1 Greek dilemma: Deal or exit (Ian Traynor & Larry Elliott in The Guardian) Greece has 48 hours to strike a new bailout deal with its eurozone creditors or face a banking collapse, a humanitarian emergency, and the start of an exit from the single currency, European leaders have decided.
Unless Athens presents convincing details entailing more austerity as the basis for its third bailout in five years, all 28 national EU leaders, not just those of the eurozone, are to gather in Brussels on Sunday in emergency session to discuss how to contain the fallout from Greece’s financial collapse.
The stark ultimatum emerged from a special eurozone summit in Brussels on Tuesday where the Greek prime minister, Alexis Tsipras, was pressed to explain to the other leaders how he wanted to proceed following his victory in a referendum on Sunday when his country voted no to eurozone austerity measures as the price of staying in the euro.
The Greek leadership exasperated EU leaders by failing to present new bailout proposals on Tuesday. It is to present a formal application on Wednesday for a new rescue package from the European Stability Mechanism (ESM), the eurozone’s permanent bailout fund.
If Berlin, Paris, Brussels and other key creditor capitals can agree the terms and timings with Athens, Greece would be offered a stay of execution in the euro. Sunday’s summit would then be of the 19 eurozone leaders. If not, the summit of all 28 leaders, including David Cameron and heads of government of other non-euro countries, would instead convene to deal with the consequences of a Greece cut loose from the eurozone financial system.
2 US Army ‘to cut 40,000 troops’ by 2017 (BBC) The US Army is to reduce the size of its force by 40,000 soldiers over the next two years, according to US media. The cost-cutting exercise will also see an additional 17,000 civilian employees cut from the army. The plan, which could be officially announced later this week, would see the US troop level drop to about 450,000 soldiers by the end of 2017.
The US army had about 570,000 troops in 2012 at the height of the conflicts in Iraq and Afghanistan. A drastic cut like this has long been on the table – in early 2014, the then Pentagon chief Chuck Hagel proposed trimming the active-duty Army to 450,000 personnel, after two costly foreign wars.
The planned army staffing levels would be the lowest since 1940, a year before the US entered World War Two, when it employed about 270,000 active-duty soldiers. A year before the 11 September 2001 attacks, the level was about 480,000. The army would have to cut a further 30,000 troops if automatic budget cuts known as sequestration come into effect in October, according to USA Today.
3 Alibaba shares hit low point in China sell-off (Fortune) Shares of Alibaba Group hit their lowest point since the e-commerce company’s September IPO, as the broader Chinese market plummeted on Tuesday.
Alibabas stock dropped more than 4% at one point during Tuesday trading, dropping as low as $76.21 per share, which represents the company’s lowest share price since going public less than a year ago. (The company’s stock more recently rebounded slightly to sit just below $80.)
The Chinese company began trading on the New York stock Exchange at a price of $68 in mid-September and closed its first day of trading at $93.89. Alibaba’s stock peaked at $120 in November before retreating earlier this year, including a large drop-off that knocked billions of dollars off the company’s market value after a Chinese regulator criticized the authenticity of some products sold on Alibaba’s websites.
Tuesday’s low-point comes amid a massive sell-off for the Chinese market that is weighing down the Chinese economy and injecting even more volatility into global markets that were already unstable due to the uncertainty over the Greek debt crisis. The Chinese market crash has resulted in $3 trillion evaporating from the Chinese stock market in the past month, with the Shanghai Composite Index falling roughly 25% from last month’s peak.
Shares of Yahoo also dropped on Tuesday and were recently down more than 1%. Yahoo is in the process of spinning off a stake in Alibaba that has been valued at nearly $40 billion.