Greek crisis timeline

Here is a crisis timeline from Reuters-

TIMELINE-Greece's debt crisis
Jan. 2010 - Greece unveils a stability programme on Jan. 14 saying it will aim to cut its budget gap to 2.8 percent of GDP in 2012 from 12.7 percent in 2009. Unions protesting against the austerity plan announce strikes for February.

Feb. 2010 - Prime Minister George Papandreou says on Feb. 2 the government will extend a public sector wage freeze to those making below 2,000 euros a month for 2010, excluding seniority pay hikes.

-- Feb. 3 - The EU Commission says it backs Greece's plan to reduce its budget deficit to below 3 percent of GDP by 2012 and urges Greece to cut its overall wage bill.

-- Greece must refinance 54 billion euros in debt in 2010, with a crunch in second quarter as more than 20 billion euros becomes due. A 5-year bond issue in January is five times oversubscribed but the government has to pay a hefty premium.

-- A one-day general strike on Feb. 24 against the austerity measures cripples Greece's transport and public services.

-- An EU mission to Athens with IMF experts delivers a grim assessment of the nation's economy on Feb. 25.

March 2010 - EU Economic Affairs Commissioner Olli Rehn asks Greece to announce further measures to tackle its budget crisis.

-- March 5 - New package of public sector pay cuts and tax increases is passed by the government to save an extra 4.8 billion euros. The measures include raising VAT by 2 percentage points to 21 percent, cutting public sector salary bonuses by 30 percent, increases in tax on fuel, tobacco and alcohol, and freezing state-funded pensions in 2010.

-- March 11 - Public and private sector workers strike.

-- March 15 - Euro zone finance ministers agree on a mechanism that will allow them to help Greece financially if needed, but reveal no details.

-- March 19 - European Commission President Jose Manuel Barroso urges EU member states to agree a standby aid package for Greece.

-- March 25 - European Central Bank President Jean-Claude Trichet says the bank will extend softer rules on collateral for ECB loans, easing the risk of Greek institutions being cut off from funding at the end of 2010.

-- Euro zone leaders agree to create a joint financial safety net, with the IMF, to help Greece and to try to restore confidence in the euro. Under the accord, Athens will receive coordinated bilateral loans from other countries that use the euro and money from the IMF, but only if all states agree to the bailout and if it has exhausted its borrowing options.

April 2010 - On April 11 Euro zone finance ministers approve a giant 30-billion-euro ($40 billion) emergency aid mechanism for Greece but stress that Athens has not yet asked for the plan to be activated.

-- April 13 - ECB policymakers give the thumbs-up to the euro zone's rescue package as Greece passed a key test of its ability to raise fresh funds.

-- April 15 - Parliament adopts a tax reform bill, backing government moves to tackle tax evasion and shift the fiscal burden to higher-income earners as Athens.

-- April 21 - Greece starts talks to hammer out details of a potential aid deal but investors dump Greek assets on a lack of clarity over whether the funds would come in time. Germany's opposition Social Democrats say they oppose "fast-track" approval for the deal in parliament. The yield on the Greek 10-year government bond rises to 8.4 percent.

-- April 22 - Moody's Investors Service downgrades Greece's sovereign rating by one notch to A3, placing it four notches above speculative, or "junk" status.

-- Greece posts a budget deficit of 32.34 billion euros or 13.6 percent of GDP in 2009, not the 12.7 percent it had reported earlier, Eurostat says.

-- April 23 - Prime Minister George Papandreou asks for the activation of an EU/IMF aid package aimed at pulling the euro zone member out of a debt crisis.

-- April 25 - Finance Minister George Papaconstantinou says bailout talks with the IMF and European partners in Washington go well and he is confident Greece will secure help in May to finance its debt.

-- April 26 - Striking dockers and protesters at Greece's largest ports.

-- April 27 - Standard & Poor's downgrades the credit rating of Greece to junk status.

-- April 28 - Bank stocks jump as much as 6.2 percent after securities regulator says it has banned short-selling in Greek shares on the Athens bourse until June 28.

-- May 1 - Thousands of angry Greek protesters march through Athens to protest against austerity measures they say only hurt the poor.

-- German Chancellor Angela Merkel says she will welcome a contribution from Germany's private sector to support a Greek rescue package.

-- May 2 - Prime Minister Papandreou says Greece has sealed a deal with the EU and IMF that opens the door to a multi-billion euro bailout and budget cuts of 30 billion euros ($40 billion) over three years, on top of measures already agreed.

-- The aid package is expected to total up to 120 billion euros ($160 billion) over three years and represents the first rescue of a member of the 16-nation euro zone.

Greek Bonds are Junk- S&P

Greece’s credit rating was cut three steps to junk by Standard and Poor’s, the first time that’s happened to a euro member since the currency started, as contagion from the nation’s debt crisis spread through the bloc.

Greece was lowered to BB+ from BBB+ by S&P, which also warned that bondholders could recover as little as 30 percent of their initial investment if the country restructures its debt. The Greek move came minutes after the rating company reduced Portugal by two steps to A- from A+. The euro weakened, stocks plunged and the extra yield that investors demand to hold Greek and Portuguese bonds over German bunds surged.

Source: Bloomberg

India becomes seventh largest shareholder in World Bank

Here is the full story on Economic Times
I do expect India's credit rating to improve. But the biggest achievement on the international scene would be to get a permanent position in United Nation's Security Council. I believe India is flexing its muscle to get that this time. It has been long overdue.

More on Eurozone's Greece...

Two questions that people want answers to are-
1. Whether this crisis is bound to have an impact on other European partners
2. If the assistance from Euro partners and IMF would solve the crisis

There are several talks about this crisis. Economists (as usual) do not have a consensus on it.
Answer to my first question is a big YES. Greek crisis could badly damage Europe. In a globalized economy, you do expect any single failure to have a cascading effect on other parties in the ecosystem. Yes, the degree of impact may vary. In this case Euro partners of Greece are at risk through their common currency-Euro. A mammoth deficit for Greece is putting downward pressure on Euro. This is a reflection of the low confidence people have in the currency.
Here is a story on that-

Greek shares led the global stock market retreat Tuesday amid mounting concerns about the country's ability to tap a bailout facility. Portuguese shares were also heavily sold off as investors worried that the debt crisis could spread to another euro country.
In Europe, the FTSE 100 index of leading British shares was down 81.33 points, or 1.4 percent, at 5,672.52 while Germany's DAX fell 59.78 points, or 0.9 percent, at 6,272.32. The CAC-40 in France fell 78.78 points, or 2 percent, at 3,918.61.
On Wall Street, the Dow Jones industrial average was down 15.04 points, or 0.1 percent, at 11,189.99 soon after the open while the broader Standard & Poor's 500 index fell 5.51 points, or 0.5 percent, at 1,206.54.
Those falls, though, are dwarfed by the route in Greece and Portugal — the Athens composite main index plunged 6.5 percent to 1,687.80 while Lisbon's main PSI 20 index slid 3.4 percent to 7,298.72. Source: Associated Press

Next few days are going to be important. Watch the markets carefully

On the second question- My answer is NO. The loan assistance would be not be sufficient in the near-mid term or in the long run. I believe that this situation has gone out of hand. Greek govt has to fight battles on two fronts simultaneously:
1. Introduction of austerity measures- Govt already has taken a lot of steps. Tax rate on bonus of pvt bank employees is 90%. No bonus for public sector employees. Wage freezes, etc. Now the point that there is already public dissatisfaction in Greece. There is a limit to which govt can impose taxes and fines. The last thing they want is a cocktail of economic disaster and political backslash
2. Arrangement of loans- Through Euro partners and IMF, Greece hopes to get about US$ 45 billion. But is it enough? I don't think so. Some estimates point to the need for about US$ 300 billion. Even if the Euro partner-IMF loans get sanctioned, the skeletons will come back again after 6 months. Then the fall will be much greater

So now what?

I have no answer right now. Stefan Karlsson suggests a mechanism through which loans can be indefinitely available to Greece. He reckons that this would boost investor's confidence in the economy.
Not sure if he is serious about it because I am still laughing (at his suggestion)

Timeo Danaos et dona ferentes

A phrase that is apt for the greeks in this situation. Except for the fact that it is not the greeks who are bearing gifts, but its eurozone partners.

When Euro Ship Hits the Greek Shores...

Yes, the Greek crisis is threatening to sink the Euro Ship. The fact is that the debt levels of Greece have hit alarming levels because of which it is posing a threat of Euro currency. And these levels are around 120% of the GDP mark. Yes, that is high...but let's have a look at the same ratio for other developed countries...

* US Gross Debt 2008 12,867.5bn 90.8% of GDP (EST) (US Debt)
* Japan National Debt 192% of GDP 2009 est) 836,521 trillion yen 2007
* Italy National Debt 115% of GDP (FT)
* UK National Debt 68% of GDP (UK)
Source: Economics Help
The above numbers are as of Feb 2010.

How is Greece coping up with it?
It has reached out to its Euro zone partners and IMF to get sufficient loans. While IMF package is nearly ready for dispatch there are some clauses (as some have claimed) in Germany's constitution that disallow it to provide loans to Greece or any partner. This is significant because Gemany's share account for the largest share in the combined Euro zone's package,

I am keenly tracking the economic shifts. Let's see if the bail out package from Euro Zone gets constitutionally passed...
This story has also put some focus on Portugal and other European countries that have high debt levels.

I will track this story...

RBI reacts to tackle inflation...

RBI hikes repo, reverse repo rates & CRR by 25 bps