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Greek-Euro Zone Deal Cancels Past Austerity Commitments, Wall Street Stocks Close at Record Highs

 

Spain's Finance Minister Luis De Guindos (L) chats with Greece Finance Minister Yanis Varoufakis during an extraordinary euro zone Finance Ministers meeting (Eurogroup) to discuss Athens' plans to reverse austerity measures agreed as part of its bailout, in Brussels February 20, 2015.

 

Greece says euro zone deal won time as cash bled from banks

By George Georgiopoulos and Alastair Macdonald

ATHENS/BRUSSELS Sat Feb 21, 2015 7:51am EST

(Reuters) -

Greece's left-wing government insisted on Saturday it had avoided being "strangled" by the euro zone, which agreed in principle to extend a financial rescue deal as nervous savers pulled huge sums from Greek banks.

Athens said the deal struck late on Friday in Brussels should calm Greeks who had feared capital controls might be imposed as a prelude to leaving the euro. But some weary voters questioned what their new leaders had achieved in weeks of testy exchanges with euro zone hardliners led by EU paymaster Germany.

After often ill-tempered negotiations, Greece secured late on Friday a four-month extension to euro zone funding, which will avert bankruptcy and a euro exit, provided it comes up with promises of economic reforms by Monday.     

"We won time," said government spokesman Gabriel Sakellaridis. "The Greek economy and the Greek government weren't strangled, as was perhaps the original political plan by centers abroad and within the country," he told Mega TV, without naming the euro zone hawks who forced the government into a climbdown at the Brussels talks.

Prime Minister Alexis Tsipras has won wide support at home for what Greeks see as their leaders finally getting tough instead of going to Brussels cap in hand and taking orders from Berlin. But it was also under intense pressure at home.

About 1 billion euros flooded out of Greek bank accounts on Friday, a senior banker told Reuters, due to savers' fears that the talks would fail and Athens might have to halt such withdrawals or prepare to reintroduce a national currency.

This added to an estimated 20 billion euros ($23 billion) that Greeks have withdrawn since December, when it became clear that the radical Syriza party of Tsipras was likely to win power in last month's parliamentary elections.

Faced with the risk of a chaotic bank run on Tuesday after a long holiday weekend, Finance Minister Yanis Varoufakis stressed that the deal should calm savers.

"It is quite clear that the reason why we had a deposit flight was because every day, even before we were elected, Greeks were being told that if we were elected and we stayed in power for more than just a few days the ATMs will cease functioning," he told reporters in Brussels on Friday. "Today's decision puts an end to this fear, to the scaremongering."

Seeking to calm Greeks worried about Monday's public holiday, a source at the European Central Bank said after the Brussels deal that capital controls were out of the question.

Last month's election of Syriza on promises to reverse austerity policies dictated by Greece's EU/IMF bailout program raised huge expectations among the public.

But under Friday's deal with euro zone finance ministers, Athens agreed to an extension of the bailout it had promised to scrap, and accepted oversight by the hated "troika" of officials from the European Commission, European Central Bank and International Monetary Fund, albeit under a new name.

"We went through two months of agony, emptied the banks, to realize we are still a debt colony," 54-year-old electrician Dimitris Kanakis told Reuters. "The paymasters call the shots."

However, the deal did open the possibility of lowering a target for Greece's primary budget surplus, which excludes debt repayments, freeing up funds to ease what Tsipras calls the nation's "humanitarian crisis".

Spokesman Sakellaridis acknowledged that the deal, which is conditional on euro zone ministers accepting Greece's economic reforms plans on Monday, was only a first step. He also admitted the difficulty for a government which is less than a month old in negotiating with heavyweight European ministers.

"These last three weeks were tough weeks for a new government which -- let's not kid ourselves, we're not trying to fool anyone -- hasn't got the relevant experience," he said.

"The real battle begins now," he added. "It is a battle that will be extremely critical for the course of the country over the next few years."

German Finance Minister Wolfgang Schaeuble said Greek politicians used to being in opposition had to wake up to the demands of office.

"Being in government is a date with reality, and reality is often not as nice as a dream," the conservative veteran said, stressing Athens would get no aid payments until its bailout program was properly completed. "The Greeks certainly will have a difficult time to explain the deal to their voters."

Athens must now negotiate a long-term deal with the euro zone before the extension runs out in the early summer.

European Union officials said one reason Greece had to cut a deal now and not delay was that confidential calculations showed the banking system had risked running out of money when it reopens on Tuesday. Extra emergency funding authorized by the ECB on Wednesday would not have been compensated for this.

Tsipras had called for a emergency summit of EU leaders on Sunday if the finance ministers had failed to agree. However, this idea was rejected by European Council President Donald Tusk, increasing pressure for a deal before the banks reopened.

Sources close to the talks said Greece's creditors had lost confidence in Varoufakis and preferred to deal directly with Tsipras. Merkel, who had her first long conversation with Tsipras by phone on Thursday, had been instrumental in ensuring a deal was done, overcoming some resistance from Schaeuble who had taken a hard line from the outset.

($1 = 0.8789 euros)

(Additional reporting by Karolina Tagaris, Renee Maltezou and Jan Stupczewski; Writing by David Stamp; Editing by Ruth Pitchford)

 

Greek PM Tsipras says euro zone deal cancels past austerity commitments

ATHENS Sat Feb 21, 2015 7:51am EST

ATHENS (Reuters) -

Greek Prime Minister Alexis Tsipras said on Saturday that a funding agreement struck with euro zone ministers canceled austerity commitments made by a previous conservative-led government to international creditors.

After often ill-tempered negotiations, Greece secured late on Friday a four-month extension to euro zone funding, which will avert bankruptcy and a euro exit, provided it comes up with promises of economic reforms by Monday.

"Yesterday we took a decisive step, leaving austerity, the bailouts and the troika," Tsipras said in a televised statement. "We won a battle, not the war. The difficulties, the real difficulties ...are ahead of us."

Tsipras and his Syriza party won power last month on promises to end Greece's EU/IMF bailout program and end cooperation with the hated "troika" -- inspectors from the European Commission, European Central Bank and IMF who have monitored Greece's compliance with its austerity and reform commitments.     

Instead Athens was forced to accept the conditional extension of the bailout and still deal with the troika, renamed in the deal as "the three institutions".

Nevertheless, he said: "Yesterday's agreement with the Eurogroup ... cancels the commitments of the previous government for cuts to wages and pensions, for firings in the public sector, for VAT rises on food, medicine."

Tsipras, a radical left-winger, had been under heavy pressure to secure a deal as Greeks have been pulling huge sums out of the country's banks, fearing the talks with euro zone finance ministers would fail and Greece would be cast adrift as the bailout had been due to expire on Feb. 28.

Without naming names, he attacked conservatives at home and in the euro zone. "Yesterday we averted plans by blind conservative powers, within and outside the country, to asphyxiate Greece on Feb. 28," he said.

About 1 billion euros fled Greek bank accounts on Friday, a senior banker told Reuters, due to savers' fears that Athens might have to halt such withdrawals or prepare to reintroduce a national currency. Greece says Friday's extension should calm such fears.

"Greece achieved an important negotiating success in Europe. We showed determination and flexibility and in the end, we achieved our basic goal," said Tsipras.

(reporting by George Georgiopoulos and Karolina Tagaris; editing by David Stamp/Editing by Ruth Pitchford)

 

Dow, S&P 500 close at record highs on Greece debt deal

By Caroline Valetkevitch

NEW YORK Fri Feb 20, 2015 6:28pm EST

NEW YORK (Reuters) -

The Dow and S&P 500 ended at record highs on Friday while the Nasdaq notched an eighth straight day of gains after Greek and euro zone finance ministers reached a deal to extend heavily indebted Greece's financial rescue by four months.

The agreement removes the immediate risk of Greece running out of money next month and possibly being forced out of the single currency area.

The Nasdaq matched an eight-session winning streak from a year ago and inched closer to its 5,132.52 all-time intraday high, reached in March 2000 just before the dot-com bubble burst. The S&P 500 ended slightly higher for the week as well, its third straight week of gains.

The Greek accord will allow investors to concentrate on the fundamentals that should be driving the market, said Ben Pace, chief investment officer at HPM Partners in New York.

"You're seeing a little bit better U.S. economic statistics than you've been seeing over the past three or four weeks. The European statistics have gotten a lot better too," Pace said. "So maybe a relief rally today, because the markets were down as there was a lot of consternation going around."

Shares of the Global X FTSE Greece 20 exchange-traded fund jumped 10.1 percent, while U.S.-listed shares of the National Bank of Greece surged 21.7 percent to $1.96.

All of the S&P 500 sectors ended in positive territory, except energy, which dipped 0.3 percent. Apple, which hit another record closing high, gave the S&P 500 and Nasdaq their biggest boost.

The Dow Jones industrial average rose 154.67 points, or 0.86 percent, to 18,140.44, the S&P 500 gained 12.85 points, or 0.61 percent, to 2,110.3 and the Nasdaq Composite added 31.27 points, or 0.63 percent, to 4,955.97.

For the week, the Dow was up 0.7 percent, the S&P 500 was up 0.6 percent and the Nasdaq was up 1.3 percent.

Intuit Inc was among the Nasdaq's biggest positives, rising 6.2 percent to $96.72 a day after reporting a smaller-than-expected quarterly loss.

Shares of Nordstrom climbed 6 percent to $81.74 and the stock was among the S&P 500's biggest percentage gainers, following its results. A slew of retailers are due to report next week, including Macy's and Home Depot.

About 6.3 billion shares changed hands on U.S. exchanges, below the 7 billion average for the month to date, according to BATS Global Markets.

Advancing issues outnumbered decliners on the NYSE 2,085 to 990, for a 2.11-to-1 ratio; on the Nasdaq, 1,449 issues rose and 1,266 fell, a 1.14-to-1 ratio.

The S&P 500 posted 82 new 52-week highs and two new lows; the Nasdaq Composite recorded 107 new highs and 23 new lows.

(Additional reporting by Herbert Lash; Editing by Bernadette Baum, Nick Zieminski and Dan Grebler)

 

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