Direct Energy is changing its water heater rental contracts and making it more expensive for customers to switch suppliers or buy their own units.
Right now, customers can remove rented water heaters any time at no cost. They may pay a $75 fee if they want Direct Energy to disconnect, remove and retrieve the tank.
But under new contract terms to start April 2, customers who cancel their rental contracts will pay a buyout fee ranging from $100 to $1,000 or more, depending on the unit
Efforts to find a diplomatic solution to Iran’s disputed nuclear program appeared to get a boost Tuesday when world powers agreed to a new round of talks with Tehran, and Iran gave permission for inspectors to visit a site suspected of secret atomic work.
The two developments appeared to counter somewhat the crisis atmosphere over Iran’s nuclear program, the focus of talks in Washington between President Barack Obama and Israel’s visiting prime minister.
EU foreign policy chief Catherine Ashton said the five permanent members of the U.N. Security Council and Germany agreed to a new round of nuclear talks with Iran more than a year after they ended in failure. Previous talks have not achieved what the powers want _ an end to uranium enrichment on Iranian soil.
The U.S. and its allies say Iran is on a path that could eventually lead to the production of a nuclear weapon. Iran denies that, insisting that its program is for energy production and other peaceful purposes.
Ashton said in a statement that the EU hopes Iran “will now enter into a sustained process of constructive dialogue which will deliver real progress in resolving the international community’s long-standing concerns on its nuclear program.”
The time and venue of the new talks have not been set.
In Washington, National Security Council spokesman Tommy Vietor said Iran must comply with U.N. Security Council resolutions and stop uranium enrichment. “We still believe diplomacy coupled with strong pressure can achieve the long-term solution we seek,” he said in a statement.
Britain’s foreign secretary, William Hague, said in a statement that the onus would “be on Iran to convince the international community that its nuclear program is exclusively peaceful.”
German Foreign Minister Guido Westerwelle called for a diplomatic solution. “A nuclear-armed Iran must be prevented,” he said.
Ashton was responding to a February letter from Iranian nuclear negotiator Saeed Jalili, in which he proposed new discussions.
This week Obama warned the U.S. would use military action to protect its interests if necessary, while appealing for time for sanctions against Iran to show their affects. In his public statements during a visit to Washington, Israeli Prime Minister Benjamin Netanyahu thanked Obama for his support but did little to counter concerns that Israel might go ahead on its own with an attack on Iran. Israel considers Iran an existential threat because of its nuclear program and its references to destruction of the Jewish state low fee payday advance.
The U.N.’s International Atomic Energy Agency last year published a report that included what it said was evidence of Iranian activity that could be linked to weapons development. The head of the IAEA, Yukiya Amano, said Monday that his organization has “serious concerns” that Iran may be hiding secret atomic weapons work, singling out the Parchin military complex southeast of Tehran.
On Tuesday, Iran appeared to respond partially to those concerns, granting long-sought permission to IAEA inspectors to visit the Parchin compound. Iran describes the site as a military base, not a nuclear facility.
The semi-official ISNA news agency stated a key condition: such a visit would require an agreement between the two sides on guidelines.
“Given that Parchin is a military site, access to this facility is a time-consuming process, and it can’t be visited repeatedly,” ISNA quoted the Iranian statement as saying. It added that following repeated IAEA demands, “permission will be granted for access once more.”
Inspecting Parchin was a key request by senior IAEA teams that visited Tehran in January and February. Iran rebuffed those demands at the time, as well as attempts by the nuclear agency’s team to question Iranian officials and secure other information linked to the allegations of secret weapons work.
The Parchin complex has been often mentioned in the West as a suspected base for secret nuclear experiments _ a claim Iran consistently denies. IAEA inspectors visited the site in 2005, but only one of four areas on the grounds, reporting no unusual activities.
Last year, IAEA’s report said there were indications Tehran has conducted high-explosives testing to set off a nuclear charge at Parchin. Iran denied the atomic activity and insisted that any decision to open the site rests with the armed forces.
“We have our credible information that indicates that Iran engaged in activities relevant to the development of nuclear explosive devices,” Amano said told reporters Monday outside a 35-nation IAEA board meeting in Vienna, describing his sources as “old information and new information.”
Tehran has dismissed the charge, saying it was based on “fabricated documents” provided by a “few arrogant countries,” a phrase Iranian authorities often use to refer to the U.S. and its allies.
Greece’s Parliament late on Tuesday approved new cuts in public sector pensions and government spending required to secure a second package of international rescue loans.
Lawmakers voted 202-80 in favor of cutbacks worth a total euro3.2 billion ($4.31 billion) and aimed at bringing the 2012 budget back in line with targets. Lawmakers from both parties in Prime Minister Lucas Papademos’ coalition, the majority Socialists and the conservatives, backed the legislation.
Earlier, the debt-crippled country’s Cabinet decided to apply recent labor reforms, including deep cuts to the minimum wage, retroactively to Feb. 14.
Greece is obliged to adopt a series of austerity measures and reforms before it can receive any funds from its new euro130 billion ($174 billion) package of rescue loans from other eurozone countries and the International Monetary Fund.
The bailout, and accompanying bond swap deal with private creditors, are meant to save the country from a potentially catastrophic default in late March that could drag down other financially vulnerable countries and threaten the European Union’s joint currency, the euro.
The rescue package is Greece’s second in less than two years. The country has been surviving since May 2010 on funds from a first bailout from the eurozone and IMF, and has received euro73 billion ($98 billion) from the initially approved euro110 billion ($147 billion) package.
But more than two years of harsh austerity implemented to secure the rescue funds have taken a hefty toll on the recession-bound Greek economy, with businesses closing in the tens of thousands and unemployment at a record high 21 percent.
“It is dramatic to cut someone’s pensions. … But why do we have to take these measures? Because our budget is still running at a loss,” Finance Minister Evangelos Venizelos said in Parliament. “We are still adding debt to our debt. And if we do not start to generate a primary surplus next year, that will be catastrophic.”
The newly approved legislation imposes nearly euro400 million ($538 million) in cuts to already depleted pensions.
Health and education spending will be reduced by more than euro170 million ($229 million), subsidies to the state health care system will be cut by euro500 million ($673 million), and health care spending on medicine will fall by euro570 million ($767 million).
Furthermore, some euro400 million ($538 million) will be lopped off defense spending _ three quarters of which will come from purchases.
The law also revises the 2012 budget, changing the government deficit target to 6.7 percent of gross domestic product from an initial forecast of 5.4 percent.
Measures approved by Papademos’ Cabinet earlier Tuesday include a 22 percent cut in the minimum salary, currently at euro751 ($1,010) per month, for private sector workers, and a 32 percent cut for workers under the age of 25, where the rate of unemployment is nearly 50 percent.
Limits also are being imposed on collective wage agreements and the process of labor arbitration, with some measures to remain in effect until overall unemployment falls below 10 percent.
Lawmakers are to vote again on Wednesday on another bill implementing cuts that have previously been announced.
The new wave of austerity measures have sparked widespread anger among a public that has seen its income and living standards drop with no clear end to the crisis in sight.
On Tuesday, about 100 uniformed police, coast guard and fire service unionists protested pay cuts outside Parliament, with a small group burning a wartime military German flag used in the Nazi era in 1935-1945. While Germany is a major contributor to both Greek bailouts, Berlin’s insistence on an austerity-based cure for the country’s financial woes has angered many Greeks.
Papademos, a technocrat heading Greece’s temporary coalition government, is to head to Brussels for a meeting Wednesday with European Commission chief Jose Manuel Barroso.
Greece’s European partners have been pressing the country to implement the measures it has already passed, after repeated delays and missed targets over the last two years eroded trust in the ability of Greece’s politicians to stick to their pledges.
European Parliament President Martin Schulz was in Athens on Tuesday for a series of meetings, and he gave a speech in Parliament stressing that “Greece must remain in the euro.”
“We must do everything we can to prevent the collapse of the euro,” he said, adding that more emphasis must be put on measures to promote growth rather than only on cutbacks.
“A policy based solely on austerity spells economic disaster,” he told Greek deputies.
“Budgetary prudence is certainly essential (but) … there is too much focus on financial penalties and austerity packages,” Schulz said, adding that economic growth could be stifled in many European countries.
“How are countries whose economies are at a standstill, which are facing a recession, supposed to pay off their debts? Greece has already paid a high price. It cannot go on paying,” he said.
On Monday, the Standard & Poor’s ratings agency downgraded Greece’s credit rating to “selective default” over a debt writedown deal with private creditors that is an integral part of the second bailout.
The downgrade had been widely expected, as ratings agencies had said the bond swap with private creditors, which seeks to cut euro107 billion ($144 billion) off Greece’s debt, would constitute a selective default. Once the swap is carried out next month, the agencies are expected to upgrade Greece.
Late Tuesday, the International Swaps and Derivatives Association said it has accepted for consideration a question relating to a potential credit event with respect to Greece. An ISDA statement said a meeting will be held at 1100GMT on Thursday to determine whether a credit event has occurred.
The decision by the New York-based trade association, which represents hundreds of banks and other companies, will ultimately determine whether the bond swap will trigger payment of insurance taken by investors against a Greek default.
____
Derek Gatopoulos and AP Television in Athens contributed.
A two-point gain was enough to push the Standard & Poor’s 500 index to its highest level since June 2008, three months before the collapse of Lehman Brothers and the darkest days of the financial crisis.
The S&P 500 index closed at 1,365.74, beating its 2011 closing high by two points.
For the second day this week, the Dow Jones industrial average nudged above 13,000 then pulled back. It rose 29 points in the morning but wavered in the afternoon. The Dow dropped 1.74 points to close at 12,982.95. American Express was the leading stock among the 30 that make up the average, gaining 1.2 percent.
It was a similar story on Tuesday, when the Dow flitted above 13,000 three times but ended the day lower. The average hasn’t closed above 13,000 since May 19, 2008.
What will it take for the Dow to close above 13,000 and stay there? Mark Lamkin, CEO of Lamkin Wealth Management in Louisville, Ky., said it would require a surprising news event, like a huge merger or an economic report that blows past expectations.
“It needs some type of surprise, a bombshell,” Lamkin said. “We’ve had a pretty good run over the past four months. Now it’s going to take something great to keep it above 13,000.”
The two economic reports out Friday didn’t make the cut.
A consumer sentiment index taken by the University of Michigan and Reuters edged up in February to its highest level in a year. And the Commerce Department reported that sales of new homes dipped slightly in January, but the figure still topped economists’ estimates. It also said sales in the final three months of 2011 were higher than previously reported.
“The numbers are just OK,” Lamkin said. “They weren’t bad, but they weren’t great, either.”
In other trading, the Nasdaq composite index rose 6.77 points to 2,963.75.
Oil prices hit a nine-month high of $109.77 a barrel. The price of oil has jumped 10 percent this month amid rising concerns about a conflict with Iran.
The euro added a penny against the dollar, hitting $1.346, its highest since Dec. 5. Greece made a formal offer to creditors to swap their Greek government bonds for new ones, another step toward knocking $142 billion off its debts. The swap is part of a deal to prevent Greece from defaulting on a debt payment due next month.
Stock indexes have been climbing since November as European officials redoubled their efforts to contain the region’s debt crisis and the European Central Bank extended cheap loans to troubled banks. The S&P 500 index has gained 8.6 percent to start 2012, better than its long-term annual average gain.
In contrast to the volatile trading of late last year, the market’s gains have been small but steady. To Lamkin, the lack of large swings looks ominous. The world is still full of dangers, he said. Lamkin tells his clients that the top risks are another flare-up in the European debt crisis and a war between Israel and Iran.
“When the next big thing happens, and it will, you’re going to see a pullback,” he said. “I think we’re due.”
Among stocks making big moves:
_ Sprint Nextel Corp. lost 2 percent. The country’s largest cable company, Comcast, filed a suit against Sprint Nextel, alleging that it was violating Comcast’s patents.
_ Gap fell 4 percent. The clothing retailer reported a 40 percent plunge in quarterly profit after the market closed Thursday. Gap said higher costs and deep discounts weighed on its revenue.
_ Deckers Outdoor Corp. sank 14 percent after the maker of Ugg boots and Teva footwear said higher costs will lead to lower profits for the quarter and full year.
_ Kenneth Cole Production Inc. soared 18 percent to $15.49 on news that Kenneth Cole is offering to buy the rest of the company. Cole currently holds about 47 percent of the company and has offered would give stockholders $15 per share, a 15 percent premium to the company’s Thursday closing price.
The ruling this week overturning a new state fund for science startups is likely headed to higher court.
Attorney General Chris Koster said Wednesday he plans to file an appeal of a Cole County judge’s ruling that declared the Missouri Science and Innovation Reinvestment Act to be unconstitutional.
Circuit Judge Dan Green tossed out the law in a ruling late Monday, saying it was invalid because lawmakers included a “contingency clause” when they passed it last fall, requiring a broader tax credit reform bill to be passed before MOSIRA could take effect. The tax credit bill never passed, and opponents of MOSIRA sued when Gov. Jay Nixon started implementing the science fund.
In a statement, Koster said MOSIRA is too valuable to let die on a technicality.
“(MOSIRA) is an important economic development tool that can bring high-tech jobs to Missouri and preserve jobs that are already here,” he said. “I don’t want to see important job-creating legislation fail. We intend to appeal this matter to its conclusion.”
Supporters of MOSIRA have said they also plan to push for a clean up-or-down vote on the matter in the General Assembly this session.
World stock markets rose Wednesday after Greece indicated a willingness to commit to spending cuts to secure its bailout and moves by Japan’s central bank to support the economy lifted its powerhouse export sector.
Benchmark oil rose above $101 per barrel while the dollar fell against the euro and was steady against the yen.
European shares rose in early trading. Britain’s FTSE 100 gained 0.2 percent to 5,912.27 and Germany’s DAX added 1.1 percent to 6,799.65. France’s CAC-40 gained 0.7 percent to 3,399.91.
Wall Street was set to head higher, with Dow Jones industrial futures rising 0.4 percent to 23,893 and S&P 500 futures adding 0.4 percent to 1,353.30.
The gains followed strong advances in Asia. The Nikkei 225 index in Tokyo soared 2.3 percent to close at 9,260.34, its highest close since Aug. 5. The surge comes a day after the Bank of Japan announced a further loosening of monetary policy through increased purchases of government bonds, raising hopes the yen’s strength could abate.
South Korea’s Kospi gained 1.1 percent to 2,025.32. Hong Kong’s Hang Seng jumped 2.1 percent to 21,365.23, its highest finish since Aug. 4. Australia’s S&P/ASX 200 index closed up 0.3 percent at 4,253.40. Benchmarks in Singapore, Taiwan and Malaysia also rose while Indonesia and New Zealand fell.
Markets found hope in reports quoting Greek government officials as saying party leaders would promise by Wednesday to implement deep spending cuts and other reforms.
That came after talks to extricate Greece from a two-year debt crisis appeared to unravel late Tuesday after European finance chiefs canceled a meeting to discuss a second international bailout for the country.
The meeting was called off after Athens failed to deliver on several demands made by its partners in the euro currency union. Greece needs a $171 billion (euro130 billion) bailout by March 20 to avoid a default that could rattle the world financial system.
The country has already passed some of the deep spending cuts its lenders were demanding but hasn’t really satisfied anyone. Greeks have rioted, saying the cuts are too harsh, and Greece’s neighbors have expressed concern that the cuts are not enough.
Greece also said its economy shrank drastically at the end of last year, and Europe is expected to report Wednesday that the economies of the 17 countries that use the euro shrank 0.4 percent after growing 0.1 percent the quarter before.
Late Monday, Moody’s also downgraded its debt ratings on six European countries, including Italy, Portugal and Spain. Moody’s also said it might cut France, Austria and the U.K. as well.
Japanese exporters rose sharply as the persistently strong yen showing signs of abating on the heels of the central bank’s surprise announcement Tuesday. Mazda Motor Corp. jumped 8.3 percent and Toyota Motor Corp. surged 4.7 percent. Sony Corp. was 5.7 percent higher. Nintendo Co. added 4.5 percent.
But shares of Japanese computer chip maker Elpida Memory Inc. plunged 14.4 percent, after the company said Tuesday that talks were not going well with other companies on investments, loans and partnerships to improve its dire financial conditions.
South Korean technology shares jumped. Samsung Electronics Co. added 5.1 percent while Hynix Semiconductor Inc. gained 5.3 percent.
Mainland Chinese shares advanced with the benchmark Shanghai Composite Index climbing 0.9 percent to 2,366.70, its highest close this year. The Shenzhen Composite Index gained 1.5 percent to 925.99.
A pledge by China’s central bank governor, Zhou Xiaochuan, for China to continue investing in crisis-stricken Europe helped fuel the rally, said Peng Yunliang, an analyst based in Shanghai.
“Trading volume was about 30 percent more than yesterday and investors expect the authorities to boost liquidity,” he added.
Shenzhen-based Dongfang Electronics Co. and Gohigh Data Networks Technology Co. both hit the daily upside limit of 10 percent on expectations that authorities will promote further development of the Internet as a national strategy.
Benchmark oil for March delivery was up 74 cents to $101.48 per barrel on the New York Mercantile Exchange. The contract fell 17 cents to finish at $100.74 per barrel on the Nymex on Tuesday.
In currency trading, the euro strengthened to $1.3158 from $1.3095 late Tuesday in New York. The dollar slipped slightly to 78.43 yen from 78.45 yen.
Asian stock markets rose Monday, just hours after Greece’s parliament approved a new set of austerity measures that were required by international lenders in exchange for an emergency bailout.
Japan’s Nikkei 225 index rose 0.2 percent to 8,963.48. Hong Kong’s Hang Seng gained 0.3 percent to 20,837.46. South Korea’s Kospi added 0.5 percent to 2,002.72.
Drastic cuts in civil service jobs, minimum wages and pensions were among the measures approved by lawmakers in Athens in order to collect a second, urgently needed rescue loan.
Without the $170 billion (euro130 billion) financial lifeline, Greece will default on a mountain of national debt next month and likely be pressed into a disruptive exit from the euro common currency.
Investors in Asia greeted the Greek vote with relief. But Greeks, who have been struggling to cope with a 20 percent unemployment rate and five years of recession, took to the streets to protest the measures. Riots and fires continued all weekend.
Attention now shifts to a meeting Wednesday of European finance ministers, who will discuss additional bailout funds for Greece.
Analysts at Credit Agricole CIB in Hong Kong said in an email that the parliament vote “did not come without major cost in the form of escalating protests and violence within Greece.”
“At least for today the market tone will be a positive one as attention shifts to a meeting of EU finance ministers on Wednesday.”
Benchmark crude for March delivery was up 91 cents at $99.58 in electronic trading on the New York Mercantile Exchange. The contract fell $1.17 to settle at $98.67 on the Nymex on Friday.
In currency trading, the euro jumped to $1.3235 from $1.3170 late Friday in New York. The dollar rose to 77.62 yen from 77.60 Japanese yen.
U.S. stocks rallied Friday, as investors cheered a much stronger-than-expected jobs report.
The Dow Jones industrial average () gained 157 points, or 1.2%, the S&P 500 () added 19 points, or 1.5%, and the Nasdaq composite () increased 46 points, or 1.6%.
The rally pushed pushed the Dow, up more than 5% in 2012, to its highest level since May 2008. The Nasdaq, up more than 11% for the year, climbed to its highest level since December 2000. The S&P 500 has gained almost 7% this year, and finished at a six-month high.
The rally was sparked by the Labor Department’s monthly jobs report, which showed that the U.S. economy added 243,000 jobs in January, far exceeding expectations. The unemployment rate dropped to 8.3%, the lowest since February 2009.
Economists surveyed by CNNMoney had expected the government to report an increase of just 130,000 jobs in January. The unemployment rate was expected to rise to 8.6%.
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Economists had expected a slowdown in post-holiday hiring, considering that about 40,000 temporary couriers were hired for the holidays alone..
"The jobs data blew away market expectations," noted Marc Chandler, global head of currency strategy at Brown Brothers Harriman, calling it a "monster" jobs report. "This coupled with other recent reports for January, show the year has begun off on a firm note," he added.
Meanwhile, investors were also on the lookout for an official agreement on a debt-reduction plan and a second bailout for Greece. The deal is expected to be near, but negotiations are likely to continue thorough the weekend.
U.S. stocks ended mixed Thursday as investors digested a cautious economic outlook from the chairman of the Federal Reserve.
Economy: Factory orders for December rose 1.1%, slightly below expectations. The January installment of the ISM Services Index hit 56.8, surpassing economists’ expectations for 53.1, and up sharply from the prior month.
Companies: Financial stocks were big gainers in Friday’s rally, with Bank of America’s (, Fortune 500) 5% spike leading the Dow’s gains. Morgan Stanley (, Fortune 500), Citigroup (, Fortune 500) and Goldman Sachs (, Fortune 500) were all up between 3% and 5%.
Shares of Genworth Financial (, Fortune 500) soared 14% after the mortgage insurer swung to a fourth-quarter profit.
Tyson Foods (, Fortune 500) shares rose after the company reported better-than-expected earnings and issued slightly upbeat guidance.
Estee Lauder (, Fortune 500) reported a 15% profit increase for its fiscal second quarter to $597 million, but its stock tumbled as the company’s guidance for the current quarter came in short of analyst expectations.
Shares of Gilead Sciences (, Fortune 500) spiked after the company posted fourth-quarter earnings that rose almost 6% from a year ago.
Edwards Lifesciences’ () stock dropped as earnings fell and the company gave a lackluster forecast for the current quarter.
Zynga () shares continue to rise, after Facebook’s IPO revealed the gamemaker accounted for 12% of its revenue in 2011.
Facebook IPO shrinks private trading market
Research in Motion () shares dipped after the BlackBerry-maker said it will give its tablet, the BlackBerry PlayBook, out to Android developers in exchange for their apps.
Trading in shares of Micron Technology (, Fortune 500) was halted after the company announced that its CEO and chairman Steve Appleton died Friday morning in a small-plane crash in Boise.
Currencies and commodities: The dollar slipped against the euro and the British pound, but rose versus the Japanese yen.
Oil for March delivery rose $1.48 to settle at $97.84 a barrel.
Gold futures for April delivery fell $19 to settle at $1,736.80 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.95% from 1.82% late Thursday.
World markets: European stocks ended sharply higher. Britain’s FTSE 100 () rose 1.8%, while the DAX () in Germany jumped 1.7% and France’s CAC 40 () rose 1.5%.
Asian markets ended mixed. The Shanghai Composite () rose 0.8%, while the Hang Seng () in Hong Kong was flat and Japan’s Nikkei () slipped 0.5%.
Leading finance chiefs sought to reassure anxious global business leaders on Friday that Europe is on track to solve its crippling debt crisis before it drags the world’s economies down. Europe’s top banker said investors, burned after trusting the region’s governments too much, now trust them too little.
The finance chiefs said the picture in Europe has changed over the past two months as the European Central Bank has loaned billions of euros to fragile banks, indebted countries have pushed through convincing reforms and EU leaders have come near to building a closer fiscal union that would make their common currency stronger.
Several also signaled Friday that Greece is close to clinching a crucial debt-reduction deal with private bondholders _ a key element in Europe’s efforts to stem a two-year debt crisis that is causing ripples around the globe. The crisis is a central topic at the World Economic Forum, a gathering of government and business leaders at the Swiss ski resort of Davos.
“They’re making progress on reforms, they’re changing the institutions of Europe to put better discipline on fiscal policy,” said U.S. Treasury Secretary Timothy Geithner. “You have three new governments doing some very tough things. You have an ECB doing what central banks have to do. You see them move to try to strengthen the financial sector.”
Mario Draghi, head of the European Central Bank, said a combination of actions _ including super-cheap, long-term loans to shaky banks on the continent and a couple of interest rate cuts _ have helped Europe avoid deeper financial trouble.
“We have avoided a major credit crunch, a major lending crisis,” he said.
Draghi said borrowing rates would remain high “for quite a while” because bond markets are overestimating the risk involved in holding European government debt after years of underestimating it. But he called market pressure “the most potent engine for reform in different governments.”
Geithner said the fate of the U.S. economy _ and by extension of the rest of the world _ hinges on Europe’s debt crisis, along with potential tensions with Iran. He said the main piece of unfinished business for Europe is building a bigger fund to help troubled economies survive.
But while French Finance Minister Francois Baroin said that fund needs to be increased to calm markets, his German counterpart, Wolfgang Schaeuble, indicated that his government is not prepared to do so. Germany, as Europe’s biggest economy, would face the biggest bill.
“We must not give the wrong incentives,” Schaeuble said. “You can make any figure. It will not work if the real problems will not be solved.”
Both, together with Spanish Economy Minister Luis de Guindos Jurado and European Monetary Affairs Commissioner Olli Rehn, agreed that the idea of issuing “eurobonds” backed jointly by all eurozone governments is a nonstarter for now. They didn’t rule out the possibility that such bonds could be introduced once confidence in Europe’s public finances is restored, with Guindos calling that a “final target.”
Schaeuble said eurobonds would provide bad incentives by allowing debt-ridden countries to “spend money you don’t have on the bill of others.”
Many economists have said eurobonds are needed to solve the crisis as they could reduce the borrowing costs of heavily indebted countries by pooling them with bonds of stronger economies like Germany’s.
Professor Nouriel Roubini, the renowned economist who predicted the financial crash of 2008, is one who thinks that eurobonds have to form part of a eurozone strategy to fend off the possibility of a breakup.
The eurozone “could be a slow-motion train wreck,” Roubini said.
Europe has been grappling with the crisis ever since Greece conceded at the end of 2009 that its public finances were in far worse shape than previously thought. Greece remains at the epicenter of the crisis over two years later. Its borrowing costs remain too high for it to borrow in the markets so a second European-led bailout is in the offing.
The finance chiefs signaled Friday that a deal is at hand that could help ease some of the near-term tensions.
Greece has been negotiating with the a group representing banks and other lenders in the hopes that they will forgive half of Greece’s debt in exchange for Greek assurances that it will pay back the other half without defaulting on its loans. The deal would also let Greece repay over a longer period at a lower interest rate _ negotiators have been trying to agree on what that rate will be.
Schaeuble said he is “quite optimistic” about a deal, while Rehn said he hopes a deal can be reached “if not today, maybe by the weekend.”
Agreement between Greece and its creditors is needed before Europe and the International Monetary Fund agree to a second multibillion-euro bailout package.
At the heart of the problem is that the 17 countries that use the euro use a single currency but have different fiscal policies. That changes the nature of their debt, said Adair Turner, chairman of Britain’s banking regulator the Financial Services Authority.
“That debt is more equivalent to the State of California debt than the U.S. federal debt,” he said.
That’s why all but one of the 27 EU countries _ the United Kingdom has refused to participate _ are discussing a closer fiscal union. On Monday, leaders meet in Brussels to work out the details of that new compact.
Schaeuble and Baroin noted that even the agreement in principle to forge closer ties has calmed markets since a December summit, as borrowing rates have dropped and stock markets have risen.
“It’s amazing,” Draghi said. “If you compare today with even five months ago, the euro area is another world.”
The crisis threatens more than Europe: the U.N.’s refugee chief warned Friday that it is fueling conflicts around the world. Antonio Guterres told The Associated Press that rising food prices and growing unemployment are hitting those already at the bottom hardest, sparking conflict in places like South Sudan and exacerbating hotspots including Afghanistan, Iraq and Somalia.
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Frank Jordans and Edith Lederer in Davos and David McHugh in Frankfurt, Germany contributed to this story.
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