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ATHENS, Greece (AP) - Civil servants staged a 24-hour strike Thursday against austerity measures and expected job cuts by Greece's crisis-plagued government, and the EU's statistics agency said the country's budget was even worse than previously thought.
The strike disrupted public services, shut down schools and left state hospitals working with emergency staff. Protesters from a Communist-backed trade union blockaded Athens' main port of Piraeus, disrupting ferry services.
Eurostat, meanwhile raised Greece's budget deficit in 2009 to 13.6 percent of gross domestic product from its earlier prediction of 12.9 percent, while the ratio of government debt to GDP stood at 115.1 percent, the second highest in the European Union after Italy.
In comments that are sure to rattle markets, the statistics agency also expressed "a reservation on the quality of the data reported by Greece." It also said Greek's 2009 figures could be revised further, to the tune of 0.3 to 0.5 percentage points of GDP for the deficit and 5 to 7 percentage points of GDP for the debt.
Markets were shocked last fall when the government announced that the previous conservative Greek government had issued misleading financial data for years.
About 3,000-4,000 protesters marched through central Athens, carrying banners reading "tax the rich" and "Don't take the bread from our table." Scuffles broke out when about 150 demonstrators challenged police lines near the city's central Syntagma Square, and police responded with tear gas.
Greek airports remained open, however, after air traffic controllers suspended their participation in the strike because of the travel chaos caused by Iceland's volcanic ash cloud.
Labor unions fear deeper cuts after the Socialist government began talks this week with the International Monetary Fund, the European Central Bank and the European Commission for a three-year rescue package aimed at easing the country's acute debt crisis.
"The IMF has the same cookie-cutter solution for different economies ... Now they are making a European cookie cutter," said Spyros Papaspyros, head of the civil servants umbrella union, ADEDY.
News of the revised figures sent Greece's borrowing costs shooting up to new record highs. The interest rate gap, or spread, between Greek 10-year bonds and German ones - considered a benchmark of stability - widened to 5.29 percentage points minutes after the announcement, from 5.03 percentage points earlier in the morning. The spreads translate into prohibitively high interest rates of more than 8 percent, more than twice those of Germany's.
Athens said its target of reducing its deficit by at least 4 percentage points in 2010 remained unchanged despite the revision.
"The government has already adopted all the necessary measures in excess of 6 percent of GDP to ensure the achievement of this objective," the Finance Ministry said.
It said the new figures showed the scale of Greece's financial troubles, which it blamed on mishandling by the previous, conservative government.
Greece is struggling to cope with a debt of euro300 billion ($406 billion) and needs to borrow about euro54 billion this year alone. It has a projected public debt of more than 120 percent of gross domestic product through 2011.
On Tuesday, the government shaved its May borrowing requirement by raising euro 95 billion ($2.62 billion) in a 13-week treasury bill auction that was oversubscribed. The public debt management agency said Thursday it had accepted an additional euro 450 million in noncompetitive bids for the treasury bill auction, which has a settlement date of April 23.
As was literally guaranteed by the BoomBustBlog analysis, Greece is well on its way to default, or at least the acceptance of significant aid in an (probably futile) attempt to avoid default. For a refresher, see “Greek Crisis Is Over, Region Safe”, Prodi Says – I say Liar, Liar, Pants on Fire!. Subscribers should reference the Greece Public Finances Projections. Of particular note is how accurate we have been in forecasting the nonsensical optimism embedded in the Greek Government’s economic numbers, see Lies, Damn Lies, and Sovereign Truths: Why the Euro is Destined to Collapse!. Now, let’s peruse the news of the morning…
In Bloomberg: Greece, Ireland Lead Euro-Area Budget Deficit Widening to Double EU Limit
April 22 (Bloomberg) — The euro area’s budget deficit widened to more than double the European Union’s 3 percent limit in 2009, led by Greece and Ireland. I explicitly warned that these two countries were at the top of the risk chain throughout the year, culminated with a forensic report on Ireland. See Many Institutions Believe Ireland To Be A Model of Austerity Implementation But the Facts Beg to Differ! Subscribers should reference Ireland public finances projections. Ireland is in a particularly precarious position, potentially more so that Greece!
SARAJEVO -- 69 people, including 32 police officers, were injured in clashes in Sarajevo, Bosnia, on Wednesday. This was stated by the Federal Police Administration in that town. The protest was organized by members of the associations of veterans in front of the Bosnia-Herzegovina Federation government building. They demanded a reversal of a decision to tax their income.
Riots also broke out during a Sarajevo-Široki Brijeg match in Sarajevo on Wednesday, during which fans demolished the stadium, while some 20 injured people were admitted into the Koševo hospital.
AT least two explosions struck Bangkok's business district, injuring at least one foreigner.
Correspondent reports by AFP and Reuters said two blasts struck the Thai capital's business area, with one person taken away by ambulance.
The Associated Press reported three small blasts struck the capital, with multiple injuries reported.
The blasts occurred during a standoff between protesters and security forces, reports said.[/URL]
ATHENS, Greece - Markets hammered Greece on Thursday after the EU revised the debt-ridden country's deficit and debt figures upward, sending Greece's borrowing costs to unsustainably high levels and pushing Athens closer to an expensive rescue.
Further bad news emerged as ratings agency Moody's Investor Services downgraded its rating on Greece's debt by one notch to A3 from A2, and warned that further downgrades were a distinct possibility.
"This decision is based on Moody's view that there is a significant risk that debt may only stabilize at a higher and more costly level than previously estimated," the agency said.
Moody's downgrade was likely to make it even more difficult for the cash-strapped Greek government to tap the bond markets for money. The government has insisted that it prefers to access money via the markets to meet its borrowing requirements instead of resorting to a joint eurozone-International Monetary Fund rescue package.
But with investors demanding such punishing rates, the possibility of getting by without the bailout seems increasingly remote.
"Greece is in the midst of another hellish week and now faces no choice but to seek to formally activate the European rescue package," said Ben May, European economist at Capital Economics. "While this may help to ease the markets' frazzled nerves, the latest upward revision to the 2009 budget deficit highlights the mammoth task ahead."
The European Union's statistics agency Eurostat said the country's budget deficit in 2009 stood at 13.6 percent of gross domestic product rather than the previously predicted 12.9 percent, and could be further revised by up to 0.5 percentage points.
Four times the limit
The level is more than four times the EU limit set for the 16 countries that use the euro currency, which has been badly hit by the Greek financial crisis. Eurostat also revised the ratio of government debt to GDP to 115.1 percent, up from 113.4 and the second highest in the EU after Italy.
Athens insisted its target of reducing its deficit by at least 4 percentage points in 2010 remained unchanged.
"The government has already adopted all the necessary measures in excess of 6 percent of GDP to ensure the achievement of this objective," the Finance Ministry said in a statement.
The revision came as the civil servants' strike disrupted public services, shut down schools and left state hospitals working with emergency staff. Protesters from a Communist-backed trade union blockaded Athens' main port of Piraeus, disrupting ferry services.
But demonstrations in Athens were far smaller than those of other recent strikes, with just 3,000-4,000 protesters marching through the city center. Scuffles broke out when a group of about 150 demonstrators challenged police lines near the city's central Syntagma Square. Police responded with small amounts of tear gas.
News of Eurostat's revisions sent Greece's borrowing costs skyrocketing to alarming levels. The interest rate gap, or spread, between Greek 10-year bonds and German ones — considered a benchmark of stability — widened to a record 5.67 percentage points minutes after the announcement, from 5.03 percentage points earlier in the morning.
The high rates reflect market concern about the country's ability to pay back its debts. A default by a eurozone country would be a serious blow to the euro, which also has other members who face financial woes — notably Spain, Portugal and Ireland.
The spreads translate into prohibitively high interest rates of more than 8 percent — levels way too high for Greece to endure for long — making it increasingly likely that Greece will ask to make use of the joint eurozone-International Monetary Fund aid package which would provide the country with much-needed cash at lower rates. That would enable it to avoid default, at least for now.
German Finance Minister Wolfgang Schaeuble, whose country has been extremely reluctant to provide a bailout for a country that has repeatedly flouted eurozone rules, indicated he does not believe Greece will ask for assistance before mid-May.
Asked in an interview with Deutschlandradio broadcaster whether he thought Athens would ask for the rescue package before mid-May, Schaeuble replied "I don't think so."
The Greek government began talks Wednesday in Athens with the IMF, the European Central Bank and the European Commission this week to hammer out details for the three-year rescue package.
Struggling to cope with a debt pile of €300 billion ($406 billion), Greece needs to borrow about €54 billion this year alone, with about €10 billion of that next month. It has €8.5 billion worth of 10-year bonds maturing on May 19.
Prime Minister George Papandreou said his country was going through an "unprecedented crisis, ... a crisis the likes of which no other government has faced in the past."
The government's duty, Papandreou said during a Cabinet meeting, "is to take every decision which prevents the worst for Greeks, every decision which solves problems that for decades we preferred not to touch, every decision which serves the national interest."
He stressed that the rescue package would provide €30 billion in bilateral loans from other eurozone countries "if and when it is needed." The package would also provide about €10 billion from the IMF, bringing the total to at least €40 billion for this year — more than Greece needs at this stage.
"With the EU-ECB-IMF talks underway in Athens, speculation persists that Greece authorities will soon activate (the) recently established aid package," HSBC said in a note to investors. "What is less clear is whether that action, if and when it happens, will be viewed as helpful to Greece debt markets and the euro."
Greece is not the only eurozone country facing financial problems, HSBC noted. "Hence, saving Greece via the EU/IMF aid package may not stop the market from assessing that other countries may encounter similar difficulties in tapping capital markets and servicing their debt going forward."
Financial markets are pushing Greece to the brink Thursday –- just begging it to activate the European Union and IMF’s financial rescue package.
There’s been a barrage of bad news: This morning, the European Union’s official statistics agency said Greece’s budget deficit for 2009 was 13.6%, higher than previously forecast by either the EU or Greece. Now, credit-ratings firm Moody’s Investors Service has lowered Greece’s rating by one notch to A3 and warned of further downgrades.
Traders in the derivatives market are pushing the cost of insurance against a Greek sovereign debt default to fresh record highs. The cost to insure $10 million of Greek government debt for five years is now $637,000, a 30% jump from $486,000 on Wednesday, according to data provider CMA DataVision. Needless to say, Greece’s cost of borrowing from the private markets has shot up to even more unsustainable levels.
President Obama travels to New York to tell Wall Street to join him in efforts to reform the nation’s banking regulations to make sure a second Great Depression never happens
Thousands of striking Greek civil servants marched on Thursday to protest against austerity measures, warning of a social explosion if the government agreed further cuts in aid talks with the EU and IMF.
More than 10,000 civil servants and students marched to parliament, calling for cutbacks to be scrapped, beating drums and chanting: "No more illusions, war against the rich."
Nurses, teachers, tax officials and dockers stopped work during the 24-hour strike, which paralysed public services