Greece soft default, Italy downgraded and volcano eruption, ah yes and Spain protests
Beside the extensive updates on Spain this weekend, thetrader finds the below as significant weekend news. Welcome to the new Europa….
Greece seems to be on the soft default path. The current interest rates are simply unsustainable, and like we at thetrader have argued over the past months, Greece needs to default, and restart the engines. from WSJ;
French support for proposals to extend the maturities of Greek debt—a so-called soft restructuring—would leave the ECB isolated in its opposition. and possibly force it to accept a compromise.
“What we certainly don’t want is a state bankruptcy, a default, in Europe,” Ms. Lagarde said in an interview published Friday in Austria’s Der Standard newspaper. “You can use a lot of words—reprofiling, restructuring, re-this, re-that—but what there won’t be is a restructuring of Greek debt.” At the same time, she said: “We would accept anything that is based on a voluntary accommodation by banks.” (WSJ)
and then we got some credit ratings downgrade preparations by S&P. this time it is Italy.
“With regard to the economy, the government has initiated and will intensify its reforms; in regard to the budget, a phase of measures are in advanced preparation in order to balance the budget by 2014,” the Treasury said today in an e-mailed statement from Rome. It also said the measures will be submitted to the Parliament for approval by July.
Italy had its credit-rating outlook lowered to negative from stable by Standard & Poor’s, which cited the nation’s slowing economic growth and “diminished” prospects for a reduction of government debt, according to an S&P statement sent late yesterday. S&P affirmed Italy’s A+ long-term rating, the fifth-highest, and its top-ranked A-1+ short-term rating.
“What S&P is saying is that Italy’s economy is not growing because it has not undertaken structural reforms, and this lack of growth could make it difficult for the country to meet its commitments in the medium to long-term,” said Nicola Borri, who teaches economics at Rome’sLuiss University. “They’re not saying we’re like Greece and Portugal now, we’re OK for now, but we need to reform or there will be trouble down the line.” (Bloomberg)
and finally to some volcano eruption this weekend. Norway has rescheduled flight, let’s see who will follow. Deja Vú all over again. Remember the Flash Crash last year?
It has been confirmed that Grimsvotn volcano underneath the Vatnajokull glacier in southeast Iceland has begun erupting.
A plume of ash is visible, which has led scientists to confirm earlier reports of an eruption. Vidir Reynisson at the public safety unit of the Icelandic police says it is too early to tell how big an eruption it will be, although it shows signs of being bigger than the last one in 2004.
Earthquake activity began in the area at 18.00 this evening (local time) — which was taken as a clear sign of an imminent eruption. The emergency co-ordination centre at Skogarhlid in Reykjavik is in operation. (icenews)