Today's Coming Crisis Movie

Wednesday, September 28, 2011

Split opens over Greek bail-out terms

A split has opened in the eurozone over the terms of Greece's second €109bn bail-out with as many as seven of the bloc's 17 members arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.

The divisions have emerged amid mounting concerns that Athens' funding needs are much bigger than estimated just two months ago. They threaten to unpick a painfully negotiated deal reached with private sector bond holders in July.

While hardliners in Germany and the Netherlands are leading the calls for more losses to be imposed on the private sector, France and the European Central Bank are fiercely resisting any such move. They fear re-opening the bond deal could spark renewed selling of shares in European banks, which have significant holdings of Greek and other peripheral eurozone debt.

Shares in French banks have rallied in recent days following signs that eurozone officials are preparing to increase the financial firepower of the bloc's €440bn bail-out fund, which could within months be able to inject capital into eurozone banks and purchase sovereign bonds.

http://edition.cnn.com/2011/09/28/business/greece-eu-split/index.html?hpt=hp_t2