Is today the climax for the Greece-eurozone bailout negotiations?
As the eurozone finance ministers meet once again in Brussels for a last-ditch attempt to find a solution for Greece’s bailout woes—and avoid a calamitous Greek exit from the euro—this is the day everyone has been waiting for.
Unless, that is, it’s not (there have been several false resolutions already), and discussions continue down to the wire, with Greece’s 172-billion-euro bailout due to expire next Friday.
It’s the end of another busy week of high-stakes negotiations, crises, scandals, criminal investigations and tech fundraising. So far this morning, amid much speculation over Greece, Tokyo’s Nikkei 225 has been extending a 15-year high, while flash eurozone composite PMI, which measures manufacturing, shows a bit of bounce, with rate of growth in February rising from 53.6 to 53.5 (50 separates growth from contraction). Early sign of quantitative easing success or, given February isn’t over yet, wishful thinking? We’ll also have a chance to revisit the holiday season, as Canadian retail numbers for December are released, and there will also be a closely watched oil-rig count from the U.S., as well as a Mexico’s fourth-quarter GDP.
How many “climactic showdowns” can the Greece crisis have? As we’ve already seen: many. Practically every day this week has brought some kind of showdown, with yesterday’s surprise rejection by Germany of Greece’s bailout compromise—a major reversal from Greece’s earlier demands—setting the mood at a fever pitch. The country’s finance office said the plan, for a six-month extension, was “not a substantive proposal for a solution” and another German official called it a “Trojan Horse,” affirming the government’s belief that a bailout term must be accepted as is, without Greek demands to scale back austerity requirements. The feelings of Germany’s finance minister, Wolfgang Shäuble, are very clear (how I would love to see him and Yanis Varoufakis run into each other at a party), but the hope now is that Angela Merkel may step in with some conciliatory balm, after talking on the phone with Alexis Tsipras last night. While a deal was supposed to be settled by Monday, today is seen as the last day to feasibly get a bailout extension in working order before Greece effectively runs out of cash. The meeting will begin at 3 p.m. in Brussels, 9 a.m. Toronto time.
Will Canada see deflation? In a speech yesterday, the Bank of Canada’s deputy governor warned that price changes could turn negative in the coming months due to oil’s fall, but stopped short of saying the economy would see true deflation, saying the declines would have to be widespread. The speech comes less than two weeks before the Bank’s next rate announcement and, after its surprise rate cut in last month’s meeting, speculation is running high about whether another cut is in the works. The latest inflation numbers, from December, were at 1.5 per cent, but, last month, the bank suggested inflation would drop to 0.3 per cent in the second quarter.
SNC-Lavalin charged with corruption and fraud in Libya case. The Montreal-based engineering firm was charged by the RCMP yesterday as part of a long-running series of investigation into company officials, which allege the company provided bribes connected to projects in Gadhafi-era Libya. SNC-Lavalin said it would plead not guilty, and criticized the process, saying the charges stem from the alleged activities of former employees, and the company has since co-operated with authorities and put in strict ethical guidelines. A company statement also noted that companies in the U.K. and the U.S. have the option of deferred prosecution agreements, which charge companies large fines without conducting trials. Under new corruption rules, a conviction would bar the company from government contracts for a decade. The charges stem from allegations that SNC-Lavalin and subsidiaries bribed the Libyan government with almost $48 million, as well as allegations of fraud against that same government amounting to almost $130 million. There are other allegations stemming from projects in Bangladesh, Algeria and Montreal. You can read more about the background to the Libya charges in a major Globe investigation from 2012.
Wal-Mart raises its wages. The chain’s earnings report yesterday was overshadowed by an announcement that up to half a million workers in the U.S. would get a pay rise in the coming months. The company said it would ensure all staff are making $9 an hour by April (the federal minimum wage is $7.25) and $10 an hour next year. The announcement, which a spokesman said was a matter of doing right by staff, was seen both as a victory for labour activism directed at the chain, and an improving labour market for Americans at large; Wal-Mart is the country’s largest private employer. But is that the real reason they’re doing it? Another suggestion is that, as the company diversifies and faces tougher competition for shoppers, they’re embracing “efficiency wages,” or wages that attempt to get better employees and keep them. But while this is good news for Wal-Mart workers, at least, it’s worth noting that even $10 an hour is still below a living wage for a single person in many areas of the U.S., according to MIT’s Living Wage Calculator.
Tech companies are taking over the future of cars. Apple is officially getting behind the electric car, at least as a worthy experiment, and is aiming to put out a car within five years. Battery companies claim they’re trying to poach their engineers and experts in order to do it. In the meantime, Tesla and GM are both racing to put out a (lower)-priced electric car by 2017, and Uber and Google are engaged in an overlapping battle to create a driverless car.
Need to know:
TSX: 15,180.33 (-32.42), Thursday
Loonie: 80.01 (-0.52 cents), Thursday
Oil (WTI): $50.91, Friday morning (7 a.m.)
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