The Latest: Moody's Warns Greece May Struggle With Bailout

The latest on Greece's financial crisis (all times local):

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12:35 p.m.

Credit ratings agency Moody's says Greece's approval of austerity measures "averts an immediate disorderly default and potential exit from the euro" but warns that "risks remain elevated" given substantial skepticism within the country on the bailout conditions.

The Greek parliament's approval of the economic measures paves the way for eurozone finance ministers to open talks on a third rescue package for the country worth some 85 billion euros ($93 billion) over three years.

Moody's notes, however, that "judging by recent events and the deep economic problems and social divisions within society, it is highly uncertain whether the Greek authorities have the capacity to achieve agreed objectives and to abide by its creditor's conditions."

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12:25 p.m.

European stock markets are up after the Greek parliament voted through a bill of budget savings needed to start official negotiations on a new bailout.

The Stoxx 50 index of top European companies was up 1.4 percent in late morning trading. Germany's DAX and France's CAC-40 were up by the same rate. Greece's stock market has been closed since late June, when banks were shut.

The Greek parliament's approval of the economic measures paves the way for eurozone finance ministers to open talks on a third rescue package for the country worth some 85 billion euros over three years.

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12:00 p.m.

The head of the eurozone's rescue fund says failure to conclude a bailout deal for Greece would lead to the collapse of the country's major banks, which he says would affect the rest of the eurozone.

Greece wants to tap the European Stability Mechanism. To use the fund, officials must establish the existence of a risk to the financial stability of the entire eurozone, which many question.

ESM chief Klaus Regling told Germany's ARD television Thursday that failure to reach a final agreement would mean the collapse of Greece's banking system.

He said the four biggest Greek banks are "system-relevant," code for significant to the international financial system, and that if they fail that would have "severe effects not just for Greece itself ... but for the eurozone as a whole."

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10:15 a.m.

Germany's finance minister says the eurozone must keep to its rules as it negotiates a new bailout with Greece, which Berlin says rules out an outright debt cut for Athens in the eurozone.

Wolfgang Schaeuble told Deutschlandfunk radio Thursday negotiations will determine whether a new package is possible given Greece's increased needs.

He added: "We will open negotiations, we will make every effort, but we must keep to the rules because Europe is based on the principles of democracy and the rule of law"

Schaeuble has taken a hardline approach. Last weekend, a paper from his ministry suggesting the possibility of a voluntary, temporary Greek euro exit emerged. The minister said Thursday "it would perhaps be a better way for Greece, and many say that — increasingly in Greece too."

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10:00 a.m.

Germany's finance minister says the Greek Parliament's approval of an austerity package is "an important step" but is warning that talks on a final bailout deal will be tough — and that an outright debt cut would be incompatible with Greece keeping the euro.

Greece's creditors demanded the Greek vote before opening full bailout negotiations. Eurozone finance ministers must approve opening those talks, as must Germany's Parliament in a vote expected Friday.

Finance Minister Wolfgang Schaeuble told Deutschlandfunk radio Thursday that making Greece's debt sustainable will be tough. Germany says a debt cut would be illegal.

Schaeuble said: "No one knows at the moment how it's supposed to work without a debt cut, and everyone knows that a debt cut is incompatible with membership in the currency union."

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