Quartz Daily Brief—Europe Edition—Japanese sentiment, Greece’s bailout, US-EU talks, home-made drones

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Good Morning, Quartz readers!

What to watch for today

Pessimism in Japan? The government Economy Watchers Survey for June, a key indicator of short-term economic sentiment in Japan, will be published. The survey showed a drop in confidence in the last two months.

Greece’s latest last-ditch bailout deal. Euro-zone finance ministers decide whether to release a €6.3 billion ($8.1 billion) installment of rescue funds. Greece’s finance minister said he was “optimistic” about reaching a deal with the troika of European lenders; EU commissioner Olli Rehn gave it a slightly more lukewarm “reasonable chance.”

Trade and surveillance talks. US-EU discussions on the Transatlantic Trade and Investment Partnership begin, though divisions remain on issues like regulation of financial services firms (paywall). European officials will also want to bring up recent revelations that the US has been spying on them.

US earnings season kicks off. Alcoa’s second-quarter revenues are expected to decline to $5.92 billion, but earnings per share are forecast to improve slightly. Though it’s no longer considered a bellwether, details of Alcoa’s sales in the many industries that use aluminium could still prove interesting.

US Congress returns from recess. The immigration reform passed last month by the Senate is unlikely to get through the House of Representatives in its current form. Other contentious issues include student loan interest rates and the farm bill, which includes $800 billion in food aid for poor Americans.

Over the weekend

And Egypt’s new prime minister is… Not liberal leader Mohamed ElBaradei, says the president’s office, backtracking on an earlier statement, although he will be nominated as a vice prime minister. Islamists and secularists (paywall) have reached a tentative agreement to put forward the Social Democratic Party’s Ziad Bahaa-Eldin, a London-trained economist.

Portugal patched up its political crisis. Paulo Portas, the leader of the junior party in the governing coalition, was bumped up to deputy prime minister and given the job of coordinating economic policies and the relationship with the troika. Portas’ resignation as foreign minister last week spooked European markets.

Two Chinese teens killed in San Francisco plane crash. A South Korean jetliner burst into flames upon landing on Saturday, killing two—including one possible run over by emergency services crews—and injuring 180. Public flight data shows that the Boeing 777 was flying lower than normal before touchdown.

Music to Carlos Slim’s ears. The Mexican telecoms tycoon invested $40 million in music-recognition app Shazam, reportedly valuing (paywall) the UK-based company at $400 million. Slim’s América Móvil will pre-install the app in the smartphones it sells in Latin America.

North and South Korea made headway, reacahing a tentative agreement to reopen the Kaesong Industrial Park about 10 kilometers (6 miles) north of the border. Work at the factory, which is a major source of income for the North, was halted by Kim Jong-un’s regime earlier this year.

China corruption verdict. An ex-rail minister was given a suspended death sentence—usually commuted to life in prison—for bribery and abuse of power. Liu Zhijun was found guilty of handing out promotions and government contracts in exchange for $10.5 million in bribes.

Quartz obsession interlude

Christopher Mims on why every major consumer-electronics firm is working on a smart watch. “Analysts are declaring 2013 the year of the smart watch, and seem sure that an entirely new product category is about to be born. Watches are already a $60-billion-a-year business worldwide, so perhaps the Rolexes and Seikos of the world could see new competition from a motley crew of manufacturers usually associated with PCs, smartphones and televisions.” Read more here.

Matters of debate

Priests should not drive fancy cars. Pope Francis says to “choose a more humble one.”

American consumers are under too much pressure. They shoulder a heavy economic burden for the rest of the world, and may not be up to the task (paywall).

Fascism is on the rise in Greece. But Athens is a long way yet from 1930s Berlin.

Free-trade charade. The two regional trade agreements that US is working on will only serve the special interests in the West.

Surprising discoveries

DIY: Drone it yourself. Anything can be turned into a drone if you have the right kit.

Bullets in America are so scarce that people are making their own. They call it “reloading.”

The secret to making meetings more productive: more discussions and fewer presentations.

The “buzz” that makes things go viral. Scientists discover the regions of the brain that help ideas spread.

All those cheap tables add up. IKEA uses a staggering 1% of the world’s wood every year.

Our best wishes for a productive day. Please send any news, comments, flashy priestmobile photos and DIY drone designs to hi@qz.com. You can follow us on Twitter here for updates during the day.

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Annunci

MONETARIO – Cosa succede oggi venerdì 21 settembre

* Il governo italiano ieri ha rivisto al ribasso, come da attese, le stime del Pil italiano per quest’anno e per il successivo. Nella nota di aggiornamento al Def la previsione per il 2012 passa a -2,4% da -1,2%, per il 2013 scivola a -0,2% da +0,5%. Peggiora il rapporto debito Pil: per quest’anno si porta al 126,4% dal 123,4% previsto ad aprile, nel 2013 salirà al 127,1% dal 121,5% indicato precedentemente.

Il deficit per quest’anno, nelle stime dell’esecutivo, si attesterà al 2,6% dallaprecedente stima all’1,7%; nel 2013 sarà all’1,6%, mentre la stima iniziale era dello 0,5% (news).

L’Italia, spiega il governo, prevede di raggiungere nel 2013 e negli anni seguenti un saldo strutturale sostanzialmente in linea conl’obiettivo di bilancio in pareggio.

Invece stamane La Stampa, citando un primo documento del responsabile Ue per l’economia Olli Rehn in vista delle stime del 7 novembre, riporta una certa preoccupazione della Commissione riguardo il pareggionel 2013. “Poichè il quadro economico è peggiorato e i tassi d’interesse continuano a mantenersi elevati, l’ottenimento nel 2013 del pareggio strutturale risulta essere più impegnativo”.

* La Repubblica riporta stamane un’intervista delministro degli esteri tedesco Guido Westerwelle secondo cui “stimao vedendo una luce alla fine del tunnel. Questo settembre può essere il mese della svolta” facendo riferimento all’Europa in generale. Parla poi dei singoli paesi e, a propositodell’Italia dice “il governo ha varato coraggiose riforme”.

* Rush d’incontri internazionali per Monti, che in mattinata vedrà i premier di Grecia, Irlanda e Spagna. Dai colloqui, che avranno al centro l’evoluzione della crisi della zona euro, potrebbero arrivare segnali interessanti agli operatori, particolarmente sensibili a chiarimenti di Rajoy in merito alle intenzioni di Madrid riguardo l’attivazione del meccanismo anti-spread.

* A mercati chiusi il Tesoro comunicherà iquantitativi di Ctz e Btpei in asta martedì e l’importo dei Bot che verranno offerti in asta mercoledì. Ieri, intanto, i Btp hanno chiuso in lieve calo, ma sopra i minimi di seduta. Il rendimento del decennale si è confermato sotto il 5% per laseconda seduta consecutiva; lo spread con l’analoga scadenza sul Bund si è allargato a 345 punti base dai 334 del finale si seduta di mercoledì.

* Il mercato forex, sul finire della seduta asiatica, mostra un euro in leggero rialzo dopo ilnetto calo visto ieri.

L’euro è a 1,2993/95 contro il dollaro dopo una chiusura ieri a 1,2968 dollari, mentre contro yen è a 101,51/56 yen da 101,45 yen. Il dollaro è a 78,14/26 yen da 78,23 yen.

* Il prezzo del greggio è in rialzopoichè restano i timori per l’evolversi della situazione in Libia e nel mare del Nord. Il contratto a novembre sul Nymex Usa è a 93,14 dollari il barile in rialzo di 72 centesimi da ieri, mentre lo stesso contratto sul Brent londinese è a 110,47dollari in rialzo di 44 centesimi.

* Il mercato obbligazionario Usa ieri ha chiuso poco variati dopo un’asta sui titoli indicizzati all’inflazione sorprendentemente debole.

Il Treasuries benchmark decennale ha chiuso invariato a 98-21/32 per un rendimento di 1,774%.

DATI MACROECONOMICI ITALIA
* Istat, ore lavorate 2° trimestre (10,00).

ASTE DI TITOLI DI STATO ITALIA
* Tesoro, annuncio quantitativi Ctz e Btpei in asta 25/09.

* Tesoro, annuncioquantitativi Bot in asta il 26 settembre.

GRAN BRETAGNA
* Tesoro offre titoli di Stato a breve.

SPAGNA
* Tesoro, lancio private placement Bono 30/04/2015, 31/01/2016, 30/04/2016, 31/01/2017 per finanziamento Fondo regionale di liquidità(Fla).

BANCHE CENTRALI SVIZZERA
* A Zurigo banca centrale svizzera pubblica bollettino statistico mensile (9,00) e bolletttino trimenstrale (9,30).

USA
* Ad Atlanta intervento Lockhart, Fed (18,40).

* A Nore Dame intervento Bullard, Fed St. Louis (0,30).

Italia promossa su conti, meglio di Francia e Spagna – Ue

MILANO/BRUXELLES, 11 maggio (Reuters) – Il problema del ‘paziente’ Italia è la crescita che langue e la cura non significa ulteriore rigore nei conti pubblici, dal momento che dal punto di vistastrutturale gli obiettivi sul disavanzo verranno centrati.

Il giudizio è quello delle stime di primavera a cura della Commissione europea, il documento semestrale illustrato stamane che usa toni ben più negativi nei confronti per esempio di Francia e Spagna.

Se Roma non deve varare manovre aggiuntive, spiega alla stampa il responsabile agli Affari economici e monetari, Bruxelles attende invece di sapere da Parigi “quali misure verranno introdotte per il 2013” e ritiene Madrid debbaadottare nuovi provvedimenti correttivi sia quest’anno sia il prossimo.

Almeno per quanto riguarda il risanamento dei conti pubblici, dunque, Italia promossa ma bocciate Francia e Spagna, per non parlare dei casi limite di Grecia, Irlanda ePortogallo destinatarie degli aiuti comunitari.

La parola ai numeri.

Per il rapporto deficit/Pil di quest’anno e il prossimo l’indicazione Ue è di 2,0% e 1,1% nel caso dell’Italia, 4,5% e 4,2% per la Francia e addirittura 6,4% e 6,3% per la Spagna.

Di più: nemmeno la locomotiva Germania, prima della classe nella zona euro, riuscirà a ricondurre il disavanzo 2013 entro il parametro Ue di ‘close to balance’, limitando il rientro del deficit a 0,7% del Pil dopo lo 0,9% di quest’anno.

Guardando al 2013, quindi, tra le principali economie europee meglio di Roma farà soltanto Berlino, potenziale motivo di orgoglio per chi come Mario Monti si vanta della propria fama de “il più tedesco degli economisti italiani”.

“Sebbenela previsione di 1,1% del deficit non sia in linea con il target italiano di 0,5% nel 2013, in termini strutturali prevediamo che l’Italia raggiunga il pareggio di bilancio nel 2013” spiega alla stampa Olli Rehn.

“L’Italia raggiungerà i suoiobiettivi a medio termine quest’anno, quindi è in linea con gli obblighi del patto di stabilità e crescita. L’Italia è sulla giusta strada per raggiungere gli obiettivi strutturali per il 2012-2013, quindi non sono necessarie nuove misure diconsolidamento dei conti” aggiunge.

La stima Ue sul deficit strutturale, aggiustato alle componenti cicliche, è infatti di 0,7% su quest’anno e 0,1% sul 2013.

BENE RIGORE MA ECONOMIA NON RIPARTE
In un’ininterrotta correzione al ribasso, Bruxelles ha portato la proiezione sul prodotto interno lordo italiano a -1,4% per il 2012 e +0,4% per l’anno prossimo.

Nel caso di quest’anno si tratta di una limatura di un solo decimo rispetto alle ‘interim forecast’ di finefebbraio, mentre per il confronto sul 2013 occorre risalire al +0,7% delle stime d’autunno pubblicate lo scorso 10 novembre, poco prima della fase più acuta della crisi del debito sovrano.

I numeri Ue non distano peraltro molto dalle proiezioni ufficiali del Def, che ipotizza per il Pil una contrazione di 1,2% quest’anno e una ripresa di 0,5% il prossimo.

Dopo il -0,7% del quarto trimestre 2011, a propria volta preceduto dal -0,2% del periodo luglio/settembre, la Commissione prevede per il Pil italiano una nuova caduta di 0,7% nel primo trimestre 2012 e di 0,4% nei tre mesi al 30 giugno prossimo.

“L’attività economica ha inaugurato il 2012 con un impulso negativo pari a 0,5% e continuerà a contrarsi nella prima metà dell’anno”si legge nelle poche pagine del documento specificatamente dedicate all’Italia.

“Basandosi sull’assunto che la situazione del mercato finanziario non peggiori ulteriormente e che il rendimento del decennale Btp resti di poco inferiore a 6%,l’economia dovrebbe stabilizzarsi nel terzo trimestre 2012 per cominciare a riprendersi a ritmo molto moderato soltanto nel quarto trimestre”.

Punto particolarmente dolente per la congiuntura italiana, sottolinea la Commissione come fanno lamaggioranza degli osservatori nazionali ed esteri, la caduta dei consumi interni in atto ormai dal secondo trimestre dell’anno scorso.

Mentre le imprese dovrebbero riprendere il programma degli investimenti già nella seconda parte del 2012, ladomanda interna si manterrà sulla china discendente per l’intero anno portando a un marcato calo delle importazioni.

Leggermente migliori le prospettive per il canale ‘export netto’, il cui contributo dovrebbe restare positivo nel biennio coperto dalle previsioni a causa del crollo delle importazioni.

“Nel 2012-2013 si vedrà comunque una moderata perdita di quote di mercato dopo il temporaneo miglioramento del 2010-2011” scrive Bruxelles.

La proeizione sul Pil italianodiventa più eloquente se paragonata a quella per l’intera zona euro, confermata a -0,3% sul 2012 e pari a +1,0% sul 2013 la stima è di +1,0%.

Sullo sfondo di un’attività economica che non accenna a ripartire, la Commissione rileva preoccupata che il tasso di disoccupazione è tornato a salire dalla seconda metà del 2011 e prevede un’ascesa da 8,4% dell’anno scorso a 9,5% quest’anno e 9,7% in prossimo.

“La dinamica salariale resterà nel settore privato inferiore all’inflazione e quelladel pubblico rimane congelata” scrive la Commissione.

Ultimissimo riferimento ai numeri italiani, con l’idea di un picco per il debito pubblico a 123,5% del Pil quest’anno “anche a causa dei costi della contribuizione al ‘firewall’ della zona euro, seguito da una discesa a 121,8% nel 2013.

BOND/SPREAD – Tutto fermo in attesa della Grecia, senza problemi l’asta Bot

Situazione di stallo sul mercato obbligazionario della zona euro in attesa di novità dalla Grecia, dove si aperto qualche spiraglio per la possibile formazione di un governo pro-euro.

In un clima così incerto possiamo tirare un sospiro di sollievo guardando ai risultati dell’asta di BOT in agenda di stamattina. Il Tesoro ha collocato senza problemi 10 miliardi di euro a fronte di 6,6 miliardi in scadenza.
Tassi in discesa: 2,34% da 2,84% di metà aprile per il Bot 12 mesi; 0,865% da 1,249% dell’asta precedente per il Bot 3 mesi.

La domanda è sata elevata come al solito: 1,79 e 2,49 volte l’offerta rispettivamente e sottolinea una volta di più che l’Italia ha fatto passi da gigante sulla via del recupero di credibilità.

Pochi minuti fa il commissario UE per gli affari economici Olli Rehn ha dichiarato che l’Italia non ha bisogno di manovre aggiuntive per raggiungere il pareggio in modo strutturale dal prossimo anno.

Lo spread Btp/Bund decennale si è riportato a quota 395 punti base dopo un’escursione mattutina oltre i 400 punti base. Il rendimento del Btp 10 anni è al 5,47%. Finora si è rivelato premiante sfruttare le discese oltre 400 punti base per gli acquisti.

Lo spread spagnolo è fissato a 443 punti base per un rendimento del 5,94%, sotto la soglia critica del 6%.

Sembra stabilmente rientrata l’emergenza “elettorale” dello spread olandese (51 punti base) e francese (127 punti base).

Il Bund future (142,77) sembra però voler chiudere la settimana sui top assoluti e non segnala alcun rientro dell’emergenza. Forti anche i Gilt inglesi e i Treasury bond americani.

Il Btp future (102,16) si difende egregiamente e trova da qualche giorno sostegno sopra quota 101. Confermata la banda di profitto a 103-105 e area 100 per gli acquisti. Lo stop loss è sotto 99,4 (chiusura).

HIGHLIGHTS-Comments by EU finance ministers and officials

BRUSSELS, March 13 (Reuters) – EU finance ministers and officials met on Tuesday to discuss a European financial transaction tax, Hungary’s deficit problems and IMF resources to be contributed to the euro zone’s bailout funding.

Following are comments by ministers and officials after the talks:
EU ECONOMIC AND MONETARY AFFAIRS COMMISSIONER OLLI REHN
ON EURO ZONE FINANCIAL FIREWALLS: “It is… now essential that we complete our crisis response, acornerstone of this response (is) the financial firewalls. The constructive discussion we had yesterday and today, make me confident on the prospect of an agreement by the end of this month to reinforce the European financial firewalls.”

SPANISH ECONOMY MINISTER LUIS DE GUINDOS
ON SPANISH DEFICIT AND CUTS: “I don’t think an additional cut of about 0.5 percent will have any significant impact, neither on economic growth nor on employment, or on the macroeconomic framework.”

“Our macroeconomic framework was based on hypotheses which were very cautious, extremely cautious, so logically there is some room.”

Following are earlier comments by ministers and officials before the meeting:
GERMANFINANCE MINISTER WOLFGANG SCHAEUBLE
ON FINANCIAL TRANSACTION TAX: “We’ll have a debate today about a fundamental political orientation considering whether it is justified to exempt the sale of financial products and services from a sales tax such as we have on the sale of goods and services with a value added tax.

“I think it’s probably not justified, but of course there are a number of arguments in favour and against.”

“You need a unanimous decision on tax issues, that’s not new. And that there are different opinions in the 27 states is also not new, but you can debate it at least.”

ON SITUATION IN GREECE: “We made progress in the Eurogroup yesterday. We saw the private sector accepted the bond swapoffer more than we expected. That’s why, according to the … EU/IMF troika, we now have a chance to get a slightly lower debt level in Greece in 2020 (than previously expected).

“On that, too, people always said it would never work, that (theprivate sector) would never accept it. You know if you always knew in advance what you can’t achieve, the world would never have been created.”

AUSTRIAN FINANCE MINISTER MARIA FEKTER
ON SITUATIONS IN HUNGARY AND SPAIN: “Unfortunately growth in Hungary did not go as planned and that’s why the numbers had to be adjusted down.

“I want to make the critical observation that we would have preferred to give Hungary some time to fall into line, namely by offering atwo-step process that makes a final decision on sanctions at the start of the summer.

“We must treat all states in the same way.”

“Yesterday we had a similar debate about Spain and we didn’t immediately impose sanctions but gave the them achance to have a more ambitious budget for 2012.”

“Looking at the pressure put on Hungary I feel as if we are measuring with different measures.”

LUXEMBOURG’S FINANCE MINISTER LUC FRIEDEN
ON FINANCIAL TRANSACTION TAX: “Weare talking about transactions that are almost always cross-border transactions and if you only have the tax in a few countries then the transactions would move elsewhere.

“In principle the tax is fine but you need all 27 countries toparticipate. We need also a debate about who pays for the tax: is it the funds, is it the banks or is it in the end the citizens, the investors?
“All these factors need to be debated and I hope to have that in the coming months, maybe not today.I don’t think we will reach a decision about this today.”

“For me there are lots of unanswered questions, especially the one of the competitiveness of European financial centres. You have to bear in mind that centres outside of Europe such as New York and Singapore won’t introduce the tax so that’s why we as Luxembourgers see big questions we would like to have answered first.”

“Without (Britain) there will be no financial transaction tax.”

SPANISH ECONOMYMINISTER LUIS DE GUINDOS
ON SITUATION IN SPAIN: “We reiterated (last night) Spain’s commitment to the 3 percent target for 2013 and the only thing that was asked of Spain was an adjustment of the path towards that 3 percent figure, anadditional adjustment this year, and Spain is completely committed to that adjustment.”

DE GUINDOS DECLINED TO SAY WHAT EXTRA STEPS SPAIN WOULD TAKE TO MEET THE 2012 TARGET, BUT SAID: “Today we will discuss the maximum expenditureceiling. It is very important to note that the majority of Spain’s arguments have been taken into consideration. There’s been a change in the stability programme of the previous government that was unrealistic in the current climate.”

SWEDISH FINANCE MINISTER ANDERS BORG
ON FINANCIAL TRANSACTION TAX: “The financial transaction tax would be difficult to accept. It would increase the households’ lending costs. It would increase the cost of capital for companies. It wouldincrease the costs for governments.”

ON DUBGET DEFICITS: “I think it’s very important that when we are seeing a stabilisation in the Europen economies that we don’t see any depreciation of credibility. It is very important that the Spanish government is sticking to their targets for 2013.”

FRENCH FINANCE MINISTER FRANCOIS BAROIN
ON COUNTRIES’ NEEDS TO REDUCE BUDGET DEFICITS: “What’s true for Spain is true for all the other countries. We are in the processof restoring confidence in the euro zone. We are in the process of putting into place measures of protection and deficit reduction.

“No one can distance themselves from the target of budgetary consolidation.”

(Reporting by AnnikaBreidthardt, Justyna Pawlak, Robert-Jan Bartunek, John O’Donnell and Robin Emmott in Brussels, and Julien Toyer in Madrid)

Recap – Euro Zone Withholds Greek Aid Until Austerity Passed

BRUSSELS — Euro-zone finance ministers withheld approval for a second Greek bailout Thursday and demanded fresh proof from Greece’s political leaders that they were ready to deliver on past and new pledges to seal a second bailout package as early as next week.

After a meeting Thursday, the ministers said they will meet again Wednesday to push through the EUR130 billion ($173 billion) bailout that Greece needs to avoid default.

But first, the Greek parliament must approve new austerity policies and a package of economic overhauls and the government should detail how it would bridge a fiscal gap of EUR325 million to meet budget targets this year.

“We still have a lot of work to do by next Wednesday,” Dutch Finance Minister Jan Kees de Jager said after the meeting. “Greece have been given their homework, which is explaining what’s in the EUR325 million.”

Greek finance minister Evangelos Venizelos put the country’s choices in starker terms saying Greece must make a “final, strategic” decision about its membership in the euro zone over the next six days.

“We have to decide between tough decisions and tougher decisions,” Venizelos told reporters after the meeting.

Venizelos said there had been objections from a number of other countries that Greece hadn’t fully set out how it would find the necessary savings for 2012.

Earlier Thursday, Greek Prime Minister Lucas Papademos said that political leaders supporting his government had agreed on a reform package following days of difficult negotiations with a troika of lenders–the European Union, the European Central Bank and the International Monetary Fund. European economic and monetary affairs commissioner Olli Rehn confirmed that the EU had received a staff level agreement between Greece and the troika.

But Rehn said this wasn’t enough to unlock a fresh bailout package.

“It’s up to the Greek government by concrete actions through legislation and other actions to convince its European partners that the second program can be made to work,” he told reporters on his way into the meeting.

German Finance Minister Wolfgang Schaeuble said he was confident Greece could complete its debt restructuring in time for a March 20 debt repayment. But conditions for a final agreement on a new bailout package are “not there yet,” Schaeuble said.

Thursday’s political deal in Athens followed protracted overnight negotiations between Greece’s main political leaders–from the Socialist, or Pasok, party, the conservative New Democracy party and the small nationalist Laos party–over what measures they were prepared to sign up to win the bailout deal.

The three political party bosses had earlier agreed to most of the creditors’ demands, including private sector wage cuts and public sector job cuts, but during night-long negotiations they were divided over a plan for deep cuts in pension benefits, leaving a roughly EUR300 million shortfall in this year’s budget targets. Officials later said an agreement was reached but no details were announced on how the gap would be covered.

As the focus of the discussions shifted to Brussels, officials indicated patience with Athens was wearing thin.

“What’s important in Athens isn’t important for everyone else,” a European government official told Dow Jones Newswires, adding that “there is a list of 10 to 15 questions” about the Athens political deal announced Thursday that need answering.

The EU and IMF are considering a number of options to ensure Greece prioritizes repayment of debt ahead of funding government operations. One of these is the creation of an escrow account that would control the bailout funds and have the power to repay Greece’s debt before lending to the Greek government.

“We are considering it seriously because it is one relevant possibility for reinforcing surveillance and also effective implementation of the program,” Rehn said after the meeting.

Several ministers have made it clear they want to see what parliamentary backing the coalition government can muster for new measures before giving a green light for the package.

The first crack in the government’s unity came earlier Thursday with the resignation of Deputy Labor Minister Yannis Koutsoukos.

“Our creditors ignored the arguments and factual proposals of the Labor Ministry and those of the finance minister. In an extortionate manner which is completely improper and shameless, they [creditors] imposed measures which demolish the structure of labor relations,” he said in a statement.

Still, the coalition has a big majority and the government should be able to win parliamentary backing for the measures despite expected defections. The first votes could come as early as Sunday.

But Greece is walking a tight timeline. It needs the new bailout and a debt restructuring deal in place before March 20 when it currently faces a EUR14.4 billion debt payment. Without the two deals in place, Greece is very likely to default.

A debt swap intended to cut Greece’s private-sector debt by about EUR100 billion is “practically finalized”, Rehn said.

The debt-restructuring deal appeared near completion after private-sector creditors indicated earlier they would accept lower interest rates on new Greek bonds they will receive after a 50% haircut.

Under the draft agreement with the troika of official lenders, Greece will slash minimum wages in the private sector by 22%, abolish permanent jobs in state enterprises and cut 150,000 jobs in the public sector by 2015, among other measures.

The economy is expected to contract 4% to 5% in 2012, but return to growth next year, although many private-sector economists are skeptical that Greece’s economy is anywhere close to coming out of recession.

The international lenders had asked Greece to come up with EUR3.2 billion in spending cuts for 2012 alone. They also sought the mass layoff of some 15,000 civil servants in Greece’s bloated public sector in 2012, as well as steep cuts in supplemental pensions paid to retirees.

While Greece comes under pressure to implement the tough reforms, fresh protests loom. Greek unions called a 48-hour strike beginning Friday as anger mounts over round after round of austerity.

At an October summit, it was decided that private-sector haircuts would suffice to bring the ratio of Greek debt to gross domestic product down to 120%. On those assumptions, leaders agreed to grant Greece a second bailout of up to EUR100 plus an extra EUR30 billion that Greece could use as sweeteners to lure in private creditors taking losses in its debt restructuring.

But as the Greek economy continued to deteriorate since October, the agreed bailout may not be enough to cover Greece’s funding needs leaving a gap of up to EUR15 billion that may still need to be filed.

The ECB could carry some of those losses by agreeing not to make a profit on some of the Greek bonds it purchased under its bond-buying program. Ahead of Thursday’s meeting, ECB President Mario Draghi said the ECB couldn’t accept a loss on its holdings of Greek bonds, but didn’t entirely rule out some role for the institution in a new bailout package for the Greek government.

-By Matthew Dalton, Matina Stevis and Costas Paris, Dow Jones Newswires; +32 (0)2 741 1481; laurence.norman@dowjones.com

(Geoffrey T. Smith, Laurence Norman and Frances Robinson in Brussels, Alkman Granitsas and Stelios Bouras in Athens, and Margit Feher in Frankfurt contributed to this article.)

UPDATE: Germany Optimistic Greek Debt Deal Will Be Struck Soon

By Andrea Thomas
Of DOW JONES NEWSWIRES

BERLIN (Dow Jones)–The German government is optimistic that a deal in the Greek debt talks will be struck soon, officials said Friday.

“I assume that the necessary negotiations between private-sector creditors and Greece will come to an end,” German government spokesman Steffen Seibert told reporters. “We are confident that an agreement will be found within the scope of what has been set in December.”

Finance ministry spokeswoman Marianne Kothe said Germany is “optimistic, as Mr. Seibert has said, that negotiations will be finalized soon.”

Greek debt swap negotiations with representatives for private-sector creditors over a EUR100 billion debt write-down were continuing Friday. A person close to the talks said Friday that negotiations have edged toward an agreement, with bond holders apparently willing to accept lower yields on their future holdings of Greek debt.

At the December summit last year, European Union leaders agreed with private creditors a 50% debt write-down.

Earlier Friday, EU Commissioner Olli Rehn said he hopes the Greek debt deal would be sealed by the weekend.

Rehn has also said private creditors’ write-down won’t be sufficient to help get Greece’s debt levels on a more sustainable path and public lenders may have to increase their contribution to Greece’s debt deal.

However, Seibert criticized these comments. “I know that we won’t learn news about Greece, about the situation there and the implementation of the programs, from Mr. Rehn but from the troika’s report,” he said. “That’s why I believe such speculation makes no sense because it helps to increase uncertainty.”

The troika is a commission of representatives from the International Monetary Fund, the European Commission, and the European Central Bank that is supervising Greece’s reform process and must approve any international aid for the country.

The German government insists that the troika must present its report, private sector involvement must be negotiated and talks with Greece over its own new contribution to debt reduction must make progress. In addition, the crucial political forces in Greece must show their determination to support Greek reform efforts, Seibert said.

German Chancellor Angela Merkel also rejected Rehn’s comments Thursday, saying debt restructuring talks with Greece must first of all focus on a voluntary restructuring deal.

The second Greece bailout package will be based on the result of these talks and “Greece then has to specify its additional commitments,” Merkel had said.

-By Andrea Thomas, Dow Jones Newswires, 49 30 2888 4125; andrea.thomas@dowjones.com

(Costas Paris in London, Alkman Granitsas in Athens and Geoffrey Smith in Davos contributed to this report.)