EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Wed 21 Dec - 18:16
The European Central Bank has announced its biggest ever liquidity
operation, worth almost half a trillion euros, to shore up confidence in the
eurozone and its cash-starved banks.
It made 489 billion euros (£409bn) of emergency funding available to 523
banks who requested it.
The eurozone banks involved have not been identified.
The three year loans are ultra-cheap and designed to help banks who are
struggling to borrow money on the open market.
Demand far exceeded analysts' expectations.
In London, the move boosted investor sentiment towards the wider sector with
Royal Bank of Scotland, Lloyds Banking Group and Barclays all climbing to the
top of the gains list on the FTSE 100 Index.
Mario Draghi, the ECB's new President, has cut its core
interest rate twice
But the key question arising from the demand is was the take-up a sign of
banks in distress - or an opportunity to borrow cheap money that was too good to
turn down?
Martin van Vliet, analyst at ING Bank, said doubts remain over whether the
money will be used to support weaker eurozone economies.
He said while the take-up was "massive", the number of banks involved was
smaller than the 1,121 two years ago when 442 billion euros (£369bn) in one year
loans was made available.
That would suggest the participating banks were concentrated in the weak
periphery of the eurozone.
Lending between banks - and wider credit - has concerned the ECB enough to
offer more lenient terms on loans.
Its core interest rate has also been slashed twice in five weeks, to 1% - the
level at which the loans were offered.
Sky's economics editor Ed Conway sees the ECB's move
as "doling out nuclear-quantity medicine to the
eurozone."
Economists expect the single currency area to enter a mild recession in 2012
- which would make it even harder for debt-laden governments such as Italy to
get a handle on their debt burdens.
The 37-month term of the most recent round of loans allows banks to get the
money need to pay off large chunks of their own maturing debts in the first part
of the new year.
While this will aid banks in the short term, there are doubts about whether
the move will help ease the sovereign debt crisis.
Jane Foley, senior foreign exchange strategist at Rabobank, told Sky News:
"Certaintly, lots of banks will not want to be increasing their exposure to that
debt.
"So the sovereign debt crisis is still going at full throttle but this
certainly should ease a lot of pressures within the banking sector."
operation, worth almost half a trillion euros, to shore up confidence in the
eurozone and its cash-starved banks.
It made 489 billion euros (£409bn) of emergency funding available to 523
banks who requested it.
The eurozone banks involved have not been identified.
The three year loans are ultra-cheap and designed to help banks who are
struggling to borrow money on the open market.
Demand far exceeded analysts' expectations.
In London, the move boosted investor sentiment towards the wider sector with
Royal Bank of Scotland, Lloyds Banking Group and Barclays all climbing to the
top of the gains list on the FTSE 100 Index.
Mario Draghi, the ECB's new President, has cut its core
interest rate twice
But the key question arising from the demand is was the take-up a sign of
banks in distress - or an opportunity to borrow cheap money that was too good to
turn down?
Martin van Vliet, analyst at ING Bank, said doubts remain over whether the
money will be used to support weaker eurozone economies.
He said while the take-up was "massive", the number of banks involved was
smaller than the 1,121 two years ago when 442 billion euros (£369bn) in one year
loans was made available.
That would suggest the participating banks were concentrated in the weak
periphery of the eurozone.
Lending between banks - and wider credit - has concerned the ECB enough to
offer more lenient terms on loans.
Its core interest rate has also been slashed twice in five weeks, to 1% - the
level at which the loans were offered.
Sky's economics editor Ed Conway sees the ECB's move
as "doling out nuclear-quantity medicine to the
eurozone."
Economists expect the single currency area to enter a mild recession in 2012
- which would make it even harder for debt-laden governments such as Italy to
get a handle on their debt burdens.
The 37-month term of the most recent round of loans allows banks to get the
money need to pay off large chunks of their own maturing debts in the first part
of the new year.
While this will aid banks in the short term, there are doubts about whether
the move will help ease the sovereign debt crisis.
Jane Foley, senior foreign exchange strategist at Rabobank, told Sky News:
"Certaintly, lots of banks will not want to be increasing their exposure to that
debt.
"So the sovereign debt crisis is still going at full throttle but this
certainly should ease a lot of pressures within the banking sector."
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Demand is high for Euro Loans
Panda Wed 21 Dec - 18:41
Demand Is High for Euro Loans From Central Bank
By JACK EWING AND DAVID JOLLY
European Central Bank President Mario Draghi, center, said this week that helping smaller banks was crucial because they provide most of the credit to small businesses.
Multimedia
Interactive Feature
Tracking Europe's Debt Crisis
Related
Readers’ Comments
European stocks and the euro initially gained, and bond yields fell for euro-zone governments like Spain and Italy that had been under pressure of late. But by afternoon, equities markets were down slightly and borrowing costs for Spain and Italy rose again.
In its role as lender of last resort to banks, the E.C.B. allocated 489.2 billion euros, or $644 billion, to 523 institutions, through what are known as long-term repurchasing operations. That was well above the roughly €300 billion average estimate of analysts polled by Reuters and Bloomberg News, though estimates had been widely divergent.
The injection of three-year funds was one of the new measures announced by the E.C.B. on Dec. 8 to calm European credit markets, which have become increasingly frothy as the euro zone crisis wears on. It was the first time that the E.C.B. has extended such loans for longer than about a year. Banks will pay the benchmark interest rate, currently 1 percent.
“This reduces the tail risk of a Lehman-type situation, where banks go into the new year facing a wave of refinancing and are unable to access the market,” Jacques Cailloux, chief euro area economist at Royal Bank of Scotland in London, said.
Mr. Cailloux said the initially positive market reaction showed investors were breathing easier, but “we’ll see if this is sustained. I don’t want to downplay the importance of the E.C.B.’s action, but the euro’s problems are bigger than that, with political and economic dimensions that still need to be addressed.”
The E.C.B., as part of its effort to prevent a credit crunch, also broadened the collateral it agreed to accept in return for the loans. The central bank is even accepting outstanding loans as security, a measure designed to help smaller community banks that may lack conventional forms of collateral like bonds.
Carsten Brzeski, an economist in Brussels with ING Group, said the size of the take-up by lenders was not surprising, because “there is obvious demand for liquidity, and it’s cheap. There’s almost a free lunch out there, so even banks that didn’t need liquidity would be thinking, ‘why not be part of it?”’
Mario Draghi, the E.C.B. president, said earlier this week that helping the smaller banks was crucial because they provide most of the credit to small businesses.
The three-year loans are also designed to compensate for a dearth of longer-term market funding, at a time when banks are facing the need to roll over an extraordinarily high amount of their own debt. Banks in the euro zone must raise more than 200 billion euros in the first three months of 2012, according to data compiled by Dealogic and cited by the E.C.B.
Banks often borrow money for relatively short periods and loan it for longer periods, profiting from the difference in interest rates. But this so-called maturity transformation means that banks must continually roll over their debts. An otherwise healthy bank can fail if it is not able to raise fresh cash.
Gilles Moëc, an economist at Deutsche Bank in London, said the E.C.B. action “is very positive for the banks,” but said “the jury is still out” on what it means for embattled euro zone governments.
Strong demand at recent Spanish debt auctions, which drove down yields, suggests that banks were loading up on the debt to use as collateral for the operation Wednesday, he said.
To the extent that banks continue buying sovereign debt — something they have been trying to move away from because of the euro crisis — government financing will be easier.
Economists said it appeared that only 190 billion to 200 billion euros of the E.C.B. funds Wednesday represented new lending. Rather, Mr. Cailloux said, most of the uptake represented banks “recycling liquidity that was already in the system,” shifting from shorter maturities into three-year loans.
By JACK EWING AND DAVID JOLLY
European Central Bank President Mario Draghi, center, said this week that helping smaller banks was crucial because they provide most of the credit to small businesses.
Multimedia
Interactive FeatureTracking Europe's Debt Crisis
Related
- Times Topic:European Debt Crisis
Readers’ Comments
Share your thoughts.
European stocks and the euro initially gained, and bond yields fell for euro-zone governments like Spain and Italy that had been under pressure of late. But by afternoon, equities markets were down slightly and borrowing costs for Spain and Italy rose again.
In its role as lender of last resort to banks, the E.C.B. allocated 489.2 billion euros, or $644 billion, to 523 institutions, through what are known as long-term repurchasing operations. That was well above the roughly €300 billion average estimate of analysts polled by Reuters and Bloomberg News, though estimates had been widely divergent.
The injection of three-year funds was one of the new measures announced by the E.C.B. on Dec. 8 to calm European credit markets, which have become increasingly frothy as the euro zone crisis wears on. It was the first time that the E.C.B. has extended such loans for longer than about a year. Banks will pay the benchmark interest rate, currently 1 percent.
“This reduces the tail risk of a Lehman-type situation, where banks go into the new year facing a wave of refinancing and are unable to access the market,” Jacques Cailloux, chief euro area economist at Royal Bank of Scotland in London, said.
Mr. Cailloux said the initially positive market reaction showed investors were breathing easier, but “we’ll see if this is sustained. I don’t want to downplay the importance of the E.C.B.’s action, but the euro’s problems are bigger than that, with political and economic dimensions that still need to be addressed.”
The E.C.B., as part of its effort to prevent a credit crunch, also broadened the collateral it agreed to accept in return for the loans. The central bank is even accepting outstanding loans as security, a measure designed to help smaller community banks that may lack conventional forms of collateral like bonds.
Carsten Brzeski, an economist in Brussels with ING Group, said the size of the take-up by lenders was not surprising, because “there is obvious demand for liquidity, and it’s cheap. There’s almost a free lunch out there, so even banks that didn’t need liquidity would be thinking, ‘why not be part of it?”’
Mario Draghi, the E.C.B. president, said earlier this week that helping the smaller banks was crucial because they provide most of the credit to small businesses.
The three-year loans are also designed to compensate for a dearth of longer-term market funding, at a time when banks are facing the need to roll over an extraordinarily high amount of their own debt. Banks in the euro zone must raise more than 200 billion euros in the first three months of 2012, according to data compiled by Dealogic and cited by the E.C.B.
Banks often borrow money for relatively short periods and loan it for longer periods, profiting from the difference in interest rates. But this so-called maturity transformation means that banks must continually roll over their debts. An otherwise healthy bank can fail if it is not able to raise fresh cash.
Gilles Moëc, an economist at Deutsche Bank in London, said the E.C.B. action “is very positive for the banks,” but said “the jury is still out” on what it means for embattled euro zone governments.
Strong demand at recent Spanish debt auctions, which drove down yields, suggests that banks were loading up on the debt to use as collateral for the operation Wednesday, he said.
To the extent that banks continue buying sovereign debt — something they have been trying to move away from because of the euro crisis — government financing will be easier.
Economists said it appeared that only 190 billion to 200 billion euros of the E.C.B. funds Wednesday represented new lending. Rather, Mr. Cailloux said, most of the uptake represented banks “recycling liquidity that was already in the system,” shifting from shorter maturities into three-year loans.
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Who will make a mint out of a Euro collapse
Panda Wed 21 Dec - 19:51
Who Will Make A Mint Out Of A Euro Collapse?
Ed Conway
December 21, 2011 2:43 PM
Are there hedge fund managers who know about top-secret plans to reshape the euro?
I
ask the question not because I myself know the details of any such
plans (though one should assume that at least some economic planning for
worst-case scenarios, including a currency zone break-up, has taken
place at the highest level) but because experience shows us that at key
moments like this, there are usually a handful of extraordinarily
well-connected individuals who know the outcome of key decisions at
least marginally ahead of everyone else.
That was what may have
happened in 1992. When Britain was ejected from the Exchange Rate
Mechanism, the event made George Soros a billion-pound fortune. While
his decision to short the pound was undoubtedly driven largely by
scepticism about the nature of the ERM, he was reportedly given a fair
amount of encouragement by policymakers themselves behind the scenes.
Indeed, an extraordinary recent obituary in The Times (here it is,
sadly behind a paywall) said that his well-connected advisor Richard
Medley “acted as a crucial go-between with the German Bundesbank,
assuring Soros that Germany tacitly supported his attack.”
The
obit added: Without the Bundesbank encouragement discreetly conveyed by
Medley, Soros might not have been quite so bold in making the
unprecedented bets against sterling that drained the Bank of England’s
reserves. Medley’s knowledge of German policies enabled Soros not only
to make £1 billion from the devaluation of sterling, but then even more
profit by buying the French franc alongside the Bundesbank, while other
less informed hedge funds were still betting against France. As Soros
later told The Times, in the interview that established his famous
nickname: ‘I felt safe betting with the Bundesbank. The Bundesbank
clearly wanted the pound and lira devalued, but it was prepared to
defend the French franc. I did better than some others by sticking to
the Bundesbank’s side.’
Even now, there are some who also suspect
Soros also had a mole in the Bank of England, although nothing to this
end has been substantiated.
Does this count as inside trading?
It’s a grey area: usually successful insider trading cases are those
where there is a direct tip-off from a source within a company about,
for instance, a forthcoming takeover, that prompts an investor to go out
and buy a particular security, making themselves lots of money. Soros –
or someone betting on the collapse of the euro – could reasonably claim
their decision was based on an economic hunch rather than inside
information.
Moreover, insider dealing cases almost always concern private sector decisions.
But undoubtedly it’s a smelly area. And not just limited to Europe.
There’s an excellent Wall Street Journal investigation (sadly also behind its paywall)
into the privileged information hedge funds can obtain over US
government decisions through Washington lobbying firms. It reveals that
hedge funds and other investors paid for meetings with key legislators
which gave them critical steers over at least two of the most
significant regulatory changes in US legislation in recent years – the
healthcare and financial reform bills.
Again, it’s a grey area.
It’s very difficult to pin down cause and effect: to what extent did
hints from policymakers make investors money? Moreover, is such
information really insider information if they hadn’t yet technically
voted on a bill?
And there are also very good reasons why
policymakers talk to these investors. Part of their job, after all, is
to gauge the likely market reaction to prospective decisions, and they
will get the best sense of that by talking to such investors. The Bank
of England talks to hedge funds, asset managers and other City bodies
thousands of times a year, since it also has a duty to try to glean what
they are seeing in the market. One of their difficulties is conducting
these conversations without giving away privileged information which the
investors could trade on (but having said that often secretive hedge
funds will be similarly reluctant to engage, for fear of giving away
their lucrative trading positions).
However, reports such as the
WSJ and Times ones compound the sense that there is a privileged elite
who consistently use their wealth to buy access to influential
decision-makers, which in turn reinforces their capacity to make money.
As Ken Rogoff said in a recent column,
there is no doubt part of the rise in inequality recently is connected
to the challenges of globalisation and the difficulty of adapting to new
technology – but part of the divide is undoubtedly due to these avenues
which allow the rich to become richer.
Which brings us back to
the original question: if the euro collapses next year, who will be the
Soros of 2012? And to what extent will their bets be based on nudges and
winks from policymakers as opposed to pure conviction and excellent
timing? We’re unlikely to find out for some years to come, but you’d be a
fool to assume it isn’t already happening.
PS It's probably
worth adding that for every hedge fund manager who does very well out of
a crisis, there are usually one or perhaps two who do equally badly. So
there are likely to be a fair few investors who are getting, and will
get, seriously - seriously - burned by the euro crisis.
euro
Ed Conway
December 21, 2011 2:43 PM
Are there hedge fund managers who know about top-secret plans to reshape the euro?
I
ask the question not because I myself know the details of any such
plans (though one should assume that at least some economic planning for
worst-case scenarios, including a currency zone break-up, has taken
place at the highest level) but because experience shows us that at key
moments like this, there are usually a handful of extraordinarily
well-connected individuals who know the outcome of key decisions at
least marginally ahead of everyone else.
That was what may have
happened in 1992. When Britain was ejected from the Exchange Rate
Mechanism, the event made George Soros a billion-pound fortune. While
his decision to short the pound was undoubtedly driven largely by
scepticism about the nature of the ERM, he was reportedly given a fair
amount of encouragement by policymakers themselves behind the scenes.
Indeed, an extraordinary recent obituary in The Times (here it is,
sadly behind a paywall) said that his well-connected advisor Richard
Medley “acted as a crucial go-between with the German Bundesbank,
assuring Soros that Germany tacitly supported his attack.”
The
obit added: Without the Bundesbank encouragement discreetly conveyed by
Medley, Soros might not have been quite so bold in making the
unprecedented bets against sterling that drained the Bank of England’s
reserves. Medley’s knowledge of German policies enabled Soros not only
to make £1 billion from the devaluation of sterling, but then even more
profit by buying the French franc alongside the Bundesbank, while other
less informed hedge funds were still betting against France. As Soros
later told The Times, in the interview that established his famous
nickname: ‘I felt safe betting with the Bundesbank. The Bundesbank
clearly wanted the pound and lira devalued, but it was prepared to
defend the French franc. I did better than some others by sticking to
the Bundesbank’s side.’
Even now, there are some who also suspect
Soros also had a mole in the Bank of England, although nothing to this
end has been substantiated.
Does this count as inside trading?
It’s a grey area: usually successful insider trading cases are those
where there is a direct tip-off from a source within a company about,
for instance, a forthcoming takeover, that prompts an investor to go out
and buy a particular security, making themselves lots of money. Soros –
or someone betting on the collapse of the euro – could reasonably claim
their decision was based on an economic hunch rather than inside
information.
Moreover, insider dealing cases almost always concern private sector decisions.
But undoubtedly it’s a smelly area. And not just limited to Europe.
There’s an excellent Wall Street Journal investigation (sadly also behind its paywall)
into the privileged information hedge funds can obtain over US
government decisions through Washington lobbying firms. It reveals that
hedge funds and other investors paid for meetings with key legislators
which gave them critical steers over at least two of the most
significant regulatory changes in US legislation in recent years – the
healthcare and financial reform bills.
Again, it’s a grey area.
It’s very difficult to pin down cause and effect: to what extent did
hints from policymakers make investors money? Moreover, is such
information really insider information if they hadn’t yet technically
voted on a bill?
And there are also very good reasons why
policymakers talk to these investors. Part of their job, after all, is
to gauge the likely market reaction to prospective decisions, and they
will get the best sense of that by talking to such investors. The Bank
of England talks to hedge funds, asset managers and other City bodies
thousands of times a year, since it also has a duty to try to glean what
they are seeing in the market. One of their difficulties is conducting
these conversations without giving away privileged information which the
investors could trade on (but having said that often secretive hedge
funds will be similarly reluctant to engage, for fear of giving away
their lucrative trading positions).
However, reports such as the
WSJ and Times ones compound the sense that there is a privileged elite
who consistently use their wealth to buy access to influential
decision-makers, which in turn reinforces their capacity to make money.
As Ken Rogoff said in a recent column,
there is no doubt part of the rise in inequality recently is connected
to the challenges of globalisation and the difficulty of adapting to new
technology – but part of the divide is undoubtedly due to these avenues
which allow the rich to become richer.
Which brings us back to
the original question: if the euro collapses next year, who will be the
Soros of 2012? And to what extent will their bets be based on nudges and
winks from policymakers as opposed to pure conviction and excellent
timing? We’re unlikely to find out for some years to come, but you’d be a
fool to assume it isn’t already happening.
PS It's probably
worth adding that for every hedge fund manager who does very well out of
a crisis, there are usually one or perhaps two who do equally badly. So
there are likely to be a fair few investors who are getting, and will
get, seriously - seriously - burned by the euro crisis.
euro
Panda- Platinum Poster
-
Number of posts : 30555
Age : 67
Location : Wales
Warning :
Registration date : 2010-03-27
Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Thu 22 Dec - 5:33
ay I asked a senior
policymaker whether he thought the Europeans had successfully managed to
“save the euro” at their summit in Brussels 11 days ago. “No,” he said.
“But the European Central Bank may have.”His point was half
serious – most UK policymakers think more – much more – needs to be done
by European policymakers to solve the single currency. But his point is
that the significance is only gradually dawning on investors and
policymakers what a significant move the ECB took on Thursday December 8.
The
central bank had already been indulging in what those who really know
the way money markets work would characterise as a kind of quantitative
easing-lite for months if not years – in part by failing convincingly to
sterilise its emergency purchases of euro government bonds, in part by
putting no ceiling on the amount of emergency cash banks could claim at
emergency auctions (I covered these issues here and here).
It
isn’t quite the same as the radical action the Bank of England and
Federal Reserve have taken to try to save their economies, but, as Mario
Draghi intimated in his recent FT interview, that’s really a question of terminology.
And the news this morning that the ECB’s latest emergency cash infusion into the banking system – the most generous offered by any of
the world’s major central banks – was taken up in unprecedented
quantities confirms the fact that it is now doling out nuclear-quantity
medicine to the eurozone.
It lent €489bn for three years to 523
banks at an interest rate fixed at its main interest rate – currently
1%. In exchange the ECB took collateral under far less stringent
conditions than usual – in other words it swapped cash for potentially
highly dodgy loans.
This was an enormous operation – greater than
the €293bn expected and more even than in its first major emergency cash
infusion operation in June 2009, when €442bn of one-year cash was taken
out. In fact, banks borrowed the equivalent of almost one and a half
times Spain and Italy’s combined sovereign bond issuance in 2012.
The comparison is not accidental. There are hopes among Europe’s political class, evinced by Nicolas Sarkozy’s comments on this matter the
other week, that banks will be able to borrow at 1% from the ECB and
then on-lend that to troubled periphery governments at 6% or above. In
other words, the hope is that this amounts to an indirect monetary
bail-out of troubled eurozone governments.
Whether this is the
case will remain to be seen. On the one hand there are certainly signs
that the take-up has been mainly from banks in periphery countries – the
number of institutions participating is big – 523 – but lower than the
1121 who took part in June 2009, which suggests it is limited to
particularly troubled institutions (which one tends to find in those
more troubled countries). But there’s nothing directly forcing banks to
invest this cash in the most-affected sovereign debt – they could,
instead, use the money to lend to the private sector as well as
bolstering their own balance sheets.
Either way, though, the move
amounts to an enormous boost for a region which is most probably already
in recession (indeed, Italy’s latest growth figures show it started
contracting in the third quarter of this year).
And investors’
moods certainly seem to have improved. Check out the interest rates on
Italian one-year debt, which have come down from a peak of over 8% to
barely more than 4%.
Share
prices in Europe jumped yesterday and leapt when today's figure was
announced, although they retreated back shortly afterwards.
Perhaps
they were worried that the ECB scheme only reinforces an
already-worrying link between the balance sheets of banks and
governments. It also significantly increases the risks facing the ECB’s
balance sheet, which is already chock full of debt from countries which
markets believe could well default, added to which it now has billions
of euros of dodgy private sector loans.
Then there’s the bigger
issue: investors aren’t stampeding out of European debt simply because
of these countries’ fiscal problems. Italy’s annual deficit is far
better than many other European nations, including the UK. The exodus is
because they are worried, rightly, that euro leaders have failed so far
to come up with a sustainable economic model for the single currency.
In other words, a convincing fiscal union as opposed to the
death-by-deflation model the EU summit concocted the other week.
As
my policymaker said: until you’ve got that, these emergency operations
might well stave off a crisis but they remain a temporary measure.
policymaker whether he thought the Europeans had successfully managed to
“save the euro” at their summit in Brussels 11 days ago. “No,” he said.
“But the European Central Bank may have.”His point was half
serious – most UK policymakers think more – much more – needs to be done
by European policymakers to solve the single currency. But his point is
that the significance is only gradually dawning on investors and
policymakers what a significant move the ECB took on Thursday December 8.
The
central bank had already been indulging in what those who really know
the way money markets work would characterise as a kind of quantitative
easing-lite for months if not years – in part by failing convincingly to
sterilise its emergency purchases of euro government bonds, in part by
putting no ceiling on the amount of emergency cash banks could claim at
emergency auctions (I covered these issues here and here).
It
isn’t quite the same as the radical action the Bank of England and
Federal Reserve have taken to try to save their economies, but, as Mario
Draghi intimated in his recent FT interview, that’s really a question of terminology.
And the news this morning that the ECB’s latest emergency cash infusion into the banking system – the most generous offered by any of
the world’s major central banks – was taken up in unprecedented
quantities confirms the fact that it is now doling out nuclear-quantity
medicine to the eurozone.
It lent €489bn for three years to 523
banks at an interest rate fixed at its main interest rate – currently
1%. In exchange the ECB took collateral under far less stringent
conditions than usual – in other words it swapped cash for potentially
highly dodgy loans.
This was an enormous operation – greater than
the €293bn expected and more even than in its first major emergency cash
infusion operation in June 2009, when €442bn of one-year cash was taken
out. In fact, banks borrowed the equivalent of almost one and a half
times Spain and Italy’s combined sovereign bond issuance in 2012.
The comparison is not accidental. There are hopes among Europe’s political class, evinced by Nicolas Sarkozy’s comments on this matter the
other week, that banks will be able to borrow at 1% from the ECB and
then on-lend that to troubled periphery governments at 6% or above. In
other words, the hope is that this amounts to an indirect monetary
bail-out of troubled eurozone governments.
Whether this is the
case will remain to be seen. On the one hand there are certainly signs
that the take-up has been mainly from banks in periphery countries – the
number of institutions participating is big – 523 – but lower than the
1121 who took part in June 2009, which suggests it is limited to
particularly troubled institutions (which one tends to find in those
more troubled countries). But there’s nothing directly forcing banks to
invest this cash in the most-affected sovereign debt – they could,
instead, use the money to lend to the private sector as well as
bolstering their own balance sheets.
Either way, though, the move
amounts to an enormous boost for a region which is most probably already
in recession (indeed, Italy’s latest growth figures show it started
contracting in the third quarter of this year).
And investors’
moods certainly seem to have improved. Check out the interest rates on
Italian one-year debt, which have come down from a peak of over 8% to
barely more than 4%.
Share
prices in Europe jumped yesterday and leapt when today's figure was
announced, although they retreated back shortly afterwards.
Perhaps
they were worried that the ECB scheme only reinforces an
already-worrying link between the balance sheets of banks and
governments. It also significantly increases the risks facing the ECB’s
balance sheet, which is already chock full of debt from countries which
markets believe could well default, added to which it now has billions
of euros of dodgy private sector loans.
Then there’s the bigger
issue: investors aren’t stampeding out of European debt simply because
of these countries’ fiscal problems. Italy’s annual deficit is far
better than many other European nations, including the UK. The exodus is
because they are worried, rightly, that euro leaders have failed so far
to come up with a sustainable economic model for the single currency.
In other words, a convincing fiscal union as opposed to the
death-by-deflation model the EU summit concocted the other week.
As
my policymaker said: until you’ve got that, these emergency operations
might well stave off a crisis but they remain a temporary measure.
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Thu 22 Dec - 9:23
Portugal is selling it"s Utility Company EDP valued at E8.4 Billion, several well known Utility Companies have shown interest.
The IMF is urging support for Ireland to avoid Fire Sales.
OECD thinks Britain is already in mild recession. The Sales have been sold at huge discounts and it appears the January Sales will be a flop. Cut throat
trading in the High street has shown the highest level of cuts since 2008.
Greece Creditors said to resist pressure from the IMF to take on more debt, as is the U.S. for all EU Countries.
There is disquiet about the 532 banks which received a Loan from the ECB, will it be used to replenish Capital or to lend to Businesses which the ECB
hoped would happen.
The IMF is urging support for Ireland to avoid Fire Sales.
OECD thinks Britain is already in mild recession. The Sales have been sold at huge discounts and it appears the January Sales will be a flop. Cut throat
trading in the High street has shown the highest level of cuts since 2008.
Greece Creditors said to resist pressure from the IMF to take on more debt, as is the U.S. for all EU Countries.
There is disquiet about the 532 banks which received a Loan from the ECB, will it be used to replenish Capital or to lend to Businesses which the ECB
hoped would happen.
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Explaining the eurozone crisis to children
Panda Thu 22 Dec - 14:09
Ideas
Explaining the eurozone crisis to children
21 December 2011
Il Sole-24 Ore
Milan
Still from the Walt Disney version of "Three Little Pigs" (1933)
©
"Hey Dad, what's the euro crisis?" Rather than explaining interest rates and public debt, the best way to answer is to trot out the well-known tale of The Three Little Pigs and the big bad wolf, suggests Giovanni Majnoni.
Giovanni Majnoni
Crises will always surprise us. But what surprises most is undoubtedly the similar behaviour patterns at their root. They are repeated at such a frequency that popular wisdom has crystallised the process in the form of fables and tales. If we reread, through today's lens, the famous [Three Little Pigs] tale, we would find the whys and wherefores of the euro crisis. It is, in short, the euro crisis explained to children.
The tale contains an obvious metaphor for the crisis – the big bad wolf – and its causes, the behaviour of the three little PIGS [the acronym used by financial markets to refer to Portugal, Ireland, Greece and Spain, the Euro Zone bad boys]. But the tale is filled with nuance and the moral is not self-evident.
First there are the various apparitions of lack of foresight – the house of straw, the house of wood – which demonstrate that the weakening of social and economic construction can be achieved in multiple fashion. It then teaches that it isn't necessary to be overly cautious or farsighted: the house of bricks is not sufficient to protect from the wolf who is able to get in through the chimney. Finally the moral is that, without cunning and foresight – the pot waiting for the wolf in the hearth – even the most solid social constructs are unprotected.
Represented by the house of straw, the most fragile societies are those that lack competitiveness, growth and social cohesion. Since the introduction of the euro in 2002, Italy, Portugal and Spain are posting a loss of competitiveness compared to Germany of 9%, 12% and 19% respectively. The privileges of corporations – well represented in the parliaments and governments of these three countries – impede the implementation of reforms that would, for the collective good, battle some entitlements.
Who is the big bad wolf?
Where these entitlements have prospered, competitiveness, the productive infrastructure and the balance of payments have paid the price. Maintaining this level of well-being required increased divestment of wealth and a rise in social inequalities.
Like the house of wood in the tale, the countries that let their public and private debt spiral out of control are also fragile. The cases of Italy and Belgium are exemplary. In 1999, both countries had, at 113%, the highest ratio of public debt to gross domestic product (GDP).
The considerable fall in interest rates made possible by the adoption of the euro allowed substantial savings in terms of debt servicing which Belgium – unlike Italy – used to reduce its debt rather finance operational spending. Walt Disney version of The Three Little Pigs has a happy ending – the pigs that built their house of straw or of wood escape from the jaws of the big bad wolf thanks to the hospitality of their brother, more cunning and farsighted than they.
We have seen the forms that foresight and lack of foresight can take but who is the big bad wolf? What spurs his appetite? And what tricks can be used to neutralise him? The wolf in the tale demonstrates what results from the denial of a manifest danger. It takes on an external appearance – in our case, that of speculation – but in reality it is the consequence of a refusal to accept reality – of denial.
Cunning must be the fuel
If this state of denial lasts a long time, it leads to the accumulation of imbalances that are increasingly difficult to control. Thus, the longer a society, or its politicians, continue in denial, the more the wolf – speculation, – is dangerous.
It is this succession of events that makes the tale an enlightening one. It reminds us that, when the lack of foresight of the short-sighted has stirred the appetite of the wolf – speculation, – foresight alone is no longer sufficient to protect anyone, including the far-sighted. The proof is in the signs, seen in recent days, of contagion spreading to the virtuous countries of Northern Europe and that the latter are unable to contain.
This is where cunning comes in. It is the ability to recognise that the commitment of the strongest cannot be limited to a civic duty of assistance, but on the contrary, it must take on the character of an emergency mobilisation. The civic duty of German, Finnish or Austrian tax payers will set neither the amount of the European Financial Stability Facility nor the responsibilities of the European Central Bank regarding financial stability.
Cunning must be the fuel for exceptional actions capable of posing a credible threat to speculation – able to scald it, to return to the metaphor of the story – and to force it to flee. It is only if the short-sighted become foresighted and if the foresighted become more cunning, the tale teaches us, that the countries of Europe will achieve a happy ending, living, with the euro, happily
presseurop 21/12/11
Explaining the eurozone crisis to children
21 December 2011
Il Sole-24 Ore
Milan
Still from the Walt Disney version of "Three Little Pigs" (1933)©
"Hey Dad, what's the euro crisis?" Rather than explaining interest rates and public debt, the best way to answer is to trot out the well-known tale of The Three Little Pigs and the big bad wolf, suggests Giovanni Majnoni.
Giovanni Majnoni
Crises will always surprise us. But what surprises most is undoubtedly the similar behaviour patterns at their root. They are repeated at such a frequency that popular wisdom has crystallised the process in the form of fables and tales. If we reread, through today's lens, the famous [Three Little Pigs] tale, we would find the whys and wherefores of the euro crisis. It is, in short, the euro crisis explained to children.
The tale contains an obvious metaphor for the crisis – the big bad wolf – and its causes, the behaviour of the three little PIGS [the acronym used by financial markets to refer to Portugal, Ireland, Greece and Spain, the Euro Zone bad boys]. But the tale is filled with nuance and the moral is not self-evident.
First there are the various apparitions of lack of foresight – the house of straw, the house of wood – which demonstrate that the weakening of social and economic construction can be achieved in multiple fashion. It then teaches that it isn't necessary to be overly cautious or farsighted: the house of bricks is not sufficient to protect from the wolf who is able to get in through the chimney. Finally the moral is that, without cunning and foresight – the pot waiting for the wolf in the hearth – even the most solid social constructs are unprotected.
Represented by the house of straw, the most fragile societies are those that lack competitiveness, growth and social cohesion. Since the introduction of the euro in 2002, Italy, Portugal and Spain are posting a loss of competitiveness compared to Germany of 9%, 12% and 19% respectively. The privileges of corporations – well represented in the parliaments and governments of these three countries – impede the implementation of reforms that would, for the collective good, battle some entitlements.
Who is the big bad wolf?
Where these entitlements have prospered, competitiveness, the productive infrastructure and the balance of payments have paid the price. Maintaining this level of well-being required increased divestment of wealth and a rise in social inequalities.
Like the house of wood in the tale, the countries that let their public and private debt spiral out of control are also fragile. The cases of Italy and Belgium are exemplary. In 1999, both countries had, at 113%, the highest ratio of public debt to gross domestic product (GDP).
The considerable fall in interest rates made possible by the adoption of the euro allowed substantial savings in terms of debt servicing which Belgium – unlike Italy – used to reduce its debt rather finance operational spending. Walt Disney version of The Three Little Pigs has a happy ending – the pigs that built their house of straw or of wood escape from the jaws of the big bad wolf thanks to the hospitality of their brother, more cunning and farsighted than they.
We have seen the forms that foresight and lack of foresight can take but who is the big bad wolf? What spurs his appetite? And what tricks can be used to neutralise him? The wolf in the tale demonstrates what results from the denial of a manifest danger. It takes on an external appearance – in our case, that of speculation – but in reality it is the consequence of a refusal to accept reality – of denial.
Cunning must be the fuel
If this state of denial lasts a long time, it leads to the accumulation of imbalances that are increasingly difficult to control. Thus, the longer a society, or its politicians, continue in denial, the more the wolf – speculation, – is dangerous.
It is this succession of events that makes the tale an enlightening one. It reminds us that, when the lack of foresight of the short-sighted has stirred the appetite of the wolf – speculation, – foresight alone is no longer sufficient to protect anyone, including the far-sighted. The proof is in the signs, seen in recent days, of contagion spreading to the virtuous countries of Northern Europe and that the latter are unable to contain.
This is where cunning comes in. It is the ability to recognise that the commitment of the strongest cannot be limited to a civic duty of assistance, but on the contrary, it must take on the character of an emergency mobilisation. The civic duty of German, Finnish or Austrian tax payers will set neither the amount of the European Financial Stability Facility nor the responsibilities of the European Central Bank regarding financial stability.
Cunning must be the fuel for exceptional actions capable of posing a credible threat to speculation – able to scald it, to return to the metaphor of the story – and to force it to flee. It is only if the short-sighted become foresighted and if the foresighted become more cunning, the tale teaches us, that the countries of Europe will achieve a happy ending, living, with the euro, happily
presseurop 21/12/11
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Thu 22 Dec - 16:25
22 December 2011
Last updated at 15:08
Share this page
Italy senate passes Monti's austerity package
Mario Monti took over from Silvio Berlusconi as Italian prime minister
Italy's senate has passed a confidence vote on austerity measures planned by Prime Minister Mario Monti.
The package includes spending cuts, tax rises and pension reforms. It had already passed in the lower house.
Although all political parties had reservations about aspects
of the programme, the measures were passed with a comfortable 257 to 41
majority.
Mr Monti leads a government of technocrats tasked with leading Italy out of its debt crisis.
The 30bn euro ($39bn; £25bn) package was widely expected to be passed.
The new prime minister, who took over from Silvio Berlusconi
last month in response to the crisis, says that without the measures
Italy would face economic disaster like that which has affected Greece.
Mr Monti calls the austerity cuts his plan to "save Italy".
The package of reforms was also passed by the lower house, the Chamber
of Deputies, by a large margin last week.
Continue reading the main story Italy's austerity measures
The former EU commissioner has
broad support in parliament: the two main parties feel they cannot
sabotage the bill for fear of unleashing economic catastrophe, analysts
say.
Silvio Berlusconi has said his centre-right PDL party would
back the government out of a sense of responsibility, not because it
agreed with the sacrifices being asked of Italians.
The BBC's Alan Johnston in Rome says that Mr Monti can expect
to face mounting opposition to his plans, particularly from the unions.
They believe that too many sacrifices are being demanded of
poorer families and pensioners, and that the wealthy are not sharing
enough of the burden,
Last updated at 15:08
Share this page
Italy senate passes Monti's austerity package
Mario Monti took over from Silvio Berlusconi as Italian prime minister
Italy's senate has passed a confidence vote on austerity measures planned by Prime Minister Mario Monti.
The package includes spending cuts, tax rises and pension reforms. It had already passed in the lower house.
Although all political parties had reservations about aspects
of the programme, the measures were passed with a comfortable 257 to 41
majority.
Mr Monti leads a government of technocrats tasked with leading Italy out of its debt crisis.
The 30bn euro ($39bn; £25bn) package was widely expected to be passed.
The new prime minister, who took over from Silvio Berlusconi
last month in response to the crisis, says that without the measures
Italy would face economic disaster like that which has affected Greece.
Mr Monti calls the austerity cuts his plan to "save Italy".
The package of reforms was also passed by the lower house, the Chamber
of Deputies, by a large margin last week.
Continue reading the main story Italy's austerity measures
- Local housing tax reintroduced (3.5bn euros per year)
- VAT rises
- Property sales (5bn euros per year)
- Utility sales
- Health spending cuts (5bn euros from 2013)
- Higher minimum retirement age
- State pension age to rise to 66
- Cash transactions above 1,000 euros outlawed to discourage tax evasion
The former EU commissioner has
broad support in parliament: the two main parties feel they cannot
sabotage the bill for fear of unleashing economic catastrophe, analysts
say.
Silvio Berlusconi has said his centre-right PDL party would
back the government out of a sense of responsibility, not because it
agreed with the sacrifices being asked of Italians.
The BBC's Alan Johnston in Rome says that Mr Monti can expect
to face mounting opposition to his plans, particularly from the unions.
They believe that too many sacrifices are being demanded of
poorer families and pensioners, and that the wealthy are not sharing
enough of the burden,
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Thu 22 Dec - 16:37
It is thought the Italian Unions will have something to say about the Retirement Age increase and a couple of other measures , let"s hope there are no more
strikes and damage to property.
Creditors of Greek bonds are complaining about E70 Billion new Bonds which they are being asked to accept some write off.
Standard & Poors downgrades Hungary,
The Euro has under performed for a while and expected to decline further. A number of Hedge Funds are the highest yet at assumption Euro will decline
in the New Year.
Britain is not doing very well, it"s current account shows a £15.2 Billion deficit. analysts suggest it should sell it"s 100 yr U.S. Bonds.
strikes and damage to property.
Creditors of Greek bonds are complaining about E70 Billion new Bonds which they are being asked to accept some write off.
Standard & Poors downgrades Hungary,
The Euro has under performed for a while and expected to decline further. A number of Hedge Funds are the highest yet at assumption Euro will decline
in the New Year.
Britain is not doing very well, it"s current account shows a £15.2 Billion deficit. analysts suggest it should sell it"s 100 yr U.S. Bonds.
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Christmas at home with the Euros
Panda Thu 22 Dec - 18:01
Christmas At Home With The Euros
Ed Conway
December 22, 2011 11:40 AM
Christmas is a time families come together, spend time with each
other and celebrate. But while for many this is a time for happiness and
relaxation, for others it can be a period of tension and stress.
With
that in mind I want you to consider a dysfunctional family of three
siblings who simply aren’t getting along – and with the recession
hitting hard, the divisions between them are greater than ever.
The
oldest sister, Angela, is wealthy: not only has she done very well out
of the past few years, she’s squirreled away her hard-earnt cash for a
rainy day.
The middle child, Mario, has a decent job but he’s
never been quite as careful with his cash. The enormous mortgage he’s
been slowly paying off over the years never seems to get smaller. And
since the credit crunch kicked in, no-one wants to lend him anything.
Then
there’s the errant younger brother, Lucas. While he’s the best company
of the lot, he’s never had much of a clue about real life. His job would
barely be enough to finance the most ascetic lifestyle and yet Lucas
has, for the past decade of his life, lived like a king – borrowing
money from whoever will lend it to him, lying repeatedly in order to get
the credit. And now the bailiffs are after him he’s turned into a
depressed mess.
As if this weren’t already recipe for a Christmas
disaster, their mother, who rules the family finances, has recently
decided to stop bankrolling the errant younger two brothers. Christine
(for so she is called) has been doling out cash to Mario and Lucas for
months but is frankly now worried that she won’t ever see any of it back
– in her lifetime or the next.
All of which brings us to Christmas morning and the present-opening.
Consider
the following typical economist’s question: when you’re giving and
receiving presents, do you think it’s right to expect a wealthier member
of your family to give bigger or more generous present than a less
well-off one?
Obviously here age is relevant: an adult’s may give a
lavish gift to a child and doesn’t expect anything in return (the
equivalent of aid for developing countries). And probably most of you
would agree that if your brother or sister is going through a tough time
financially one shouldn’t expect them to give very expensive gifts to
their relatives. But does it wash the other way?
Do Mario and Lucas have a right to expect Angela
to give them a far more generous present than they could hope to give?
How about if times for them have got so tough that the gift is actually a
lifeline: the sweater is the only new thing they’ll have to wear
through the winter; the M&S voucher is all they really have with
which to buy food over the next few months?
The above is, of
course, a crude caricature of what’s happening in Europe at the moment.
But the parable illustrates the inherent problem: Germany (Angela) feels
it is being expected to provide an extremely generous gift that will
never be repaid, purely because of the reckless way Greece (Lucas) has
managed its economy, and the enormous debts Italy (Mario) faces.*
Even the most generous rankle when it turns out the recipient of their generosity shows little or no gratitude – nay expects the
gift. So one can understand why the German people and politicians are
rejecting any talk about Eurobonds or more bail-outs for their
Mediterranean neighbours. It’s rather like being told that every
Christmas for the foreseeable future you’ll have to fork out a fortune
for gifts for your less hard-working relatives. And there's little
guarantee under current plans that Greece or Italy won't get themselves
in another stew a few more years down the line.
What the Germans resent is this institutionalised expectation that they will funnel their money elsewhere – something that’s integral to a real European fiscal union. Unfortunately, without such a union (others call it a transfer union) there is little prospect of the euro surviving to see another Christmas.
So
be reassured this Christmas: however much you argue, however many
issues there are over the presents, the Christmas meal and the charades,
your festive season is unlikely to be as dysfunctional as the euro’s.
*
The mother is of course Christine Lagarde of the International Monetary
Fund, representing the international bail-out cash which has supported
much of southern Europe.
euro
imf
Ed Conway
December 22, 2011 11:40 AM
Christmas is a time families come together, spend time with each
other and celebrate. But while for many this is a time for happiness and
relaxation, for others it can be a period of tension and stress.
With
that in mind I want you to consider a dysfunctional family of three
siblings who simply aren’t getting along – and with the recession
hitting hard, the divisions between them are greater than ever.
The
oldest sister, Angela, is wealthy: not only has she done very well out
of the past few years, she’s squirreled away her hard-earnt cash for a
rainy day.
The middle child, Mario, has a decent job but he’s
never been quite as careful with his cash. The enormous mortgage he’s
been slowly paying off over the years never seems to get smaller. And
since the credit crunch kicked in, no-one wants to lend him anything.
Then
there’s the errant younger brother, Lucas. While he’s the best company
of the lot, he’s never had much of a clue about real life. His job would
barely be enough to finance the most ascetic lifestyle and yet Lucas
has, for the past decade of his life, lived like a king – borrowing
money from whoever will lend it to him, lying repeatedly in order to get
the credit. And now the bailiffs are after him he’s turned into a
depressed mess.
As if this weren’t already recipe for a Christmas
disaster, their mother, who rules the family finances, has recently
decided to stop bankrolling the errant younger two brothers. Christine
(for so she is called) has been doling out cash to Mario and Lucas for
months but is frankly now worried that she won’t ever see any of it back
– in her lifetime or the next.
All of which brings us to Christmas morning and the present-opening.
Consider
the following typical economist’s question: when you’re giving and
receiving presents, do you think it’s right to expect a wealthier member
of your family to give bigger or more generous present than a less
well-off one?
Obviously here age is relevant: an adult’s may give a
lavish gift to a child and doesn’t expect anything in return (the
equivalent of aid for developing countries). And probably most of you
would agree that if your brother or sister is going through a tough time
financially one shouldn’t expect them to give very expensive gifts to
their relatives. But does it wash the other way?
Do Mario and Lucas have a right to expect Angela
to give them a far more generous present than they could hope to give?
How about if times for them have got so tough that the gift is actually a
lifeline: the sweater is the only new thing they’ll have to wear
through the winter; the M&S voucher is all they really have with
which to buy food over the next few months?
The above is, of
course, a crude caricature of what’s happening in Europe at the moment.
But the parable illustrates the inherent problem: Germany (Angela) feels
it is being expected to provide an extremely generous gift that will
never be repaid, purely because of the reckless way Greece (Lucas) has
managed its economy, and the enormous debts Italy (Mario) faces.*
Even the most generous rankle when it turns out the recipient of their generosity shows little or no gratitude – nay expects the
gift. So one can understand why the German people and politicians are
rejecting any talk about Eurobonds or more bail-outs for their
Mediterranean neighbours. It’s rather like being told that every
Christmas for the foreseeable future you’ll have to fork out a fortune
for gifts for your less hard-working relatives. And there's little
guarantee under current plans that Greece or Italy won't get themselves
in another stew a few more years down the line.
What the Germans resent is this institutionalised expectation that they will funnel their money elsewhere – something that’s integral to a real European fiscal union. Unfortunately, without such a union (others call it a transfer union) there is little prospect of the euro surviving to see another Christmas.
So
be reassured this Christmas: however much you argue, however many
issues there are over the presents, the Christmas meal and the charades,
your festive season is unlikely to be as dysfunctional as the euro’s.
*
The mother is of course Christine Lagarde of the International Monetary
Fund, representing the international bail-out cash which has supported
much of southern Europe.
euro
imf
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Badboy Thu 22 Dec - 18:58
IT WAS SAYING IN THE GUARDIAN THAT A LOT OF GREEK,ITALIANS AND PORTUGUESE ARE WANTING TO EMIGRATE,GREEKS TO PLACES LIKE AUSTRALIA AND EVEN IRAN TO FIND WORK,ALMOST 10% OF DOCTORS HAVE MOVED ABROAD,PORTUGUESE MOVING TO EX-COLONIES.
IRELAND AS WELL IS LOSING POPULATION.MANY GAELIC FOOTBALLERS ARE LEAVING FOR ELSEWHERE.
IRELAND AS WELL IS LOSING POPULATION.MANY GAELIC FOOTBALLERS ARE LEAVING FOR ELSEWHERE.
Last edited by Badboy on Thu 22 Dec - 19:04; edited 1 time in total (Reason for editing : MORE DETAILS)
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Thu 22 Dec - 19:19
Badboy wrote:IT WAS SAYING IN THE GUARDIAN THAT A LOT OF GREEK,ITALIANS AND PORTUGUESE ARE WANTING TO EMIGRATE,GREEKS TO PLACES LIKE AUSTRALIA AND EVEN IRAN TO FIND WORK,ALMOST 10% OF DOCTORS HAVE MOVED ABROAD,PORTUGUESE MOVING TO EX-COLONIES.
Hi Badboy, it"s ironic that Britain is becoming over-run with immigrants from Pakistan, Rumania, Afghanistan etc and goodness knows how many illegals
we have, with the result that the middle class Brits have been leaving in their thousands for years and we end up with a poorer and poorer population
badly educated and our NHS bursting at the seams. Every Country in the World is affected yet the Banking system has until 2017 before any changes
are made.I have a horrible feeling the worst is yet to come .
The only reason so many immigrants come here is to take advantage of our Welfare State, not to integrate , learn our language and try to find work,
I exclude all those Professional People and those working for the NHS.
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Fri 23 Dec - 7:10
Latest articles
Latest articles
Latest articles
- HungaryThe fragile ambitions of Magyar capitalism
The suspension of negotiations with the IMF and the EU over the issue of the independence of the central bank has demonstrated that Viktor Orbán’s government also intends to apply its “national revolution” to the economy. However, economist Miklós Sebők argues that the basis for this policy is erroneous.
22 December 2011 Magyar NarancsBudapest - EmigrationThe Greek exodus to Australia
For young Europeans from crisis stricken states, booming Australia has become a new land of opportunity. This is especially true for a new generation of Greek graduates, joining the largest expatriate Greek community in the world.
22 December 2011 The GuardianLondon3 - RomaniaRevolution? What revolution?
For most people in post-communist Europe, December is the month to commemorate the fall of the communist regimes. In Romania, the fall has become a story that a society living in a world of cheap illusions tells itself.
21 December 2011 Jurnalul NaţionalBucharest5
Latest articles
- HungaryThe fragile ambitions of Magyar capitalism The suspension of negotiations with the IMF and the EU over the issue of the independence of the central bank has demonstrated that Viktor Orbán’s government also intends to apply its “national revolution” to the economy. However, economist Miklós Sebők argues that the basis for this policy is erroneous.
22 December 2011 Magyar NarancsBudapest - EmigrationThe Greek exodus to Australia For young Europeans from crisis stricken states, booming Australia has become a new land of opportunity. This is especially true for a new generation of Greek graduates, joining the largest expatriate Greek community in the world.
22 December 2011 The GuardianLondon3 - RomaniaRevolution? What revolution? For most people in post-communist Europe, December is the month to commemorate the fall of the communist regimes. In Romania, the fall has become a story that a society living in a world of cheap illusions tells itself.
21 December 2011 Jurnalul NaţionalBucharest5
Latest articles
- HungaryThe fragile ambitions of Magyar capitalism The suspension of negotiations with the IMF and the EU over the issue of the independence of the central bank has demonstrated that Viktor Orbán’s government also intends to apply its “national revolution” to the economy. However, economist Miklós Sebők argues that the basis for this policy is erroneous.
22 December 2011 Magyar NarancsBudapest - EmigrationThe Greek exodus to Australia For young Europeans from crisis stricken states, booming Australia has become a new land of opportunity. This is especially true for a new generation of Greek graduates, joining the largest expatriate Greek community in the world.
22 December 2011 The GuardianLondon3 - RomaniaRevolution? What revolution? For most people in post-communist Europe, December is the month to commemorate the fall of the communist regimes. In Romania, the fall has become a story that a society living in a world of cheap illusions tells itself.
21 December 2011 Jurnalul NaţionalBucharest5
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Fri 23 Dec - 7:49
Moodys cuts Slovenia Rating.
French GDP proves lower than thought o.3% not 0.4% a recession is forecast for the next 2 quarters.
French 10 yr Bond up t0 3.02% Italian 10yr Bond rising to 6.96%
Analysts say Euro will weaken over next 3 months which may prove helpful.
It appears the ECB 3yr Loan euphoria has worn off and pessimism in Europe and around the World remains.
French GDP proves lower than thought o.3% not 0.4% a recession is forecast for the next 2 quarters.
French 10 yr Bond up t0 3.02% Italian 10yr Bond rising to 6.96%
Analysts say Euro will weaken over next 3 months which may prove helpful.
It appears the ECB 3yr Loan euphoria has worn off and pessimism in Europe and around the World remains.
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Not really uniting, to not really save the Euro.....Not really
Panda Fri 23 Dec - 9:16
a fistfulofeuros
Economics and demography
Not Really Uniting, to Not Really Save the Euro…Not Really
by Alex Harrowell
The British newspapers are full of lines like “UK vetoes EU
uniting to save euro” and worse. This illuminates a huge problem with
the European Union.
The first problem is that this assumes that somebody’s going to save the euro. This is an error of the same form as the classic Yes, Minister joke:
that balanced-budget amendments will “save the euro”. Further, the UK
isn’t opposed to the euro as a matter of policy and you have to be very,
very Commission-minded to imagine that everyone outside is secretly
either desperate to get in, or else desperately trying to keep the euro
from sucking them in. Also, there’s nothing intrinsically good about
“uniting around” a bad idea. Being united and wrong isn’t a good thing.
As we used to say at school:
dreadful poverty of discourse about the EU. Whatever happens gets
discussed in terms of europhiles vs. eurosceptics, intergovernmental vs.
supranational, nation A vs. nation B. In the UK’s national context,
this meant that the prime minister could announce a veto on lower
reserve capital requirements for banks and be accused of selling out to
the City. I mean, it’s weird enough in itself, but it doesn’t make
sense to claim that he’s selling out to the banks in doing something
that directly, mathematically costs them money.
It is rare that any policy proposal regarding the EU gets discussed
seriously on its content, rather than as part of a specialised form of
horse-race journalism. Is one nation or institution getting an edge in
the game of diplomacy? Last week’s summit cut across all the standard EU
dichotomies. A Tory veto on lower reserve requirements? French
and German backing for a purely intergovernmental arrangement? Core
European demands for aggressively procyclical economics? If you were
working on any of the usual rules, you’d be completely disoriented, and
it’s painfully obvious that so many people are.
So let’s discuss the merits. The headline proposal is to make
everyone have a balanced-budget amendment in their national
constitution. (They weren’t exactly holding back!) This sets a limit of
0.5% of GDP for the cyclically-adjusted structural budget deficit, and
requires a 1/60th reduction every year in the public debt over and above
60% of GDP. This sounds pretty Hooverite, but it’s worth noting that
it’s also full of language that leaves lots of room for interpretation.
“Cyclically adjusted” means that there could be leeway for a stimulus,
and a “structural” budget deficit is precisely whatever the person who
defines “structural” wants it to be.
Further, it mentions leveraging the EFSF and states that the EFSF and
ESM will operate with the European Central Bank as their agent. This
sounds like something worth having, and the ECB’s announcements on
Friday do suggest that there might be quite a bit more central bank
liquidity coming.
It also takes note of the trade problem – at last. This is important.
There is language in there that accepts that the intra-eurozone trade
imbalances are a problem and that it’s not enough to flog the deficit
states. However, if the budgetary outs were vague, this is far vaguer.
And finally, there were a gaggle of added extras like wanting to have
all transactions in euros cleared via the ECB and maybe moving the
European Banking Authority to Paris, which seems to have freaked out
David Cameron something good and proper. I can’t see why this stuff
should have been on a serious agenda – it’s more Silvio Berlusconi’s
style – but perhaps the temptation was unavoidable, and I may come back
to this in a post on the diplomatic side of the story.
In conclusion, whether this “fiscal compact” is going to be
Euro-Hooverism or “hard Keynesianism” seems to depend mostly on
political will and interpretation, the first being the father of the
second. A reading that emphasises the hard numbers and takes an
ungenerous definition of “cyclical” and “structural”, that considers the
ECB’s role as “agent” to mean just acting as a broker, and that
considers the clause on trade imbalances to be hot air, will give us the
first.
However, a reading that takes a sceptical view of the reality of
“structural”, that thinks the pits of a depression are the place to
exploit a cyclical adjustment if there ever was one, and that insists on
pushing the imbalances clause, would get us somewhere else entirely,
especially if it also suggests that the “agent” might have more “agency”
than just processing transactions.
Economics and demography
Not Really Uniting, to Not Really Save the Euro…Not Really
by Alex Harrowell
The British newspapers are full of lines like “UK vetoes EU
uniting to save euro” and worse. This illuminates a huge problem with
the European Union.
The first problem is that this assumes that somebody’s going to save the euro. This is an error of the same form as the classic Yes, Minister joke:
We’ve got to do something. This is something. Therefore we’ve got to do it.Given what I’ve already said about this, I’m very far from convinced
that balanced-budget amendments will “save the euro”. Further, the UK
isn’t opposed to the euro as a matter of policy and you have to be very,
very Commission-minded to imagine that everyone outside is secretly
either desperate to get in, or else desperately trying to keep the euro
from sucking them in. Also, there’s nothing intrinsically good about
“uniting around” a bad idea. Being united and wrong isn’t a good thing.
As we used to say at school:
Why did you do it? Lee told me to do it. If Lee told you to do it, would you jump off a cliff?But all this is a special case of a general problem. There is a
dreadful poverty of discourse about the EU. Whatever happens gets
discussed in terms of europhiles vs. eurosceptics, intergovernmental vs.
supranational, nation A vs. nation B. In the UK’s national context,
this meant that the prime minister could announce a veto on lower
reserve capital requirements for banks and be accused of selling out to
the City. I mean, it’s weird enough in itself, but it doesn’t make
sense to claim that he’s selling out to the banks in doing something
that directly, mathematically costs them money.
It is rare that any policy proposal regarding the EU gets discussed
seriously on its content, rather than as part of a specialised form of
horse-race journalism. Is one nation or institution getting an edge in
the game of diplomacy? Last week’s summit cut across all the standard EU
dichotomies. A Tory veto on lower reserve requirements? French
and German backing for a purely intergovernmental arrangement? Core
European demands for aggressively procyclical economics? If you were
working on any of the usual rules, you’d be completely disoriented, and
it’s painfully obvious that so many people are.
So let’s discuss the merits. The headline proposal is to make
everyone have a balanced-budget amendment in their national
constitution. (They weren’t exactly holding back!) This sets a limit of
0.5% of GDP for the cyclically-adjusted structural budget deficit, and
requires a 1/60th reduction every year in the public debt over and above
60% of GDP. This sounds pretty Hooverite, but it’s worth noting that
it’s also full of language that leaves lots of room for interpretation.
“Cyclically adjusted” means that there could be leeway for a stimulus,
and a “structural” budget deficit is precisely whatever the person who
defines “structural” wants it to be.
Further, it mentions leveraging the EFSF and states that the EFSF and
ESM will operate with the European Central Bank as their agent. This
sounds like something worth having, and the ECB’s announcements on
Friday do suggest that there might be quite a bit more central bank
liquidity coming.
It also takes note of the trade problem – at last. This is important.
There is language in there that accepts that the intra-eurozone trade
imbalances are a problem and that it’s not enough to flog the deficit
states. However, if the budgetary outs were vague, this is far vaguer.
And finally, there were a gaggle of added extras like wanting to have
all transactions in euros cleared via the ECB and maybe moving the
European Banking Authority to Paris, which seems to have freaked out
David Cameron something good and proper. I can’t see why this stuff
should have been on a serious agenda – it’s more Silvio Berlusconi’s
style – but perhaps the temptation was unavoidable, and I may come back
to this in a post on the diplomatic side of the story.
In conclusion, whether this “fiscal compact” is going to be
Euro-Hooverism or “hard Keynesianism” seems to depend mostly on
political will and interpretation, the first being the father of the
second. A reading that emphasises the hard numbers and takes an
ungenerous definition of “cyclical” and “structural”, that considers the
ECB’s role as “agent” to mean just acting as a broker, and that
considers the clause on trade imbalances to be hot air, will give us the
first.
However, a reading that takes a sceptical view of the reality of
“structural”, that thinks the pits of a depression are the place to
exploit a cyclical adjustment if there ever was one, and that insists on
pushing the imbalances clause, would get us somewhere else entirely,
especially if it also suggests that the “agent” might have more “agency”
than just processing transactions.
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Badboy Fri 23 Dec - 15:06
IT WAS SAYING IN GUARDIAN TODAY THAT MANY PORTUGUESE ARE MOVING TO BRAZIL WHICH HAS HAD ABOUT 5/6% ECONOMIC GROWTH, BUCKING THE WORLD TREND(AUSTRALIA IS ALSO BUCKING THE WORLD TREND).
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Fri 23 Dec - 16:28
Hi Badboy,
Iv"e been out most of the day and just checking, the concensus among Analysts is that Merkel and Sarkozy have handled the Euro Crisis badly because they concentrated too much on the deficit in the EU Countries being the cause of the problem. It was pointed out that Ireland was doing very well but
has been dragged down by the contagion. Merkel is paranoid about the debt but the U.S., U.K. and Japan all have large debts .
One analyst says if the Eurozone is to survive, it must have a Central Banking system and issue Eurobonds.
Iv"e been out most of the day and just checking, the concensus among Analysts is that Merkel and Sarkozy have handled the Euro Crisis badly because they concentrated too much on the deficit in the EU Countries being the cause of the problem. It was pointed out that Ireland was doing very well but
has been dragged down by the contagion. Merkel is paranoid about the debt but the U.S., U.K. and Japan all have large debts .
One analyst says if the Eurozone is to survive, it must have a Central Banking system and issue Eurobonds.
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Why European Banks are sacrificing growth
Panda Fri 23 Dec - 20:02
text size:TTMarkets & FinanceDecember 15, 2011, 4:30 PM EST
Why European Banks Are Sacrificing Growth
Amid the crisis, lenders are selling some of their best businesses to raise money
Illustration by Topos Graphics
By Anne-Sylvaine Chassany, Kevin Crowley and Charles Penty
Under pressure from regulators to bolster capital, European banks are selling some of their fastest-growing businesses to competitors from outside the region. The sales may leave them better able to withstand financial stress—and less able to boost future profits. Spain’s Banco Santander, which said in October it needs an additional €5.2 billion ($6.9 billion) to meet capital requirements, sold its Colombian unit in December to Chile’s Corpbanca for $1.16 billion. Germany’s Deutsche Bank is weighing options including the sale of most of its asset management unit, while Belgium’s KBC Groep may dispose of businesses in Poland.
Such sales are an unintended consequence of the decision by European regulators to make banks increase capital—a buffer that protects against credit losses—to help them survive the worsening sovereign-debt crisis. The European Banking Authority on Dec. 8 ordered the region’s financial companies to raise €114.7 billion of additional capital by the middle of 2012.
To reduce their reliance on the markets for funding, banks across Europe have pledged to cut assets by more than €950 billion over the next two years, according to data compiled by Bloomberg. About two-thirds of that will come from sales of profitable units and performing loans, says Huw van Steenis, a Morgan Stanley analyst in London. While it may be hard to get premium prices for those businesses in a crisis, other options for raising money are even less appealing. Lenders don’t want to issue additional shares because their stock prices are too low: The Bloomberg Europe Banks and Financial Services Index is down 33.5 percent this year. Selling troubled loans is also problematic. If the banks accept the low prices investors are willing to pay, the lenders would have to record losses on the loans, and those losses would erode their capital. As a result, distressed assets and souring loans will account for just 4 percent of asset reductions over the next two years, according to van Steenis.
That leaves selling entire business units outside of their domestic markets. These are the most profitable parts of their business,” says Azad Zangana, European economist at London-based Schroders, citing Spanish and Portuguese banks selling assets in Latin America. “You begin to become a less profitable organization. Your business model stops working if you’re being forced to lend only to an economy that’s going through a very deep recession.”
By shedding some of their best assets, the sales may make banks less stable. “Lenders are selling more liquid assets so they can get a price that avoids additional capital losses,” says Joseph Swanson, co-head of restructuring at Houlihan Lokey in London. “Unfortunately, this strategy can result in lower asset quality and increased earnings volatility.”
Santander completed the sale of its Brazilian insurance operations to Zurich Financial Services for $1.7 billion in October. The Spanish bank also sold a $958 million stake in Banco Santander Chile, the South American country’s biggest bank by assets. The Chilean bank’s net profit grew 45 percent between 2008 and 2010 and may increase 15 percent this year, to about $970 million, according to analyst estimates compiled by Bloomberg. Santander said it will also sell a stake in its Brazilian banking unit. The Spanish lender’s planned sale of part of its U.S. consumer loan business to a group led by KKR may cut net profit for Santander’s shareholders by €150 million, according to an Oct. 28 estimate by Raoul Leonard, an analyst at Royal Bank of Scotland Group in London. “Assuming multiple asset sales may be in the pipeline, this could lead to a meaningful negative drag” on earnings, Leonard wrote. A spokeswoman for Santander declined to comment.
Why European Banks Are Sacrificing Growth
Amid the crisis, lenders are selling some of their best businesses to raise money
Illustration by Topos Graphics By Anne-Sylvaine Chassany, Kevin Crowley and Charles Penty
Under pressure from regulators to bolster capital, European banks are selling some of their fastest-growing businesses to competitors from outside the region. The sales may leave them better able to withstand financial stress—and less able to boost future profits. Spain’s Banco Santander, which said in October it needs an additional €5.2 billion ($6.9 billion) to meet capital requirements, sold its Colombian unit in December to Chile’s Corpbanca for $1.16 billion. Germany’s Deutsche Bank is weighing options including the sale of most of its asset management unit, while Belgium’s KBC Groep may dispose of businesses in Poland.
Such sales are an unintended consequence of the decision by European regulators to make banks increase capital—a buffer that protects against credit losses—to help them survive the worsening sovereign-debt crisis. The European Banking Authority on Dec. 8 ordered the region’s financial companies to raise €114.7 billion of additional capital by the middle of 2012.
To reduce their reliance on the markets for funding, banks across Europe have pledged to cut assets by more than €950 billion over the next two years, according to data compiled by Bloomberg. About two-thirds of that will come from sales of profitable units and performing loans, says Huw van Steenis, a Morgan Stanley analyst in London. While it may be hard to get premium prices for those businesses in a crisis, other options for raising money are even less appealing. Lenders don’t want to issue additional shares because their stock prices are too low: The Bloomberg Europe Banks and Financial Services Index is down 33.5 percent this year. Selling troubled loans is also problematic. If the banks accept the low prices investors are willing to pay, the lenders would have to record losses on the loans, and those losses would erode their capital. As a result, distressed assets and souring loans will account for just 4 percent of asset reductions over the next two years, according to van Steenis.
That leaves selling entire business units outside of their domestic markets. These are the most profitable parts of their business,” says Azad Zangana, European economist at London-based Schroders, citing Spanish and Portuguese banks selling assets in Latin America. “You begin to become a less profitable organization. Your business model stops working if you’re being forced to lend only to an economy that’s going through a very deep recession.”
By shedding some of their best assets, the sales may make banks less stable. “Lenders are selling more liquid assets so they can get a price that avoids additional capital losses,” says Joseph Swanson, co-head of restructuring at Houlihan Lokey in London. “Unfortunately, this strategy can result in lower asset quality and increased earnings volatility.”
Santander completed the sale of its Brazilian insurance operations to Zurich Financial Services for $1.7 billion in October. The Spanish bank also sold a $958 million stake in Banco Santander Chile, the South American country’s biggest bank by assets. The Chilean bank’s net profit grew 45 percent between 2008 and 2010 and may increase 15 percent this year, to about $970 million, according to analyst estimates compiled by Bloomberg. Santander said it will also sell a stake in its Brazilian banking unit. The Spanish lender’s planned sale of part of its U.S. consumer loan business to a group led by KKR may cut net profit for Santander’s shareholders by €150 million, according to an Oct. 28 estimate by Raoul Leonard, an analyst at Royal Bank of Scotland Group in London. “Assuming multiple asset sales may be in the pipeline, this could lead to a meaningful negative drag” on earnings, Leonard wrote. A spokeswoman for Santander declined to comment.
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Why Politicians are helpless in Euro Crisis
Panda Sat 24 Dec - 10:02
Why Politicians Are Helpless In Euro Crisis
Fitch's gloomy forecast did little to raise the hopes of Eurozone countries
6:30pm UK, Saturday December 17, 2011
Tadhg Enright, business correspondent
Such is the scale of the eurozone's problems, Fitch ratings
has dashed any hope that Angela Merkel might do a Wonder Woman twirl and
unleash a Big Bazooka with enough financial firepower to end the debt
crisis once and for all.
"Fitch has concluded that a 'comprehensive solution' to the eurozone
crisis is technically and politically beyond reach," it said as it
warned Spain, Italy, Ireland, Belgium Slovenia and Cyprus that their
credit ratings would soon be downgraded.
The "positive commitments" made by European leaders towards more
disciplined borrowing and spending limits agreed at last weekend's
summit were welcomed.
But even in the unlikely event of the eurozone's 17 members coming
together in a United States of Europe style union, in which richer
states subsidised the poorer, its credit rating would still be far from
perfect.
That is because the backbone of Europe's financial infrastructure,
the European Central Bank (ECB), still cannot and will not do what the
Bank of England and US Federal Reserve can - lend money to their own
governments in case of emergency.
Nick Clegg hits out at French comments on the UK
It is what people in the know call a "financial backstop".
And while the ECB has been giving emergency loans to the region's
banks to help them weather the debt storm, Fitch said its "continued
reluctance to countenance a similar degree of support to its sovereign
shareholders" is holding back recovery and until something changes the
"crisis will persist and likely be punctuated by episodes of severe
financial volatility."
"In Fitch's opinion this requires more active and explicit commitment
from the ECB to mitigate the risk of self-fulfilling liquidity crises
for potentially illiquid but solvent Euro Area Member States."
It is certainly not the first time that the ECB has been called upon to act this way.
Most central banks do, and in principle it costs nothing because they have the power to create new money out of thin air.
An obvious solution you might think.
It had been hoped that the ECB's new Italian President, Mario Draghi, might loosen the reins
But Germany does not think that way - having twice experienced
periods of hyper-inflation in the 20th century after its central bank
engaged in similar activity - and its refusal to entertain such ideas is
arguably the clearest illustration of who calls the shots in the
eurozone, in case you had been left in any doubt.
The ECB is based in the second German city of Frankfurt and the
conservatism of its policy was demanded by Germany as a key plank of the
eurozone's architecture, whose many flaws are now clear to see.
Observers are constantly looking for clues in the rhetoric from the
German government and the ECB's governors that change is on the cards.
Some hoped that the strict new rules on borrowing and spending agreed
by Europe (minus Britain) would do enough to placate German voters, in
whose mindsets memories of hyper inflation remain fresh, to convince
them that unleashing the potential of the ECB is the only solution.
So between now and March 2012 when the new intergovernmental treaty -
The Fiscal Compact - is due to be ratified, expect bickering and
grandstanding between the 26 countries who have said they are willing,
in principle, to sign up.
Expect more market turmoil and various crunch points at which Italy's
borrowing costs will escalate to levels at which many will say a
bailout is inevitable even if there is not the money in either the IMF
or EFSF to pay for it.
While the flames of the eurozone debt crisis continue to burn with
the smoke choking off the global economic recovery, the politicians are
debating how to fireproof the single currency against a repeat of the
crisis.
Fitch's gloomy forecast did little to raise the hopes of Eurozone countries
6:30pm UK, Saturday December 17, 2011
Tadhg Enright, business correspondent
Such is the scale of the eurozone's problems, Fitch ratings
has dashed any hope that Angela Merkel might do a Wonder Woman twirl and
unleash a Big Bazooka with enough financial firepower to end the debt
crisis once and for all.
"Fitch has concluded that a 'comprehensive solution' to the eurozone
crisis is technically and politically beyond reach," it said as it
warned Spain, Italy, Ireland, Belgium Slovenia and Cyprus that their
credit ratings would soon be downgraded.
The "positive commitments" made by European leaders towards more
disciplined borrowing and spending limits agreed at last weekend's
summit were welcomed.
But even in the unlikely event of the eurozone's 17 members coming
together in a United States of Europe style union, in which richer
states subsidised the poorer, its credit rating would still be far from
perfect.
That is because the backbone of Europe's financial infrastructure,
the European Central Bank (ECB), still cannot and will not do what the
Bank of England and US Federal Reserve can - lend money to their own
governments in case of emergency.
The danger at the moment is because society is under economic stress, xenophobia, chauvinism and polarisation increase.
Nick Clegg hits out at French comments on the UK
It is what people in the know call a "financial backstop".
And while the ECB has been giving emergency loans to the region's
banks to help them weather the debt storm, Fitch said its "continued
reluctance to countenance a similar degree of support to its sovereign
shareholders" is holding back recovery and until something changes the
"crisis will persist and likely be punctuated by episodes of severe
financial volatility."
"In Fitch's opinion this requires more active and explicit commitment
from the ECB to mitigate the risk of self-fulfilling liquidity crises
for potentially illiquid but solvent Euro Area Member States."
It is certainly not the first time that the ECB has been called upon to act this way.
Most central banks do, and in principle it costs nothing because they have the power to create new money out of thin air.
An obvious solution you might think.
It had been hoped that the ECB's new Italian President, Mario Draghi, might loosen the reins
But Germany does not think that way - having twice experienced
periods of hyper-inflation in the 20th century after its central bank
engaged in similar activity - and its refusal to entertain such ideas is
arguably the clearest illustration of who calls the shots in the
eurozone, in case you had been left in any doubt.
The ECB is based in the second German city of Frankfurt and the
conservatism of its policy was demanded by Germany as a key plank of the
eurozone's architecture, whose many flaws are now clear to see.
Observers are constantly looking for clues in the rhetoric from the
German government and the ECB's governors that change is on the cards.
Some hoped that the strict new rules on borrowing and spending agreed
by Europe (minus Britain) would do enough to placate German voters, in
whose mindsets memories of hyper inflation remain fresh, to convince
them that unleashing the potential of the ECB is the only solution.
So between now and March 2012 when the new intergovernmental treaty -
The Fiscal Compact - is due to be ratified, expect bickering and
grandstanding between the 26 countries who have said they are willing,
in principle, to sign up.
Expect more market turmoil and various crunch points at which Italy's
borrowing costs will escalate to levels at which many will say a
bailout is inevitable even if there is not the money in either the IMF
or EFSF to pay for it.
While the flames of the eurozone debt crisis continue to burn with
the smoke choking off the global economic recovery, the politicians are
debating how to fireproof the single currency against a repeat of the
crisis.
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Sun 25 Dec - 9:55
Latest articles
- Eurozone crisisIceland is our modern Utopia
In rejecting by referendum a bailout for their toxic banks and the repayment of external debt, the citzens of Iceland have shown it is possible to escape the laws of capitalism and take control of one's destiny, writes a Spanish historian.
23 December 2011 PúblicoMadrid19 - HungaryThe fragile ambitions of Magyar capitalism The suspension of negotiations with the IMF and the EU over the issue of the independence of the central bank has demonstrated that Viktor Orbán’s government also intends to apply its “national revolution” to the economy. However, economist Miklós Sebők argues that the basis for this policy is erroneous.
22 December 2011 Magyar NarancsBudapest - EmigrationThe Greek exodus to Australia For young Europeans from crisis stricken states, booming Australia has become a new land of opportunity. This is especially true for a new generation of Greek graduates, joining the largest expatriate Greek community in the world.
22 December 2011 The GuardianLondon9
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Sun 25 Dec - 12:45
Merkel’s Nein is wrecking the EU
24 November 2011
Die Tageszeitung
Berlin
"!??! At your orders, Madame".
Nicolas Vadot
Alone against all, the Chancellor says ‘No’ to a supporting mandate for the ECB and ‘No’ to common euro bonds. In Germany too, more and more experts are warning that her firm stance on discipline and rules is plunging the eurozone into chaos.
Eric Bonse
The carrot and the stick: that’s one way of summing up the European Commission’s proposals to resolve the debt crisis. The carrots are common bonds with the same interest rates for all euro countries – the so-called Euro Bonds; that is, liabilities pooled among the member states.
The stick: tighter controls and tougher sanctions on those who break the rules on debt. With this programme, one would think, Commission President Barroso could score points with Merkel in Berlin.
Far from it. Although the Eurobonds have been spontaneously rechristened “stability bonds” for the occasion, and despite the fact that the sweet carrots will be served up only when the bitter medicine of austerity has been swallowed, from Berlin there only comes back a dull No.
Even the debate over Eurobonds is “inappropriate,” believes Merkel, who commissioned the feasibility study into the bonds herself. The debate is coming at just the right time. In the meanwhile, the markets have begun attacking not only over-indebted countries, but countries like Austria and the Netherlands as well. Protecting these important partners is also in Germany’s interest.
Many will say Germany is to blame
But for Merkel, only discipline and obedience matter. The Iron Chancellor seems to be ignoring the fact that more and more economists are convinced that the crisis can be overcome only with both common bond purchases and backing from the ECB.
She thus risks not only new controversy with Barroso, who has long been annoyed about the faltering German course, but risks isolating Germany even more. Already Merkel can count on only a handful of supporters in Paris, The Hague and Helsinki. France's President Sarkozy has already distanced himself from the dispute over the ECB.
Now even Germany itself is looking vulnerable: the federal budget for 2012 doesn’t quite tally with the tough austerity Merkel preaches. And on Wednesday, for the first time ever, the markets recognised doubts in the creditworthiness of Germany and largely turned down the otherwise popular federal bonds.
In addition, there are strong indications that the debt crisis is deepening. If in the end the eurozone does indeed begin to tumble and Merkel blocks all rescue attempts, many will say Germany is to blame – and they would be right.
Translated from the German by Anton Baer
Financial markets
First upset for Berlin
"Germany packs up its bonds," headlines Die Welt the day after a disappointing sale of German bonds on the financial markets. The newspaper says the country faces a problem that its European partners aren’t familiar with: the interest rate on German bonds is less than two percent (1.98%), a yield too low to draw in investors. As a result, Germany has been able to sell no more than a third of its bonds at its proposed price. “A total disaster,” say some analysts; an episode, say others, who have no doubt in Berlin’s ability to find refinancing on the markets.
Your comments
24 November 2011
Die Tageszeitung
Berlin
"!??! At your orders, Madame".Nicolas Vadot
Alone against all, the Chancellor says ‘No’ to a supporting mandate for the ECB and ‘No’ to common euro bonds. In Germany too, more and more experts are warning that her firm stance on discipline and rules is plunging the eurozone into chaos.
Eric Bonse
The carrot and the stick: that’s one way of summing up the European Commission’s proposals to resolve the debt crisis. The carrots are common bonds with the same interest rates for all euro countries – the so-called Euro Bonds; that is, liabilities pooled among the member states.
The stick: tighter controls and tougher sanctions on those who break the rules on debt. With this programme, one would think, Commission President Barroso could score points with Merkel in Berlin.
Far from it. Although the Eurobonds have been spontaneously rechristened “stability bonds” for the occasion, and despite the fact that the sweet carrots will be served up only when the bitter medicine of austerity has been swallowed, from Berlin there only comes back a dull No.
Even the debate over Eurobonds is “inappropriate,” believes Merkel, who commissioned the feasibility study into the bonds herself. The debate is coming at just the right time. In the meanwhile, the markets have begun attacking not only over-indebted countries, but countries like Austria and the Netherlands as well. Protecting these important partners is also in Germany’s interest.
Many will say Germany is to blame
But for Merkel, only discipline and obedience matter. The Iron Chancellor seems to be ignoring the fact that more and more economists are convinced that the crisis can be overcome only with both common bond purchases and backing from the ECB.
She thus risks not only new controversy with Barroso, who has long been annoyed about the faltering German course, but risks isolating Germany even more. Already Merkel can count on only a handful of supporters in Paris, The Hague and Helsinki. France's President Sarkozy has already distanced himself from the dispute over the ECB.
Now even Germany itself is looking vulnerable: the federal budget for 2012 doesn’t quite tally with the tough austerity Merkel preaches. And on Wednesday, for the first time ever, the markets recognised doubts in the creditworthiness of Germany and largely turned down the otherwise popular federal bonds.
In addition, there are strong indications that the debt crisis is deepening. If in the end the eurozone does indeed begin to tumble and Merkel blocks all rescue attempts, many will say Germany is to blame – and they would be right.
Translated from the German by Anton Baer
Financial markets
First upset for Berlin
"Germany packs up its bonds," headlines Die Welt the day after a disappointing sale of German bonds on the financial markets. The newspaper says the country faces a problem that its European partners aren’t familiar with: the interest rate on German bonds is less than two percent (1.98%), a yield too low to draw in investors. As a result, Germany has been able to sell no more than a third of its bonds at its proposed price. “A total disaster,” say some analysts; an episode, say others, who have no doubt in Berlin’s ability to find refinancing on the markets.
Your comments
Johant77 | 24.11.2011 | 23:23
Economist: "Merkel should accept eurobonds, when there will be established a common fiscal policy at the same time."
Not only a common fiscal policy (want to have some of our high car taxes?), but even more important; a system of sanctioning states that don't keep their budget under control, which is automatically applied to both small and large countries (no escape routes).
It is obvious that Southern Europe needs help, but it should not turn into a reward for a flawed budgetting policy.
taka.jp982 | 25.11.2011 | 03:37
Being Economist myself, I do wonder if people who talk or write about Eurobonds really understand the implications of creating such financing instrument. The foremost problem of such Eurobonds are that they introduced to fix a problem that steams from a systematic abuse of external debt financing to cover up extraordinary spending behaviour. As long as such behaviour isn't dealt with, no instruments what so ever can fix the problem. Calling for Eurobonds to create a market to borrow cheap money, let loose those who already abused the system. No matter what, the first best thing to do is to fix the spending behaviour. Using the US as an example with its unprecedented debt financing resulted in owing over 26% to China and 19% to Japan in treasury securities alone, making debt financing a political instrument and not a fiscal instrument.- steinberg23 | 25.11.2011 | 10:02
Ontnous dit sans arrêt heureusement que Sarkozy est là pour sauver l'Europe.Mais il sauve rien du tout ,il se donne une apparence de Zorro et en fin de compte ce n'est qu'un sergent Garcia qui dit Amen à tout.Nous avons besoin chaque pays doit retrouver son indépendance monétaire c'est une nécéssité absolu.Emprunter sur les marchés est un baisse-couillon,nous serons toujours dépendant de ce qui nous prêtes et c'est trés malsain .Regarder le Japon sa devrait faire réfléchir.Mais nous savons nous les peuples bien informés,que la droite et la gauche molle du capitalisme libéral ne voudrons pas,ils préfèrent nous maintenir la tête à moitié hors de l'eau imaginaire de leur crise pour mettre fin à la sécurité sociale,les mutuelles ,les allocations familiales ,la retraite,pour nous proposés un système plus rentable pour ces gros fainéants avides et vorace ,mais beaucoup moins intérèssant pour nous.
Johant77 | 25.11.2011 | 10:45 | Translated comment
taka.jp98: "As long as such behaviour isn't dealt with, no instruments what so ever can fix the problem. Calling for Eurobonds to create a market to borrow cheap money, let loose those who already abused the system. No matter what, the first best thing to do is to fix the spending behaviour."
I agree. No eurobonds without budget controls and hard sanctions.
I am more than happy to support Greek, Spanish, Portugese and Irish citizens, if needed. But I am not willing to support corrupted and inefficient government institutions that fail to modernize their societies.
I am more than happy to support Greek, Spanish, Portugese and Irish citizens, if needed. But I am not willing to support corrupted and inefficient government institutions that fail to modernize their societies.
English
alvaro14 | 25.11.2011 | 12:27
I understand the problem that taka speaks about. I don't think a sanctioning system needs to be included as Johant says but a fixed limit of debt that the BCE can create for each country. If the country depletes its allowed debt there will be no more.
The negotiation within the EU to define each national limit could take geologic ages but it's the way to go.
Also I find it is very easy and popular these days to complain about those in the South but let's not forget that, other than the expectations of the markets, the debt figures look much worse in Germany or UK, and it's not so straight forward to explain some behaviours we have seen lately.
And talking about the UK, it's a pity, specially now, that they want to have just a cold relation with the EU. More initiative from the British partner would have helped a lot with this surrealistic situation we are living, I think.
Johant77 | 25.11.2011 | 15:07
alvaro
---
I understand the problem that taka speaks about. I don't think a sanctioning system needs to be included as Johant says but a fixed limit of debt that the BCE can create for each country. If the country depletes its allowed debt there will be no more.
---
But what will you do when a country reaches its allowed debt limit? You can't let the people starve because the leaders failed to keep to a budget.
I think that non-monetary sanctions, like having government spending controlled by the EU / IMF until the situation improves, are better than setting fixed budget limits.
Besides, when a large country, like France or Germany, reaches those limits in the future, these limits are probably not so fixed anymore.
Vernony2 | 25.11.2011 | 22:10
I don't think people (at least sensible people) will hold Germany to blame if the Euro collapses. The Euro was born with an inbuilt terminal decay, by reason you cannot have a common currency without a common economic policy. What is surprising is that the financial markets took so long to understand that.
As for the ECB, effectively it would mean that any bonds it issued were underwritten, in the main, by Germany and regardless of how successful Germany is, it could hardly underwrite most of the other Euro countries debts. I am sure if I were a German citizen I would object most strongly to the notion that I should help to bail out other nations who have been unwise with their money
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Mon 26 Dec - 5:36
European Council
EU just can’t accept that Britain is right
12 December 2011
The Daily Telegraph
London
Peter Schrank
If Britain is marginalised after last week’s fractious European Council, it’s only because the continent is furious that the UK never signed up to its troubled euro project, argues the Mayor of London, Boris Johnson.
Boris Johnson
I know some people are unsettled to see all these powerful Europeans getting so very, very cross. Angela Merkel has said that we weren’t even negotiating properly. Nicolas Sarkozy can hardly bring himself to mention Britain by name and has been filmed apparently refusing to shake David Cameron’s hand. Across the Continent, the papers are full of wrathful headlines about the general arrogance and stupidity of the Englanders/Anglais/Inglesi. I watched some poor Lib Dem Euro MP who seemed about to explode with disgust at the UK’s handling of the recent summit.
And there must be many people in this country who find themselves a bit spooked by the vitriol of the criticism. For some days, the BBC has been telling us in sepulchral tones that we are “isolated” and “marginalised” – as if a decision had been taken to abandon us in our misty island like a bunch of woad-painted savages. So I hope everyone will be reassured if I point out that our European friends and partners aren’t really angry about the summit. Everyone is behaving as if there were something epoch-making about David Cameron’s use of the veto – as though some national Excalibur had been finally plucked from the rock, or as Trident had at last been launched from its briny lair.
The reality is that plenty of prime ministers have blocked things that aren’t in this country’s interests – from Thatcher on the EU budget to Tony Blair on the withholding tax. And plenty of other prime ministers have been far more obstreperous than the British – one thinks of Felipe González of Spain, who used to hold up EU summits until he felt he had got his hands on enough Irish cod and haddock.
No, they aren’t really angry with us for opposing the new Treaty for Fiscal Union. The reason our brother and sister Europeans are so chronically enraged with the British is that we have been proved completely right about the euro. For more than 20 years, British ministers have been coming out to Brussels and saying that they just love all this single-market stuff, but that they doubt the wisdom of trying to create a monetary union. And for more than 20 years, some of us have been saying that the reason a monetary union won’t work is that you can’t do it without a political union – and that a political union is not democratically possible. Read full article in The Daily Telegraph...
EU just can’t accept that Britain is right
12 December 2011
The Daily Telegraph
London
Peter SchrankIf Britain is marginalised after last week’s fractious European Council, it’s only because the continent is furious that the UK never signed up to its troubled euro project, argues the Mayor of London, Boris Johnson.
Boris Johnson
I know some people are unsettled to see all these powerful Europeans getting so very, very cross. Angela Merkel has said that we weren’t even negotiating properly. Nicolas Sarkozy can hardly bring himself to mention Britain by name and has been filmed apparently refusing to shake David Cameron’s hand. Across the Continent, the papers are full of wrathful headlines about the general arrogance and stupidity of the Englanders/Anglais/Inglesi. I watched some poor Lib Dem Euro MP who seemed about to explode with disgust at the UK’s handling of the recent summit.
And there must be many people in this country who find themselves a bit spooked by the vitriol of the criticism. For some days, the BBC has been telling us in sepulchral tones that we are “isolated” and “marginalised” – as if a decision had been taken to abandon us in our misty island like a bunch of woad-painted savages. So I hope everyone will be reassured if I point out that our European friends and partners aren’t really angry about the summit. Everyone is behaving as if there were something epoch-making about David Cameron’s use of the veto – as though some national Excalibur had been finally plucked from the rock, or as Trident had at last been launched from its briny lair.
The reality is that plenty of prime ministers have blocked things that aren’t in this country’s interests – from Thatcher on the EU budget to Tony Blair on the withholding tax. And plenty of other prime ministers have been far more obstreperous than the British – one thinks of Felipe González of Spain, who used to hold up EU summits until he felt he had got his hands on enough Irish cod and haddock.
No, they aren’t really angry with us for opposing the new Treaty for Fiscal Union. The reason our brother and sister Europeans are so chronically enraged with the British is that we have been proved completely right about the euro. For more than 20 years, British ministers have been coming out to Brussels and saying that they just love all this single-market stuff, but that they doubt the wisdom of trying to create a monetary union. And for more than 20 years, some of us have been saying that the reason a monetary union won’t work is that you can’t do it without a political union – and that a political union is not democratically possible. Read full article in The Daily Telegraph...
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Mon 26 Dec - 9:57
A Studio discussion with 3 Analysts on the European Economy agreed the followinf:-
Blatant Greece made no attempt to put it"s house in order
A question to be asked of the ECB is "how do you plan to control the exchange rate mechanism"?
Fiscal Union not expected to work for 5 years
Italy has a E300 Billion deficit which is freaking the Market which wonders how it will be able to
reduce this without growth.
It could just as well be another Country, not Greece which defaults.
Blatant Greece made no attempt to put it"s house in order
A question to be asked of the ECB is "how do you plan to control the exchange rate mechanism"?
Fiscal Union not expected to work for 5 years
Italy has a E300 Billion deficit which is freaking the Market which wonders how it will be able to
reduce this without growth.
It could just as well be another Country, not Greece which defaults.
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Mon 26 Dec - 12:01
Another discussion between analysts from Standard Chartered, UBS and HM Treasury says:
Europe needs growth and is in a terrible shape , Germany could help by importing instead of exporting but are selling Bonds as well although not on the
scale of other Countries.
Unless there is Political Union the EURO will not survive,
Fiscal union in the US and the Central Bank allows it to intervene on a massive scale which is why the seeds of a recovery are appearing ,
the EU has no such mechanism.
The Euro can"t survive unless some Countries leave.
Britain is in recession and this weak period will last a long tiime.
Europe needs growth and is in a terrible shape , Germany could help by importing instead of exporting but are selling Bonds as well although not on the
scale of other Countries.
Unless there is Political Union the EURO will not survive,
Fiscal union in the US and the Central Bank allows it to intervene on a massive scale which is why the seeds of a recovery are appearing ,
the EU has no such mechanism.
The Euro can"t survive unless some Countries leave.
Britain is in recession and this weak period will last a long tiime.
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Mon 26 Dec - 13:12
Editorial ....fromPresseurop
Being top of the class is not always easy. A founder
member of the European Union and home to its largest population and
most powerful economy, Germany sits at a crossroads between Northern,
Southern, Western and Eastern Europe. In the current period of economic
crisis and amid fears about the future of the euro, it has also become
the main pillar of the EU, whose support is critical for every
decision, and whose funds are essential to any effort to bail out
weaker member states.
However, notwithstanding its pivotal role, the idea that Germany has
a problem with the EU is increasingly gaining ground. Berlin has been
criticised for a lack of solidarity towards countries in difficulty,
its reluctance to take incisive action, and its desire to impose on
other nations the austerity model that it has implemented with such
apparent success.
One political figure in particular has become the focus for many of
these reproaches: Chancellor Angela Merkel. Powerful but on occasion
too mild-mannered, indecisive but inflexible, dominant but also
constrained by a complex political system, she has now come to
symbolise the Germany of today in Europe. And let’s not forget her
occasionally troubled alliance with French President Nicolas Sarkozy,
which has highlighted the insufficiencies of a relationship that is
critical for Europe.
At a time when claims that Germany wants to dominate Europe are
clearly informed by a vision of history that no longer holds sway, the
articles gathered in this briefing explain why she is now the somewhat
reticent leader of a Europe where idealism has been superseded by
pragmatism.
Being top of the class is not always easy. A founder
member of the European Union and home to its largest population and
most powerful economy, Germany sits at a crossroads between Northern,
Southern, Western and Eastern Europe. In the current period of economic
crisis and amid fears about the future of the euro, it has also become
the main pillar of the EU, whose support is critical for every
decision, and whose funds are essential to any effort to bail out
weaker member states.
However, notwithstanding its pivotal role, the idea that Germany has
a problem with the EU is increasingly gaining ground. Berlin has been
criticised for a lack of solidarity towards countries in difficulty,
its reluctance to take incisive action, and its desire to impose on
other nations the austerity model that it has implemented with such
apparent success.
One political figure in particular has become the focus for many of
these reproaches: Chancellor Angela Merkel. Powerful but on occasion
too mild-mannered, indecisive but inflexible, dominant but also
constrained by a complex political system, she has now come to
symbolise the Germany of today in Europe. And let’s not forget her
occasionally troubled alliance with French President Nicolas Sarkozy,
which has highlighted the insufficiencies of a relationship that is
critical for Europe.
At a time when claims that Germany wants to dominate Europe are
clearly informed by a vision of history that no longer holds sway, the
articles gathered in this briefing explain why she is now the somewhat
reticent leader of a Europe where idealism has been superseded by
pragmatism.
Panda- Platinum Poster
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Re: EC PRESIDENT CALLS URGENT MEETING FOR TOMORROW #2
Panda Mon 26 Dec - 15:51
drzej Stasiuk’s European lesson
26 December 2011
Wprost
Warsaw
Adam Golec / Agencja Gazeta
Why do the Germans and the Poles have a hard time
getting along? How does one recognise a Pole? Is there a way to help
Germany better "dominate" the EU? A hard to pigeon-hole Polish writer
provides some leads. Excerpts.
Tomasz Machała
TOMASZ MACHAŁA: In Poland, how emotionally and negatively charged is the word Germany?
ANDRZEJ STASIUK: It has a heavy legacy, beginning
with the etymology of the word 'German' [Niemiec, in Polish] which
means mute, someone with which you cannot communicate because of his
incomprehensible language. There are also a multitude of sayings, such
as this one:
'As old as the world becomes, a German will never be the brother of a
Pole' and the popular image of the devil disguised as a German. There
are other examples that could be cited. We can say that for a long time
this word had enormous weight, which is difficult to alleviate after
so many centuries.
Despite the European Union, despite the subsidies, despite the absence of borders?
They have really tried and are still trying and I say this without
irony and with respect. The weight is so great that it overwhelms a
generation that should be free of this trauma of history. Our daughter,
when she was in Third Grade [8 years old] recited before a German
friend the words to Rota [a patriotic Polish song] which contains the
phrase: "The German will not spit in our faces".
She obviously didn't do it in bad faith. Not at all. She just wanted
to please our guest by quoting the only verse she knew about anything
Germanic. Albrecht was stunned and could not believe that such a thing
was still taught in school. Well, it is.
In Germany, is the same true of the word 'Polish'?
I don't know. But even if it is true, they are too well-brought up
to show it. Nonetheless, I honestly think that the attitude of the
Germans towards us is just as complex as ours regarding them. But it is
hidden. They have chased us out of their consciousness.
Is a Pole in the European Union treated as an equal partner or as someone inferior?
He is harder and harder to distinguish in the street by his clothing
or by his behaviour. There exists a trans-European mimicry. But to
the expert eye, some anthropological traits remain visible. That
indelible Slavic face. Before, when speaking in the street, a Pole
would lower his voice. This is no longer the case. At least in Berlin.
But Berlin is not Germany; it is the tower of Babel.
What about in Paris, Hamburg, London or Rome?
A few years ago, on Saint Peter's Square in Rome, I could recognise
my compatriots without hesitation, especially the males (clearly more
rigid from the self-image perspective): pants that end mid-calf,
sandals, socks; higher up a beer-belly; a moustache at the top and, the
obligatory camcorder. I think that the division between the old and
the new Union will be around for a while.
Can the old Union learn something from us?
We didn't welcome them, they incorporated us. The price is to become
like them or at least try. There is no reciprocity. The 'how we are'
doesn't interest them much, all they want is that we not disturb too
much. That doesn't bother me personally. By staying in the margins, we
have greater freedom.
Do you fear German domination? Hegemony from Berlin?
When there is a group, someone has to dominate, that's how it is. Of
course, the Poles would rather play this role but the situation being
as it is, Germany will dominate. We already tried to stop them with a
certain Versailles Treaty and we saw where that led us.
Is domination necessarily bad and dangerous?
Everything rests in the art of inciting the dominators to 'dominate
well'. For a long time, we managed rather well. With their bad
conscious, their history, their guilt, they tried by all means to
dominate gently. The 'bad Germans' were transformed into 'good Germans'
– and my words are devoid of irony.
But how can they be convinced to continue "dominating well'? All of
Europe must get involved. They need to be the best at everything, and
what is needed is to put them on the rails to good leadership. In other
words, they need, how shall I put it, a bit of monitoring.
For you, does the Union have more or less value than the nation state?
The Union is an administrative system. You see, I write books,
texts. My tool is language. It's from that perspective that I perceive
the world. The Union is not a total reality; there is no 'Union
language'. That's a first issue.
Secondly, I think of history. There is, of course, a universal or
European history. But show me a sensible person who identifies with
universal history. We have distinct histories which define us in the
same way as language does. All the stories about the 'common house of
Europe' sound absolutely fabulous but they are more like propaganda.
Why do you admire Germany?
Admire...That may be too big a word. I like Germany by contrast,
it's a world that is the opposite of ours. I felt well there studying
history, civilization, all the superiorities and the inferiorities.
Germany transformed, in a rather interesting manner, my 'Polishness'
which doesn't usually bother me. Yet as soon as I’m strolling on Unter
der Linden or on Potsdamer Platz, it comes back. I don't admire
Germany. I just like to go there from time to time to see how matter is
tamed and organised.
Should all of Europe be more like Germany: tidy, hardworking, neat and respectful of the law?
Who would we take as an example? No, we can't do that to them. No,
Europe is diversity. It is incredible that on this little peninsula at
the margins of huge Eurasia, so many nations, so many languages and
such numerous cultures were able to emerge. Look on a map, please, this
little European thing. So what? Is the next step Scandinavia and its
social ideals? No. Europe should be more Greek. Prosperity and
tranquillity are deadly.
Before Europe existed because it knew how to take risks, it went to
sea to seek a fortune. Today it just accumulates and fears losses. I
know nothing of nation states. I know nothing of states at all. For me
language is of course primary. Poland survived partitions, occupations
thanks to its language, thanks to the culture. Religion also played an
important role in affirming the national consciousness. The Catholic
Church replaced the budget, the army and taxes. Today, it is somewhat
trying to do the same.
But what seems the most essential, is the feeling of uniqueness, of
unity, which is worth sacrificing for. Otherwise, why not become German
for convenience sake, Russian on a whim or Jewish to upset everybody?
This 'Polishness' must also certainly be a sort of feeling of
superiority. Don't you think so? Yes, a feeling of superiority.
Unjustified, of course. But still.
Are you afraid that Germany will become a dangerous nation?
Yes, and that is very good because my country exists more when it is
threatened. Without danger, without troubles, Poland is less alive and
a little more inexistent. However, whenever nationalism comes knocking
on the door, it feels better right away, it perks up and gets its
strength back. So long live German nationalism. Which doesn't mean,
does it, that we must not remain vigilant.
Andrzej Stasiuk
Eastern Europe's storyteller
Well-known abroad, Andrzej Stasiuk is among the most famous
contemporary Polish authors. He is a poet, essayist, literary critic,
pacifist activist (he spend a year and a half in jail for desertion),
and traveller. Born in Warsaw in 1960, he has lived for many years in
southern Poland, in the mountains, where he raises sheep and llamas.
His published works include, The Walls of Hebron (1992) White Raven (2000), Tales of Galicia (2003), On the Road to Babadag (2007).
26 December 2011
Wprost
Warsaw
Adam Golec / Agencja Gazeta
Why do the Germans and the Poles have a hard time
getting along? How does one recognise a Pole? Is there a way to help
Germany better "dominate" the EU? A hard to pigeon-hole Polish writer
provides some leads. Excerpts.
Tomasz Machała
TOMASZ MACHAŁA: In Poland, how emotionally and negatively charged is the word Germany?
ANDRZEJ STASIUK: It has a heavy legacy, beginning
with the etymology of the word 'German' [Niemiec, in Polish] which
means mute, someone with which you cannot communicate because of his
incomprehensible language. There are also a multitude of sayings, such
as this one:
'As old as the world becomes, a German will never be the brother of a
Pole' and the popular image of the devil disguised as a German. There
are other examples that could be cited. We can say that for a long time
this word had enormous weight, which is difficult to alleviate after
so many centuries.
Despite the European Union, despite the subsidies, despite the absence of borders?
They have really tried and are still trying and I say this without
irony and with respect. The weight is so great that it overwhelms a
generation that should be free of this trauma of history. Our daughter,
when she was in Third Grade [8 years old] recited before a German
friend the words to Rota [a patriotic Polish song] which contains the
phrase: "The German will not spit in our faces".
She obviously didn't do it in bad faith. Not at all. She just wanted
to please our guest by quoting the only verse she knew about anything
Germanic. Albrecht was stunned and could not believe that such a thing
was still taught in school. Well, it is.
In Germany, is the same true of the word 'Polish'?
I don't know. But even if it is true, they are too well-brought up
to show it. Nonetheless, I honestly think that the attitude of the
Germans towards us is just as complex as ours regarding them. But it is
hidden. They have chased us out of their consciousness.
Is a Pole in the European Union treated as an equal partner or as someone inferior?
He is harder and harder to distinguish in the street by his clothing
or by his behaviour. There exists a trans-European mimicry. But to
the expert eye, some anthropological traits remain visible. That
indelible Slavic face. Before, when speaking in the street, a Pole
would lower his voice. This is no longer the case. At least in Berlin.
But Berlin is not Germany; it is the tower of Babel.
What about in Paris, Hamburg, London or Rome?
A few years ago, on Saint Peter's Square in Rome, I could recognise
my compatriots without hesitation, especially the males (clearly more
rigid from the self-image perspective): pants that end mid-calf,
sandals, socks; higher up a beer-belly; a moustache at the top and, the
obligatory camcorder. I think that the division between the old and
the new Union will be around for a while.
Can the old Union learn something from us?
We didn't welcome them, they incorporated us. The price is to become
like them or at least try. There is no reciprocity. The 'how we are'
doesn't interest them much, all they want is that we not disturb too
much. That doesn't bother me personally. By staying in the margins, we
have greater freedom.
Do you fear German domination? Hegemony from Berlin?
When there is a group, someone has to dominate, that's how it is. Of
course, the Poles would rather play this role but the situation being
as it is, Germany will dominate. We already tried to stop them with a
certain Versailles Treaty and we saw where that led us.
Is domination necessarily bad and dangerous?
Everything rests in the art of inciting the dominators to 'dominate
well'. For a long time, we managed rather well. With their bad
conscious, their history, their guilt, they tried by all means to
dominate gently. The 'bad Germans' were transformed into 'good Germans'
– and my words are devoid of irony.
But how can they be convinced to continue "dominating well'? All of
Europe must get involved. They need to be the best at everything, and
what is needed is to put them on the rails to good leadership. In other
words, they need, how shall I put it, a bit of monitoring.
For you, does the Union have more or less value than the nation state?
The Union is an administrative system. You see, I write books,
texts. My tool is language. It's from that perspective that I perceive
the world. The Union is not a total reality; there is no 'Union
language'. That's a first issue.
Secondly, I think of history. There is, of course, a universal or
European history. But show me a sensible person who identifies with
universal history. We have distinct histories which define us in the
same way as language does. All the stories about the 'common house of
Europe' sound absolutely fabulous but they are more like propaganda.
Why do you admire Germany?
Admire...That may be too big a word. I like Germany by contrast,
it's a world that is the opposite of ours. I felt well there studying
history, civilization, all the superiorities and the inferiorities.
Germany transformed, in a rather interesting manner, my 'Polishness'
which doesn't usually bother me. Yet as soon as I’m strolling on Unter
der Linden or on Potsdamer Platz, it comes back. I don't admire
Germany. I just like to go there from time to time to see how matter is
tamed and organised.
Should all of Europe be more like Germany: tidy, hardworking, neat and respectful of the law?
Who would we take as an example? No, we can't do that to them. No,
Europe is diversity. It is incredible that on this little peninsula at
the margins of huge Eurasia, so many nations, so many languages and
such numerous cultures were able to emerge. Look on a map, please, this
little European thing. So what? Is the next step Scandinavia and its
social ideals? No. Europe should be more Greek. Prosperity and
tranquillity are deadly.
Before Europe existed because it knew how to take risks, it went to
sea to seek a fortune. Today it just accumulates and fears losses. I
know nothing of nation states. I know nothing of states at all. For me
language is of course primary. Poland survived partitions, occupations
thanks to its language, thanks to the culture. Religion also played an
important role in affirming the national consciousness. The Catholic
Church replaced the budget, the army and taxes. Today, it is somewhat
trying to do the same.
But what seems the most essential, is the feeling of uniqueness, of
unity, which is worth sacrificing for. Otherwise, why not become German
for convenience sake, Russian on a whim or Jewish to upset everybody?
This 'Polishness' must also certainly be a sort of feeling of
superiority. Don't you think so? Yes, a feeling of superiority.
Unjustified, of course. But still.
Are you afraid that Germany will become a dangerous nation?
Yes, and that is very good because my country exists more when it is
threatened. Without danger, without troubles, Poland is less alive and
a little more inexistent. However, whenever nationalism comes knocking
on the door, it feels better right away, it perks up and gets its
strength back. So long live German nationalism. Which doesn't mean,
does it, that we must not remain vigilant.
Andrzej Stasiuk
Eastern Europe's storyteller
Well-known abroad, Andrzej Stasiuk is among the most famous
contemporary Polish authors. He is a poet, essayist, literary critic,
pacifist activist (he spend a year and a half in jail for desertion),
and traveller. Born in Warsaw in 1960, he has lived for many years in
southern Poland, in the mountains, where he raises sheep and llamas.
His published works include, The Walls of Hebron (1992) White Raven (2000), Tales of Galicia (2003), On the Road to Babadag (2007).
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