Go to the Globe and Mail homepage

Jump to main navigationJump to main content

A protester raises Greek flag in front of the parliament in Athens. (© Pascal Rossignol / Reuters/REUTERS)
A protester raises Greek flag in front of the parliament in Athens. (© Pascal Rossignol / Reuters/REUTERS)

Top Business Stories

Greece is 'running out of time' (Time for new schtick) Add to ...

These are stories Report on Business is following Monday, Feb. 6, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

Follow Michael Babad and Globe top business news on Twitter

Greece running out of time As one analyst noted today, Greece hasn't defaulted yet. And yet again, politicians warn that Athens is running out of time.

But it's edging ever closer as the temperature rises on two fronts, in negotiations between Athens and private creditors, the other on demands for more reform by the so-called Troika of international lenders calling the shots on bailout funds.

There's no agreement on either, though officials say they're hopeful, and some observers expect the issues to be resolved. Still, as we've oft heard from other euro leaders, and again today from France's Nicolas Sarkozy and Germany's Angela Merkel, time is running short.

“We want this accord,” Mr. Sarkozy said after a meeting with Ms. Merkel, according to Reuters. “Greece’s leaders have made commitments and they must respect them scrupulously ... Europe is a place where everyone has their rights and duties. Time is running out, it needs to be concluded, it needs to be signed.”

Athens is said to be close in talks with bondholders, on what is known as "private sector involvement," or PSI, in the overall debt plan, which would see those creditors take a hit of up to about 70 per cent. But the Troika, which includes the International Monetary Fund, the EU and the European Central Bank, wants further cuts in Greece.

"The PSI is ready to roll in Greece but there is tension between the Troika and the Greek government about the need for further fiscal reform as a condition for the next tranche of bailout money being handed over," said Kit Juckes, the chief of foreign exchange at Société Générale.

"Popular resistance to additional austerity is growing and the focus is slowly shifting to when and what kind of ‘haircut' official lenders to Greece (which really means the ECB) will face."

Indeed, two major Greek unions today called for yet another 24-hour walkout to protest more austerity measures. The Greek people have clearly had more than enough, and this is not lost on the politicians.

"Greece’s finances remain the main focus of market concern and the weekend didn’t appear to bring the much promised for resolution any closer, with still no real signs of an imminent agreement on the new €130-billion bailout that the country needs to avoid a default in March," said CMC Markets analyst Michael Hewson.

"There had been talk of some form of tentative agreement between Greek PM Papademos and other party leaders on how to boost economic competitiveness, however this hasn’t been confirmed with the meeting due to reconvene later today," Mr. Hewson said in a report today.

"The Troika continues to press the Greek government for more reforms, as well as further wage cuts which the main opposition leaders remain opposed to. Due to the fiscal deterioration in the Greek economy since the bailout was agreed last year there is now a gap of between €15-billion and €20-billion, which the Troika are insisting has to be met with further budget cuts. With the ECB remaining opposed to any form of changes with respect to the value of its holdings the impasse appears intractable."

Greece dogs markets Investors continue to watch these developments in Europe, which are weighing on global markets.

"Global financial markets are under pressure this morning from the … oh, what’s the word … shocking … news that not enough progress was made over the weekend as Greece negotiates with the European Union officials," said senior economist Jennifer Lee of BMO Nesbitt Burns, joking, of course, that word of stalemates and missed deadlines in Greece is in any way surprising.

"The EU Commission says 'we are already beyond deadlines' and that the 'ball is in the court of Greek authorities,'" she added.

Tokyo's Nikkei climbed 1.1 per cent today, while Hong Kong's Hang Seng lost 0.2 per cent. European stocks are down, and signs point to a weaker opening in New York.

London's FTSE 100, Germany's DAX and the Paris CAC 40 were down by between 0.3 per cent and 1.1 per cent by about 9:15 a.m. ET.

Dow Jones industrial average and S&P 500 futures also slipped.

Hasbro profit dips The United States and Canada appear to be letting down Hasbro Inc. .

Hasbro's profit dipped in the fourth quarter, though revenues increased, and the company today cited its overseas businesses as areas of growth last year.

Hasbro earned $139.1-million (U.S.) or $1.06 a share, diluted, in the fourth quarter, down slightly from $140-million or 99 cents a year earlier. Revenue increased 4 per cent to $1.33-billion.

"In 2011 we delivered strong growth in our international business driven by continued investments in advancing our global capabilities," said chief executive officer Brian Goldner.

"However, we did not meet our expectations for growth in the U.S. and Canada segment, as we experienced weaker demand than we had anticipated, especially post-Thanksgiving, including challenges in the games and puzzles category. We have taken significant steps by putting new leadership and new plans in place to re-accelerate growth and innovation in both of these important areas."

GM sets high bar In a sign of just how remarkble the turnaround at GM has been, the auto maker is now aiming for an annual profit of more than $10-billion (U.S.).

The Wall Street Journal reports today that General Motors Co. will probably post a 2011 profit of some $8-billion. But even more telling is that Daniel Ammann, its chief financial officer, told the newspaper that it's looking to boost its margin to 10 per cent.

As the Journal notes, the auto maker has seen strong gains in China, as well as its home base in North America, where it has slashed costs and added thousands of jobs since its short stint in bankruptcy protection.

What to watch for this week Three major central banks meet this week amid a muddied economic picture, including the Reserve Bank of Australia on tomorrow, the Bank of England on Wednesday and Thursday, and the European Central Bank on Thursday. Economists believe the Australian central bank will cut its benchmark rate for a third time, by one-quarter of a percentage point, while British policy makers hold the line, and ECB officials probably stand pat as well.

There is, however, the chance of another rate cut by the ECB.

"Despite recent signs of stabilization in Europe and better U.S. data, central banks will likely remain proactive and provide further stimulus and overall activity remains subdued," said Benjamin Reitzes of BMO Nesbitt Burns.

In the markets, several major companies are on tap to report quarterly results, including BCE Inc. and its rival Telus Corp., Agrium Inc., Husky Energy Inc., Manulife Financial Corp., Teck Resources Ltd., Thomson Reuters Corp., Precision Drilling Corp. and the two big airlines, Air Canada and WestJet.

Report Typo/Error

Next story




Most popular videos »

More from The Globe and Mail

Most popular