PM says Greece waiting for "European solidarity" over austerity plan

ATHENS, March 3, 2010, (Xinhua) -- Prime Minister George Papandreou said on Wednesday before Greece is set to formally announce its new austerity cuts that Greece is "awaiting European solidarity" over the measures.

Papandreou was briefing President Karolos Papoulias ahead of the formal announcement of the renewed package of austerity measures demanded by the European Union.

The new austerity measures, aimed at saving the country 6.5 billion U.S. dollars, are to include a 30-percent cut in the so-called 14th salary (Easter and holiday bonuses) and a 30-percent cut in the 13th salary (Christmas bonus) for civil servants.

In all, the 6.5 billion dollars of savings are expected to come from salary reductions and tax increases.

Expected tax hikes of two percentage points are expected on fuel, cigarettes and value-added tax, up from 19 percent to 21 percent.

The announcement was expected to defuse a Greek government debt crisis that has shaken the entire European Union and undermined the euro currency as well.

European Union leaders have remained tightlipped over a possible bailout plan for Greece. The bailout is to be made conditional on the austerity cuts.

Will crisis-hit Greece be another Lehman Brothers?

by Xinhua Writer Ming Jinwei

BEIJING, March 2, 2010 (Xinhua) --

The world faces the possibility that embattled Greece will become another Lehman Brothers by escalating the European sovereign debt crisis into a new round of global financial turmoil.

But unlike Lehman Brothers, which was denied a bailout by the U.S. government, Greece might get the aid it seeks from its fellow members of the European Union and avoid "bankruptcy protection."

SIMILARITIES

The comparison between Greece and Lehman Brothers largely refers to their similar financial woes and the potential fallout of those woes for the global financial system.

Both Greece and Lehman Brothers were hit by a crisis and faced difficulty in paying off their debt. They also found it was increasingly difficult to sell new debt at a reasonable price and even ran the risk of being shut out of the debt market altogether.

Furthermore, both of them feared the bailout they needed could be delayed or even scrapped by politicians looking to avoid the creation of a so-called "moral hazard" or provoking a public outcry.

What is most striking is that, if Greece goes into default, it could trigger another round of global financial turmoil, just like Lehman Brothers.

The then fourth largest investment firm on Wall Street filed for bankruptcy protection on Sept. 15, 2008, and helped turn the U.S. mortgage woes into a full-blown global financial and economic crisis.

Some fear if Greece fails to pay off its debt, investors could start doubting the credibility of other eurozone economies, particularly Portugal, Italy, Ireland and Spain - all of which run large fiscal deficits.

Editor: An

U.S. stocks rise on Greece bailout hope, consumer spending

NEW YORK, Mar. 1, 2010 (Xinhua) --

U.S. stocks advanced on Monday after reports showed details of a bailout deal for Greece are being discussed and U.S. consumer spending data came in higher than expected.

The Dow Jones industrial average rose 78.53, or 0.76 percent, to 10,403.79. The Standard & Poor's 500 index jumped 11.22, or 1. 02 percent, to 1,115.71 and the Nasdaq rallied 35.31, or 1.58 percent to 2,273.57.

The Technology-heavy Nasdaq outperformed broader markets as the Semiconductor Industry Association reported a substantial pick-up in chip sales, boosting buying interest in tech stocks. Notably, SanDisk led storage stocks higher, with its shares surging nearly 12 percent after the flash memory maker raised its revenue forecast for the first quarter late Friday and said the outlook for the industry in the coming years is strong.

Adding Monday's gains, both S&P and the Nasdaq have turned positive for the year, while the Dow was only 0.2 percent lower than the level when market closed on the last day of 2009.

U.S. stocks followed oversea market higher on hopes that European nations will announce a certain kind of rescue package soon, as European Union and Greek officials met to address the mounting debt problem.

Investors were also happy to see that Americans spent more in January. The Commerce Department said before the opening bell that personal income increased by 0.1 percent compared to the prior month, while personal spending climbed by 0.5 percent, higher than economists had expected.

In addition, news about mergers and acquisitions apparently gave the market a further lift. American International Group ended 4.08 percent higher, after surging nearly 13 percent during the day, as the insurance group decided to sell its Asian unit to London-based Prudential for 35.5 billion dollars. AIG, which is 80 percent owned by the U.S. government, will use the money to repay the bailout money.

Editor: Mu Xuequan