EU's Rehn: 'No Plan B' to avoid Greek default (by William L. Watts)

FRANKFURT (MarketWatch) -- The Greek parliament must this week endorse the government's proposed 78 billion euro ($111.4 billion) program of austerity measures and asset sales in order to secure emergency aid needed to avoid a default, European Union economic commissioner Olli Rehn said Tuesday. "The only way to avoid immediate default is for parliament to endorse the revised economic program," he said. "The program includes both the medium-term fiscal strategy and the privatization program. They must be approved if the next tranche of financial assistance is to be released," Rehn said in a statement, referring to a 12 billion euro aid payment. Rehn dismissed talk that European officials were weighing a backup plan in the event the austerity package is defeated. "To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default," he said.

Czech central banker calls for Greek restructure (by Simon Kennedy)

LONDON (MarketWatch) -- Miroslav Singer, governor of the Czech National Bank, said Tuesday that European authorities must stop trying to muddle through the sovereign debt crisis and make a clear decision to restructure Greek debt. In a speech to the Official Monetary and Financial Institutions Forum, Singer said there are two options -- either Greece can restructure its debt while remaining in the euro and committing to rigorous fiscal discipline, or it can exit the euro and restructure while devaluing its currency. Either way, Singer said the opportunity for a relatively painless outcome has passed and that dithering and U-turns by European political and economic authorities has left markets completely confused.

Greek privatization plan not a fire sale: official (by Polya Lesova)

LONDON (MarketWatch) -- Greece's five-year privatization program "is not a fire sale" and it's designed to front-load sales during the first few years, said George Christodoulakis, the nation's special secretary for asset restructuring and privatisations, on Tuesday at a London conference on reforming Greece. The Greek government is planning to sell stakes in companies, real estate and infrastructure projects in an effort to raise money to help pay down some of its enormous debt. "This is not a fire sale. It's a professionally run privatization plan," Christodoulakis said.

Greek default would pose contagion risk: economist (by Polya Lesova)

LONDON (MarketWatch) -- The Greek parliament will likely approve this week the latest austerity and privatization plan, since the alternative scenario is "substantially worse," said Mark Wall, head of economic European research at Deutsche Bank, on Tuesday at a London conference on reforming Greece. "There's no guarantee that this muddle-through [...] will be sustainable," Wall noted. However, a Greek debt default is "so unthinkable because of the contagion ramifications. Whatever happens in Greece sets a precedent for others," he said. There are contagion channels through the European banking system as well as the other European sovereigns themselves, according to Wall.

GOP urges Geithner not to bailout Greece via IMF (by Ronald D. Orol)

WASHINGTON (MarketWatch) - Eight Republican Senators on Tuesday urged Treasury Secretary Tim Geithner and the Obama administration to ensure that the U.S. doesn't inject U.S. taxpayer funds into Greece through an International Monetary Fund bailout package. "Today is a good time to review and adjust our commitment to IMF bailouts. Today is not a time to tap American taxpayers for more bailouts," the group of GOP senators said. Sens. Orrin Hatch (R., Utah), Jim DeMint (R., S.C.), David Vitter (R., La.), John Cornyn (R., Texas), Kay Bailey Hutchinson (R., Texas), Jon Kyl (R., Ariz.), Jerry Moran (R., Kan.) and Kelly Ayotte (R., N.H.) sent the letter to Geithner. The letter comes as Europe braces for the possibility that Greece defaults on its sovereign debt.

Trichet reiterates ECB's strong vigilance: report (by MarketWatch)

FRANKFURT (MarketWatch) -- European Central Bank President Jean-Claude Trichet on Tuesday said he is in a "strong vigilance mode" on inflation, Dow Jones Newswires reported. The phrase, used by Trichet earlier this month, is viewed as a signal the ECB is likely to hike its key lending rate when it meets July 7. Trichet was speaking at a news conference in Amsterdam. Currency analysts said the remarks helped lift the euro (cur_eurusd) , which traded at $1.4304 versus the dollar in recent action, up from $1.4275 in North American trade late Monday.