• Greek government insists talk of a noon deadline was wrong
•Greek politicians locked in talks with an eye on upcoming elections
•Credibility of eurozone banks capital boosting plans questioned
Nicolas Sarkozy and Angela Merkel have also waded into the situation, at a joint news conference in Paris this lunchtime.
Sarkozy claimed – with just a hint of optimism – that an agreement over Greece's second bailout has "never been closer". The French president also urged Greece's political leaders to follow through on their commitments.
As Sarkozy put it:
Europe is a place where everyone has their rights and duties. Time is running out, it needs to be concluded. It needs to be signed.
Chancellor Merkel told the press conference that it was important to see "some progress" in "the next few days", and also insisted that Greece must decide whether it remains in the euro. She said:
We want Greece to stay in the euro. To say it clearly, this is the opinion of both of us. But I also say – there can be no new Greece programme if agreement is not reached with the Troika
All those who bear responsibility in Greece must know – we will not deviate
from this position.
And without a new programme of aid, Greece would head to default next month.
The European commission has blasted Greece for its failure to reach an agreement, and insisted that time has run out.
EC spokesman Amadeu Altafaj told journalists in Brussels that "the ball was in the court of the Greek authorities", insisting that they must now decide whether it would accept the terms of its proposed second bailout.
Altafaj said:
We have gone beyond the deadline already.
Altafaj added that EU finance ministers would meet as soon as Greece has said it will make its commitments.
In other words – don't wait for us to hold our next meeting. We're waiting for you.
Frustrations at the missed-deadline-that-never-was over fresh Greek austerity measures are brilliantly articulated by Louise Cooper, of BGC Partners, who gives us an etymology lesson. "Deadline", she reminds us, was originally a Civil War term for a line that marked the boundary beyond which a prisoner could not go without being shot.
Yet again a euro crisis deadline has been proved to be not as its definition would suggest - I think the Oxford English Dictionary needs to update its meaning of deadline to include a eurozone version – likely to be missed, more of an optimistic hoped-for time frame rather than an actual reflection of the days and weeks needed to get something achieved.
We've been messed around a good deal on Greek deadlines in recent days (see below). Meanwhile, eurozone heavyweights are piling on the pressure. Eurogroup president Jean-Claude Juncker, of Luxembourg, said: "If we were to determine that everything has gone wrong with Greece, then there would be no new programme, then this would mean that in March they would have to declare bankruptcy."
The latest hint as to when we might learn more came from one Greek MP, a member of the ruling Pasok party, who has told Bloomberg TV that agreement among coalition politicians must be reached by tomorrow afternoon. Should we hold our breath on that promise? Perhaps not.
Germany's December factory orders were up 1.7% on the previous month, well ahead of expectations and boosting the impression that the eurozone's largest economy continues to power ahead, boosted by demand from further afield.
A curious historical echo: Today is the anniversary of the 1832 crowning of Otto, King of Greece, an occasion that saw the birth of a (highly indebted) modern state – albeit under the protection of the UK, France and Russia. As FT Alphaville notes Otto was really quite Bavarian. In fact, he was the son of King Ludwig I. His rule saw massive tax hikes and led to widespread discontent – even an assassination attempt on his wife. Eventually, he was ousted in a coup and retreated to Bavaria in 1862. A lesson for our times?
Should Scotland vote for independence, it could emerge with something less than a triple A credit rating, according to a mischievous article in the FT this morning. Taking unofficial soundings from the big three credit rating agencies – Standard & Poor's, Moody's and Fitch – the report suggests Scotland might scrape in with an investment-grade rating, but some notches short of the UK's triple A. SNP describes such reports as "inaccurate".
The pound has strengthened this morning against the euro as concerns about Greece continue to build. The euro was down about 0.4% against the pound at 82.87 pence. Sterling is now close to its highest level since September 2010 – despite the prospect of the Bank of England opting for another dose of quantitative easing shortly.
Hmmm. Greek government officials are now telling Reuters there is no deadline at noon today (10am GMT). They say the only commitment is to reach agreement before the next meeting of the Eurogroup of eurozone finance ministers. A meeting had been in the diary for 4pm today – but appears to have been cancelled over the weekend. On Friday a spokesman for the German finance ministry told Reuters:
A meeting of this kind only makes sense – if it is to be about Greece – if we have all the elements sorted... All of those elements have not been met, so it's speculative to talk about such a meeting.
So the deadline for Greek political agreement is a meeting, invitations to which will only be sent out once Greek political agreement has been reached.
European prime minister resigns months ahead of elections and after weeks of nationwide protest against tough austerity measures... Not Greece's Lucas Papademos (yet). In fact it's Emil Boc of Romania.
Helena Smith, in Athens, confirms the prospect of April elections is looming large over intense negotiations among coalition parties about Greek austerity proposals. Their deliberations will be followed by a brief meeting with prime minister Lucas Papademos. He, in turn, will deliver Greece's position to the "troika" of visiting debt auditors from the EU, ECB and IMF. It's likely, however, that word will leak out before then. Even if further cost-cutting measures are accepted, says Helena, it is far from sure that recalcitrant MPs will also endorse them.
Emerging from the talks last night, Giorgos Karatzaferis, the media-savvy leader of the populist Laos, one of the three parties backing Papademos' national unity government, railed: "I'm not going to contribute to the explosion of a revolution [by supporting] a wretchedness that will then spread across Europe."
Antonis Samaras, who heads the main conservative New Democracy party, also emphasised that the boxing gloves were on. "They are asking for more recession than the country can take," he said in a statement, referring to creditors' demands that Greece accept further wage and pension cuts. "I am fighting against them. This is the first time there has been real negotiations."
Papademos in a statement said progress of a kind had been made. The three party leaders had agreed to further spending cuts amounting to €1.5bn.
"These leaders were not given a mandate to allow the country to go bankrupt," Babis Papadimitriou, a prominent commentator on economic affairs, told Skai news. "Bankruptcy will mean years of isolation. If they allow this to happen they will have betrayed Greeks."
The FT has a story this morning suggesting as many as half of the capital-boosting proposals put forward by 30 European banks may be rejected as not sufficiently credible. Remember these banks were forced to come up with plans to increase their capital cushions after the European Banking Authority in December found that together they needed to raise €115bn to meet their regulatory targets.
The EBA board are due to discuss submitted plans at a meeting next week. Some experts have pointed a finger at Commerzbank as one bank likely to find filling its capital shortfall a big ask. Since then the German bank has generated €3bn of capital toward its €5.3bn stress test shortfall and local regulators have played down concerns.
Spanish bank Santander was found to have the largest shortfall - of €15bn - but has insisted it has found ways of filling the gap. Only Italy's Unicredit opted for a rights issue to raise capital - and look how well that went.
There's not much in the diary today (other than Greece). Here's the agenda:
•10am deadline for Greek politicians to reach agreement on austerity measures
•11am German factory orders for December (Consensus forecast: 1% rise)
•2pm Klaas Knot, governing council member of the ECB speaking at an event in Amsterdam
As time ticks on there is increasing concern that a lack of agreement among Greek politicians will overshadow the day. The Asian markets were up overnight on the back of Friday's strong jobs figures from the US. (Japan's Nikkei average rose 1.1% to a three-month high of 8,925 points, the Hang Seng was up 0.51% at 20,862.) Back in Europe the mood is more sombre.
Greek coalition parties are supposed to be working to a deadline of midday - 10am GMT. That might get pushed back, of course, but if it passes without agreement it will do nothing to calm the mood.
Here is the view from analysts at Investec:
Greek politicians face a general election soon after the second bailout has been agreed (or not as it may be). The prospect of an election campaign is certain to influence bailout negotiations. The extra austerity measures may well be counterproductive, but a messy default and uncertainty over Greece's position in the euro will not do much good either, so it is a bit of a lose-lose situation for Greek politicians. Public opinion seems to put greater trust in outsiders than in domestic politicians though, so putting up with EU/IMF conditions may still have the upper hand with the electorate, but remains to be seen if politicians can agree. With no agreement later today, expect markets to become increasingly concerned and a lack of flexibility from the EU may cause some contagion…
Good morning, and welcome to our rolling coverage of the eurozone financial crisis.
Today is deadline day for Greece, which must tell the European Union whether it accepts the terms of its second bailout, worth €130bn. The heads of its three largest political parties spent the weekend locked in talks, but are still divided.
One leader – Laos's Giorgos Karatzaferis - has already refused to endorse the painful package of spending cuts and tax rises. Can PM Lucas Papademos pull a deal out of the fire?
Athens is also still struggling to reach a deal with its private creditors over its debt restructuring package – adding to fears that Greece might fall into bankruptcy.
On the economic front, the latest German factory order data should be released this morning, showing how its manufacturers fared at the end of 2011.