In Brief
Pledge to lower deficit ambitious but credible While Greece’s pledge to rein in its deficit may be «ambitious,» the struggling euro-region state has drawn up «credible» steps to relieve its budget misery, said Germany’s BDB private bank federation. Greece must back up fiscal promises with appropriate action, said the Berlin-based group, which represents lenders including Commerzbank AG and Deutsche Bank AG. If the steps are taken, the specter of a bailout by Greece’s euro partners would fade, said the group yesterday. «If actions are followed by deeds, it’s almost of secondary importance which instrument is chosen to uphold European solidarity,» said the group in a presentation of spring economic forecasts. «Belgium’s example shows that strict fiscal consolidation can work in the euro region.» Greece has the biggest budget deficit of all 27 European Union countries. (Bloomberg) Federal Reserve looking at Goldman Sachs deals Federal Reserve Chairman Ben S. Bernanke said the central bank is reviewing the arrangements of Goldman Sachs Group Inc and other companies with Greece. «We are looking into a number of questions relating to Goldman Sachs and other companies and their arrangements with Greece,» Bernanke said yesterday in testimony before the Senate Banking Committee in Washington. (Bloomberg) End of eurozone? The bankruptcy of a euro-region country would spell the end of European monetary union, said Carl Heinz Daube, the head of Germany’s debt agency. «If one member were to go bankrupt this would mean, after 10 years, the euro experiment is at its end,» Daube said in a speech at a London conference organized by Euromoney Institutional Investor Plc. It would lead to «a collapse of the whole system,» he said. The euro weakened to a one-year low against the yen yesterday. Moody’s Investors Service and Standard & Poor’s said they may cut Greece’s debt rating as the nation struggles to manage the largest budget deficit in the European Union. European finance ministers signaled on February 16 they may provide Greece with support if it takes what EU Monetary Affairs Commissioner Olli Rehn called «determined action» to reduce its debt. «These kinds of comments from an informed guy could be a call to action,» said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York. (Bloomberg) Toy profits Greece’s largest toy retailer, Jumbo, posted a fall in first-half net profit, all its growth wiped out by a one-off tax aimed at cutting the towering national deficit. The company said net profit fell to 49.4 million euros ($66.6 million) in the six months to end-December after the government imposed a 10 million euro tax on the retailer. Consumers tightened their belt last year, fearing Greece’s first recession in 16 years could further reduce their income. Retail sales volume fell 11 percent in November year-on-year, but Jumbo, which also operates in Cyprus and Bulgaria, has shown resilience thanks to its low-cost products. (Reuters) Strike off Gasoline dealers in Cyprus called off a crippling three-day strike yesterday which sapped supplies and caused a run on the pumps. The dispute was triggered by authorities’ decision to impose a cap on prices at the pumps. (Reuters)
