30 Jan 2012: Greece reject EU budget plan; dangerously close to default

FTSE 100 5670 Down 111bp
S&P 500 1316 Down 16bp
NIFTY 50 India 5204 Up 90bp

Major Stories

  • Greece reject EU budget plan
    • Greece’s Finance minister has angrily rejected Germany’s proposal of a ‘budget commissioner’ to oversee the austerity measures in Greece
    • He also said that this was a choice between ‘national pride’ and ‘financial assistance’ as the budget commissioner would have veto power for Greece’s budget and tax policies
    • There is some consensus as to the Greece’s privately held bonds with holders having to face losses of upto 70%; however the remaining budget deficit has still to be accounted for- the options are austerity cuts, additional loans or ECB support
    • With Greece not agreeing on budget cuts, it is unlikely that EU nations will provide it a Euro 130bn bailout; this is a critical week to reach a decision
    • IMF and EU have already provided Greece with a 10-page ‘prior actions’ document for the bailout; Greece’s non-agreement to these will almost certainly see it default on the Euro 14.4bn worth of debt that matures in March

Other news, briefly

  • Stephen Hester, RBS CEO agrees to give up £1 million of his bonus in the midst of ridicule in the UK Parliament
  • ABB will buy Thomas& Betts for $3.9bn
  • Former UBS ‘inside-trader’ pleads not guilty
  • Hedge Funds bet on commodity bulls

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