Greece Deal Won’t Lead to Lehman-Like Event: Dallara

The deal that allowed Greece to renegotiate its debt will not lead to a credit event on the scale of the Lehman Brothers failure that triggered the US financial crisis, the lead negotiator in the talks told CNBC.


Charles Dallara, head of the Institute of International Finance, said the Greek debt deal is “voluntary” and agreed to after a “marathon session” with European leaders that lasted well into the night. He said it is unlikely to cause a major problem in the market for credit default swaps

[cnbc explains]

, which are triggered in the case of debt defaults.

The deal will result in Greek debt

[cnbc explains]

holders absorbing a nominal 50 percent loss and the nation’s total debt load reduced by 100 billion euros.

“We’re not responsible for making those judgments” regarding credit default swaps, Dallara said. “It’s our understanding that this being judged a voluntary agreement by participants meets the terms and conditions… It was very important to provide a substantial amount of collateral — 30 billion euros — to help underpin the value of the new bonds.”




Michelle Caruso-Cabrera
CNBC Anchor

Supporting the new bonds is crucial, he said, because “the new claims will be of higher quality (compared to the old claims) due to the funds provided.” That’s a crucial condition to avoid having the debt exchange labeled as involuntary.

“I think it was huge to avoid an event,” Dallara said. If it had not been voluntary, it “would have created a calamity.”

There remained wariness, however, over how the deal will be perceived.

“While voluntary is what Europeans want, the deal last night was voluntary at the point of a gun,” said Peter Boockvar, equity strategist at Miller Tabak. “If (the International Swaps and Derivatives Association) declares this strong arming combined with a 50 percent cut in the value of Greek debt voluntary, it will make a complete joke of sovereign CDS and will potentially destroy this market to the point where it will go away.

The ISDA, in a statement, confirmed that it is viewing the deal as voluntary, though it said it is not at the point where it is evaluating whether a technical credit event has occurred.

The market also could see increased risk in Italy and Spain for the simple reason that the European Union has backtracked on its previous position that European sovereign debt should be judged as risk-free.

“It was important for all of us at the same time to shore up the credibility of all the other sovereign credits and that has been accomplished by the firewall arrangements,” Dallara said.

As a result, when it comes to the possibility of the credit markets going after Italy, he said, “I don’t see that happening. Italy is now in the process of rebuilding its credibility and that was reinforced this week by the measures they are taking.”


Greece Deal Won’t Lead to Lehman-Like Event: Dallara

The deal that allowed Greece to renegotiate its debt will not lead to a credit event on the scale of the Lehman Brothers failure that triggered the US financial crisis, the lead negotiator in the talks told CNBC.


Charles Dallara, head of the Institute of International Finance, said the Greek debt deal is “voluntary” and agreed to after a “marathon session” with European leaders that lasted well into the night. He said it is unlikely to cause a major problem in the market for credit default swaps

[cnbc explains]

, which are triggered in the case of debt defaults.

The deal will result in Greek debt

[cnbc explains]

holders absorbing a nominal 50 percent loss and the nation’s total debt load reduced by 100 billion euros.

“We’re not responsible for making those judgments” regarding credit default swaps, Dallara said. “It’s our understanding that this being judged a voluntary agreement by participants meets the terms and conditions… It was very important to provide a substantial amount of collateral — 30 billion euros — to help underpin the value of the new bonds.”




Michelle Caruso-Cabrera
CNBC Anchor

Supporting the new bonds is crucial, he said, because “the new claims will be of higher quality (compared to the old claims) due to the funds provided.” That’s a crucial condition to avoid having the debt exchange labeled as involuntary.

“I think it was huge to avoid an event,” Dallara said. If it had not been voluntary, it “would have created a calamity.”

There remained wariness, however, over how the deal will be perceived.

“While voluntary is what Europeans want, the deal last night was voluntary at the point of a gun,” said Peter Boockvar, equity strategist at Miller Tabak. “If (the International Swaps and Derivatives Association) declares this strong arming combined with a 50 percent cut in the value of Greek debt voluntary, it will make a complete joke of sovereign CDS and will potentially destroy this market to the point where it will go away.

The ISDA, in a statement, confirmed that it is viewing the deal as voluntary, though it said it is not at the point where it is evaluating whether a technical credit event has occurred.

The market also could see increased risk in Italy and Spain for the simple reason that the European Union has backtracked on its previous position that European sovereign debt should be judged as risk-free.

“It was important for all of us at the same time to shore up the credibility of all the other sovereign credits and that has been accomplished by the firewall arrangements,” Dallara said.

As a result, when it comes to the possibility of the credit markets going after Italy, he said, “I don’t see that happening. Italy is now in the process of rebuilding its credibility and that was reinforced this week by the measures they are taking.”


Tourism revenues up 10% in Jan-Aug

Ferry schedules
Tourist destinations

Cinemas
Theatres
Restaurants
Public events
Expat organisations


All-round specialist targets further fast growth


The Munich-based group has doubled revenues since 2003 to nearly €1.3 billion and is now officially Germany’s fourth-largest tour operator with the integration of Big-Xtra into the group. The group incorporates tour operator FTI, last-minute specialist 5 vor Flug, several niche specialists, travel TV channel Sonnenklar TV and online portal Reise.de. In its latest move, FTI has set up a cruises business. It has also bought a 30% stake in French firm Voyages Starter, based in Mulhouse, close to the German and Swiss borders.

This year the group has “a low double-digit” increase in bookings, and has thus won market share, according to CEO Dietmar Gunz. The company is satisfied with its profit margin of about 1%. “I’m convinced that you cannot generate a profit margin of 3-5% in the tour operating business with responsible risk-taking given the high transparency in the market,” he declares. “And we don’t have to promise that to anyone.”

Despite the firm’s overall growth, however, Gunz still sees the group as a broadly-based specialist for destinations and niche products. “We have retained our specialist status in many areas whether in destinations such as Malta and Italy, Turkey, Egypt, North America and the Emirates or products such as LAL Sprachreisen,” he says. “Our development is destination-based.” In Turkey, for example, FTI claims to be among the top three German tour operators now while it sees itself in the top four in Egypt.

Above all, FTI wants to differentiate itself through products, speed, quality and a focus on travel agency sales. It has sold its small own travel agency chain and now distributes mostly through third-party agencies, and disposed of its few hotels several years ago.

COO Boris Raoul, responsible for IT and specialist products, stresses that FTI has sufficient customer volumes to be able to produce competitively-priced holidays in destinations such as Spain, Greece and Turkey.

FTI is extremely flexible in its production, offering holidays as packages or individual combinations of hotels with a wide range of scheduled and charter airlines. “Our modularity is unique. Other operators have four brands for it,” he declares. Above all, FTI stresses its speed. Its incoming agency network Meeting Point, with branches in 15 destinations, enters the latest hotel prices directly into the FTI system so that they are available to German travel agents the same day.

The next initiative within the next few months will be the launch of a new ‘neutral’ hotel portal under the name ‘Hotelshop’, targeted at both travel agents and consumers. This will offer bookings of FTI’s own procured hotel capacity but also of rooms from hotel ‘bedbanks’, including GTA, recently acquired by Kuoni. The portal will include a ‘best price’ search of all available hotels and a ‘best price guarantee’.

Asked where the FTI Group will be in five years’ time, Gunz says: “We will be a healthy, dynamic company, close to travel agents and customers. Our advantage is that we don’t have to promise to anyone where we will be in five years’ time. There is a rough plan but fundamentally we think from month to month. That means we can use all the opportunities in the market.”


Amid Greece’s challenges, Kalamata basks in the sun


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 For most people, the lure of Kalamata is the beaches, its blue waters and free sun beds. For most people, the lure of Kalamata is the beaches, its blue waters and free sun beds.

Take a leisurely walk or bike ride along the promenade and it's hard not to stop into one the many tavernas and sample the local fare, like this mixed plate.Take a leisurely walk or bike ride along the promenade and it’s hard not to stop into one the many tavernas and sample the local fare, like this “mixed plate.”

The Haikos Hotel is situated across the street from the beach.The Haikos Hotel is situated across the street from the beach.

Kalamata seems to embrace the energy of the sun -- and young people seem to outnumber the old. Kalamata seems to embrace the energy of the sun — and young people seem to outnumber the old.

A typical Greek salad at a restaurant in Kalamata.A typical Greek salad at a restaurant in Kalamata.

The streets of downtown Kalamata.The streets of downtown Kalamata.


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Kalamata, Greece (CNN) — Throughout its history, Greece has been conquered by the Macedonians, the Romans, Persians and, in modern times, the Ottoman Empire and Nazi Germany.

But now there is a new and different battle being waged against the Greeks, and the enemy is not wielding swords or guns but the threat of bailouts and default. For many, it’s a modern-day tragedy that even the Greek classical writer Euripides would have a hard time envisioning.

After reading all the bad economic news coming out of Greece, it’s easy to lose sight of the fact that the Greek people are still carrying on their daily lives.

Greeks may be cutting back on their vacations, but the country has seen a rise in the number of tourists. The Association of Greek Tourism Enterprises expects more than 105 million visitors this year, a 9.6% increase from 2010.

On a recent trip to my mother’s hometown of Kalamata, I was curious to see how this seaside city on the southern part of the Peloponnese, best known for its luscious olives and as the birthplace of the New Age performer Yanni, was faring amid the country’s economic crisis.

As my flight descended over Athens, I couldn’t help but think that I was flying from the heels of one storm — Hurricane Irene had just ravaged the eastern U.S coastline — into the throes of another. The sea of white marble buildings below offered no glint of the economic tempest that has produced fear, anxiety and scores of strikes and protests throughout the country.

The uneventful three-and-a-half hour bus ride to Kalamata (about $30) is expected to get shorter with a new stretch of national highway from Athens. But how quickly will the work get done in the current economic climate? Only time will answer Greece’s growing list of uncertainties.

As in Athens, cigarette smoke is pervasive in Kalamata, and pedestrians yield to cars, whether you like it or not. But there the similarities end.

Unlike Athens, which is home to more than 3 million Greeks, the images of protests and distress are nowhere to be visibly found in this sun-drenched town of just over 100,000. Here, the city seems to embrace the energy of the sun. Young people seem to outnumber the old.

The origins of the city’s name remain murky, but according to relatives, it’s probably derived from the Greek words “kala ommata,” which means “beautiful eyes.”

Kalamata is hardly a destination most tourists consider when they think of a vacation in Greece. The islands of Mykonos and Santorini are usually the headliners in that fantasy.

Kalamata, the 10th largest city in Greece and the capital of Messinia, is built on the foot of the Tavgetos and near Messinia Bay. It draws mostly Greek vacationers, as it’s a good home base close to other tourist sites in Messinia and ferries to some nearby islands, including the Ionian island of Kythira and Kissamos in Crete.

Within an hour’s car ride, you can visit the beaches Navarino or the castles and historical sites of Mystras, Olympia, Koroni, Methoni and Mani.

Though Kalamata has grown dramatically since an earthquake ravaged portions of the city in 1986, some areas have a small-town feel. It’s not uncommon to catch the smell of jasmine on a summer evening while walking the paths between the family-owned plots of lime, fig and orange trees.

The pride and joy of many residents is owning some land — even a small parcel — where they can grow a variety of things including cucumbers, squash, tomatoes and herbs.

Kalamata has a historical center with beautiful neoclassical houses. A 13th-century castle dominates the town and has an interesting archaeological museum and a folklore museum with relics of the War of Independence of 1821.

In addition to its theaters and theatrical groups, Kalamata hosts an International Dance festival during the summer in the amphitheater of the castle.

But for most people, the lure of Kalamata is the beaches, with their blue waters and free sun beds.

The tranquil beaches in Kalamata are more than 6 miles long, and elderly people taking a morning swim is a familiar sight.

Take a leisurely walk or bike ride along the promenade, and it’s hard not to stop into one the many tavernas for a cold Mythos beer and a Mikri Pikilia: a selection of sardines, meatballs, calamari, tomatoes and cucumbers.

I always have to smile when I get up from a taverna’s hard straw chairs. Although patrons won’t ever be rushed out by a waiter trying to turn over a table, the uncomfortable seats are more than likely to leave you with a funny walk for the first several strides.

And while unemployment in Kalamata, which city officials put at 10%, is far below the national average, there’s still a feeling of uncertainty in the streets.

“The mood is gloomy. Things are tough, very tough. It seems there is no hope, and there isn’t a light at the end of the tunnel,” Mayor Nikas Panagiotis said.

“Strikes happen every day; there is unemployment. But compared to Athens, things are better. Not as bad as some places in Athens, but this doesn’t mean that things are easy in Kalamata. There is no work, and they don’t give us any hope, and that is the worst,” he said.

Panagiotis says Kalamata’s annual budget of about 100 million euros is very dependent on tourism to cover the gap with what comes from Athens, which supplies only around 65 million euros.

Although Kalamata does very well with tourism — and the new national highway will help — high unemployment and a small but increasing number of immigrants from North African countries, Afghanistan, Pakistan and Sri Lanka have put strains on social services, the mayor said.

Hotel owner Nikos Haikos, 35, whose establishment bears the family name and is situated across the street from the beach, says business has been mixed this year.

“This year we did not have a very good season in the beginning. June did not go as we preferred.” The hotel had a good May, July and August, but that success came with sacrifice.

“We lowered the price in the high season to keep the hotel full,” Haikos said. The rooms, which normally go for 100 euros in the high season, were lowered to 70 euros this year.

With the economy in shambles and the government reducing benefits and cuts to pensions, that’s less money for Greeks to spend on holidays, Haikos said. So he’s planning to adapt to the circumstances and begin making arrangements with the hotel site Booking.com.

“Good companies, if they manage, will survive. If you give good quality, with inexpensive rents, you will have tourists and still be able to pay off the expenses, and you will continue to live,” Haikos said.

Penny Manis contributed to this report.






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