From Europe to the USA and beyond: Sovereign Debt, Falling Credit Rtings, Public Spending and Austerity Measures

motorfirebox said:
Wow, um, remember how in some other thread I brought up that European far-right groups, unlike in the US, are strongly opposed to austerity measures? Remember how I mentioned that Greek cops are speaking out against austerity measures? There's a direct connection, there.

ChrisSick said:

Holy shit. That's just amazingly bizarre. And what kind of far-right Neo-Nazi party takes their name from a 19th century British magical order?

motorfirebox said:
Wow, um, remember how in some other thread I brought up that European far-right groups, unlike in the US, are strongly opposed to austerity measures? Remember how I mentioned that Greek cops are speaking out against austerity measures? There's a direct connection, there.

ChrisSick said:

Holy shit. That's just amazingly bizarre. And what kind of far-right Neo-Nazi party takes their name from a 19th century British magical order?

The Republic of Ireland is voting on whether to ratify the EU's Fiscal Pact, which sets strict limits for countries' budget deficits.

Rejecting it would bar Ireland from emergency EU funding when its current bailout package expires in 2013.

Ireland is the only EU state putting it to a national vote but only 12 of the 17 eurozone members need to ratify it, so a "No" would not block the treaty.

The pact, signed by all EU members except the Czech Republic and the UK, allows EU member states to co-ordinate their budget policies and impose penalties on rule-breakers.

It commits all ratifying members to achieve budget deficits of less than 0.5% of economic output.

Last year, Ireland's deficit reached 13.1%.

The country's 3.1m voters have twice rejected European Union treaties - in referendums in 2001 and 2008 - though both votes were overturned in subsequent polls.

Greece's election campaign turned ugly Thursday on live TV: The spokesman of the extreme-right Golden Dawn party, after trading insults of "commie" and "fascist," lunged at two female left-wing politicians on a mainstream morning talk show, throwing water at one and smacking the other three times across the face.

The violent display reminiscent of trash TV, a week and a half ahead of crucial elections, stunned Greeks as they seek to avoid a catastrophic exit from the common euro currency. Prosecutors immediately issued an arrest warrant for Ilias Kasidiaris, whose party alarmed Europe by gaining 21 of parliament's 300 seats in Greece's inconclusive May 6 elections.

Golden Dawn, which vehemently denies the neo-Nazi label, has been accused of violent attacks against immigrants in Athens. The party denies involvement in the attacks, insisting it is a nationalist patriotic group campaigning on a platform of ridding the country of illegal immigrants and cleaning up crime-ridden neighbourhoods. It has advocated planting anti-personnel mines along Greece's borders to stop migrants from sneaking across.

The attack "put on public display what was widely known," said the radical left-wing Syriza party, whose member Rena Dourou was splashed with water on the show. "The true face of this criminal organization."

Spain's credit rating has been downgraded as estimates on the size of the bailout it needs begin to mount up.

Fitch cut its rating on Spanish government debt by three notches to "BBB", a sign it thinks Spain's ability to honour its debts has weakened.

Three years ago the mayor of Alcorcon embarked on a hugely ambitious project.

Some 100m euros ($124m; £80m) was to be invested in a world-beating culture and arts centre, complete with nine buildings, three underground levels, and even a circus.

But it did not work out.

The area where the project was being built is now a sorry sight.

Inside, light fittings hang loose and the half-finished futuristic buildings are surrounded by a graffiti-covered corrugated iron fence.

A project that was meant to put the local area on the map has instead become an unsightly symbol of Spain's past unhealthy habit of regional overspending.

Many regions in the country owe billions of euros, partly because some local politicians built anything from airports to swimming pools to cultural projects during the boom times.

Spain is to get up to 100bn euros ($125bn; £80bn) in loans from eurozone funds to try to help shore up its struggling banks.

The move was agreed during emergency talks with eurozone finance ministers.

Spain's Economy Minister Luis de Guindos ... emphasised that the help would be for the financial system, not the economy as a whole. "This is not a rescue," he said.

The Spanish government had been reluctant to ask for a bailout like the one given to Greece, Ireland and Portugal, as these rescue packages came with demands for spending cuts and stringent spending cuts.

Mr de Guindos said there would be conditions attached for the banks receiving the loans, but there would not be "micro-economic conditions" for Spain.

Germany's deputy finance minister has ruled out "eurobond-lite" plans to pool part of eurozone countries' debt.

Speaking exclusively to the BBC, Secretary of State Steffen Kampeter said "debt is a national responsibility".

"I don't see any strategies where we socialise and redistribute the bad political decisions made by some who are over-indebted."

The German government has already ruled out full "eurobonds" for now.

That may disappoint investors on international markets whose hopes had been raised by reports that the Germany might be inching toward the compromise mutualisation plan.

World leaders have welcomed the narrow election victory of Greece's broadly pro-bailout New Democracy party and urged Athens to form a cabinet quickly.

The Syriza party, which rejected the bailout terms and came a close second, said it would lead the opposition.

The leader of the party that narrowly won Greece's election has begun urgent talks to form a coalition, saying he wants to forge a "national consensus".

New Democracy's Antonis Samaras met leaders of the other two largest parties, but no deal on a coalition has yet been announced.

Mr Samaras says he will seek changes in the terms of a bailout agreement reached with the EU and IMF.

PERHAPS within days, at most within weeks, Moody’s, a big ratings agency, will announce a reappraisal of major banks that will include across-the-board downgrades, differing only in the degree of their severity.

Moody’s has made no secret of its plans. But banks are nonetheless cowering as they await bad news. Credit ratings matter. Many big investors have built them into their investment guidelines, which restrict which assets they may buy and prescribe how much collateral is required in derivatives transactions. In either case, a weak rating costs money.

This leads to a second worry: that a poor credit rating will ultimately undermine a financial firm’s ability to provide finance. Morgan Stanley has been the focus of particular concern, as Wall Street types speculate that its rating may fall to “Baa2”—which is barely investment grade.

Ten banks in France, the Netherlands, Belgium and Luxembourg have been downgraded as Moody's continues to cut the credit ratings of major lenders amid fears over the worsening crisis in the eurozone.

The downgrades are part of a global review by Moody's of bank credit ratings. Italian, Spanish and Greek banks are among those already to have been downgraded by the agency.

Britain's largest banks could see their ratings cut next week, along with those of some of the world's most prominent investment banks, including Goldman Sachs and Morgan Stanley.

The credit ratings agency Moody's has downgraded 15 banks and financial institutions.

UK banks downgraded include Royal Bank of Scotland, Barclays and HSBC.

In the US, Bank of America, Citigroup, Goldman Sachs and JP Morgan are among those marked down.

The other institutions that have been downgraded are Credit Suisse, UBS, BNP Paribas, Credit Agricole, Societe Generale, Deutsche Bank, Royal Bank of Canada and Morgan Stanley.

Belize is in danger of defaulting on its debt after it missed a $23m (£14.6m) bond payment due on Monday.

The government still has a 30-day grace period to pay the interest, but said it was unlikely to be able to do so.

Creditors accuse Belize of trying to force a Greek-style debt restructuring on holders of the $550m bond, which represents half its public debt.

The row has drawn attention to Caribbean countries' growing debt burden amid falling tourism revenues.

The Belizean "superbond" is due to mature in 2029, but pays an annual "coupon" to holders, which now amounts to 8.5%.

Prime Minister Dean Barrow said he would renegotiate the terms of the bond after he won a second term in March.

Earlier this month, he said Belize could not afford the coupon payment, adding: "Our hope, however, is that we can move quickly towards a sensible restructuring of the instrument."

The government's proposals include extending the maturity date of the bond and cutting the amount to be repaid by up to 45%.

Egypt has asked the International Monetary Fund for a $4.8bn (£3bn) loan to help revive its struggling economy.

The request was made during talks in Cairo between President Mohammed Mursi and IMF chief Christine Lagarde.

Ms Lagarde said the IMF would respond quickly, while Prime Minister Hisham Qandil said he hoped the deal could be finalised before the end of the year.

It is needed to cover budget deficits resulting from shrinking tourism and foreign investment revenues.

Eurozone finance chief Jean-Claude Juncker has said the Greek people have to be aware the country is facing its "last chance".

After a meeting with Greek Prime Minister Antonis Samaras, Mr Juncker praised the nation's "tremendous efforts" so far to cut its deficit.

But he said "priority number one" was further consolidation of the public finances of Greece.

Greek premier Mr Samaras promised that Greece would finalise a package of cuts worth 11.5bn euros ($14bn) in the next few weeks.

The Greek premier wants an extension of up to two years to implement those painful cuts.

At issue during the week of talks is whether Greece will receive its next instalment of loans worth 31.5bn euros that it needs to avoid defaulting on its vast public debts.

Under the terms of the bailout agreement, Greece needs to demonstrate it can find 11.5bn euros in public spending cuts within two years in order to qualify for the money.

There are also reports that due to the worsening state of the economy, which affects tax receipts and welfare spending levels, Greece may now need to find savings of up to 13.5bn euros, 2bn more than thought.

Greece’s far-right Golden Dawn party is increasingly assuming the role of law enforcement officers on the streets of the bankrupt country, with mounting evidence that Athenians are being openly directed by police to seek help from the neo-Nazi group, analysts, activists and lawyers say.

In return, a growing number of Greek crime victims have come to see the party, whose symbol bears an uncanny resemblance to the swastika, as a "protector".

As the head of Greece’s largest oncology department, Dr. Kostas Syrigos thought he had seen everything. But nothing prepared him for Elena, an unemployed woman whose breast cancer had been diagnosed a year before she came to him.

By that time, her cancer had grown to the size of an orange and broken through the skin, leaving a wound that she was draining with paper napkins. "When we saw her we were speechless," said Dr. Syrigos, the chief of oncology at Sotiria General Hospital in central Athens. "Everyone was crying. Things like that are described in textbooks, but you never see them because until now, anybody who got sick in this country could always get help."

The French government has downplayed the importance of rating agency Moody's decision to deprive the country of its top triple-A credit rating.

Moody's downgraded France's debt from Aaa to Aa1, and kept its negative outlook, meaning it could be cut again.

Moody's blamed stalled economic growth, the risk of a Greek euro exit and the risk that France has to contribute to bailing out other eurozone countries.

"Judge us on our results," French Finance Minister Pierre Moscovici said.

Rival ratings agency Standard & Poor's downgraded France from AAA in January. Of the big three agencies, only Fitch still gives France its top rating.