These are stories Report on Business is following Monday, Nov. 12, 2012.
Greece hurtles toward deadline
Greek politicians have approved a new austerity budget, but still find themselves racing against the clock to stave off default.
Finance ministers from the 17-nation euro zone are meeting today in Brussels, and while Greece’s troubles are a big part of that, Germany has warned that another round of bailout money isn’t likely until a final report from the so-called troika of lenders that includes the International Monetary Fund, the EU and the European Central Bank.
But at the same time, Greece faces a Friday deadline on €5-billion ($6.3-billion U.S.) in debt payments to the ECB.
“Another key week for Europe begins with last night’s decision by the Greek parliament to approve a budget for 2013 … and in so doing overcoming the latest obstacle in a long line of hurdles in the long running saga that has marked the debt crisis in Europe since Greece got its first bailout in early 2010,” said senior analyst Michael Hewson of CMC Markets in London.
Athens plans to meet the Friday deadline with a treasury bill sale tomorrow, though the Greek banks that would buy the bills can't put together more than about €3.5-billion of the necessary collateral unless the central bank changes the collateral rules.
“With its cash reserves almost depleted and a €5-billion T-bill rollover later this week the hope is that this will be enough for EU finance ministers, meeting in Brussels today, to sanction the release of the next tranche of aid,” Mr. Hewson said in a research note.
“Unfortunately things are never that simple with arguments raging amongst EU ministers about how best to get Greece’s runaway debt levels under some semblance of control, without the need to find any more money. A difficult prospect when a two-year extension is likely to require another €30-billion.”
The ECB probably will change the collateral rules, Mr. Hewson added in an interview, allowing Athens to meet its Friday deadline. And then "the Ponzi scheme goes on," Mr. Hewson said.
"If Greece was a company, it would have been wound up months ago," he added.
There are several things at play here. First, Prime Minister Antonis Samaras promises this will be the last austerity budget, in a country deep in recession and crippled by 25-per-cent unemployment. Protests have been frequent.
But, said Mr. Hewson, it won't be the last austerity budget and it won't be the last bailout given Greece's outlook and finances.
"He's kidding himself, or trying to kid the Greek people," the analyst said. "If people believe that, they're deluding themselves. He's selling a lie."
The other problem is Germany, where voters are running out of patience with being the deep pockets and where Chancellor Merkel is heading into an election in less than a year. Ms. Merkel wants Athens to remain in the euro zone, at least until then, as she has promised Germans that the bailouts will, in the end, be profitable.
"Unfortunately, the Greek situation is now out of her hands," said Mr. Hewson, referring to the widespread social unrest in Greece.
- Recessionary gusts buffet EU's biggest economies
- OECD sees China, U.S. outlook stabilizing, Europe still hobbled
RIM to launch BB10 in January
Research In Motion Ltd. has now set a firm date for its crucial BlackBerry 10 platform, The Globe and Mail’s Iain Marlow reports.
There have been several delays amid deteriorating financial results, and fears that the BB10 devices could be delayed again.
RIM, however, said today it would officially launch the BB 10 on Jan. 30, and unveil the first two devices.
“In building BlackBerry 10, we set out to create a truly unique mobile computing experience that constantly adapts to your needs. Our team has been working tirelessly to bring our customers innovative features combined with a best in class browser, a rich application ecosystem, and cutting-edge multimedia capabilities,” said chief executive officer Thorsten Heins.
“All of this will be integrated into a user experience - the BlackBerry Flow - that is unlike any smartphone on the market today.”
- RIM to launch make-or-break BlackBerry 10 on Jan 30
- In the developing world, RIM makes its last stand
Japan's economy shrinks
Japan may well be in the midst of another recession amid fresh data showing the economy contracted in the latest quarter at an annualized pace of 3.5 per cent.
Two back-to-back quarters of decline typically marks a recession.
Today’s reading of gross domestic product will add to the already intense pressure on the Bank of Japan, notably from its government, to do more.
Japan has been struggling with a high yen and, adding to the troubles of its exporters, a dispute with China over a string of island that has sparked a consumer backlash in that country over Japanese goods.
“This was the first quarterly decline since 2011 and increases pressure on the BoJ to ease monetary policy further,” said senior currency strategist Sue Trinh of RBC in Hong Kong.
- Japan's economy shrinks as firms cut spending, recession looms
- Japanese PM looks to join Trans-Pacific Partnership trade deal
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