Wednesday, March 09, 2011

Europe Update: Ireland and Greece

by Calculated Risk on 3/09/2011 11:29:00 AM

The eurozone debt crisis summit scheduled is on Friday and this meeting is to prepare for the next meeting of all 27 EU leaders in Brussels on March 24th and 25th - so I expect no major announcement on Friday.

However it is interesting that To Vima quoted Prime Minister Georgios Papandreou as telling his cabinet that these meetings are "all or nothing", implying a comprehensive solution or ... ?

Also from To Vima this morning: Nightmare: 14.8% Unemployment

Explosive growth of unemployment recorded in Greece, with a total number of unemployed is at 733,645, according to data from the Greek Statistical Authority (ELSTAT) that were released Wednesday.

The percentage of registered unemployed reached 14.8% in December 2010 an increase of one percentage point compared with November.

The number of the employed workforce in the country fell to 4.23 million from 4.3 million the same period. Record low unemployment, record the ages of 15 -24 which rose 39% from 28.9% compared with December 2009.
This is politically untenable.

And on Ireland, the new government's plan is worth reading "Towards Recovery: Programme for a National Government 2011-2016". Here is an excerpt from page 6:
In our engagement with the lenders, we will pursue a number of different strategies to achieve this end.

We will seek a reduced interest rate as part of a credible re-commitment to reducing Government deficits to ensure sustainability of our public finances.
...
• The Government accepts that enabling provisions in legislation may be necessary to extend the scope of bank liability restructuring to include unsecured, unguaranteed senior bonds.emphasis added
Sounds like haircuts ...

The Greek ten year yield is at 12.9% (up again today). The Irish ten year yield is down a little to 9.5%.