Paul Taylor

POROS, Greece (Reuters) – Seen from Greece, there is something faintly surreal about watching European authorities and banks trying and failing to work out how to involve private sector bondholders in another rescue of Athens.

The damage this wrangling is causing to the euro zone’s credibility appears out of all proportion to the money it might raise towards funding the bloc’s most distressed debtor.

Just when Greece hoped for breathing space after adopting a new five-year austerity plan despite fierce street protests, acrimonious talks on making private bondholders pay have wrecked any honeymoon.

Markets have taken fright. The borrowing costs of hitherto “safe” euro zone countries such as Spain and Italy are rising, and depositors are pulling funds out of Greek banks in growing numbers.

To assuage domestic political interest groups, especially in Germany, Europe is fiddling while Athens burns.

LONDON/PARIS (Reuters) – The downgrading of freshly bailed-out Portugal’s credit rating to “junk” shocked financial markets on Wednesday and cast new doubt on European efforts to rescue distressed euro zone states without debt restructuring.

The cost of insuring all weaker euro zone countries’ debt against default rose and Portuguese two-term bond yields spiked by a whole percentage point on Moody’s decision, announced late on Tuesday, to cut Portugal by four notches.

The euro and European shares fell on the news, ending a seven-day stocks rally, and Portugal had to pay more to sell 3-month T-bills on Wednesday.

LONDON/PARIS (Reuters) – International banks and insurers will meet on Wednesday to thrash out a plan for the private sector to contribute to Greece’s bailout effort as fears grow that the proposal will be derailed.

The Institute of International Finance (IIF) lobby group said it will chair the meeting of private-sector creditors.

It needs to resolve how a deal can get past credit rating agencies without it being termed a default, and how accountants will deal with it.

SAINT-REMY-DE-PROVENCE, France (Reuters) – In the heart of France’s “caviar left,” there were mixed feelings on Friday about news that U.S. sexual assault charges against former Socialist presidential frontrunner Dominique Strauss-Kahn may collapse.

This Provencal town — nestled amid olive groves and sunflower fields where Vincent Van Gogh painted and was buried, at the foot of the Alpilles hills — is a favored retreat for well-heeled big names of the Socialist political family.

Critics brand them the “caviar left” because their lifestyle is so remote from the travails of ordinary working people.

BRUSSELS (Reuters) – On a rainy Friday night in Berlin, sometime in the next 18 months, Angela Merkel receives a telephone call from the president of the European Central Bank.

Let us imagine the scenario. Any resemblance with reality, as they say in the movies, is purely coincidental.

Greece has once again fallen behind on its deficit reduction targets because of its inability to collect taxes. Privatisation plans are behind schedule and investors are shunning the asset sales because of labour unrest and political instability.

BRUSSELS (Reuters) – On a rainy Friday night in Berlin, sometime in the next 18 months, Angela Merkel receives a telephone call from the president of the European Central Bank.

Let us imagine the scenario. Any resemblance with reality, as they say in the movies, is purely coincidental.

Greece has once again fallen behind on its deficit reduction targets because of its inability to collect taxes. Privatisation plans are behind schedule and investors are shunning the asset sales because of labour unrest and political instability.

ATHENS/BRUSSELS (Reuters) – Greece won the consent of international lenders on Thursday for a five-year austerity plan intended to avoid looming bankruptcy and its prime minister pledged to push radical economic reforms through parliament.

After a day of wrangling in Athens, new Finance Minister Evangelos Venizelos clinched a deal with EU and IMF inspectors on extra tax rises and spending cuts to plug a 3.8 billion euro funding gap due to a revenue shortfall.

Greek government spokesman Elias Mossialos, accompanying Prime Minister George Papandreou at an EU summit in Brussels, confirmed the talks had been completed and the legislation would be put to parliament next week.

ATHENS/BRUSSELS, June 23 (Reuters) – Greece won the consent
of international lenders on Thursday for a five-year austerity
plan intended to avoid looming bankruptcy and its prime minister
pledged to push radical economic reforms through parliament.

After a day of wrangling in Athens, new Finance Minister
Evangelos Venizelos clinched a deal with EU and IMF inspectors
on extra tax rises and spending cuts to plug a 3.8 billion euro
funding gap due to a revenue shortfall.

Greek government spokesman Elias Mossialos, accompanying
Prime Minister George Papandreou at an EU summit in Brussels,
confirmed the talks had been completed and the legislation would
be put to parliament next week.

PARIS (Reuters) – “When will the euro zone debt crisis end and how will we know it?”

A reader’s emailed question cuts through the daily dramas of the financial soap opera that has kept European investors glued to their screens for the last 19 months, threatening to wreak wider global turmoil.

Yet European Union policymakers are so busy building firewalls within the 17-nation single currency area and devising temporary fixes to avert immediate disaster that scant thought is being given to how the story ends.

PARIS (Reuters) – “When will the euro zone debt crisis end and how will we know it?”

A reader’s emailed question cuts through the daily dramas of the financial soap opera that has kept European investors glued to their screens for the last 19 months, threatening to wreak wider global turmoil.

Yet European Union policymakers are so busy building firewalls within the 17-nation single currency area and devising temporary fixes to avert immediate disaster that scant thought is being given to how the story ends.