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Re: New EC Thread

Post  Panda on Tue 7 May - 10:32

Mr Normal has become the Pitiful President

One year in, François Hollande has alienated most voters, antagonised Angela
Merkel, driven droves of French into exile and presided over a worsening economy

President François Hollande with
his partner Valérie Trierweiler, who is even more unpopular than
him Photo: Getty

By Anne-Elisabeth Moutet

7:31PM BST 02 May 2013


With hindsight, it seems as if François Hollande’s troubles started the day
he was inaugurated, on May 15 2012. First he was drenched by a surprise storm as
his open Citroën drove up the Champs-Elysées. Then, the very same day, his
Falcon plane was hit by lightning on the way to Berlin, where he was scheduled
to meet Angela Merkel – making it possibly the first and last time the German
Chancellor has felt unreserved sympathy for him.

The new president had to turn back before travelling to Berlin in another
aircraft. When he got there – in more pouring rain – he missed a turn on the
airfield red carpet while reviewing German troops, and had to be steered back in
the right direction by Mrs Merkel’s firm grip on his elbow, a moment that
presciently symbolised their future relationship.

And everything went downhill from there.

One year later, the man who had billed himself as the “normal president”
during his victorious campaign against Nicolas Sarkozy is breaking records for
unpopularity. With 75 per cent against him, Hollande is scoring the lowest
approval ratings of any president of the Fifth Republic since the country
started conducting polls. Unemployment has risen by 11.5 per cent since his
election, reaching an all-time high of 3.2 million. An estimated 150,000 young
people have left the country in search of better prospects abroad: the only jobs
created in France have been in the public sector, usually in fields such as
teaching that are solidly controlled by Socialist voters.

Despite a widely touted “austerity” drive, public spending stands at 57 per
cent of GDP – the figure in Britain is 45 per cent – and the country’s public
debt is about to reach 94 per cent of GDP. The largest street demonstrations
since 1984 – when the country also had a Socialist president, François
Mitterrand – have brought more than a million people on to the streets of Paris
on two occasions (and more are planned), to protest against justice minister
Christiane Taubira’s new law on gay marriage and adoption: given that France is
a fairly tolerant society, these were effectively a street referendum against

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France’s very visible spat with Germany is a good example of how Hollande
manages to make a bad situation worse. It is hardly new for French and German
governments to disagree on economic issues; nor is it unusual that its leaders
belong to different political parties. Yet, mindful of the European leverage
afforded by the French-German axis, Valéry Giscard d’Estaing, a conservative,
was excellent friends with the Social Democrat Helmut Schmidt, while the
Socialist Mitterrand spoke in almost Gaullian terms of his German counterpart,
the Christian Democrat Helmut Kohl. Even Jacques Chirac never clashed with
Chancellor Gerhard Schröder in the way he did (as PM) with Margaret Thatcher.

Hollande, however, still seems to manage France the way he managed rival
“currents” during his long tenure as Socialist Party leader, trying to play one
against the other while trying to keep everyone happy by granting them some sort
of concession. This was in evidence at last year’s European summit, where
instead of sitting down with Mrs Merkel to hammer out a viable compromise, he
tried to rustle up an alliance with Spain and Italy behind her back, thinking
this would be enough to counter the German position.

“This may work in Corrèze [Hollande’s constituency in central France]; it
doesn’t in the real world,” a French diplomat commented at the time. “At the end
of the day, the Germans were annoyed, the French line was all but absent from
the final communiqué – and Mrs Merkel and David Cameron found themselves in
closer alliance than they’d ever been.”

Recently, a trio of ministers including the flamboyant Arnaud Montebourg,
minister for industrial recovery, started making increasingly belligerent
statements about “German-imposed austerity”, accusing Mrs Merkel of “egotistical
intransigence” and calling for “a democratic confrontation with Germany”,
without being taken to task by the president.

It didn’t take long for Mrs Merkel’s entourage, who are much savvier in the
ways of French politics than the French are about Berlin affairs, to counterleak
a memo – plausibly produced by the Chancellor’s coalition partners, the Free
Democrats – on France being “Europe’s biggest problem child”, with a stalled
economy and a “meandering” reform programme. Mrs Merkel then gave a perfunctory
denial that she thought anything of the kind.

The truth is that she is incensed with Hollande, not least because of her
growing conviction that the French president and his spin doctors allowed the
German-bashing because they felt that it would displace domestic dissatisfaction
with Hollande on to Germany.

Even the notoriously complacent French press is now giving the president a
hard time. “Is 'GrandPa’ [one of Hollande’s mildest nicknames] really up to it?”
asked the news magazine L’Express on a recent cover. Le Point called him
“Monsieur Faible” – Mr Weak – after Hollande confessed that he hadn’t believed
the economic crisis would “last so long”.

No relief was to be expected after the announcement yesterday that Arnaud
Montebourg had scuppered a deal by which Yahoo had agreed to acquire 75 per cent
of Dailymotion, a successful French internet video site, valuing it at $300
million. “Yahoo wants to devour Dailymotion, but we told them no and that it had
to be a 50:50 split,” the avowedly anti-American Montebourg boasted to Europe 1
radio. Whereupon Yahoo called the whole thing off.

Similar grandstanding by Montebourg had already driven the Indian tycoon
Lakshmi Mittal from the Florange steelworks in Lorraine, and the American
company Titan International from a floundering Goodyear tyre plant in northern

“The country is drowning in an ocean of discouragement,” said Christophe
Barbier, the influential editor of L’Express. “It’s not just the tax-avoiding
rich, artists like Gérard Depardieu, businessmen – everyone is now tempted to
leave for a better life elsewhere. Young people feel they will never get a
break, a job, a sign of trust. Entrepreneurs have to fend off red tape, rising
costs and levies.”

In April, to add to this toxic climate, came the Cahuzac scandal: France’s
budget minister, the man in charge of fighting tax fraud, was revealed to have a
secret bank account in Switzerland – and in all likelihood another in Singapore
– and to have lied to the president and parliament about it.

In the past week, polls have given Marine Le Pen, the far-Right National
Front leader, record numbers in a hypothetical presidential election – 23 per
cent, well above Hollande at 19 per cent, while Sarkozy scored 34 per cent. Were
Sarkozy to stand, he would beat Le Pen easily in the second round but the talk
in France has been of the dangers of Fascism, beginning with the very real
distrust of all politicians and of the ruling class.

It says a lot about Hollande’s tin ear that he chose that very moment to
compel ministers to disclose their personal assets, arguing for the virtues of
“transparency” against corruption. This may work in the United States, where
personal success is admired: but in France, a country where unregenerated
Marxist thought still largely holds sway, overlaying a centuries-old Catholic
mistrust of money, it prompted Claude Bartolone, the Socialist Speaker of the
National Assembly, who is fighting suggestions of a similar obligation for MPs,
to talk of “voyeurism and envy”.

Embattled in the Élysée Palace, where at times it seems his only remaining
supporter is his partner Valérie Trierweiler – a woman so unpopular that
Hollande has to fend off unpleasant remarks about her during his rare walkabouts
– the president is now mulling a cabinet reshuffle as a way of signalling to the
French that he has taken their displeasure on board.

But whom to choose to replace his weak prime minister, Jean-Marc Ayrault, a
former German language teacher? The 2007 Socialist presidential candidate,
Ségolène Royal, is unacceptable to Mme Trierweiler. The former Socialist leader
Martine Aubry, Jacques Delors’s daughter and the artisan of the rigid 35-hour
working week, may be unacceptable to Mrs Merkel. François Mitterrand’s former
PM, Laurent Fabius, now the foreign minister, is hampered by having just been
revealed to be the richest man in the Cabinet.

Hollande’s instinct is probably to try to trundle along with the same tired
team. His latest attempt to show that the presidency is doing its part to
relieve the public debt has been to announce that he will sell part of its
cellar of fine wines, lovingly accrued since the Vincent Auriol presidency in

On May 30 and 31, 2,200-euro bottles of 1990 Pétrus and Château d’Yquem will
be auctioned off, “to be replaced by more modest vintages”, according to the
president. So speaks a self-proclaimed modest man, who may be feeling that he
has a lot to be modest about

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Re: New EC Thread

Post  Panda on Tue 7 May - 16:56

Society: Why have the Spanish people not revolted?

6 May 2013Infolibre Madrid


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A banner showing the number of unemployed, at a protest in Madrid on May 1, 2013.

Five years of crisis, 6 million unemployed and thousands driven from their homes: Despite the heavy social toll, Spaniards suffer their fate without rebelling against the government or against the EU because they fear losing what little they have left, argues a sociologist.

Ignacio Sánchez-CuencaThe fifth year of the crisis is upon us. Unemployment, poverty and social exclusion are all on the rise; reports of malnutrition in children are cropping up; tens of thousands of families have been evicted from their homes; and wages continue to fall, which can’t be said for the costs of goods and services.
What’s more, people have grasped that this situation is not a passing phase and can still stretch on for a few years yet. Given all this, why has there been no social explosion? Why has the system not collapsed? How much can Spanish society endure without an uprising?
It is hard to think of a combination of conditions more favourable for bringing about an explosion. First, the effects of the crisis are terrible. How can a population survive with 6 million unemployed? The worst is that unemployment will keep growing as domestic demand is depressed. The savings and the subsidies that have kept many going so far are being depleted. Among those who do have work, many are earning subsistence wages in the underground economy.
Second, the savage austerity policies that Spain and the European Union are pursuing are only pushing the country onto the scrap heap and putting off the day of recovery. In place of consumption and state investment combatting the fall in household demand, the government is cutting administrative expenses across the board. This is not only worsening the crisis, but decreasing social coverage for the unemployed and the poor.
‘Internal devaluation’

Although it sounds a little brutal, the EU and the government have deemed that the road out of the crisis passes through the general impoverishment of the majority of the Spanish people. “Internal devaluation” does not mean anything else.
Third, there is a growing perception that way the sacrifices are being shared out is enormously unfair. The bloodiest case, but certainly not the only one, is the evictions. The state handed out generous aid packages and is getting dangerously into debt to restructure the banks, but has no solution for all those who have been trapped by the mortgage crisis. The insensitivity to this situation of the public authorities and of the two big parties has helped fuel the sense of outrage across much of society.
Fourth, at the moment there is no light at the end of the tunnel. Despite the propaganda of the government about the upcoming recovery, the people have grasped that we are in the midst of a very long process of stagnation and the government is failing to anticipate the very difficult years ahead of us.
Finally, we are suffering from a corrupt and astonishingly inefficient party in power. Incredibly, at a moment as serious as the present, the head of the government is being blackmailed by charges of illegal financing of the political party that he leads.
Few alternatives

Despite all these calamities that I have listed, the people are not rising up. What exactly is going on here?
On the one hand, there are no longer any alternatives. There is no ideology today that proposes a path distinct from the one we are on and that can marshall an effective resistance. The people are dominated by rage, which translates into rejection of and alienation from the economic and political system – but that rage has failed to crystallise into a movement that amounts to a collective threat to that system.
On the other hand, despite the widespread impoverishment, Spain continues to enjoy a considerable level of development. Developed democracies, as we know, are extremely stable and put up with almost anything. The stability is astounding: never has there been a democracy with a higher per capita income than the Argentina that collapsed in 1976.
Even after the crisis of these past years, Spain has a per capita income well above that. Tensions and violent episodes are therefore expected, but no widespread collapse. This is partly because the state is very powerful and can put a brake on protests, and partly because many families own their flats or have their savings in stocks and are unwilling to set out on adventures of uncertain outcome. At all levels, development brings in its train a higher level of political conservatism.
The clearest symptom that the people, no matter how angry they are, are averse to risks is the absence of a public debate in Spain about the wisdom of staying in the euro. Despite the fact that the monetary union has turned out to be a mousetrap, almost no one wants to assume the short-term costs of leaving the currency. Strangely enough, people are directing their criticism at the parties and institutions of Spain when much of the problem is higher up, in the rules for the functioning of the euro and in the policies set by the northern countries. True, the European Union institutions have lost much of their status in the eyes of the public, but without too many consequences: the support for the euro continues to be massive. And it’s that support that is key to understanding why there has been no collapse

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Re: New EC Thread

Post  Panda on Wed 8 May - 7:32

Eurozone: ‘Rajoy and Letta warn Merkel of the risk of social unrest’

7 May 2013
Presseurop La Vanguardia

La Vanguardia, 7 May 2013
Meeting in Madrid on May 6, Spanish Prime Minister Mariano Rajoy and his Italian counterpart Enrico Letta agreed to "pressure" the EU to approve a youth unemployment plan at the European Council summit in June.
The two leaders also emphasised the need for new policies to combat populism and anti-European sentiment, which is increasingly prevalent in all EU countries.
La Vanguardia remarks that the "Italian-Spanish front is still alive", and eager to exert pressure on northern countries and German Chancellor Angela Merkel to proceed with the implementation of measures decided at the Rome summit in June 2012. These include the progressive introduction of a banking and budgetary union in the EU.

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Re: New EC Thread

Post  Panda on Wed 8 May - 17:37

Youth unemployment: Germany’s unique key to success

8 May 2013Die Welt Berlin


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For the five million young unemployed Europeans, Germany, where the rate of youth joblessness is the lowest in Europe, looks like a promised land. While its system of dual training at the core of this success seems like a model for crisis-hit countries, it is not easily exported.

Stefan von BorstelMore than 5.5m young Europeans are without jobs. In the crisis countries in southern Europe, a generation is coming of age with few prospects: one in two Spaniards and Greeks under 25 are unemployed, and it's one in three in Italy and Portugal.
To them, Germany must look like an island of the blessed: youth unemployment here is below 8 per cent. In none of the other 27 EU member states is it this low. Only Austria is anywhere close (8.9 per cent).
How do they do it, our European neighbors ask – and even make pilgrimages to Germany to research the phenomenon. What they discover is our dual vocational training system – going to school (theory) and working (practice) simultaneously rather than consecutively. For most Europeans, that’s new: learning and working, instead of learning then working.
The European Commission has praised the German model as a "guarantee against youth unemployment and shortage of skilled labour." Even US President Barack Obama praised the German model in his 2013 State of the Union address: “Right now, countries like Germany focus on graduating their high school students with the equivalent of a technical degree from one of our community colleges, so that they're ready for a job."
Slow-changing opinions

For a long time, other countries criticised Germany for this approach – in fact, the OECD regularly upbraided us for having too few university graduates. For many international education experts, a university education – bachelor or master’s degree, doctorate – is the measure of all things. German “Meister” (master) certification is seen as rather exotic.
Practical training is considered to be notches below academic training. Equating an apprenticeship diploma with a high school degree, considering master certification to be on a par with a bachelor’s degree, is inconceivable for many Europeans. But slowly, word is getting around that German industry’s ability to innovate – and indeed its success as measured by the success of its products worldwide – might have something to do with the sound training German workers receive.
Even within Germany there are critics of the dual system. It has been said that the training is too specialised, too tailored to the specific needs of certain industries, and that the number of different specialties (more than 300) that kids can train for is way too high. Doubts have also been expressed as to whether dual-system qualifications can keep up with fast-changing economic times in our Internet era.
Becoming an export hit

The system came under a lot of pressure about a decade ago when there was mass unemployment in Germany, and tens of thousands of young people were unable to get apprenticeships. In 2004, the red-green (Social Democrat/Green Party) government was even pushing for a training levy to force the economy to create more apprenticeships.
But then in June 2004, the German government joined with employers and business associations in pushing through the national Vocational and Educational Training Pact, which helped reverse the situation: now, supply is greater than demand.
The global economic crisis has turned the German model into an export hit. Germany has signed a training cooperation deal with six EU countries, and German companies are playing a pioneering role by training staffers in their subsidiaries abroad according to the German model.
Expectations are high – also for the Germans. Germany doesn’t only want to export a winning system, it’s hoping for dynamic, motivated southern Europeans to occupy all the apprenticeship slots that aren’t presently being filled – and who once they’ve got their qualification don’t head back home but stay in Germany to fill out the growing shortage of skilled workers.
Sceptics are quick to point out problems, like language barriers, and say they doubt whether migrants can play a determining role in alleviating the shortage of apprentices in Germany.
And it is true that the time-frame may not be ideal, as the German system is strongly dependent on the economy. The market, not education experts, is ultimately what determines the number of apprenticeships available. It is companies that decide how many positions requiring which qualifications they will need in the future; that is the basis for the number of apprenticeship positions they open up.
So the big advantage of the German vocational training approach is also its biggest drawback. The system is contingent on the economy – and in bad times, such as the crisis countries in Europe are currently experiencing, demand for apprentices will be lower.
Sign of desperation

That southern Europeans are looking for an answer in the dual system shows how desperate they are. They not only lack companies willing to create apprenticeship positions, and patient “masters” happy to pass on their know-how to “their” apprentices, but also the institutions, and close-knit cooperation that is required between employers, politicians, unions and other players to implement the dual training system successfully.
Even in Germany, where this collaboration is so well established, the system is still not without its own setbacks, such as the conflict over the Training Pact and the resistance from the unions.
So southern Europeans adopting the German system have undertaken something highly ambitious. But it’s better to push for courageous structural reform rather than opt for the simpler solution of giving young unemployed people senseless occupational training just to keep them busy – and quiet. That deserves our support. As do young southern Europeans who are leaving home to come to Germany to find a job or receive vocational training. We should welcome them with open arms.
Translated from the German by Gail Mangold-Vine/Worldcrunch

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Re: New EC Thread

Post  Panda on Wed 8 May - 17:43

I suggested a couple of days ago that out of work qualified people should be training young unemployed people NOW , ready for the upturn .

Afew years ago many Brits worked in Germany helping to build houses, they are not needed now because German has their own experienced workers now.

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Re: New EC Thread

Post  Panda on Thu 9 May - 20:09

The European project is a total failure

9 May 2013Il Sole-24 Ore Milan


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Constructed on economic, political and geopolitical criteria, the EU must be judged by the same criteria. And the verdict of the British historian Niall Ferguson is final.

Niall FergusonThank you. Merci. Mersi. Grazie. Gracias. Grazzi. Go raibh maith agat. Dziekuje. Danke. Aitäh. Köszönöm. Multumesc. Dêkuji. Paldies. Ačiū. Dakujem. Obrigado. Hvala. Dank u. Kiitti. Blagodaria. Merci villmahl. Efharisto. And my personal favourite, tak.
There are 23 ways of saying thank you in the European Union, and I think that in itself illustrates why the European experiment has ended in failure. Do you remember those experiments that you used to do as a kid with a chemistry set? You would keep adding chemicals, one after the other, to see what would finally produce an explosion. That’s what they did in Europe. It started with six; that wasn’t enough. It went to nine . . . nothing. Ten . . . a little bit of smoke, nothing more. Twelve . . . nothing. Fifteen . . . still nothing. Twenty-five . . . beginning to bubble. Twenty-seven . . . explosion!
I’m absolutely certain that Lord Mandelson and Daniel Cohn-Bendit will tell you that the European experiment has succeeded because there has been peace in Europe since it began in the 1950s. Can we just knock that on the head? European integration has had absolutely nothing to do with peace in Europe since World War II; that has been the achievement of NATO [the North Atlantic Treaty Organisation]. The creation of the European Union was not about war and peace, otherwise there would have been a European Defence Community, and that was vetoed by the French National Assembly in 1954.
Economic evaluation

Europe has to be judged in economic terms, since its own terms have always been economic. And how did it do? In the 1950s the economy of integrated Europe grew at 4 per cent. In the 1960s, it was about the same. In the 1970s, growth was 2.8 per cent; in the 1980s, it slid to 2.1 per cent; in the 1990s, it was only 1.7 per cent: and so on, down to zero.
As European integration has proceeded, its growth has declined. The share of Europe in global GDP has fallen since 1980 from 31 per cent to just 19 per cent. Since 1980 the EU has grown faster than the United States in only nine out of 32 years. Never has its unemployment rate been lower than the US unemployment rate.
Are any of you investors? What were the worst equity markets of the last 10 years? They were Greece, Ireland, Italy, Finland, Portugal, the Netherlands, and Belgium — the worst in the world. And on top of all of this, we have monetary union — the ultimate experiment gone wrong.
We warned them, ladies and gentlemen. We said, if you have a monetary union without labour market integration and without any fiscal federalism, it will blow up. I predicted that in 2000. It is happening in real time, in a chemistry lab, on the other side of the Atlantic.
But this was also a political experiment gone wrong. Do you know what that experiment was? The experiment was to see if Europeans could be forced into an even closer union — despite their wishes — by economic means because the political means failed.
Loss of political legitimacy

And when the European peoples voted against further integration, their respective governments were told to try again. It happened to the Danes in 1992, and to the Irish twice: in 2001 and again in 2008. Their citizens gave the wrong answer in the referendum, so the governments just held another one. This tells you something about why this experiment has failed — it has failed because it has lost political legitimacy. And we see this not only in Greece but in government after government across Europe. Thirteen have fallen since this crisis began two years ago, and more will follow in the months to come.
Finally, the European experiment has been a geopolitical failure. The European Union was supposed to act as counterweight to the United States. Do you remember Jacques Poos’s 1991 “hour of Europe” speech announcing that Europe was going to solve the war in Bosnia [He actually said that after war broke out in Slovenia and Croatia]? Yes, that was supposed to be in 1991. But 100,000 people died in that war and 2.2m were displaced, and the conflict didn’t end until the United States finally stepped in and sorted out the mess.
Henry Kissinger famously asked, “Who do I call when I want to call Europe?” The answer came several years later: you call Baroness Ashton of Upholland. Nobody had ever heard of her, nor had they ever heard from her. Ladies and gentlemen, you’re Canadians. You know how hard it is to run a federal system with just 10 provinces and only two languages; that’s why you will understand more readily than most people why the European experiment, with 27 countries and a staggering 23 languages, has ended in ignominious failure. Thankfully, here in Canada I only have to use two or maybe three words now. Thank you and merci.
This article is the transcription of Niall Ferguson’s contribution as speaker in the Munk Debate on “Has the European experiment failed?” It was part of the Il Sole 24 Ore’s magazine IL’s cover story on “Europe under attack”, issued in April 2013.

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Re: New EC Thread

Post  Panda on Fri 10 May - 10:34

Europe day: A rise halted by nation states

9 May 2013Il Sole-24 Ore Milan


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Beppe Giacobbe
For Die Zeit publisher-editor Josef Joffe, the European experience has been derailed by the reluctance of some member states to give up their sovereignty.

Josef JoffeI have to start by correcting my friend Niall. He’s wrong about the phone number. There is a phone number. The phone number is Catherine Ashton’s. You call the phone number and then you get a computer voice: for Germany, press 1; for France, press 2 — that tells you where Europe is at.
Let me say something else. I think Europe was a wonderful idea. After all, Zeus, the god of gods, risked his marriage by running off with Europa — a woman he was smitten with. And Ovid, the Roman poet, sings, “Till in the open sea he bore his prize ... her right hand grasped a horn, the other leant upon his back.”
Europe was also a wonderful idea several eons later when it decided to unify after the two most murderous wars in history. What a magnificent story. First, six nations got together by integrating coal and steel. Next, they slowly created a common market for goods, capital services, and people; democracy followed à la Cohn-Bendit with a European parliament, and finally they introduced the euro, which meant no more francs, pesetas, and drachmas. Now there are 27 member states. The euro reigns from Portugal to the borders of Poland. Now, what would come next? Of course, the United States of Europe.
[German politician Daniel Cohn-Bendit says ‘Yes!’ in the audience]
Wrong! Europe is crumbling before our eyes. The grandest experiment since the 13 American colonies became E Pluribus Unum now faces its most deadly crisis. Why has this seemingly inexorable march of progress ground to a halt?
Conquering national sovereignty

Think about integration as a mountain climb in the Rockies or on the Alps. In the beginning or in the foothills it is nice and easy. As we rise, the ascent gets tougher and the air gets thinner. Finally we reach the sheer cliff, the north face of the Eiger, in Switzerland, for example — a cliff that forms the core of national sovereignty.
This is where we are today, with the euro, our proudest achievement, about to bury us. We have gone too far, so what do you do next? There are only three ways: you retreat, stop, or attack. Do you attack the summit and climb to the United States of Europe? “Just look at your party of 17,” this mountain growls, “all stragglers, miscreants, cripples, free-riders.” And because this is a very educated mountain, he would add that there is no true unification without war, where the strongest element forces the rest into a single state.
That is what happened in Italy and Germany, and of course, [...] in the United States, where the civil war was actually a war of national unification. There will be no such war in Europe, and thank God for that. There is no Bismarck or Lincoln in Europe’s future. And Frau [Angela] Merkel is no Bismarck, of course.
Tenacity of the nation state

But what does this deadly crisis tell us? It says that you can’t go to the summit unless you are both willing and able. Except you are neither of those things and nor will you ever be because: (a) you can’t and will not give up the biggest chunk of democratic sovereignty, which is the power to tax and spend; and (b) you don’t belong in the same climbing party to begin with. Just two or three or four of you have the discipline and the stamina to keep going. The rest are overweight, lame, or out of breath.
So let’s bring it down from the mountain metaphor. The political point is that Europe is broke, and Germany neither wants nor is able to pay for the rest. Even France is broke. Furthermore, the stragglers don’t want to go back to camp, to get into shape through a very painful domestic regimen that has already killed so many of their governments.
The deepest problem is the stubborn tenacity of the nation state, which will not submit when the core of its sovereignty is at stake. Money, as the Germans say, is where a friendship stops, and so does integration. The EU is not cavorting in the foothills anymore. It’s facing the north face of the Eiger.
So is Europe history now? We don’t know yet. But we do know one thing: that the experiment has failed in one sense because that wonderful dream from the 1950s — of up, up, and away — has collided with the nasty reality of the nation-state that will not fade away. And if truth be told, how many Frenchmen, Italians, Germans, Poles, and so on, will want to part with 2,000 years of history? Who wants to be ruled from Brussels rather than from his or her own capital?
Let me conclude with a prayer. Let’s pray that the inevitable crash of the euro, the most ambitious part of the experiment, will not bury the rest of the union. And let’s plead with Zeus to save Europa from the angry seas and set her down at a cozy little harbour because Europe cannot conquer the sea that is the nation-state. But if she drowns, Canada and the United States will not flourish. Amen. Thank you.
This article is the transcription of Josef Joffe’s contribution as a “pro” speaker in the Munk Debate on “Has the European experiment failed?” It was part of the Il Sole 24 Ore’s magazine IL’s cover story on “Europe under attack

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Re: New EC Thread

Post  Panda on Sat 11 May - 0:11

Spain is officially insolvent: get your money out while you still can

By Jeremy WarnerEconomicsLast updated: May 10th, 2013
327 CommentsComment on this article

I'd not noticed this until someone drew my attention to it, but the latest IMF Fiscal Monitor, published last month, comes about as close to declaring Spain insolvent as you are ever likely to see in official analysis of this sort. Of course, it doesn't actually say this outright. The IMF is far too diplomatic for such language. But that's the plain meaning of its latest forecasts, which at last have an air of realism about them, rather than being the usual dose of wishful thinking.
Let's take the projected budget deficit first. This is expected to decline quite steeply this year to 6.6 per cent of GDP, but that's mainly because the cost of bailing out the banking sector fell substantially on last year's budget. On a like-for-like basis, there has in fact been very little fall in the underlying deficit. And nor on the present policy mix is there ever likely to be, for that's where the deficit is projected to remain until the end of the IMF's forecasting horizon in 2018.
Next year, the deficit is expected to be 6.9 per cent, the year after 6.6 per cent, and so on with very little further progress thereafter. Remember, all these projections are made on the basis of everything we know about policy so far, so they take account of the latest package of austerity measures announced by the Spanish Government.
The situation looks even worse on a cyclically adjusted basis. What is sometimes called the "structural deficit", or the bit of government borrowing that doesn't go away even after the economy returns to growth (if indeed it ever does), actually deteriorates from an expected 4.2 per cent of GDP this year to 5.7 per cent in 2018. By 2018, Spain has far and away the worst structural deficit of any advanced economy, including other such well known fiscal basket cases as the UK and the US.
So what happens when you carry on borrowing at that sort of rate, year in, year out? Your overall indebtedness rockets, of course, and that's what's going to happen to Spain, where general government gross debt is forecast to rise from 84.1 per cent of GDP last year to 110.6 per cent in 2018. No other advanced economy has such a dramatically worsening outlook. And the tragedy of it all is that Spain is actually making relatively good progress in addressing the "primary balance", that's the deficit before debt servicing costs.
What's projected to occur is essentially what happens in all bankruptcies. Eventually you have to borrow more just to pay the interest on your existing debt. The fiscal compact requires eurozone countries to reduce their deficits to 3 per cent by the end of this year, though Spain among others was recently granted an extension. But on these numbers, there is no chance ever of achieving this target without further austerity measures, which even if they were attempted would very likely be self defeating. IN any case, it seems doubtful an economy where unemployment is already above 25 per cent could take any more.
In the past, the IMF has been guilty of being far too optimistic about Spain, both on the outlook for growth and the public finances, so it's possible it is now committing the reverse mistake of undue pessimism. Yet somehow I doubt it. Spain is chasing its tail down into deflationary oblivion.
All this leads to the conclusion that a big Spanish debt restructuring is inevitable. Spanish sovereign bond yields have fallen sharply since announcement of the European Central Bank's "outright monetary transactions" programme. The ECB has promised to print money without limit to counter the speculators. But in the end, no amount of liquidity can cover up for an underlying problem with solvency.
Europe said that Greece was the first and last such restructuring, but then there was Cyprus. Spain is holding off further recapitalisation of its banks in anticipation of the arrival of Europe's banking union, which it hopes will do the job instead. But if the Cypriot precedent is anything to go by, a heavy price will be demanded by way of recompense. Bank creditors will be widely bailed in. Confiscation of deposits looks all too possible.
I don't advise getting your money out lightly. Indeed, such advise is generally thought grossly irresponsible, for it risks inducing a self reinforcing panic. Yet looking at the IMF projections, it's the only rational thing to do.
PS. I don't include creditors of the British arm of Santander in this warning, who are ring fenced from the mothership back bome in Spain, theoretically at least.
Read more by Jeremy Warner on Telegraph Blogs
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Tags: eurozone debt crisis, fiscal compact, government debt, IMF Fiscal Monitor, primary balance, spain, structural deficit

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Re: New EC Thread

Post  Panda on Sat 11 May - 13:23

Eurozone crisis: An end to ‘stupid’ Europe

6 May 2013Le Monde Paris


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In granting extra time to Madrid and Paris to clean up their public accounts, Brussels has shown good sense. This is in contrast to the rigid position it had adopted until now, which dragged the EU executive into a fool’s game with wayward member states.

Le MondeHas Europe finally decided to make a stand for intelligence and mutual trust? Hopes that this is the case have been inspired by the European Commission’s surprise decision to grant France an additional two years in which to rein in its public spending deficit to less than 3 per cent of GDP. The target no longer has to be achieved in 2013, or indeed in 2014, but not until 2015.
In the runup to the announcement, Paris was hoping for a more modest postponement of one year, once it had given notice that it would not able to respect the commitment undertaken by Nicolas Sarkozy and later confirmed by François Hollande.
However, the Commissioner for Economic and Monetary Affairs, Olli Rehn, decided otherwise. Having judged that the effort required to stay on course for a 3 per cent deficit from next year was on a scale too great to be credible, he postponed the deadline until 2015 so as to ensure that hopes for recovery would not be nipped in the bud. In exchange, he demanded that the French government accelerate its efforts to push through reforms and to reduce public spending.
The Commission and Europe’s member states have finally put an end to a role playing game which has undermined any attempt to ensure good governance of the economic and monetary Union, and brought the euro to the brink of disaster.
Starting with a ‘stupid’ period

To cite former Commission president Romano Prodi the implementation of the stability pact began with a “stupid” period. To establish its power, Brussels sought to apply accountancy rules, which as early as 2003, EU states — read France and Germany — took the opportunity to ignore. Intelligently, in the case of Gerhard Schröder, who took advantage of added leeway to reform Germany, and in a more insouciant manner in the case of Jacques Chirac, who hurriedly set about doing nothing.
In the wake of their suspension in the years of crisis, the same rules ushered in an era marked by tolerated deceit, in which all parties made promises they could not keep. It was in this context that the Commission and François Hollande claimed for months that France would post a deficit of less than 3 per cent in 2013 — an assertion that enabled the Commission to save face while allowing Paris to lay claim to the status of model student.
This little game has been rendered unsustainable now that Europe is embroiled in a quarrel over conflicting doctrines, in which the partisans of nudging the steering wheel to take into account the real impact of policies (notably France and the IMF) have squared off against the proponents of austerity (Germany and the Commission). The former are highlighting how successive austerity packages contribute to economic recession, but they remain unable to convince their adversaries, who believe that such arguments are simply a clever pretext to put off necessary efforts. As a result of this dispute, the implementation of reforms and the drive avoid recession were both under threat.
In giving up its fetishistic insistence on a 3 per cent deficit, the Commission has decided to put an end to a game where all sides were bound to lose, and taken a politically clever and economically wise decision.

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Re: New EC Thread

Post  Panda on Sat 11 May - 17:08

European Central Bank

European Central Bank News

  • Spanish Bonds Decline as Demand Falls at Debt Sale; Bunds Slide

    Spain’s 10-year government bonds declined for the first time in six weeks as demand fell when the nation sold a combined 4.57 billion euros ($5.9 billion) of securities at an auction.
  • Dollar Gains Most Since February on Jobs as Yen Falls Below 100

    The dollar had its biggest rally since February as signs of labor market strength suggested the Federal Reserve may reduce stimulus sooner than its peers, driving the yen lower than 100 for the first time since 2009.
  • Gross Says Bond Bull Market Probably Ended April 29

    Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest fixed-income fund, said the 30-year bull market for bonds has probably ended as yields reached a low and prices peaked.
  • European Stocks Rally for a Third Week; BT Group Climbs

    European stocks rallied for a third week, closing at their highest level in almost five years, as companies from BT Group Plc to Hochtief AG posted earnings that beat estimates, while economic data exceeded expectations.
  • Schaeuble Signals Support for Easier European Austerity

    U.S. Treasury Secretary Jacob J. Lew said European policy makers are still falling short in efforts to revive their economy, intensifying pressure on them to further ease their budget-cutting.
  • Gold Traders Divided Amid Worst ETP Rout Since ’04: Commodities

    Gold traders are divided on whether surging demand for jewelry and bullion coins will sustain the rally in prices as a slump in holdings through exchange-traded products extended to the longest in more than eight years.
  • Lloyds to Sell Loans to Cerberus Capital for $501 Million

    Lloyds Banking Group Plc agreed to sell a portfolio of U.K. real estate loans to Cerberus Capital Management LP for 325 million pounds ($501 million) as the U.K. lender shrinks its balance sheet after its government bailout.
  • European Stocks Advance as ArcelorMittal, BT Group Climb

    European stocks gained, extending the Stoxx Europe 600 Index’s highest level since June 2008, as companies including ArcelorMittal and BT Group Plc posted better-than-expected results and German exports increased in March. U.S. index futures and most Asian shares advanced.
  • Central Banks Keep Easing After Cuts Fail to Spur Growth

    Global central bankers are poised to ease monetary policy even further after a wave of interest-rate cuts from India to Poland.
  • Eastern Europe’s Growth Tops Agenda as Development Bank Meets

    The European Bank for Reconstruction and Development meets today and tomorrow in Istanbul as the 34 countries it invests in, from Russia to Morocco, seek to kickstart their economic recoveries.

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Re: New EC Thread

Post  Panda on Sat 11 May - 17:17

The Trouble With Bundesbank President Jens Weidmann

ByMelvyn KraussMay 9, 2013 11:00 PM GMT+0100

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Germans need to re-think whether Bundesbank President Jens Weidmann’s move to lodge a legal challenge against the European Central Bank’s bond-buying program was such a good idea. They don’t have a lot of time.
Germany’s constitutional court in Karlsruhe is scheduled to decide the case next month. If it says the ECB’s outright-monetary-transactions program is illegal, then markets will dump the euro, and bond markets in the euro area’s peripheral economies will swoon. The last thing Europe needs as it seeks to emerge from a recession is a return to last year’s unstable financial markets.
Chancellor Angela Merkel, no doubt, has a Plan B available for such an outcome, like going to parliament to amend the constitution, so the ECB program can resume. If she doesn’t, she should. Even so, the market volatility that would follow until the ECB was able to restore its bond-purchase guarantee would be devastating.
Most analysts believe the court will rule in favor of the ECB program, at least in a modified form. Even if that proves to be the case, however, the court hearings could easily develop a circus-like atmosphere that creates uncertainty and undermines confidence in the common currency. The hearings might also affect September’s federal elections in Germany, given that Merkel supported the ECB’s program from the outset.
And all this risk for what? So that the anti-euro lawyers and officials in top management at the Bundesbank can take their revenge on a currency union that they opposed from the very beginning. Germany’s central bank clearly went too far this time.
Foolish Position

The Bundesbank doesn’t have veto power over the decisions of the ECB’s Governing Council, which has 23 members. Weidmann is trying to use Germany’s courts to get a veto, even though he was in a minority of one in opposing outright monetary transactions.
Weidmann might not look so foolish if the program hadn’t proved so successful. By merely threatening intervention in the bond markets, the ECB has been able to reduce sovereign interest rates in the periphery and keep them down, despite inconclusive elections in Italy and a bailout fiasco in Cyprus. The yield onSpain’s 10-year bonds, for example, reached a high of 7.6 percent before the ECB announced its bond-buying program. Today they are about 4.2 percent. That’s a difference between solvency and default for Spain, and quite an accomplishment to want to undo.
Moreover, none of this has cost Germany or the ECB a euro cent, because the pledge to intervene in bond markets alone has been enough to calm investors. Not a bond has had to be purchased yet.
Weidmann should stand up to the anti-euro elements within his house, not capitulate to them. The euro is Germany’s future, not the deutsche mark. By failing to accept this fact, the Bundesbank is putting German interests at risk. Weidmann will be a less effective advocate for German interests inside the ECB now that he has offended his colleagues by attempting to undermine the program they voted for.
Germany’s top central banker acknowledges that the ECB’s program brought stability to turbulent financial markets. But his response has been, in essence: so what? “It did not come as a surprise to me that the markets were calmed,” Weidmann said in an interview with the Wall Street Journal last month. “This doesn’t necessarily make the decision a good one from a policy perspective.” Pardon me, Mr. Weidmann, but saving the euro when it was under fierce speculative attack in the currency marketswas the essence of good policy.
The head of the Bundesbank shouldn’t sound like a Christian Scientist, who prefers to see a loved one die rather than use needed medical interventions that are proscribed by his religion. German taxpayers have a lot to lose if the euro fails.
Germany has racked up impressive gains from lower interest rates on peripheral debt, since Weidmann was overruled and the ECB began its bond-purchase guarantee. The price of bonds from the peripheral economies increased substantially as a result, and the German government owns a lot of these investments.
German Interests

The gains that followed would turn into steep losses if the Bundesbank’s lawyers were to prevail in court. In effect, Weidmann’s legal challenge has made the Bundesbank’s interests antithetical to those of German taxpayers.
This is hard to explain on policy grounds alone. Taking the ECB to court is further evidence that the Bundesbank is having a tough time coming to grips with its diminished role in European monetary affairs since Germany adopted the euro. Who can forget the almost-comic antics of ex-Bundesbank head Axel Weber, when he leaked information to the media before then ECB PresidentJean-Claude Trichet could get to a microphone? Trichet wasn’t amused. In retrospect, though, Weber’s behavior seems to reflect an institutional, rather than personal, animus.
Merkel and her finance minister, Wolfgang Schaeuble, have said on more than one occasion that going back to the deutsche mark would be insane. Weidmann should learn from his experience with the outright-monetary-transactions program. He allowed anti-euro hard-liners within his central bank to put a successful policy at risk and impose large potential costs on the German economy. The Bundesbank needs to accept that the euro is now Germany’s only viable currency and do whatever it takes to secure it.
(Melvyn Krauss is an emeritus economics professor at New York University and a senior fellow at the Hoover Institution atStanford University. The opinions expressed are his own.)

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Re: New EC Thread

Post  Panda on Sun 12 May - 17:58

panish prelate fears 'mutual hatred' over euro crisis
The Catholic Primate of Spain has called for a profound shift in Europe's
debt crisis policy to avert social collapse, warning that soaring unemployment
in Spain and across southern Europe has become "very dangerous".

Braulio Rodriguez, the
Archbishop of Toledo, has warned that soaring unemployment in Spain and across
southern Europe has become "very dangerous". Photo:

By Ambrose Evans-Pritchard, in

3:50PM BST 12 May 2013


"We have to change direction, otherwise this is going to bring down whole
political systems," said Braulio Rodriguez, the Archbishop of Toledo.

"It is very dangerous. Unemployment has reached tremendous levels and
austerity cuts don't seem to be producing results," he told The

"There is deep unease across the whole society, and it is not just in Spain.
We have to give people some hope or this is going to foment conflict and mutual

Europe's Catholic bishops have been careful not to stray into the political
debate or criticise EU economic strategy but the Archbishop said the current
course is untenable.

"The Vatican has always been an enthusiast for Europe, but a Europe of
solidarity where we help each other, not a Europe of coal and steel. Whether
this is possible depends on Germany and Chancellor Angela Merkel," he said.

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Unemployment in Spain has reached 6.2m,
or 27pc
, despite a growing diaspora of young Spaniards seeking work
in Britain, Germany, Brazil, or the Gulf, and an exodus of immigrants returning
home. Spain's population fell by 0.7pc last year.

The jobless rate in the Toledo region of Castilla-La Mancha is 31pc. The rate
for youth has jumped to 64pc from 14pc at the peak of the credit bubble (see
chart below

Spain has largely avoided the sort of street clashes seen in Greece. People
have coped with stoicism, drawing on the deep strengths of Spanish family
support. Yet the authority of the state is eroding. A new Metroscopia poll shows
that 87pc of voters have lost confidence in premier Mariano Rajoy.

El Mundo fears a slow-fermenting 'crisis of the regime', with almost every
institution -- including the monarchy -- in disrepute. It likens the mood to
"pre-revolutionary" France in the late 1780s.

The Archbishop, speaking in the austere episcopal palace of Spain's ancient
capital, said the current crisis is doing far more damage than the recession in
the mid-1990s when unemployment briefly spiked above 24pc. On that occasion
peseta devaluations let Spain regain competitiveness and recover gradually
despite austerity cuts.

This time the country seems trapped in slump. The long-term jobless rate is
much higher. Unemployment benefits taper off after six months, and stop after
two years. There are almost two million households where no family member has a

Europe's Catholic bishops know first-hand from their Cor Unum charitable
network just how desperate it has become. "We can try to mitigate the effects by
giving basic help to people left totally unprotected, but we can't create jobs,"
said the Archbishop.

"We are seeing families who used to middle class needing help. This is
totally new. As a matter of honour, they won't come to us until they have
exhausted everything,"

The Archbishop said the COMECE forum of European bishops is spear-heading a
push for change, drawing on social doctrines dating back to Pope Leo XIII.

The eminence grise is Munich Cardinal Reinhard Marx, author of "Das Kapital:
A Plea for Man". The firebrand cardinal has been picked by Pope Francis for his
eight-man team of policy advisers at the Vatican.

Europe's churches are emerging as a powerful pole of authority, filling a
vacuum left by political parties of all stripes tainted by the crisis. German
leaders may be more ready to heed criticism from the Vatican and their own
clergy than from Club Med politicians.

Spain's economic malaise has prompted protests.

Marisa Martinez, the volunteer director of Caritas in Toledo, said the
Catholic charity is now helping 40,000 people in a province of 700,000, often
with bags of food. Each family receives 12 kilos a month, mostly beans, oil,
milk, and pasta. "We pass on whatever we get in donations. It is all done
quietly to protect the dignity of the families. They take the food away and cook
it at home," she said.

This task is becoming harder as more people are evicted for mortgage default,
the now infamous "desahucios" that have
led to two high-profile suicides
. The Spanish government froze
evictions for the most vulnerable families in November. A thousand people are
still losing their homes each week, though this is less than often claimed .
"They are just thrown onto the street," she said.

The region of Andalucia plans to block evictions by expropriating homes from
banks but the European Commission has warned that this may violate the terms of
Spain's EMU bank bail-out. "If that is so, it is not worth being part of
Europe," said Jose Antonio Grinan, Andalucia's leader.

Repossessions in Spain are unusually harsh since creditors can pursue debtors
for all their assets and dock future income on tough terms even after
bankruptcy, with an hereditary element unique to the country. Most US states
abolished such "debt servitude" laws in the 19th Century, deeming them Medieval.

Pickets of protestors have been swooping on the homes of leading cabinet
ministers demanding a change in the law. Premier Mariano Rajoy has denounced the
campaign as "intimidation".

In Toledo there is a glut of unsold properties, causing rents to collapse.
Caritas is leasing unsellable flats back from the banks for as little as €200 a
month to house the homeless, but this is draining their funds.

Mrs Martinez said Caritas had not received any of its usual subsidies from
the Castilla-La Mancha government so far this year. "January went by, then
February, March, and now it is May, and nothing has arrived. They want to help,
but they are broke too. We don't know from one day to the next what we are going
to do," she said.

Caritas's team of 2,000 volunteers in Toledo -- almost all unpaid -- are
running workshops to retrain the unemployed or to keep youth off the streets.
One group of jobless school-leavers in the Toledo barrio of Poligono laughed
bitterly when asked if there was any work. Some wanted to know much English they
would need to find jobs in London. Others talked of Latin America as the new El
Dorado, if only they could get there.

There were jobs until 2011 in the nearby Toledo Hospital, intended to be the
biggest in Europe, a €450m Pharonic project begun by the previous Socialist
government with co-funding from the European Investment Bank. Construction
stopped when the money ran out, leaving a spectral half-built scar on the

Prime minister Rajoy is pinning his hopes on recovery later this year, but
admits that there will be few fresh jobs until 2016 even if all goes to plan. By
then this group of youngsters may be scarred for life.

The Archbishop said the debt crisis is a symptom of a deeper malaise. The
roots lie in the "moral disarmament" of the last quarter century. A
`get-rich-quick' culture of "stupid consumption" and "deranged indebtment" has
corrupted public life. Children have been brought up to wallow in

"This is common to the whole of Western Europe. It goes back to the core
issues of moral philosophy, of what we are as human beings. It is here that we
must search for a way out of the impasse," he said.

IMF tells Greece to step up tax evasion fight

Euro founder calls for currency to be broken



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Re: New EC Thread

Post  Panda on Mon 13 May - 8:22

Europe Tries to Boost Economy After Pressure From U.S.

By Simon Kennedy & Patrick Donahue - May 13, 2013 8:06 AM GMT+0100

European policy makers expressed a willingness to consider new ways to revive their ailing economy as they confronted fresh U.S. pressure to take action.
The bloc’s finance ministers and central bankers left weekend talks of the Group of Seven signaling that they’re poised to scale back austerity, are open to increased monetary aid and looking to unfreeze bank lending. European officials will meet in Brussels today to discuss the economy and review aid payments for crisis-struck nations from Greece to Spain.

Enlarge image
ECB President Mario Draghi

Ralph Orlowski/Bloomberg
European Central Bank President Mario Draghi told reporters after the G-7 talks that it’s considering buying asset-backed securities among options to support lending to small and medium-sized companies.
European Central Bank President Mario Draghi told reporters after the G-7 talks that it’s considering buying asset-backed securities among options to support lending to small and medium-sized companies. Photographer: Ralph Orlowski/Bloomberg
Europe’s governments are in the midst of a policy rethink after three years of slimming budgets as they face up to a deepening recession in the euro area and a record unemployment rate that’s exceeded 12 percent. Still in doubt for economists is what kind of stimulus will actually be delivered and what effect it could have in the crisis-torn 17-member currency bloc.
“The new ‘fiscal realism’ is in evidence,” Mark Wall, co-chief European economist at Deutsche Bank AG in London, said in a report to clients. “Austerity may have reached its political limits and markets are happy to see some rebalancing. The key remains economic growth.”
Yields on sovereign debt that soared during the crisis have eased with the European Central Bank’s pledge to do whatever it takes to defend the euro. The single currency was little changed at $1.2986 as of 9:03 a.m. today.
Record Low

Italy’s one-year borrowing costs fell to a record low on May 10, while Portugal’s 10-year bond yield slid to the least since August 2010. Spanish 10-year yields rose last week for the first time in six weeks after declining to a three-year low of 3.94 percent on May 3. German 10-year yields were about one basis point from the highest level in seven weeks today.
Euro-area governments are already easing up on fiscal consolidation, with countries including France and Spain poised to receive more time to meet European Union budget-deficit goals. That means less pressure to take tax and spending steps to plug fiscal shortfalls caused by economic weakness.
Italy’s new government is trying to reverse some of its predecessor’s policies such as a pending sales-tax increase. Spain has introduced plans to support the creation of new businesses and invest in research and development.
The ECB is also debating what more it can do. The bank’s president, Mario Draghi, told reporters after the G-7 talks that it’s considering buying asset-backed securities among options to support lending to small and medium-sized companies.
“On the lending side, we see that the situation is still tight, especially in the periphery,” Draghi said after the meeting in Aylesbury, near London. Still, “the situation is in a sense getting less bad.”
Bank Lending

Authorities are keen to rally lending at banks, which account for about 80 percent of corporate financing in the euro area, compared with less than 20 percent in the U.S. Small companies in the periphery are especially starved of cash, hurting a traditional engine for hiring.
Europe’s ease in austerity measures could translate into a decline in the bloc’s so-called structural budget deficit by less than 1 percentage point of output, compared with a 3-point decline over the last two years, Credit Suisse Group AG said.
Highlighting the change in tone, French Finance Minister Pierre Moscovici said there needs to be a greater onus on improving the competitiveness of economies and delivering consolidation that’s credible and doesn’t destroy growth.
“I don’t like the word austerity,” Moscovici told Bloomberg Television’s Francine Lacqua after the G-7 meeting.“It means cutting over what is necessary.”
Moscovici said France is suffering “adjustment fatigue”as it teeters on the brink of its third recession in four years.

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Re: New EC Thread

Post  Panda on Mon 13 May - 16:20

  • Business news and markets: live

    Youth unemployment in the eurozone's southern states is a "tragedy", says
    Portugal's prime minister, as finance ministers from the 17-nation bloc meet to
    discuss bail-ins and Cyprus gets its first €2bn tranche from European rescue

    Image 2 of 2
    Ignazio Visco, who is also an
    ECB governing council member, said that he thought the introduction of a
    negative deposit rate - which would see banks effectively having to pay the ECB
    to hold deposits - would be an ”effective” move. Photo: AP

    Image 2 of 2
    Japanese 10000 yen notes are
    arranged for a photograph in Tokyo. Photo: Bloomberg

    By Szu Ping Chan, and Ben

    4:05PM BST 13 May 2013


    runUpdate = true;

    2013-05-13 16:16:27.0
    This page will automatically update every 90 secondsOn Off

    • Youth unemployment a "tragedy", says Portuguese

    • Cyprus gets first bail-out tranche of

    • EU debt inspectors say Greece must to more to sell
    state assets

    • US retail sales edge up in

    • Ocado shares fall 12pc on Waitrose tie-up

    • Lloyds
    chairman Sir Win Bischoff to retire by May 2014


    16.10 Just ahead of markets in Europe closing for the day,
    Nick Lewis, head of risk at Capital Spreads, says that despite a "reasonably
    lacklustre day" of trading, sentiment does seem to be on the up.

    That said, the banking sector held the FTSE back from
    making any real headway so far today with Standard Chartered suffering the most,
    falling nearly 4% on rumours of US hedge funds betting against their investment
    in the emerging markets, and China in particular.

    Given the rally of the past couple of weeks there can be no real surprise
    the markets need a bit of a breather, but with most of the US session still to
    go, who would bet against a late rally yet again, given their penchant for new

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    Re: New EC Thread

    Post  Panda on Wed 15 May - 16:03

    Cyprus: ‘Eurogroup to dig deep again’

    13 May 2013
    Presseurop Politis

    Politis, 13 May 2013
    Meeting in Brussels on May 13, Eurozone finance ministers are expected to approve the first tranche of €3bn in aid for Cyprus. “Two billion euros will be transferred in mid-May, and a third billion at the end of June,” reports Politis.
    The newspaper points out that of the €10bn stipulated in the memorandum of agreement with the EU-ECB-IMF troika of international creditors, “€9bn will be provided by the European Stability Mechanism and €1bn by the International Monetary Fund,” and adds that the IMF contribution “will have to be discussed and approved on May 15.”
    “Eurogroup will also examine a report on money laundering in Cyprus,” reports the daily, which notes that —
    … Finland and Slovakia have demanded that transfer of the tranche be subject to additional conditions focusing on laundering by Cypriot banks.
    The Loans to Ireland and Portugal have the due date for payment extended to 2017, expect all the other Countries to ask for the same consideration..

    Question: At what stage does the printing of Euros to make these payments weaken the Euro to such an extent that the Economies of these Countries get worse.

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    Re: New EC Thread

    Post  Panda on Thu 16 May - 17:10

    Eurozone: Finland reveals the fine print of the loan to Greece

    15 May 2013
    Presseurop Helsingin Sanomat

    According to the Finnish Finance Minister Jutta Urpilainen, “it was the Greeks who wanted to keep it secret”. However, the Finnish Supreme Administrative Court decided otherwise, and on May 14, the Government was forced to publish the terms of the contract it signed with Greece in 2012.
    Under the agreement Athens pledged to provide financial collateral in exchange for a loan which formed part of the international bailout for the country.
    The documents reveal that Finland and the Greece set up three bank accounts into which the money and financial securities used as collateral have since been deposited.
    The matter had been referred to the court by the True Finns party and several media outlets, including Helsingin Sanomat. The daily is pleased with this “important and expected” decision —
    It will strengthen the principle of the broadest possible implementation of transparency and publicity by government. The public has a right to be informed of all relevant official documents. [...] Helping the weak countries of the eurozone is a naturally difficult and controversial issue in Finland. Confidential documents will only serve to undermine confidence in decisions politicians have taken in the eurocrisis.
    In the course of the eurozone crisis, Finland has stood out from among the eurozone states by demanding collateral from countries in difficulty as a condition for financial aid. The deal with Greece served as model for another deal concluded with Spain in July 2012.
    Just what did Greece offer as collateral, they have sold everything except the kitchen sink. Finland is only one Country that Greece borrowed from .

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    Re: New EC Thread

    Post  Panda on Fri 17 May - 7:33

    Europe can survive without Britain, says François Hollande

    François Hollande launched a three-pronged attack on Britain saying that
    Europe would survive without the UK, while claiming David Cameron risked
    splintering the EU and that his austerity policies were failing.

    French president Francois
    Hollande says Europe can survive without Britain. Photo: BENOIT

    By Henry Samuel, Paris

    8:29PM BST 16 May 2013


    In a marathon press conference just shy of three hours, the embattled
    Socialist President promised to "go on the offensive" in year two of his
    five-year mandate with France sinking into recession and enduring record
    unemployment levels.

    When asked about Mr Cameron's plan for a law
    guaranteeing a vote on Britain's EU membership, Mr Hollande told 400
    journalists gathered at the Elysée Palace: "Europe existed before Britain joined

    France, Germany and four
    other nations were long part of the European Economic Community before Britain
    joined fully in 1973.

    "I hope Britain stays in the European Union but I don't want to decide for
    the British," he added.

    Mr Cameron's promise to claw back powers from Europe and then put Britain's
    membership of the bloc to a vote by 2017 has failed to silence Eurosceptics
    within the Conservative Party and halt the rise of Ukip

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    "There are political forces favourable to Britain leaving," Mr Hollande said.
    "The UK Prime Minister himself wants to renegotiate his country's presence (in
    the EU). Let me be clear: I want to make the eurozone go forward as it is the
    heart (of the EU), because we have integration to pursue."

    There were overtones of Charles de Gaulle in his warning that Britain would
    not slow down European construction. De Gaulle twice vetoed Britain's entry to
    the EEC, claiming its "deep-seated hostility" towards European construction
    would result in the break-up of the community.

    "I can understand countries don't want to join the euro but they cannot
    impede the consolidation and strengthening of the eurozone," Mr Hollande said.
    "And if they want to go further and refuse powers, then the risk is of a
    splintered Europe. So we must fix red lines."

    Last week, Lord Lawson, the former Conservative chancellor of the exchequer,
    warned that Mr Cameron's attempts to repatriate powers from Brussels would
    probably only secure "inconsequential" results and that Britain would be better
    off outside the EU.

    In what will provide further ammunition for Eurosceptics, Mr Hollande
    promised to lead the bloc towards "political union" within two years – implying
    treaty change.

    "Germany has several times said it is ready for political union, for a new
    phase in integration. Well France is ready to give body to this political union
    and gives itself two years to do so … It is a question of European urgency.

    "If Europe does not advance it will fall or even be wiped out from the world
    map ... My duty is to bring Europe out of its lethargy."

    Mr Hollande reaches for a glass of water during his marathon press
    conference. (AP)

    The French president's final flourish was a jab against Mr Cameron's
    austerity policy, saying Britain's lack of economic progress was helping "raise
    awareness" for the need for growth measures.

    "He is aware too that he's going through a recession," Mr Hollande said.
    "David Cameron has enacted austerity policies that are even worse than in
    certain countries of the eurozone and the level of British growth even, it if
    was better in recent quarters, has in these past few years been roughly the same
    as what the eurozone produced.

    "It means those who say all you need to do is to leave the eurozone, to
    abandon the euro to have growth and prosperity, should go and look at countries
    in the European Union that are not in the eurozone."

    Mr Hollande used the press conference, his first in six months, to defend his
    first year in office. He said his deficit reduction and growth measures would
    start bearing fruit while he also denied claims he was indecisive, saying "I
    make decisions all the time."

    But when asked whether a reshuffle was on the cards, he said: "A reshuffle is
    possible … but not today."






    Francois Hollande

    • News »

    • World News »

    • Europe »

    • France »

    • EU »

    In Finance »


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    Re: New EC Thread

    Post  Panda on Fri 17 May - 7:49

    Car burnings rise as France threatens to take euro crisis to 'higher plane'
    , says hedge fund boss Michael Hintze

    A stagnant economy, a weak President and a jump in car burnings are all
    signs of a looming crisis in France that is threatening to drive the eurozone’s
    problems to a “higher plane”, according to Michael Hintze.

    Michael Hintze said a rise in
    car burnings reflects growing discontent among French youths. Photo: AP

    By Louise Armitstead, Chief Business

    2:44PM BST 16 May 2013


    The billionaire boss of CQS, one of London’s biggest hedge funds, has written
    to investors warning them that the France could trigger another more dangerous
    phase of the debt crisis and rock the fragile global recovery.

    In a note to investors, Mr Hintze has said: “While Cyprus has stolen the news
    headlines of late, I am concerned that the eurozone’s problems could soon turn
    to the ‘core’, and in particular the focus could be on France.”

    He added: “A loss of confidence in France would shift the eurozone’s troubles
    to a higher plane. France lies not only at the core of the eurozone, but is also
    one of the original architects of the European Union. Clearly, a loss in
    confidence in France would likely have far-reaching consequences; its impact on
    the EU, the broader global economy and markets.”

    France, which yesterday was shown to have plunged back
    into recession,
    represents 19.6pc of eurozone GDP and 14.4pc of
    European Union GDP. Its share of the European Central Bank’s capital is 14.2pc.

    Mr Hintze, a Tory donor and leading philanthropist, said that rising social
    unrest, especially among young people, could hamper the French government’s
    ability to push through “deeper economic reforms that are required.”

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    “A reflection of growing discontent among the youth can be seen in the rise
    in car burnings,” Mr Hintze has said in a note to investors. “Figures released
    by the French Minister of the Interior recorded 1193 cars having been burned
    over a two-day period on New Year’s Eve and New Year’s Day, with the annual
    number somewhere around 42,000 to 60,000.”

    The discontent, which is being fuelled by rising unemployment, is leading to
    a “strong revival” in smaller political parties, including the National Front,
    he argued. Meanwhile, the approval rating of President Francois Hollande has
    crashed from 61pc at his election a year ago to 27pc today.

    As a result France, which desperate needs economic reforms, could languish in
    political paralysis instead.

    Mr Hintze said: “President Hollande’s ability to drive structural reform may
    be limited by his ability and willingness (and the Socialist Party’s support of
    him) to pursue the deeper economic reforms that are required – the tax and
    benefits system, deep reductions in government spending and public
    administration, and extensive reforms to pensions and the labour market.”

    He added: “In a country where more than half of the voting population is
    employed (directly or indirectly) by the state, can France’s leadership tackle
    the difficult choices that exist?”

    Like other economists, Mr Hintze argued that France’s woes are being
    compounded by the single currency, as well as President Hollande’s policies. He
    said the “rigidity imposed by the euro has taken its toll on French unit costs
    and productivity.” Meanwhile, he criticised France’s “botched attempt” to raise
    the top rate of income tax to 75pc which has “driven out may high profile
    celebrities, businessmen and entrepreneurs.”

    Mr Hintze concludes: “Mario Draghi has provided the leadership to address the
    structural challenges faced by the eurozone. Actions such as the Fiscal Compact,
    OMT and eurozone-wide banking supervision have re-established confidence,
    soothed sovereign debt contagion and mitigated the long tail risk. However, many
    of the fiscal challenges are yet to be addressed and are arguably most pressing
    at the very core of the eurozone.”

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    Re: New EC Thread

    Post  Panda on Fri 17 May - 7:53

    German euro founder calls for 'catastrophic' currency to be broken up

    Oskar Lafontaine, the German finance minister who launched the euro, has
    called for a break-up of the single currency to let southern Europe recover,
    warning that the current course is "leading to disaster".

    Mr Lafontaine said on the
    parliamentary website of Germany's Left Party that Chancellor Angela Merkel will
    "awake from her self-righteous slumber" once the countries in trouble unite to
    force a change in crisis policy at Germany's expense. Photo:

    By Ambrose Evans-Pritchard,
    International Business Editor

    9:30PM BST 05 May 2013


    "The economic situation is worsening from month to month, and unemployment
    has reached a level that puts democratic structures ever more in doubt," he

    "The Germans have not yet realised that southern Europe, including France,
    will be forced by their current misery to fight back against German hegemony
    sooner or later," he said, blaming much of the crisis on Germany's wage squeeze
    to gain export share.

    Mr Lafontaine said on the parliamentary website of Germany's Left Party that
    Chancellor Angela Merkel will "awake from her self-righteous slumber" once the
    countries in trouble unite to force a change in crisis policy at Germany's

    His prediction appeared confirmed as French finance minister Pierre Moscovici
    yesterday proclaimed the end of austerity and a triumph of French policy,
    risking further damage to the tattered relations between Paris and Berlin.

    "Austerity is finished. This is a decisive turn in the history of the EU
    project since the euro," he told French TV. "We're seeing the end of austerity
    dogma. It's a victory of the French point of view."

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    Mr Moscovici's comments follow a deal with Brussels to give France and Spain
    two extra years to meet a deficit target of 3pc of GDP. The triumphalist tone
    may enrage hard-liners in Berlin and confirm fears that concessions will lead to
    a slippery slope towards fiscal chaos.

    German Vice-Chancellor Philipp Rösler lashed out at the European Commission
    over the weekend, calling it "irresponsible" for undermining the belt-tightening

    The Franco-German alliance that has driven EU politics for half a century is
    in ruins after France's Socialist Party hit out at the "selfish intransigence"
    of Mrs Merkel, accusing her thinking only of the "German savers, her trade
    balance, and her electoral future".

    It is unclear whether the EU retreat from austerity goes much beyond
    rhetoric. Mr Moscovici conceded last week that the budget delay merely avoids
    extra austerity cuts to close the shortfall in tax revenues caused by the

    The new policy allows automatic fiscal stabilisers to kick in, but France
    will stay the course on the original austerity. "It is not about relaxing the
    effort to cut spending. There will no extra adjustment just to satisfy a
    number," he said.

    Mr Lafontaine said he backed EMU but no longer believes it is sustainable.
    "Hopes that the creation of the euro would force rational economic behaviour on
    all sides were in vain," he said, adding that the policy of forcing Spain,
    Portugal, and Greece to carry out internal devaluations was a "catastrophe".

    Mr Lafontaine was labelled "Europe's Most Dangerous Man" by The Sun
    after he called for a "united Europe" and the "end of the nation state" in 1998.
    The euro was launched on January 1 1999, with bank notes following three years
    later. He later left the Social Democrats to found the Left Party.

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    Re: New EC Thread

    Post  Panda on Fri 17 May - 8:57

    Heroic Spain is damned if it does, and damned if it doesn't

    My colleague Jeremy Warner has set off a storm in the Spanish press and
    something close to a diplomatic incident by asserting in a blog that Spain is

    Image 1 of 2
    Protestors in Madrid hold a
    model skeleton as they march against austerity measures earlier this
    year Photo: AP

    Image 1 of 2

    By Ambrose Evans-Pritchard

    8:23PM BST 15 May 2013


    The Telegraph has been accused by Spanish newspapers of launching a
    "brutal attack", succumbing to "Hispanophobia", leading an Anglo-Saxon assault,
    and otherwise trying to divert attention away from Britain's own lamentable
    condition. Spanish readers might be comforted to know that we are even more
    brutal with our own leaders.

    Since I was in Madrid last week as a guest of the Spanish government, let me
    add my half-penny to the debate. Spain has already done all that can reasonably
    be expected of any nation, enduring its "calvario" with dignity and fortitude.
    It has slashed internal consumption by 16 percentage points of GDP without
    triggering a social explosion - "no mean feat", said one minister.

    Whether the country proves to be solvent or insolvent by mid-decade depends
    almost entirely on the future actions of the European Central Bank and the
    northern creditor powers. Nothing is pre-determined.

    Data released on Wednesday shows that Euroland is in even an deeper
    double-dip recession than feared, with the risk of a Japanese-style slump
    stretching on for years. There was no outside shock to explain this relapse. It
    was caused by policy error, and those policies have not been corrected.

    If Euroland sticks to its grim path of synchronized contraction on all fronts
    - fiscal, monetary and bank deleveraging - and if it continues to impose all the
    burden of intra-EMU adjustment on the deficit states in a replay of the early
    1930s, then it will push Spain, Portugal and others over a cliff.

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    There has been much talk of retreat from austerity but all this means is that
    Europe no longer insists on chasing its own tail in a downward spiral. It will
    not demand extra cuts to make up deficit shortfalls created by recession itself.
    Pro-cyclical fiscal tightening will continue.

    The ECB has a special duty of care to Spain. It played its role in causing
    the crisis, holding interest rates too low in the early years of EMU to nurse
    Germany through its post-unification bust. The result was a double-digit surge
    in the eurozone's M3 money supply and uncontrollable credit booms as northern
    banks flooded the South with cheap capital. Spain was as much sinned against as

    The ECB has now swung from too loose to too tight, allowing M3 to stagnate
    for the whole of Euroland, with EMU-wide loans contracting, and deflation
    gaining a foothold in a string of countries. The ECB's latest quarter point cut
    in rates does not keep pace. Real rates are rising.

    Frankfurt has the monetary tools to reverse this. It could pursue a
    reflationary policy that would help lift Spain and others off the reefs. It
    chooses not to do so.

    The consequence of the EU policy mix for Spain is a contraction in "nominal"
    GDP, down 1.8pc last year. This means the national debt stock of around 320pc of
    GDP - 212pc private, and 86pc public, plus other arrears - is rising on a
    shrinking base.

    Britain's debt levels are roughly the same. But the UK's nominal GDP is
    growing at nearly 4pc as a result of covert monetisation by the Bank of England.
    The debt sits on an expanding base. The compound effect spells two different

    The European Commission refers repeatedly to this as the "denominator effect"
    in its "In-Depth Review" of Spain's imbalances last month. It is why Spain's net
    international investment position (NIIP) deteriorated from minus 89.5pc to minus
    91.7pc of GDP in 2011, even though the country is paying off foreign debts. The
    report described the level as "very high", far above the safe threshold of 35pc.

    Spain is making heroic efforts to adjust. Officials are rightly proud that
    exports are flourishing, keeping pace with those of Germany. Shipments have
    risen 15pc to Africa and 13pc to Asia over the past year, as struggling firms
    scour the world for a lifeline.

    For the first time in living memory, the country is clawing its way back to
    competitiveness without a devaluation. Total exports in January and February
    were up 5pc from a year before, a startling contrast to the 3.2pc fall in
    Britain, where the long-awaited fruit of devaluation never seems to arrive.

    The roots of Spanish export success lie in the high productivity of its world
    class companies Iberdola, Telefonica and Santander, so like the "dualism" of
    Japan where the exporting "Samurai" seem decoupled from the internal economy.

    Spain's car industry has clearly turned the corner. Ford is closing its Genk
    car plant in Belgium and shifting the work to Valencia. Volkswagen is to invest
    €785m in Pamplona to build Polos. France's Renault is to boost output by 30pc at
    its plants in Valladolid and Palencia by 2015.

    They are betting on Spain because Spanish workers have agreed to keep plants
    open seven days a week, to toil on Sundays without overtime pay, and to accept
    wage deals below inflation. A blast of Iberian Thatcherism is at last blowing
    away the thickets of the 1970s.

    The reforms are patchy. The Commission says labour markets are still "overly
    rigid". Yet there is no doubt that Spain is becoming a different country.
    Officials at the infrastructure group FCC said they have five teams of workers
    operating seven cement factories around the country to cut costs, so amenable
    these days that they are willing to carry out shifts 200 miles from their homes.
    "We couldn't think think of doing that at our plant in Austria," said one

    Spain has closed much of the gap in unit labour costs (ULC) with the eurozone
    core built up in the early years of EMU, though part of this is a statistical
    illusion caused by the property crash. More than 1.6m low productivity jobs in
    construction have disappeared, boosting the average productivity level.

    The Commission says Spain lost 20pc in exchange rate competitiveness from
    2000 to 2008, and has gained back 7pc so far. "The adjustment of ULC has been
    largely driven by the economic recession and very high unemployment, and it
    could partly reverse once the cyclical conditions improve."

    The elemental problem for Spain is that if does manage to pull off an
    "internal devaluation" by cutting wages back to parity, it will make its debt
    burden worse. It is damned if it does, and damned if it doesn't.

    The country is already in deflation. Prices fell 0.6pc last month, stripping
    out the one-off effects of higher VAT and levies. Officials appear delighted by
    victory over inflation but they should be careful what they wish for. The
    "denominator effect" is going to bite even deeper.

    Raoul Ruparel from Open Europe said Spain's export boom is impressive but
    from a low base. Exports are just 30pc of GDP, compared with 105pc for Ireland,
    91pc for Estonia, 84pc for Belgium, 83pc for Holland, 59pc for Latvia or 50pc
    for Germany. The economic gearing is far lower. "We don't think exports can
    offset the collapse in internal demand," he said.

    Nor is it clear whether Spain can keep up the export momentum based on
    running down old plant. Fixed investment fell 9.1pc last year, and is expected
    to fall another 7.6pc this year.

    Smaller firms are facing an acute credit crunch, forced to pay 250 basis
    points more for credit than core-EMU rivals, if they can raise money at all. The
    ECB's bond purchase lifeline for Spain has brough down bond spreads and
    eliminated the risk of a sovereign funding crisis for now, but it has yet to
    filter through to the frontline.

    The Commission said part of the export surge is "cyclical". The switch to a
    healthy trade balance "remains incomplete". The current account sould be in
    balance this year but the fact that Spain is still near deficit with 27pc
    unemployment begs the question of how many lives must be blighted for Spain to
    generate big enough surpluses to pay down external debt.

    The level of pain still to come depends on the housing market, the great
    disaster that has infected everything. Prices are down 33pc from the peak so
    far, or 45pc in real terms. The government's stress test for the banks is
    premised on a real fall of 50pc. If that proves correct, Spain is nearly there.

    If the dissenters are right, Spain is nowhere near bottom. Madrid consultants
    RR de Acuna have a report coming out this month warning that the glut of unsold
    properties has risen to a fresh peak of 2.25m homes, including those in the
    hands of builders and banks, or in the eviction process.

    "It will take 10 years to get rid of the stock. We're pretty sure that prices
    will bleed another 15pc," said Fernando Rodriguez de Acuna. "The market is
    broken, and the quoted prices in many areas are a fiction. You can't sell even
    if you offer a 50pc haircut. A lot of buildings will have to be knocked down and
    land is going to revert to farmland, or just to nothing."

    If he is right, it is going to be a long hard struggle for Spain. As the
    Commission says, the Spanish people have "gradually exhausted their financial
    asset buffers".

    The hot dispute over Jeremy Warner's blog is a surprise
    since the pro-EU chief economist of Citigroup, Willem Buiter, has been arguing
    for some time that Spain will need debt restructuring, as have others. The issue
    is standard debate in financial circles.

    Mr Buiter's latest report says there will be "no light at the end of the
    tunnel" for another two to three years, predicting that Spain's economy will
    shrink by a further 2.1pc in 2014. That would play havoc with debt dynamics. "If
    it happens we're in serious trouble," said a senior official.

    At the end of the day, the question for the Spanish people is not whether
    they can hold their place in EMU for year after year by further sacrifice, but
    whether it is in their national and human interest to do so.

    They are a great nation. They can demand different terms from Europe, and
    sooner or later they will.

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    Re: New EC Thread

    Post  Panda on Sat 18 May - 8:52

    Eurozone: Europe needs its Martin Luther

    17 May 2013La Repubblica Rome

    "The 95 Theses of Martin Luther," oil on canvas by Ferdinand Pauwels (1872)

    The EU is becoming a corrupt church where Germany rules by a dogmatic economic orthodoxy. Politics must take back control with a protestant schism coming from grassroots initiatives, argues an Italian columnist.

    Barbara SpinelliIt can only happen in this Europe, which is veering towards disaster not because of its economic woes but the contorted foolishness of its politics. We’re referring to the scandal of a German constitutional court that has become crucial for every EU citizen, while the constitutional court in Portugal is worthless. We’re talking about Jens Weidmann, the governor of the German Central Bank, who is accusing [the president of the European Central Bank (ECB) Mario] Draghi of going beyond his mandate – saving the euro with the means at his disposal – and is shamelessly declaring war on a currency that we call “common” precisely because it does not just belong to Berlin.
    The ECB’s mandate is in fact clear even if Weidmann contests its constitutionality. It aims to maintain stable prices (Article 127 of the Lisbon Treaty) but while respecting Article 3, which prescribes sustainable development for Europe, full employment and improvement in the quality of the environment, the fight against social exclusion, justice and social protection, economic, social and territorial cohesion and solidarity between EU member states.
    Something is not right if Article 3 does not even poke its head out from the pages of the ECB’s website for fear that Berlin might take a dim view of it.
    Challenging the anti-crisis othodoxy

    In little over a year, in May 2014, we will vote for a new European Parliament. It will be a date that is unusual for Italians in particular. That is because the European troika (ECB, European Commission, International Monetary Fund) has a bigger impact on our lives than ever was the case in the past. It is because its anti-crisis medicines are being challenged everywhere by people, even shaking the confidence of the doctor that is applying them with the greatest passion. On September 22, the Germans will go to the ballot box and may reward an anti-European party – Alternative for Germany – that came into being last February. The parties will need to put a stop to the lies that are being put about as to the possibility of making Angela Merkel “yield”. Especially in Italy, they will need to stop the betrayal of voters and citizens. Finally and for the first time, if they dare, they will be able to name a president of the European Commission. That is in the treaties.
    The reason we talk of lies is that no government is in a position to bend Berlin to its will with exclusively economic arguments that have been peddled up until now: a bit less austerity, a bit of growth, some amnesty. Convinced as it is that it is up to the markets and nothing else to discipline us, Berlin will make a move only if politics prevails over economic arguments that have degenerated into dogmas. Governments, parties and citizens will stake out clear visions on what another Europe must look like: not the current one with its minimal resources and rushing into 18th Century power struggles.
    The EU today looks like a corrupt church, needing a protestant schism: a reform of its credo and its vocabulary. It needs a plan with specific points (Martin Luther had 95 theses). The economic papacy is being subverted and political faith is taking precedence. Only in this way will a dominant religion break through and Berlin will have to choose: either a German Europe or a European Germany or hegemony or parity between EU member states. It has always had to choose such this path: Europe, as Adenauer said in 1958, “must not be left to the economists”.
    Unequal democracies

    German orthodoxy goes back a long way, secured its position in the post-war period and is called “ordoliberalism”. The markets are perfectly able to correct imbalances without the intervention of the state because they have unchanged rationality. This is the ideology of the “ordered house”, ie that every nation is to make amends for its own faults (the German word Schuld means debt and fault). Solidarity and international cooperation come afterwards, rewarding the homework that has been done if it is has been done well. As in England, the word democracy is invoked misleadingly: transferring part of one’s own sovereignty creates a vacuum in national parliaments. For that reason, the German constitutional court is invited to give its view on any European move.
    It is misleading because not all democracies are equal in the European “factory”. There are some that are sacrosanct and some that are doomed. On April 5, the Portuguese constitutional court rejected four austerity measures imposed by the troika (cuts to state stipends and pensions) because they were contrary to the principle of equality. The communication sent out by the European Commission two days later, on April 7, ignored the judgement completely, expressed its happiness that Lisbon was continuing with the agreed treatment and refused any renegotiation. “It is essential that the key political institutions in Portugal remain united in continuing” to clean up financial affairs. The different treatment given to German and Portuguese constitutional judges is so dishonest that Europe will find it hard to survive as an ideal among its citizens.
    Some say that it can survive if German hegemony, whilst remaining a hegemony, becomes more benevolent. George Soros asked for that in September 2012 in the New York Review of Books, with solid arguments. The Polish government is demanding it. In Germany, those who fear not just hegemony but a rather introvert and shabby self-idolatry, are calling for it.
    If Germany wanted a supranational Europe, up to the point of inserting it in its constitution, it is because the ordoliberals (in the Central Bank and academic circles) have been repeatedly unseated. Adenauer imposed the EEC and the Franco-German pact on a minister of the economy – Ludwig Erhard – who did everything to bury them and who accused the EEC of “protectionist navel-gazing” and “economic foolishness”.
    ‘chameleon-like politicians’

    With London, he tried to sabotage the Treaties of Rome, preferring an area of free trade by far. Neither Adenauer nor the first head of the European Commission, Hallstein, listened to him. Thanks to them political reason won the day. The same scenario re-emerged with the euro. Here too, clinging on to Paris, Kohl put politics first, going over the head of the mainstream economists and the central bank. Today we are at a similar crossroads but with chameleon-like politicians who do not have any firm will. The crisis has disillusioned the German people. Ordoliberalism is becoming politicised and smacks of old vendettas.
    All that is left then is a schism: the construction of another Europe, which starts from the bottom up rather than from governments.There already is a project, written down by the economist Alfonso Iozzo: according to federalists, it can become a “European citizen’s initiative” (Article 11 of the Lisbon Treaty) to be presented to the Commission. The idea is to equip the EU with enough resources to create growth in place of the state, which is constrained by austerity. The growth would be not only less expensive, as it would be done together, but socially fairer and more environmentally conscious because it would be fuelled by a tax on financial transactions, a carbon tax (carbon dioxide) and by a European VAT. The first two taxes alone would generate €80-90bn. The common budget would respect the threshold of 1.27 agreed in its time. Mobilising the European Investment Bank and Eurobonds, we would have €300-500bn and 20m new jobs in the economy of the future.
    To do these things, however, politics would need to turned upside down and become once again, as the economist Jean-Paul Fitoussi said, not a collection of automatic rules but a choice. There is a need for a Luther-style self-subversion, such as which occurred when he wrote his 95 theses and reportedly said: “Here I stand. I can do no other. May God help me, amen.”

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    Re: New EC Thread

    Post  Panda on Sat 18 May - 9:01

    The EU today looks like a corrupt church, needing a protestant schism: a reform of its credo and its vocabulary. It needs a plan with specific points (Martin Luther had 95 theses). The economic papacy is being subverted and political faith is taking precedence. Only in this way will a dominant religion break through and Berlin will have to choose: either a German Europe or a European Germany or hegemony or parity between EU member states. It has always had to choose such this path: Europe, as Adenauer said in 1958, “must not be left to the economists”.
    Unequal democracies

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    Re: New EC Thread

    Post  Badboy on Sat 18 May - 16:25


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    Re: New EC Thread

    Post  Panda on Sat 18 May - 17:09


    It would be nice to think so Badboy, but the weather is not so good this year

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    Re: New EC Thread

    Post  Panda on Sun 19 May - 17:56

    Pay cuts for EU officials 'raise serious legal concerns'

    Plans by David Cameron and other European leaders to cut pay and perks for
    Brussels officials in line with national austerity measures "raise serious legal
    concerns" according to secret advice from European Union lawyers.

    Lawyers in the European
    Commission and Council of the EU have warned that any "abrupt changes" to
    salaries or pensions would be illegal if reforms violated the "legitimate
    expectations" of officials. Photo: DAN KITWOOD/GETTY

    By Bruno Waterfield,

    3:29PM BST 16 May 2013


    At a time when unemployment in the eurozone is at a record high amid the
    longest European recession since the war, the Prime Minister won majority
    support at a Brussels summit in February for cuts to the EU civil service.

    But lawyers in the European Commission and Council of the EU have warned that
    any "abrupt changes" to salaries or pensions would be illegal if reforms
    violated the "legitimate expectations" of officials.

    A recent letter from Maros Sefcovic, the European Commissioner responsible
    for administration, warns that proposals tabled by national ambassadors last
    week for cuts to pay, perks, promotions and pensions break EU law.

    "The mandate raises serious political and legal concerns," he wrote in a
    confidential letter seen by The Daily Telegraph.

    "Many aspects of the mandate are legally questionable with regard to the
    protection of acquired rights and legitimate expectations of staff, and the
    cumulative effect of the measures is simply incompatible with the needs of the

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    A different internal commission document notes: "The proposals are legally
    highly questionable and incompatible with the operational needs of the

    A Government spokesman said: "The UK and other governments won't let up in
    our efforts to reform the generous terms and conditions of Brussels officials.
    People don't understand why EU civil servants should be immune from the reforms
    and changes that other civil servants across Europe are faced with."

    Ambassadors representing national governments last week agreed to go beyond a
    decision to freeze pay and pensions, made at an EU summit, to demand deeper cuts
    and a longer working week for Eurocrats.

    The measures include cutting pensions by 20 per cent and increasing the
    retirement age for EU official from 63 to 67, a measure that is line with the
    commission's own policy recommendations for members of the public.

    Cuts include a two-year freeze on pay increases followed by salary cuts of up
    to six per cent, an increase of the working week from 37.5 to 40 hours and a one
    third cut in automatic promotions for officials.

    Detailed confidential legal advice, seen by The Daily Telegraph, warns
    governments that European judges, who are also EU officials, might take a dim
    view of cuts to pay and conditions for European civil servants.

    "The envisaged measures would mean unprecedented changes to the conditions of
    employment of Union officials," the legal advice said.

    "This makes it difficult to predict to what extent a particular combination
    of measures would be found in breach of general principles and fundamental
    rights by Union courts."

    Opening the floodgates for litigation from unhappy officials, the lawyers
    warn that European civil servants have a legal right to protect their current
    pay and perks.

    "The principle of legitimate expectations protects officials in service from
    changes to provisions of the Staff Regulations that have been fundamental to
    their decision to become officials of the Union," the advice said.

    Martin Callanan MEP, the leader of the European Conservatives and Reformist
    bloc in the European Parliament, said: "It's hardly surprising that the EU's
    legal officials - or even its judges - would decide that their own terms and
    conditions should be sacrosanct; but the fact they can do so shows the system is
    rotten. Somebody tries to remove a tiny bit of the down from their feather bed
    and they think it's a mugging."

    Officials have been accused of hypocrisy for refusing reform while drawing up
    austerity programmes that reduce pensions, minimum wages and living standards in
    countries like Cyprus, Portugal Ireland and Greece.

    "The gall of EU officials is breath taking when they insist that others
    financially suffer while they benefit. The Eurocrat mantra is 'austerity for
    them, cake for us'," said Paul Nuttall MEP, the deputy leader of Ukip.

    The Union Syndicale, a trade union for Brussels officials, has denied that EU
    civil servants are against reform.

    "The officials and other agents of the European institutions are frequently
    accused of wanting at all costs to preserve their exorbitant privileges and
    conditions and of refusing any 'modernisation.' They categorically reject those
    accusations," it told the EUobserver website.











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