Trichet Says ECB ‘Confident’ Greece Can Get Budget Under Control
By John Fraher
Feb. 4 (Bloomberg) -- European Central Bank President Jean- Cladue Trichet said he’s “confident” that Greece will take the necessary action to cut its budget deficit.
“We expect and we are confident that the Greek government will take all the decisions that will permit them to reach that goal,” Trichet said at a press conference in Frankfurt after the ECB left its benchmark interest rate at a record low of 1 percent today. Proposals announced this week on freezing wages and revamping the pension system “are steps in the right direction.”
Trichet also said that the euro region’s combined budget deficit will be “around 6 percent” of gross domestic product this year, less than Japan and the U.S.
4. The PIIGS are flying high today as the next disaster is looming - remember what Bernanke said why the big depression of the 302s happened, he claims that a big European bank went bust in 1931 was the reason - well we have nınot heard a lot but with Spanish real estate players bankrupt who hold 1/3 of Spanish debt we might soon here from such an European bank - although 1 year ago some European banks were anyway bankrupt starting in England.
There Goes The Neighborhood: European Sovereign Default Contagion Goes Virulent
Contagion is here. Portugal and Greece default risks are now racing who can hit 500 first... Then 1,000... Forget the bond vigilantes: the sovereign default vigilantes just called Almunia's bluff.
At last check SovX was flirting with the record century mark, Greece was almost back to record wides with some bids of 410 bps floating around, while Portugal, which is today's whipping boy, exploded to 215 bps. We eagerly await to see which other country will join the CDS ballet. Almunia is now openly waging a two-front war, which will soon become multi. The last time this happened to a European, the results were not that good.
And guess what: Portgual is now openly refuting that it has any problems. Has Dick Fuld been giving "How to blatantly lie about the true state of your [company/country]" motivational talks? The country's debt chief Alberto Soares, dismissed the market views that its 12 month T-bill auction on Wedensday had failed (Right, it simply just got priced about 50% weaker than 2 weeks ago.)
"We maintain our financing programme for the first quarter as previously announced," said Alberto Soares, the head of the Instituto de Gestao do Credito Publico, or IGCP. He noted that the tail on Wednesday's T-bill auction was "huge."
Away from CDS, 10 Year Portugal OT to German Bunds widened to a fresh post-EMU record of 155 bps.
Zero Hedge's favorite risk exposure, US and Germany CDS, keeps drifting ever wider, with the USA now at 50 bps and Germany at 41 bps. Look for much more action here very soon.