Greece Fails to Strike Deal on Pension Cuts, US Stocks Investors Still Hopeful

Greece Fails to Strike Deal on Pension Cuts,
US Stocks Investors Still Hopeful

Greek bailout talks end without settlement on pension cuts

Greek Prime Minister Lucas Papademos (2nd R), Socialist PASOK party leader and former Premier George Papandreou (1st R), conservative New Democracy President Antonis Samaras (2nd L) and rightist Popular Orthodox Rally head George Karatzaferis (1st L) attend a meeting of the political leaders of the three parties in the coalition government in Athens, capital of Greece, on Feb. 8, 2012. (Xinhua/POOL/Yiorgos Karahalis)

ATHENS, Feb. 9, 2012, (Xinhua) --

After seven hours of negotiations, Greek leaders have agreed on almost all the austerity and reform measures in exchange for a bailout package. Yet one vital point remains unsettled, a statement from the prime minister's office said early Thursday.

The unsettled point concerns pension cuts, and was left to the following discussions between Prime Minister Lucas Papademos and the so-called troika of Greek's international lenders, namely the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB).

The dialogue with the troika is expected to complete the deal before the Eurogroup meeting scheduled for Thursday afternoon in Brussels.

At stake is a 130-billion-euro (172.56 billion U.S. dollars) loan offered by the troika, the second of its kind since May 2010, which is crucial to escape a bankruptcy that could have major repercussions across the eurozone and the global economy.

In return, Athens must accept conditions requiring big cuts in many Greeks' living standards, including pension cuts. Here, the talks hit snags, with the smallest member of the coalition, the far-right LAOS (Popular Orthodox Rally) party, disagreeing.

LAOS' President George Karatzaferis "expressed serious reservations (over the level of cuts to supplementary pensions)," the statement said.

Among the proposals the leaders have accepted is a monthly minimum wage cut by 22 percent, from 751 euros (994.32 dollars) to 586 euros (775.87 U.S. dollars).

The agreement comes after lengthy and tough talks with a delegation of European Union (EU)/IMF inspectors in Athens since last week, the result of which will determine whether Greece can pay off a big redemption payment due on March 20.

Greece has been in an economic recession since 2008. Despite financial aid from the EU, ECB and IMF in 2010, Greece is still buckling under the weight of its mounting debt, unable to repay it.

Given the dire situation, the trio of public creditors urged Greece's main political parties to implement tough reforms to maintain its fiscal balance as a precondition for the release of the second EU/IMF aid package.

The troika insisted that external aid would not be endless and that the Greek government should "assume responsibilities."

At the same time, Greek leaders face mounting pressure from citizens and labor unions, which staged a 24-hour general strike on Tuesday. There have been warnings that more may follow.

Adding to the messy domestic situation in Greece are the predictions of some observers that inside Papademos's coalition, differences will gradually emerge as the general election draws near. It's expected the parties will concentrate more of their effort on preparations for the election and, as a result, cause delays in the debt talks.

U.S. stocks edge higher on Greece hopes

NEW YORK, Feb. 8, 2012 (Xinhua) --

U.S stocks edged higher on Wednesday as investors were still hoping the debt talks in Greece to get a deal done.

Investors expected that the Greek debt talks will soon be resolved and the European Central Bank was willing to exchange its Greek government bond holdings, in an effort to help further ease the country's debt burden. Despite the hopes, some investors were still concerned that as the talks dragged on, a disorderly Greece debt default would drag the region deeper into recession and dampen the U.S. recovery.

On earnings front, Groupon posted its first results as a public company, saying that its fourth-quarter net loss attributable to common stockholders was 42.7 million dollars, or 0.08 dollar per share.

Cisco Systems, the computer networking giant, posted Wednesday its fiscal second-quarter earnings. The company achieved earnings with 0.47 dollars a share and its net income hit 2.2 billion- dollars, beating analysts' expectations.

Walt Disney released quarterly revenue which fell short of expectations, but its profit grew faster than expected as its TV networks and theme parks held strong despite the weak economy.

As for shares, technology sector jumped as investors believed technology companies will embrace a great profit surge this year. Healthcare and transportation shares were among the laggards. The Dow Jones industrial average added 5.75 points, or 0.04 percent, at 12,883.95. The Standard & Poor's 500 gained 2.91 points, or 0.22 percent, to 1,349.96. The Nasdaq Composite Index rose 11.78 points, or 0.41 percent, to 2,915.86.

As for other markets, the U.S. dollar traded mixed against major currencies in late New York trading on Wednesday as investors still waited for the results of Greek debt talks. The dollar index edged up 0.01 percent to 78.58.

Crude prices rose on Wednesday as another round of optimism on Greece debt deal lifted sentiment and tension between Iran and the West fueled supplies concerns.

Light, sweet crude for March delivery gained 30 cents, or 0.30 percent to settle at 98.71 dollars a barrel on the New York Mercantile Exchange. In London, Brent crude rose 97 cents, or 0.83 percent to close at 117.20 dollars a barrel.

Editor: yan

Greece Fails to Strike Deal, Goes to EU Empty-Handed

Greek leaders failed early on Thursday to agree on reforms and austerity measures, the price of a bailout to avoid a messy default, forcing Finance Minister Evangelos Venizelos to go to the country's financial backers with an incomplete deal.

Athens' partners in the European Union and the International Monetary Fund are increasingly exasperated by a lack of agreement on the measures they demand in return for a 130 billion euro ($172 billion) bailout and time is running out for Greece before a major March 20 bond redemption.

Euro zone officials say the full package must be agreed with Greece and approved by the EU, IMF and European Central Bank before February 15 so legal paperwork can be completed in time to avoid a chaotic default that could threaten global economic recovery.

But after all-night talks with leaders of the three parties in the Greek coalition and with chief EU and IMF inspectors, Venizelos emerged shortly before dawn to say that one issue was unresolved.

"I am leaving for Brussels in a short while with the hope that the Eurogroup meeting will be held, and a positive decision on the new program will be taken," he told reporters.

"The financial survival of the country in the coming years depends on the new program ... It is time of responsibility for everyone."

Venizelos had hoped to present to his fellow euro zone finance ministers in Brussels a fully-fledged deal on a new bailout plan, including a commitment for 3.3 billion euros in budget cuts this year.

A spokesman for the socialist PASOK party said disagreement over pension reform had been the stumbling block.

Prime Minister Lucas Papademos said earlier he hoped the party leaders could sort out their differences before euro zone finance ministers meet at 10 a.m. EDT.

Before then, all eyes will be on what the ECB is willing to do to help Greece at its monthly policy meeting.

A senior government official said the party chiefs had agreed on how to make about 90 percent of the promised savings, leaving a relatively small hole in the calculations.

Athens had to close this gap quickly, said the official. "Greece has another 15 days to specify fiscal savings worth 300 million euros," he said on condition of anonymity.

International lenders are demanding that the party leaders commit themselves in writing to implement the program of pay and pension cuts, structural and administrative reforms.

However, the leaders have been loath to accept the lenders' tough conditions, which are certain to be unpopular with voters. They face parliamentary elections possibly as early as April.

"In these difficult hours we have to look after the ordinary people, the pensioners," conservative New Democracy leader Antonis Samaras said after the political leaders' meeting.

"I haven't got the right to not negotiate hard and I don't care what other people think about that. We have to make sure that people will suffer less."

Newspaper editorials criticized the harshness of the austerity measures demanded by Greece's lenders, but said there was no other option but to give in and agree.

"The memorandum seems, and in fact is, heavy and unbearable for the majority of the Greek people but unfortunately it is the only choice so that the country is not led over the cliff," financial daily Imerisia said.

Greece has been falling deeper into recession since it was rescued by a first bailout deal in May 2010, with unemployment reaching record highs of over 18 percent.

"The measures that are being imposed on Greeks so as to ensure the restructuring of the debt have the same, unsuccessful recipe: more cuts, which will cause deeper recession and will create the need for new cuts. A vicious circle," centre-left daily Ta Nea wrote in the first-page editorial.

Prospects for a deal had brightened, if shortly, when the finance ministers' chairman Jean-Claude Juncker called the Brussels meeting - which IMF managing director Christine Lagarde will attend - to examine the bailout and accompanying bond swap.

On offer from the EU and IMF is a package involving the new rescue funds and a bond swap with private creditors to ease the nation's large debt burden.

Athens is also urging the ECB to forego profits on its Greek bond holdings in what could raise 12 billion euros or more. The ECB's 23-member Governing Council has yet to agree a position. [ID:nL5E8D84PC]

For the bailout, Athens must accept conditions requiring big cuts in many Greeks' living standards. The smallest member of the coalition, the far-right LAOS party, was particularly uncomfortable with the measures.

Panos Beglitis, spokesman for PASOK which is in the coalition along with LAOS and the conservative New Democracy party, said they had disagreed over the level of cuts to supplementary pensions needed to safeguard the pension system.

However, he told reporters the leaders had agreed to cut the minimum wage by 22 percent as part of efforts to make the economy more competitive. Plans to scrap holiday bonuses paid to private sector workers had been dropped.

Two sources close to the talks said the government would promise spending cuts and tax rises totaling 13 billion euros from 2012 to 2015, almost double the seven billion it originally pledged.

Other elements of the deal have been gradually slotting into place, including the bond swap with private creditors to ease Greece's debt burden by reducing the value of government bonds held by banks and insurers.

The new bonds would have an average interest rate of around 3.5 percent, said state NET TV, with creditors having to swallow a 70 percent cut in the value of their debt holdings.

Ratings agency Standard & Poor's said Greece would probably fail to achieve manageable debt levels if it relied on the 70 percent reduction in the value of bonds held by private creditors, putting the onus on the ECB to take losses too.

(Additional reporting by Renee Maltezou, Lefteris Papadimas and Karolina Tagaris in Athens and Paul Carrel in Frankfurt; Writing by David Stamp and Ingrid Melander)

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