European Sovereign Debt Crisis Timeline: Greek Crisis Timeline
Last updated: 15th January 2012
We present below a timeline of the past and future scheduled events surrounding the European Sovereign debt crisis. It is a work in progress and is updated as future events unravel.
Check out our Explanation of the European Sovereign Debt Crisis here.
Countries in the euro zone as of 2011
Belgium Spain Malta Austria Germany France Cyprus Portugal Estornia Italy Luxembourg Slovenia Ireland Cyprus Malta Slovakia Greece Luxembourg The Netherlands Finland
May 2010: Phase I
Stated by the ECB as the first phase of the sovereign debt crisis.
The IMF approved a €30bn 3 year loan for Greece as part of a joint EU and IMF €110bn financing package.
5.5bn available immediately from the IMF, with the EU a combined 20bn in immediate financial support was made available.
The arrangement provides 'exceptional access to IMF resources'.
Of course 'conditions apply'. The IMF lends money to nations with a veritable list of demands that must be met in order for loan payments to be delivered. The conditions surround Greece's huge level of debt.
"On May 10, the EU and the ECB adopted an ambitious package of policy measures, including creation of a European Financial Stabilization Mechanism and an ECB program to support securities markets and reactivate temporary liquidity swap lines with the U.S. Federal Reserve."
July 2011: Phase II
Renewed tensions in financial markets from the sustainability of public finances in both the US and euro area and market participants increased concerns regarding the global economic outlook.
Tremors really started in the US and predictably spread across the atlantic.
The European Banking Authority (EBA) published stress test results from its 2011 EU-wide stress on 91 European banks designed 'to assess the resilience of the banks involved in the exercise against an adverse but plasible scenario'.
9 out of the 91 banks failed with Greek and Spanish banks being the majority.
Monday August 1st: US Debt Deal(ay)
Congress in the US played a game of chicken with global financial stability at stake. The US had reached its self-imposed $14.3T debt ceiling and could no longer issue more debt to pay back principal and interest on its existing debt. Only at the very last minute on Monday August 1st did the policy makers reach a deal to raise the debt ceiling. Unfortunately the devil was in the details as it represented a reversal of the US's previously expansionary fiscal policy with a large cut to government spending (almost US$900bn immediately).
Thursday August 4th
The S&P500 fell 4.78%, the largest percentage fall in over 2 years. The first of many 4% swings in major global indices to come in the following weeks.
The ECB started to recognise things might be worse than they had anticipated. So the Governing Council of the ECB at its meeting on the 4th of August announced a couple of things:
- the 'provisision of liquidity to banks by means of full allotment at fixed rates would be extended until at least early 2012'
- a 'futher longer-term refinancing operation with a maturity of approximately six months. These measures are aimed at supporting bank funding'
Friday August 5th
This is when things really started to heat up.
In an extremely controversial and much publicised decision S&P downgraded US Treasuries from AA to AA. Several factors contributed to S&P’s decision. In a press statement S&P stated that the recent US fiscal consolidation plan reached on Monday August 1st “falls short” of the target S&P had set for a US$4 trillion deficit reduction.
Credit default swaps (CDS), the cost of insuring against a default, on euro government debt exceeded levels observed in May 2010 (Phase 1 of the crisis).
Government bond volatility shot up to levels not seen since the aftermath of Lehman Borthers in September 2008.
Euro area government bond spreads over German bonds rocketed. Record highs were reached on 5th August on 10 year government bond spreads.
Sunday August 7th
The ECB announced it would start up the Securities Markets Programme (SMP) once again. The programme was introduced in May 2010 to purchase government securities to help reduce the risk of government debt securities markets becoming dysfunctional and tensions spreading to other markets. No purchases had been made under the programme since the end of March 2011. The programme is designed to be temporary and bond purchases are limited to secondary markets only.
September 14th: Bank Downgrades
More downgrades - this time to the private sector. Moody's downgraded Societe Generale from Aa2 to Aa3 and Credit Agricole from Aa1 and Aa2.
September X to September 20th
Berlusconi's government pushed through a 59.8 bn euro austerity plan and has pledged a balanced budget by 2013.
Italy was downgraded by S&P from A+/A-1+ to A/A-1. Italy as the euro zone's third largest economy represents a substantial risk in the event of a default. Its debt stands at 120% of GDP.
Thursday 22nd September
Global commodities sell off. Copper down 7.3%, and on Friday Gold down 5.85% and WTIC dropped below US$80
September 23rd to 25th
IMF held its annual meeting in Washington, Greek Finance Ministor, Evangelos Venizelos said Greece will do 'whatever it takes' to meet its budget goals. No action was announced for resolving the eurzone crisis - but there was a lot of talk about 'co-ordinated policy action' being required, the IMF seem to have forgotten that talk is cheap in financial markets. On saturday the 24th the IMF stated that it is ready to 'strongly support' the euro zone nations in resolving the sovereign debt crisis. 
- Parliamentary vote on property tax that is key to persuading the EU and IMG to provide the next aid installment
- The vote is expected to be passed
- The tax is to be levied via electricity bills to ensure speedy collection
- 74% of 1,002 Greeks polled by Rass for To Paron newspaper opposed the property tax, 59% believed Papandreou's government won't be able to avert default 
Europe holds out hope for co-ordinated response
- DAX rallies 5.29%, STOXX 50 rallies 5.31%
- Papandreou speaks in Germany and has a working diner with German Chancellor Angela Merkel in Berlin
- Papandreou announces "I can guarantee that Greece will live up to all its commitments. I promise you we Greeks will soon fight our way back to growth and prosperity after this period of pain"
- German parliament ratified the new EFSF powers agreed at an EU summit in July
- 10 out of 17 eurozone countries have approved the boost to the EFSF so far
- The vote was to increase Germany's guarantee from 123bn euros to 140bn euros
- Italy auctioned approximately 6bn euros at around 5.73%
Greece disclosed it will miss this year's budget targets.
- Euro-area ministers meet to discuss the possible approval of Greece's next aid payment
- Trichet in his final ECB meeting as ECB president announced that the ECB will resume covered bond purchases and that rates will remain at 1.5%
- 'The ECB will spend 40 billion euros ($53 billion) on covered bonds (assets backed by mortgages or public-sector loans) starting next month and will offer banks two additional unlimited loans of 12 and 13-month durations'
- 'He also said the ECB will continue to lend banks as much money as they need in its regular refinancing operations at least until July 2012.'
Italy and Spain downgraded by Fitch Ratings
- Fitch Ratings downgraded Italy and Spain citing concerns that they will struggle to improve their finances.
European Bank Dexia Takes another thrashing
- The Belgium federal government bought the local consumer-lending unit of Dexia SA (DEXB) for 4 billion euros and guaranteed 90bn euros of its funding over the next 10 years. Dexia faced inadequate short-term funding due to concerns over their European sovereign debt holdings. Dexia's balance sheet had total assets of around 518 bn euros at the end of June.
- Dexia Shares have fallen roughly 44% since the end of September
- In 2008 France and Belgium guaranteed 150bn euros worth of debt and injected 6 billion euros.
- French president Nicolas Sarkozy and German Chancellor Angela Merkel met in Berlin at a joing briefing aimed at stamping out the euro debt crisis. Sarkozy stated "By the end of the month, we will have responded to the crisis issue and to the vision issue,". Merkel also stated European leaders will do "everything necessary" to ensure banks have nough capital.
- The plan would be delivered by the November 3rd G20 summit according to Sarkozy
Troika announces Greece will get next bailout money pending approval
The EC, ECB and IMF, known collectively as the 'Troika' concluded their 5th review mission to Greece and stated in a joint press release "Once the Eurogroup and the IMF's Executive Board have approved the conclusions of the fifth review, the next tranche of EUR 8 billion (EUR 5.8bn by the euro area member states (EAMS), and the EUR 2.2 billion by the IMF) will become available, most likely, in early November"
Slovakia rejected EFSF overhaul
- Slovak lawmakers rejected the planned overhaul of the EFSF in parliament
- The legislation was blocked by the largest opposition party Smer
- Majority opposition party leader Robert Fico told reporters the party will support the legislation in a second vote that is currently unscheduled
- Slovak Finance Minister Ivan Miklos stated “There is likelihood that the bailout fund will eventually be approved this week, one way or the other,”
- The failure to pass represented a vote of no confidence in the government and meant that current Slovak PM Iveta Radicova will remain only as a 'caretaker'.
- Slovakia is the only country that is yet to approve the EFSF deal 
- Berlusconi survives a confidence vote
- Spain's credit rating is cut one level to AA- by S&P to their 4th highest investment grade.
- Spain continues to face severe struggles with unemployment hitting 21.2% in August and manufacturing posting the biggest decline in 2 years in September
- Spain is scheduled to hold a general election November 20th 2011.
Berlusconi passes a confidence vote.
Sunday October 23rd
EU leader summit had been scheduled where they hoped to reach a final decision on a Greek bail-out and a new strategy to recapitalise Europe's banking sector. The summit was postponed following a disagreement between France and Germany on details of the deal and rescheduled for Wednesday the 26th October.
A final report by the troika (IMF, EC and ECB) on Greece's fiscal and economic reforms is expected to be presented to European finance ministers. 
EU leaders met with European financial instituion leaders and agreed on a 50% writedown on Greek debt as well as recapitalisation. EU leaders also seek a leveraged EFSF to 1T euros.
Greek Prime Minister George Papandreou announces that the EU bailout for Greece will need to be approved in a national referendum. (Bloomberg)
Papandreou got summoned to Cannes ahead of the G20 summit to answer for his surprise referendum announcement. Nicholas Sarkozy flew to China to negotiate with Chinese prime minister Wen Jiabao about possible aid coming from China's roughly 3 trillion euro reserve holdings. The negotiations were unsuccessful and the Chinese government remains reluctant to provide aid to the euro zone.
G20 summit in Cannes where EU leaders were expected to present their plan for restoring confidence in the euro. Papandreou won a confidence vote in Greek parliament after facing calls of resignation from the opposition party. There remains an intense political battle in the Greek parliamentary system.
G20 leaders are called on to pledge more money to the IMF to increase the IMF's warchest and help fund purchases of the proposed EFSF bonds.
Italian Prime Minister Silvio Berlusconi announces he will resign after further budget measures are passed in Italian parliament. Italian 10 year bonds reach a euro era record of 7.48%.
Italian Prime Minister Silvio Berlusconi resigns. Mario Monti is planned to succeed Berlusconi (Bloomberg).
6 Central banks co-ordinate to offer lower borrowing costs for Euro zone banks. (Bloomberg)
January 13th 2012
Friday the 13th aka black friday certainly proved to be a day of darkness for many of the Euro Area Member States. S&P, who in the later half of 2011 sparked an equity market sell-off with it's downgrade of the US, downgraded several Euro nations credit ratings.
- France and Austria downgraded one level from AAA to AA+
- Finland, The Netherlands and Luxembourg kept their AAA rating but were put on outlook negative.
- Germany remains AAA rated
- Italy and Spain were also downgraded
"We have lowered the long-term ratings on Cyprus, Italy, Portugal, and Spain by
two notches; lowered the long-term ratings on Austria, France, Malta,
Slovakia, and Slovenia, by one notch; and affirmed the long-term ratings on
Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands.
All ratings have been removed from CreditWatch, where they were placed with
negative implications on Dec. 5, 2011 (except for Cyprus, which was first
placed on CreditWatch on Aug. 12, 2011)."
- Standard & Poor's Takes Various Rating Actions On 16 Eurozone Sovereign Governments, S&P, Jan 13th 2012
These are future events at the time of writing.
When is Greece expected to run out of money?
The greek government has said it will run out of money by the middle of Novermber if it does not receive the next 8 billion euro tranche of aid.
 ECB Monthly Bulletin, September 2011
 Results of 2011 EU-wide stress test, press release, European Banking Authority (EBA), 2011
 EU Stress test pass rate under fire, Financial Times, July 15th 2011
 Troika May Conclude Greek Talks Mon, Statement Seen Tue-Source, WSJ, 2011
 Dexia Accepts Rescue Plan, WSJ, 2011
 Statement by the EC, ECB and IMF on the 5th Review Mission to Greece, IMF, 11th October 2011
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