THE DISTILLERY: Greek pact

Greece and the US: struggling debtors and would be financial black holes, for differing reasons. The euro and the greenback: up and down at the whisper of a deal or report of a pact. Now what's hoped to be the final deal for Greece from a European leaders' meeting in Brussels overnight. But in the US, more rumours than fact about the stuttering negotiations on the debt ceiling and a tax and spending package. But the big deal is the agreement on Greece.

The Financial Times reported this morning on the front page of its Asian edition: "European leaders last night agreed a fresh bailout for Greece involving private sector bondholders that would cut the country's debt burden by a quarter. The agreement is a political victory for Angela Merkel, Germany's chancellor, but one that will almost certainly lead to the first default on eurozone bonds since the creation of the single currency. The central issue – as it has been for weeks – has been how to get private Greek bondholders to contribute to the package, which is expected to lead to a temporary default on some Greek bonds." Let's hope this is the real deal.

In the US, still no sign of an agreement on cutting spending, raising taxes and the debt ceiling, and Reuters reported early this morning: "Standard & Poor's reiterated on Thursday it sees a real risk that future US government deficits may meaningfully miss discussed targets and that there is a 50-50 chance the US AAA credit rating could be cut within three months, perhaps as soon as August. The deficit reduction debate is coming up against an August 2 deadline when the $14.3 trillion limit on America's borrowing capacity is exhausted, putting in jeopardy payments on US Treasury debt as well as paychecks for federal employees and soldiers. If an agreement is reached to raise the debt ceiling but nothing meaningful is done in terms of deficit reduction, the US would likely have its rating cut to the AA category, S&P said." Wall Street and European markets were higher because of the reports about a deal for Greece.

Back home, Fairfax's Malcolm Maiden wrote: "The attempt to get the world clear of the 2008-09 global financial crisis and the growth-choking tsunami of debt it unleashed reached another crucial milepost last night when Europe's political leaders sat down to consider a new plan to stave off a Greek sovereign debt implosion. Overseas markets were boosted yesterday by news that the German Chancellor, Angela Merkel, and French President, Nicolas Sarkozy, had hammered out a new Greek plan ahead of a US summit, in seven hours of talks that also included the European Central Bank President, Jean-Claude Trichet. Spain and Italy both have plans to get their deficits and debt down. But they need time and won't get enough of it if the Greek rescue falters. It's a big moment."

The Australian's Matthew Stevens wrote this morning: "On the one hand we have the International Monetary Fund instantly endorsing Treasury and Reserve Bank concerns about the unsustainability of China's growth story because of inflation concerns, the undervalued currency and a crop of regional property bubbles fed by banks failing to heed official directives on pricing debt. And, on the other hand, we have regional markets chilled by data indicating that Beijing's move to constrain economic growth may have slowed the engine room of the global economy, with industrial growth dropping in June."

The Australian Financial Review reports this morning: "NAB chief Cameron Clyne has cautioned against aggressive bank expansions into Asia, arguing competition from global banks there is already strong." And who is expanding into Asia? Why NAB's Melbourne rival, the ANZ.

The Australian's Nabila Ahmed asked this morning: "The silver donuts and vampire squids of this world have attracted attention for falling share prices in a depressed market, but what of the other end of the scale? They may not be as sexy as Macquarie Group and Goldman Sachs, but questions are being asked about listed investment advisory groups such as Austock and Wilson HTM – namely, is the listed structure sustainable for these vehicles? The share prices of both are suffering."

Michael Pascoe wrote on smh.com.au yesterday: "Outgoing Woolworths CEO Michael Luscombe yesterday joined the chorus effectively complaining about consumers enjoying the benefits of the stronger Australian dollar. This is a problem? Australians are buying more stuff for less money, so we're effectively wealthier – part of the promised payoff from the commodities boom through our stronger currency. Competition and smarter, better informed consumers are ensuring that some of the benefits of our dollar buying more are passed on, rather than sticking to retailers' bottom lines. In Woolworths' case, if the trend is maintained, it eventually means dividend growth will be lower for shareholders, but note that Woolworths' overall sales still rose and there was no change to the company's profit guidance. For that matter, while David Jones was generating wild headlines last week about a civilisation-threatening cut in its profit outlook, DJs was still talking about a healthy profit on a reasonably fat margin – not about making a loss."

The AFR's Chanticleer columnist posed a good question this morning after a surprise departure at QBE last night: "The sudden management shake-up at QBE will raise the question of whether long-standing chief executive Frank O'Halloran is more powerful than the board of directors."

The London hacking scandal continues to rumble on with the AFR reporting this morning: "Rupert Murdoch's British newspapers are set to lose exclusive access to British athletes ahead of the 2012 London Olympics after the phone hacking scandal that led to the News of the World's closure." The AFR's Notebook column also weighed in this morning: "Instead of a board of insiders who obey Rupert Murdoch's whims, News Corp needs a new chairman who can recruit new directors." But the paper said in an editorial: "It is hard to blame Rupert Murdoch for declaring he is the man to clean up a mess he says he knew little about."

Adele Ferguson wrote on smh.com.au yesterday: "Attempts to protect consumers from being fleeced by the dodgier elements of the mortgage broking and payday loan market by forcing all credit providers to be licensed by ASIC has resulted in more than 1000 applications being rejected or withdrawn. In its first report into the Australian consumer credit industry since its powers were widened to include regulation of Consumer Credit on 1 July 2010, the Australian Securities & Investments Commission revealed that it had refused outright four licence applications. The more interesting statistic is that 637 applicants withdrew their applications before finalisation. The reasons for this pre-emptive move are unknown, but if the stiffer stance acts as a deterrent, then it is a good thing."

The Australian's Tim Boreham wrote on the paper's website yesterday: "The gold sector's production "league ladders" are rather like those surveys on investment banks' deal-share, or newspaper circulation audits: they're open to interpretation and you'll never hear the last word on them. In this cautious vein, we report Resolute Mining's (RSG, $1.35) claim that it will this year emerge as the second-biggest listed miner behind (undisputed) sector-titan Newcrest Mining (NCM, $40.96). The Thai-centric Kingsgate Mining, the enlarged Alacer (the old Avoca) and the to-be merged Conquest Mining and Catalpa all have reasonable dibs on gold's silver medal status as well."

The Australian's John Durie wrote yesterday: "If the federal government thought handing $300 million to Bluescope and OneSteel would ease the pain of the carbon tax, the sharemarket disagrees. Since July 11, OneSteel has underperformed the market by 1.6 per cent and Bluescope by 0.8 per cent. Granted both rallied into the announcement on the theory by complaining loudest the industry would get a handout, but the market sees through such political games. The combined impact of the carbon tax and the mining tax has meant a massive underperformance by both stocks. The carbon tax has knocked $240 million in value from them relative to the market fall."

And Fairfax's Elizabeth Knight wrote this morning: "Placing a spotlight on insider trading has emerged as an unintended consequence of the introduction of a carbon tax/emissions trading scheme. Someone made a killing out of trading the steel industry stocks Bluescope and OneSteel before the announcement of the detail of the carbon tax package. It could turn out to be a hot potato that no one really wants to be left holding, but one that will gain enough media attention it cannot be ignored. The embarrassing aspect of this particular instance is the leak of market-sensitive information came from the ranks of the government or the legion of public servants who were aware of the details of the carbon tax package before it was released to the public on July 10."

Fairfax's Insider, Ian McIlwraith says: "Macquarie Group's Nick Moore and MAp Airports' boss, Kerrie Mather, look like having an interesting six months as the two try to satisfy their individual corporate imperatives. Mather, who is a former colleague of Moore's because MAp was not so long ago a Macquarie satellite, this week announced that she was well on the road to turning her group into virtually a single investment entity by flogging its stakes in Copenhagen and Brussels airports in exchange for topping up to 85 per cent its interest in Sydney Airport. She also said that once that deal is finalised, MAp intends paying its investors cash equivalent to 80¢ for each of its triple-stapled securities (nothing is simple about MAp or Sydney Airport's ownership structure thanks to Macquarie's original privatisation structure)." Macquarie has around 400 units in MAp, so it could get around $300 million, which should help the faltering share price.

And finally, The Australian's John Durie wrote this morning: "Malcolm Turnbull is spreading the word all over town about his broadband plans, which is good news except for an alarming lack of detail on the final product. Yesterday the opposition communications spokesman was at lunch with JPMorgan and on Wednesday at a CEDA luncheon in Sydney where he laid down his blueprint to replace the NBN."