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Re: New EC Thread

Post  Panda on Sat 14 Jul - 8:43

Jul 14, 2:21 AM EDT


French president's 'Mr. Normal' image hit by tweet

By THOMAS ADAMSON
Associated Press Writer



France's PSA Peugeot-Citroen slashing 8,000 jobs





PARIS (AP) -- A feud involving the French president's live-in girlfriend, his former partner and his eldest son may have tarnished the new leader's carefully cultivated image as "Mr. Normal" - credited with helping him win the spring election among a populace weary of his flashy predecessor, Nicolas Sarkozy.

Francois Hollande is expected to break his silence about the family feud that has riveted the media during a television interview Saturday - tradition-steeped Bastille Day when a military parade and an interview by the chief of state about French policy at home and abroad is standard.

That he has agreed to answer questions about what's really on everyone's mind is a sign that in the Twitter era, even French leaders can't keep their private lives private. And that's the problem.

The presidential Elysee Palace on Friday confirmed reports that Hollande would talk about "tweetgate," as the media call the affair if - as is almost certain - he is asked about it during the TF1 broadcast.

A tweet last month, during legislative elections, by Hollande's companion Valerie Trierweiler in support of the political opponent of his ex-partner Segolene Royal caused a scandal. Royal - the mother of the president's four children - was defeated in her bid for a parliamentary seat.

The tweet was all it took to set the French political establishment aflame, and turn the president's image on its head.

Widely criticized as a vindictive move, the tweet went viral and dominated news shows.

"He campaigned for a clean break with Sarkozy, but it was a big mistake for Valerie, as it put his private life into public view," political communications expert Arnaud Mercier said in a telephone interview.

According to behind the scenes reports in the media, both Hollande and his children were furious, but all sides moved into a damage control operation and kept the feud under wraps.

Trierweiler has since kept a low profile. She was notably absent when Hollande visited with Queen Elizabeth II this week in London.

The Twitter account of Hollande's eldest son Thomas reads discreetly: "I don't count on tweeting for the moment."

A low profile was maintained until this week when the 27-year-old Thomas broke his silence, speaking out against his father's companion's actions to the newsweekly Le Point, published on Wednesday

"I knew that something could come from (Valerie) one day, but not such a big knock. It's mind blowing," he was quoted as saying.

"It upset me for my father. He really hates it when his private life is spoken about," he said. Then he added what many were already thinking: "It destroyed the "Normal" image that he'd built up."

The Elysee tried to diffuse the comments, saying on Friday that they were made during a "personal interview." Thomas Hollande has said some comments were taken out of context.

Despite those efforts to water down the remarks, "tweetgate" still dominates French media. Son Thomas' remarks are thought to have pushed his father into speaking out about a feud now set to overshadow the Bastille Day celebrations.

Since the Le Point article, Trierweiler has been spotted by her man's side in a clear show of unity. French media reported that Hollande allowed diners to take photographs during an intimate dinner with her at a swish Paris restaurant on Wednesday night. Trierweiler is also set to accompany him in engagements this weekend and next week.

"This is really serious for him now. That's why he's going on TV," Mercier said.

Sarkozy lost May's presidential election in large part because French voters grew tired of his very public private life, political pundits have said.

Conversely, a clear strength of Hollande, slightly portly and very discreet, was his Mr. Normal image.

Voters thought a Hollande presidency would spell the end of the Elysee family soap opera that saw Sarkozy divorce and take a new wife, haute-couture model turned singer, Carla Bruni, while president.

Commentators are now saying that history is repeating itself.

"He only beat Sarkozy by a small percentage, (owing to) his non-bling, private image ... Now he seems no different than Sarkozy, caught between two women," said Mercier.

The colorful amorous exploits of French leaders is nothing new.

For instance, Francois Mitterrand, French president from 1981 to 1995, had a secret daughter with a mistress.

But the French media, who have made it a point of honor to be protective of politicians' private lives, kept Mitterrand's exploits out of the papers.

In today's world, however, politicians' every public move is now under the scrutiny of smart phones and Twitter, and maintaining privacy is harder than ever - even in France.

"It's for sure we're in an era where the private life of public people is more and more exposed with new media," said Diane-Monique Adjanonhoun, a political marketing strategist.

For Adjanonhoun, "tweetgate" signals the end of the era of politician's privacy.

"Presidents now are breaking with Mitterrand's time... We used to be a private country. But now, whether conscious or unconscious, France is no exception."

----

Thomas Adamson can be followed at http://Twitter.com/ThomasAdamsonAP .

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.





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Re: New EC Thread

Post  Panda on Sat 14 Jul - 14:11



Greeks Favor Renegotiation of Bailout Even at Risk of Euro Exit

By Paul Tugwell - Jul 14, 2012 12:36 PM GMT+0100
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Nearly three-quarters of Greeks say the country’s new coalition government lead by Antonis Samaras must insist on a renegotiation of the terms of Greece’s international loan agreement, a poll by MRB for Real News newspaper showed.

Of those surveyed, 73.9 percent said the coalition should insist on discussing the terms even if such talks lead to the danger of Greece leaving the euro area, according to an excerpt of the poll published today on the web site of Athens-based Real News.

That compared with 15.5 percent who said the government should accept the current terms of Greece’s bailout, according to the newspaper.

To contact the reporter on this story: Paul Tugwell in Athens at ptugwell1@bloomberg.net



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Re: New EC Thread

Post  Panda on Sat 14 Jul - 14:26




Euro Down to Weakest Level in 2 Years on Economic Outlook

By Joseph Ciolli and Allison Bennett - Jul 14, 2012 5:00 AM GMT+0100
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The euro dropped to the lowest weekly level versus the dollar in more than two years as investors sought safety amid concern Europe’s sovereign-debt turmoil is worsening.

The yen rose for a third week against the greenback, the longest winning stretch in almost a year. The euro pared its loss versus the dollar yesterday amid speculation global central banks will take further action to sustain faltering economic growth. Federal Reserve Chairman Ben S. Bernanke will testify to Congress next week about the U.S. outlook.

“For the majority of the week the theme was largely risk- off,” Omer Esiner, chief market analyst in Washington at the currency brokerage Commonwealth Foreign Exchange Inc., said in a telephone interview yesterday. “There were questions and doubts about the timely implementation of any plan to help arrest the debt crisis.”

The euro declined 0.3 percent $1.2249 yesterday in New York, from $1.2291 on July 6 and the lowest on a weekly basis since June 11, 2010. The shared currency dropped 0.9 percent to 96.98 yen. The Japanese currency appreciated 0.6 percent to 79.18 per dollar, completing its longest stretch of five-day gains since the four weeks ended July 29, 2010.

Futures traders added to bets the euro will fall against the dollar, Commodity Futures Trading Commission data showed. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 165,705 on July 10, compared with net shorts of 146,177 a week earlier. It reached a record of 214,418 June 8.

Finance Ministers

The euro slid this week even as European officials laid the groundwork for possible purchases of Italy’s bonds and fast- tracked aid for troubled Spanish banks to help stem the debt crisis. Finance ministers at a two day meeting in Brussels that ended July 10 worked out a way for the euro bailout funds to intervene in bond markets and said the first 30 billion euros ($37 billion) flowing to Spanish banks this month.

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said the shared currency is destined for failure and must be reworked if it is to remain alive.

“It can’t survive with the present rules,” Buffett said yesterday on Bloomberg Television’s “In the Loop With Betty Liu” in an interview from the Allen & Co. media conference in Sun Valley, Idaho. “That’s what they’re learning. The question is, can 17 countries get together in a way to essentially re-do something?”

ECB Policy

The European Central Bank is prepared to ease monetary policy, including cutting its deposit rate further, if Europe’s debt crisis worsens, according to a Medley Global Advisors report obtained yesterday by Bloomberg News.

Slowing growth in China fueled bets policy makers will boost stimulus there. Premier Wen Jiabao said after the nation announced its second interest-rate cut in a month last week that the government will intensify fine-tuning of policies in response to downside risks to economic growth.

Bernanke is scheduled to deliver his semiannual report on the economy and monetary policy to the Senate Banking Committee on July 17. He will testify on the report to the House Financial Services Committee the next day.

Higher Yield

The euro dropped against the majority of its 16 most-traded peers and reached record lows against the Australian and Canadian dollars as investors sold the shared currency to invest in higher-yielding assets. Benchmark interest rates in Australia and Canada are 3.5 percent and 1 percent, compared with 0.75 percent in the euro zone.

“The euro is now the main funding currency, and everyone wants to be short euro,” said Sebastien Galy, a senior foreign- exchange strategist at Societe Generale SA in New York. “The dollar is no longer the main funding currency.” A short position is a bet a currency will weaken.

Implied volatility on three-month options for Group-of- Seven currencies fell to 9.2 percent, the lowest since May 4, according to the JPMorgan G7 Volatility Index. The average over the past year is 11.5 percent. Lower volatility makes investments in currencies of nations with higher benchmark rates more attractive because the risk in such trades is that market moves will erase profits.

Japan’s currency rose versus the dollar as the extra yield investors receive for investing in U.S. Treasury two-year debt versus comparable Japanese government bonds fell to the lowest in five months, limiting dollar-denominated assets’ appeal. The yield spread was 13 basis points, or 0.13 percentage point.

Best Performance

The yen gained 6.1 percent over the past three months, the best performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar rose 3.5 percent, while the euro was the biggest loser, dropping 3.7 percent.

The dollar’s losses were limited after minutes of the Fed’s June meeting released on July 11 disappointed speculators who had bet policy makers would signal a need for more monetary stimulus. Only two participants said additional bond purchases, a move that may debase the currency, were appropriate.

The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trade partners, touched a two-year high of 83.829 on July 12. The gauge was little changed for the week at 83.349.

Sterling advanced against most of its major counterparts this week as investors bet an attempt to ease U.K. credit conditions will help spur Britain’s economy.

Lending Program

The pound reached its strongest since November 2008 versus Europe’s shared currency after the Bank of England released details yesterday of a new lending program it said may boost credit to companies and households by at least 80 billion pounds ($124 billion). Sterling touched 78.57 pence to the euro and ended the week at 78.65 pence, up 0.9 percent.

Australia’s dollar reached a record A$1.1935 against the euro July 11 amid speculation that China, the nation’s biggest trade partner, will move to boost growth. The Aussie ended the week at A$1.1979 per euro, up 0.4 percent. It gained 0.1 percent to $1.0226 for the week and fell 0.5 percent to 80.97 yen.

The Mexican peso climbed against all of its most-traded peers, and the Canadian dollar gained versus most, as crude oil rose. The commodity is Canada’s biggest export and Mexico’s second-biggest. Crude for August delivery increased 3.2 percent to $87.11 a barrel in New York.

The peso gained 0.8 percent to 13.2904 per dollar. It touched 13.2404 on July 10, the strongest since May 8.

The Canadian dollar strengthened 0.5 percent to C$1.0141 to its U.S. counterpart. It climbed to C$1.2378 per euro yesterday, a record, and ended the week at C$1.2422, up 0.8 percent.


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Re: New EC Thread

Post  Panda on Sat 14 Jul - 19:09

Car industry

Peugeot-Citroen: “Made in France” under strain



Le Figaro, 13 July 2012


The restructuring plan of PSA (Peugeot-Citroen), France’s foremost car manufacturer, is “no coincidence”, leads the editorial in Le Figaro. Yesterday PSA announced the cutting of 8,000 jobs in France and the closure of its factory in Aulnay-sous-Bois, near Paris.

The conservative daily takes this to be a “formidable trial of initiation” for the socialist government and analyses the causes of this “social catastrophe” –


What's wrong with the car manufacturer? First and foremost, it suffers from being too European and, above all, from being too French. Here is the paradox: held up as an example for having kept nearly half its production in France, unlike Renault, which survives thanks to its low-cost models built in Romania and Morocco, PSA is suffering from the evils that are methodically destroying our industry.

The leftist daily Libération in turn raises the role that Europe has played in this “fiasco” –


Europe bears some of the responsibility for flagging French fortunes. By pushing free trade, it opened the market to the Koreans; the latter have profited from it immensely, while European sales in Korea are a secret (...). Europe has also had a hand in financing new plants built in Eastern Europe, which have left the French factories in a hard place. But awareness is dawning. The European Cars 21 report published in June recommends that open markets become strictly reciprocal to ’maintain a strong industrial base.’

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Re: New EC Thread

Post  Panda on Sat 14 Jul - 19:21


Patrick Chappatte


The European Council cannot afford the hunt for a new compromise in the short term, warns the European press. European leaders must take seriously the risk that the single currency will collapse – and with it, the EU.


Le Monde in its editorial shows a certain impatience with European summits that have been coming fast and furious since the eurozone has been gripped by the debt crisis – and they’re all starting to look the same, the paper writes: “The 17 are all clogged up. They are doing emergency plumbing when they ought to be taking a good look at all the piping.” The French daily hopes that the upcoming European Council will be focused on realism:




It may be time for the Council to reach a climax in the ongoing drama, to let Europeans grasp just how close they are to the abyss; because they are. And, for the first time, there’s a comprehensive plan on the table that looks like the start of a solution. It must be adopted in Brussels on Friday, and even go further ... In the search for a positive compromise, the responsibility weighs as heavily on France as on Germany. Both must take some risks to escape a lethal status quo.


Handelsblatt denounces the “fireworks of ideas” that it believes will harm the German economy. Satisfied with Angela Merkel’s “No” to eurobonds, Gabor Steingart, the editor-in-chief of the business daily, demands that the Chancellor explain the German model to her colleagues:




She ought to explain to our friends that nobody is going to be helped by Germany generously dividing up the fruits of its labour. Quite the opposite: to say "No" to the ideas of Barroso is to say "Yes" to Europe. Replacing “work” and “effort” by “consumption” and “credit” in the European economic system has got us into this current mess. A courageous "No" to these proposals means "Yes" to Europe. Europe, the truth is, needs a culture of rolled-up sleeves more than a philosophy of parasitism.


“If we fail to come up with a collective response, the probability that the euro will collapse is real,” warns Público, which sets out the possible consequences in detail:




A return to worthless national currencies, a rush on the banks, inflation, a return to capital and exchange-rate controls, shrinking markets, mass bankruptcies and failed states, and unemployment soaring to unimaginable levels. All the European leaders are aware that the disaster of the euro will be a tragedy [...] Merkel is right in saying that there can be no pooled debts without pooled controls of balance sheets and taxation; Hollande is right in saying that the urgency of the situation calls for a more massive intervention in the debt market using the stabilisation funds and by the ECB, and the creation of eurobonds. Both are right – but nobody seems willing to yield to the other’s arguments. That leaves the outlook looking bleak.


For La Stampa, “it was clear from the encounter in Rome between Monti, Merkel, Rajoy and Hollande” on June 22 that the Council meeting, which gets underway this Thursday, “will be a tough and tricky test that will see European leaders try to establish and, who knows, bring in a revamped monetary union”:




After euro 1, dangerously teetering over the abyss, comes euro 2. How would it work? When, and how far would it extend? Almost everyone, except the English, who are looking on the agony of the old continent from atop their sterling, agree on the need to overhaul the monetary union; not everyone agrees, however, on the timing and the dosage of the formula. [...] It will not be easy to agree on the concept of ‘political union’, which is interpreted differently by the countries attending the summit (...) In the decisive dilemma between integration and disintegration, there is no third choice.


“To save the euro we must first accept, and admit, that the single European currency, like anything else in this world, is mortal and can die tomorrow if no one takes care of it or worries themselves with it,” writes Luis Bassets in the El Pais daily:




To say that the euro is irreversible sounds like prayers for rain. The more it gets repeated, all the more real becomes the dark and undesirable image of a Europe without the euro and a world without Europe [...] We all grasp it perfectly: the euro is mortal, and it can die in our arms in the coming days. Mentally, we have already entered uncharted territory. [...] It’s no wonder therefore that over the last hours the paper mills in Europe have been churning out manifestos, articles and urgent reports searching for a formula that can twist on the tap for Eurobonds, for the saving graces of solidarity, for the transfer union ruled out so far by Germany – a tap that can at the same time guarantee the austerity, the control and the responsibility demanded by Angela Merkel [...] The problem is that very few of these ideas can be put into action right away, and their effectiveness is even less evident while it remains necessary to appease the markets placing bets on the mortality of the euro.



Warren Buffet has said that unless the EU changes the rules.....the EURO will not survive.

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Re: New EC Thread

Post  Panda on Sun 15 Jul - 13:43



Bloomberg

2:57PM BST 14 Jul 2012

160 Comments





“Of course I can understand why a country would want to lower its refinancing costs,” Weidmann said in an interview with German financial newspaper Boersen-Zeitung. “But because of the last-resort aspect of financial aid in the currency union, that alone can’t be a justification for granting it.”


“If Italy stays the course on reforms, it’s on a good path,” Weidmann told the German newspaper. Asked whether the euro area’s third-largest economy needs to tap the planned European Stability Mechanism, he said, “No, I don’t see Italy in that situation.”


The European Central Bank Governing Council member’s comments indicate German reluctance to allow the government-run bailout funds to buy Italian bonds to insulate that country from the debt crisis.


Italian Prime Minister Mario Monti has sought a “debt shield” against spillover from the crisis at Spain’s banks, which are getting as much as €100bn in rescue loans.


On Friday, Moody’s cut the credit rating of the eurozone’s third-largest economy, by two notches to “Baa2”.


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Re: New EC Thread

Post  Panda on Sun 15 Jul - 13:48

Rachel Cooper, and agencies

6:36PM BST 13 Jul 2012



399 Comments





Workers blocked streets and railways in Madrid on Friday in protests against sweeping cuts, as the Spanish government outlined details of its €65bn austerity programme.


More than 100 civil servants gathered outside the presidential palace, whistling and booing, as prime minister Mariano Rajoy's ministers convened to rubber-stamp new tax rises and spending cuts.


After a weekly cabinet meeting, the government gave details of the €65bn austerity package which Mr Rajoy announced on Wednesday.


Ministers approved an overhaul of city and regional governments, wage cuts for public workers and cuts in unemployment benefits. They said they would also pass this month a reform of the energy sector and laws to liberalise the rail, road and air transport sectors.


Among other expected measures, the government said an increase in VAT to 21pc from 18pc would take effect from September 1.


The country also created an emergency fund to protect its regional governments from defaulting. The mechanism to help the regions, which are currently shut out of international financial markets, will have a maximum capacity of €18bn.

It will be funded through a €6bn loan from the state lottery and by the Treasury.

Spain is under pressure to find savings, having sought a bailout of up to €100bn for its struggling banks.

Spanish lenders are almost completely locked out of international markets, illustrated by their increasing reliance on loans from the European Central Bank.

Spanish banks borrowed a record €365bn from the ECB, up from €324.6bn in May, data showed on Friday.

Cutbacks in Spain have caused consternation, though, with miners marching on Madrid this week to protest against cuts to industry subsidies and civil servants on Friday protest against cuts.

The civil servants - whose wages were cut 5pc percent on average in 2010 in the first round of austerity cuts - are usually paid 14 times a year. The government is now axing an extra payment made just before Christmas.

In the Puerta del Sol in downtown Madrid, about 500 civil servants gathered, about half dressed in black. Some women wore veils, as if at funerals. Protesters blew whistles and horns.

Isabel Perez, a 40-year-old librarian, told AP: "Our wages have already been cut and now they take away the Christmas payment. I don't make it to the end of the month as it is. The extra payment gave some relief. We're not exactly millionaires."

There could be more unrest to come in Spain, with the country's main unions calling on public workers to strike in September.

Deputy prime minister, Soraya Saenz de Santamaria, acknowledged the widespread pain: "Thousands of Spaniards have been pushed to the edge, and millions are unemployed."

"Spaniards are living today one of the most difficult and traumatic moments of our history, a crisis which has muted into a daily drama for millions of Spaniards," she added.

Admitting that the austerity measures were "neither simple, nor easy, nor popular," she said the government would try to enact the measures "with the maximum justice and equity."























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Re: New EC Thread

Post  Panda on Mon 16 Jul - 7:37



Merkel Gives No Ground on Demands for Oversight in Debt Crisis

By Patrick Donahue - Jul 15, 2012 11:00 PM GMT+0100
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Chancellor Angela Merkel gave no ground on Germany’s demands for more central control over euro member states in return for joint burden-sharing as the region struggles to contain the debt crisis.

The German leader said yesterday she hadn’t softened her stance at last month’s summit in Brussels and that a so-called banking union involving a bloc-wide financial overseer will have to include joint oversight on a “new level.” She chided member states who had sought to slow moves toward greater central control “since the first summit” in the 2 1/2-year-old crisis.





Enlarge image









Angela Merkel, German Chancellor. Photographer: Alessia Pierdomenico/Bloomberg





Play Video


July 13 (Bloomberg) -- Stephen Gallo, senior foreign exchange strategist at Credit Agricole CIB, discusses the euro crisis, European Central Bank policy and the outlook for the euro and dollar. He speaks with Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)
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“All of these attempts will have no chance with me or with Germany,” Merkel said in an interview with broadcaster ZDF in Berlin.

Two weeks after a European Union summit aimed at bridging differences over crisis resolution, euro leaders are still squabbling over details of how to lift the bloc out of the turmoil. Merkel hardened Germany’s position that any attempt to share burdens in Europe -- such as jointly issued euro bonds or common banking bodies -- must first be met with greater cooperation and a handover of some sovereignty to Brussels.

The euro fell to its lowest level against the U.S. dollar in more than two years last week, sliding to as low as $1.2163 on July 13. Europe’s most credit-worthy government bonds climbed, with German two-year note yields down to a record minus 0.052 percent, as investors sought havens from the euro crisis.

Diverging rates and capital outflows within the 17-member monetary union signal that the single currency is “slowly unraveling,” Stephen Gallo, senior foreign-exchange strategist at Credit Agricole SA in London, told Bloomberg Television’s “The Pulse” in a July 13 interview.

’Unraveling’

“The whole project is unraveling, that’s what’s essentially happening now,” Gallo said.

While Merkel said that Europe is on the “right course” toward putting an end to the crisis, euro-area leaders “haven’t solved the problems conclusively.”

German lawmakers will interrupt their summer vacations and return to Berlin on July 19 to vote to approve 100 billion euros ($122 billion) in rescue loans to Spain. After Spanish Prime Minister Mariano Rajoy last week announced 65 billion euros in welfare cuts and tax increases, Merkel reiterated yesterday that financial assistance would not be doled out without conditions.

“Whoever receives assistance and where liabilities are taken over, there has to be control,” Merkel told ZDF.

Banks

French President Francois Hollande, Italian Prime Minister Mario Monti and Spain’s Rajoy have pressed for faster action, including joint liabilities, while Merkel has called jointly issued debt the “wrong way” to fix the crisis. Merkel last month castigated a blueprint for the summit by EU President Herman Van Rompuy as too focused on “collectivization.”

Euro officials this month have also sparred over the timetable for establishing a euro-wide bank supervisor, a benchmark required before they implement one of the decisions from the June 28-29 summit -- direct bailout funding for banks. Investors have viewed such a step as a way to sever the link between banking debt and sovereign debt.

Euro-area finance ministers will confer on Friday, July 20, to complete an agreement on Spain’s bank bailout. On July 10, the minister’s announced 30 billion euros of aid would be made available by the end of this month.

Klaus Regling, who heads the euro’s bailout funds, told Welt am Sonntag yesterday that governments could avoid liability for bank rescues under proposals for a regional supervisor. That contradicts German Finance Minister Wolfgang Schaeuble, who said July 9 that he expects governments to guarantee loans even if they go directly to banks, Welt said.

Surrendering Sovereignty

Merkel said leaders hadn’t yet reached an agreement on the terms for bank rescues.

German Bundesbank President Jens Weidmann said euro leaders had caused damage by failing to define more clearly their conclusions at the summit. He told Dutch newspaper Het Financieele Dagblad on July 14 that euro nations “should discuss giving up sovereignty with the same openness as the question of how to resolve the debt problem collectively.”

As governments in Spain and Italy struggle under the burden of higher borrowing costs, Weidmann, Germany’s chief central banker and a European Central Bank Governing Council member, told Boersen-Zeitung that Italy’s higher yields don’t justify a request for bailout assistance. Euro bailout funding should be deployed only as a last resort, he said.

Italy

“If Italy stays the course on reforms, it’s on a good path,” Weidmann told the newspaper in an interview. Asked whether the euro area’s third-largest economy needs to tap the fund, he said, “No, I don’t see Italy in that situation.”

Italian Prime Minister Mario Monti has sought a “debt shield” against spillover from a Spanish banking crisis.

Euro-area leaders have given Spain an extra year, until 2014, to drive its budget deficit below the euro limit of 3 percent of gross domestic product, a concession that may foreshadow leniency for other indebted states in the bloc.

In Greece, an MRB poll published in Athens-based Real News newspaper showed that almost three-quarters of Greeks want Prime Minister Antonis Samaras’s coalition government to insist on a renegotiation of the country’s international bailout.

Seventy-four percent in the survey said the government should insist on discussing the terms even if negotiations steer toward the prospect of Greece leaving the euro; 15.5 percent said the government should stick to current conditions.

Volker Kauder, the parliamentary leader of Merkel’s Christian Democratic Union, told Welt am Sonntag that he doesn’t want to give Greece more time to meet economic targets.

Merkel, asked the same question during the ZDF interview, said she would await a report by Greece’s international creditors, known as the troika.


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Re: New EC Thread

Post  Panda on Mon 16 Jul - 14:29

Jul 16, 9:10 AM EDT


Class of 2012: 5 Europe grads face rocky future














Athina Prassa in Athens mastered English in four years studying at a private university. It's a skill that may not help her much as she hunts for work while hard-right thugs roam her blighted neighborhood.

Lucy Nicholls in London graduated from fashion school brimming with optimism. It took just a week for real life to step in: She fell victim to a scam that left her broke and desperate for work.

Rafael Gonzalez del Castillo in Madrid has pulled countless all-nighters to win a degree in his passion, architecture, just as Spain's building bust has littered the country with abandoned buildings.

Moira Koffi in Paris left her widowed mom in Normandy for "bohemian life" at the Sorbonne. Now the communications grad is heading into the real world.

Lutz Henschel in Berlin graduated near the top of his class with a degree in electrical engineering in Europe's top economy. Since January he's sent out nearly 40 applications, and is still chasing his dream of working in renewable energies.

Meet AP's Class of 2012: five talented and vibrant university graduates who face a rocky future as they emerge from the cocoon of student life and head into the worst economic crisis Europe has seen since the end of World War II, one that threatens to engulf an entire generation.

They're excited. They're scared. They're full of hope. And full of uncertainty.

The Associated Press will follow them over the next 12 months as their lives unfold in the crisis - through text, photo and video dispatches, as well as webcam diaries and tweets straight from the graduates themselves.

Their drama will play out amid the somber realities of Europe's financial crisis, with profound implications for the future of young people everywhere. After all, the European Union is this interconnected world's biggest economy, and it's struggling badly.

Austerity is eroding an envied way of life. Long-cherished certainties about cradle-to-grave welfare are evaporating. As leaders scramble to extinguish one debt fire after another, the futures of ordinary people grow dimmer.

And a parallel crisis of demography is developing as the population ages rapidly, creating even more of a burden on this generation of young people who are finding it so hard to carve out a future.

Those twin crises will challenge Lutz as he leaves his studies in Europe's strongest economy, even with its low youth unemployment rate of 8 percent.

They will haunt Lucy and Moira in Britain and France, where more than a fifth of all young people are unemployed.

Athina and Rafa worry they'll have to move abroad to survive. In Greece and Spain, youth unemployment is above 50 percent.

"I don't think this time is suitable for fulfilling your dreams," Athina says. "That can happen later."

This is the AP Class of 2012:

ATHINA PRASSA, 22

"Want to see my fridge?" Athina asks a visitor.

She's a natural optimist but it's hard to keep up the cheer as she gazes at the lonely milk carton and container of butter on empty shelves.

"There are days," she says, "where I forget what it's like to eat meat."

Athina left her family home on the island of Lemnos four years ago to study at the private Hellenic-American University in Athens. Her parents were able to pay for her studies but not much more. It meant she ended up in a crime-ridden neighborhood notorious for its extreme-right thugs, where she lives rent-free in an apartment owned by her godmother.

Her parents sent her 100 euros ($120) a week at first, then cut it back to half that when they couldn't afford more.

Now she's on her own.

"My parents can't send me money anymore to live here," she says. "I'm really scared about the future."

She longs to work in Athens but is worried the crisis will force her to leave Greece.

She says the hard times, brought on by years of profligate spending in Greece, have taught her some valuable lessons: "It's funny, but I think the crisis has turned me into a better person, because I definitely hate money right now. ... I see how people go crazy about money."

She despises the anti-immigrant Golden Dawn party that roams her neighborhood.

Through all the turmoil, Athina still holds onto her dreams. She wants to work in fashion. She wants to backpack around Europe. She wants to visit America.

And she still manages to have fun with her friends in Athens - which she calls "a jungle" - by taking advantage of the beaches and free concerts and art exhibitions.

At a recent gallery event, Athina stood staring at a photograph of a demolition site. Spray-painted over it in red was one word: FUTURE.

LUCY NICHOLLS, 22

Lucy sits against a backdrop of rose-patterned wallpaper emblazoned with the word "Wish," the name of the fashion magazine that's her graduation project.

She's presenting it at a London show called RAW to launch Middlesex University fashion grads like herself, exuding a mixture of confidence and jitters.

The fashionista with artsy glasses and bright red hair has paid a Lithuanian company 2,000 pounds ($1,550) to print 500 copies of WISH, which she's planning to ship to customers.

She concedes her optimism verges on the "cocky."

But she also has a dose of realism: "I'm going to need money very soon. Luckily the magazine is going to bring in a tiny, weeny little bit ... But I'm going to need a job pretty soon, that's for sure."

A week later, disaster strikes: The printing company has gone bust and disappeared with her money.

Now she's broke and needs a job fast: "I realize because of this catastrophe with the magazine I need work now. I really, really need to be making money."

The setback doesn't keep her down for long: She's picked up some freelance photography work for a London PR agency that's helping her pay the bills. Meanwhile, she has revamped her resume to wade into her first real job hunt.

Lucy says her teachers didn't prepare her for life: "We don't get told anything about industry or the real world. We didn't ever get told about what jobs were really out there."

Half-English, half-French, Lucy comes from a rural town in Surrey, south of London. She says her father warned her about how hard life can be: "You have to be prepared to be living off beans."

Fluent in French, she says she could try Paris for a while - but things aren't much better there, and in any case she sees her future in the British capital.

"I've been told by everybody London is where it's at, London is where you've got to be."

RAFAEL GONZALEZ DEL CASTILLO, 24

Rafael - or Rafa as everyone calls him - is a budding architect in a nation that's gone through one of the worst building busts in modern times.

He loves his field. He loves Spain. But he fears his future lies abroad.

Like millions of other young Spaniards trapped in the nation's devastating economic spiral, he says he'll jump at any opportunity for rewarding work - be it in Sudan, Chile, Alaska or Mongolia.

He just presented his final project - a design for urban greenhouses and terraced farmland on the marshy banks of a river - at Madrid's Polytechnic University. If it's approved by a jury, he'll officially be an architect in October.

Then what? A stroll through the wasteland.

The construction industry was crushed by the implosion of a real estate bubble in 2008. It's ground zero of Spain's economic crisis, with more than 1 million jobs lost in that industry alone.

Rafa, however, keeps on dreaming.

An actor in the university drama troupe, he talks a mile a minute with charm and eloquence, gushing enthusiasm for his chosen profession. He loves his studies so much he'd do it all over again - despite the doom that hangs over the industry.

Rafa refuses to believe that after a five-year journey through one of Spain's most demanding schools, what awaits him is the edge of a cliff and a plunge into the dead-end jobs in bars or supermarkets that many of his fellow college grads are taking up to get by.

He breaks into this riff: "Since I was little, they told me, `when you get to middle school, you will fail some subjects.' I did not fail. `When you get to high school, your grades will go down.' They did not. `When you get to university, you will fail.' OK, I have failed a few subjects, but I got by. So I do not want to be told again that there is not going to be any work. I simply do not believe it.

"It all depends on me."

Gonzalez is not angry about his plight. He says everybody in Spain is to blame - consumers hooked on loans, banks that threw around the money, politicians who sat back and watched it all inflate dangerously.

"In the end," he says, "it is all of us at least a little bit."

MOIRA KOFFI, 22

Moira worries if she'll have a job when she gets back from vacation in Greece.

She worries about how she'll live in Paris once she has to leave student housing.

Above all - following big gains by far-right parties in France, Greece and elsewhere - the African-French communications grad worries about a racist wave engulfing Europe: "It's like the 1930s again. I don't get why people can recreate this atmosphere of hate and fear. It's crazy."

Moira just handed in her thesis at the Sorbonne, capping three years of study.

She started out as a journalism major, but switched to corporate communications when crisis hit in 2008.

"I wanted to be a journalist, but then I heard about everyone who couldn't find jobs," Moira says.

But by the time she graduated the downturn had expanded, and now half of France's new graduates have no work.

"Can it get any worse?" she says with a wry laugh. "Well, maybe if the European Union explodes."

Moira has had time to come to terms with the crisis. Its start coincided with her move to Paris four years ago. Leaving her widowed mother teaching school in a small town in Normandy, Moira made her way in the capital as countless young students have before her, counting her centimes and enjoying "la vie boheme" - bohemian life.

The Sorbonne helped her find a short-term apprenticeship at a public relations agency, where she handles social media campaigns.

The four-day-a-week job ends in September. She wants to stay on, but there are no guarantees.

Moira budgets carefully, keeping expenses to around 600 euros ($750) a month. She goes out less than she did when she first moved to Paris, taking up hobbies like dressmaking and baking muffins. Her most recent creation? A "beautiful and classy" black dress. It's nearly finished after six months of work.

LUTZ HENSCHEL, 27

Lutz picks up his diploma in a soaring hall adorned with a sculpture of Nike, the Greek goddess of victory. He savors a glass of champagne. Listens to the music.

With a masters in electrical engineering in Germany, Europe's most successful economy, he knows his prospects are brighter than those of millions of other university graduates across the continent.

But since finishing his studies in January, Lutz has sent out nearly 40 applications and been through about 15 interviews, only to keep hitting a brick wall.

"At the beginning I felt disappointed because I believed that I was the reason for the rejections," he says. "But now I think that a lot of companies have too high expectations."

Even facing a shortage of skilled workers, elite German companies have been notoriously unwilling to hire students straight out of university. Lutz sees himself trapped in a Catch-22: "They expect a graduate to have specific knowledge and experiences which I think is impossible to have right after graduation."

The Berlin native who teaches karate on the side dreams of a job in renewable energy.

This month he took a six-hour train journey south for an interview with German engineering giant Bosch.

Two days later, it was an hour-and-a-half train ride north for an interview with a German-Danish company that builds wind farms.

He's confident that the latest interview went well: He got to talk to real engineers, not just HR reps.

"It's a little bit discouraging at first, because everyone is saying, `you are sought so much, you're an electrical engineer, everyone wants you,'" Lutz says. "But then you get out, and it's not true."

On the eve of the launch of Class of 2012, Lutz's fortunes turn. He sends out this tweet:

"I got my first official job offer! I will stay in Berlin, building elevators."

Developing electric circuits for elevators is a far cry from Lutz's ambition of making the world a better place through green technologies, but it's a start.

"How awesome," he tweets.

---

This story was reported by Efty Katsareas, Theodora Tongas and Elena Becatoros in Athens; Cassandra Vinograd and Tom Rayner in London; Greg Keller in Paris; Daniel Woolls and Hernan Munoz Ratto in Madrid; Kerstin Sopke and David Rising in Berlin. It was written by Joji Sakurai in London.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.

____________________________________

Portugese Students are streaming to Angola and other former Portugese Colonies, Greek Students are leaving to find work in Canada, Australia and U.S. what is going to happen when their Economies eventually turn around? Who will there be to fill jobs? Angela Merkel thinks she is doing Spain a big
favour by deferring the 3%GDP rule until 2014 while her Country benefits from a weak Euro . We already have a huge displacement of refugees around
Europe , what will happen to these EU Countries whose young people have to leave their Families so are unable to care for them in later years.





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Re: New EC Thread

Post  Panda on Mon 16 Jul - 15:09

16 July 2012 Last updated at 14:30 Share this pageEmail Print Share this page


The global economic recovery is still at risk, and eurozone economies remain in a "precarious" situation, the International Monetary Fund has said.

A delayed or insufficient response from European leaders to the crisis would further derail the recovery, it said.

The IMF downgraded its forecast for global growth for 2013 to 3.9% from the 4.1% prediction it made in April.

One of the biggest downward revisions was to the UK, now expected to grow by 1.4% in 2013. In April it predicted 2%.

The forecast for growth in 2012 was also reduced for the UK, down to 0.2% from the 0.8% cited in April.

The IMF's prediction for world output this year - as measured by gross domestic product - was little changed at 3.5%.

In its updated World Economic Outlook, which is published twice each year, the Washington-based lender said: "Downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action."

IMF annual growth forecasts (% change)
Latest forecasts Previous forecasts (April)
2012 2013 2012 2013
Source: IMF World Economic Outlook

World output
3.5
3.9
3.5
4.1

Euro area
-0.3
0.7
-0.3
0.9

US
2.0
2.3
2.1
2.4

Japan
2.4
1.5
2.0
1.7

UK
0.2
1.4
0.8
2.0

China
8.0
8.5
8.2
8.8

Brazil
2.5
4.6
3.0
4.1

India
6.1
6.5
6.9
7.3

Russia
4.0
3.9
4.0
3.9


'Precarious situation'

The euro area will remain in a "precarious" situation unless leaders take further action to avoid the sovereign debt crisis from escalating and prevent a market meltdown, the report said.

Continue reading the main story “
Start Quote
For Labour, and even some senior figures inside the Fund, this downward revision in Britain's economic prospects ought to re-open the argument over the government's deficit plans and the need for a "Plan B". ”
End Quote
Stephanie Flanders

Economics editor

--------------------------------------------------------------------------------
Read more from Stephanie
Profile: IMF and World Bank

"The utmost priority is to resolve the crisis in the euro area," said the report.

The 17-member eurozone economy is expected to contract by 0.3% this year before rebounding by 0.7% next year.

The IMF, along with the European Central Bank (ECB) and the European Union, has demanded austerity measures in the struggling periphery economies of Greece, Spain and Portugal in return for bailouts.

The crisis has led millions of people to lose their jobs and benefits. There were also concerns that runs on bank deposits would trigger a eurozone-wide bank run and banking crisis.

Europe must be committed towards forging a "complete" monetary integration by pursuing a banking and fiscal union, said the IMF.

Recently, eurozone leaders agreed to bail out Spanish banks directly and unveiled a plan to implement a fiscal and banking unification. But the proposals for such a decision will not become concrete until later this year, and it is not yet known how long it will take for such a union to take shape.

The ECB last week cut its benchmark lending rate below 1% for the first time, to 0.75%.

But the IMF called on the central bank to use more unorthodox monetary tools, such as providing the region's banks with additional unlimited loans, or long-term refinancing operations (LTROs).

A similar move last December helped to calm markets and brought down crucial borrowing costs for struggling economies.

However, the effects have waned in recent weeks as eurozone efforts to solve the crisis failed to shore up investor confidence.

US deadlock
Continue reading the main story “
Start Quote
The temptation amongst European officials is to focus on institutions and structures. The future of the eurozone is more likely to be decided by the real economies. There can be no solution without growth.”
End Quote
Gavin Hewitt

Europe editor

--------------------------------------------------------------------------------
Read more from Gavin

The IMF also urged US lawmakers to solve a deadlock on how to deal with a "fiscal cliff" - which refers to a set of fiscal deadlines at the end of the year, including deciding whether to extend tax cuts for the wealthiest Americans.

"If policymakers fail to reach consensus on extending some temporary tax cuts and reversing deep automatic spending cuts, the US structural fiscal deficit could decline by more than four percentage points of GDP in 2013," the IMF warned.

"US growth would then stall next year, with significant spillovers to the rest of the world."

The US economy is expected to grow by 2.0% this year and 2.3% in 2013.

Overall, growth in advanced economies is projected to expand by 1.4% this year and 1.9% the following year, the IMF now predicts.

Emerging market power

Growth in emerging economies was also revised downwards. They are now forecast to see growth slow down to 5.6% in 2012 before picking up to 5.9%, the IMF report said.

Growth momentum dropped particularly in Brazil, China and India, considered to be the drivers of a global recovery.

That was aggravated by risk aversion among investors who pulled out their money out of these economies, causing domestic share prices to tumble.

But developing economies are being supported by a number of government measures to shore up growth, as well as lower oil prices, said the IMF.

One of the rare bright spots for the global economy is inflation, which is expected to ease as demand and commodity prices, including oil, weaken.

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Re: New EC Thread

Post  Panda on Mon 16 Jul - 18:02

Debate

Brussels’ smothering embrace


16 July 2012
Die Welt Berlin Comment



In the name of serving the greater good of the EU, Brussels claims it is forced to strong-arm its members. Examples from Romania, Hungary and Italy, however, reveal something quite different: civil society and local cultures are sometimes being sacrificed.

Thomas Schmid


Going into debt today means a poorer tomorrow. That’s why austerity is the alpha and omega of a policy that is meant to ensure the continued survival of that half-freewheeling, half-iron-clad grouping of states that we have somewhat hastily called the European Union. This priority is perceived in some states of the EU as a diktat from Germany. That’s not fair.

And yet, if we’re to tell the whole truth, we have to admit that the new European austerity policy is also doing some damage. As nice as the talk about federal Europe (including its supposedly subnational structure) sounds, the reality is that it’s not just the financial crisis but the overall interests of the Union that can have a serious impact on sovereignty.

Neither Italy nor Greece’s new government would have come into office without pressure from the EU. As long, however, as the individual countries of Europe do not really conceive of the EU as a community, such steps are rightly grasped by the citizens as disenfranchisement and expropriation. To some that may even be welcome.

A recent example of this is an EU member state that was allowed to join the club too early and in too unsettled a state: Romania. There a violent battle is presently raging between cliques from the former socialist era, embodied by Prime Minister Victor Ponta, and the not exactly unblemished Conservatives, over President Traian Basescu, who has been cashiered by Parliament.

In Romania, rotten with corruption, the various political forces view the state as their looting ground. And those who want to put an end to this state of affairs, like the courageous former Justice Minister Monica Macovei, lack the tools to tackle it effectively.

Austerity fiat

They place their hopes on Romania’s becoming enmeshed in the EU – that is, that the EU will not accept the practice of perverting justice. For those who want a democratic Romania, this is a plus, because without the EU’s contractually stipulated power to intervene they would be even more isolated than they already are.

That’s the good part of being bound to the EU. The bad part is that the power to enforce the rule of law does not come from within a country – and in a way, it does not even need to. The safety net that comes from being within the EU can indeed enforce certain standards, but it does not necessarily bolster the democratic forces in such states.

Hungary furnishes an example of this paradoxical effect. The national conservative government under Viktor Orbán, in seeking to place the power of the ruling party Fidesz above state institutions, is very consciously obstructing the counterbalancing force of those institutions. This the EU cannot allow.

Again and again they force major or minor retreats on Orbán, on media policy or on the status of the central bank. When the EU puts its foot down, Orbán gives way with operetta-like gestures: he obliges – and with an ironic twinkle in his eye signals at the same time that he is doing so only under compulsion and that he will always find ways of properly watering down the Brussels “dictate”. In this game of ping-pong between Orbán and the EU, Hungary’s domestic opposition plays no decisive role.

To put it bluntly, having the moral police of democracy sited in Brussels is sapping the Hungarian opposition of its meaning. In any case, the game between Brussels and Budapest is not necessarily appropriate for promoting in Hungary what must never be left out of almost any EU communiqué: the self-confidence of civil society – and its capability to intervene.

The austerity fiat of the EU, however, can also impact the inner social clockwork of individual countries pieced together over many centuries. This is happening right now in Italy. Since Italian unification came so late in European history, Italy is a difficult and shaky nation-state. More than almost any other country in Europe, it thrives on the diversity of its regional and especially local identities.

Little homelands

That is what the Italians prize (as we do) about their country: a diversity that is as stamped by the landscape as it is by the architectural traditions, and not least by the varying cuisines.

Now the country must tighten its belt, and the resolute Mr. Monti, who now has the rating agencies and Signor Berlusconi breathing down his neck, must downsize wherever he can: in the public administration, health care, welfare, etc. A natural consequence of this is to cut back too on the uncontrolled flourishing (a cultural habit) of regional and local administrations.

The government wants to significantly reduce the number of provinces, regions and municipalities. The voice of reason says it must be done; but emotions and history are not so sure. What most embitters many Italians is that this deconstruction is not to be carried through out of any domestic Italian logic, or domestic Italian considerations, but is being imposed, they feel, from Brussels.

As the journalist Francesco Merlo wrote, Italy’s “little homelands” are under threat. These little homelands may be dysfunctional in Brussels’s view, but they are also safe. It’s just that in Brussels they forget one thing: the real lives of real people is not an issue of ‘functionality’.

Worries like those about the little homelands, unfortunately, steal up on our EU politicians only when they privately surrender to the pleasures that a Franconian inn, a Breton restaurant or a trattoria in Piedmont can so richly give.

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Re: New EC Thread

Post  Panda on Tue 17 Jul - 9:51



Stocks around Europe have opened higher on News that the U.S. may take action.

The U.K. inflation rate has fallen to 2.4%, median forecast 2.8%.

The ECB problem has shifted , Draghi cannot do LTRO because there is no money left . It is looking unlikely that the all the Banks who borrowed from the ECB will be able to repay.

Pomeroy says Politicians in the EU are incapable of managing the crisis and Germany cannot continue to profit from the weak Euro through Exports while all the other Euro Countries are finding it tougher.

The IMF says Global growth in 2013 is forecast to be 3.9%. However, this has not taken into consideration the current drought which has halved U.S.
wheat production, the floods in Japan causing so much damage and the emerging markets slowing down.

The EU bailout to Spain faces an 8 week delay as German Court sets September date. There is a crisis in Spain and more and more protest marches, so how can Germany behave in such a high-handed fashion???

The U.K. Economy is feeling the crisis in the Eurozone as is the rest of the World.

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Re: New EC Thread

Post  Panda on Tue 17 Jul - 14:47



European Union

Power struggle for control of banks


16 July 2012


Süddeutsche Zeitung Comment4





"English level: fluent in business English". That will have to be on the CV of anyone who wants to run a bank in Europe if the proposed banking union sees the light of day, reports the Süddeutsche Zeitung. Any member of a European bank would have the right to look into the books of any other European bank, from big to small.

To enable European Commission President Jose Manuel Barroso to present the outline of a central banking authority as speedily as possible, the Munich-based daily writes, dozens of senior EU officials are “starting their second coffee very early in the morning”, and many have cancelled their holidays. Commissioners Michel Barnier (Internal Market and Services), Joaquin Almunia (Competition) and Olli Rehn (Economic and Monetary Affairs) are also working on getting the proposal ready for September 12 –


It’s not just that the task is technically complicated; we’re also witnessing a real battle to see who will chair the supervisory authority.

On one side is the Commission, pushing forward its role as guardian of the treaties to lay claim to the job of designing this new authority. On the other is the ECB under Mario Draghi, unofficially claiming the distinction of being the only European institution that has not lost its credibility in the crisis. Beyond these jurisdictional struggles, plenty of questions remain to be cleared up –


Between now and the end of July, we must decide whether the authority will be responsible for the 27 countries of the EU or the 17 of the Eurogroup; if all banks will be subject to checks – there are about 8,000 in Europe – or just the big ones; and if there will be a central authority or a decentralised network.

Finally, notes the Süddeutsche Zeitung, pending the ruling of the Constitutional Court in Karlsruhe on the European Stability Mechanism, September 12, Brussels is pondering if –


... the Germans really want a strong authority that will lose their sovereignty to, or if they will reformulate the terms of a banking union to put off the whole project.


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Re: New EC Thread

Post  Panda on Tue 17 Jul - 15:33


Eurozone rescue without growth means Finland could be first to leave

After last week's euro meeting, Spanish 10-year government bond yields fell back to 6.6pc.







Finland is just as financially conservative as Germany and in contemplating euro exit, she does not bear the burden of war guilt.









By Roger Bootle

5:55PM BST 15 Jul 2012

237 Comments





So that's all right then. In fact, if Spain carried on borrowing at this rate it would be set for the knacker's yard sooner than you could say Don Quixote.


The essence of the eurozone's financial problem lies in the discrepancy between northern and southern members. So why don't they just integrate their finances? Because that would mean the northern countries taking their share of the debts incurred by the southerners.


Understandably, people in the north don't like this idea. They haven't enjoyed the benefits of government largesse – why should they now suffer the pain of higher taxes or interest costs to pay for it?


Suppose the German government said: "We are going to borrow more in order to lend it to the Spanish government." The reaction would be the Teutonic equivalent of "Not on your Nellie." So if you are hell-bent on preserving the euro, somehow you have to get money flowing to the south without the north noticing. This is where the wizardry of modern finance comes in.


The solution is that the German government does not lend the money – at least, not directly. The ECB provides one alternative channel through its purchases of peripheral countries' debt.



A second comes through the euro-system's recycling of deposits which have left vulnerable countries' banking systems and built up with the Bundesbank. (This is the so-called Target-money.) A third channel is to put the money through an off-balance sheet entity. The latest version of this idea is called the European Stability Mechanism (ESM). This is partially funded by eurozone governments, but because it is able to borrow in the markets with those governments' guarantee, it is able to lend six times what they put in.

Haven't we been here before? If this lending goes wrong, the guarantees will be called and the northern eurozone governments will be up for the whole amount. German government debt is not huge but neither is it comfortably low. It is running at about 80pc of GDP. But this excludes its indirect exposure, which is rising at alarming rates. The Bundesbank's claims on other parts of the eurozone now amount to about €700bn (£550bn), or the equivalent of almost 30pc of German GDP.

So you can understand why the politicians find it difficult to come up with a "solution".

The latest Spanish deal was astonishingly vacuous. It was agreed to lend to the Spanish government €30bn of the €100bn that had already been promised. The aim is to provide the rest direct to Spanish banks, so that Spanish government debt is not increased.

But member countries are yet to agree to this. Last week's meeting merely agreed to discuss it in September. If the money goes direct to Spanish banks, they will require some common eurozone oversight. This may take a year to work out. Meanwhile, the German Constitutional Court is bothered about the legality of all this. It may not pronounce for several months.

The politicians and the markets are operating on completely different time-scales. The politicians are finally realising that they are grappling with the impossible but think they have years to play with – the markets suspect they are dealing with the unsustainable and think they have only months to decide.

As we saw with the sub-prime crisis, in the end, financial chicanery mixed with obfuscation gets you nowhere. Without growth, the peripheral countries are heading for a debt disaster.

Yet there is still no growth initiative from the eurozone authorities. They have not even agreed to discuss it in September.

What cannot be sustained won't be. Yet we cannot exactly foresee the details of future events.

I have written about the desirability of Germany leaving the euro – and the likelihood of Greece doing so. But I am now wondering whether Finland might be the first to go. She is just as financially conservative as Germany and in contemplating euro exit, she does not bear the burden of war guilt.

She is close to other Nordic countries which have done pretty well by maintaining their own currencies. And if Finland left, she would not have the problems associated with weak currencies. On the contrary, she has a triple A credit rating and her new currency would rise.

Finland has been critical before. The disintegration of the ERM in 1992 began there. Going back further, it was the Finns' bold resistance against the Red Army's assault in 1939 that persuaded Hitler that the Soviet Union would be a pushover for the Wehrmacht. It would be fitting if it was the country not of Wagner but of Sibelius that prompted the unravelling of the euro.

Roger Bootle is managing director of Capital Economics. Contact him at roger.bootle@capitaleconomics.com

A special edition of Roger Bootle's recent book, The Trouble with Markets, including a new chapter about the euro crisis, based on his Wolfson Prize-winning essay, is out now, published by Nicholas Brealey.






















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Re: New EC Thread

Post  Panda on Tue 17 Jul - 18:36




Hi-tech Europe has no reason to blush







Le Monde, 17 July 2012


“Five reasons to believe (once more) in Europe” – An optimistic Le Monde wants to prove that “Europe is not a continent in distress, a tragic commentator on its own decline.” In its Economy supplement the French daily notes that –


The euro crisis and the wave of austerity plans that accompany it dull and mask the reality of the power of a continent with unique advantages [...] It’s not just in Silicon Valley or Asia where innovation is to be found. Of the 30 most innovative countries in the world, 20 are European.

European brains, Le Monde reports, are “a sought-after species,” and that continental workforce is a workforce of “quality” because it “benefits from a very specific cultural broth” –


To innovate – or almost – it is sufficient to contrast these differences. That is the purpose of the Erasmus mobility program (...), which gets subsidies from Brussels for research (...). Of course, there is no equivalent to Harvard between the Atlantic and the Urals. But, in the absence of loads of cash, the network of higher education institutions is very dense. And young people can study here for very little money compared to Asia and the United States.

[...] The European Union combines unique strengths, but today those strengths are under threat. Will it know how to use them to overcome the crisis?

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Re: New EC Thread

Post  Panda on Tue 17 Jul - 22:15

How to move away from a technocratic government


17 July 2012
Corriere della Sera Milan Comment5


Ajubel


Last year, to calm the markets, Italy resorted to a government of unelected technocrats. But with elections coming up in 2013, one columnist writes, the only way for political parties to regain public confidence is to propose public works projects.

Angelo Panebianco


We are living a phase of chronic tension between democracy and the European Union, between the aspirations of the electorate and the need to safeguard the European project. Sometimes we succeed in controlling that tension, and at other times it degenerates into open conflict. The fracture, which crosses the eurozone, between the countries in the North and those along the Mediterranean, is in the form of expression.

To keep the markets at bay, reassure public opinion in the northern countries and save its place in the euro club, Italy has invented a stop-gap, an emergency workaround: the government called "technical". But the hourglass knows no pity, and no one can halt the countdown. As paradoxical (and "politically incorrect") as it may seem, almost everyone in Italy and elsewhere is dreading the moment when "democracy" will rediscover its rights – that moment, when, in less than a year, voters will make their voices heard.

Why such fear of democracy? Because, rightly or wrongly, it’s widely believed that the political formations the Italians will vote for, or against, are all inadequate, constitutionally incapable of persevering in the clean-up policies that the crisis has made necessary.

The parties supporting the Monti government are promising that they will not unravel the reforms that have already been committed to. But why should anyone believe them? Who says that the Right, on returning to power, won’t immediately repeal the Spending Review [Law on the rationalisation of public expenditure] to resume managing public funds the way it always has?

And why should we believe the Left when it says it will not stray from the path laid down by the Monti government when we know very well that this path does not have the backing of the unions and it is unthinkable for the Left to set out on anything without their approval?

A rocky road

The fact that it brings up the possibility of a "grand coalition" (that is to say, yet another Monti government) after the elections shows that these same political forces are fully aware of their inadequacies.

How to leave that all behind? There’s one way out: a rocky road, one alien to our traditions. For the first time since the birth of Italian democracy, the political forces that matter should work through the instructions in “The Manual of a Good Democrat". These state that the electoral campaigns should lead not to a rain of vague promises, but to specific projects.

A project can be called specific when it is clearly announced who will be rewarded and who will be penalised. A project is called specific when it is applauded by some and makes others hit the roof. A political organisation could announce possible examples of specific projects to its constituents: if we win the election, within thirty days after taking office we will slash public expenditure on such and such a sector by so much, and we will lower the tax burden by the same amount.

Or: if we win the elections, we will halve the North-South transfers, except for essential services, and along with it we’ll abolish business taxes for so many years.

The parties should propose projects on all the major topics of general interest. In health, for example, what has been the impact of bringing in the "standard cost" of services [which compares costs and outcomes]? Or, in education, who would dare to propose a detailed roadmap (as opposed to the usual blah-blah) to inject a bit of meritocracy? Indexing wages to the quality of teaching is possible, technically, if the political will is there.

Discredit suffered by the political class

If the electoral campaigns were well conducted, it would, in a sense, be a posthumous victory for Ugo La Malfa (substance over ideology lay at the heart of the political creed of the Republican). A “LaMalfa-isation” of political groups would be a radical break with tradition. In Italy, election campaigns have always been conducted by combining ideological stances against the "enemy" with vague promises.

Ideology (the series of 'isms': anti-communism, anti-Berlusconism, etc.) serves to close up the ranks, while the vague promises displease no one and cast a wide net. Moving on from using "ideology + vague promises" to the "specific projects" method would be a revolution that would translate into drastic changes in political style and communication.

Relying on instinct, calculation, tradition and personal expertise, the politicians are preparing to take their perennial campaign to the Italian people. But this time they may well have been mistaken in their calculations. As evidence from the polls suggests, the discredit suffered by the political class has exceeded the warning threshold. A radical change in communication style may well be the only way out. In addition, it may have a reassuring effect on the rest of the world, looking on from outside.

What they may lose in proposing projects that might displease their potential voters – and thus cost them votes – they may win back by forging an image of seriousness and rigour. It is precisely the lack of seriousness and rigour that everyone is reproaching the political class for today. Besides, a campaign based on specific, competing projects will let voters grasp which forces are most credible for continuing the policy of consolidation.

The global crisis, as it’s being drummed into us all day long, is forcing us, if we want to survive, to change many of our habits. It’s time for the political class to change theirs.

On the web
Original article at Corriere della Sera it
L’Unità article it
La Repubblica article it


Politics

Berlusconi 2, the spectre haunting Europe

Silvio Berlusconi is back on the scene. The former Italian premier, who resigned last November as the debt crisis spiralled out of control, has announced that he will run as centre-right candidate in 2013 general elections. In an interview with the German tabloid Bild, the 75 year old billionaire said that Forza Italia, the party he founded in 1994, might replace the PDL (People of Freedom) coalition launched in 2007.

“Whether it will be a Berlusconi different from the past is impossible to foresee now, because the settings are changing fast,” centre-left newspaper L’Unità writes. What is sure is that 18 years of leadership in the centre-right “have left the mark” in the Italian political scene. The announcement of his candidacy also –


... raises important issues regarding the challenges Italian parties are facing today, first of all the question of electoral reform.

Berlusconi’s return has raised concern in Europe. European governments are worried that he will spoil all the efforts made by Monti. La Repubblica writes–


European have welcomed Berlusconi’s return on the Italian political scene as if he were a ghost they had hoped was exorcised once and for all. A ghost that affects them closely, because Italy, since the crisis broke, is the battlefield on which will be decided the fate of the euro and the EU. And Berlusconi’s removal, triggered by his isolation in Europe, was a step considered crucial to save the country and, with it, the single currency

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Re: New EC Thread

Post  Panda on Wed 18 Jul - 16:05



European royals get a (small) taste of austerity

By DANIEL WOOLLS
Associated Press






MADRID (AP) -- Spain's Crown Princess Letizia has a penchant for haute couture. Queen Elizabeth II's Bentley's are spotless. Belgium's King Albert II maintains a sumptuous villa in the south of France. But believe it or not, many of Europe's royals are feeling a pinch of the austerity sweeping the continent as it deals with its debt crisis.

The latest in royal belt-tightening comes from Spain, where King Juan Carlos has cut his own salary, as well as that of his son and heir Prince Felipe, by about 7 percent. The avuncular king, who is generally respected by his people, took the step after being engulfed in a public relations nightmare over an expensive elephant-hunting safari he took this spring as Spaniards endured hardship and bailout fears.

Here is a look at how austerity is making its mark in European countries that still have royal families.

SPAIN

Juan Carlos's salary this year will be reduced to about (EURO)272,000 ($334,000) and that of his only son, Crown Prince Felipe, to (EURO)131,000 ($160,000) respectively. The cut is in line with a new austerity package unveiled last week which features, among other things, the suspension of one of 14 paychecks into which Spanish civil servants' yearly salary is divided.

The Spanish royal budget is relatively small compared to those of other countries - (EURO)8.26 million, and now down to (EURO)8.16 million with the king's gesture. Even the original figure was down 2 percent from 2011.

The king acted voluntarily, and in the cuts he included Felipe, Queen Sofia, Crown Princess Letizia, and his daughters, princesses Elena and Cristina.

The female royals do not get a salary per se. But the pool of money available for their expenses is being trimmed, also by about 7 percent, to (EURO)292,625. The newspaper El Mundo put it this way: "So, among the four, they will not be able to spend more than (EURO)292,625 a year on clothing, shoes, accessories or hairdressing."

Then, there's this: since last year, Royal Palace staffers fly coach.

BRITAIN

In recent years Queen Elizabeth, long known as one of the world's richest women with her priceless collection of fine art, jewels and real estate holdings, has opened some parts of Buckingham Palace to tourists, raising money on admission tickets. Palace officials say they have met targets that called for a 25 percent cut in real terms in the use of public expenditures to support the monarchy.

Buckingham Palace officials say the queen - this year celebrating her Diamond Jubilee to mark six decades on the throne - has cut her use of public funds to stay in line with wide-ranging budget cuts announced by the government.

That's meant a pay freeze for royal staff, an increased emphasis on generating income through royal properties, and a reduction in planned property maintenance - although the royal fleet of Bentleys and other classic cars always appears spotless in public.

But travel costs have stayed high, in part because the queen is dispatching senior royals, including Prince Charles, Prince Harry and Prince William, to far corners of the Commonwealth for Jubilee festivities.

Official accounts showed British taxpayers spent 32.1 million pounds ($49.5 million) supporting the monarchy in 2011, 5.3 percent less than the previous year. Much of the saving came from cutting the maintenance bill of royal residences from 15.4 million pounds ($23.8 million) to 11.9 million pounds ($18.4 million).

THE NETHERLANDS

Dutch Queen Beatrix, who lives in a state-owned palace in a forest on the edge of The Hague, is paid a salary of (EURO)829,000 a year and also receives (EURO)4,314,000 for "personal and material" expenses. The budget for Queen Beatrix, Crown Prince Willem Alexander and his wife Princess Maxima was cut in 2011 by (EURO)422,000 to (EURO)39.2 million, according to the latest figures on the Royal House website.

Most of those savings came in the form of cuts to the royals' private travel expenses. Also, the queen forked over (EURO)163,000 from her own pocket for maintenance on her private yacht, the Groene Draeck.

BELGIUM

King Albert II pledged this year to use part of his salary to help pay for the upkeep on his properties.

He made a rare public statement in January saying he wanted to freeze the (EURO)10.8 million ($13.8 million) he gets from the state. He intends to use an automatic 2012 salary inflation adjustment of some 3 percent - or roughly (EURO)350,000 ($446,000) - to help pay for some property maintenance costs normally borne by the government.

The amount may be relatively small, but even such a symbolic concession could help ease the pressure on the royal family, which increased when it became clear the Belgian constitution forces the government to pay out the inflation adjustment under any circumstance.

SCANDINAVIA, THE EXCEPTION TO THE RULE

Norway - one of the richest countries in Europe per capita - has not cut its royal budget, nor have neighbors Denmark and Sweden. Indeed, the countries of Scandinavia have largely dodged Europe's debt crisis. Their budgets are in order, as they did not spend beyond their means, as some countries of the south did, such as Greece, Spain and Portugal. They are suffering indirectly, of course, because weakened Europe is a big export market for the Scandinavians.

----

Gregory Katz in London, Don Melvin in Brussels, Mike Corder in Amsterdam and Karl Ritter in Stockholm contributed to this report.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.





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Re: New EC Thread

Post  Panda on Wed 18 Jul - 16:59


Kim Carson


Europe now lives off over-regulation, complacent bureaucracy and state intervention. And it will end up a museum if it doesn’t recover its entrepreneurial spirit, argues Poland’s former EU negotiator.

Jarosław Mulewicz


Europe is not sick with Parkinson’s disease. It is a victim of Parkinson’s law. When a company or organisation has more than 500 employees or members, it no longer needs income, profits or clients. What matters is its own bureaucracy and internal procedures, which keep the employees busy. This is true for corporations and it is true also for the European Union, or European Mummy, as the pundits call it.

Pie in the sky

The EU increasingly needs itself. It’s been working less and less for economic growth and citizens and more and more for itself and its own officials. The procedures and regulations it passes are less and less needed and hinder business instead of facilitating it.

Globally, the EU is becoming less and less economically competitive. Member states have no money to finance officialdom and public spending so they endlessly indebt themselves either internally (Belgium, Germany, Netherlands, France) or externally (Ireland, Portugal, Spain, Italy, Greece).

The EU never reduces its own budget and also demands more funds for its army of eurocrats. The existing mechanisms of the EU’s functioning have degenerated, meaning that the union is no longer a promoter of economic growth. The proposed reforms in the shape of closer political integration and debt-sharing and a policy of stimulating growth at the cost of even greater deficit will only increase the army of officials and result in a thousand new regulations that will hinder business even more.

No one wants to remember recent history, when market liberalisation in Poland in 1989 resulted in an unprecedented economic boom. What Europe wants today is socialism, state monopoly over everything, artificial full employment, especially in administration and the public sector, and finally, the rationing of everything.

Vote by acclamation

In order not to sound hollow, let us cite some examples. One closest to me will best explain the phenomenon in question. One of the EU’s official bodies is the European Economic and Social Committee that was supposed to review the EU’s decisions on behalf of civil society. How does the rightful idea of civil oversight look in reality?

The Committee members are named by non-governmental organisations, employees and employers and appointed by the Council following nominations by member state governments. Most of the members are in fact members of organisations representing the above. So you can hardly find a real business-person in the employer group, a real worker in the employee group or a real social activist in the civil society group. Many members serve numerous terms, in some cases extending to several decades. The oldest of them is eighty nine.

A recent vote in the employer group took place by acclamation. When I asked whether a representative of the employer group was now or had ever been a businessman, I heard that not, but that he had a feel for the spirit of enterprise.

Similarly, a representative of the employee group said he had never been a worker. When I asked whether they could switch places, I heard it wouldn’t be so difficult.

Precisely such officials of employer, employee and non-governmental organisations represent us, the civil society. As officials, their salaries slightly exceed the EU average. What does the EU offer them? The session allowance is 233 euros. All you need to do is sign the list and you can disappear, which some have developed a habit of.

Once a week you get a 1,084 euros travel-cost reimbursement. Add a 30 euro daily lodging allowance, double allowances for out-of-Brussels sessions and many other perks (subsidised canteen, fitness club, medical service). In all, being highly active, you can save up to eight thousand euros a month free of tax.

For function members there’s even more. You only have to attend as many sessions as possible. What do you need to proceed more often? Hundreds of new regulations to review as well as your own opinions. The more law is established, the more you earn. Several years ago, when an initiative to simplify the law-making process came out of President Jose Manuel Barroso’s office, everyone applauded. Just not in my section, working group or sub-committee, they said.

Everyone’s happy

That’s the case all over the EU. Officials are employed and earn money introducing new regulations. An average of one hundred thousand regulations in ten years, which means ten thousand every year. It’s like “what else is there yet to spoil?”

There is a drive to regulate everything. The observance of new regulations is to be overseen, in both the EU and in member states, by new officials, in this case in charge of banking supervision, or, possibly, in charge of the supervision of everything.

If you spend a day or two in this atmosphere, you feel like living in real socialism again. No one is willing to remember how that system ended. There, too, bureaucrats wanted to decide how much meat, sugar or other rationed goods citizens should get.

In the EU, too, there will soon be ration coupons for everything, unless someone finally opposes the bureaucratic rule.

What the EU and its members states need is the kind of fundamental reforms that were unleashed in Poland in 1989 – a decisive liberalisation of business regulations and telling the citizens clearly that their future depends on their hard work rather than the good or bad will of an army of officials.

Until the EU and its citizens realise that there is no free lunch, the crisis won’t end and growth will be hard coming. For now, we are going to see a new army of well-paid officials to control banks and financial institutions, another army to oversee fiscal matters and so on.

The EU remains well on its way to becoming a European Mummy and a museum.

Translated from the Polish by Marcin Wawrzyńczak

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Re: New EC Thread

Post  Panda on Wed 18 Jul - 17:23



This is an excellent Article , for many Years the Auditors could not sign off the Accounts for the EU and why isn't the EU subject to an austerity plan?

Angela Merkel says she can't be sure the Euro project will work unless Leaders work harder. Germany sells Bond with a negative yield and Finland
and the U.K. have the same status now....this means an Investor PAYS THEM to buy their bonds. One analyst says Merkel is facing an Election next year and is aware that the Germans do not want to help bail out any more Countries. He says he thinks Merkel believes in the tooth fairy which doesn't
exist and the rest of the World is becoming impatient with the way the Euro crisis is being tackled.
The IMF has called on the EU to stand behind Deposit Insurance.


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Re: New EC Thread

Post  Panda on Thu 19 Jul - 0:11

Portugal is being emptied of its population. Its people are getting older, the birth rate is falling and immigration is receding. And that's without the added pressure of the crisis which is pushing young graduates to seek a better future abroad.

João Silvestre


The headline is deliberately provocative. It is also an exaggeration, but the goal is to call attention to a serious threat facing Portugal. For if the Portuguese population fell in 2010 and again in 2011, there is every indication that this trend will continue. Over the past two years, between a negative natural balance (the difference between the number of births and of deaths) and a negative migration balance (the difference between the number of people immigrating and those emigrating), Portugal has lost 85,000 inhabitants.

Population levels had not dropped since the 1990s. The natural balance was negative once in 2007 but that was compensated for by the rate of immigration. The shift towards a long-term trend came in 2010. There is a series of bad news on the demographic front, be it in terms of birth rates or of migratory flows.

Foreigners returning to home countries

According to the latest available data (based on the number of Gutherie tests made on new born babies), a drop in the birth rate is expected this year. In 2011, 97,000 births were registered in the country, the lowest figure in decades and it could fall further in 2012, to 89,000.

At the same time, the number of deaths has always exceeded 100,000 per year – 104,000 on average since 2007. These figures negatively affect the natural balance which was -6,000 in 2011 and could fall to -12,000 this year if the trend, is confirmed.

To that must be added a migratory balance that is also unfavourable to Portuguese demographics. Many foreigners settled in Portugal are beginning to return to their home countries, while the Portuguese themselves, pushed by the crisis and by unemployment, have begun to emigrate at a faster rate than had been seen in previous decades.

The rate of unemployment is the best indicator of the attractiveness of an economy. During nearly 20 years, until 2010, the Portuguese economy posted a positive migration balance. This corresponds to a period in which unemployment receded to as low as 4%, in 2000. There had not been a negative balance since 1980, which coincided with an intervention by the International Monetary Fund and a 10% rate of unemployment (in 1984).

A country without inhabitants is a desert

The flight of the Portuguese abroad has direct consequences on demographics in general and not only on the migration balance. Those that leave are, on average, younger than those who stay. Thus, their departure also lowers the birth rate. Not to mention that many of these Portuguese emigrants, after having gotten a diploma (engineers for example) in the best schools in their country, go "offer" their talents to Germany or Belgium.

A demographic crisis is bad news for all economies. First because a lasting declining trend will lead, in time, if nothing is done, to a total disappearance of the population. This should happen in 2204, according to a simple projection based on: a continued negative migration balance as projected for this year; the expected birth rate; a stable mortality rate; and the same average migration balance as in the past two years.

In other words, that is the year the Portuguese population will become extinct if the country continues, as is the case today, to lose 55,000 people each year (Portuguese living abroad are not included in the projection).

This is also bad news because the fall in the birth rate and the rise in emigration add to the aging of an already elderly population, with all the consequences that ensue in terms of health care, public spending, productivity and economic growth.

Unfortunately, this threat, although serious for Portugal, has not been given the attention it deserves by political leaders. This is not a problem due to the [austerity] programme imposed by the Troika [European Commission, International Monetary Fund and European Central Bank]. It is a trend that tends to get worse and that is self-sustaining. A country without inhabitants is a desert – yet, with few exceptions, no one dreams of living in a desert.

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Re: New EC Thread

Post  Panda on Thu 19 Jul - 8:35

How to move away from a technocratic government


17 July 2012
Corriere della Sera Milan Comment19

Last year, to calm the markets, Italy resorted to a government of unelected technocrats. But with elections coming up in 2013, one columnist writes, the only way for political parties to regain public confidence is to propose public works projects.

Angelo Panebianco


We are living a phase of chronic tension between democracy and the European Union, between the aspirations of the electorate and the need to safeguard the European project. Sometimes we succeed in controlling that tension, and at other times it degenerates into open conflict. The fracture, which crosses the eurozone, between the countries in the North and those along the Mediterranean, is in the form of expression.

To keep the markets at bay, reassure public opinion in the northern countries and save its place in the euro club, Italy has invented a stop-gap, an emergency workaround: the government called "technical". But the hourglass knows no pity, and no one can halt the countdown. As paradoxical (and "politically incorrect") as it may seem, almost everyone in Italy and elsewhere is dreading the moment when "democracy" will rediscover its rights – that moment, when, in less than a year, voters will make their voices heard.

Why such fear of democracy? Because, rightly or wrongly, it’s widely believed that the political formations the Italians will vote for, or against, are all inadequate, constitutionally incapable of persevering in the clean-up policies that the crisis has made necessary.

The parties supporting the Monti government are promising that they will not unravel the reforms that have already been committed to. But why should anyone believe them? Who says that the Right, on returning to power, won’t immediately repeal the Spending Review [Law on the rationalisation of public expenditure] to resume managing public funds the way it always has?

And why should we believe the Left when it says it will not stray from the path laid down by the Monti government when we know very well that this path does not have the backing of the unions and it is unthinkable for the Left to set out on anything without their approval?

A rocky road

The fact that it brings up the possibility of a "grand coalition" (that is to say, yet another Monti government) after the elections shows that these same political forces are fully aware of their inadequacies.

How to leave that all behind? There’s one way out: a rocky road, one alien to our traditions. For the first time since the birth of Italian democracy, the political forces that matter should work through the instructions in “The Manual of a Good Democrat". These state that the electoral campaigns should lead not to a rain of vague promises, but to specific projects.

A project can be called specific when it is clearly announced who will be rewarded and who will be penalised. A project is called specific when it is applauded by some and makes others hit the roof. A political organisation could announce possible examples of specific projects to its constituents: if we win the election, within thirty days after taking office we will slash public expenditure on such and such a sector by so much, and we will lower the tax burden by the same amount.

Or: if we win the elections, we will halve the North-South transfers, except for essential services, and along with it we’ll abolish business taxes for so many years.

The parties should propose projects on all the major topics of general interest. In health, for example, what has been the impact of bringing in the "standard cost" of services [which compares costs and outcomes]? Or, in education, who would dare to propose a detailed roadmap (as opposed to the usual blah-blah) to inject a bit of meritocracy? Indexing wages to the quality of teaching is possible, technically, if the political will is there.

Discredit suffered by the political class

If the electoral campaigns were well conducted, it would, in a sense, be a posthumous victory for Ugo La Malfa (substance over ideology lay at the heart of the political creed of the Republican). A “LaMalfa-isation” of political groups would be a radical break with tradition. In Italy, election campaigns have always been conducted by combining ideological stances against the "enemy" with vague promises.

Ideology (the series of 'isms': anti-communism, anti-Berlusconism, etc.) serves to close up the ranks, while the vague promises displease no one and cast a wide net. Moving on from using "ideology + vague promises" to the "specific projects" method would be a revolution that would translate into drastic changes in political style and communication.

Relying on instinct, calculation, tradition and personal expertise, the politicians are preparing to take their perennial campaign to the Italian people. But this time they may well have been mistaken in their calculations. As evidence from the polls suggests, the discredit suffered by the political class has exceeded the warning threshold. A radical change in communication style may well be the only way out. In addition, it may have a reassuring effect on the rest of the world, looking on from outside.

What they may lose in proposing projects that might displease their potential voters – and thus cost them votes – they may win back by forging an image of seriousness and rigour. It is precisely the lack of seriousness and rigour that everyone is reproaching the political class for today. Besides, a campaign based on specific, competing projects will let voters grasp which forces are most credible for continuing the policy of consolidation.

The global crisis, as it’s being drummed into us all day long, is forcing us, if we want to survive, to change many of our habits. It’s time for the political class to change theirs.

Berlusconi 2, the spectre haunting Europe

Silvio Berlusconi is back on the scene. The former Italian premier, who resigned last November as the debt crisis spiralled out of control, has announced that he will run as centre-right candidate in 2013 general elections. In an interview with the German tabloid Bild, the 75 year old billionaire said that Forza Italia, the party he founded in 1994, might replace the PDL (People of Freedom) coalition launched in 2007.

“Whether it will be a Berlusconi different from the past is impossible to foresee now, because the settings are changing fast,” centre-left newspaper L’Unità writes. What is sure is that 18 years of leadership in the centre-right “have left the mark” in the Italian political scene. The announcement of his candidacy also –


... raises important issues regarding the challenges Italian parties are facing today, first of all the question of electoral reform.

Berlusconi’s return has raised concern in Europe. European governments are worried that he will spoil all the efforts made by Monti. La Repubblica writes–


European have welcomed Berlusconi’s return on the Italian political scene as if he were a ghost they had hoped was exorcised once and for all. A ghost that affects them closely, because Italy, since the crisis broke, is the battlefield on which will be decided the fate of the euro and the EU. And Berlusconi’s removal, triggered by his isolation in Europe, was a step considered crucial to save the country and, with it, the single currency.

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Re: New EC Thread

Post  Panda on Thu 19 Jul - 16:16


Bado


MEPs and public servants in Brussels are frequently stereotyped as members of a “religion”. This is because they live in a blanket pro-European environment, writes a Dutch journalist. But different voices are now being heard.

Philip Ebels


Derk-Jan Eppink is a heretic. The conservative Member of the European Parliament does not believe in the basic principle of European integration, that of “ever closer union between the peoples of Europe”, as laid down in the treaties since 1957.

Eppink – a Dutchman holding a seat for a Belgian party – is one of the most outspoken critics. “Everyone who comes here is expected to support that view,” he says. Those that do not, are non-believers – “heretics” – and are treated like pariahs. ”We are given dirty looks as soon as we start to speak. The federalists leave the room or start to talk to each other. We are also given less speaking time. Daniel Cohn-Bendit [co-president of the Green EU parliamentary group], often exceeds the allotted time and there is no intervention. If we do that the gavel comes down.”

The comparison with religion is only slightly exaggerated. Brussels is another world, where many people are zealously committed to the happy tidings of a united Europe. A world where the mention of any other belief – in a purely economic union or, God forbid, in no union at all – is set aside as dark primitivism.

This is particularly the case in the European Parliament, Eppink's arena. The majority are definitely more pro-European than party members at home. They are always in favour of, never against the transfer of more power. Right now they are first in line to argue in favour of the introduction of eurobonds and other community measures to solve the crisis.

“Brussels changes you”

This can undoubtedly be explained by the fact that the more Europhile among them are inclined to move to Brussels. Part of the explanation is also found in the fact that the less Europhile among them tend to convert as time goes by. “They go native,” in the words of a high-ranking public servant. Eppink: “Brussels changes you, as if you have been touched by the hand of God.”

CDA [Christian Democrat] member Wim van de Camp is one of them. He came to Brussels in 2009, after 23 years in the Lower House of the Dutch Parliament, with the idea of stopping the regulatory zeal and reducing the budget. Now he shares responsibility for the new, more pro-European course of the CDA.

“That's right,” he says. “This is partly because I now know more about it. And partly because, no matter how you look at it, people always blend in with the company for which they work. I am now more convinced than ever of the use of and need for the European Union.” The longer you are there, the more you start to believe.

In addition, says Dutch Socialist Party member Dennis de Jong, Brussels is set up in such a way that it pays to believe: “If you show yourself to be in favour of the United States of Europe, doors are automatically opened for you. For example, I will not be invited to Herman Van Rompuy's office very quickly.”

The same applies to daily activities, says De Jong. “If you do your job properly, you might become the chairman of a certain Parliamentary Committee. You are rewarded for your parliamentary work, and that is by definition pro-European. The positive reinforcement is enormous. It is difficult to keep your feet on the ground."

The gospel of “ever closer union”

In addition to the Parliament the Commission is unmistakably pro-European, but as anonymous discussions with three top public servants show, more pragmatic than ideological. “We are not all believers,” says one, who works in the Enlargement department [Directorate-general]. “There are really two groups of public servants: the group that simply does their work and the group that are true believers. The second group is getting smaller and smaller.”

Things were different in the past, say the public servants, two of whom have been working for the Commission for twenty years. In the past they still had the idea they were working on a historic task. These days things are far more business-like. “The EU exists, European integration is a reality,” says someone who works in the Competition DG. “The issue now is: how do you make sure that it works? It is all much more humdrum than people sometimes think.”

There is thus little political discussion on the direction Europe should take now. At the end of the day, they are public servants, no matter how exotic the Commission may appear to be. By definition they are apolitical, technocratic, and talk about football when they hang around the water cooler – not about the pros and cons of a European banking union.

Difficult times for the prophets

Since the beginning of 2010, for the first time, the number of people who don't trust the EU is bigger than those who do. The European Commission is starting to notice this. Public servants recently found stickers on their cars with an illustration of a man who used his tie to hang himself. “Eurocrat, make good use of your tie” [Eurocrate, sers-toi de ta cravate], was the caption. A number of them were given a good scare a month earlier when they were surrounded in the metro and ambushed by “a group of left-wing activists”. The Commission unions wrote in a letter on the topic that there had always been some “attacks”, but since the outbreak of the euro crisis they had increased in both number and size.

These are difficult times for the prophets. The crisis is testing their faith. “The believers are starting to have doubts,” Eppink thinks. He says that these days they listen better if he or one of his political brothers is speaking. “We have the intellectual high ground,” he thinks.

The elections will show whether the Netherlands thinks the same. More, or less, Europe. “That's a good thing,” the public servant of the expansion department thinks. “It is proof that integration is becoming real. In the past everyone agreed. But then nothing was really at issue. Now it is.”

On the web
De Groene Amsterdammer article € nl

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Re: New EC Thread

Post  Panda on Thu 19 Jul - 22:41



Angela Merkel is set to ratify the Spanish Bailout but with Elections next year in Germany and her Party not doing very well, she is aware the Germans
do not want to bail out any more Countries.

The Troika is to visit Greece on 24th July analysts are wondering what this is about.

Spanish Bonds on sale today realised a yield of 5% on 2 yr with not much interest shown, but the cause for concern is the 7.3 % yield on 10 yr Bonds ,
above the 7% danger level .

Deutchebank, Credit Agricole and Societe Generale are 3 European Banks, together with Goldman Sachs which are to be investigated by the U.S. and
considering European Banks are already fragile, this is cause for concern.

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Re: New EC Thread

Post  Badboy on Thu 19 Jul - 23:18

I RECEIVED A TWEET ON MY TWITTER ACCOUNT SUGGESTING THAT GERMANY MIGHT PAY IT CITIZENS TO VISIT THE INDEBTED COUNTRIES OF THE SOUTHERN HALF OF THE EU.

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Re: New EC Thread

Post  Panda on Fri 20 Jul - 6:01

20 July 2012 Last updated at 02:45 Share this pageFacebook Twitter Email Print Share this page

Spanish police have fired rubber bullets to clear demonstrators in Madrid as a day of nationwide protests against spending cuts ended in unrest.

Protesters set alight rubbish bins as riot police charged them in the city centre, near the parliament building.

Seven people were arrested and at least six injured, officials said.

Earlier, tens of thousands of people held largely peaceful protests across Spain against the latest government austerity measures.

Public sector workers crowded the streets of Madrid, Barcelona and several other cities, chanting slogans against government "robbery".

Among those protesting were firefighters and police officers, as well as health and education workers. "We have lived through bad times, but this takes the biscuit," fireman Francisco Vaquero, 58, told the Reuters news agency

The new 65bn-euro (£60bn; $80bn) package of public sector wage cuts and tax rises were announced last week by Prime Minister Mariano Rajoy.

He said it was part of a deal with eurozone leaders to help rescue Spain's troubled banks. Parliament ratified the measures on Thursday.

Earlier in the day, Germany's parliament voted in favour of the 100bn-euro bailout for Spain's debt-laden banking sector.

Government austerity measures aimed at cutting Spain's large deficit have prompted frequent protests, including one by miners against subsidy cuts last week.

At a debt auction on Thursday, Spain managed to raise 2.98bn euros on the financial markets, but at the cost of sharply higher interest rates compared to an auction last month.

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