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European debt crisis: Greece vows to ‘fight back to prosperity’ – as it happened

• World markets rally
• George Papandreou: We will rebuild prosperity in Greece
• Germany rules out extending bailout fund to €2trn
• Barack Obama: Europe is “scaring the world”
• Check out key upcoming events in today’s agenda
• Let us know what you think in the comments, or ping @graemewearden

7.30am: Good morning, and welcome to our live coverage of another important day in the European debt saga.

Greece is top of the agenda today. Prime minister George Papandreou is meeting Angela Merkel in Berlin tonight for dinner, to “discuss the economic situation in Europe”. Papandreou will also address a business conference during his visit to Berlin.

And the Greek parliament will vote on an unpopular property tax – just one small part of its latest austerity package. Transport workers are organising strike action, and protesters are expected to gather in Athens to register their anger. Riot police clashed with demonstrators on Sunday – will we see a repeat?

We’ll also be tracking the latest efforts to construct a rescue package for the eurozone. Last night, German officials were insisting that Europe is a long way from agreeing a plan – was the €2trn bailout that hit the headlines last weekend just wishful thinking? Is Europe as indecisive and divided as ever?

7.35am: Good news – the financial markets are in upbeat mood. Asian markets have all risen today (see the latest prices here), and Japan’s Nikkei just closed 2.8% higher at 8,609.95. That’s a healthy rebound from Monday’s two-and-a-half-year low.

City traders expect a strong start in London, with the FTSE 100 being called up more than 100 points. We saw yesterday that the markets are pretty jittery, and it probably wouldn’t take much to send share prices down again.

Here’s the view of Chris Weston, institutional trader at IG Markets:

Sentiment in equity markets changed markedly just after the European close last night, with traders suddenly becoming increasingly confident that European leaders can now reach an agreement to successfully contain the debt crisis. With stock prices having been decimated in recent days, this was sufficient to see the bargain hunters flood back into the market.

We’re looking at some big upswings in Europe ahead of the open although sustaining these gains – and ensuring we can continue to grind higher – will rely on two key points.

Investors must hold their nerve and at the same time central banks and finance ministers need to remain ‘on message’ as any suggestions that the rescue plans may go awry will likely be enough to see markets take fright once again

7.45am: Japan’s finance minister has also hinted today that his country could offer some support to Europe

“If there is a scheme that is based on a firm process, involves a reasonable amount of money and could provide the world and markets with a sense of security regarding a Greek bailout, I would not rule out the possibility of Japan sharing some of the burden,” Jun Azumi told Reuters.

Japan has its own financial problems (including the biggest debt-to-GDP ratio in the G20), and its fiscal reduction plan partly depends on decent economic growth – unlikely if the EU debt crisis triggers a global downturn. Its exporters are already suffering from the strength of the yen, which hit a ten-year high against the euro on Monday.

We know Azumi is serious, as last week he said Tokyo would “supportively think about” supporting Europe. How would this work in practice? It could buy up bonds from weaker eurozone nations, helping to drive down their borrowing costs. Or, as the second largest contributor to the International Monetary Fund, its support would be important if the IMF did increase its support for Europe.

7.55am: Here’s a few events to watch out for today:

• Spain and Italy to auction government debt – this morning
• Greek PM George Papandreou addresses a conference for the Federation of German Industries – 10am CET (9am BST), Berlin
• CBI Distributive Trades Survey (measuring UK retail sales in September): 11am BST
• US consumer confidence data – 10am EST (3pm BST)
• Greek property tax debate and vote – from 7pm CET (6pm BST), Athens
• Papandreou/Merkel “working dinner” – evening, Berlin

8.06am: Europe’s stock markets are open, and there’s a rush to buy shares. The FTSE 100 jumped by 108 points to 5197, a rise of just over 2%. Similar gains in other markets, with the Italian FTSE MIB the best early performer (up 2.4%).

So optimism reigns – but for how long? As Michael Hewson, market analyst at CMC Markets, predicted earlier this morning:

Uncertainty will undoubtedly remain the predominant sentiment.

8.24am: Eight of the top risers on the FTSE 100 this morning are mining giants – led by Antofagasta, the copper producer, which is up 5.3% at £10.01. Mining stocks typically rise when investors feel confident about global economic prospects, and fall whenever fears over the global economy ripple across the City.

There’s good news for taxpayers too – the second-best performing stock is Royal Bank of Scotland, which has gained nearly 5% to 24.6p. That’s still roughly only half the level at which the government bought into the bank when it was bailed out in early 2009 – so some way to go yet.

8.49am: America ratcheted up its pressure on Europe last night, with Barack Obama issuing his sternest warning yet about the need to resolve the euro debt crisis.

As this video shows, Obama told a forum organised by LinkedIn that Europe’s failure to fix its banking sector had been compounded by Greece’s woes, creating a situation that is “scaring the world”. The US president said European politicians now need to speed up their efforts to fix the crisis:

They’re trying to take responsible actions, but those actions haven’t been quite as quick as they need to be.

9.15am: The euro crisis is dominating the business sections of today’s newspapers, online and in print. Here’s a round-up of some of the most interesting pieces I’ve read:

The Guardian: Bankruptcy threat to Greece as euro ministers delay vital €8bn
The Daily Telegraph: Germany at war over eurozone bail-out
The Financial Times: Germany and the eurozone: Besieged in Berlin (registration required)
The Daily Mail: Families face £5,000 bill to bail out debt-stricken Euro nations
FT Alphaville: Disorderly default, almost as bad as civil war

9.29am: Just hearing that Evangelos Venizelos, Greece’s finance minister, is giving a press conference in about 90 minutes.

Our Athens correspondent, Helena Smith, has more details:

It’s a glorious autumn day in Athens but there are clouds in the sky and clouds on the horizon for Greece’s embattled government.

The finance minister, who returned from the IMF’s annual meeting overnight, gives an all-important press conference at noon local time (11am BST) outlining details of Greece’s new austerity measures. These cutbacks were announced last week in a desperate bid to meet fiscal targets and secure a sixth tranche of aid from the country’s “troika” of lenders.

Investors should watch what he says closely.

Confusion has reigned over what exactly the measures will amount to in terms of lost jobs and extra taxes but of one thing Venizelos is clear: the belt-tightening will be the equivalent of “3% of the country’s gross domestic product,” as he explained in Washington.

But he also said they are being enforced in an environment of “deep recession, bad liquidity conditions, uncertainty and anxiety” which is THE problem.

After seeing their wages and benefits and working conditions gradually eroded, the country’s vast array of state employees once again feel it is the most vulnerable sector of society – namely pensioners and low-income civil servants – who are being called upon to pay the price for Greece’s great economic crisis. The rich, who have made millions avoiding the taxman, seem to have got off scot-free.

9.59am: “The governments don’t rule the world, Goldman Sachs rules the world”.

With that bold statement, and the admission that he’s been dreaming about a recession for the last three years, stock market trader Alessio Rastani has turned into the latest “celebrity” of the financial crisis.

Rastani’s appearance yesterday on BBC News 24 has now “gone viral”, with more than a quarter of a million views. Rastani does appear to be speaking honestly – he advises viewers to “be prepared and act now”, rather than trust politicians to resolve the crisis.

The stunned look on the interviewer’s face is clearly genuine too!

Rastani’s admission that he “doesn’t really care” about the desperate efforts to rescue the euro is attracting a backlash this morning.

Umair Haque, a London-based economist, believes Rastani is an example of what’s wrong with the City:

@umairh: Good morning, everyone. I’ve seen the trader video. What is there left to say? It’s the truth. Now, either we create the future. Or not.

Erik Wesselius is struggling to believe Rastani is the real deal:

@erikwesselius: I still can’t believe “crash trader” @AlessioRastani is real. But if this is a prank, it’s an elaborate one

My colleague Charles Arthur, though, is slightly more sanguine:

@charlesarthur Compare this scarily straight-talking stock market trader against the idiot politicians burbling about the euro:

Incidentally, you can follow Rastani on Twitter, at @alessiorastani

10.33am: Are you astounded by stock trader Alessio Rastani’s admission that he’s been dreaming about the chance to make money from a new financial crisis? Or is this just the way the world works?

Let us know, in this poll: Are you shocked by this stock market trader’s comments?

10.55am: George Papandreou is refusing to be funereal in Berlin. Greece’s prime minister promised Germany’s business leaders this morning that Athens will meet its commitments to the international community, and rebuild its economy.

Papandreou told the Federation of German Industries that:

I promise you, we Greeks will soon fight our way back to growth and prosperity after this period of pain.

But to achieve that, he added, the European Financial Stability Facility (the EFSF, Europe’s main bailout fund) must be strengthened. The Greek PM also argued that Europe must embrace closer fiscal union if it is to triumph over market speculators who believe the single currency is doomed.

Along with much tighter fiscal oversight, we must expand the EFSF and formulate permanent mechanisms for economic stability and solidarity.

The eurozone must now take bold steps toward fiscal integration to stabilize the monetary union. Let’s not allow those who are betting against the euro to succeed.

11.25am: George Papandreou’s optimism has been well received in the financial markets. We’re nearly three and a half hours into trading, and the FTSE 100 just hit its highest level of the day.

The blue-chip index is now up 131 points, or 2.59%, at 5221.12. Mining stocks continue to lead the risers (with Vedanta now up by over 10%), and every company in the FTSE 100 has gained ground.

Strong words alone won’t satisfy traders for long, though, as David Jones, chief market strategist at IG Index, explains:

Today’s rally is an impressive one, but it is hard to see today’s mining sector strength as anything but a dead-cat bounce while economies continue to struggle.

The speech by Greek prime minister Papandreou in Germany this morning contained a balance of contrition and optimism for the future – but as usual it won’t be long before traders are looking for action to back up all the politician’s words.

12.13pm: More news from Berlin, where Angela Merkel has announced that Germany continues to stand by Greece.

Merkel followed Papandreou by addressing the Federation of German Industries, and told industry leaders that she was determined to help Greece “regain confidence”, as long as it met its fiscal targets:

We will provide all the help desired from the German side so that Greece regains trust

Merkel also told the meeting that the international regulation of hedge funds “leaves much to be desired” – a suggestion that Europe may be moving towards tighter controls on the City?

Our Berlin correspondent, Helen Pidd, has also flagged up that today is a watershed moment in Germany:

The tabloid, Bild, has come out in favour of the rescue fund. In an editorial today, it reluctantly admits that the EFSF is not just to bailout the “lazy Greeks” but to also secure the financial stability of the whole of Europe – including Germany.

They have printed a crib-sheet with points Merkel should raise during her dinner with Papandreou tonight – eg “Make sure people pay their taxes!” “Do away with the bloated public sector!” “Sell off your national assets already”.

You can read the full editorial (in German, of course) here.

12.39pm: Germany has no intention of allowing the European bailout fund to be dramatically enlarged to €2 trillion, it appears.

A government spokesman has briefed journalists in Berlin that finance minister Wolfgang Schaüble told his cabinet colleagues this morning that there was “no plans” to enlarge the European Financial Stability Fund. It will remain at €440bn.

“There was complete agreement on this in the cabinet,” the spokesman said.

Details of a “€2tn rescue package” first emerged from the G20 finance ministers meeting in Washington over the weekend. Since then, though, several EU governments have indicated that the plan may be more of a pipedream.

Earlier today, Spanish economy minister Elena Salgado also dismissed the €2tn rescue plan during a TV interview.

None of this is upsetting the markets, though, with the FTSE 100 now up 3%, or 154 points, at 5243.

12.50pm: Is Alessio Rastani a hoax? We blogged earlier about how his appearance on BBC News 24 has gone viral, with hundreds of thousands of people amazed by the stock market trader’s callous candour.

Now Twitter and Facebook are abuzz with speculation that it’s all a set-up, and that Rastani is actually one of the Yes Men (who famously fooled the BBC in 2007 by impersonating a Dow Chemicals spokesman, promising massive compensation following the Bhopal disaster.)

Rastani certainly looked genuine this morning – his Facebook page (now filling up with largely derogatory comments) appears to show him trading, and holding coaching sessions. His main website,, has been offline all day, so it’s been tricky to get in touch with him.

That site was registered in February 2010, so if it’s a hoax it’s a damn good one.

The doubts have been creeping in at the BBC though, judging by ace business editor Robert Peston’s twitter feed over the last 30 minutes.

@peston: This trader who was on BBC News y’day is a must watch, if you want to understand the euro crisis & how markets work


@Peston: People telling me trader isn’t genuine. Am trying to find out how BBC got him & who he is. But he says what traders say privately to me


@Peston: @dsquareddigest says BBC (& I) may have been hoaxed by YesMen. If so, it is a brilliant hoax.

On the other hand!

@Peston: We spoke to the trader again this morning, & as far as we can tell he is a genuine independent trader, not a member of YesMen


1.50pm: Here’s a lunchtime (ish) round-up of events so far.

• Stock markets are rallying today on optimism that the euro debt crisis may be resolved, with the FTSE 100 index now up 153 points, or just over 3%, at 5243
• Greek PM George Papandreou has told German industrial leaders that Greece will rise again, with the help of its European allies
• But Germany and Spain have both rubbished the idea of expanding the EFSF rescue fund to €2 trillion
• A BBC interview with a straight-talking stock market trader has attracted huge attention….but is it a hoax?

2.07pm: Remarkable scenes in Athens, where the press conference held by finance minister Evangelos Venizelos was disrupted by protests – led by members of his own department.

Helena Smith was there, and has all the details:

While George Papandreou was sounding upbeat in Berlin – telling German business leaders Greece would meet its commitments to the international community – his finance minister was greeted by scenes of chaos as he tried to outline some of those commitments at a press conference in Athens.

Evangelos Venizelos, freshly arrived from the more civilized climes of Washington DC, was forced to wait as employees at the finance ministry, protesting wage cuts and other benefit losses, occupied the third floor where the conference was due to take place.

Hundreds more screaming “bread, education and freedom,” a slogan heard before the collapse of the military junta in 1974, scuffled with riot police outside the building. When Venizelos finally got to talk, it was against a cacophonous backdrop of cat-calls, loud whistles and the piercing whirr of police cars.

“I know it’s crazy that it should be us taking to the streets but with the new austerity measures we’ll lose 60% of our salaries,” said Yannis Perakis, who I met protesting at a safe distance from the building. “I’ve worked for the ministry in its computer department for 20 years and have a post graduate degree. With all these cuts I’ll be taking home 1,200 euro a month and I’ve got two kids. It’s not fair.”

Closer to the building Leonidas Papayiannis, a veteran employee of the ministry’s research department, was less cool. Bellowing at the top of his voice after coming to blows with riot police at its entrance he said: “Soon all 300 of our politicians will be leaving this country in helicopters and submarines. They have not just taken money from us. They have stolen our dignity and when a man loses his dignity he becomes an animal, and when he becomes an animal, he bites, steals and kills. They are asking a lot of people to live on six and seven hundred euro a month when it’s just impossible.”

The protesters, who included tax collectors, customs officials and ministry staff said they represented 35,000 employees.

2.25pm: With Wall Street about to open, I’m handing this blog over to my colleague Alex Hawkes…..

2.51pm: Hello everyone. Difficult to make much sense of the markets today. The Dow has just opened and it is now 2% up in early trading.

My colleague Nick Fletcher has more on that and new figures on US house prices here.

The surging markets come despite suggestions that the €2trn Eurozone bailout plan mooted at the weekend has had a lukewarm reception from European politicians.

3.40pm: Some more views from the Germans on the proposed €2trn bailout plan.

German finance minister Wolfgang Schaüble gave a speech at a conference at lunchtime organised by the Bruegel economic think tank.

In it he said that increasing the European Financial Stability Facility is a bad idea, which would mean some AAA states would lose their top credit ratings. He also seems to have stressed fiscal solutions to the crisis and issued a rebuke to US President Barack Obama, who suggested last night that European leaders needed to act and act fast:

I don’t think that the problems of Europe are the only reason for the problems in the United States.

Interestingly, the smoke signals from German politicians seem to be that they do not intend to increase the size of the bailout fund (which will be worth €440bn), but have not directly addressed whether the fund could be increased through the ECB borrowing money.

3.56pm: My colleague Helena Smith has more from Athens, where Greek finance minister Evangelos Venizelos has finally got round to delivering his press conference.

Germany’s new tact of firmly expressing support for Greece appears to have lifted the mood in Athens. Despite protests which saw the capital being brought to a standstill as transport workers went on strike, the Greek finance minister Evangelos Venizelos was ebullient at today’s press conference.

Not only would the debt-stricken country’s rescue creditors disburse new loans, they would disburse them “in time” – code language for paying civil servants who are dependent on the €8bn installment for their next wages and pensions – “as long as we do what is necessary.”

“The most critical link in the eurozone, Germany, will not let [Greece go under],” he said.

“Madame Merkel has made clear that it would endanger the eurozone …that it would hurt the union’s credibility, authority and ability to function.”

For the eurozone to be saved Greece had to be saved, and because of this he was “very optimistic” that the German parliament would vote in favour of expanding the EFSF rescue fund whose reinvigorated role would include overseeing the second €109bn bailout agreed for Athens in July.

Acutely aware that rescue creditors want to see action, the minister said he would send letters detailing the government’s latest austerity measures to the International Monetary Fund, European Commission and European Central Bank.

The letter would list 14 measures worth €6.5bn, ranging from a 20 percent cut in public sector wages, a further drop in pensions and eradication of tax relief benefits.

While refusing to divulge the degree of public sector involvement in the rescue package drawn up for Greece in July, Venizelos said the figures were both “optimistic and encouraging.”

American, British, French, Spanish and international banks had all shown interest.

Privatizations aimed at what Greece needs most – development and growth – would rake in a further €4bn by the end of the year.

Venizelos, who was speaking ahead of a crucial parliamentary vote on a new property tax, said the government aimed to have all the measures passed by the end of October.

Analysts, quite rightly, are worried. With so much discord among members of the ruling socialist Pasok party over policies that not only go against their beliefs but increasingly are being blamed for the deep recession Greece is mired in, it is far from certain that they will be passed. Without further belt-tightening creditors have warned that the cash will dry up.

4.07pm: Further news too on Alessio Rastani, the trader who told the BBC so memorably that “Goldman Sachs rules the world.”

The BBC has issued a statement in response to suggestions that Rastani is in fact a hoaxer, one of the “Yes Men” who appear on TV to highlight issues involving corporate wrongdoing among other things.

The full statement is here but the key bit is:

We’ve carried out detailed investigations and can’t find any evidence to suggest that the interview with Alessio Rastani was a hoax. He is an independent market trader and one of a range of voices we’ve had on air to talk about the recession.

4.59pm: The FTSE 100 has closed 4% up, meaning its constituents are collectively worth £53bn more than they were yesterday.

That is likely to provoke some head-scratching as to why – given that talks on a rescue package for the Eurozone appear to have taken a turn for the worse during the course of the day.

Nick Fletcher’s market report will be up shortly but for now, it may be worth noting that mining companies have led the charge – on the back of higher commodities prices.

The Euro is stronger against the dollar, as is the pound, suggesting markets think talk of a rescue plan, even if European politicians haven’t warmed to it, is good thing.

6.08pm: Here is our market reporter Nick Fletcher’s take on today’s surging stock markets.

Among other things, he notes the views of Joshua Raymond, chief market strategist at City Index, who has a bash at explaining the market’s reaction to today’s developments:

There are likely to be two phases of the rally we are seeing in equity markets this week.

The first phase, which we are in right now, is based on optimism and relief that Europe’s leaders finally recognise the danger that is engulfing stock markets and economy’s in the region and is prepared to implement strong and co-ordinated actions to contain contagion of debt and beef up bank liquidity within the region.

The second phase will come when the market actually see’s what actions are being planned and assesses whether they are both credible and realistic. Considering that today we have seen a firm quashing of earlier speculation that the European Financial Stability Facility (EFSF) will be increased to €2trn what we may actually see in terms of a rescue plan remains particularly clouded.

We are now waiting for the outcome of a vote in Athens on a new (and unpopular) property tax, expected in the next hour or so.

6.31pm: The Greeks have approved the government’s property tax law, crucial for the country’s austerity campaign.

All 154 of the ruling Socialist PASOK party’s deputies have voted in favour, passing the 151 threshold needed in the 300-seat parliament.

Helena Smith will have more from Greece on that on the site shortly, but we are signing off here. Thanks for all your comments today. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds