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June 25, 2012

Cyprus seeks EU bailout

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Cyprus seeks EU bailout

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Monday, June 25, 2012

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Cyprus today became the fifth member state to seek access to funds from the European Union’s bailout fund. The Cypriots join Spain, Ireland, Portugal, and neighbours Greece.

The move was triggered after the Cyprus Popular Bank, the nation’s second-largest bank, asked the government for recapitalisation. The bank has been hit hard, as has the wider Cypriot banking sector, by exposure to Greek economics. A Greek restructure of 200 billion in debt has caused the bank a €3.65 billion loss, and money is being lost on loans domestically and to Greek customers.

Christofias meeting with Dmitry Medvedev of Russia in 2008. Russia has lent Cyprus money before and may do so again to alleviate the island nation’s problems.

Cyprus Popular Bank chairman Michalis Sarris today revealed talks are also underway with China about a possible loan. Low taxes and regulation have attracted large amounts of foreign money to Cyprus, including much Russian money, producing a banking sector far larger than most nations that size. Russia and China are both viewed by officials as possibilities to seek loans from, and Russia last year agreed to a €2.5 billion loan to allow Cypriot financial restructuring.

The bailout request comes within days of Cypriot president Demetris Christofias giving an interview to Greek newspaper To Vima in which the EU’s only communist leader criticised international bailout policies. He complained the European Commission, European Central Bank, and International Monetary Fund acted like a “colonial force” by forcing nations receiving bailouts to agree to austerity measures.

Cyprus, due to take over the rotating EU presidency this week, hopes to limit the scope of its bailout to the banking sector. This is similar to Spain, and unlike the other bailed-out nations. Ratings agency Fitch today relegated Cyprus to “junk”, a reflection of how much money may be required.

“The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spillover effects through its financial sector, due to its large exposure in the Greek economy,” read a government statement. Former President George Vasiliou, an economist, recently claimed markets were failing to recognise the differences between Greece and Cyprus: “Cyprus’s problems are the result of a Greek tragedy, and the ratings agencies are not distinguishing between Greek-speaking people, whether we are in Athens or Nicosia“.

Cyprus has recently discovered large natural gas fields, and unemployment at 10% is below the likes of Greece (22%) and Spain (24%). Cypriot officials predict a growth in the economy, although the International Monetary Fund expects a contraction. There are also concerns a Greek withdrawal from the euro would damage confidence in investors, but Vasiliou predicts “if Greece has to exit the euro, it will not be the end of Cyprus.”



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July 15, 2011

Euro reaches new lows

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Euro reaches new lows

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Friday, July 15, 2011

Economy and business
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On Tuesday, the Euro fell to a new record low in relation to the Swiss Franc, and to multi-month lows against the U.S. Dollar and Japanese yen; all considered by investors to be safe currencies during times of economic turmoil.

The Wall Street Journal reported earlier that recent comments from the newly installed head of the International Monetary Fund, France’s Christine Lagarde, resulted in a sell-off of the Euro. At a roundtable discussion in Washington, Lagarde noted that the IMF had not yet reached discussion of terms and conditions of a second Greek bailout plan. In fact, a representative from the IMF is currently meeting with Eurozone policymakers to draft such a new proposal. The yield differential between Italian bonds and German bonds has spread to more than 300 basis points, something not seen in over a decade and evidence of investors’ concern.

Adding to the Euro’s woes is the upcoming release of the bank stress tests on Friday. The European Bankers Association said that they expect the data release to shed new light on the Eurozone’s banking situation. Representatives of several of the Eurozone’s governments, including Germany, have requested that the association consider releasing fewer specific details for fear that investor panic will ensue. The inadequacy of the capitalization rates has been an issue with the European Central Bank, whose president recently called upon Eurozone banks to make every effort to put their balance sheets in order.

For the time being at least, an unsubstantiated rumor reported by the Wall Street Journal states that the Eurozone’s central banks’ purchase of periphery debt has helped to quell the downward momentum of the Euro.



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November 29, 2010

US economist tells Portugal to seek bailout

US economist tells Portugal to seek bailout

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Monday, November 29, 2010

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Nouriel Roubini said that it is becoming “increasingly likely” that Portugal will need international monetary assistance.
Image: Kjetil Ree.

American economist Nouriel Roubini has said that Portugal should consider seeking a bailout because of its weak growth and high amount of debt. Roubini made the comments to the Diario Economico newspaper. He said that it is becoming “increasingly likely” that Portugal will need international help. His comments came after Ireland received a €85 billion bailout from the European Union.

Portugal has become the second most likely eurozone country to require a bailout after Ireland, but it has paid all its insurance debt for this year. After news about Ireland’s bailout became available, the euro rose around $1.33. After trading at $1.3181 in Asian trade, it sank to its lowest level since September 21.

Roubini also commented on the situation of Spain, the fourth largest economy in Europe. He said that the country is “too big to bail out.” Nicholas Smith, the director of equity research at MF Global in Tokyo said: “The one to really watch is Spain, as the eurozone’s fourth largest economy, bigger than Greece, Ireland and Portugal put together. The question is whether the Union has the capital firepower to rescue Spain in the way it has for Greece and Ireland.”

He commeted on the euro zone as a whole. He said “The economic outlook over the next few quarters, the next few years, is going to be weak economic growth … The policy consequence is going to be more monetary easing,” Roubini added. “The only central bank officially against further quantitative easing is the European Central Bank, but the pressure coming on sovereigns and the pressure coming on the financial sector in the euro zone are going to force the ECB to provide liquidity and increase base money.”



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April 23, 2010

Greece formally asks for EU-IMF loans

Greece formally asks for EU-IMF loans – Wikinews, the free news source

Greece formally asks for EU-IMF loans

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Friday, April 23, 2010

Greek Prime Minister George Papandreou made the request for bailout loans.
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Greece has formally asked for rescue loans by the European Union and International Monetary Fund (IMF) to be activated, aimed at helping the country recover from an economic crisis.

Under the plan, countries in the Eurozone will provide up to 30 billion euros in loans in the first year, while the IMF will contribute ten billion euros.

“The moment has come,” said Greek prime minister George Papandreou. He stated that it is “a national and pressing necessity for us to formally ask our partners for the activation of the support mechanism, which we jointly created in the European Union.” The prime minister added that “several days will pass before money can start being drawn.”

Under the bailout, Greece’s borrowing needs for the immediate future will be covered, so it can avoid default and keep servicing; the request needs to be approved by all fifteen countries using the euro, and will be reviewed by the European Central Bank.



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April 8, 2010

Eurozone economy did not grow at all in last quarter of 2009

Eurozone economy did not grow at all in last quarter of 2009

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Thursday, April 8, 2010

European Union
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According to revised official figures, the economy of the eurozone, the sixteen European countries using the euro, did not grow at all in the final quarter of last year. Eurostat reports that the number was revised from an initial figure of +0.1%.

Meanwhile, the eurozone’s lost more than 2.2% in a year-on year comparison, more than the initial estimate of 2.1%.

According to the numbers, Ireland saw an output drop of 2.3% in the last quarter of 2009, while Greece, the country in the eurozone with the most debt, had its economy contract by 0.8%. Italy was down by 0.3%, Germany saw no gain, but France posted a 0.6% quarterly growth.

The Associated Press reports the stagnation was unexpected by analysts, and will only reinforce expectations that the European Central Bank will keep the key interest rate at one percent for most of 2010.



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March 27, 2010

Greek debt deal reached

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Greek debt deal reached

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Saturday, March 27, 2010

Greece
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A meeting in Brussels has produced a plan, supported by all 16 countries in the eurozone, to make available up to 22 billion euros in financing to support Greece, which is laden with debt.

The deal would come into force only if Greece was unable to borrow money from commercial lenders, and would require approval from all 16 eurozone countries. While no figures were included in the agreement, anonymous officials said the total package would be around 22 billion euros, of which European countries would provide two-thirds. The remainder would be supplied by the International Monetary Fund.

Germany and France were the architects of the document, which was subsequently approved by the other members of the eurozone. While it is seen as a partial retreat for countries such as France that previously opposed any IMF participation in the loans, it is nevertheless regarded as a breakthrough in negotiations. Germany had been insistent on relatively strong terms for the plan, a large amount of which was in the final version.

Despite the agreement, there are no plans for it to take immediate effect, as the Greek government has not requested financial aid, and officials said that they hoped the option would never have to be used. The president of the European Central Bank, Jean-Claude Trichet, said that “the mechanism decided today will not normally need to be activated.”



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February 5, 2010

Concern about sovereign debt of some EU members roils markets

Concern about sovereign debt of some EU members roils markets

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Friday, February 5, 2010

Economy and business
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Global stock markets fell steeply on Thursday on investor concerns about the growing sovereign debts of European Union member states Greece, Portugal, and Spain. A report of a rise in weekly jobless claims in the United States contributed to the market gloom. The MSCI World index fell the most in over nine months. Currency and commodities markets also posted major moves.

Cquote1.svg If other European countries are having trouble like Greece, then it’s a big problem for banks, and the banks are the foundation for everything. Cquote2.svg

—Keith Springer, Capital Financial Advisory Services

The euro fell more than one percent against the US dollar to an eight-month low; against the yen it fell 2.2%, approaching a one-year low. The price of crude oil fell 5% to US$73.14 per barrel and gold slid 4.4% to US$1,063 per ounce.

Greece’s Prime Minister, George Papandreou, announced an austerity program, but that is now threatened by plans by the largest trade union for a national strike. In 2009, Greece’s budget deficit was 12.7% of the nation’s gross domestic product (GDP). Papandreou’s plan called for that to drop to 3% by 2012.

Gary Jenkins of Evolution Securities told the Financial Times, “[t]he risk aversion trade is back on as the debt problems of Europe are for the first time bringing down global markets. Corporate earnings may come in strongly [in the US], but investors are more concerned about the possible default of a sovereign European nation.”

Jean-Claude Trichet last month.
Image: World Economic Forum.

“This is a sovereign problem, and it’s hitting everything,” said Keith Springer of Capital Financial Advisory Services to Reuters. “If other European countries are having trouble like Greece, then it’s a big problem for banks, and the banks are the foundation for everything. European banks will be in trouble and that will carry over to all stocks.”

“The focus is shifting toward Spain and Portugal, where the deficit-reduction plans have been far less ambitious than Greece,” said Kornelius Purps of UniCredit Markets & Investment Banking to Bloomberg.

Concerns in Portugal centered on political tension surrounding a regional spending bill. In Spain, the source of worry was reportedly because the government backed down from promised pension reform.

European Central Bank President Jean-Claude Trichet sought to ease investor fears, in part by noting that the deficit in the US is expected to hit 10% of GDP in 2010, compared with about 6% in the eurozone. He said that he was “confident” that Greece is moving in the right direction.

Trichet did admit that it is of “paramount importance” for Greece, Portugal and Spain to get their public finances under control.



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October 4, 2009

Ireland votes \’Yes\’ to Lisbon Treaty

Ireland votes ‘Yes’ to Lisbon Treaty – Wikinews, the free news source

Ireland votes ‘Yes’ to Lisbon Treaty

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Sunday, October 4, 2009

Status of the Lisbon Treaty in EU nations:

██ Deposited: 23 countries

██ In ratification process: Poland, Czech Republic, and Ireland

On Saturday, 67% of Irish voters favored the European Union’s (EU) Lisbon Treaty which now requires approval from the presidents of the Czech Republic and Poland for ratification.

With polls closed at 10 PM local, the vote in favor of the EU treaty stands at 67% in favor and 33% against. 41 of Ireland’s 43 constituencies had a majority of voters in favor of the treaty. The treaty was mainly supported by the Fianna Fáil, Fine Gael and Labour parties amongst others and was opposed mainly by the Sinn Féin Party and Libertas. The Irish rejected the Lisbon Treaty in June 2008 when 53% of the population voted against the Twenty-eighth Amendment of the Constitution of Ireland that covered the ratification in a referendum. Since 2007 the Lisbon treaty has undergone a series of ratification votes and reviews in all of the current 27 member-states. Ireland was the only state to require both a parliamentary vote and a popular referendum.

The Lisbon Treaty is a number of amendments to the Treaty on the European Union and the Treaty Establishing the European Community, which was later renamed the Treaty on the Functioning of the European Union. Some of the major tenets of the Lisbon Treaty include the legitimization of the European Central Bank, revisions to European Court of Justice powers, a restructing of EU-level legislative institutions, and the establishment of the High Representative of the Union for Foreign Affairs and Security Policy. Also, the treaty allows for the election of an EU President for two and one-half years by the executives of each member-nation.

With the treaty now passed in Ireland, the Czech Republic and Poland will make a final review. In the Czech Republic, the parliament has already passed a bill supporting the treaty however, the signature of Czech President Vaclav Klaus is required. Senators from the Czech Parliament have filed a complaint with the Czech Constitutional Court on the grounds that the treaty violates their constitution. Legally, the president cannot ratify the treaty until the Court makes a decision. Poland must also sign-off on the treaty before it can be enacted. The Polish parliament also has approved the treaty but Polish President, Lech Kaczynski, must also sign the document. Thus, while Ireland’s referendum is important in the ratification process, the Czech Republic and Poland must still approve.



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August 21, 2009

Stock markets worldwide rise on hopes of US economic recovery

Stock markets worldwide rise on hopes of US economic recovery

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Friday, August 21, 2009

2008–09 financial crisis

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Ben Bernanke

Stock indexes worldwide rose on Friday, after US bank chief Ben Bernanke said that the US economy was starting to recover from the recession.

Addressing a conference in Wyoming, the bank chief said that “the prospects for a return to growth in the near term appear good.”

He added, however, that “the economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels.”

The Dow Jones Industrial Average gained 155.91 points, or 1.67%, to end the day at 9505.96. The Nasdaq reached 2020.90 points after gaining 1.59%. The Standard & Poor’s 500 Index, meanwhile, struck a ten-month high, reaching a level of 1,026.13 at the closing bell, up 1.9%.

The British FTSE index rose about two percent, closing at 4,851. The French Cac index gained 3.1% and the German Dax 2.8%.

“Bernanke was a little bit more bullish than most people were expecting. He’s saying that the global economy is starting to emerge from the recession and that the fears of a financial collapse have receded substantially,” said Jacob Oubina, the currency strategist of Forex.com.

“I think the market is just taking those headlines as extreme positives for the outlook.”

Jean-Claude Trichet, the European Central Bank president, warned that talk of a complete recovery might be premature. “I am a little bit uneasy when I see that, because we have some green shoots here and there, we are already saying, ‘well, after all, we are close to back to normal,’ ” he said.



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February 5, 2009

Wikinews Shorts: February 5, 2009

Wikinews Shorts: February 5, 2009 – Wikinews, the free news source

Wikinews Shorts: February 5, 2009

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A compilation of brief news reports for Thursday, February 5, 2009.

Help Wikinews! Contribute to Wikinews by expanding these briefs or add a new one.

Flight 1549 transcript released

The United States Federal Aviation Administration has released a transcript of the conversations that went on between Flight 1549 and the control tower at La Guardia before the airplane crash landed in the Hudson river. All 155 passengers and crew survived and were rescued by a flotilla of boats.

The transcripts reveal that the pilot, Chesley Sullenberger, realised that both engines had been disabled by bird strike and that the airplane was about to crash. Controllers attempted to clear runways at nearby airports but Sullenberger had to put down immediately, telling them “we’re going to be in the Hudson”.

The transcript, in PDF format, can be read here.

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UK house prices rise despite recession

The average price of a house in the United Kingdom rose by 1.9% in January, according to a survey by the mortgage lender Halifax. This takes the average price to £163,966 – a rise, according to The Daily Mail, of £100 a day, although their headline and story do not agree on the figure.

Year-on-year figures show that prices fell 17.2% since January 2007, and 5.1% over the last three months. A similar survey by the Nationwide Building Society said that prices fell 1.3% in January. The Daily Mail says 1.2 million households now have “negative equity”, where the mortgage on their property is more than the property is actually worth.

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Bank of England cuts interest rate; European Central Bank waits

The Bank of England, the UK’s central bank, has cut interest rates to their lowest level since the bank was created in 1694. The new base rate is to be 1%, down half a percentage point.

Meanwhile, the European Central Bank, which governs rates in the Eurozone, has left its rates unchanged at 2%, but has hinted that a half point cut is possible in the next review in a month’s time.

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U.S. new unemployment at 26-year high

The U.S. Department of Labor says that initial jobless claims in the country have gone up 35,000 to a seasonally adjusted 626,000. The figures for the last week of January are the highest since 1982. The four-week average, which removes anomolies like strikes and holidays, were up 39,000 to 582,250. America now has 4.788 million people unemployed and claiming welfare. Bloomberg believes that 7.5% of the working population will be unemployed in figures to be released tomorrow.

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