Quartz Daily Brief—Afghan presidential palace attacked, Obama’s climate plan, Snowden hunting

Good Morning, Quartz readers!

What to watch for today

Afghanistan’s presidential palace is under attack. Gunmen began an attack in the early hours of Tuesday as reporters gathered for a press conference with President Hamid Karzai. Details are still emerging.

Bankers convene. Over 1,000 of the world’s top bankers and policymakers will meet in Paris on Tuesday and Wednesday at a conference of the Institute of International Finance. Top of the agenda: Fixing Europe and adapting to new regulation.

Will Sprint close the deal? Sprint shareholders will vote on SoftBank’s sweetened offer, worth $21.6 billion. Sprint’s other suitor, Dish Network, abandoned its bid last week after a long bidding war.

Obama’s climate vision. President Barack Obama is expected to announce a slew of measures including limits on carbon emissions from existing power plants, which account for 40% of the annual emissions in the US.

Digital drag for Barnes and Noble. The retailer is expected to report a loss for the fourth straight quarter, while revenues may see a 4% drop. The drag is coming from the Nook division, which includes e-readers, tablets and e-books.

Homebuyers are back. Economists expect new US home sales to increase 2.2% in May. The S&P/Case-Shiller home price index for April and durable goods orders for May are also due.

While you were sleeping

Where in the world is Edward Snowden? US intelligence agencies and a lot of frustrated journalists continued their hunt for the NSA whistleblower after he didn’t board a flight from Moscow to Havana. The US criticized China for letting Snowden leave Hong Kong for Moscow—if in fact he ever went there.

Indonesia apologized for wayward pollution. Taking full responsibility for illegal fires on the island of Sumatra, President Yudhoyono called for an end to the bickering that has soured the relationship between Indonesia and its smoke-choked neighbors, Malaysia and Singapore.

Berlusconi’s Bunga-bunga boo-boo. Italy’s former prime minister was sentenced to seven years in jail and banned from public office for having sex with an underage prostitute. The ruling threatens to destabilize Italy’s ruling coalition, although he is unlikely to ever see the inside of a prison cell.

Dilma Rousseff goes to the people. Brazil’s president responded to days of nationwide protest by offering to hold a referendum on political reform and invest 50 billion reais ($25 billion) in public transport.

Affirmative action goes back to the drawing board. The US Supreme Court sidestepped a sweeping decision on race-conscious admission policies by asking lower courts to take fresh look under more demanding standards. But make no mistake, affirmative action is already dead.

Rivals Microsoft and Oracle team up. Both companies are struggling to preserve their market share in cloud computing in the face of stiff competition from cheaper alternatives. Oracle has been under fire from its shareholders for missing software sales targets for a second quarter running.

Quartz obsession interlude

Matt Phillips on what the US and Chinese central banks have learned about bubbles. “Before the global financial crisis hit, central bankers didn’t try to deflate asset bubbles. Instead, they just waited until they popped and tried to contain the damage and pick up the pieces. But that hand-off approach appears to be no longer in vogue. The evidence? Look no further than the most recent market upheaval, which was sparked by central banks in the world’s two largest economies doing their best to deflate bubblicious conditions in key financial markets.” Read more here.

Matters of debate

China’s opacity makes it a dangerous investment. Beijing has lost control of its Frankenstein economy.

Global warming is making the world un-insurable. Governments are the only ones who can do something about it.

The next merger boom is already here. M&A volumes will rise even though most mergers continue to disappoint.

The coffee critics are wrong. The science shows that caffeine can drive creativity.

Surprising discoveries

Get important people to answer your emails. Six secrets on how to get responses.

Avoiding US extradition treaties is a toughie. This map will help.

Influential statistics. The most persuasive word you can use in a meeting is “yeah.” 

Wine connoisseurs can’t tell the difference. Only 10% knew they were being given the same wine over and over.

Visit the Burj Khalifa for free. Google Street View now takes you into the world’s tallest building.

The 1% of the 1%. 0.01% of the US population contributed 28% of campaign donations in the 2012 elections.

America’s best-loved pets. Dogs are an overwhelming favorite. But tigers are the top exotic pet.

Our best wishes for a productive day. Please send any news, comments, tips for escaping world powers and unidentifiable vintages to hi@qz.com. You can follow us on Twitter here for updates during the day.

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Greece Edges Towards Debt Deal With Lower Yield

ATHENS — Talks between Greece and its private sector creditors over a EUR100 billion debt write-down edged towards an agreement, with bond holders seemingly willing to accept lower yields on their future holdings of Greek debt, a source close to the talks said Friday.

According to the source, the two sides were discussing a deal that would see Greece pay an “average coupon below 4%” on newly issued Greek debt, with the talks centering around an average yield of around 3.7-3.8%.

That is below what Greece’s private sector creditors–led by the Washington-based Institute of International Finance–has previously indicated it was willing to accept, but comes closer to what Greece’s official creditors have been demanding.

However, the source said the IIF is also asking for higher returns on those new bonds when Greece’s economy returns to growth–reviving a proposal previously floated in the discussions.

Talks between the two sides are due to continue Friday in the Greek capital after a two-and-a-half-hour meeting Thursday between IIF head Charles Dallara and Greek Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos.

According to a statement issued by the creditors, “some progress was realized” after that first day of meetings Thursday but no deal had yet been clinched.

In October, the IIF, a lobby group representing more than 400 of the world’s major banks, agreed to a “voluntary” 50% write-down in the value of Greek bonds that would be conducted through a distressed debt exchange swapping old Greek government bonds with new ones.

The bond deal is a precondition for a broader EUR130 billion bailout promised to Greece by its European partners and the International Monetary Fund at a European summit in October. Without private-sector agreement, the governments won’t contribute their share to the package.

However, the talks have repeatedly stumbled amid differences over the interest rate the new bonds would pay. Germany and the IMF have pushed creditors to accept an interest rate below 3.5%, while the creditors have indicated that 4% was the minimum they could accept under a voluntary deal.

At issue is Greece’s deteriorating debt dynamics. The goal of the October agreement was to cut the country’s debt ratio to no more than 120% of gross domestic product by 2020 from more than 160% currently.

But since then, a deeper-than-expected recession and a budget deficit that has widened to nearly 10% of GDP has cast doubt on those projections. A new debt sustainability study, due for release by the European Union and the IMF once talks with the private creditors are completed, might require a rethink on the funding Greece will need to be able to service its debt for the rest of the decade.

The IMF and the stronger euro-zone countries are reluctant to permit high coupons, partly because they would have to lend Greece the money to pay them but also because high interest burdens make it less likely the country can get its debt under control.

That leaves two options: pressure private-sector bond holders to accept more losses, or accept that other euro-zone countries and the IMF will have to kick in more support.

With private-sector talks already difficult, suggestions are growing that any additional burden would have to be taken up by euro-zone governments, while there have also been growing calls for the European Central Bank to take part–directly or indirectly–in the debt write-down.

In the past two days, IMF Managing Director Christine Lagarde and European Union Economics Commissioner Olli Rehn have both said that Greece’s public creditors may have to take a hit on their loans if private lenders can’t agree on a restructuring plan that goes far enough to make the country’s debt sustainable.

On Thursday, Jean-Claude Juncker, chairman of the college of eurozone finance ministers, suggested the ECB should consider playing a role, something the bank has resisted. Many ECB officials view losses on their Greek holdings as a violation of the central bank’s statutes, which forbid it from financing governments.

Juncker also acknowledged earlier this week that the Greek debt-reduction program is “off track.” Just how far won’t be known until the new debt assessment is released. This won’t happen until after an EU summit Monday, German officials say. People familiar with the talks estimate that Greece’s deteriorating fiscal position could now require an additional EUR20 billion to put the country on a sustainable footing.

-By Costas Paris and Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@dowjones.com

Greece To Continue Debt Talks With Creditors

ATHENS — Greece and its private-sector creditors agreed to meet again Friday in a race to negotiate a EUR100 billion debt write-down for the country amid concerns that Greece’s funding needs might be bigger than originally thought.

According to a statement issued by the creditors committee, “some progress was realized” after a first day of meetings in the Greek capital Thursday but no deal had yet been clinched.

“Discussions here in Athens today focused on legal and technical issues on the voluntary [debt restructuring] and some progress was realized. Work will continue tomorrow,” said the statement, issued by the Institute of International Finance.

A senior Greek finance ministry official also confirmed that the talks were set to continue.

The IIF, a Washington-based lobby representing the world’s major banks, is leading the negotiations on behalf of private creditors with the Greek government on the debt restructuring.

In October, the IIF agreed to a “voluntary” 50% write-down in the value of Greek bonds that would be conducted through a distressed debt exchange swapping old Greek government bonds with new ones.

The bond deal is part of a broader EUR130 billion bailout promised to Greece by its European partners and the International Monetary Fund at a European summit in October. Without private-sector agreement, the governments won’t contribute their share to the package.

However, the talks have stumbled twice amid differences over the interest rate the new bonds would pay. Germany and the IMF have been pushing the creditors to accept an interest rate below 3.5%, while the creditors have indicated that 4% was the minimum they could accept under a voluntary deal.

At issue is Greece’s deteriorating debt dynamics. The goal of the October agreement was to cut the country’s debt ratio to no more than 120% of gross domestic product by 2020, down from more than 160% currently.

But since then, a deeper-than-expected recession in the Greek economy and a budget deficit that has widened to nearly 10% of GDP could put those projections in doubt. A new debt-sustainability study, due for release by the European Union and the IMF once talks with the private creditors are completed, might require a rethink on the funding Greece will need to be able to service its debt for the rest of the decade.

The IMF and the stronger euro-zone countries are reluctant to permit high coupons, in part because they would have to lend Greece the money to pay them and in part because high interest burdens make it less likely the country can get its debt under control.

That leaves two options: pressure private-sector bondholders to accept more losses, or accept that other euro-zone countries and the IMF will have to kick in more support.

With private-sector talks already difficult, suggestions are growing that any additional burden would have to be taken up by euro-zone governments.

IMF Managing Director Christine Lagarde said Wednesday that Greece’s public-sector creditors may have to take a hit on their loans if private lenders can’t agree on a restructuring plan that goes far enough to make the country’s debt sustainable. The Fund said this didn’t assign a specific role to the ECB, which has rigidly opposed accepting a write-down on its Greek bond holdings. Many ECB officials would be likely to view losses on their Greek holdings as a violation of the central bank’s statutes, which forbid it from financing governments.

On Thursday, European Union Economics Commissioner Olli Rehn said public-sector lenders may have to increase their contribution to Greece’s overall debt deal. He said he was hopeful agreements could be struck soon to increase euro-zone bailout funds and IMF resources.

“I don’t rule out a small adjustment of lending needs of the euro-area member states,” he said in an interview with The Wall Street Journal, referring to the pending update in Greece’s debt-sustainability study.

Eurogroup President Jean-Claude Juncker acknowledged earlier this week that the Greek debt-reduction program “is off track.”

Just how far off track won’t be known until the new debt assessment is released. This won’t happen until after an EU summit Monday, say German officials. People familiar with the talks estimate that Greece’s deteriorating fiscal position could now require an additional EUR20 billion to put Greece on a sustainable footing.

“This gap, which is around 10% of GDP, has to be covered for the second bailout loan to be approved,” said one person familiar with the situation.

Ian Talley in Washington and Stephen Fidler in Davos, Switzerland contributed to this article.

By Costas Paris, Nektaria Stamouli and Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@dowjones.com

Greece, creditors edge closer to deal, talks to continue

By George Georgiopoulos andLefteris Papadimas
ATHENS, Jan 26 (Reuters) – Greece and its private creditors made progress on Thursday in talks on restructuring its debt, both sides said, and they will continue negotiating on Friday with the aim of sealing an agreementwithin a few days.

Athens needs a deal quickly to avert a chaotic default when a major bond redemption comes due in March. Greece’s creditors are demanding that the European Central Bank contribute to a deal to put the country’s messy financesback on track.

“The talks focused on legal and technical issues and progress was made. They will continue on Friday and probably on Saturday too,” a senior Greek government official told Reuters on condition of anonymity.

“We aim toconclude the deal very soon.”

The Institute of International Finance, which leads talks on behalf of creditors, similarly cited progress and said work would continue Friday. Neither side disclosed any details.

After weeks of wrangling over the coupon, or interest rate, Greece must pay on new bonds it will swap for existing debt, attention has shifted to whether the ECB and other public creditors will follow private bondholders in swallowing losses.

A day after InternationalMonetary Fund chief Christine Lagarde said the ECB may need to accept losses on its Greek holdings, the European Union’s top economic official also warned more public money will be needed to make up a shortfall in the country’s secondbailout.(news)
EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters “there is likely to be some increased need of official sector funding, but not anything dramatic.” It was the first time a top EU official had said morepublic money than a planned 130 billion euro package would be required to rescue Greece.

Private bondholders have added to the pressure by insisting that others who bought bonds, and in particular the ECB, which is Athens’ single biggestcreditor, take part in the bond swap.

The swap, also known as the Private Sector Involvement, is aimed at slashing Greece’s debt by getting creditors to write down their holdings by 50 percent nominally. Real losses are expected to be higher,depending on the terms involved.

“It would be outrageous if the ECB doesn’t take part in the PSI as keeping their Greek bonds to maturity would allow them to make a profit, while everybody else is taking 70 percent (losses) or even more,” onesource close to the talks said.

The IIF wants public sector officials to be more decisive in negotiations over Greek debt, the bank lobby group’s chairman and Deutsche Bank (DBK.FRA) CEO Josef Ackermann told CNBC.

The ECB, which ownsroughly 40 billion euros worth of Greek bonds, is no closer to agreeing on whether or not it will take losses on the Greek bonds it owns after a late night Wednesday meeting, euro zone central bank sources told Reuters.

Either way, a debt dealat the very latest must be clinched a month before 14.5 billion euros of bond redemptions fall due on March 20, the first source said, i.e., in just over three weeks.

If a deal is not reached by then, Greece could sink into an uncontrolleddefault that would trigger a banking crisis spreading contagion through the euro zone, though the ECB’s creation of nearly half a trillion euros of three-year money for the banks in December has tempered that fear.

Debt-laden Italy saw itsgovernment bond yields and the cost of insuring against a default fall on Thursday, helped by solid demand for short-term debt at an auction. (news)

COUPON STUMBLE
So far the coupon on the new bonds had been the main stumbling block in the negotiations.

On Monday, euro zone ministers rejected the creditors’ offer of a 4 percent coupon on new bonds after Greece and its EU/IMF lenders held out for a 3.5 percent interest rate. They want the lower coupon toensure the country’s debt falls to a target of 120 percent of GDP by 2020, from around 160 percent now.

A second source familiar with the negotiations said the “coupon is parked for current time until we can get closer on detail of the overallpackage”. Asked if that would include the ECB, the source said: “We would expect it to, still to be determined though.”

Greek bankers and government officials said they had not heard of any new proposal from creditors, after local media reported they were willing to improve their “final offer” of a 4 percent interest rate on the new bonds to about 3.75 percent.

One Greek daily, Kerdos, said participation of public sector creditors including the ECB in the swap deal was apre-condition for that offer. (news)
“Until last week, we knew that the steering committee was authorised to concede up to 3.8 percent for the average coupon,” one senior Greek banker told Reuters.

“But things are once again up inthe air. You have to deal with politicians and 15 different governments asking for different things.”

Exact details of Friday’s meetings have yet to be scheduled, after IIF chief Charles Dallara left a meeting with Prime Minister Lucas Papademos late on Thursday.

Earlier, German Chancellor Angela Merkel said the debt swap talks were on a “good path”. (news)
Senior EU, IMF and ECB officials are holding talks with the Greek government in parallel with the debt swap talks,to flesh out a new 130-billion euro bailout for Greece. They have warned they need the debt swap to cut Greece’s debt substantially in order to go ahead with the new loans.

Talks with the “troika” inspectors on the new bailout programme areexpected to go well into next week.

A senior German official said Greece was not expected to play a major role at the EU leaders summit on Monday and that Germany does not expect the troika to deliver a report on Greece’s progress before thesummit. (news)
Greece has made little progress on reforms as it stumbles through its worst post-World War II economic crisis. The task facing the country has been made harder with anger against austerity measures and squabblingpoliticians running high.

A poll on Thursday showed Greece’s conservatives had widened their lead over socialist coalition partners ahead of elections expected in April, but they would not win an absolute majority if elections were held now.(news)
Eurogroup chairman Jean-Claude Juncker was quoted in a German newspaper as saying the euro zone would probably have to support Greece longer than expected — more than 10 years.

(Additional reporting by Sarah White and Sophie Sassard in London, Paul Taylor and Axel Threlfall in Davos, Harry Papachristou, Tatiana Fragou, Renee Maltezou and Karolina Tagaris in Athens; Writing by Deepa Babington; Editing by Dan Grebler) Messaging: deepa.babington.reuters.com@reuters.net)

Greece, creditors move to breach gap as clock ticks

By Sophie Sassard and Dina Kyriakidou
LONDON/ATHENS, Jan 19 (Reuters) – Greece and its private bondholders inched closer on Thursday to a vital debt swap deal needed to avoid a messy defaultby Athens, with both sides saying progress has been made and negotiations would continue on Friday.

Nearly a week after talks hit an impasse over the coupon, or interest payment, that Greece must offer on its new bonds under the swap, there were signs the two sides were moving to overcome their differences as time to strike a deal runs out quickly.

“The atmosphere was good, progress was made and we will continue tomorrow afternoon,” Finance Minister Evangelos Venizelos said after talkswith Charles Dallara, head of the Institute of International Finance representing bondholders.

The IIF issued a statement echoing the minister.

Bankers and sources close to the talks say a deal could be wrapped up in the next few days,though previous predictions of a quick resolution have proven premature.

The stakes could not be higher this time. Greece must thrash out a deal within days to pave the way for a new infusion of aid that allows it to avoid bankruptcy when 14.5billion euros ($18.5 billion) of bond redemptions fall due in March.

Even if a deal is struck rapidly, the paperwork will take weeks and Greece’s official lenders, the European Union and the International Monetary Fund, say the work must becleared before funds are doled out from a 130 billion euro rescue plan they drew up in October.

Turning up the pressure before Thursday’s round of talks, Venizelos told lawmakers that a large chunk of the bond swap must be agreed by noon onFriday and formalised before Monday’s meeting of euro zone finance ministers.

Kept afloat by bailout loans, Greece faces the threat of having to leave the euro zone and slumping into further economic and social misery if it fails to come to grips with its debt, including securing the deal with the private bond holders.

“Now is the crucial moment in the final battle for the debt swap and the crucial moment in the final and definitive battle for the new bailout,” Venizelos told parliament. “Now, now! Now is the time to negotiate for the sake of the country.”

Progress had been hard to come by in the latest round of discussions, with bankers worried about being hit by losses far higher than the 50 percent writedown they wereexpected to take on the nominal value of their bonds.

A source close to the talks said earlier that Athens and its foreign lenders had offered a coupon of just over 3.5 percent during a two-hour meeting on Wednesday, but bondholders rejected that as too low. They were angling for a coupon of at least 4 percent, the source said.

One banker briefed on the talks said progress was made on minor points related to the structure of the deal and the law it would fall under, but the couponremained a sticking point.

The two sides were roughly one percentage point apart in their demands on the coupon as talks restarted on Thursday.

(Additional reporting by Lefteris Papadimas and George Georgiopoulos; Writing by DeepaBabington; editing by Ron Askew and David Stamp)

Greek PM confident debt talks will be clinched in time

By George Georgiopoulos
ATHENS, Jan 16 (Reuters) – Greek Prime Minister Lucas Papademos promised a debt swap would be clinched in time and dispatched senior officials toWashington on Monday to break a deadlock in talks that has prompted new fears of a disorderly default.

Athens needs a deal with the private sector, the EU and the IMF to avoid going bankrupt when 14.5 billion euros of bond redemptions fall duein late March, but talks with its creditor banks broke down without an agreement on Friday. (news)
A leading representative for the creditors said Athens was not the problem in the talks, suggesting the issue lay with terms insisted onby foreign lenders keeping Greece afloat with aid.

The head of Greece’s debt agency and a senior adviser were travelling on Monday to Washington to meet International Monetary Fund officials, a government source said, and Athens put a braveface on the standoff.

“There is a little pause in these discussions. But I am confident that they will continue and we will reach an agreement that is mutually acceptable in time,” Papademos said according to a transcript of an interview withCNBC.

Under the bailout terms agreed in October, Greek privately held debt would be reduced by half so that, together with structural reforms, the overall debt to GDP ratio of Greece would fall to 120 percent in 2020 from 160 percent now. Inspectors from the EU, the IMF and the ECB, due in Athens on Tuesday for talks on a second, 130-billion-euro bailout, have warned they need the deal with the private sector to achieve that debt-reduction goal before they agree to give more aid.

Papademos said talks on these two processes must be completed over the next two to three weeks.

“This is the objective. I think the conditions are in place in order to do so,” Papademos told the broadcaster.

UNCERTAINTY GROWS Charles Dallara, head of the Institute of International Finance who represents Greece’s private creditors, told the Financial Times an agreement in principle was needed by the end of this week if it was to be finalised in time for the March bondredemptions and said the Greeks were not the problem.

“All the European heads of state said they wanted a deal with a 50 per cent (haircut) and a voluntary agreement,” Dallara was quoted as saying. “Some of their own collaborators are not following that decision.”

Negotiations stalled over the interest rate Greece will pay on new bonds it offers.

Greece, in its fifth year of recession, has continuously missed its fiscal targets, prompting speculation that the country mayneed further financial support to put its debt on viable footing.

The country has repeatedly flirted with bankruptcy in recent months, with only bailout loans from European partners and the IMF agreed on condition of unpopular austerity measureskeeping Greece away from a default.

Papademos played down speculation that Athens would need additional aid to that agreed at a euro zone summit in October.

“I think the funds that have been pledged at the Euro Summit, combined with theoutcome of the private sector involvement process should be sufficient in order to support financially the Greek economy,” Papademos said.

Uncertainty over fixing Greece’s debt crisis is more of a threat to Europe’s stability than the downgradeon Friday of nine euro zone countries’ credit ratings by Standard & Poor’s, British finance minister George Osborne said on Monday. (news)
The downgrades were largely expected and traders said pressure on Italian and Spanish bondyields on Monday were offset by the European Central bank stepping in to buy the bonds. (news)
Bill Gross, the manager of the world’s largest bond fund PIMCO, said in a Twitter post that Standard & Poor’s downgrade had made investors”aware” that countries can default and Greece would be the next example.

(Additional reporting by Angeliki Koutantou and Karolina Tagaris; Writing by Deepa Babington; Editing by Ingrid Melander/Mike Peacock) Messaging: deepa.babington.thomsonreuters.com@reuters.com)