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Dow Breaks 13,000
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Dow Breaks 13,000
For the first time since May 2008, Dow Jones Industrial Average breaks 13,000
after European leaders cleared another round of aid for Greece. Trading
throughout the session was mixed throughout the day as we kick off a shortened
trading week.
European finance ministers approved the terms of a fresh aid package for Greece
on Tuesday and the country agreed to the terms of a deal with its private debt
holders. European finance ministers and other top European officials said they
stand ready to provide up to 130 billion euros ($171.9 billion) of extra
financial aid to Greece until 2014 - following a marathon meeting that went into
the early hours Brussels time. The Eurogroup said they had the 'expectation that
the International Monetary Fund will make a significant contribution' to the new
Greek aid program. IMF Managing Director Christine Lagarde said she would take
the proposal to the IMF board in the second week of March. European member
states will lower interest rates on their loans to Greece retroactively to a
margin of 150 basis points from 200 basis points, as part of the agreement.
Eurogroup said Greece’s debt-to-GDP ratio is expected to fall to 120.5% by 2020,
from around 160% in 2011 and the measures “will preserve the financial stability
of Greece,” Luxembourg Prime Minister Jean-Claude Juncker, who chairs meetings
of the euro-zone finance ministers. Greece also reached a deal with private
holders of Greek government bonds - endorsed by the Eurogroup, the country’s
institutional lenders and the steering committee of the private
creditor-investor committee for Greece. Greece Private-sector bond holders will
take a haircut of more than 53% on nearly 200 billion euro worth of privately
held Greek government debt. “Today’s announcement is a major step towards
implementing the debt exchange,” the private creditors’ committee said in its
own statement. Complete details will be submitted to full committee and the
steering committee recommended that private investors 'carefully consider' the
proposed offer. The committee said it views the Greek offer as 'broadly
consistent' with the voluntary agreement reached last October where it was
expected that private-sector bond holders would take a 50% write-down on the
value of their Greek government debt holdings. The Eurogroup statement said the
group 'looks forward to a high participation of private creditors in the debt
exchange, which should deliver a significant positive contribution to Greece’s
debt sustainability'. Greece needed to agree to terms on fresh funds with its
institutional lenders as well as, reach a deal with its private bondholders in
order to head off default as it faces a 14.5 billion bond redemption on March
20. Eurogroup members said Tuesday that the success of the new aid program
'hinges critically on its thorough implementation by Greece' and that there
would be a significant strengthening of the European Commission task force in
Greece. Greece will also put in place a mechanism 'that allows better tracing
and monitoring of the official borrowing and internally generated funds destined
to service Greece’s debt,' the European finance ministers said, referring to a
special segregated account that would be monitored by European and International
Monetary Fund officials. "It is an extremely important element of this overall
process of rebuilding confidence," said Charles Dallara, managing director of
the Institute of International Finance. "The lack of resolution of Greek issue
has hung over euro zone for the better part of two years now," he said, adding
investors all over world have been deeply concerned. The IIF has negotiated a
deal on behalf of private holders of Greek debt that will see a 53.5% reduction
in the nominal value of their holdings that will allow Greece to reduce its debt
stock by EUR107 billion. "This is an unprecedented level of voluntary debt
reduction," said Dallara. Though Dallara emphasized it is up to individual
investors to decide whether or not to accept the deal, he expects a big take up.
"Despite a huge loss of value for investors, it holds a number of positive
dimensions," Dallara said. "Losses will be substantial but they are contained."
A sweetener in the deal is a form of a security linked to Greece gross domestic
product that will offer investors a yield pick-up if future Greek GDP growth
exceeds currently forecast levels. Dallara said most importantly, the deal gives
Greece 'tremendous breathing space' in order to get its economy back on sound
footing.
On Tuesday, President Barack Obama called on Congress to replicate its recent
passage of the payroll tax cut extension by passing more bipartisan legislation
to help the economy without getting distracted by the coming fall presidential
election. "There is a lot more we can do, and there is plenty of time to do it,"
Obama said during an event at the White House. Obama said Congress should take
up other parts of his agenda, and specifically, a proposal that would help more
homeowners refinance underwater mortgages as well as a separate plan to improve
small companies ability to export. Obama said Congress should pass the so-called
'Buffett rule' to make sure that Americans with over $1 million in annual income
pay a 30% tax rate. He added that the White House would continue to try to find
ways to help the economy that does not require congressional action. "Instead of
spending the coming months in a lot of phony political debates, [and] focusing
on the next election, I hope that we spend some time focusing on middle-class
Americans," Obama said.
In a move aimed at helping ease the liquidity squeeze in the banking system,
China's central bank suspended its routine open market operation Tuesday and the
People's Bank of China didn't offer any bills or repurchase agreements. PBOC
carries out open market operations Tuesdays and Thursdays, offering bills and
repos to control liquidity in the money market. Liquidity conditions in the
banking sector have been tight since last week due to a large share offering by
China Communications Construction Co. that locked up around CNY180 billion worth
of subscription funds. PBOC central bank said on Saturday it will lower banks'
reserve requirement ratio by 0.5 percentage point with an effective date of
February 24 to help boost liquidity and support the economy a move that is
expected to release nearly CNY400 billion of liquidity.
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February
21, 2012
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Top of the page | |
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Total for Year |
Last Week |
$207,545.00 |
$15,148.00 |
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Total for Year |
Last Week |
$54,280.00 |
$7,557.50 |
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| |
Total for Year |
Last Week |
$477,923.89 |
$44,196.66 |
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| |
Total for Year |
Last Week |
$395,980.00 |
$47,570.00 |
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Total for Year |
Last Week |
$0.00 |
$0.00 |
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