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Greece

Germany Gauges Latest Wave Of Grim News To Hit Euro Zone's Weakest Links

The Fitch ratings agency offers the latest vote of no-confidence on Italy's finances, as the situation only grows worse in Greece. Germans try to measure whether the vicious cycle of bailouts will ever end.

Athens keeps on crumbling (christine zenino)
Athens keeps on crumbling (christine zenino)
Florian Hassel

BERLIN - Looking southward, we see more bad news out there in Euroland.

To start with, Italy is expected to lose its top AAA credit rating from Fitch later this month, which could set off further financing difficulties for the government in Rome. Because of its soaring public debt levels, high borrowing rates, and insufficient euro zone crisis planning, Italy stands to lose the top rating it has thus far enjoyed, said David Riley, head of sovereign ratings at Fitch, who spoke this week at a conference on European credit policy.

Italy, the euro zone's third-largest economy is, along with Spain, Ireland, Belgium and France, due for reevaluation by Fitch by the end of January. "When we've completed this, there's a significant chance that Italy will be downgraded," Riley stated. The analyst stressed that the interest of financial markets was focused on Italy. "Rome will be the door to future decisions' about the euro, he said, adding that in 2012 alone, Italy had to re-finance government debt of 440 billion euros. Rome would have to pay more than 7% interest on that – 5% more than the German interest rate.

In addition to Italy, ratings could expect to be downgraded in Spain, Ireland, and Belgium by one or two notches, the Fitch analyst said. That could mean increased financing costs due as interest rates rise. The one sigh of relief was for France, which would retain its Triple A rating.

The euro zone's second-largest economy after Germany wouldn't be looking at a Fitch downgrade within the year, although Fitch is not the only agency conducting reevaluations. In early December 2011, Standard & Poor's said the outlook for evaluation of the 15 euro countries was "negative" and that possible downgrades could be announced within three months.

More Greek debt to forgive?

The situation in Greece remains dismal. Worsening conditions there make a comprehensive haircut seem ever more likely, although euro countries led by German chancellor Angela Merkel and French president Nicolas Sarkozy are pressuring Athens to come to a quick agreement with banks and other private lenders, based on the EU crisis summit decisions at the end of October 2011. At that summit, along with a new credit program of 130 billion euros, Athens was granted debt forgiveness of 50% on some 210 billion euros of privately held Greek government bonds. The decision was based on a debt sustainability analysis by the E. U. Commission, European Central Bank (ECB) and the International Monetary Fund (IMF), or the "Troika" as they are known.

Since then however, the economic situation in Athens has gotten dramatically worse, with the Economist Intelligence Unit forecasting a further 7% shrinkage of the Greek economy in 2012, although Troika experts are predicting a loss of only 3%. Nor will tax revenues meet the amount owed.

"The numbers are not good. It is clear that there will have to be significant debt forgiveness," said the IMF's chief economist Olivier Blanchard in a TV interview, adding that the reduction that had been planned would no longer be sufficient. "We still have to crunch the numbers, as soon as the economy figures are in. These keep getting worse, so that may well mean a bigger haircut."

From the IMF standpoint, the only alternative to more comprehensive debt forgiveness for Athens would be for euro countries to shore up aid to Greece. IMF director Christine Lagarde held talks about Greece on Tuesday evening with Chancellor Merkel. The Troika starts its next inspection in Greece on Monday.

According to E.U. economy commissioner Ollie Rehn, Greece's talks with its private creditors including French banker Baudoin Prot and a number of Greek bankers listed in the Kathemerini newspaper, are nearing their end – possibly as soon as a week away. Chancellor Merkel and President Sarkozy have made Athens' agreement with its private creditors a condition for receiving the next credit.

Even if the Greek Finance Ministry and the negotiating committee of private lenders agree on time frame, interest rate, and laws applicable for the restructuring, it still remains to be seen how many of the private creditors accept the agreement.

Meanwhile, according to Reuters, many hedge funds have been selling Greek bonds and credit default swaps based on speculation that the country is headed for bankruptcy -- and thus have no interest in bailing Greece out. "At the end of the day, we can be glad if more than 50% of the private lenders go along with the agreement," said a banker familiar with the content of the talks on Tuesday.

That would however mean that the 100 billion euro debt relief planned in October 2011 would fall by the wayside. But, in light of the worsening economic data from Athens and the IMF's increasing skepticism, even 100% agreement might not save the day.

If the IMF declares Greece's debts no longer sustainable, then neither it nor the other euro countries would be allowed to make any more loans to Greece, according to an agreement made in May 2010 between the euro zone and the IMF.

Read the original article in German

Photo - christine zenino

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Society

How India’s Women Are Fighting Air Pollution — And The Patriarchy

India is one of the world's worst countries for air pollution, with women more likely to be affected by the problem than men. Now, experts and activists are fighting to reframe pollution as a gendered health crisis.

A woman walking through dense fog in New Delhi

*Saumya Kalia

MUMBAI In New Delhi, a city that has topped urban air-pollution charts in recent years, Shakuntala describes a discomfort that has become too familiar. Surrounded by bricks and austere buildings, she tells an interviewer: "The eyes burn and it becomes difficult to breathe". She is referring to the noxious fumes she routinely breathes as a construction worker.

Like Shakuntala, women’s experiences of polluted air fill every corner of their lives – inside homes, in parks and markets, on the way to work. Ambient air in most districts in India has never been worse than it is today. As many as 1.67 million people in the country die prematurely due to polluted air. It is India’s second largest health risk after malnutrition.

This risk of exposure to air pollution is compounded for women. Their experiences of toxic air are more frequent and often more hazardous. Yet “policies around air quality have not yet adequately taken into account gender or other factors that might influence people’s health,” Pallavi Pant, a senior scientist at the Health Effects Institute, a nonprofit in the U.S., told The Wire Science.

“It’s unacceptable that the biggest burden [rests on] those who can least bear it,” Sherebanu Frosh, an activist, added. People like her are building a unique resistance within India.

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