While you were sleeping: Greek hopes kept alive

Feb. 14 (BusinessDesk) - Investors breathed a sigh of relief when Greek lawmakers approved austerity measures that might finally gain the credit-crunched country approval from officials at the European Union, International Monetary Fund and the European Central Bank needed to access a bailout fund and stave off bankruptcy.

As tiresome as the seemingly never-ending process has been for the Greeks to get with a cost-cutting program that will meet the strict standards of EU leaders, there's still hope that all their ducks are now finally in a row.

The Greek parliament’s backing “is a crucial step forward toward the adoption of the second program,” EU Economic and Monetary Affairs Commissioner Olli Rehn said, Bloomberg News reported.

“I’m confident that the other conditions, including for instance the identification of the concrete measures of 325 million euros (US$430 million), will be completed by the next meeting” of finance ministers, Rehn added. The next EU meeting is on February 15.

In Europe, the Stoxx 600 Index closed today's session with a 0.7 percent increase.

In early afternoon trading in New York, the Dow Jones Industrial Average rose 0.46 percent, the Standard & Poor's 500 Index gained 0.43 percent and the Nasdaq Composite Index climbed 0.67 percent.

While the mood was supportive, caution is not far off anyone's mind either.

"That the deal was approved really reduces a lot of the tension over the euro zone, but it was expected and on a short-term basis we're very done to the upside," Yu-Dee Chang, chief trader of ACE Investments in McLean, Virginia, told Reuters.

"That's why we went up and then backed off this morning. I'm cautious because there could be a short-term correction."

That also kept alive the appeal of US Treasuries.

“There is still a lot of uncertainty about the Greek situation, there are still a lot of rumours flying, and the devil is in the details, which is keeping Treasuries supported,” Larry Milstein, managing director in New York of government trading at RW Pressprich & Co, told Bloomberg. “The riots over the weekend also bring into question how long can the austerity measures be kept in place, given the mood in the populace.”

Across the Atlantic, US President Barack Obama unveiled an election-year budget plan to deal with the massive debt load of the world's largest economy. Obama's plan, involving "very difficult" cuts to government spending and programs, would still boost debt by US$6.7 trillion over the next decade.

The budget forecast that the nation's economy will expand 2.7 percent this year, a rosier outlook than that of Federal Reserve policy makers and economists. It compares with a 2.2 percent increase, according to the median of 79 estimates in a survey of economists by Bloomberg News conducted from February 3 to February 9.

(BusinessDesk)

BUDGET 2012:
Parliament Debate Live - Video Of Budget 2011
Keith Ng Interactive Graphic: How the Budget Breaks Down
BUDGET 2012 - FULL COVERAGE: Reports / Analysis - Press Kit - Reaction (from everybody) - Previews (from everybody) - Pre-Budget Announcements

Gordon Campbell: On the Budget’s Spreadsheet Victories

It wasn’t as if expectations were sky high, exactly. Chances are, it was always more likely that we’d be seeing Bigfoot rampage through the Beehive lock-up than catch a glimpse of a credible growth agenda from this government. More >>

Sludge Budget Report - Short The Dollar! MEMO: To international bankers FROM: C.D. Sludge Please short the dollar! It'll be good for both you and us. And you know you want to. Greexit, Eurogeddon... watch out... flight to quality and all that. Follow your instincts. The NZ Debt Management Office has been so surprised at the unprecedentedly low interest rates that it can borrow at that it has already entirely pre-funded the 2013 fiscal deficit - all $8 billion of it! More >>

Pattrick Smellie Comment: Doddling along the best we can hope forCriticising Budgets for lacking vision or imagination is like shooting fish in a barrel, but even so, this year's Budget again feels like a missed opportunity. Perhaps it's the intrusion of real world needs that means the government couldn't make better political use of the $558.8 million it expects to gather in its first partial asset sale. More >>