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Timeline: Greece’s debt crisis
Here is a timeline of economic events in Greece since 2010:
Jan 2010 – Greece unveils stability program on Jan 14, saying it will aim to cut its budget gap to 2.8 percent of GDP in 2012 from 12.7 percent in 2009.
Feb – Greece must refinance 54 billion euros ($66.6 billion) of debt, with a crunch in Q2 as more than 20 billion euros becomes due and market yields for Greek debt soar.
March 5 – Package of public sector pay cuts and tax increases is passed to save an extra 4.8 billion euros. VAT to rise 2 percentage points to 21 percent; state-funded pensions frozen in 2010.
April 11 — Euro zone finance ministers approve 30 billion euros ($40.67 billion) emergency aid mechanism for Greece.
April 15 – Greek parliament passes law that seeks to tackle tax evasion and shift tax burden to higher earners.
April 22 – Eurostat says Greece’s 2009 budget deficit is 13.6 percent of GDP, not 12.7 percent as reported earlier.
April 23 – Prime Minister George Papandreou asks for activation of an EU/IMF aid package. Read more…
Mexico ramps up gold reserves at dollar’s expense
* Mexico ups gold reserves by over 90 tonnes in two months
* Mexic onow ranks 33 among official holders of gold (Changes dateline, pvs LONDON; adds comment, details)
By Dave Graham
The price of gold has risen by 11% this yearMEXICO CITY, May 4 (Reuters) – Mexico massively ramped up its gold reserves in the first quarter of this year, buying over $4 billion of bullion as emerging economies move away from the ailing U.S. dollar, which has dipped to 2-1/2-year lows.
The third biggest one-off purchase of gold by any country over the past decade took Mexico’s reserves to 100.15 tonnes — or 3.22 million ounces — by the end of March from just 6.84 tonnes at the end of January, according to the International Monetary Fund and Mexico’s central bank.
Gold has gained 11 percent this year, driven by concern over euro zone debt and the violence in the Arab world, as well as by the U.S. dollar’s 7.6 percent decline against a basket of currencies .DXY.
Sergio Martin, chief economist for HSBC in Mexico, said the government probably saw gold as a highly liquid asset that would reduce exposure to the falling greenback.
“They’re probably thinking that getting out of dollars and into gold makes sense because we know that the dollar has some trend to depreciate in the near future at least,” said Martin. “I don’t think they’re going to lose money Read more…
Why Is the U.S. Bankrolling IMF’s Bailouts in Europe?
humanevents
The World Bank and International Monetary Fund held their spring meeting April 14 to 18 in Washington, D.C. Both financial titans were created after World War II to foster economic cooperation and development around the globe. With 16.2% of the International Monetary Fund (IMF) shares, the United States is the largest shareholder among the 187 nations who belong to the fund—even though its managing director has always been a European.
Remote to most Americans, the IMF has been in the headlines recently because of its role as one of the financial rescuers of three European nations whose economies collapsed last year. Under Managing Director Dominique Strauss-Kahn (the former French finance minister, who is considered the leading Socialist candidate for president of France in 2012), the IMF has joined with the European Union to sculpt bailout packages for Greece, Ireland, and Portugal. Coupled with loans from the EU, the price tags on the bailout packages come to $157 billion for Greece, $122 billion for Ireland, and most recently, $116 billion for Portugal.
Obviously, these are quite substantial packages for the three economically devastated countries. They will become very relevant to U.S. taxpayers when they realize that, because we are the largest single contributor to the organization, and with Spain and Italy now Read more…
Chinese Know Real Value
The International Monetary Fund reported without fanfare recently its projection that the candidate who wins the 2012 U.S. presidential election will be the last U.S. President to lead the world’s richest super power.
The IMF prediction is based on its calculation that within the next five years China will surpass the United States as the world’s largest economy.
The IMF forecast differs from that of most traditional forecasts, which put the date China’s economy outstrips the U.S. at least a decade or two into the future. However, those traditional forecasters are looking at value as calculated in currency—and as we at WealthCycles.com have reiterated many times, currency lies.
US, China to hold economy meeting in May
WASHINGTON — Top officials from the United States and China will meet in Washington early next month, the Treasury Department said Monday, as tensions between the two economic superpowers simmer.
Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton will host Chinese Vice Premier Wang Qishan and State Councilor Dai Bingguo, amid continued tensions over debt, exports and the value of China’s currency.
The Treasury Department has delayed the publication of a report that could lead to sanctions against Beijing until after the meeting, despite US lawmakers complaining that China is still manipulating its currency for trade advantage.
The semi-annual report, which was due on April 15, has become a focal point for critics who accuse Beijing of unfairly keeping the yuan weak against the dollar to boost Chinese exports.
The US government said it would wait until a meeting of the Group of 20 finance chiefs, the IMF’s annual spring Read more…
IMF bombshell: Age of America nears end: China’s economy will surpass the U.S. in 2016
For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.
The Obama deficit tour
The Wall Street Journal editorial page’s Steve Moore critiques the president’s speeches attacking Republican budget plans.
And it’s a lot closer than you may think.
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington, D.C., right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
According to the IMF forecast, whomever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes, and they will tell you Read more…
World Bank president: ‘One shock away from crisis’
The president of the World Bank has warned that the world is “one shock away from a full-blown crisis”.
Robert Zoellick cited rising food prices as the main threat to poor nations who risk “losing a generation”.
He was speaking in Washington at the end of the spring meetings of the World Bank and International Monetary Fund.
Meanwhile, G20 finance chiefs, who also met in Washington, pledged financial support to help new governments in the Middle East and North Read more…
BRICS demand global monetary shake-up, greater influence
(L-R) India's Prime Minister Manmohan Singh, Russia's President Dmitry Medvedev, China's President Hu Jintao, Brazil's President Dilma Rousseff and South African President Jacob Zuma attend a joint news conference at the BRICS Leaders Meeting in Sanya, Hainan province April 14, 2011. The development banks of the five BRICS nations agreed in principle on Thursday to establish mutual credit lines denominated in their local currencies, not in dollars. REUTERS/How Hwee Young/Pool
SANYA, China (Reuters) – The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar and for a louder voice in international financial institutions.
The leaders of Brazil, Russia, India, China and South Africa also called for stronger regulation of commodity derivatives to dampen excessive volatility in food and energy prices, which they said posed new risks for the recovery of the world economy.
Meeting on the southern Chinese island of Hainan, they said the recent financial crisis had exposed the inadequacies of the current monetary order, which has the dollar as its linchpin.
What was needed, they said in a statement, was “a broad-based international reserve currency system providing stability and certainty” — thinly veiled criticism of what the BRICS see as Washington’s neglect of its global monetary responsibilities.
The BRICS are worried that America’s large trade and budget deficits will eventually debase the dollar. They also begrudge the financial and political privileges that come with being the leading reserve currency.
“The world economy is undergoing profound and complex changes,” Chinese President Hu Jintao said. “The era demands that the BRICS countries strengthen dialogue and cooperation.”
In another dig at the dollar, the development banks of the five BRICS nations agreed to establish mutual credit lines denominated in their local currencies, not the U.S. currency.
The head of China Development Bank (CDB), Chen Yuan, said he was prepared to lend up to 10 billion yuan to fellow BRICS, and his Russian counterpart said he was looking to borrow the yuan equivalent of at least $500 million via CDB.
“We think this will undoubtedly broaden the opportunities for Russian companies to diversify their loans,” Vladimir Dmitriev, the chairman of VEB, Read more…
China Inflation Is `Somewhat Out of Control’ on Weak Currency, Soros Says
China’s decision to keep its currency weak has caused the government to lose control of inflation and risks fuelling wage-price gains, billionaire investor George Soros said.
While the policy helped insulate China from the financial crisis in 2008, the world’s second-biggest economy has missed its chance to allow the yuan to appreciate to tame inflation, Soros, chairman of Soros Fund Management LLC, said yesterday at a conference in Bretton Woods, New Hampshire.
“It would be very advantageous to allow the currency to appreciate as a way of controlling inflation,” Soros said. “The authorities missed that opportunity. You now have inflation somewhat out of control, and causing some serious danger of wage-price inflation.”
The yuan gained 4.6 percent against the U.S. dollar in the past two years, the second-smallest gain of 10 Asian currencies tracked by Bloomberg, even as economic growth rebounded and foreign-exchange reserves jumped to a record. Inflation accelerated to Read more…
Setbacks in Portugal and Ireland Renew Worry on Debt Crisis
Allied Irish Bank is one of several prominent financial institutions in Ireland in need of a rescue.
LONDON — A higher-than-expected budget deficit in Portugal and the need for more money to rescue Ireland’s failing banks have renewed fears that Europe’s debt crisis is worsening despite its sizable bailout fund.
Officials in Lisbon said Thursday that the country’s budget deficit last year was 8.6 percent of its gross domestic product, well above the goal of 7.3 percent. Although officials said the revision would not affect the government’s goal of reaching a deficit of 4.6 percent of domestic product in 2011, the news was a reminder that, even after the problems from Greece’s fraudulent deficit statistics, some numbers from the euro zone remain unreliable.
Also Thursday, Ireland’s central bank announced that four of the country’s most prominent financial institutions would need an additional 24 billion euros to cover sour real estate loans, a move that pushes the Read more…
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