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Greece in chaos, party chief slams 'barbaric bailout'

These are stories Report on Business is following Tuesday, May 8, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Greece in turmoil The situation in Greece threatens to go from bad to worse, if that's even possible, as uncertainty weighs on Athens and the markets.

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After Sunday's elections left the country with no clear outcome, the head of the party that wants to undo the terms of the bailout is now trying to form a coalition government. But it's not clear that will work, which could mean another election. And time is not on the country's side.

"The timeline going forward requires Greece to pass a budget including measures agreed to in its last bailout as a pre-condition for the first review that is supposed to occur by the end of this month," noted Derek Holt and Dov Zigler of Scotia Capital.

"A medium-term fiscal plan is also supposed to be ready by the end of May. All of this is necessary in order to prove that financing is in place for the next year. At present, these timelines are unlikely to be met and especially so if another election is called on a coalition stalemate."

The voters have clearly spoken in Greece, and that's the direction politicians have to take.

But it's not clear a coalition can even be formed at this point - the first-place New Democracy party failed to put one together - and the situation now threatens the international rescue of the country.

"Press reports that Greek lawmakers won't manage to form a coalition points to [a]possible new election," said Kit Juckes, the chief of foreign exchange at Société Générale. "If this derails Greece's bailout, it has the potential to spin out of control."

And that's just the uncertainty. Should Alexis Tsipras and his Syriza party, which took second place in the elections, form a coalition government, then all bets are off.

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I'm not saying he'd be wrong to attempt to rewrite the harsh terms of the bailout agreement - indeed, something has to give amid Greece's crippling unemployment - only that it would plunge Greece back into fiscal turmoil.

As he put it today on state television, Sunday's vote was one against "a barbaric bailout."

"There will be no €11-billion of additional austerity measures, 150,000 jobs will not be cut," he said.

But that's if he can form a coalition.

"Given he is unwilling to talk to ND (New Democracy party), the Communist Party has said it won't talk to anyone and Golden Dawn (the extreme right) is not a candidate coalition partner, the numbers don't add up," said senior currency strategist Elsa Lignos of RBC in London.

"So it seems Greece will have to go back to elections (June 17 is the touted date)," Ms. Lignos said, noting the country's looming obligations aside from the bond swap deal, known as the private sector involvement or PSI, arranged earlier.

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"Greece's €436-million redemption on May 15 is starting to attract attention – it is an international bond which was not part of the PSI," she said.

"There is a 30-day grace period so Greece could effectively hard default just days ahead of a new election. That would open the way for litigation but the real story should still be what fresh elections mean for chances of a [euro]exit."

Condo boom continues Canada's construction industry continues to chalk up gains, notably in the condo market that has become such a concern in Toronto.

Housing starts across the country climbed in April to an annual pace of 244,900, Canada Mortgage and Housing Corp. said today, from 214,800 a month earlier.

Driving the increase, the federal agency said, was construction of multiple units such as condominiums. In Quebec and Ontario, starts surged 56.5 per cent and 12.2 per cent, respectively, due largely to multiples.

"The boom in the condo market clearly extended into April, thanks primarily to low interest rates," said senior economist Krishen Rangasamy of National Bank Financial. "That said, there may be some softening ahead if yesterday's drop in residential building permits is any guide."

Construction of singles fell across the country, except in Ontario, where they climbed almost 8 per cent.

"Most of the increase was in the multiples segment," Mathieu Laberge, a deputy chief economist at CMHC, said of the overall report.

"The increase in this segment is partly a reflection of the high level of pre-sales in large multi-unit projects since 2011, which is in line with job gains over the last year," he said. "Looking at single-detached homes, 67,700 such units were started across Canada in April, a rate which is consistent with that of the recent past."

The Toronto region was, of course, the focus for Ontario.

"Given uncertainty regarding labour conditions and financing, builders have been breaking ground quicker on projects sold out in the past," said CMHC regional economist Ted Tsiakopoulos.

"Meanwhile, tight resale markets for singles and low unsold inventories helped single detached construction grow in April. Modest job growth, rising apartment inventories, high home prices and more balanced resale markets should temper gains ahead."

Ackman sees more support The activisit shareholdering fighting the board of Canadian Pacific Railway Ltd. says his dissident forces are building ever more support heading toward a crucial May 17 vote.

Bill Ackman of Pershing Square Capital Management, who wants to replace Fred Green as chief executive officer, among other things, said today he has vitually all the support of the 36 per cent of CP shareholders who have voted in advance, The Globe and Mail's Jacquie McNish and Brent Jang report.

Mr. Ackman is proposing a slate of seven directors. With 14.2 per cent of the railway's stock, he's the biggest shareholder.

He has already won the support of other major players, putting the pressure on the CP to strike a settlement before the meeting. But he said today he has no plans to negotiate such a settlement.

Yahoo chief sorry I'm not at all sure that his apology is going to make this thing go away, but the new chief executive officer of Yahoo Inc. says he's sorry about a discrepancy on his CV.

Actually, Scott Thompson's apology to his staff, according to reports today, was about how the controversy has distracted the company.

"We have all been working very hard to move the company forward, and this has had the opposite effect," Mr. Thompson said in the memo. "For that, I take full responsibility, and I want to apologize to you."

Mr. Thompson's CV has reportedly at times included a computer science degree that he didn't get. The board is now looking into it.

"I am hopeful that this matter will be concluded promptly," Mr. Thompson said. "But, in the meantime, we have a lot of work to do. We need to continue to act as one team to fulfil the potential of this great company and keep moving forward."

RIM names new executives Research In Motion Ltd. has named two key new executives as the company struggles to overcome its deep troubles.

The BlackBerry maker said today it named Kristian Tear as chief operating officer and Frank Boulben as chief marketing officer.. Both, the company said, have "deep experience" in mobile computing.

"Kristian and Frank bring extensive knowledge of the rapidly changing wireless global market and will help RIM as we sharpen our focus on delivering long-term value to our stakeholders," said chief executive officer Thorsten Heins. "Most importantly, both Kristian and Frank possess a keen understanding of the emerging trends in mobile communications and computing."

Mr. Tear is a former executive vice-president of Sony Mobile Communications, Mr. Boulben the one-time executive vice-president of LightSquared.

CRTC sets regulations Canada's broadcast regulator has been asking TV providers to turn down the racket in loud commercials, and now it's making that an order.

Today, the Canadian Radio-television and Telecommunications Commission published changes to some of its regulations that govern the broadcasting industry, The Globe and Mail's Susan Krashinsky writes.

Controlling the volume of commercial messages is now part of the rules that the companies that own TV channels, distribution systems such as cable and satellite services, and video-on-demand offerings, must follow.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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