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European Leaders Agree to New Budget Discipline Measures

By STEPHEN CASTLE and JAMES KANTER

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BRUSSELS — All but two European Union countries agreed Monday to new and tougher measures to enforce budget discipline in the euro zone, but the bloc still showed few signs of producing a comprehensive solution for the sovereign debt crisis or a credible plan to revive fragile economies across Europe’s weakened Mediterranean tier.

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Philippe Wojazer/Reuters

President Nicolas Sarkozy of France, Chancellor Angela Merkel of Germany and Italian Prime Minister Mario Monti in Brussels.

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The meeting of 27 European Union heads of state and government here in Brussels was aimed at completing the text of a so-called fiscal compact for the 17 nations relying on or intending to join the euro zone — with only Britain and the Czech Republic opting not to adopt the measures.
After a meeting lasting seven hours, the leaders also issued a declaration calling for a new push to restart growth and combat joblessness across the Continent.
But a number of politicians and analysts said the pledge by the European leaders to create new jobs was mostly empty, and others complained that the proposed rules to keep deficits under control contained little to actually help nations with high borrowing costs.
The summit declaration also skirted the continuing problems in Greece, where a second bailout is being held up by the inability of the government in Athens to complete a deal with private holders of Greek bonds over the losses they should accept.
Until Athens and its private-sector creditors can agree on a $132 billion writedown on Greek government debt, the International Monetary Fund and the European Union are not prepared to sign off on a further bailout. Chancellor Angela Merkel of Germany said the Greek situation would not be addressed until after representatives of Greece’s so-called troika of creditors — the European Union, the I.M.F. and the European Central Bank — report back on their investigation into what will be needed for Greece to manage its finances on its own.
Nicolas Sarkozy, the French president, told a news conference at the end of the summit that there would be a “definitive agreement” on the private sector’s involvement in reducing Greek debt in coming days. After Monday night’s summit meeting, informal talks continued between the Greek prime minister, Lucas Papademos, and European officials.
Despite the various other problems to deal with, an agreement on the fiscal compact could clear the way for Germany to accept stronger efforts by the European Central Bank to support ailing countries and a more comprehensive bailout fund aimed at protecting Italy and Spain against the risk of default.
“It is an important step forward to a stability union,” Mrs. Merkel told reporters. “For those looking at the union and the euro from the outside, it is a very important to show this commitment.” Britain, which clashed openly with France and Germany last month over the pact, did not give any ground Monday and was joined by the Czech Republic, which also elected to stay outside.
“We are not signing this treaty,” David Cameron, the British prime minister, said. “We are not ratifying it. And it places no obligations” on the United Kingdom, he said.
He added: “Our national interest is that these countries get on and sort out the mess that is the euro.”
Mr. Sarkozy sounded philosophical about the Britons’ intransigence. “There are different degrees of integration and everyone is free to choose where they stand,” he said.
While European leaders agreed to bring a permanent bailout fund into existence earlier than previously foreseen, they postponed any final decisions on its ultimate size and how it will be financed. The International Monetary Fund has been pressing Europe to commit enough money to provide a credible backstop that would insure that Italy and Spain could pay their bills and continue to finance their debts.
Germany backed away from a suggestion that it wanted the government in Athens to cede temporarily control over tax and spending decisions to a new, all-powerful, budget commissioner before it can secure further bailouts. Italy won its battle to restrict the scope of the fiscal compact, which calls for making it easier to impose sanctions against countries that break European Union budget rules. The text said the compact would make it harder to block sanctions against countries that exceed annual deficit targets but that the same tough system would not apply to nations with excessive overall debt, like Italy.
The compact will come into force in those nations that agree to its terms once 12 euro zone nations have ratified it. That would prevent the project being held up if one or two nations hold referendums on the deal.
Still, impatience with the German focus on belt-tightening loomed large over the summit meeting.
“You don’t have to be an economics professor to know that if you have zero growth you are not going to sort things out,” said Martin Schulz, the president of the European Parliament. Critics of austerity point to Greece, which is being strangled by a vicious cycle of deficit cutting, declining tax revenues and more budget cutting, while making little if any progress on its overall budget deficit.
Guy Verhofstadt, leader of the centrist liberal and democrat group, and a former prime minister of Belgium, took a similar stand.
“The new agreement consolidates fiscal discipline but omits completely to address the other side of the coin — that of solidarity and investment that will create jobs and growth,” Mr. Verhofstadt said. “E.U. leaders should act instead of producing more paper.”


A version of this article appeared in print on January 31, 2012, on page A4 of the New York edition with the headline: European Leaders Agree to New Measures to Enforce Budget Discipline.

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36 Comments

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Portugal may need a second bail-out, but the Prime Minister says it does not have the same problems as Greece. He points out that Portugal has met all austerity measures.

Papademos says he expects a deal will be struck by Bondholders by Friday.Most analysts expect a default.

Draghi is stuck by Trichet remark that Eurobonds will not be so far away.

Germany's unemployment rate is 6.7% very good, but just announced the Nokia/Siemens partnership have announced job cuts, 2,900 in Germany.

analyst Mark Glazer says rally will not last. political solutions are needed.

The EURO resilience has been the resuilt of fiscal sustainability and at the EU meeting yesterday it was agreed to act more quickly in future and agrees
the austerity p[rogramme.

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31 January 2012
Last updated at 11:44











Eurozone unemployment hits new record











Unemployment is at the highest rate since the euro was launched in 1999


Continue reading the main story













Global Economy

• 
  What caused the eurozone crisis?
  
• 
  How will the euro crisis end?
  
• 
  Crisis jargon buster
  
• 
  Europe's four big dilemmas
  

Unemployment in the eurozone hit a record high at the end of last year, the Eurostat agency has said.

The jobless rate in the 17 countries that use the single
currency was 10.4% in December, unchanged from November's figure which
was revised up from 10.3%.

Some 16.5 million people were out of work in the eurozone in December, up 751,000 on the year before.

The highest unemployment rate remains in Spain (22.9%), while the lowest is in Austria (4.1%).

Unemployment has been rising throughout 2011, as the debt
crisis in the region has continued. In December 2010, the unemployment
rate in the euro area was 10%.

Investment delays
Guillaume Menuet, economist at Citigroup, said he expected the number of people out of work to increase throughout 2012.

"If you think about the direction of employment expectations
that you see across various business surveys, the outlook for employment
doesn't look particularly enticing, simply because the uncertainty is
very high.

"In many cases you find firms continuing to delay investment
projects. For those that are still making profits, hiring is being
frozen, and for those which are under pressure to hit results or losing
money, job losses are becoming the only solution that they have," he
said.

In the 27 EU countries, the unemployment rate was 9.9% in
December, with 23.8 million people out of work. November's figure was
also revised up from 9.8% to 9.9%.

The biggest increases over the past year were seen in Greece, Cyprus and Spain.

The largest falls took place in Estonia, Latvia and Lithuania.

Deteriorating situation
The issue of jobs and economic growth was a key area for discussion at this week's summit of EU leaders in Brussels.

On Monday, figures showed that the Spanish economy shrank by
0.3% in the last quarter of 2011. It is now widely expected that Spain
will enter recession in the first quarter of this year.

Also on Monday, France cut its growth forecast for this year
to 0.5% from 1% "to take into account the deterioration of the economic
situation".

At the Brussels summit, 25 of the 27 member states agreed to
join a fiscal treaty, aimed at much closer co-ordination of budget
policy across the EU to prevent excessive debts accumulating.

The UK and the Czech Republic did not sign up to it. UK Prime
Minister David Cameron said he had "legal concerns" about the use of EU
institutions in enforcing the treaty, while the Czechs cited
"constitutional reasons" for their refusal.

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verty in a time of economic diktat



30 January 2012


Libération
Paris

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New Year's meals for the homeless, organised by the city of Athens on 1 January 2012.


AFP







While negotiations on the write-down of Greek debt remain
ongoing, Athens city hall is supplying two meals a day to jobless
workers who are now threatened with famine in the wake of austerity
measures: a situation that some Greeks readily compare with the
occupation of the country during World War 2.


Maria Malagardis




In a scene that is played out daily, at midday the silent crowd
gathers outside the gates of the Athens City Hall which is only a
stone’s throw from Omonia Square. How many are there? A hundred? Even
more?

“In the evening, there are twice as many,” sighs Xanthi, a young
woman employed by the City Hall “to manage the crowd.” The atmosphere
is tense when the gates finally open, and a long queue forms for a
stand distributing diet Coke and what looks like mashed potato in
plastic dishes.

There are shouts and arguments. Everything has to happen very quickly: the stand will only be open for half an hour.

Amid the down-and-outs and the pensioners in threadbare clothes,
there are members of a new category of soup kitchen customers who are
clearly not used to scrounging for food, most of whom refuse to talk to
journalists. “They are ashamed,” explains Sotiris, aged 55, who found
himself living on welfare after 20 years spent working for a security
company. “But in Greece, unemployment benefit only lasts for a year,”
he reminds us.

In Greece, they call them the “neo-poor” or the “iphone homeless:”
former employees of many of the small and medium sized companies that
have gone to the wall, or civil servants who were laid off as a result
of the austerity measures introduced over the last two years.

"Distributing food like we do in Third World countries"


Not only are they unemployed, but also deep in debt from consumer
loans taken out during the boom years. Not so long ago – between 2000
and 2007 – Greece still had a promising growth rate of 4.2%. Then
the 2008 banking crisis followed by the bombshell announcement of a
record budget deficit of 12.7% of GDP at the end of 2009 brought down
an economy built on foundations too weak to resist the speculative
attacks of the markets like a house of cards.

Moonlighting, tax fraud, inefficient administration: the issues are
well known and most of the population accepts the need for the
structural reforms demanded by “Merkozy,” a.k.a. the Angela
Merkel-Nicolas Sarkozy duo, which has dominated negotiations in
Brussels.

But the austerity packages imposed on the country since the spring
of 2010 have been hard to swallow. The wage earners and pensioners, who
have been the worst affected, have seen their incomes dwindle, or even
disappear in the wake of job cuts, while their taxes which are
deducted at source have increased exponentially. As a result, in just
two years the number of homeless has risen by 25% and many people are
now facing a daily battle with hunger.

“I began to worry when in my consultancy I saw one, then two, then
ten children who came for treatment with an empty stomach, without
having had a meal the previous evening,” says Nikita Kanakis, President
of the Greek branch of Doctors Without Borders.

Ten years ago the French NGO opened an office in Greece to cope with
the sudden massive influx of penniless migrants. “Over the last year,
we have seen more and more Greeks. Middle-class people, who have lost
their social security status and can no longer obtain treatment in
public hospitals. Six months ago, we began distributing food like we do
in Third World countries,” remarks Dr Kanakis, who adds: “The debt
problem is real, but how far is Brussels going to take its demands,
when just a three-hour plane ride away from Paris and Berlin there are
children who have no access to health care or even adequate food?”

"Greece is the laboratory"


On Thursday, a bizarre scene takes place in Syntagma Square, just
opposite the parliament building in the centre of Athens: farmers, who
have traveled 83 kilometres from Thebes to the capital, are giving out a
free 50 tonnes of potatoes and onions. Announced on television, the
distribution quickly turns into a riot, with everyone battling to get to
the stalls. There are more disputes and shouts. “There hasn’t been
anything like it since the occupation,” remarks Andreas, observing the
spectacle from distance. The terrible famine caused by the WWII German
occupation is still a strong memory.

However, the use of the term when describing the hunger that is now
affecting the middle class is also in part a reference to the diktats
from Brussels, and worse still Berlin. “Every three months, they
threaten us with immediate bankruptcy and order us to squeeze the poor
even more. And as for the money they promise, all we get is loans so
that we can reimburse our creditors!” exclaims Andreas.

The shipping company worker laughs when we mention plans to cut 13th
and 14th month salary payments. Like many companies, Andreas’ employer
has not paid his wages for several months. “The bosses are using the
crisis as an excuse so as not to pay their workers,” he complains.

Then turning towards the former royal palace which houses the
national parliament, he adds: “There are 300 cretins in there who have
fallen in step behind an unelected government. Do you think they have
cut back on their own spending? The civil servants at the parliament
are still receiving 16th month payments and no one in Brussels is the
least bit concerned.”

Far from paving the way for a national mobilisation against the
crisis, like the new government in Italy, the November appointment of
Lukas Papademos has been followed by a largely unbroken silence. At a
time when the country is negotiating for its survival and promising yet
more austerity measures, the only interview accorded by the technocrat
Prime Minister was with the … New York Times, which leads Andreas to
conclude: “We are living in an economic dictatorship. And Greece is the
laboratory where they are testing the resistance of the people. After
us, it will be the turn of other countries in Europe. There will be no
more middle class.”

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Fiscal compact


Prague keeps its distance



31 January 2012


Presseurop

Hospodářské noviny

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“Neither yes or no. The Czech Republic stands alone in the union,” announces Hospodářské Noviny
in the wake of yesterday’s adoption of the fiscal compact by the
European Council. Prague and London were the only two governments to
refuse to sign the budgetary discipline pact adopted by 25 other EU
member states. “The treaty offers no political benefits and does not
enable all EU countries to participate in European summits on an equal
footing,” insisted Prime Minister Petr Nečas, who also had to take into
account Czech President Václav Klaus’ opposition to any additional
European integration.

The Prague daily does not believe
that the Brussels summit has prompted a division in Europe, but
instead argues that the event has highlighted “different points of view
on integration that will allow everyone to take up a position of their
choosing.” As it stands -


... the Czech Republic will not be seated at the round table, or in
the anteroom (...). It prefers to “listen” through the walls of a
minuscule room, from which it will be difficult to influence the course
of events in Europe

[Panda]

31 January 2012
Last updated at 11:44









Eurozone unemployment hits new record











Unemployment is at the highest rate since the euro was launched in 1999


Continue reading the main story













Global Economy
















Unemployment in the eurozone hit a record high at the end of last year, the Eurostat agency has said.

The jobless rate in the 17 countries that use the single
currency was 10.4% in December, unchanged from November's figure which
was revised up from 10.3%.

Some 16.5 million people were out of work in the eurozone in December, up 751,000 on the year before.

The highest unemployment rate remains in Spain (22.9%), while the lowest is in Austria (4.1%).

Unemployment has been rising throughout 2011, as the debt
crisis in the region has continued. In December 2010, the unemployment
rate in the euro area was 10%.

Investment delays
Guillaume Menuet, economist at Citigroup, said he expected the number of people out of work to increase throughout 2012.

"If you think about the direction of employment expectations
that you see across various business surveys, the outlook for employment
doesn't look particularly enticing, simply because the uncertainty is
very high.


Continue reading the main story
“Start Quote

Much energy and argument has been
spent on this agreement. It is questionable, however, whether it will
have much influence on the immediate crisis. ”

Gavin Hewitt
BBC Europe editor








"In many cases you find firms
continuing to delay investment projects. For those that are still making
profits, hiring is being frozen, and for those which are under pressure
to hit results or losing money, job losses are becoming the only
solution that they have," he said.

In the 27 EU countries, the unemployment rate was 9.9% in
December, with 23.8 million people out of work. November's figure was
also revised up from 9.8% to 9.9%.

The biggest increases over the past year were seen in Greece, Cyprus and Spain.

The largest falls took place in Estonia, Latvia and Lithuania.

Deteriorating situation
The issue of jobs and economic growth was a key area for discussion at this week's summit of EU leaders in Brussels.

On Monday, figures showed that the Spanish economy shrank by
0.3% in the last quarter of 2011. It is now widely expected that Spain
will enter recession in the first quarter of this year.

Also on Monday, France cut its growth forecast for this year
to 0.5% from 1% "to take into account the deterioration of the economic
situation".

At the Brussels summit, 25 of the 27 member states agreed to
join a fiscal treaty, aimed at much closer co-ordination of budget
policy across the EU to prevent excessive debts accumulating.

The UK and the Czech Republic did not sign up to it. UK Prime
Minister David Cameron said he had "legal concerns" about the use of EU
institutions in enforcing the treaty, while the Czechs cited
"constitutional reasons" for their refusal.

[Badboy]

PEOPLE BEING FORCED TO RELY ON FOOD HANDOUTS,MIGHT BECOME MORE COMMON PLACE AS AUSTERTY BITES.

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PEOPLE BEING FORCED TO RELY ON FOOD HANDOUTS,MIGHT BECOME MORE COMMON PLACE AS AUSTERTY BITES.

Spain is in a bad way with 23% unemployed. There is a lot of colncern among Analysts about this new Fiscal policy and Merkel's insistance that this takes
priority over growth. Many analysts are saying Greece will default anyway .

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European Council


The Don Quixotes of Brussels



31 January 2012


El País
Madrid







Faber








At best, the measures adopted at the January 30 summit –
the fiscal treaty and the economic growth plan – are meant, at best, to
overcome the mistakes of the past year and a half, says columnist Xavier
Vidal-Folch. At worst, they’re part of a recurring sham.



Xavier Vidal-Folch




“The leaders are spending a great deal of their time at their
summits discussing how to get out of the mess they got into at the
previous summit,” whispers one player high in the political echelons of
the EU.

The inanity of the repetitive and circular conversations about
Greece, Portugal or on the size of the bailout fund confirmed yesterday
just how difficult it is to extract oneself from the mess. The
politicians have been stuck in it at least since Merkel and Sarkozy
released from its bottle the goblin of state bankruptcy (Deauville,
October 19, 2010), lurking in the write-off for private creditors
(i.e., the decline in the value of their bonds). The meeting did make
two great contributions to the saga of recurring stubbornness: giving the green light to a sham “Fiscal Treaty” and endorsing a plan for economic growth that is not a plan. It’s a joke.

Or does it just look like one?

Let's suppose the new fiscal treaty is necessary to ensure the
discipline of eurozone members and to design, or open the door to, the
resulting “compensations” in favour of growth. Which is a lot to
assume: the European Parliament has expressed “its doubts about the
necessity” for the agreement (Resolution of January 18), and Wolfgang Munchau
(in Monday’s Financial Times) endorses and amplifies those doubts:
“The Treaty is unnecessary,” because its provisions are “either in
existing treaties or in legislation” and because the excessive
restrictions of those provisions “will encourage” recessionary
policies.

Byzantine tweaks



Let's suppose the doubters are wrong and that the Treaty, with its
pompous title “for Stability, Coordination and Governance in the
Economic and Monetary Union”, is worth something. Well, the text
develops only the idea of “stability”, of budgetary discipline. The
rest of the title is not mentioned in the actual text.

It has to be repeated ad nauseam that only Article 9 (of the 16)
mandates “promoting economic growth.” And it requires that the
signatories “take the actions and measures necessary” for that growth.
But it specifies none. There is nothing that is actually obligatory.
There are no fines for those who don’t take those actions and measures
for growth. There are no threats to haul off to the Court of Luxembourg
those who fall by the wayside.

And yet, in contrast to all that, the Treaty sets out very precisely
the sanctions to be meted out to all who fail to follow the provisions
for cutting deficits. In this asymmetry lies the joke: the package is
being sold as a tool to drive the two poles of economic policy, yet
only develops one.

But there's more. The fifth version of the text, the one that made
it to the conference, is even more convoluted than the last. The [new]
tweaks are essential not because they are Byzantine, but because their
very Byzantineness reveals how the planners and drafters of the text
have fallen ill: fighting illusory windmills – i.e., the most obscure
routes for incurring deficits and circumventing the sanctions – like
mad Don Quixotes.

For the good people who have not fallen ill, it is enough to point
out that one of the obsessions of these tweaks is to empower any
government to pursue a defaulting partner, if the Commission itself
refrains from doing so.

Snake oil


And so the text probably is necessary, dear Wolfgang – but it will
be useless. Because all the historical actions in this area that have
marginalised or minimised the power of institutions – from the Lisbon
agenda of 2000, to the revolts in Paris and Berlin in order to evade
sanctions from Brussels for failing to hew to the Stability Pact in 2003
– have led to the place that nobody wants to think about: irrelevance.

The other false “snake oil” is the “Declaration” on reviving
economic growth. The issue has worried the Franco-German couple – the
last to find out that if GDP falls it will not be enough even to
service the debts – since their bilateral get-together on January 9,
the first time they proposed combining the sackcloth with vitamin
shots.

The Berlin-Paris axis, and the Commission and Council have deployed
two techniques of proven inefficiency for reviving economic growth. One
is to shake out the drawers (as with the Lisbon Agenda) for a few
beautiful ideas and scrapped plans: youth employment, and financing for
SMEs (Small and Medium Enterprises).

The other is to rake over the Community budget and reallocate items.
The money left over, i.e. that has neither been spent nor returned to
the governments, is chump change – about 30 million euros. And
reorganising the 82 billion euros of the structural and cohesion funds
not yet allocated for the two years (2012 and 2013) still remaining in
the current Financial Perspectives septennial (i.e., in the 2007-2013
budget cycle) may be premature. In any case, it’s misleading, since
those funds are already geared towards growth: roads, schools, water
treatment plants. And following the “Luxembourg employment strategy” of
1997, not one cent is to be spent on projects that do not create jobs.

There is, therefore, not a single new euro. Just juggling games.

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ANGELA MERKEL IS TO CAMPAIGN FOR SARKOZY DURING THE FRENCH ELECTIONS.

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MANY GREEKS ARE BUYING GREEK PRODUCTS.
I GUESSTIMATE RETAIL GROWTH WILL BE POSITIVE BY DECEMBER.

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Back to Brussels

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Adam Boulton

January 30, 2012 3:37 PM

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  Recommend post (4)
  

Even more than usual the point of this European Union summit is
the fact that the leaders of all 27 member states are here, sitting in
collegiate fashion around the same table.

Above all this means
the worst has not happened (yet). The Eurozone is still in one piece,
even if Greece and Germany are still haggling fiercely over the next
urgently needed slice of bailout.

Perhaps it's complacency,
but, Greece apart, the sense seemed to be that the immediate crisis for
the Euro has passed, although it remains on the critical list.

Indeed
Mario Monti, the newly appointed technocrat running Italy, now seems to
have a place in the ultimate inner circle. He, Chancellor Merkel and
President Sarkozy held a private caucus of their own delaying the start
of the full meeting. That used to be the habit of just France and
Germany alone.

The
second most important thing about this summit is David Cameron’s
presence. Six weeks ago there were bitter words on both sides, as
Cameron played Britain’s veto and refused to sign up to Euro rescue
package.

According to Foreign Secretary William Hague the UK
still reserves its position on the Euro treaty which the other 26
nations are planning. But the British are no longer obstructing progress
or demanding explicit concessions as the price of acquiescence. This
means the green light for EU institutions such as the Court of Justice
to police a treaty to which only 26 out of 27 members at most will be
signatories.

Mr Cameron may have trouble with Eurosceptic
Conservatives when he reports back home but his conciliatory approach
has gone down well in Brussels.

At December’s summit Nicolas
Sarkozy snubbed Cameron on camera and Merkel cold shouldered him too.
This time both the German and the French leaders made smiling beelines
to greet him during the televised opening minutes of the meeting.

Even
as the continent is expected to dip back into recession and
unemployment soars, the official task here is to talk about plans for
growth and job creation. Their fundamental message is the age-old if
trite consolation for the gloomy: “Cheer up, it might never happen !”

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Germany is enjoying the greatest jobs boom in 20 years even as unemployment rises to post-EMU highs across southern Europe, stretching the euro's North-South divide ever closer to breaking point.


Germany's jobs miracle reflects its industrial structure. Its top-notch machines and cars are sought by China, Russia, and Mid-East sheikhdoms. Photo: Stefan Warter/Audi AG







By Ambrose Evans-Pritchard, International Business Editor

10:38PM GMT 31 Jan 2012
Comments


The latest Eurostat data shows that the two halves of the currency bloc have diverged dramatically. Germany's jobless rate dropped to 5.5pc in December, the lowest since reunification in 1990, with even lower rates of 4.9pc in Holland and 4.2pc in Austria.

The jobs miracle is in cruel contrast to the slump in the southern bloc, where unemployment has risen relentlessly as austerity bites.

Spain's jobless rate has reached 22.9pc – or 48.7pc for youths – with Greece fast catching it at 19.2pc. Italy, at 8.8pc, is climbing steadily but this is likely to accelerate as austerity bites and recession deepens.

The jobs data came as Europe's markets rallied on hopes that Germany will back a bigger rescue machinery after securing an EU "fiscal compact" on Monday.

FT Deutschland said Berlin is discussing plans for a €1.5 trillion "mega-fund" in conjunction with the IMF, but details are vague and Germany has yet to soften its hardline stand on Greece.

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Chancellor Angela Merkel said Berlin would not stump up more money for Athens as rescue costs escalate by €15bn to €145bn. The shortfall would have to be covered by "more action from the Greek government, more contributions from private creditors," she said.
Market opinion is split over whether Mrs Merkel is playing poker to enforce discipline, or seriously intends to push Greece into default and EMU exit.
Germany's jobs miracle reflects its industrial structure. Its top-notch machines and cars are sought by China, Russia, and Mid-East sheikhdoms.
The country shook up its labour markets under Harz IV reforms, allowing it gain labour competitiveness against southern Europe by compressing wages. Its economy is now 20pc-30pc undervalued within EMU against Club Med.
It is hotly disputed whether this was deliberate mercantilism. "A slice of educated opinion in Germany went into monetary union with this idea in mind, seeing the advantage," said Charles Dumas of Lombard Street Research.
For Spain, the jobs crisis can only get worse with the IMF expecting its economy to contract 1.7pc this year. Private analysts say unemployment could top 26pc by year-end.
The new premier Mariano Rajoy has vowed to shake up Spain's rigid labour laws. That risks a fight with trade unions, and will inevitably lead to more jobs losses at first.
Just four years ago the jobless rates in Germany and Spain were similar. That was an illusion of the cycle, with Germany coming out of slump and Spain at the top a bubble. The harsh reality is now painfully clear.








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Greece says there is no need for the EU to monitor its Finance and if the EU insist rioting in Greece will ensue

Portugal is feeling the effect of the Greece crisis because sale of their Bonds are affecting the Yields which are up. The Portugese Prime Minister says
it's debt is sustainable.

Santander , a Spanish Bank made a 98% loss which is very worrying, it may affect their Banks in Britain.

Greek finance Minister says they are one step away from a deal with Bondholders which would mean only a 3% loss. The deadline is 5th Feb.

Schnauble says Greece MUST meet conditions before the tranche can be released .

It is rumoured that Germany wants Greece out but is too cowardly to admit it. If other Countries, ie, Finland, Austria, Norway are so fed up they will
say let Greece default that will be the cue Germany needs. Germany is making it too painful for Greece to remain.

It has to be said, why was Greece not allowed to default over two years ago, they have borrowed so much money they will be in debt for generations
to come, meanwhile Germany has benefitted for a weak Euro caused by this crisis.

Analysts are predicting Greece and Portugal will leave the Euro by the end of the Year.

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Life at 27










EU Summit


Poland not 100% happy



31 January 2012


Presseurop

Gazeta Wyborcza, Dziennik Gazeta Prawna

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Gazeta Wyborcza, 31 January 2012








“Eurosummits with and without Poland”, leads Gazeta Wyborcza
on the compromise reached at the January 30 EU summit which allows
Poland to participate in eurozone meetings, but only those dedicated to
“the implementation of the fiscal pact and eurozone reforms”.

Polish PM Donald Tusk insists that he is not “100% happy with the compromise”, but Poland will nevertheless sign the pact. Dziennik Gazeta Prawna paints a gloomy picture of this week’ summit, drawing the following conclusions-

Firstly, Europe has broken up. The fiscal pact is the founding act
of the new EU, where non-euro countries will become second tier
members. Secondly, it offers an excellent opportunity to do away with
the myth that we [Poland] are hitched up to Germany and sucking up the
benefits. Germany will not sacrifice its co-operation with France on
the altar of Foreign minister Sikorski’s Berlin speech
calling for more German leadership. Thirdly, we can congratulate
France and Germany on conducting an effective policy with clearly
defined national goals. We [Poland] just improvise.

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Blog















Slump pact



Europe's lurch backward



31 January 2012










Borne of failure and fear, the EU moves toward
political union not in strength, but in weakness. The latest proposed
treaty for a "fiscal compact" continues this inglorious tradition, says
Jason Walsh


And so, 25 European countries will now, we are told, sign a pact, the
objective of which is to reinforce the euro by toughening and
regularising budget rules. Sold as a step forward, this move in fact
underscores just how politically incoherent Europe has become.

At once high-minded and a product of failure, the European Union had
its genesis in the maelstrom of the Second World War. Devised as a means
of politically and economically aligning the power blocs of France and
Germany in the – quite correct – belief that they would never again
go to war with one-another, plunging the rest of the continent into hell
with them, if they shared a common interest.

European Coal and Steel Community founding father Jean Monnet was
remarkably clear about his designs for Europe: political union. Those
who followed, however, have been less open.

In fact, the seeds of European Union disregard for the masses we see
being played out today are a direct result of the EU's gradualist
approach. Instead of taking the bull by the horns and straightforwardly
arguing for political union, successive generations of EU leaders have
balked at the, admittedly Sisyphean, task of uniting European nations
and instead trod a piecemeal path, fiddling here, meddling there and all
the while refusing to admit that the ultimate logic of going beyond a
mere trade bloc is political union.

And so, Europe lurches forward, if you can call it that, not as a
united social entity or political demos, but driven by the fear and
failure of the various national political elites. The latest proposed treaty,
or "fiscal compact" if you prefer, ties 25 supposedly sovereign EU
nations together under German-led anti-growth economic policy in the
name of safeguarding the future of euro and with it, in the darkest and
most apocalyptic visions, that of the entire EU.

To some small degree it has already succeeded: markets have rallied in response to the announcement. But in the longer term this plan will not work.

German-inspired "fiscal discipline" is not the only way to run an
economy, nor is it the necessarily the right way to run one. For
instance, Greece's spending cuts have worsened the country's debt
crisis, not alleviated it.

There is, and has been, much that is good in European co-operation, even integration, but this madness must stop. Greece is being immiserated,
crushed underfoot by Franco-German diktat that cares only about the
country's (entirely imaginary) ability to repay its debts. And so, more money will be thrown
at Greece, though it will slide through the country without so much as
touching the ground, making its way to Greece's creditors while
unemployment and poverty will continue to grow.

Ireland, Italy, Portugal and Spain are all also getting a raw deal,
though none quite as egregious as that foisted in Greece, and now the
rest of the EU, with the exception of the United Kingdom and Czech
Republic, have signed this mutual suicide pact that will do nothing but
depress consumer demand and, with it, the wider economy.

No country being forced to implement swingeing cuts will ever be able
to emulate Germany's enviable export-driven economy even if they
desired to do so – and, in truth, few seem so inclined anyway. Germany
too will suffer, with the European market for its goods going into
decline. Next to the absence of workable industrial policy and the
ability to make strategic investment in industry, talk of stimulating
the small and medium enterprise and tackling youth unemployment melts
into so much blather. What we will get is a longterm slump.

When the warnings start about the growth of far-right and populist
movements, and they will surely come soon, the European elites will cast
around looking for scapegoats before finding one in the supposedly
backward, nationalist and selfish European publics. But they will have
no-one to blame but themselves.

Image by Chesi. CC licenced.

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Member States










Fiscal treaty


Ireland begins bitter referendum debate



1 February 2012


Presseurop

The Irish Times

The Irish Times, 1 February 2012








“Fiscal treaty designed to avoid Irish referendum,” headlines the Irish Times.
According to Irish law, all new EU treaties must be put to a national
plebiscite. However, an anonymous EU official has told the Dublin daily
that the fiscal treaty agreed on Monday January 30 “was specifically
crafted” to avoid the scenario of the Lisbon treaty referendum of 2008,
which was rejected, thus delaying its coming into force.

Conceding that the decision to hold a vote could well go to the
Irish Supreme Court, the official argued that a referendum has “nothing
to do with democracy.” The Irish Times notes that –

While it is not absolutely clear which parts of the treaty were
written to suit the Government, Irish officials are known to have
sought scope to adopt strict new limits to debt and deficits in
legislation rather than through the Constitution.

Nevertheless, Irish opposition parties including Fianna Fáil and
Sinn Féin are lining up mount a legal challenge to force a vote, writes the Irish Examiner, in a context of increasingly bitter debates in parliament.

Irish Times European correspondent Arthur Beesley notes
that while Ireland has been “no stranger” to “intrusive external
oversight of its internal affairs” since the €85 billion EU/ECB/IMF
bailout of 2010, the new treaty could bind the country to such
oversight “forever.”

It is one thing, of course, to submit to the unforgiving writ of the
troika in an emergency situation in which the State is shut out of
private debt markets. It is quite another to accept the hands of future
governments will be tied by Ireland’s expanding obligations to Europe –
even when the State can stand on its own two feet again.

Beesley also suggest that if the mooted referendum were rejected, this “would seriously impede Ireland’s return to markets.”

More importantly still is the fact that countries which do not
ratify the pact within 13 months will have no further right to aid from
the permanent bailout fund of the European Stability Mechanism.
Observers may well see something decidedly nasty in that provision,
which was a German idea.

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Poverty trap for middle classes of Europe



1 February 2012


El País
Madrid








Dario








Unemployment has hit record levels in the EU, putting
nearly a quarter of those Europeans who until now had a decent standard
of living at risk of sliding into social exclusion. The phenomenon is
undermining the EU’s strategies against poverty.


María Antonia Sánchez-Vallejo




Dimitris Pavlópulos’s pension is €550 per month. His monthly
medical expenses come to around €150. The slash in subsidies for
prescription drugs forces him to choose between buying a litre of milk
(€1.5) or filling one of the prescriptions for his illness, because he
can’t pay for both.

In Greece, the spectre of hunger has become awful reality. Since the
first adjustment plan (2010) cut out many subsidies, Mr. Pavlópulos
spends his pension in ten days, then falls back on the food and
medicines handed out by the NGO Medecins du Monde-Greece.

Manuel G. is one of Spain’s long-term unemployed. He yearns for the
€1,000 a month he used to make back when the crisis first hit. Three
years ago he lost his job as a clerk, and by now he has exhausted his
unemployment benefits. With no family to fall back on, he lives in a
rented room, eats at soup kitchens and gets clothing from an NGO.

These are just two of the victims of the crisis. Elements of society
that were in the middle classes or lower middle classes just five
years ago are today’s new poor. People who must choose between cooking a
hot meal or heating the house, between paying the mortgage or making a
meal.

They are social cases that destroy the traditional association of
poverty with begging. Increasingly, poverty is becoming more and more
the norm. “The volunteers of yesterday are our beneficiaries of today,”
explains Jorge Nuño, Secretary General of Caritas Europa.

One of every four Spanish children is in poverty


According to the EU, in 2009 there were 115 million people at risk
of poverty and social exclusion in the lands of the twenty-seven member
states (23.1% of the population) – “not counting another 100 or 150
million on the razor's edge” says Nuno. “Two months of unemployment and
carrying a mortgage at the same time can sink anyone.” In 2007, 85
million Europeans (17% of the population) were below the relative
poverty line. The list includes countries like Greece, Spain and
Ireland, “but also France, Germany and Austria,” Nuno notes.

The examples show how the system breaks down: household debt; the
bankruptcies of states that gave out subsidies too freely; and the
profusion of casual and uncertain jobs, like the millions lost in the
construction sector in Spain.

How is the hardship measured? There are two types of poverty:
moderate or relative (60% of the average national income), and severe
(40%). “Most of the poor are increasingly found far below this
threshold. The poor have become poorer, but it is also true that the
soup kitchens are feeding people who never dropped in on them before.
The poverty rates have gone up dramatically in children – one of every
four Spanish children is in poverty – and quite a lot among immigrants
and the young,” says sociologist Paul Mari-Klose of the CSIC.

“We are talking about deprivation, of being unable to make it to the
end of the month, or eating meat less than twice a week. In Spain, as
in Greece, Portugal and Italy, however, it’s not so much that poverty
has spread into new classes, but that it has become more severe and
focused in certain groups. During the economic boom many young people
struck out on their own prematurely, and now they’re in borderline
situations. Iceland has seen a dramatic increase in poverty, especially
in children,” Mari-Klose adds.

Lower middle classes have not been in the spotlight


In the Eurostat statistics on poverty and exclusion the crisis is
bringing countries like Portugal, Ireland, Greece and Spain closer to
eastern European countries that recently joined the EU and to ever
broader layers of the populations of stable states and model welfare
states that have come down in the world, as in Iceland, due to the
collapse of its banking system.

But the EU average on poverty has a high dispersion around the mean.
Bulgaria (46.2%) and Romania (43.1%) are almost double the mean,
according to Eurostat. At the other extreme are the Czech Republic
(14%), the Netherlands (15.1%) and Sweden (15.9%). Spain is in the
middle, at 23.4%. But being in the middle ground is to go unnoticed: for
Spain the structural risk (in 2007, about 20%), the lack of social
protection, and record unemployment (22.8%) all add up to a less than
rosy future.

As social spending cuts amplify the effects of the crisis, the four
social groups traditionally more exposed to poverty – children, the
elderly, women, and immigrants, i.e., age, gender and ethnicity as
factors that intensify poverty – are joined by a host of citizens not
so easily labelled.

These are “people with a very precarious job, which makes it hard to
make ends meet, and on top of that they have no support; people
between 30 and 45, with or without family responsibilities, and getting
no subsidies because they have some income. If they want to keep
paying the mortgage, they’re forced to go back to their parents,” says
Joan Subirats, of the Autonomous University of Barcelona. “The other
sectors are more closely studied. These lower middle classes, however,
have not been in the spotlight,” he adds.

Good intentions on the rubbish heap


The semi-starvation of large sections of European society is not
only a social problem, but also has clear political repercussions as
more and more citizens find themselves on the margins of the system.

Although most of the experts consulted warn against the temptation
to make the “new poor” the only victims of the crisis, and highlight
the deterioration in previously impoverished areas, what is undeniable
is that after almost fifteen years of good times and new wealth, the
crisis has knocked flat part of the population that, until 2007, had
their basic needs met.

But there are many more factors at play in the bad dream of the new
poor. Among the newest members of the EU, most of which are former
communist regimes converted to market economies by forced marches, such
as Latvia (a 37.4% risk of poverty and exclusion), Lithuania, Hungary,
Bulgaria and Romania, the biggest drag is the inherited structural
deficit.

2010 passed almost unnoticed as the European Year for Combating
Poverty and Social Exclusion. It thus concluded the Lisbon Strategy,
which sought to make “a decisive impact on eradicating poverty,” and
got the 2020 Strategy underway. The crisis, though, has left those good
intentions on the rubbish heap. The main objective of the Strategy
2020 – to reduce the number of poor by 20 million in this decade –
threatens to become a dead letter.

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Euro










Greece


Leaving the euro, a risky business?



4 January 2012


Presseurop

Presseurop




The euro or the drachma? That is the question asked by the Greek
press while the government continues to negotiate with the European
Union and the International Monetary Fund to find a new bailout plan. Athens daily To Vima writes-

Faced with this challenge, the most crucial for our country since the
overthrow of the dictatorship of the colonels in 1974, we must choose
between taking all the measures necessary to stay in the eurozone or
sinking into uncontrolled bankruptcy and thus return de facto to the drachma.

The paper attacks the political parties that encourage instability.
PASOK (socialist), LAOS (extreme right) and New Democracy (right-wing)
"support the government [and] at the same time lead the political
opposition."

To Ethnos notes that -

... the dilemma over the euro or the drachma leaves no one
indifferent, even the left parties that have a different view on the
issue. The truth is that this dilemma hides a major truth. The measures,
the bailout plans imposed by the EU and the Greek government in the
name of the euro these last two years, as well as all those that were
implemented for the good of the country have drawn us closer to the
drachma.

But the daily warns that while "a majority of Greeks do not want the drachma, many no longer feel implicated in the debate".

Yet, as highlighted by news site protagon.gr-

... a return to the drachma would impoverish 90% of the population.
We must thus realise that, like it or not, we must do everything to stay
in the euro clan in order not to become the poor little neighbour of
'Grand Turkey'. This requires much, much work with major sacrifices but
the choice is ours to make.

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2 February 2012
Last updated at 03:23











German Chancellor Merkel in China on eurozone talks











China and Germany enjoy strong economic relations with each other



Continue reading the main story Related Stories

• Impasse at UN Syria crisis debate
  
• EU approves Iran oil imports ban
  
• 'Helping euro will help China'
  

Angela
Merkel, the German chancellor, has arrived in Beijing for a two-day
visit expected to focus on the eurozone crisis, Iran and Syria.

Accompanied by a 20 strong trade delegation, she is scheduled to meet President Hu Jintao and Premier Wen Jiabao in the capital.

On Friday, she will visit Guangdong province with Mr Wen and executives from various industries.

This is her fifth visit to China, a strategic economic partner for Germany.

The two countries need each other, says the BBC's correspondent in Berlin, Steve Evans.

Chinese purchases of German goods have kept the German
economy growing much faster than that of other European countries, he
adds, and Chinese imports of German technology embodied in machinery for
Chinese factories has allowed the Chinese economy to improve.

Ms Merkel is expected to deliver a speech on the economic
crisis in the European Union - a key item on her agenda - at the Chinese
Academy of Social Sciences on Thursday.

She is also likely to seek support from China for a UN
Security Council resolution against Syria and urge Beijing not to
increase its imports of Iranian oil, following EU bans last month.

Also on the agenda is access to what are called "rare earth
elements" used in the manufacture of many electronics components. China
mines 97% of the global supply and has been accused of limiting its
supply to fetch higher prices.

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Italy


Relax, Germans!



30 January 2012


Die Zeit
Hamburg





Mario Monti and Angela Merkel at a press conference in Berlin, January 11 2012


AFP








Italy has long cursed Germany as a know-it-all, and yet
respects it as the head of the class. With the arrival of the very
proper Mr Monti this is changing, and Berlin will have to get used to
some lessons from Rome. Excerpts.


Birgit Schönau




It was a Monday afternoon at Rome's Leonardo da Vinci airport.
The queue outside the security checkpoint in the departure hall was
getting longer. Losing their patience, two Germans began to shout
loudly: “Chaos like this you only find in Italy!”

An Italian in the queue turned to the annoyed Germans, anger on his
face. “Germans never change,” he said in English, stressing each word.
“You always know everything better and you always look down on us.” The
Germans fell silent, and from then on the Italian ignored them.
Because they both were flying to different destinations, a little later
neither heard the captain of the Lufthansa flight to Düsseldorf come
on over the public address. “We should be taking off in half an hour,”
he said. “With the Italians, though, you never know.”

The episode happened around the time the Berlusconi government was
on its last legs. Half of Europe was laughing at Italy then, and
perhaps Germany was laughing a little louder. The third-largest economy
in Europe was seen mostly as a scenic backdrop for bunga-bunga parties
– seriously in debt, and for that very reason not taken seriously.

The Chancellor had never openly criticised Berlusconi, merely
largely ignored him – and Italy. Relations between the countries were
at the freezing point, as was the personal relationship between the
East German pastor's daughter and the party animal from Lombardy who
loved a dirty joke.

That helped explain Merkel’s enormous popularity in Italy. For many
of those Italians who suffered under Berlusconi, she embodied those
German virtues that the political class in Rome had long parted company
with: an appreciation for the common good, restraint, and integrity.

Berlusconi era already seems years in the past


But for two months now Italy has been ruled by a man who, apart from
these qualities, possesses a few that Merkel lacks. A certain
cosmopolitanism for example, as well as profound economic expertise and
the determination that comes with it.

There was some amusement in Italy when the German media tagged Mario
Monti and the new ECB chief Mario Draghi as “Prussian Italians”. Monti
had hardly moved into the Palazzo Chigi before the pristine image of
Angela Merkel began to tarnish. The luminary reduced to the role of
maestrina, a somewhat narrow-minded teacher who raps the knuckles of
the rebellious students in the class, never grasping that sometimes
they’re precisely the ones who actually have the better ideas.

When Berlusconi stepped down, to relief all round, Germany was
swiftly singled out in Rome as the biggest problem for Europe. In
Germany, “policies are made by the barometer of public opinion,”
remarked Giovanni Moro, a son of the assassinated Christain Democrat
Aldo Moro. “With its rigid dogmatism Merkel's Germany is risking not
only the euro but the entire Union,” wrote one journalist close to
Monti.

Inexorably, the feeling is getting around Rome: “We can do it
differently – the Germans can’t.” In his first appearance before the
foreign press Mario Monti rhapsodised at length about Scandinavia. The
merits of the northern European countries have been overlooked by
Europe for far too long. Europe need not convalesce, the message goes,
strictly German-style. There are other models too.

With Monti, Italy has won back its self-confidence. Within a
strikingly short time, drastic austerity measures and reforms have been
implemented, privileges stripped away, and tax evaders convicted. The
Berlusconi era already seems years in the past.

Italian way of life assiduously copied


Before his first official visit to Berlin, Monti did something that
Berlusconi would have never dared: he presented some demands to his
German colleague. Germany and France, he declared, should no longer
take an “overly authoritarian” stance. He reminded both big partners of
their EU policy mistakes, and warned Angela Merkel of anti-German
protests in Italy if Berlin fails to acknowledge his government’s
efforts.

Angela Merkel's praise for Monti's reform policy was accepted with
some relief in Rome – but with annoyance, as well, that this praise is
always a little condescending. “The culture of stability imposed by
Germany is extremely valuable,” Monti told the Financial Times, “but
the more clearly the indebted countries show they have understood the
need for the discipline, the more the Germans ought to relax.”

The Germans will have to get used to the Italians reading the riot
act to them, as among friends. For a long time it was the other way
around. German nationalism has always defined itself in contrast to
Italy.

The Italian way of life, however, has been assiduously copied by the
Germans. Pasta, balsamic vinegar and olive oil are as widespread north
of the Alps as south of them, and more espresso machines are now sold
in Germany than in Italy. Sometimes it seems as if the Germans are
better at being Italian than the Italians are.

But what will happen now if all at once the Italians want to be the better Germans? Both efforts can only be good for Europe.

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Deutsche Bank shares fall 76% as a direct result of the Euro crisis.

ECB may hold out any bail until with Bondholders is reached.

Antonmucci of Morgan Stanley says Europe is still in dangerous Territory as Sovereign Debt turned into crisis of confidence.

He says the ECB will weaken significantly , challenges need to construct solid firewall to fend off contagion risk.

He predicts the Eujro will be vbalued at E1.2p0 by the end of the year.

Portugal is under pressure but Fitch says it doesn"t see any danger because although Portugal might need another bail out it"s debt is sustainable and it has implemented austerity measures to contain the debt.

Rory O'Connell, Economics adviser says Ireland still has more to do although Bond Prices have reduced the yield.

Spain sells 4.56 billion Bonds , target was 4.5 spread over 3 and 5 yr Bonds.

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EU Students Not Repaying Loans.

• 
  
  
  
  
  

Jason Farrell

February 02, 2012 10:34 AM














The
numbers of EU students taking out loans for tuition fees in the UK is
on the rise, and the number not paying them back is also increasing at a
worrying rate. 45 per cent of students from European Union countries
who were liable to start repaying UK student loans have disappeared or
are in arrears.
The
government released the figures last week after we asked for details
under the freedom of information act. Sky News also learned that only a
fraction of these outstanding debts have been reclaimed through the
courts.
EU
students have been able to get loans for higher education in the UK
since 2006. By 2009/10 the debt of nearly 19,000 EU graduates already
amounts to 47.4 million pounds. Like UK graduates they can make
repayments over time once they reach a certain earnings bracket.
The
Student Loans Company has powers to deduct money directly from the
wages of those who find jobs in Britain, but for graduates who live
overseas it is forced to rely on their co-operation in giving
information about their earnings and making arrangements to pay. Many are qualifying for repayment and failing to pay, or they have failed to provide their earnings details.
Already around 9,000 are avoiding their repayments and between them they owe the UK tax payer 20 million pounds.
Despite
government pledges to pursue non-payment through the courts, so far
they have reclaimed just over £8,000 according to figures from the
Department of Business Innovation and Skills.
What’s
concerning is the figure of unpaid debt could rise dramatically in the
coming years, for two reasons. Firstly because, as UCAS figures show
this week, the number of English students applying to go to University
is in decline: 9% down this year. Universities may then be tempted to
top-up their places with more applicants from abroad.
Secondly
EU students, like UK Students, will take out much larger loans in the
future. That’s because they will be paying for higher tuition fees which
are being allowed to treble to a maximum of £9,000 from this September.

So it seems the non-payment of EU student debt is a problem that’s only going to get bigger.

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Can you believe this!! While U.K Students have had rises in their tuition Fees, European Students can owe £20 million which with the current crisis will never be repaid. Why on Earth have European Students been al;lowed the same facility as U.K Students.....no wonder this Country is in such a State!!!

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TEurozone: Greece Is The Word

• 
  
  
  
  
  

Robert Nisbet

February 02, 2012 12:25 PM

• 
  

After
all the talk of fiscal compacts, Euro-ins and Euro-outs and whether the
hands of Prime Minister Cameron and President Sarkozy merely brushed or
were firmly clasped in greeting, one could be forgiven for forgetting
the real crisis here.

Greece is still in serious trouble.

I
understand the talks over the so called PSI (private sector
involvement) deal, which would involve banks agreeing to write-off most
of the real value of their Greek debt paper, are effectively completed,
but both sides have been told to wait before going public.

That's
because the Greek government has to convince debt inspectors from the
so-called Troika of international creditors (IMF, ECB and EU) that it
will follow through on its austerity plans.

Both conditions have to be in place to unlock a second, 130 billion Euro bailout which Athens needs to pay its bills.

The
inspectors are not encouraged by what they've unearthed in terms of
asset selling, job cuts and tax collection, but how much more can you
make the Greek people suffer?

That's the dilemma: should the
Troika be squeezing the central banks to restructure their debts (as
well as the private sector) instead of punishing the people even more?

Of
course as these talks are drawn out, the Greek economy continues to
shrink at a fairly alarming rate, which means the bailout may need to be
bigger.

It's probably likely the European Central Bank will have to take a hit on its holdings of Greek debt.

A
meeting's been scheduled between finance ministers of countries which
use the Euro on Monday, so expect some movement before then, or else we
may start to see a return of that 2011 nervousness in the markets.

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