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Markets dive as Greek leftist says austerity plan ‘null’

Markets slide as Greek politicians threaten to tear up EU austerity deal and Spain announces £8 billion bank bailout for Bankia.

 
Markets dive as Greek leftist says austerity plan ‘null’

Markets across Europe slid on Tuesday amid threats from Greek politicians to pull out of the EU bailout plan.   

The FTSE 100 shed 1.78%, or 101 points, to 5,555 and the Mid-250 index dropped 2.54%, or 283 points, to 10,873. Tuesday’s poor performance means the FTSE 100 is down 0.3%, or 17.7 points in the year to date, having made a loss of £4.6 billion. See the FTSE’s performance and the index’s top risers and fallers.

Citywire Top Stock Tullow Oil (TLW.L) rose to the top of the FTSE 100 leader board, taking on 48p, or 3.27%, to £15.17 following a new oil find at one of its Kenyan projects. 

Greek anti-austerity party attempts coalition

Markets tumbled as Alex Tsipras, leader of Greece's left-wing SYRIZA party, said that the austerity measures imposed by the joint EU and International Monetary Fund (IMF) bailout were ‘null’. Some 70% of the Greek public voted for anti-austerity parties during elections over the weekend.

Tsipras, whose party came second in Sunday’s elections, said he would attempt to form a coalition based on backing out of the terms of the bailout deal, which has so far held the country back from a messy default and a possible exit from the monetary union.

The announcement prompted a sell-off in stock markets across Europe: Germany’s DAX index lost 1.95% to 6,441, France's CAC 40 index gave up 2.8% to 3,124, and the FTSEurofirst 300 index of top European shares lost 1.66% to 1,018.

Spain announced an £8 billion rescue plan for the country’s third-largest bank, Bankia. The bailout package pushed up the country’s borrowing cost as the yield on 10-year Spanish bonds rose 10 basis points to close at 5.84%.

Stateside stocks also felt the impact of the instability in the eurozone: the Dow Jones Industrial Average dropped 1.2% to 12,853, the Standard & Poor's 500 index slipped 1.36% to 1,351, and the Nasdaq Composite index fell 1.44% to 2,917.

Aviva rises as CEO resigns

Aviva (AV.L) added 0.6p, or 0.2%, to 302.9p following the resignation of chief executive Andrew Moss following a shareholder revolt at his pay package at last week’s AGM. The company’s shares have lost 56.3% in the past 10 years.

Cyclical stocks were hit the hardest, falling to the bottom of the FTSE 100 index: Polymetal International (POLYP.L) dropped 76.5p, or 8.6%, to 807p; Fresnillo (FRES.L) gave up 112p, or 7.4%, to £13.94; Randgold Resources (RRS.L) shed 347p, or 6.8%, to £47.73; and Vedanta Resources (VED.L) 63p, or 5.6%, to £10.59.

Hedge fund Man Group (EMG.L) shed 6.3p, or 7.1%, to 82.5p as the embattled group reshuffled the management of its flagship AHL fund, with Douglas Greenig taking on the role of chief risk officer.

Rail software group Invesys (ISYS.L) took on 10.5p, or 5.2%, to 213p on speculation that the British engineering group may be a bid target.

26 comments so far. Why not have your say?

Paul Eden

May 08, 2012 at 18:15

I wonder investors don't want full repayment of debts and interest given the scenario where the Greek Government reneges on its promises. After all, the proffered 'haircut' was conditional.

Failing this, a full default would be necessary, a precedent other countries much bigger than Greece, will perhaps follow. What then happens to the many billions Britain so helpfully 'loaned' to support the euro? Quite a mess to clear up

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Jonathan

May 08, 2012 at 18:39

It's fairly obvious to me that the Greek people will just want to leave the Euro now and go back to their old inflationary Drachma that they were used to. The massive buy-up of Greek debt from private banks by the ECB at the end of last year and the beginning of this was a for the sole purpose of helping private banks. Nothing to do with helping Greece. Now the debt has been transferred from the private banks to the tax payers central banks the bankers in Europe don't care.

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stormdog

May 08, 2012 at 19:50

Europe today is like watching a train smash in slo-mo.

The Franco-German political and economic axis has now been found out for what it really is, no more than a handful of dreams now transmogrified into a living nightmare for millions of European families.

In Italy for instance, there are increasing reports of ordinary people who are unable or unwilling to live in a state of continuing and relentless financial oppression, with not one shred of relief on the horizon, and now feeling forced to take the option of suicide.

Just who are these revolting politicians and bureaucrats who are now engaged in gradually driving their fellow citizens to the brink of oblivion?

To whom are 'rulers' accountable for their egotistical, uncaring and pig-headed decisions that are now resulting in many deaths?

Surely it is time to start dismembering the EU in as orderly fashion as is possible thus putting an end to this disgusting arrangement which, let's face it, was doomed from the outset.

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Christopher

May 08, 2012 at 20:56

Stormdog - you may want to disband the euro but do you seriously want to go back to the warring European nations of the centuries before the EEC/EU was founded and all the troubles of fluctuating currencies etc etc? Are you expecting the good old Commonwealth preferences to help us out?

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daisychain

May 08, 2012 at 21:10

See the wood for the trees,what is needed and will take place will be for the ECB to underwright another Trillion Euros this time direct to the countrys in trouble. This will buy 18 months breathing space. Markets will reach new highs by November. Daisy

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stormdog

May 08, 2012 at 22:26

Mr. Christopher,

Are you actually implying that should the EU no longer exist that European wars will then ensue?

Looking at the global economic shifts that are taking place it would seem somewhat unlikely.

That said, I do admit that almost anything is possible with the Germans, particularly so should they find themselves in a similar economic situation as present day Greece.

Sir, can you not see that the 'one size fits all' just does not work for a group of countries with differing economies, cultural aspirations, backgrounds, imperatives and so on?

Interestingly you offer no solution to the present breakdown of the 'European dream' and its possible fragmentation should Greece and possibly others find that have no option but to leave.

You fail to comment on the economic horror that is now wreaked upon the increasing tens of millions of ordinary families who find themselves as the victims of the total failure of what some economists now beginning to refer to as the European Economic Experiment.

One can only marvel at your failure to address this aspect.

Your inference that Britain, a nation of traders, will, in the event of the EU disappearing, never be able to successfully trade with Europe again is based on what exactly?

I am sorry Sir, whilst thanking you for your comments I find that I just cannot completely buy into any of them.

All the best,

sd.

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Alans opinion via mobile

May 09, 2012 at 00:20

Stormdog has certainly got his finger on the pulse of the sick European patients and has given an excellent diagnosis and prognosis of the disease afflicting the beggar economies of the region. Such clarity of perception is to be commended and applauded, not criticized - well done sir!

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Jeremy Bosk

May 09, 2012 at 00:32

There will be a muddle through. If the French and Germans want stability in the EU they will start reflating. If they don't, then everyone will leave the Euro except the Germans. Same result but messier.

Nobody with an IQ above 75 ever believed that sacking people would produce recovery, Now even morons like Merkel and the IMF are beginning to understand. Another three years and even Cameron, Clegg and Osborne will see the light. Or be drowned in spit.

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Leander

May 09, 2012 at 01:07

Christopher, you have obviously been reading too much LibDem propoganda in your spare time! The predictable way the EU is imploding is the likely cause of confllict in Europe. The Greeks,(and maybe eventually the Italians, Spanish, Portuguese and, probably the French) confronted with unending austerity and absence of hope might want to turn their anger to somewhere else. And by the way, it was never the EU that kept the peace in Europe; it was NATO, backed by the Yanks and the UK. God help us if we ever have to rely on the EU for anything important.

The EU, and moreso the Euro are underhand steps towards a country called Europe, concocted by a political elite without the permission of their electorates. With treachery like that, conflict is guaranteed.

Better off out.

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stormdog

May 09, 2012 at 01:58

Leander,

You put your finger on it.

It is the absence of hope that is the destructive force and it will most certainly lead to the implosion of the EU., Sadly - for some - it now seems that EU disintegration is now a mere matter of the timing.

As to this country. I have feeling that the economy is doing somewhat better than we are being told.

Cameron and Osborne must have realised that in order to get re-elected they need to be seen as heroes.

My bet is that in about a years time the economic figures will start to go 'corrugated', a better month here, then a not quite so good one there, all the time slightly brightening the general outlook.

A few months before the next election it will be announced that the economy is at last turning and that the overall outlook is beginning look very bright.

Around that time it will be announced that the total shambles, inherited from Labour, is almost cleared up, income tax will fall, and the pensioners as well as the the nurses will get more money.

A really good election selling point will be that if you don't want to return to Labour's bad old tax spend and borrow policies then the only option is to vote Conservative.

Far fetched? I suspect not.

All the best,

sd.

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Philip East

May 09, 2012 at 02:54

Be interesting to see that now the average citizen has not swallowed that it is their job to pay off debts created by bankers, if there is a plan B.

What are they going to do now the turkey's are no longer voting for christmas????

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Philip East

May 09, 2012 at 02:57

Jeremy

Could it be something to do with the brain structure of these very destructive rightists? I doubt if Cam oron will get it anytime soon.

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John Osborne

May 09, 2012 at 10:37

I see very little recognition here of the core of the problem - huge debts that are unsustainable. They must be reduced.

Whether countries leave or stay in the euro, governments in europe cannot continue overspending, or using that as so-called Keynsian excuse.

All of us are suffering, both left and right, because of the past collective US and european governments incompetance, and left-wing "stimulus" will not solve the problems, because it was that that got us into the mess to start with.

The only solution, whether we like it or not, is to find ways of rebalancing and growing economies whilst decreasing debt.

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Philip East

May 09, 2012 at 10:49

Is left wing stimulus the billions of pounds the coalition have printed. I thought that was the policy of the last government to reduce debt at a sensible rate so as not to damage growth.

I just see this taxi drive running out of fuel because he cutting overheads to reduce debts. Thankfully his fare was Cameron and Osbourne.

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Jeremy Bosk

May 09, 2012 at 15:26

There are two ways to reduce unsustainable debts. Make the poor live in misery and squalor for generations or negotiate them down. The creditors, having been stupid enough to lend too much to those who never had a chance of repaying in the first place, have tried to squeeze blood out of a stone. Millions have been thrown out of work, millions have seen their living standards slashed, thousands have been driven to suicide. Now the voters are saying that it has to stop.

Both sides will eventually recognise that there is no way the money owed can be repaid either in full or on time. Creditors can either wake up to reality and accept a reasonable compromise, or they can face disorderly default and see an even higher proportion of their money lost.

The only questions are the size and time scale of the defaults. The rich and vicious caused the problem and now they want the poor to bail them out. Just say no!

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John Osborne

May 09, 2012 at 16:48

Philip East

There is no painless way of reducing debt at a "sensible rate, except default which in itself would have very painful repercussions.

The last government now in opposition leads you to believe they would reduce debt albeit slower , but they were the lot who ran it up to start with and we would probably now be in greater debt. Can anyone have confidence in them?

As Jeremy suggests, default is the preferrable method of reducing debt, certainly for the PIIGS, whose populations are suffering for German and French banks balance sheets. Some short-term disruption, devaluation but a lot of banks are reconstructed, hopefully with lower paid fat-cats and economies are given a chance to be competitive and recover.

Shame our major banks were not reconstructed, at least there is a Bill to ring fence customers assets at last now being proposed.. But no state sponsored banks supporting industry unfortunately.

It is most unfortunate that this discussion is politicised because of present party spin and deceipt. Why do left wing governments always overspend, mismanage and claim they can solve the problems by spending more? It did not have to be that way in UK if they did not deceive by claiming "prudence" as Brown did 12 or more years ago and then proceed to do the opposite.

No wonder the Scots have seen through all this incompetance and are voting with their feet for Nationalism, but we have to suffer for it.

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Philip East

May 09, 2012 at 19:44

I would like to say the spin is not from a labour government, high levels of spending come with high unemployment and downward growth spirals that follow it, a situation that the poor are now enjoying everyday. The debt problem incurred by governments across the world who were incumbent at the time of financial crisis were not just labour ones , the problem was wreckless and irresponsible lending ,by banks, mostly in relation to inflated housing prices.

Jeremy

I see someone who can see the wood for the trees and is not just on an ideological rant. One of my friends summed it up as seeing a taxi driver who was cutting back on overheads , he ran out of fuel. I see the debts as you do it has to be a surgical operation and not butchery. Its ironic that private sector debts have now become the burden of the public sector, very convenient for the power brokers.

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John Osborne

May 09, 2012 at 21:11

Philip,

The banks were only lending within the environment and leadership at the time,( Labour) and are the scapegoat of leftwingers trying delude themselves by shifting blame away from the real culprits at the time, the politicians, who were complicit in their activities whilst not providing enough support for industry and infrastructure.

You must be aware of what was going on then, with the government sponsored FSA allowing self-certified mortgages, 110% mortages, etc., all pumping up house prices to a bubble whilst Brown claimed he had abolished boom and bust. At the same time personal debt was spiralling from the "feel-good" factor and security from the illusionary rise in house prices.

This is not the kind of leadership I look for in a government, and even though others have conveniently forgotten already and believing the same people's spin that they were not to blame, I have not.

However I am not a Cameron supporter either, and am not brainwashed by right or left, I only want better quality governments who can govern our country in a competant and fair way.

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Jeremy Bosk

May 09, 2012 at 21:16

Omnes

I make a conscious effort to stand back and see beyond the immediate issues. When I can achieve this clarity of thought, I communicate better and make better decisions. Once people find some common ground they tend to find more. It isn't easy. I have had a few big bust ups on Citywire which usually ended with everyone dug into entrenched positions, neither listening nor thinking.

I enjoy high quality argument whether I persuade or am persuaded by others. What matters is finding the truth or as much truth as can be found. Sometimes there is no plain and simple truth. Sadly the simple minded expect yes or no answers and get upset at hearing ifs, buts and maybes. Politicians and economists have a hard job.

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Philip East

May 09, 2012 at 22:19

John

I was in business for 35 years in the Uk, i can assure you the current banking crisis is nothing new and self certified mortgages and 100% plus mortgages were not a conception of Gordon Brown, very much a factor of the 80's banking crisis and housing crash.. The banks were let loose in the early eighties not that it passes the responsibility from the banks, they know what they are doing when they make bad loans, to people who can not repay them.

I have also have been on the receiving end, along with 14,000 other investors defrauded by ANZ Bank and ING bank, we fought back to the point where ING had to rebrand in New Zealand. This will all be in a book soon to be published "THE HUSTLERS" so this is why it is called a global banking crisis , i don't think Gordon Brown could have stopped ING misrepresenting CDO's as during our investigations we found the goal of bankers was to be so deceitful that not many of them understood the products they were selling or selling to other banks..

I have personally fronted up these criminals and i can assure you Gordon Brown was not even in the room or anywhere near, you will also notice that no regulation has been introduced to trim their wings as they are the power brokers and governments and politicians Labour and Conservative alike are cap in hand to them.

Gordon Brown and Tony Blair precided over 10 years of growth , its just very sad that greedy bankers derailed something that if properly managed could have been sustained.

On my own part i left the Uk in 2006, seeing what the banks were up to and changed my pounds into NZ and AUs dollars which since 2010 have gained 35% so for me the coalition has paid dividends but then i knew the policies they would introduce would produce those results.

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Philip East

May 09, 2012 at 22:24

Jeremy

I am not too concerned about bust ups , but simple economics should not be so hard to grasp and debating with people who have little understanding of business and economics can be somewhat frustrating. You would think the problems caused by banks are something new and isolated to the Uk , they go back over hundreds of years and have been repeated time and time again , its not about right and left wing , i think it was George Bush who was holding the house when it kicked off in America, from memory i don't think he was that left wing.

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John Osborne

May 09, 2012 at 23:23

Philip,

Understand how you feel about this aspect of bankers. Sorry to hear you were defrauded by ING and ANZ. The ratings agencies have a lot to answer for also.

What a rotten lot.

Lets hope the lessons are learnt again as far as banking regulation is concerned now the BoE is responsible and domestic banking will be ringfenced .

However, the government is ultimately responsible and must take the blame when things go wrong, particularly in this case when control was taken away from BofE and given to FSA. The 10 years of growth were an illusion unfortunately. Whether the coalition proves any more competant remains to be seen, so far some ideas but pretty toothless.

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Philip East

May 09, 2012 at 23:56

John

Thankyou for your sympathy, but if the last ten years were an illusion so were the last 50. My companies are still trading as they did in the previous two decades. i don't hold with this illusion line as up until the banking crisis debt to GDP was running at around 32% somewhat less than the previous decade inspite of many upgrades to public infrastructure investments. Business is often transacted on credit , its fine if its good credit for the right reasons.

I cashed up my illusions in 2006 and like many i find them pretty real and rewarding.

As a business person i would not hold the government responsible liable for any corruption my industry took part in, regulations were in place and were broken under both labour and Conservative governments as they will continue to be.

I blame the muggers not the mugged or the police who may have been their to stop them, muggers know what they are up to.

Bankers like most capitalists know how to get around the rules, i was also a consumer credit broker so know what others may not wish to know about.

Although my group in New Zealand managed to get over 500million dollars back after an original offer of about 6 million , these banks still walked away with over 200million of investors money and on our final meeting with our National (NZ Conservative ish) government we were told it was in the best interests of the country for us not to pursue the matter further. No banking executives faced proscecution.

Our PM is ex financial markets trader with one of the large global groups, so yes i doubt if regulation wil,l if introduced, change anything, we can live in hope but until they take a real one on the nose i doubt it.

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Philip East

May 10, 2012 at 04:24

Yes forgot to say that the ratings agency had rated ING's bonds tripple A , turned out they were junk bonds and these are the people who guide the markets , makes you wonder.

The other point Jeremy mentioned was the amount of suicides , i was a committee member on our protest group and i saw people who thought they were losing their life savings , people having breakdowns and people dying from the stress , while our banking friends were still paying themselves multi million dollar salaries.

ING sold out to their partner in crime ANZ in NZ and after a couple of years disposed of all the ING staff who had once run the NZ branch and had fought their corner against our protest group .

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John Osborne

May 10, 2012 at 11:30

Philip,

Thanks. Load of crooks and manipulators, glad to hear you had at least some success in exposing ING and ANZ. Many sufferers from bankers greed. Most people are still outraged that the same bankers and directors are still awarding themselves gross salaries and bonuses at expense of taxpayers and shareholders, and disappointed that the coalition has not done more to reign this in, but at least the process has started.

I know this is another subject, but unfortunately the greed appears to have spread, albeit in a smaller way, to Investment Trusts. Non-execs are now paying themselves around £25K pa for on average a day a month's work, plus a few more days perhaps. This has more than doubled in 10 years. Small beer for large trusts perhaps, but most shareholders seem to be unaware of this trend. I have raised this issue on Citiwire several times with little response.

re. deficits. The 35-40% figure is often quoted but was manipulated by the last govt and conveniently forgets all the off-balance sheet items which are not shown on the govt borrowing figures. The present debt ratio is stated as nearer 500% to GDP when PFI, unfunded pension liabilities, corporate and private debts are included. Most western nations are the same. About £5Trillion in our case. Some present for the next generation.

The arguments about stimulation versus cuts are finely balanced , but I think it is more a matter of how it is done and whether stimulation is applied in the correct manner. ie how to stimulate business and infrastructure rather than chinese imports. The coalition does not appear to be doing enough, it was hardly mentioned in the Queen's speech.

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Philip East

May 10, 2012 at 23:34

John

We were very proud of our partial victory against ING and ANZ , their initial offer of 6 cents in the dollar that they assumed us muppets would just swallow. We ended up taking to the streets organising pickets outside banks and making a general nuisance of ourselves when they held sales seminars. in the usual bank arrogance thye pretended we did not exist and ignored us, after their business began to drop and ANZ was voted the least trustedcompany in NZ , they started to listen. We flooded the media with articles about our members who had suffered and indeed some lost their lives.

The end result was our commerce commission found them guilty on all counts and they eventually paid some members in full and others not far off it.

I would urge all people who find themselves in this situation to do the same, you may find out things you rather would have preffered not to.

We have recorded on record for future generations our experience, i think if you google ING/ANZ Frozen funds group you can find our links. Remember the actions of the determined few can change the world and saving is cool but ING and ANZ are not.

Keep on rattling the cage and one day we may escape.

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