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Eurozone crisis live: Greece begins cleanup after protests over austerity package

EU condemns violence that struck Athens
Athens starts to clean up
Cabinet reshuffle expected soon
Greek elections to be held in April
Germany: parliamentary vote is just a step forward

1.55pm: Time for a lunchtime round-up of today’s key developments in Greece, and beyond.

The clean-up has begun in Athens, following violent clashes between rioters and the Greek police last night as MPs voted through the controversial austerity package. Shops, cafes and historic buildings are all being cleared out after being set on fire, including the Attikon cinema. Police estimate that 45 buildings were torched, with around 130 people detained.

Elections will be held in Greece in two month’s time. A goverment announced that the Greek people will go to the polls in April, once the country’s second rescue package has been finalised

The EU has welcomed last night’s vote, and condemned the violence. EC commissioner Olli Rehn called the vote a “positive step”, claiming that it showed Greece’s determination to address its finances. Rehn added that last night’s rioters “did not represent the vast majority” of Greeks.

European stock markets have rallied following the vote. The FTSE 100 is now up 58 points, while the euro is hovering around .324 against the US dollar.

Disappointing GDP data from Japan underlined the weak state of the global economy. The Japanese economy shrank by 0.6% in the last thee months of 2011, adding to fears of double-dip recessions in some developed economies.

1.32pm: As well as announcing that snap elections will be held in April (see 12.01pm) government spokesman Pantelis Kapsis also told reporters in Athens this lunchtime that Greek leaders will pledge to enforce the new austerity plan, in time for the eurogroup meeting in two days time.

Kaspsis said:

Written assurances must be given by Wednesday…I imagine it will be in the form of a written letter.

As mentioned earlier, New Democracy wouldn’t confirm today that their leader, Antonis Samaras, would sign the pledge. Without his signature, Greece still wouldn’t get the bailout package….

1.14pm: It’s not been a great morning for the world economy, with Japan reporting overnight that its GDP fell by 0.6% in the final quarter of last year (or 2.3% on an annualised basis).

The final three months of 2011 were a bad time for many countries – the UK shrank by 0.2%, while Spain contracted by 0.3%. America, though, posted strong growth

Economist Nouriel Roubini warned that Japan’s data showed that the global economy is in a worrying position:

Japan joins Eurozone and the UK in experiencing a contracting GDP in Q4 of 2011. Many advanced economies double dipping

— Nouriel Roubini (@Nouriel) February 13, 2012

1.07pm: The latest official statistics from the Athens police this morning are that:

• 150 shops were looted
• 48 buildings caught fire
• 100 people were injured, including 68 police officers
• 130 people have been arrested

The roll call of burned-out buildings includes the Attikon cinema, a historic Athens landmark built in 1870 (pictured here ablaze last night).

12.48pm: Europe’s stock markets remain higher this lunchtime, following the Greek parliament’s vote in favour of the new austerity programme.

The FTSE 100 is currently up 61 points at 5913, a rise of just over 1%. The German Dax and the Italian FTSE MIB are both up around 0.8%.

Lloyds Banking Group leads the risers in London, with financial stocks across Europe doing well. Joshua Raymond, chief market strategist at City Index, explained:

What we have seen today is a relief rally, with investors buying into heavyweight financial stocks on the back of the successful parliament vote in Athens.

In the secondary bond markets, 10-year securities issued by Italy, Belgium, Portugal and Spain have all strengthened – a sign that investors are more confident that they will honour their debts.

12.19pm: As if Greece didn’t have enough problems, police are confirming that hackers belonging to the anti-capitalist group, Anonymous, last night managed to bring down several government sites.

Among them: the prime minister’s office, finance ministry, public order ministry and police site itself, says our correspondent in Athens Helena Smith.

“Using computer programs they bombarded us with hits that slowed down all the sites dramatically,” police spokesman Thanassis Kokkalakis told Helena.

“When we realised what was happening we decided for protective reasons to take down the sites ourselves.”

In the case of the police’s website Kokkalakis said the site was down from around 11pm Sunday through to Monday morning.

In its own blog, the group declared:

Taken Down: Major TV channel, the Greek prime minister, the national police, the ministry of finance, the Greek parliament and the minister of finance Evangelos Venizelos (personal site).

The Greek parliament has finally approved an enormously unpopular bill to secure a second EU/IMF baiklout and avoid national bankruptcy, despite buildings being set ablaze in central Athens against it. No more IMF! Stop the intervention in Greek sovereignty. If you don’t give democracy a chance, you should Expect US!

12.01pm: Just in – a Greek government spokesman has said that general elections will be held in Greece in April.

Spokesman Pantelis Kapsis told reporters in Athens:

The bond swap will be concluded in March…..Elections will be held in April.

(That’s via Reuters)

Ths news will please New Democracy, the centre-right party that has been demanding an early ballot. It will not delight Pasok, the socialist party whose popularity has plunged since the crisis escalated.

11.56am: The body that represents Greece’s retail industry has warned today that last night’s vote will not spare the country from bankruptcy.

Vassilis Korkidis, the head of the National Confederation of Greek Commerce, said in a statement that:

Yesterday’s vote in the parliament may have saved the country temporarily from default, but the Greek economy is going bankrupt and the country’s political system is failing.

Many of the 45-or-so buildings torched in Athens overnight were retail outlets. This pictures shows a man walking into a shopping mall that was burned during the violence.

11.30am: Olli Rehn went on to condemn last night’s violent scenes in Athens. He told Brussels journalists that:

I also wish to join my voice to the Greek government in condemning the unacceptable violence that took place yesterday in Athens.

These individuals do not represent the vast majority of Greek citizens who are genuinely concerned for the future of their country.

Our own Helena Smith pointed out this morning that “unidentifiable hooded youths” had caused last night’s chaos.

But while a small minority were responsible for the stone-throwing and the arson, there are probably millions of Greeks who support the tens of thousands of people who protested peacefully on the streets – a point Brenda Kelly of CMC Markets made:

*REHN SAYS RIOTERS DON’T REPRESENT VAST MAJORITY OF GREEK PEOPLE – (maybe not but the peaceful protestors probably do.)

— Brenda Kelly (@Brenda_Kelly) February 13, 2012

11.22am: Olli Rehn, the EC Commissioner for Economic and Financial Affairs, is briefing journalists in Brussels now about the Greek situation.

Rehn said that he welcomes the “positive vote”, calling it “an expression of the determination prevailing in the country to put an end to the spiral of unsustainable public finances.”

Rehn acknowledged that the vote does not, alone, mean that Greece will definitely receive its second rescue package. “Additional measures” need to be adopted by the time euro group ministers meet on Wednesday.

Those “additional measures” refer to the €325m or so of outstanding cuts that were not agreed last week.

11.11am: Pictures from the battered streets of Athens keep coming.

Here, firefighters tackle a historic building damaged last night. The slogan on the wall at right reads ”no IMF-no new [austerity] measures”.

10.49am: More in from Athens, where Helena Smith says officials from the conservative New Democracy party insist that their leader does not want to rip up the loan agreement and start agin.

New Democracy has been a vocal opponent of the fiscal remedies meted out to Greece from the outset, and its leader Antonis Samaras insisted last night in a speech to parliament that he wanted to “change and renegotiate” the loan agreement (see 8.30am)

One party cadre told Helena:

We are not against all of the memorandum.

We have always been for spending cuts and structural reforms.

But he couldn’t says whether Samaras would put his name in writing to the new accord – one of the core demands lenders say Athens must also meet for rescue funds to be released in time for repayment of €14.5bn euro in bonds on March 20.

10.34am: Interesting developments in the bond market this morning – where Italy’s borrowing costs have fallen, but Germany’s have risen.

Germany sold €3bn of six-month bills at an average yield [effectively the interest payment on the bond] of just 0.0761%. At a previous auction of this type, investors actually paid Germany to hold its debt (with the yield coming in at -0.012%).

Italy sold €8.5bn of one-year bills at yields of 2.23%, down from 2.735% at a similar auction last month, plus another €3.5bn of 127-day bills at just 1.5% (from 1.64%).
The usual proviso applies – with European banks holding almost €500bn of cheap loans from the ECB, there’s a lot of liquidity sloshing around the system.

UPDATE: The bid-to-cover ratio on the Italian one-year auction fell to 1.09 this morning – which means that it barely received enough bids for the amount of debt on offer [despite all that "liquidity sloshing around"]. Well, the Italian Treasury is now blaming a “technical glitch”….. developing

9.59am: On the political front, a cabinet reshuffle could come within the next few hours.

Greek prime minister Lucas Papademos needs to bring in new ministers after several Pasok and New Democracy members resigned in protest at the austerity programme.

Insiders have told Helena Smith in Athens that a “broad broad cabinet reshuffle” can be expected later today, possibly even in the next few hours. She reports:

Tired with the constant political bickering and brinkmanship that has eclipsed almost all else in recent weeks, interim prime minister Lucas Papademos is expected to forge head with a sweeping re-assembly of his ministers.

The 48-member cabinet will likely be streamlined drastically with the former vice president of the European Central Bank also following in Mario Monti’s footsteps by appointing technocrats to key positions.

Monti, the eurozone’s other non-elected prime minister, recruited academics and lawyers – some rather obscure – for his ‘cabinet of technocrats’ when he replaced Silvio Berlusconi as Italy’s prime minister. They boasted an impressive record, but none of them had been chosen by the peope. Just like Papademos.

9.44am: This image from Athens shows workers at an central Athens capital, which was set alight last night.

9.35am: Here’s another image from Athens this morning.

The graffiti reads: “Bosses are killers of the people”.

9.16am: In Greece, Athenians are facing the aftermath of last night’s savage street fighting, which lasted for around 10 hours.

Helena Smith, our correspondent in Athens, says that parts of Athens’ historic centre now lies in tatters. There are burned out shells of buildings, including some of the capital’s fabulous 19th century edifices. Shops have been looted and smashed, and cafes are still smouldering this morning.

Helena reports:

Unsurprisingly, the vandalism made for as much coverage in the press this morning as the austerity measures Greeks will have to endure for the best part of the next decade to make their nation’s debt mountain even begin to look sustainable.

“Yes through fire and tears,” Ta Nea, the mass-selling daily, proclaimed from its front page in reference to the vote’s passage.

But it should be pointed out, as this appears to have been lost in coverage, that it was unidentifiable hooded youths hijacking an otherwise peaceful anti-austerity demonstration who were behind the violence, not hard-working Greeks badly hit by tax hikes and repeated wage and pension cuts who took to the streets not because they wanted a fight but to vent their spleen.

They are as shell-shocked as the shop-owners who turned up to work this morning to find their properties in tatters.

8.53am: Shares in Greek banks jumped by 10% in Athens this morning, on relief that the vote was passed. That follows an 8% drop on Friday, as a series of ministers quit Lucas Papademos’s coalition.

But with Greece entering a fifth year of recession, economists say there is little reason for optimism this morning. Robin Bew, chief economist of The Economist Intelligence Unit, questioned how Greece’s GDP could expand in the face of deeper austerity measures:

Greek parliament approves cuts, amid riots. No disorderly default. But can they grow?

— Robin Bew (@RobinBew) February 13, 2012

8.30am: City analysts are speculating that the situation in Greece could be thrown into confusion in a couple of months if Antonis Samaras, head of the New Democracy party, becomes Greece’s next prime minister.

Samaras, the current front-runner to replace Lucas Papademos, told parliament last night: “I ask you to vote in favour of the new loan agreement today and to have the ability to negotiate and change the current policy which has been forced on us”.

That would rather thwart the Troika’s demands that Greece’s leaders all pledge to implement the current plan, as Megan Greene of Roubini Economics pointed out on Twitter:

Samaras demands bailout be renegotiated after elections and troika insists he sign that he’ll uphold 2nd bailout. We still have a problem.

— Megan Greene (@economistmeg) February 13, 2012

Samaras also said his party will “demand the dissolution of parliament and immediate elections” once the second rescue deal is ageed.

Elisabeth Afseth, analyst at Investec, also warned this morning that “the next Greek crisis is then likely to come with the approaching election”. New Democracy wants that vote to be held in April……

8.22am: Greece must still clear four hurdles before it receives its €130bn bailout package.

1) The eurogroup of finance ministers, which meets on Wednesday night, must agree that it has now met the terms of the package
2) The leaders of its political parties must pledge in writing that they will implement it.
3) The German Bundestag must vote to approve the package, probably on February 27th.
4) The long-running negotiations with its creditors over debt restructuring (the Private Sector Involvement) must be concluded.

Gilles Moer of Deutche Bank told Bloomberg TV this morning that it is essential for Greece to maintain its credibility with its international partners. He said that the demand for Greece’s leaders to make a commitment in writing “shows the pressure that the Troika is still prepared to put on Greece”.

8.09am: European stock markets have rallied this morning following the Athens vote. The FTSE 100 has gained 49 points in the first few minutes of trading to 5901, around 0.85%. The French and German indices are showing similar gains, while the Italian MIB is 1.5% higher.

The euro also strengthened this morning, to .3275.

7.57am: Germany’s economy minister has warned that last night’s vote will not be enough to guarantee that Greece receives its €130bn bailout.

Speaking earlier this morning, Phillip Rösler said the vote was merely a “necessary condition” on the path to Greece’s second rescue package, as Athens must also prove that the measures will be implemented.

Rösler added that the German parliament must receive a report on Greece from the Troika [the IMF, the EU and the ECB] before deciding whether to give its approval for the bailout fund.

That vote is expected to take place in the Bundestag on 27 February.

7.50am: The scenes of mayhem on the streets of Athens last night, and in other parts of Greece, show the depth of public anger against the package. As we reported last night:

More than 40 buildings were set ablaze in an orgy of looting that left scores injured as protesters vented their anger at the caretaker government and parliament’s ordering of a further €3.3bn of savings by slashing wages and pensions and laying off public sector workers.

This picture from last night shows protesters running away from teargas during clashes between protesters and riot police near the Greek parliament.

Prime minister Lucas Papademos warned that banks would collapse and schools and hospitals would be left without funds unless the bill passed. But 43 MPs failed to back the bill, with some arguing that Greece would be better off refusing to implement the measures and defaulting its debts. All those MPs have now been expelled from the coalition government.

7.45am: Good morning, and welcome to our rolling coverage of the eurozone financial crisis.

Late last night the Greek parliament approved the controversial austerity package demanded by its lenders in return for its second rescue fund. The vote took place as violent scenes raged in Athens, where running battles raged between protesters and riot police.

We’ll be following the reaction to the vote today in Athens, and across Europe.

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