Portugal on Monday became the latest eurozone country to announce austerity measures to rein in a ballooning budget deficit as debt-stricken Greece urged global action to curb speculation in credit default swaps (CDS).
European Commission sources said that finance ministers of the 27-nation bloc would discuss ways to dampen speculation in the sovereign CDS market at their scheduled meeting on Tuesday next week.
Hedge funds have been accused of aggravating the Greek debt crisis by so-called “naked short selling” — betting on a default without owning the underlying Greek bonds, hence forcing up Athens’ borrowing costs.
Greek Prime Minister George Papandreou, who took draconian austerity measures last week to stem attacks on his country’s debt, called credit default swaps a “scourge” that threatened the Greek and global economy and asked the US to join Europe in action on the issue.
“We need clear rules on shorts, naked shorts and credit default swaps. I hope there will be a positive response from this side of the Atlantic to bring this initiative to the G20,” Papandreou told the Brookings Institution on a visit to Washington, where he was to meet US President Barack Obama yesterday.
Portugal announced plans to cut its deficit to 2.8 percent of GDP in 2013 from 8.3 percent this year by trimming spending on civil servants and public investment, and raising taxes on high incomes and stock market gains.
The program is seen as the key to convincing markets that Portugal will tackle its high deficit and debt after coming under scrutiny by investors fearing it may be next in line to have Greece-style fiscal problems.
Under the plan, Portugal’s public debt would peak at 90.1 percent of GDP in 2012 and fall thereafter. Greece’s debt is set to reach 125 percent of GDP this year.
“This is a bet on reducing the weight of the state in the economy and the weight of public spending,” Portuguese Finance Minister Fernandio Teixeira dos Santos said.
Analysts said the Portuguese stability program was more cautious than Greece’s in its growth and revenue assumptions, but extra measures might still be required if growth fell short.
Portugal’s spread over benchmark 10-year German bunds stood at 109 basis points on Monday, down from a peak of 175 basis points on Feb. 4 at the height of the market panic over Greece. Spain’s spread was down to 67 basis points, the lowest since mid-January.
The CIA has a message for Chinese government officials worried about their place in Chinese President Xi Jinping’s (習近平) government: Come work with us. The agency released two Mandarin-language videos on social media on Thursday inviting disgruntled officials to contact the CIA. The recruitment videos posted on YouTube and X racked up more than 5 million views combined in their first day. The outreach comes as CIA Director John Ratcliffe has vowed to boost the agency’s use of intelligence from human sources and its focus on China, which has recently targeted US officials with its own espionage operations. The videos are “aimed at
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
SHIFT: Taiwan’s better-than-expected first-quarter GDP and signs of weakness in the US have driven global capital back to emerging markets, the central bank head said The central bank yesterday blamed market speculation for the steep rise in the local currency, and urged exporters and financial institutions to stay calm and stop panic sell-offs to avoid hurting their own profitability. The nation’s top monetary policymaker said that it would step in, if necessary, to maintain order and stability in the foreign exchange market. The remarks came as the NT dollar yesterday closed up NT$0.919 to NT$30.145 against the US dollar in Taipei trading, after rising as high as NT$29.59 in intraday trading. The local currency has surged 5.85 percent against the greenback over the past two sessions, central
RSS