over bribery, tax fraud, abuse of power, and sexual relations with a 17-year-old prostitute.