Expectations rise of Greece bailout, despite government reluctance (+ analysis); Toyota announces worldwide Prius recall; Gates wants Iran sanctions in 'weeks not months'; experts committee to lead French identity debate; and more

Top of the Agenda: Investors Predict Greek Bailout at EU Summit

The euro began recovering from doubts about European sovereign debt, as traders predicted (FT) a possible bailout for Greece at this week's EU summit. European Central Bank President Jean-Claude Trichet left a summit in Australia early to attend the EU gathering in Brussels, allaying investors' fears that a Greek default would spread to other eurozone countries and upset the global financial recovery.

The euro rose 0.6 percent versus the dollar to trade at $1.3725 Monday, while the broader market dipped 0.9 percent. Yields on Greek, Portuguese, and Spanish sovereign debt dropped about ten basis points, reflecting hope that speculation over Greek default would end. The S&P 500 lost more than 8 percent in fourteen trading days.

Greece needs roughly $75billion in financing this year. Germany and France insist (FT) that they will not give emergency financial assistance to Greece.

Greek Finance Minister George Papaconstantinou said resorting to outside help would send "the worst possible signal" and that Greece will "tackle the deficit" (Telegraph).

Analysis:

Nobel laureate Joseph Stiglitz says (Bloomberg) Greece's budget deficit reduction plan will prevent a default. He called for the EU to help Greece guard against "speculative attacks" in financial markets.

Wells Fargo economist Jay Bryson says (PDF) the International Monetary Fund will need to come to Greece's rescue sometime this year.

In this interview, CFR's Sebastian Mallaby discusses the impact of sovereign debt problems in and beyond Europe.

 

PACIFIC RIM: China Sentences Quake Dissident

The Chinese government sentenced (VOA) a Chinese dissident –who investigated allegations of poor construction in earthquake-destroyed schools – to five years in prison.

Japan: Japanese carmaker Toyota announced (JapanTimes) another global recall of the Prius and other hybrid cars with braking problems.

 

ELSEWHERE:

Gates Presses for Faster Iran Sanctions
NATO Prepares for Flight of Afghan Civilians
Committee to Handle French Identity Debate

 

This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org.