Eurozone finance ministers refuse to approve more bailout funds to Greece without more austerity cuts (+ analysis on default); Euro bank stocks continue to slide; China warns of trade war with US; Suicide bombing in Somalia kills at least 70; US likely to pass long-awaited free-trade deals; Panetta criticises Congress on Palestine; and more
Top of the Agenda: Eurozone Ministers Delay Greek Bailout
Eurozone finance ministers postponed until November (NYT) a decision on releasing the next tranche of last year's €110 billion EU and IMF Greek bailout. Despite assertions by Greece that it will run out of funds by mid-October if it does not receive the €8 billion installment, the finance ministers said they would first push for more austerity measures from the indebted state.
The ministers also said they would wait for a verdict from representatives of the European Commission, the European Central Bank, and the IMF--the so-called troika--to determine Greece's eligibility for more funding. The chair of the eurozone finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, insisted Greece had the financial means (DeutscheWelle) to get through to November.
Juncker added that the ministers were reassessing the terms (Reuters) of a € 109 billion second Greek bailout, tentatively agreed upon in July. Ministers are considering more private-sector involvement, which could amount to an orderly restructuring of Greek debt.
European bank stocks, heavily exposed to eurozone sovereign debt, continued to fall. Shares in French-Belgian bank Dexia (WSJ) dropped 17 percent, as the French and Belgian governments said they would take all necessary measures to shore up the bank.
A drought in wholesale financing is merely the symptom of a much deeper problem--the crisis of confidence over sovereign debt. The markets simply do not have faith that a divided and hesitant Europe will be able to meet the challenge of contagion should Greece default, argues this Financial Times editorial.
In addition to Greece missing its deficit targets, the country's continued economic contraction has multiplied doubts as to the wisdom of saving Greece at all, says Der Spiegel.
Greek sovereign debt levels appear unsustainable and a default may be inevitable. Most economists think the question now is how to make the process orderly, explains this CFR Analysis Brief.
China Warns US on Currency Bill
China warned the United States that it could incite a trade war (FT) between the two countries if the US Congress passes a bill forcing the Chinese yuan to appreciate. US lawmakers initiated debate yesterday over a measure that would impose tariffs on Chinese imports in an effort to punish Beijing for devaluing its currency.
TRANS-ASIA: Asian stocks were hit by investor fears (Bloomberg) over the ongoing European sovereign debt crisis. The MSCI Asia Pacific Index dropped 2.3 percent, continuing its largest quarterly decline in almost three years.
Deadly suicide bombing in Mogadishu
US Congress expected to approve free-trade deals
Palestinian Aid freeze criticised