EUROZONE / GREECE : Small Protest Continues After Cabinet Reshuffle; Merkel Reluctantly Relents To Voluntary Roll-Overs.

REUTERS / GUARDIAN

About 5,000, mostly communist, protestors marched on parliament...even after PM George Papandreou reshuffled his cabinet...because of his vow to continue austerity measures.

"What has changed with the reshuffle? Nothing," said a student."We are not planning to leave unless they take back the measures."

The Euro, European and world markets also settled down...as German Chancellor Angela Merkel ended her 6-week stand-off...and reluctantly relented to only "voluntary" roll-overs by investors of Greek debt that was pushed by French President Sarkozy and the ECB.

Merkel has long called-for private investors in Greece bonds to suffer forced debt re-structuring...so-called "haircuts".

Now she must face an increasingly antagonistic German parliament...and a populace unhappy about "supporting" the distressed, mostly southern tier of eurozone countries, sometimes called the "Club Med" nations.

"They've bought themselves time until September," said a London strategist.

EUROZONE / GREECE: Is Restructuring "Off The Table" With New Rescue Package? Debt Rollover...May Be Rewarded; Moody's Downgrades Greece Again To...7th Level Of Junk Hell.

NYTIMES/ L. Thomas
2 screen read combined

    “Restructuring is off the table,”claims a Greek official. “For now it is all about growth, growth, growth.”
    The alleged end of "reprofiling" is based on reports of a new 60 bn euro/$86 bn usd rescue package...with new loans...for faster privatization and tougher tax collections.
     Greek officials have been especially disturbed by draining of some 60 bn euros in deposits from Greek banks...almost a quarter of its GDP...since the crisis began.

ALSO:  BLOOMBERG reports the ECB is considering encouraging bondholders to roll over their Greek debt...by offering preferred status, higher coupon payments or even collateral.
http://www.bloomberg.com/news/2011-06-01/greece-s-second-rescue-is-readied-by-eu-urging-investors-to-buy-more-debt.html

 AND:  Moody's has downgraded Greece again...this time to the speculative Caa1 level...seven notches into junk territory...with a NEGATIVE outlook.
  Only Ecuador...which has defaulted TWICE...is a worse sovereign risk. 

EUROZONE: Merkel Relents...Supports Italy's Draghi For ECB; Finland Wins Changes To Support Portugal.

M.PRESS/  Poor version of  Thursday Re-post

     Germany's Chancellor Angela Merkel finally supported Italian central banker Mario Draghi...as the next president of the ECB...to replace after eight-years Jean-Claude Trichet, whose term ends in October.
    Germany is the last of the big 4 EU nations to endorse Draghi.
    On 26 April, French President Nicolas Sarkozy told PM Berlusconi that he would back an Italian.

AND: 
    A parliamentary committee allowed Finland's outgoing FM Jyrki Katainen (pictured) to support a Portugal bailout at 16 May meeting.
     Portugal needs 78bn euros $111bn in loans from the EU and IMF.
    Finland is the only country that requires its parliament to approve the bail-out package.
 http://www.bbc.co.uk/news/business-13394004

EUROZONE/ PORTUGAL / GREECE: Debts Are Bigger Than Projected; Greek Default Almost Certain.

GUARDIAN/ P. Inman

   After reporting a debt 10.5% of GDP in 2010, Greece's woes are worse than the projected 9.6%.
   Portugal reported debts of 9.1% of GDP.
   Both are far worse than 7.3%...the EU commission benchmark.
   Now, many economists say a Greek default is inevitable.
   The only question is the timing.
   Some speculate the EU will keep Greece afloat until 2013 when a multibillion-euro bailout fund is available.
   "A restructuring would have legal and systemic consequences that are difficult to calculate right now but would in all probability be bigger than after the collapse of Lehman Brothers," said a ECB board member.

EUROZONE: Euro Declines Over Japan And Cracks In Bailout Fund As Finland Balks.

BLOOMBERG

  The bloom is off the bailout rose...as Eurozone finance ministers recently failed to bring its emergency aid fund up to the full 440 billion euros
($615 billion usd) from 250 billion euros.
  The market has noticed.
   And ECB head Jean-Claude Trichet (pictured) is frustrated.
   He does not want the ECB to be buyer of last resort of bonds from struggling debt-strapped EU nations.
  The EU parliament must also debate and approve any new measures.
   According to the WSJ, the weight of any fund increase will fall primarily on 5 nations, most prominently Germany and France...but also Finland.
   Finland is the only country to oppose an increase
   Finland faces a parliamentary election in mid-April. FM Jyrki Katainen said approving it would be...political suicide.
  Also, Greece may need more money and Moody's has downgraded Portugal debt by two notches meaning that its 12-month treasury bills rose to 4.331%, compared with 4.057% two weeks ago.
    Portugal may soon face a political crisis and thus a new EU bailout request.