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Thursday, March 5, 2015
Government can restore permission clause to land bill, but in diluted form
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Euro zone rebuffs Spanish talk of new Greek bailout
By Andrés González and Philip Blenkinsop
BARCELONA/BRUSSELS Wed Mar 4, 2015 2:03pm EST
1 of 2. German Chancellor Angela Merkel (L) speaks at a joint news conference with European Commission President Jean-Claude Juncker at the EC headquarters in Brussels March 4, 2015.
Credit: Reuters/Yves HermanBARCELONA/BRUSSELS (Reuters) - Germany and the European Commission slapped down talk of a third financial rescue for Greece as premature, after Spain once again suggested on Wednesday that a new aid package for Athens was almost inevitable.
Athens, which says it does not need a new aid program, averted a new crisis on Wednesday by successfully raising over 1 billion euros in short-term debt as planned but its long-term funding outlook appears increasingly uncertain.
The country has secured a four-month extension to its bailout program until the end of June but remains shut out of debt markets and its new leftwing government has angered euro zone partners with its sharp anti-bailout rhetoric.
For the second time this week, Spanish Economy Minister Luis de Guindos said Athens was unlikely to be able to return to capital markets by June, and that a package of between 30 and 50 billion euros ($33-56 billion) would be needed.
"If Greece does not recover market access by June ... we will have to establish some other type of agreement with Greece, call it a pact, a deal, a program," de Guindos told a conference in Barcelona. "We have given ourselves these four months to, one, see what the real situation is, to see how Greece has met conditions and to try and establish what happens next (...), which is fundamentally a third rescue."
He was swiftly rebuffed by German Chancellor Angela Merkel, who said she was focusing on the current bailout.
"I think we now have all our hands full to make this succeed and that's what I'm concentrating on," she said when asked about a third package at a news conference with European Commission President Jean-Claude Juncker in Brussels.
A German finance ministry spokesman also said no discussion of a third Greek aid program was on the agenda for Monday's Eurogroup meeting, while European Commission chief Juncker agreed with Merkel on keeping the focus on implementing the extension to Greece's bailout agreed last month.
"It is premature to talk about a third program," he said. "That is speculation that is best avoided."
REFORM PLAN WORRIES
The fresh talk of a bailout comes amid growing worries about a more pressing funding crunch for Athens in the coming weeks.
In a temporary respite, Greece raised the 1.138 billion euros it hoped for to refinance maturing short-term debt on Wednesday, but at the highest yield for 11 months.
The sale was being closely watched in a test of Athens' ability to raise funds after foreign investors began fleeing its T-bill auctions in recent months over rising political tensions.
Athens has already hit a ceiling of 15 billion euros in outstanding T-bills set by EU/IMF lenders, preventing it from using that option to keep its state coffers from running out.
At least part of the state's cash needs for the month will be met by repo transactions in which pension funds and other state entities sitting on cash lend the money to the country's debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials have told Reuters.
Greece is hoping EU and IMF lenders will relent and unfreeze some aid to ensure it does not default on its payments. Athens is due to present a six-point reform plan to euro zone finance ministers on Monday to press its case.
But International Monetary Fund chief Christine Lagarde told MSNBC in an interview on Wednesday that the success of Greece's reform plan would depend on the framework put in place and how the overhaul is implemented.
"They've made progress over the years," Lagarde told MSNBC. "But now clearly number one, they should not lose the benefit of that progress and, two, they really have to reform in-depth the economy so that it works, so that it's attractive again and so that people want to invest in Greece, so that people want to lend to Greece."
Tsipras swept to power in January on a pledge to end Greece's bailout and austerity for good, but has since made key concessions and agreed to step back from popular pledges to reverse austerity measures imposed over the years.
But he has struck a hard anti-austerity line at home. Late on Tuesday, his government submitted a bill to offer free food and electricity to thousands of poverty-stricken Greeks as its first legislative act in parliament, in a symbolic move to address what it calls a "humanitarian crisis".
(Additional reporting by George Georgiopoulos in Athens, Jan Strupczewski in Brussels, Stephen Brown in Berlin, writing by Deepa Babington)
Wednesday, March 4, 2015
Premature to talk about third Greek bailout: EU's Juncker
German Chancellor Angela Merkel (center, L) and European Commission President Jean-Claude Juncker (center, R) take part in a group photo with EU commissioners in Brussels March 4, 2015.
Credit: Reuters/Yves HermanU.S. Fed struggled with 2009 bailouts, bond-buying: transcripts
By Michael Flaherty, Howard Schneider and Jonathan Spicer
WASHINGTON/NEW YORK Wed Mar 4, 2015 2:06pm EST
The sun rises to the east of the U.S. Federal Reserve building in Washington, July 31, 2013.
Credit: Reuters/Jonathan Ernst
WASHINGTON/NEW YORK (Reuters) - The Federal Reserve struggled with the message being sent by its role in bank bailouts and worried about the impact of a bond-buying program aimed at easing the 2007-2009 financial crisis, according to transcripts released by the U.S. central bank on Wednesday.
The transcripts from Fed meetings in 2009 reveal intense discussions on how to prop up the U.S. banking system and nurse an economy reeling from the biggest financial shocks since the Great Depression.
They also indicate that central bank officials anticipated a faster economic recovery and were laying out plans on how to exit the Fed's stimulus program long before they were ready to make the transition.
In a prescient view of future policy, then-San Francisco Fed President Janet Yellen expressed concern about proposing an exit plan too soon.
"I want to emphasize that we have to be very careful not to signal an early end to policy stimulus," Yellen said at a policy-setting meeting that June. "The outlook over the next several years remains disturbing," added Yellen, who took over as Fed chief in February 2014.
The transcripts, released with a customary five-year lag, capture what was a tumultuous year for the U.S. economy. With the collapse of Wall Street firm Lehman Brothers in its rear-view mirror, Fed and other government officials were scrambling to avert further meltdowns in the financial system.
The S&P 500 index fell to its lowest level in 12 years in March 2009 and unemployment soared to a 10-percent recessionary high that October.
"Until the reinforcements arrive, I don't think we have much choice but to try to work with other parts of the government to prevent a financial meltdown," then-Fed Chairman Ben Bernanke said during an unscheduled Jan. 16 conference call, shortly after Bank of America (BAC.N) announced massive fourth-quarter losses.
The Charlotte-based bank's losses, driven by its emergency takeover of Merrill Lynch, prompted the Fed to step in with financial support, which ruffled some central bank officials.
"I am curious as to whether we envisioned this as a possibility," Dallas Fed President Richard Fisher asked during the Jan. 16 call. "If so ... what reasonable probability did we assign when that merger was announced that we might have to step up to the plate?"
When another Fed official raised a similar concern, Bernanke agreed that the Fed's role in the rescue of Wall Street banks was "uncomfortable," but said it was better than other options and that the U.S. Treasury was taking the bulk of the fiscal risk.
STIMULUS DEBATE
"I think that just crossing the Rubicon will have a significant announcement effect because it will signal our willingness to do more if necessary in the future," Bernanke told the Fed's policy-setting committee that March, as officials debated a $1.15 trillion increase in the asset purchases.
Greater confidence in the financial system returned after the May 2009 release of the so-called stress tests on banks. The Fed pushed ahead with its bond-buying program, though the path forward was unclear at the time, the transcripts showed.
According to transcripts of the June policy meeting, staff made two presentations on an "exit strategy" from the unconventional monetary policy accommodation, with Bernanke telling colleagues: "I promised we would focus today a good bit on our exit strategy, that is, on how we're going to unwind the policies that we have put in place."
But it would take the Fed five years before it began implementing the plan. It ended three rounds of bond-buying last October, after adding more than $3 trillion to its balance sheet.
New York Fed official William Dudley said at the June meeting that he was worried the Fed risked chasing its tail with bond-buying if the pace of purchases was altered each month to pursue a particular interest rate level in mortgage or other markets.
"I mean, talk about potentially having severe cliff effects," Dudley said. "I'm going to buy more as rates go up? What happens if rates go up more?"
The outlines of a debate that continues to rage today already existed at that June meeting, the transcripts show, with Fed staff immediately pointing to an interest rate the Fed pays on excess bank reserves (IOER) as a key tool to eventually help tighten policy.
And Yellen pointed out that while the perception that the Fed was printing money with abandon was "misguided," the central bank needed to say it would not tolerate high inflation to avoid risking damage to its credibility.
In one of the transcripts, Yellen joked that "things are now so bad that I actually open the Greenbook with greater trepidation than my 401(k)."
For a blog on the transcripts: here
(Additional reporting by David Chance; Editing by Paul Simao)
View the original article here
WASHINGTON/NEW YORK Wed Mar 4, 2015 2:06pm EST
The sun rises to the east of the U.S. Federal Reserve building in Washington, July 31, 2013.
Credit: Reuters/Jonathan Ernst
WASHINGTON/NEW YORK (Reuters) - The Federal Reserve struggled with the message being sent by its role in bank bailouts and worried about the impact of a bond-buying program aimed at easing the 2007-2009 financial crisis, according to transcripts released by the U.S. central bank on Wednesday.
The transcripts from Fed meetings in 2009 reveal intense discussions on how to prop up the U.S. banking system and nurse an economy reeling from the biggest financial shocks since the Great Depression.
They also indicate that central bank officials anticipated a faster economic recovery and were laying out plans on how to exit the Fed's stimulus program long before they were ready to make the transition.
In a prescient view of future policy, then-San Francisco Fed President Janet Yellen expressed concern about proposing an exit plan too soon.
"I want to emphasize that we have to be very careful not to signal an early end to policy stimulus," Yellen said at a policy-setting meeting that June. "The outlook over the next several years remains disturbing," added Yellen, who took over as Fed chief in February 2014.
The transcripts, released with a customary five-year lag, capture what was a tumultuous year for the U.S. economy. With the collapse of Wall Street firm Lehman Brothers in its rear-view mirror, Fed and other government officials were scrambling to avert further meltdowns in the financial system.
The S&P 500 index fell to its lowest level in 12 years in March 2009 and unemployment soared to a 10-percent recessionary high that October.
"Until the reinforcements arrive, I don't think we have much choice but to try to work with other parts of the government to prevent a financial meltdown," then-Fed Chairman Ben Bernanke said during an unscheduled Jan. 16 conference call, shortly after Bank of America (BAC.N) announced massive fourth-quarter losses.
The Charlotte-based bank's losses, driven by its emergency takeover of Merrill Lynch, prompted the Fed to step in with financial support, which ruffled some central bank officials.
"I am curious as to whether we envisioned this as a possibility," Dallas Fed President Richard Fisher asked during the Jan. 16 call. "If so ... what reasonable probability did we assign when that merger was announced that we might have to step up to the plate?"
When another Fed official raised a similar concern, Bernanke agreed that the Fed's role in the rescue of Wall Street banks was "uncomfortable," but said it was better than other options and that the U.S. Treasury was taking the bulk of the fiscal risk.
STIMULUS DEBATE
"I think that just crossing the Rubicon will have a significant announcement effect because it will signal our willingness to do more if necessary in the future," Bernanke told the Fed's policy-setting committee that March, as officials debated a $1.15 trillion increase in the asset purchases.
Greater confidence in the financial system returned after the May 2009 release of the so-called stress tests on banks. The Fed pushed ahead with its bond-buying program, though the path forward was unclear at the time, the transcripts showed.
According to transcripts of the June policy meeting, staff made two presentations on an "exit strategy" from the unconventional monetary policy accommodation, with Bernanke telling colleagues: "I promised we would focus today a good bit on our exit strategy, that is, on how we're going to unwind the policies that we have put in place."
But it would take the Fed five years before it began implementing the plan. It ended three rounds of bond-buying last October, after adding more than $3 trillion to its balance sheet.
New York Fed official William Dudley said at the June meeting that he was worried the Fed risked chasing its tail with bond-buying if the pace of purchases was altered each month to pursue a particular interest rate level in mortgage or other markets.
"I mean, talk about potentially having severe cliff effects," Dudley said. "I'm going to buy more as rates go up? What happens if rates go up more?"
The outlines of a debate that continues to rage today already existed at that June meeting, the transcripts show, with Fed staff immediately pointing to an interest rate the Fed pays on excess bank reserves (IOER) as a key tool to eventually help tighten policy.
And Yellen pointed out that while the perception that the Fed was printing money with abandon was "misguided," the central bank needed to say it would not tolerate high inflation to avoid risking damage to its credibility.
In one of the transcripts, Yellen joked that "things are now so bad that I actually open the Greenbook with greater trepidation than my 401(k)."
For a blog on the transcripts: here
(Additional reporting by David Chance; Editing by Paul Simao)
View the original article here
U.S. oil rises, Brent pares losses on Iran news
By Barani Krishnan
NEW YORK Wed Mar 4, 2015 4:16pm EST
An oil well is seen near Denver, Colorado February 2, 2015.
Credit: Reuters/Rick WilkingNEW YORK (Reuters) - U.S. oil futures rose on Wednesday and benchmark Brent pared losses as OPEC member Iran stressed that it opposed a timeline for a freeze on nuclear activities, news that helped crude rebound from an early slide tied to swelling U.S. stockpiles.
Comments from Saudi Arabia's oil minister that prices ought to stabilize from the selloff of recent months also helped put a floor under prices, dealers said.
Some drew encouragement from the Federal Reserve's Beige Book report anticipating cuts in capital expenditure for oil and gas producers in certain U.S. districts. Lower oil exploration budgets could mean less supply in the future.
U.S. crude CLc1 settled up $1.01 at $51.53 a barrel, reversing a near $1 drop from earlier in the day.
Brent LCOc1 finished down 47 cents at $60.55 a barrel, after falling more than $1.50 earlier.
Oil prices slid in early trade after U.S. Energy Information Administration data showed domestic crude stocks rose 10.3 million barrels last week, more than double the build forecast by analysts in a Reuters poll. It was the eighth straight week of record highs for total inventories. [EIA/S]
After a steep slide earlier in the week, losses on the U.S. data were somewhat muted as market bulls noted that stockpiles grew much less than expected in the Cushing, Oklahoma storage hub.
Within two hours of that data, prices bounced after Tehran's ambassador to the International Atomic Energy Agency, Reza Najafi, said no deal had been reached on the duration of any possible agreement covering Iran's nuclear program.
On Monday, Iran, in negotiations with six world powers, had rebuffed as "unacceptable" comments by U.S. President Barack Obama that any accord last at least a decade.
Brent tumbled 5 percent on Monday, amid fears that a quick nuclear deal could lift U.S. and other Western government sanctions on Tehran and flood the market with new oil exports.
"The market certainly seems to have jumped on the latest Iran news, after earlier pricing in a nuclear deal and removal of sanctions," said John Kilduff, partner at New York energy hedge fund Again Capital.
Saudi Oil Minister Ali al-Naimi said in a speech delivered in Berlin that he expected supply and demand of oil to reach a balance soon. His remarks came after a hike on Tuesday in official selling prices (OSPs) of Saudi crude delivered to Asia and the United States.
(Story has been refiled to fix typo in headline)
(Additional reporting by David Sheppard in London and Florence Tan in Singapore; Editing by Kevin Liffey, Chris Reese, Diane Craft and David Gregorio)
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