Overnight Markets Leading News -Update 1

 

Eurogroup statement-Official Text by EU

The Eurogroup welcomes the agreement reached with the Greek government on a policy package that constitutes the basis for the successor programme. We also welcome the approval of the policy package by the Greek parliament, the identification of additional structural expenditure reductions of € 325 million to close the fiscal gap in 2012 and the provision of assurances by the leaders of the two coalition parties regarding the implementation of the programme beyond the forthcoming general elections.

This new programme provides a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing and hence for safeguarding financial stability in Greece and in the euro area as a whole.

The Eurogroup is fully aware of the significant efforts already made by the Greek citizens but also underlines that further major efforts by the Greek society are needed to return the economy to a sustainable growth path.

Ensuring debt sustainability and restoring competiveness are the main goals of the new programme. Its success hinges critically on its thorough implementation by Greece. This implies that Greece must achieve the ambitious but realistic fiscal consolidation targets so as to return to a primary surplus as from 2013, carry out fully the privatisation plans and implement the bold structural reform agenda, in both the labour market and product and service markets, in order to promote competitiveness, employment and sustainable growth.

To this end, we deem essential a further strengthening of Greece’s institutional capacity. We therefore invite the Commission to significantly strengthen its Task Force for Greece, in particular through an enhanced and permanent presence on the ground in Greece, in order to bolster its capacity to provide and coordinate technical assistance. Euro area Member States stand ready to provide experts to be integrated into the Task Force. The Eurogroup also welcomes the stronger on site-monitoring capacity by the Commission to work in close and continuous cooperation with the Greek government in order to assist the Troika in assessing the conformity of measures that will be taken by the Greek government, thereby ensuring the timely and full implementation of the programme. The Eurogroup also welcomes Greece’s intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece’s debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter’s debt service directly to a segregated account of Greece’s paying agent. Finally, the Eurogroup in this context welcomes the intention of the Greek authorities to introduce over the next two months in the Greek legal framework a provision ensuring that priority is granted to debt servicing payments. This provision will be introduced in the Greek constitution as soon as possible. The Eurogroup acknowledges the common understanding that has been reached between the Greek authorities and the private sector on the general terms of the PSI exchange offer, covering all private sector bondholders. This common understanding provides for a nominal haircut amounting to 53.5%. The Eurogroup considers that this agreement constitutes an appropriate basis for launching the invitation for the exchange to holders of Greek government bonds (PSI). A successful PSI operation is a necessary condition for a successor programme. The Eurogroup looks forward to a high participation of private creditors in the debt exchange, which should deliver a significant positive contribution to Greece’s debt sustainability.

The Eurogroup considers that the necessary elements are now in place for Member States to carry out the relevant national procedures to allow for the provision by EFSF of (i) a buy back scheme for Greek marketable debt instruments for Eurosystem monetary policy operations, (ii) the euro area’s contribution to the PSI exercise, (iii) the repayment of accrued interest on Greek government bonds, and (iv) the residual (post PSI) financing for the second Greek adjustment programme, including the necessary financing for recapitalisation of Greek banks in case of financial stability concerns.

The Eurogroup takes note that the Eurosystem (ECB and NCBs) holdings of Greek government bonds have been held for public policy purposes. The Eurogroup takes note that the income generated by the Eurosystem holdings of Greek Government bonds will contribute to the profit of the ECB and of the NCBs. The ECB’s profit will be disbursed to the NCBs, in line with the ECB’s statutory profit distribution rules. The NCBs’ profits will be disbursed to euro area Member States in line with the NCBs’ statutory profit distribution rules.

The Eurogroup has agreed that certain government revenues that emanate from the SMP profits disbursed by NCBs may be allocated by Member States to further improving the sustainability of Greece’s public debt. All Member States have agreed to an additional retroactive lowering of the interest rates of the Greek Loan Facility so that the margin amounts to 150 basis points. There will be no additional compensation for higher funding costs. This will bring down the debt-to-GDP ratio in 2020 by 2.8pp and lower financing needs by around 1.4 bn euro over the programme period. National procedures for the ratification of this amendment to the Greek Loan Facility Agreement need to be urgently initiated so that it can enter into force as soon as possible.

Furthermore, governments of Member States where central banks currently hold Greek government bonds in their investment portfolio commit to pass on to Greece an amount equal to any future income accruing to their national central bank stemming from this portfolio until 2020. These income flows would be expected to help reducing the Greek debt ratio by 1.8pp by 2020 and are estimated to lower the financing needs over the programme period by approximately 1.8 bn euro.

The respective contributions from the private and the official sector should ensure that Greece’s public debt ratio is brought on a downward path reaching 120.5% of GDP by 2020. On this basis, and provided policy conditionality under the programme is met on an ongoing basis, the Eurogroup confirms that euro area Member States stand ready to provide, through the EFSF and with the expectation that the IMF will make a significant contribution, additional official programme of up to 130 bn euro until 2014.

It is understood that the disbursements for the PSI operation and the final decision to approve the guarantees for the second programme are subject to a successful PSI operation and confirmation, by the Eurogroup on the basis of an assessment by the Troika, of the legal implementation by Greece of the agreed prior actions. The official sector will decide on the precise amount of financial assistance to be provided in the context of the second Greek programme in early March, once the results of PSI are known and the prior actions have been implemented.

We reiterate our commitment to provide adequate support to Greece during the life of the programme and beyond until it has regained market access, provided that Greece fully complies with the requirements and objectives of the adjustment programme.

 

Putin To Win Election In First Round -Poll

http://www.reuters.com/article/2012/02/20/us-russia-election-putin-idUSTRE81G1J920120220

Fishing Slaves on the High Seas for the English Crown

Here is the deal. Don’t buy your fish at Costco. Don’t go to Red Lobster. Don’t  go to Long John Silver. Don’t go to any national or global or even big regional fish restaurant. Buy locally grown fish like Catfish/Talpia, or catch it yourself. Don’t buy from fish outside your country. Only buy from a local fish  monger fishing in a sustainable fishery from your home waters. The ocean is being raped by these national chains , and they are killing these poor Asians and others to bring it to you. And who is at the Center of it all -the same cretins ,  the English , who killed the Grand Banks and got into ‘Cod Wars’ with Iceland trying to kill their fishery. The world’s  fishery stocks are 5-25 years from total collapse. Fish farms are healthier than they were ex in the third world. And never, ever go to work for the Koreans on a fishing boat.  I’m a very numbers oriented person and the worlds fishing stocks are being depleted by the Costco and Red Lobster gang and China is consuming what Japan and Europe and America are not. Global fisheries need around 25 years to ‘heal’ then put on a sustainable harvest basis. Granted your morality is not going to stop the Chinese but at least you can say you tried to save the global fishery.

http://www.businessweek.com/global/fishing-as-slaves-on-the-high-seas-02202012.html

Greece Wins 2n Bailout As EU Leaders Choose aid over default

http://www.bloomberg.com/news/2012-02-21/greece-wins-second-bailout-as-european-leaders-choose-aid-over-default.html

Greeks Get  A Deal with EU

Euro-area finance ministers reached agreement on a second bailout package for Greece that is vital to staving off a default next month.

The deal includes a 53.5 percent writedown for investors in Greek bonds, Luxembourg’s Jean-Claude Juncker, who led the meeting, told reporters early this morning. Debt-swap bonds will have a coupon of 2 percent in 2014, rising to 3 percent in 2015- 2020 and to 4.3 percent after that, he said.

Finance ministers haggled into the night in Brussels over the terms of new loans to Greece and a possible contribution by central banks, and leaned on investors to accept bigger write- offs in a bond exchange. Ministers were discussing a Greek debt target of 121 percent of gross domestic product by 2020.

European Central Bank President Mario Draghi called the deal “a very good agreement.” Italian Prime Minister Mario Monti said private bondholders agreed to take a bigger writeoff on their Greek debt after “intense” negotiations.

The euro surged on news of a deal, rising as high as $1.3293 and trading up 0.1 percent at $1.3262 at 5:30 a.m. in Brussels.

European governments need to weld together the program to give enough time for the bond exchange — designed ultimately to write off about 100 billion euros of Greek debt — to go ahead by a mid-March deadline. The target is for the swap offer to run from Feb. 22 to March 9, so the exchange takes place in time for Greece to escape the full 14.5 billion-euro cost of a March 20 bond redemption, German lawmakers were told last week by government officials.

More Control

Bondholders’ response to the swap, Greece’s ability to prolong two years of austerity, and a series of parliamentary approvals in northern European countries gripped by an anti- bailout mindset loom as risks to the latest salvage operation.

Frustrated with Greece’s inability to meet two years of targets for cutting the deficit and selling off state assets, donor countries are also insisting on more control over how Greece spends the money. German Finance Minister Wolfgang Schaeuble said Greece accepts the idea of paying international aid into a special account, which would give priority to keeping Greece solvent before releasing money for the country’s budget.

The Netherlands, one of four euro-area nations still ranked as AAA borrowers, is pushing for monitors to set up a full-time observation post in Athens.

http://www.bloomberg.com/news/2012-02-21/europe-finance-ministers-said-to-reach-accord-on-second-bailout-for-greece.html

 

China to Follow Iran and Drop Dollar from Oil Trade ?

(thanks to Z for this…looks like they are not afraid of the fat queer boys cheney and kissinger and the mobster rockefeller).

Banker Calls for Yuan to Be Used in Oil Trade
20 Feb 2012

http://en.21cbh.com/HTML/2012-2-20/1NMjMyXzIxMTc1NA.html

February 20, China should push for the use of its currency, the yuan, to settle oil trade from central Asia, the Middle East and Russia, according to Cao Tong, senior vice president of state-run CITIC Bank.

In comments published in the Financial News, a newspaper run by China’s central bank, Cao said using the yuan for pricing and settling oil trade with these major oil producing countries would be a “second front” in the internationalization of China’s currency.

China has inked bilateral currency swap deals with the United Arab Emirates, Kazakhstan and Uzbekistan worth billions of dollars, giving these countries a credit line to obtain yuan from China and boosting economic and political ties between China and the resource rich Central Asian and Gulf nations.

According to previous Chinese media reports, China has also discussed using the yuan to settle bilateral trade with Iran, its third-biggest source of oil imports.

Late last week the country’s largest oil importer, China International United Petroleum & Chemical Co. Ltd., renewed a deal with National Iranian Oil Co. under which China will increase imports to half a million barrels per day.

In its efforts to make the yuan a global currency, Beijing has allowed the development of an offshore market in Hong Kong, and is looking to locate similar trade in London, which sits in the middle of time zones between Asia and the U.S.

 

China’s “Mystery” Gold Buyer

The ZGR  covered the main FT story, but Adrian Ash is sometimes  a good read. Thanks to z for forwarding this discussion. I do think his analysis is wrong but don’t have time to go into it. Always good to read other people.

 

By: Adrian Ash, BullionVault

– Posted Monday, 20 February 2012 | Share this article | Source: GoldSeek.com

Was the People’s Bank of China really buying gold at the rate of 1 ounce in every 8 sold worldwide last quarter…? -thanks to the kind reader who sent me this.

SO THOSE MILITANT crazies known to the mainstream media as “gold bugs” – and to the FBI as subversives – got the headline they’ve been longing for, apparently, last week.

“China central bank in gold-buying push,” declared the Financial Times. “It does appear the People’s Bank of China has been a significant buyer,” agreed a Reuters columnist.

At last, rapture is upon us! Beijing is buying gold in the open market! The FT picks up the story…

http://news.goldseek.com/BullionVault/1329774305.php

 

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