Greek debt talks productive over Arab Spring … or Winter

Debt talks productive

At the offset of last week, there was a relief that European stocks climbed as Greece described its debt talks held last Friday in Poland with the European Union and the International Monetary Fund as “productive”. Investors have now been able to speculate that the Federal Reserve will provide more stimulus. Also, amid hopes that Greece may avoid default, U.S. futures rose.

According to Before it’s News (People Powered News), Greece, Portugal, Ireland, Spain and Italy, which saw its credit rating downgraded at the begining of last week, by Standard & Poor’s, went on implementing austerity packages to bring down their debts and restore confidence after investors demanded record premiums to hold their bonds, instead of benchmark German bunds. But the point is: Is Greek austerity the answer? What would Arab SpringGreek default mean?

Over last week, experts agreed that a Greek default could spark a crisis for other European countries as well as the United States. They also agreed that it was almost certain that Greece would not be able to pay off all of its debts.

Greek leaders have been struggling to agree to a set of painful budget cuts, including layoffs and new taxes, in order to get to the next round of bailout cash from its European partners. Meanwhile, news leaked that Greece was in the midst of a painful recession, which is cutting tax collections and causing it to sink even deeper into the deficit hole.

European financial stress

As a matter of fact, a default in Greece could cause investors to flee the debt of other troubled European economies, including Portugal, Ireland, Italy and Spain. Investors trading in credit default swaps are now placing the chance of default in those countries at between 28% to 66%. While Greece has only about €300 billion ($411 billion) in outstanding debt, believed to be mostly in the hands of European banks, adding all five countries’ debt together comes to €2.8 trillion ($3.8 trillion). Reportedly, Spain and Italy are particularly worrisome. If those countries were to default, European authorities would not have enough money to bail them all out, experts say.

German Chancellor Angela Merkel says that the eurozone must stick together and that there aren’t any procedures underway to ease Greece into a default that promises a softer landing. (In July, European Union leaders agreed to a rescue plan for Greece worth more than $150 billion, which would help it cover its financing needs for the next several years. One of the key elements of the plan, which is awaiting final approval, is a bond swap deal in which Greece’s debt burden is reduced, while the country’s private-sector creditors agree to accept new bonds worth less than their original holdings.)

Investors spooked

Peculiarly enough, developing nations have completed orderly defaults before. But for Greece, economists believe, austerity measures attached to its rescue package will slow economic growth and weaken the country’s competitiveness for years to come. What’s more, orderly defaults in industrialized nations are essentially unprecedented, which partly explains why investors are so spooked by what’s happening in the eurozone.
Syria
According to CNN Money, Europe’s emergency bailout resources are far from enough to support anything more than smaller countries such as Greece, Portugal and Ireland. As there’s no common treasury in the construction of the euro, The International Monetary Fund has urged eurozone leaders for bigger funds. It remains to be seen how much influence the global lender has.

So far, a default — however orderly or disorderly — hasn’t been able to calm markets. Spooked investors might likely find calm in an expanded EFSF.

Bashar Assad’s crackdown on dissent rages on

Five months after President Obama told Muammar Qaddafi to leave Libya, yet he is pressing on against NATO-backed rebel forces, and four months after Obama offered Syria‘s leader an ultimatum to lead reform or leave, Bashar Assad’s crackdown on dissent rages on.

Through intervention or engagement, the U.S. is stuck with inconclusive results in both countries.

It appears, the involvement is not part of US government but on its peoples’ as well. To show this to the rest of the world, protesters hit Wall Street.

Modeled on the “Arab Spring” uprisings that swept through Egypt, Tunisia, Syria and other countries this year, Occupying Wall Street is a “leaderless resistance movement”, orchestrated last week through Twitter, Facebook and other social media tools.

Activist magazine Adbusters spearheaded the event, putting the call out two months ago for participants in a Sept. 17 demonstration in lower Manhattan. Organizers are hoping some protesters stay for two months.

“Something needs to change,” said one protester, who declined to give his name and covered half his face with a bandanna. “We need an economy for the people and by the people, not for the rich and by the rich.” Another protester, Rheannone Ball, chimed in: “It’s our duty as Americans to fight for our country and to keep it true to serving its people. When it doesn’t do that, it’s immoral not to stand up and say something.”

Scott Atran, in Talking to the Enemy: Faith, Brotherhood, and the (Un)Making of Terrorists says
„We are living on the cusp of perhaps the second great tipping point in human history, and this is an awesome and chancy thing to experience”.

Now, how are we going to be involved with the social media making it all but possible for us? Like it, or not, you may have a say, or even go out and protest. Beware! Depending on where you are, you may get killed for doing that.

Is Arab Spring a fraud?

“‘Arab Spring’ as a force for democracy, human rights and peace in Egypt seems to me to be a fraud,” said four months ago CBS NEWS’ contributor, Ben Stein. In his opinion there is a gigantic regional coup by Iran taking place. He believes that the common denominator of all the successful Arab street movements is that they are sympathetic to Iran. He says: “ When the dust settles, Iran is going to own the Middle East – except for maybe Saudi Arabia.” In his article in Sunday Morning he concluded: “You can call it “Arab Spring” if you want. But with Iran now the regional superpower, it is a lot more like an extremely bleak Mideast winter.” It remains to be seen if he was right.
Meanwhile, mid last week UN chief urged support for Arab Spring nations. As Associated Press reported, Global leaders pointed to democratic uprisings across the Arab world as a sign of hope in a world wracked by conflict, climate change and other crises as they gathered Wednesday for the annual opening of the new U.N. General Assembly.

Global stocks and commodities fell

Just before weekend — due to recession concerns — global stocks and commodities fell even though G20 financial chefs reached consensus, yet, apparently not that satisfactory as both the IMF and the World Bank will not present reports until the next meeting in April when the second finance meeting under the French G20 presidency is to take place in the United States; The third and final finance meeting will be held in October in Paris, when an ultimate agenda will be set for the G20 Summit scheduled in November in Cannes, France. Meanwhile, they said that they were committed to a strong and coordinated international response to address the renewed challenges facing the global economy, but, U.S. and European stocks fell even after that.
On Friday morning, according to a ‘Morning Call‘ from Barchart, global stocks were lower with the Euro Stoxx 50 down -1.13% and Dec S&Ps down -7.90 points.
The dollar was little changed and commodities were weaker with copper plunging to a 14-month low and crude oil sliding to a 1-1/2 month low.

We’ll see what happens through this week. Till next monday, then.

Stay safe Folks,

Greg Grey

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