Re: New EC Thread

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Greek Bondholders are taking more time to agree a deal and looking for a 66% write off, not the 73% previously offered. Greece is facing extremely
high debt, the deadline is Thursday.

The ongoing Greek debt to be shouldered by EFSF and EC Countries.

Euro Countries Commercial Banks deposited a record amount of cash to ECB Bank. They would rather earn .25% interest than lend........which was the
object of the ECB loan at 1%.

Euro's needier Countries sees borrowing from U.S. money markets at record pace.

The end of the Irish love affair with Europe may damage Bond sales and EURO credit.

Euro debt swap crisis to be resolved and this will indicate that the EC is past crisis.

Denmark announces it's 5th rescue plan since 2008 which will not solve the debt crisis.

EC and U.K. stocks opened lower this morning, concern about the price of Oil the main factor.

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Merkel intent on snubbing Hollande


5 March 2012


Der Spiegel, Der Standard, Libération Comment




“Entente against Hollande”, announces Monday's Der Spiegel, which reveals that the German Chancellor has agreed with several European partners not to receive the socialist candidate for the French presidency François Hollande. Italy’s Mario Monti, Spain’s Mariano Rajoy and Britain’s David Cameron are all part of this secret alliance, which Merkel has organised to defend her European policy. Hollande has announced his intention to renegotiate the fiscal compact recently signed in Brussels if he wins the election.

For Der Standard, this “bizarre conspiracy” is evidence of European conservative leaders awareness that their political dominance is on the verge of collapse. A harsh critic of Angela Merkel, the Viennese daily points out –


All of this is perfectly clear, and this initiative is bound to fail. The Chancellor could not devise a strategy to better assist Hollande. The French have grown weary of Sarkozy’s broken promises and obsequious gestures. And that is not to mention the overwhelming majority of voters who have no desire to see Berlin decide on the issue of their president.

The fact that Merkel is depending on support from Cameron (who regularly gives her the brush-off on the euro) and Rajoy (who has just announced a major increase in the Spanish deficit) shows how weak she has become. To deliberately ignore the next possible president of her most important partner country highlights a lack of political instinct the like of which has not been seen for decades.

In Paris, Libération notes that this development coincides with a poll which found that 41% of French voters consulted believe that Germany “is using the crisis to strengthen its economy on the back of other populations…” If François Hollande is elected, “we will have to begin by picking up the pieces”, notes the daily which cites political analyst Sabine von Oppeln. The latest news is all the more significant when considering that in 2007, two months before the last French presidential vote, Angela Merkel held an official meeting with socialist candidate Ségolène Royal, which was followed by a joint press conference and a handshake in front of the cameras.

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Merkel sees the Euro minted from Marks in political trial of German Integrity . More Euro Countries are complaining that Germany was only to happy to let the Euro devalue which helped their exports.

Portugal's Prime Minister says there is no restructuring for Portugal , the IMF says the Portugese debt is sustainable. He says Portugal intends to go to
the market in 2013.

Greek Finance Minister is getting tough on the debt swap saying there is only plan A which says 75% of Bondholders must accept the writedown for the
bailout to go ahead. there are $140 billion bond swap at stake .

Italy hasn't done as much refinancing as Spain and bond yields are slightly lower than Italy.

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Euro


Czech Republic

Has Prague strayed too far from the herd?


5 March 2012




By being the only country, along with the United Kingdom, not to sign the European Budget Pact on March 2, “is the Czech Republic returning to a no man's land?” wonders Tomáš Sedláček in Czech daily Hospodářské Noviny. The economist notes that his country is not very enthusiastic about greater European integration. This, he says, demonstrates “a lack of vision concerning its economy, its state and Europe”.

“The position of Prime Minister Petr Nečas, according to which the budget pact benefits none of us, sums up our position towards the Union: take but do not give,” Tomáš Sedláček writes. Yet, he notes that -


After 1989, Czechoslovakia, followed by the two states which emerged from it, had a single international priority: to get out of the ‘zone’, away from what was left after the implosion of the USSR. We joined the OECD, NATO and the EU to clearly signify on which side we belonged.

But for another economist, Pavel Kohout, also writing in Hospodářské Noviny, the Czech “no” to European budget regulations does not represent a risk to the country. “The treaty does not solve any of the issues linked to the euro crisis,” he argues, adding that it “may help to smooth the way for fiscal harmonisation”. But, while this might be appropriate for France and Germany, harmonisation would be devastating for Czech competitiveness.


Quietly trotting with the herd means paying for the errors of others, such as French or German bankers, for example. Only those that create problems have anything to gain.

Foreign Affairs Minister Karel Schwarzenberg, who backs the budget pact, for his part warned that the Czech Republic is making a strong bid for marginalisation but could still reverse its decision later this year or next year.

On the web
Tomáš Sedláček in Hospodářské noviny cs
Pavel Kohout in Hospodářské noviny cs

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United States

A bogeyman called Europe


5 March 2012
De Volkskrant Amsterdam Comment6


"You abject debt-maker!"

Horsch




A haven for euthanasia, the homeland of socialism and the cradle of the debt crisis: for Republican candidates campaigning for the US presidency, Europe is a model that must be avoided at all costs.


Arie van Elshout

Europe is where they do away with the infirm elderly, and where cruise line captains are the first to jump ship in the event of an accident. It is the place where the ailing euro continues to be a source of contagion for the rest of the world and where the economy is strangled by cumbersome and prohibitively expensive welfare states. Worse of all, it is a place where the future of the young generation is sacrificed.

Notwithstanding 65 years of good and faithful service, America’s longstanding European allies are being pilloried in the US presidential primaries, where no Republican campaign speech is complete without a fresh attack on a European whipping boy.

Attacks that specifically target other politicians are a standard feature of election campaigns, and Rick Santorum is not the first conservative to throw respect for reality to the winds with claims that, in the wake of the Netherlands’ legalisation of euthanasia, the elderly are no longer safe in the in the country. But the prevalence of tactics of this kind in the current US presidential race is nonetheless unprecedented. And they have been deployed with an added spin that makes them even more painful for Europeans: a certain pity. Europe, it seems, is of no further importance.

Obama a “European socialist”

China, India and Brazil are all on the agenda for Republican campaign meetings. The candidates are not sure if these emerging powers constitute a danger or an opportunity, but they are considered to be the future, whereas Europe represents the past. Thus the continent is not mentioned or a European approach is cited as an example to be avoided. As Mitt Romney puts it, “It does work there, and it will never work here”.

The European welfare state has become the weapon of choice for attacks on Obama. According to Republicans, the Democrat president “takes his inspiration from the capitals of Europe” and seeks to implement policies that would prevent freedom loving citizens from personally benefiting from their hard-earned cash, which to a large degree will have to be handed over to the all-powerful state for redistribution to others.

At every stage in his campaign, Romney has announced that a welfare state is “a fundamental corruption of the American spirit”, and this assertion has met with unfailing applause. In short, anyone who is pro-American must be anti-European and thus anti-Obama – an electioneering rhetoric that lacks subtlety but one that has nonetheless proved effective for Romney.

Another Republican candidate Newt Gingrich has gone even further, describing Obama as a “European socialist” intent on imposing a hostile foreign ideology on Americans.

Social mobility in Europe higher than in US

What consitutes fact is surprisingly elastic in the context of election campaigns. The Netherlands is not a “killing field” for the elderly. Europe is not a social Land of Cockayne, Obama is not a socialist, and the Republicans are not Darwinists in disguise. Although, they are theoretically opposed to public authority, opinion polls show that Republican voters have no real desire to modify benefit programmes for the sick and the elderly “to which they have contributed throughout their lives”. But nuances of this kind tend to disappear during election campaigns, which are all about highlighting contrasts, which rapidly lead to caricatural portrayals.

The only way they have found to maintain their costly welfare states is to force young people to accept “less secure work at lower pay”, wrote columnist Adam Davidson in the New York Times in January. European leaders may mock the United States for its inequalities and its lack of social security, but its own young people are forced to pay the price for their well-off elders. Davidson argues that America also has enormous debts, but its competiveness is intact, which is why he expects US growth to recover.

That is not to say that there are no objections to this argument. After all, social mobility in Europe is higher than it is in the United States. However, the negative image of a fossilized continent to hold sway, and youth unemployment figures are cited as a measure of this inflexibility. In Spain almost 50% of young people are without jobs, a figure that is even worse than the one for Greece which stands at 48%. The United States, with 18% youth unemployment is significantly better off, but according to a Wall Street Journal columnist, this relatively high rate is evidence that European “lassitude” could become a problem in America. In a word, the European bogeyman is never far away.

Only on very rare occasions to do we hear anything positive about Europe, and with this in mind we should welcome the remarks made by 62-year-old Republican and former White House advisor to Bush Senior, Richard Breeden, at the the party to celebrate Romney’s victory in New Hampshire, who insisted that the bid to “stabilize” Europe is “vitally important” for the US – words that are particularly resonant words when you consider the past of the continent.

On the web
Original article at De Volkskrant nl
Adam Davidson in The New York Times en

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Spain's sovereign thunderclap and the end of Merkel's Europe




By Ambrose Evans-PritchardEconomicsLast updated: March 5th, 2012

851 CommentsComment on this article



(Photo: Corbis)

The Spanish rebellion has begun, sooner and more dramatically than I expected.

As many readers will already have seen, Premier Mariano Rajoy has refused point blank to comply with the austerity demands of the European Commission and the European Council (hijacked by Merkozy).

Taking what he called a "sovereign decision", he simply announced that he intends to ignore the EU deficit target of 4.4pc of GDP for this year, setting his own target of 5.8pc instead (down from 8.5pc in 2011).

In the twenty years or so that I have been following EU affairs closely, I cannot remember such a bold and open act of defiance by any state. Usually such matters are fudged. Countries stretch the line, but do not actually cross it.

With condign symbolism, Mr Rajoy dropped his bombshell in Brussels after the EU summit, without first notifying the commission or fellow EU leaders. Indeed, he seemed to relish the fact that he was tearing up the rule book and disavowing the whole EU machinery of budgetary control.

He is surely right to seize the initiative. Spain’s economy will contract by 1.7pc this year under his modified plans and unemployment will reach 24pc (or 29pc under the 1990s method of counting). To compound this with manic fiscal tightening – and no offsetting devaluation – is intellectually indefensible.

There comes a point when a democracy can no longer sacrifice its citizens to please reactionary ideologues determined to impose 1930s scorched-earth policies. Ya basta.

What is striking is the wave of support for Mr Rajoy from the Spanish commentariat.

This one from Pablo Sebastián left me speechless.

My loose translation:

"Spain isn’t any old country that will allow itself to be humiliated by the German Chancellor."

"The behaviour of the European Commission towards Spain over recent days has been infamous and exceeds their treaty powers… these Eurocrats think they are the owners and masters of Spain."

"Spain and other nations in the EU are sick and tired of Chancellor Merkel’s meddling and Germany’s usurpation – with the help of Sarkozy’s France and their pretended "executive presidency" that does not in fact exist in EU treaties."

"Rajoy must not retreat one inch. The stakes are high and the country is in no mood to suffer humiliations from a Chancellor who is amassing all the savings of Europe and won’t listen to anybody, as if she were the absolute ruler of the Union. Merkel and the Commission should think hard before putting their hand into the sovereignty of this country – or any other – because it will be burned."

This then is the fermenting mood in the fiercely proud and ancient nation of Spain in Year III of depression, probably the worst depression the country has seen since the 1640s – or have I missed a worse one?

As for the "Fiscal Compact", it is rendered a dead letter by Spanish actions.

Gracias a Dios. If the text were enforced, the consequences would be ruinous. It enshrines Hooverism in EU law, and imposes contractionary policies without the consent of future parliaments – including any future Bundestag. Indeed, it probably violates the German constitution.

But it won’t be enforced in any meaningful sense because the political realities of the EU are already intruding, and will intrude further. A president François Hollande of France will rip it up.

The Latin Bloc is awakening.

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Spain on collision course with Brussels over budget deficit targets

European commission accuses Spain of 'serious deviation' after PM Mariano Rajoy sets deficit target of 5.8% rather than 4.4% agreed

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Ian Traynor in Brussels

guardian.co.uk, Monday 5 March 2012 19.25 GMT
Article history



Spain's new conservative prime minister Mariano Rajoy said his budget changes were none of Europe's business. Photograph: Daniel Ochoa De Olza/AP


Spain is on a collision course with the European commission after Brussels fired a warning shot at the austerity wracked country for planning to overshoot its budget deficit targets.

In an early test for the EU's new fiscal regime, the commission said Madrid was engaged "in a serious deviation" from previous pledges after Mariano Rajoy, Spain's new conservative prime minister, confirmed the government would fail to meet a budget deficit target this year of 4.4% of gross domestic product agreed earlier with Brussels. Rajoy has set a new target of 5.8% for this year after revealing that last year's deficit was 8.5%.

The stand-off between the European authorities and Spain, a vulnerable party in the eurozone's debt crisis, came as Greece raced against the clock to sign up willing creditors for writing down half of its debt to private lenders.

Athens has until Thursday evening to conclude a debt swap with its private creditors, reducing its obligations by €100bn as a central element in its new €130bn bailout accord with the eurozone.

It remained unclear on Monday night whether some 90% of Greece's private creditors would volunteer for the deal by Thursday, casting uncertainty over the prospects for the bailout.

But the International Institute of Finance, representing around half of the creditors, said its members would accept the terms, while Athens threatened to invoke legal clauses to force others to follow suit.

"Our target is near universal participation," Evangelos Venizelos, the Greek finance minister, said. "Whoever thinks that they will hold out and be paid in full is mistaken," he told Reuters.

With the fate of the Greek bailout hanging in the balance, but likely to go ahead, eurozone finance ministers are to hold talks on Friday once they have learned the participation rate in the "haircuts" being suffered by Greece's private creditors.

While Greece's position should be clarified this week, other challenges to the EU's fiscal dilemmas are bubbling away, ready to erupt.

In recession, wrestling with runaway unemployment rates that are the highest in Europe, and already embarked on huge spending cuts, the Spanish government appears to be up against a European commission keen to make full use of its new powers.

The commission has already ordered Belgium to slash its spending and threatened to withhold hundreds of millions of euros in funds to Hungary unless Budapest sticks to its budgetary pledges, making it more difficult to show leniency towards Madrid.

The Netherlands is also heading for a confrontation after its finance ministry warned that deficit reduction targets had gone awry. A report by the economic consultancy Lombard Street Research said the Dutch would be better off outside the euro after a decade of low growth. The report said the rising cost of supporting bankrupt European countries, which it put at between €1.3 trillion and €2.4tn by 2015, would force the Netherlands to accept much lower standards of living.

Amadeu Altafaj, a spokesman for Ollie Rehn, the monetary affairs commissioner who under the new rules has the right to police national budgets, said: "All member states should continue to respect their commitments according to the rules … They should meet agreed budgetary targets and stand ready to pursue further consolidation measures if needed.

"Let's shed all the light on what happened in Spain in 2011 because it's a serious deviation. We need to know the origin of this deviation, the nature of this deviation."

But Rajoy is asserting national sovereignty over the new EU rules. At an EU summit on Friday when he signed up for the eurozone's binding new fiscal pact, Rajoy failed to let other EU leaders know of his budget revision. He bragged that it was none of their business.

"I'm not going to tell the other presidents or heads of state about the deficit figure that will be included in our budget," he said. "I don't have to. It's a sovereign decision. I'll tell the (European) commission in April."

The fiscal pact and new laws on "economic governance" enacted last year have been criticised as representing an assault on democratic choice in EU countries and as a restriction on sovereignty.

The new rules have largely been written in Berlin, but even among Germany's allies in the euro crisis countries are bristling at the constraints on their freedom of manoeuvre.

The Dutch, fiscal hawks strongly aligned with Germany throughout the crisis, are also at risk of breaking the rules. Faced with a deterioration in the public finances that could see the Netherlands also penalised for excessive deficits, the minority coalition government of Mark Rutte on Monday launched weeks of negotiations on spending cuts.

The populist eurosceptic, Geert Wilders, who props up the government in parliament in return for policy concessions, called for a referendum on staying in the eurozone.






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More on this story




Live blog: Monday as it happened


European leaders expecti private sector involvement to be arranged by the end of this week



China cuts growth target to 7.5%


Phillip Inman: Germany has run out of patience


Recovery could slip up over oil


Ireland will ratify EU fiscal compact – polls





Related

19 Dec 2011

Spain's new prime minister pledges €16bn spending cuts


1 Mar 2012

Spain and Netherlands put new eurozone rulebook to test


27 Jan 2012

Spain unemployment tops 5.3m and set to get worse


****** Looks as if the Eurozone is in disarray, Ireland having a Referendum, now Spain threatening to do the same

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Apparent $140 Billion Greek Bonds have been issued, the biggest in History.

Private Investors amounting to 20% have agreed to accept the debt swaps 53% Default by Greece and with interest loss this amounts to 75%.

However, 90% have to agree and the majority are Banks, Hedge Funds and Investment Managers who know if they refuse , their Insurance Company will cover the Loss Herein lies the rub, if they refuse Greece will be in default , leave the Euro and all hell will break loose again.

If Greece does not receive bailout by 20th March default id certain.

Portugese Prime Minister says his Country's debt is sustainable, the IMF agrees and he does not expect to need to sell more Bonds until 2013, although
the current bond yield is rising. Ernst & Young say if economy worsens Portugal may have to go to the market with more bonds.

European and U.K. Stocks down for 3rd consecutive day/

Commercial Banks again deposited E827 released by ECB back in the bank overnight. They are frightened to lend because they fear the borrower will be
unable to repay, meanwhile the more money lent by the ECB the more inflationary the Euro becomes.

Greeks speak out on Goldman Sachs deal in 2001....".reveals two sinners with Client taken apart."

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IRISH TIMES REPORTERS

Work on completing a deal on restructuring the €31 billion promissory notes for the former Anglo-Irish Bank is expected to be finished shortly, it was reported today.

A senior Irish official confirmed that a revised deal was in the pipeline and said the Government was also seeking a wider agreement on bank debt.

Speaking this morning, Minister for Communications Pat Rabbitte said any restructured agreement would be warmly welcomed.

"It would be hugely significant; It would be a psychological boost to the morale of the Irish people who are so aggrieved about what happened following the banking collapse," he said.

Mr Rabbitte added the Government has been "hopeful for some time" that the talks with Ireland's bailout partners on the issue would be successful. However, he stressed any deal was separate from the referendum.

"The stability treaty wasn't even a twinkle in Angela Merkel's eye when the Irish Government fed in their proposals for the restructure of our debt arrangements so there was no connection, and if there never was a stability treaty the discussions would have been under way," he said.

Ministers yesterday moved to distance themselves from comments made by Minister for Social Protection Joan Burton at the weekend in which she said a deal on bank debt would facilitate a Yes vote in the referendum.

Minister of State for European Affairs Lucinda Creighton denied reports there are divisions in Government over the referendum.

She reiterated the Government position that negotiations for better terms on bank debt are being treated separately to the fiscal treaty referendum.

Separately, Taoiseach Enda Kenny warned there will be no second referendum if the people vote against ratification.

Speaking in Castlebar, in his home constituency of Mayo yesterday, the Taoiseach said: “As this treaty does not require unanimity, therefore there is no veto involved here, so it’s a once-off. And when the Irish people make their choice, that’s it."

The referendum will be the Government’s top priority into the immediate future and Mr Kenny discussed it with senior Ministers on his return last Friday after signing the Treaty at the EU Summit in Brussels.

The timing of the referendum will be discussed at Cabinet today, but no final decision will be made.

Divergent views have emerged within the Cabinet about the best date to hold the crucial referendum on the fiscal treaty, with some Ministers maintaining a polling date in autumn would be preferable.

Mr Rabbitte said earlier today that although he favours holding the vote “before the summer recess”, it is “purely a mechanistic question”.

Several Government sources confirmed while the general thinking is to hold it earlier rather than later, some senior Ministers have not dismissed the merits of holding the poll after the summer break. One Minister said that Taoiseach Enda Kenny and Mr Noonan are among those who have yet to express a preference to colleagues and have left open the option of a later poll.

One senior Minister said he was one of those who had originally wanted the referendum to be held in autumn but had recently been persuaded that an earlier poll was preferable. That Minister favoured a date in late May or early June.

Minister of State for Finance Brian Hayes said his preference has always been for an earlier poll. “My personal view is that the sooner it is held the better. You need some time for debate, a two months or three months period. But for market certainty, it is better not to put it off,” he said.

A Government spokesman said the date had not been decided. “There is no decision. There are always variables in relation to the appropriate date. Everything is being genuinely discussed in relation to the date,” he said.

The publication of two opinion polls last weekend showing clear initial support for the Treaty strengthened the case for holding the referendum in late May or early June.

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21 February 2012 Last updated at 12:10 Share this pageEmail Print Share this page

Business reporter, BBC News

Of non-Greek banks, France's BNP Paribas has the biggest holding of Greek debt Continue reading the main story
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Greece: Dangerous precedent?

The banking industry has described its agreement with Greece to cut its debts as "unprecedented".

A group of banks and other investors in Greek government debt have agreed to exchange their debt for new bonds that are worth much less and pay a modest rate of interest.

Including the reduced interest rate, the losses to the banking industry are more than 70%.

For some of Europe's biggest banks, that means heavy losses.

"The losses are going to be substantial, but they are contained and there's a longer-term benefit for the system in having a core group of investors sit down across the table and coming together," said Charles Dallara, managing director of the Institute for International Finance, which negotiated on behalf of the banking industry.

Continue reading the main story “
Start Quote
In the long and tawdry history of governments borrowing more than they can afford, this represents a remarkably huge, unprecedented write-off”
End Quote
Robert Peston

Business editor, BBC News

--------------------------------------------------------------------------------
More from Robert

It is perhaps no great surprise that Greek banks are the most exposed to Greek debt.

According to Barclays Capital, the top two holders of Greek debt are National Bank of Greece, with 13.2bn euros ($17.5bn), and Eurobank EFG, which holds 7.3bn euros ($9.7bn).

Once the bond exchange is completed, those holdings will be worth less than half their current value, and if you include future interest payments, worth 70% less.

Outside Greece, French and German banks hold the most Greek debt.

The last bailout?

Many foreign banks have already accepted that their investments in Greece are now worth just a fraction of their original value, irrespective of the latest deal.

In its most recent set of results, France's BNP Paribas, the biggest owner of Greek debt outside Greece, said that it had written down the value of its Greek debt by 75% on its balance sheet.

And according to the Barclays report, Commerzbank is the biggest holder of Greek debt among Germany's banks. Its holdings of government debt have complicated its efforts to raise new finance to boost its balance sheet.

For the average investors, the effect of Tuesday's bailout is limited. Most insurance companies and investment firms have little or no exposure to Greece.

Some hedge funds have built up their holdings in Greek debt, but it is likely to be a relatively small amount, perhaps less than five billion euros.

It is thought some will refuse to sign up to the bailout deal and hope to be repaid in full.

Analysts are now wondering whether the latest deal will be enough. The Greek economy is in recession, making it even more difficult for the nation to pay its debts.

"The debt sustainability analysis is much worse than people were expecting," said Laurent Fransolet, head of fixed-income strategy research at Barclays Capital.

"It's ambitious and we cannot be sure this is the last bailout. Does it buy a bit more time? Yes. But the next one will have to involve the official sector much more."

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No one wants Greece to default but rumour has it Germany is fed up trying to get Bonds sorted , Greece can still have an orderly default.

Apparently the Greeks releasing the deal with Goldman Sachs , whether by a private or Government source is quite damning.I seems in 2001 Greece
did a deal with GS whereby GS loaned a third party E274 million which gave GS a E600m profit in return for writing off 2% of Greece's Balance sheet.
Goldman Sachs have refused to comment,I'm not sure Iv'e got the details right, will adjust when more information is available.

ECB Balance Sheet jumps to E3.96 Trillion, bigger than Germany's by 30% because of all the lending.

Ireland must grit its' teeth and accept the fiscal policy but may show rebellion by voting for a referendum.

EU considers tougher collateral rules to rein in REPO agreements risks.

Deutchebank says improving education and exports are needed for the future and there is still a long way to go. Car exports around Europe have
fallen , rising Oil prices partly to blame.

Bank bonuses being discussed by EU Lawmakers to avoid the controversy at present.

Portugal has built one Business H3 , a smart Burger Restaurant , over 4 years and it has been so successful the Owner is opening a Branch in Spain.
The Firm has no bank loan or overdraft because it is a cash Business.

The ECB has pulled down Corporate Bond Yields to lowest ever but too much uantitive easing threatens the stability of the Euro.

Lehmann Bros, the start of the Crisis has exited its 2 year Bankruptcy and will start trading again on 17th April and make first payment to Creditors

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European commission advert shows white woman facing attack from ethnic minorities. Link to this video
The European commission has been forced to withdraw a high-budget video promoting the EU amid accusations that it depicts other cultures in a racist manner.

A row broke out after the enlargement directorate of the European commission, which is responsible for the expansion of the EU, released a video clip that was designed to appeal to young voters.

The video, entitled Growing Together, features a white woman dressed in yellow – the colour of the stars of the EU – walking calmly through a warehouse. As a gong sounds, she looks behind her as an aggressive Chinese-looking man shouting kung fu slogans jumps down in the style of the film Crouching Tiger, Hidden Dragon.

As he moves towards her, an Indian-looking man in traditional dress wielding a knife levitates towards her. He is a master of kalaripayattu, a martial art from the southern Indian state of Kerala. As she deals with him, a black man with dreadlocks cartwheels towards her in the style of capoeira, the Brazilian martial art.

The woman stares at the men. She then multiplies herself to form a circle around the men who drop their weapons and sit down. The woman's yellow outfit then turns into the stars of the EU.

The video shows the words: "The more we are, the stronger we are." It then says: "Click here to learn more about EU enlargement."

Raoul Ruparel, of Open Europe, said: "This was an ill-advised move by the European commission. It is strange because normally there is something of the Kum Ba Yah about the commission. But it has produced a video which shows a white female being threatened by foreign men with weapons. This is in dubious taste and judgment.

"We also question whether it was necessary to produce the video in the first place. We are in favour of EU enlargement but we are not sure that making viral videos is the best way to go about that."

Stefano Sannino, the director general of the enlargement division of the European commission, said: "We have received a lot of feedback on our latest video clip, including from people concerned about the message it was sending. It was a viral clip targeting, through social networks and new media, a young audience (16-24) who understand the plots and themes of martial arts films and video games. The reactions of these target audiences to the clip have in fact been positive, as had those of the focus groups on whom the concept had been tested.

"The clip featured typical characters for the martial arts genre: kung fu, capoeira and kalaripayattu masters; it started with demonstration of their skills and ended with all characters showing their mutual respect, concluding in a position of peace and harmony. The genre was chosen to attract young people and to raise their curiosity on an important EU policy. The clip was absolutely not intended to be racist and we obviously regret that it has been perceived in this way. We apologise to anyone who may have felt offended. Given these controversies, we have decided to stop the campaign immediately and to withdraw the video."




















6 Mar 2012

European commission advert shows white woman facing attack from ethnic minorities – video

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Sarkozy: Too Many Foreigners In France
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Mr Sarkozy has been accused of moving to the right in the run up to the presidential election
1:57am UK, Wednesday March 07, 2012

French President Nicolas Sarkozy has said there are too many foreigners in France and has pledged to cut the number of new arrivals in half.
As the country's presidential election campaign gathers pace, Mr Sarkozy insisted France's attempts to integrate foreign arrivals into its culture and society had become paralysed.

"Our system of integration is working more and more badly, because we have too many foreigners on our territory and we can no longer manage to find them accommodation, a job, a school," he said in a television debate.

Mr Sarkozy has been accused of moving to the right in the run up to the presidential election in order to recruit voters tempted by anti-immigrant candidate Marine Le Pen.

He said that while immigration could remain "a boon" for France in many areas, it must be controlled more tightly through tougher residency qualifications for newcomers.

"Over the five-year term I think that to restart the process of integration in good conditions, we must divide by two the number of people we welcome, that's to say to pass from 180,000 per year to 100,000," he said.

Mr Sarkozy also announced new plans to limit some welfare benefit payments currently available to immigrant workers to those who have enjoyed residency for 10 years and have worked for five of those.

France will vote in the first round of a presidential election on April 22, followed by a second-round run-off on May 6.

All recent opinion polls forecast that Francois Hollande will emerge victorious.

[Badboy]

SLIGHTLY OFF TOPIC,I WONDER IF EU SHOULD LOOK INTO THE WAY EUROPEAN SOCIAL FUND MONEY IS BEING USED IN UK WORKFARE PROJECTS BECAUSE OF FRAUDELENT CLAIMS BY CONTRACTORS.
MISUSE OF EU FUNDS SHOULD BE A PRIORITY.

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Debt Crisis: Big banks holding €81bn in Greek bonds row in behind deal to save country
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Greece's Prime Minister Lucas Papademos. Photo: Reuters
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Ads by GoogleBy Independent.ie reporters


Wednesday March 07 2012

BIG banks and pension funds have thrown their weight behind the attempt to avoid a messy Greek default as holders of €81m of the country’s bonds said they will participate in the debt relief programme.

The 39pc support for the debt swap deal comes ahead of tomorrow’s deadline and after a warning from the Institute of International Finance which yesterday said that a disorderly default would cost at least €1 trillion.


Private investors exposed to Greek debt will swap their bonds for new ones but face an overall loss of 75pc on their holdings as well as longer repayment times and lower interest rates.


Greece, under the stewardship of technocrat leader Lucas Papademos, claims that despite the losses the loss represents a good deal for investors as the alternative is to go empty-handed if the country could not secure the €130bn in bailout loans from the EU/IMF/ECB troika.


Investors hold a total of €206bn in Greek bonds.


Under the rules, Greece needs to secure a participation rate of over 66pc but for some of the bonds the rate must be higher.


A rate of more than 75pc but less than 90pc is seen as the most likely come by analysts.


Stock markets were more buoyant today having fallen yesterday on hopes that a deal will be signed off on.


- Independent.ie reporters

[Panda]

Merkel Sees Euros Minted From Marks in Trial of German Integrity

By Angela Cullen - Mar 5, 2012 12:01 AM GMT



Lionel Bonaventure/AFP/Getty Images

German Chancellor Angela Merkel speaks during a press conference at the end of a two-day European Union summit in Brussels, on March 2, 2012.

The vaulted red-brick building overlooking the River Main on Frankfurt’s east side has an illustrious if checkered past.

Once the biggest free-standing reinforced concrete hall in the world, the 220-meter-long Gross-markthalle became an emblem of modernism when it first opened its doors as a wholesale fruit and vegetable market in 1928, Bloomberg Markets reports in its April issue.





Enlarge image









Looming over the rebuilt Grossmarkthalle, two adjoining 185-meter-high glass towers are intended to portray a united Europe - not “just a flag, but a really striking feature,” says Prix, the Austrian architect whose firm, Coop Himmelb(l)au, designed the complex. Photographer: Hannelore Foerster/Bloomberg




Angela Merkel, Germany's chancellor is protecting the currency that has been a boon to the country's exports, about 40 percent of which go to euro-zone countries. Michele Tantussi/Bloomberg
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Then, from 1941 to 1945, it was a deportation point for more than 10,000 Frankfurt Jews, most of whom met their deaths in concentration camps. Partially destroyed in World War II bombing raids, the Grossmarkthalle is being recast for its next incarnation: the new home of the European Central Bank, which is now housed in three separate buildings around the city.

The central bank complex is designed to be what its architect, Wolf Prix, calls a “three-dimensional icon” of European unity. And yet its construction coincides with a bout of angst in Germany over the single currency that the ECB is charged with safeguarding.

Arguing that her country has benefited from the euro and stands to gain from its preservation, German Chancellor Angela Merkel is stalwart in her defense of it.

“You can trust that I will do everything to strengthen the euro,” she said in a televised address to the German nation on New Year’s Day.

Tricky Crosswinds

The Iron Chancellor, as she’s known, has stood her ground against tricky crosswinds. On Feb. 27, at Merkel’s urging, the German Bundestag defied a popular backlash and approved the second Greek bailout in as many years.

Anti-euro sentiment at home has grown as the European sovereign-debt crisis drags on. Sixty percent of Germans think the introduction of the euro in 1999 was a bad idea, according to a poll published on Dec. 4 by the German magazine Focus.

The defeat of Merkel’s party, the Christian Democratic Union, in a Berlin state election in September capped a year in which voters punished her coalition government again and again over its handling of the sovereign-debt crisis.

Next year will be an even bigger test: Elections will determine whether Merkel, first elected in 2005, will serve a third term.

Even in Germany’s broadly pro-euro business establishment, there’s some grumbling.

Wolfgang Reitzle, chief executive officer of German industrial group Linde AG and a former Bayerische Motoren Werke AG (BMW) board member, told Der Spiegel magazine in January that if member countries such as Italy cannot get their fiscal affairs in order, Germany should leave the currency union -- though he added he didn’t think it would come to that.

Deepest Crisis

For their part, Merkel’s euro-zone partners want her to be as involved as she can be.

They look to Germany, Europe’s largest economy and the world’s second-biggest exporter after China, as the only country that can steer the Continent out of what Merkel describes as its deepest crisis since World War II.

In February, there were signs that Merkel’s handling of the European financial emergency was finally gaining support at home.

According to a Feb. 8 Forsa poll, public support for the Christian Democratic Union rose to 38 percent, the highest rating since before Merkel’s re-election in 2009. Support for the main opposition party, the Social Democratic Party, stood at 27 percent.

Boosting Exports

The currency Merkel is protecting has been a boon to German exports, about 40 percent of which go to euro-zone countries.

A single monetary policy across the euro zone has benefited German companies, says Geoffrey Pazzanese, co-manager of the Pittsburgh-based, $583.3 million Federated InterContinental Fund, which had 22.7 percent of its assets invested in German firms as of Jan. 31.

The euro has blessed Germany with a weaker, export-boosting currency, which wouldn’t be the case if the deutsche mark still existed, he says.

Furthermore, he says, “The euro has provided more stability within the continental market, where the majority of German exports and imports occur.”

With a gross domestic product of $3.3 trillion in 2010, the German economy is the fourth largest in the world. It is the healthiest of Europe’s major economies. Germany’s unemployment rate of 6.8 percent as of Feb. 29 was the lowest among major European countries. Its inflation rate was 2.3 percent, compared with Britain’s 3.6 percent.

Anti-Euro Sentiment

In 2011, German exports, buoyed by a relatively weak euro that made them attractive, breached 1 trillion euros ($1.3 trillion) for the first time, according to the Bundesbank.

Even so, the same poll that reported a majority anti-euro sentiment also found that 74 percent of Germans considered the abandoned deutsche mark a more reliable and stable currency than the euro. Pazzanese says such anti-euro attitudes are shortsighted.

“Our view is that if there were still deutsche marks, the German export engine would likely be struggling with problems that can occur with a strong currency, such as competitiveness,” he says.

Frankfurt Mayor Petra Roth says German nostalgia for the mark is misplaced.

“Monetary union is part of Europe’s success,” she said in an e-mail interview. “If we were to abandon these aspirations, Europe would be nothing more than a conglomeration of national states.”

Kohl’s Protege

The events of 1989, when the Berlin Wall fell and the process of German unification was set in motion, put Europe and the world on a path of no return, she says.

The single currency was never a particularly German project, says Irwin Collier, a professor of economics at the Freie Universitaet Berlin. He says Germany had its own, pragmatic reasons for signing up for it, however.

By supporting what was largely a French undertaking, Germany got Paris and the European Economic Community, the precursor to the EU, to back the unification of East and West Germany in 1990.

Then-Chancellor Helmut Kohl sold the single currency to Germans on that basis, Collier says. He says Kohl’s thinking was, “We don’t get German unification without caving in on monetary union.”

All these years later, it’s Kohl’s protege, Merkel -- born in West Germany, raised in East Germany -- who holds the fate of the euro in her grasp.

Cajoled by Merkel

Germany is contributing as much as 211 billion euros to the European Financial Stability Facility, which is empowered to raise up to 440 billion euros by selling bonds to bail out over- indebted euro-zone countries.

In the pre-dawn hours of Feb. 21, cajoled by Merkel, European leaders ground out a deal valued at 130 billion euros in aid to Greece, allowing the country to escape an imminent default that would have convulsed the single currency.

In 2014, if all goes according to plan, the new ECB headquarters will be inaugurated and take its place along the Frankfurt skyline.

Looming over the rebuilt Grossmarkthalle, two adjoining 185-meter-high (600-foot-high) glass towers are intended to portray a united Europe -- not “just a flag, but a really striking feature,” says Prix, the Austrian architect whose firm, Coop Himmelb(l)au, designed the complex.

Banking Dynasties

Frankfurt is well-suited to such symbolism. Like Germany as a whole, it was born again after the war.

It is Germany’s fifth-largest city, with a population of about 650,000, and has a long tradition in finance, with roots in the Bethmann and Rothschild banking dynasties. Commercial bank towers now rise above what was once the rubble of a bombed city.

Frankfurt was also the cradle of a brief democratic movement that flared in 1848, when the insurgent National Assembly met in the Paulskirche, or St. Paul’s Church.

Today’s united Europe is an attempt to preserve democracy and prevent a return to tyranny, Frankfurt Mayor Roth says.

In that sense, she says, “there are parallels between the Paulskirche and Europe.”

While its designers intended the new ECB complex to convey harmony, old tensions are never far away.

Financial Turmoil

German lawmakers from the Social Democratic Party and the Christian Social Union as well as Merkel’s party criticized the ECB for purchasing bonds of euro-area countries and flooding the market with cash to stem the financial turmoil emanating from such countries as Greece and Italy.

The unprecedented intervention by the central bank prompted ECB chief economist and executive board member Juergen Stark, a former Bundesbank board member, to resign in protest at the end of last year.

Earlier, in February 2011, Axel Weber, who was a contender for the job Mario Draghi got, resigned as Bundesbank president after voicing his opposition to the same measures.

Many Germans don’t buy into the ECB as a symbol or even as an institution, the Freie Universitaet’s Collier says.

“There’s a common feeling that this European project -- all of the institutions of the EU -- is not ‘theirs,’” he says. “The ECB is just one more institution.”

Joerg Asmussen is one German who doesn’t feel that way. He’s a former German deputy finance minister who took Stark’s place on the ECB executive board in January. He says the new ECB premises are built to last and to endure difficult times.

“And so are we,” he says of the central bank.

Long, Hard Slog

When the guardians of Europe’s single currency move into their new ECB offices, they could be gazing upon a very different landscape than the one European leaders envisioned under the 1992 Maastricht Treaty that created the European Union and led to the euro.

In a Feb. 7 speech on the future of Europe, Merkel said that beating the debt crisis would require deep structural reform. While it would be a long, hard slog, she said, “change can bring something good.”

Whatever it brings, Germany will get the credit -- or the blame.




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[Panda]

8 March 2012 Last updated at 01:11 Share this pageEmail Print Share this page

Greek debt crisis

Ministers should draw up plans to deal with a break-up of the eurozone "as a matter of urgency", a committee of MPs and peers has warned.

The joint committee on the government's National Security Strategy (NSS) said the full or partial collapse of the single currency was "plausible".

It said political unrest and a rise in economic migrant numbers could result.

"Long term security" is at the heart of foreign policy thinking, the government said in response.

The committee, whose members include ex-MI5 director general Baroness Manningham-Buller, said economic instability could leave the UK "unable to defend itself".

It added that governments across the EU could be forced to cut defence spending if the instability were to continue.

"International economic problems could lead to our allies having to make considerable cuts to their defence spending, and to an increase in economic migrants between EU member states, and to domestic social or political unrest," it said.

And, while the committee welcomed the government's decision to publish the NSS alongside the 2010 Strategic Defence and Security Review, it said that "a clear over-arching strategy" had not yet emerged.

Committee chairman and former foreign secretary Margaret Beckett said: "A good strategy is realistic, is clear on the big questions, and guides choices. This one does not.

"We need a public debate on the sort of country we want the UK to be in future and whether our ambitions are realistic, given how much we are prepared to spend."

Margaret Beckett, who chairs the committee, called for a public debate on UK ambitions
In a wide-ranging report, it said Britain might also have to re-think its relationship with the US, as Washington realigned its strategic priorities and turned its focus away from Europe.

It said changing US priorities raised "fundamental questions if our pre-eminent defence and security relationship is with an ally who has interests which are increasingly divergent from our own".

The committee said that in an era of "diminished resources", the UK would have to take on a more "partnership-dependent" role in world affairs.

It stated: "We believe it is totally unrealistic not to expect any diminution in the UK's power and influence in the medium and long term."

In response, a government spokesman said ministers remained vigilant and regularly took stock of "the changing global environment" and threats to the UK's security.

"A strategy for Britain's long term security and prosperity is at the heart of the government's approach to foreign policy," he said.

[Panda]

8 March 2012 Last updated at 00:15 Share this pageEmail Print Share this page

A leading European Union official has urged private holders of Greek bonds to sign up to a vital debt swap deal ahead of a deadline later on Thursday.

Economic and Monetary Affairs Commissioner Olli Rehn said there would be no better offer, and the deal was vital for eurozone financial stability.

Greece needs at least 75% of bondholders to agree to take a 53.5% cut in the value of their holdings.

Greece needs the deal if it is to receive a second bailout.

The package from the European Union and International Monetary Fund would be worth 130bn euros ($171bn; £109bn).

Mr Rehn said: "It is important that all investors recognise that Europe has committed the maximum funds available to this voluntary debt exchange and that full participation is necessary for the Greek program to move forward."

Private investors have until 2000 GMT on Thursday to agree to the debt swap on the 206bn euros of Greek bonds they hold.

On Wednesday, the Institute of International Finance said that just under 40% of private holders of the outstanding Greek debt had agreed to it.

Bondholders are also being asked to accept a lower interest rate and give Greece more time to repay them.

Late on Tuesday, Greece's finance ministry said that six of the country's largest banks would accept the deal.

Default threat

National Bank of Greece, Eurobank, Alpha, Piraeus, Hellenic Postbank and ATEbank said they accepted the deal. Together they hold about 40bn euros of the 206bn euros of affected bonds.

But five small Greek pension funds, holding about 2bn euros of debt, have said they will not accept the deal.

The Greek Finance Ministry has made it clear that the alternative to the debt swap is a potential default.

"The republic's representative noted that if [private sector involvement] is not successfully completed, the official sector will not finance Greece's economic programme and Greece will need to restructure its debt," it said on Tuesday.

Their 107bn-euro write-off - the "haircut" - together with a huge package of public sector cuts aim to reduce Greek debt from 160% of GDP to 120.5% by 2020.

Athens was first bailed out in 2010 with 109bn euros from the EU and IMF.

[Panda]

7 March 2012 Last updated at 11:43 Share this pageEmail Print Share this page
Greece is only hours away from its latest make-or-break deadline - to reduce its massive debtload.

The country's government secured a second bailout worth 130bn euros (£110bn; $173bn) from the European Union and the International Monetary Fund last year and this was ratified last month.

But to get its hands on the money, it must get its private sector lenders to agree to take a loss on what it owes them.

Otherwise it won't get the aid it needs to keep it afloat. And that would mean the prospect of an imminent and disorderly default, and possibly even an exit from the euro.

The deadline for the debt swap is 2000 GMT on Thursday.

How does the deal work?
Greece was bailed out to the tune of 109bn euros back in 2010.

But by the middle of 2011, it became clear that this was never going to be enough for Greece to pay off its massive debts as its economy shrinks.

So Greece's benefactors - the International Monetary Fund and the other eurozone governments - agreed a second bailout worth 130bn euros.

But one of the key conditions was that Greece would reach a deal with its existing private sector lenders to reduce its debt.

This would be done through a swap of old bonds with newly-issued bonds that would be worth a lot less and pay less interest.

After months of negotiations between the Institute of International Finance (IIF), which represents most of Greece's private sector creditors, and the European Central Bank - which also owns a lot of Greek debts as a result of efforts to prop up Greece's banks and its bond market - a deal was finally reached in February.

Private holders will take a 53.5% nominal loss on their Greek debt - which works out to a real loss of about 74% after taking into account the loss of future interest payments, and the extra time being given to Greece to repay its reduced debts.

That means Greece wipes out what it owes on more than half of its 206bn-euro mountain of debt.

The 107bn-euro losses - the "haircut" - being allocated to lenders, along with another huge package of public sector spending cuts, aim to reduce the Greek government's total indebtedness from 160% of GDP now to 120.5% by 2020.

What is the issue now?
As the deadline approaches, no-one is entirely sure if the deal will come to pass.

Major banks such as France's Societe Generale and Italy's UniCredit - both of whom have seen large write-downs on their Greek holdings trigger steep falls in their share prices - have said they will participate.

But others, including some Greek pension funds, have said they will not.

To add to the tension, the IIF - which agreed the broad terms of the deal - has refused to say how much Greek debt the members of its steering committee hold.

Members include banks BNP Paribas and Deutsche Bank, and insurer Allianz.

Reports have also said that a quarter of Greece's privately-held debts are owned by hedge funds, which can bet on declines in the markets, unlike mutual and pension funds.

No-one is quite sure what these secretive funds will decide to do.

One piece of good news is that a global financial body, the International Swaps and Derivatives Association, announced last week that the debt write-off would not constitute a default.

A ruling of a "credit event" - a default - would have meant insurance against bond losses, called credit default swaps, would have been paid out.

That would have caused further losses and uncertainty for already fragile financial institutions.

What needs to happen next?
Greece wants 90% of holders to accept the offer.

They think this is likely to happen because the deal has a few sweeteners - such as upfront cash payments, a guarantee on some of the debt repayments from the eurozone bailout fund, and a warrant offering a higher rate if the Greek economy does better than expected.

For the deal to pass, the take-up must be above 75%. This would allow Greece to activate a Collective Action Clause (CAC) in its bond contracts that would force the rest of its bond investors to accept the deal.

To complicate matters even further, the CAC rules differ between Greece's international bonds governed by English law, and its roughly 177bn-euros worth of bonds that are governed by Greek law.

Even if Greece manages to get past the 75% threshold, it would still consult with its bailout lenders and private sector lenders again if total acceptance is less than 90%.

This is because it wants to try to prevent a "credit event", which might happen if it uses the CACs to force lenders to accept losses.

If the overall acceptance for its Greek and English law-governed debt is less than 75%, then the deal is off and we are all back where we started.

And if the deal does not happen?
Greece is continually having to pay back what it owes to creditors, which adds urgency to all these conversations.

The nation's next big payment is due on 20 March, when it owes 14.5bn euros.

It cannot afford this unless it gets the money from the new EU and IMF bailout - and it cannot get that money without the debt swap.

So if the debt swap does not happen on Thursday as planned, Greece and its creditors would have to come up with a Plan B (or C) pretty quickly.

Or default.

[Panda]

Spain pushes back against austerity.

Peter Bofinger, Merkel's Economic Advisor says this bond swap will not help Greece and will make it worse. He says the Greek GDP will go from 164% to
161% and will need more debt swaps to survive . He believes a loosening of the austerity measures will be necessary.

HSBC Chief Economist says there must be a stimulus for growth from Germany which has the highest Current account balance.

Europe heading for recession resulting in debt increase in contagion Countries, yet no provision has been made to create a higher firewall.

The ECB did the right thing to help European Banks but there is a danger that confidence in these banks will increase. Lowering interest rates is not the answer Economists say , it should stay at 1%. also, the ECB should not lend any more money to Banks at present because the quantitive easing will
add to inflation. Banks are not doing anything with the Loans anyway like paying off some debts or helping small Businesses stay afloat.

The Greek swap deal is seen as provoking aftershocks by hitting borrowing costs. Currently 60% of Bondholders have agreed to the Bondswap including
several big banks. It is the smaller investors who are holding back , but even though it is expected the deal will go through, there are other consideration on whether this is seen as a default.

The proposed 3 month reviews on bonds will mean greater writedowns on future Bonds and make investors very wary of buying Bonds..

[Panda]

Ideas


Economy

Is Keynesianism now a thoughtcrime?


7 March 2012
The Irish Times Dublin Comment14



British economist John Maynard Keynes (1883-1946).






Ireland will be the only country to put the EU fiscal compact to a popular vote. But what is really on the table, denounces columnist Fintan O’Toole, is that neo-liberal ideology is being raised to the status of unbreakable law.


Fintan O'Toole

“. . . the essential crime that contained all others in itself. Thoughtcrime they called it.” George Orwell, 1984

In the referendum we are now to have, the question is – ah, but what is the question?

It is not, as [Irish finance minister] Michael Noonan wrongly claimed last year, a referendum on whether Ireland should leave the euro zone. (They can’t throw us out.) It is not, as the Taoiseach variously claimed last week, about “economic recovery” or “jobs” or whether we “wish to participate in the European community and the euro and the euro zone from now on. It is surely not about how to define a structural deficit of 0.5 per cent – if it were, it would be the weirdest thing ever put to a public vote.

What it is about, however, is the creation of a thoughtcrime. A certain way of thinking is to be outlawed. It is not Nazism or racism or some other hateful ideology.

It is, in fact, a way of thinking that was, for three decades after the second World War, the dominant economic “common sense” of much of the developed world: the philosophy of John Maynard Keynes. This is the intellectual framework of most of the European centre-left and of New Deal Democrats in the United States. And it is to be banned by an international treaty, like human trafficking or chemical warfare.

Read article in full at The Irish Times en

On the web
Original article at The Irish Times en


Context

Doubts linger over referendum date and wording

The Irish government has yet to announce an exact date for the referendum on the EU25 fiscal compact. Initially expected to take place in May or June after Taoiseach Enda Kenny’s February 28 announcement that the 10 page legal document will be submitted to a popular vote, the government, writes the Irish Times, is divided on the issue. According to government sources –


… while the general thinking is to hold it earlier rather than later, some senior Ministers have not dismissed the merits of holding the poll after the summer break.

Speaking to the Dublin daily on condition of anonymity, one senior minister argued that a later date –


… would allow us to wait and see the outcome of the French presidential election and the change, if any, in its approach to the Fiscal Treaty.

The Irish Independent reports that while the exact wording of the referendum has yet to determined, the question put to the electorate will be “strictly technical and factual”, say government sources, and will only “relate to amending the Irish Constitution to allow the State to ratify the treaty.” The eventual question on the ballot paper will not, therefore, pose a broader question about membership of the euro, as was suggested by Finance Minister Michael Noonan in December.

According to two recent polls, a substantial portion of the electorate remains undecided on whether to support ratification. A Sunday Business Post survey found 44% saying they would vote Yes, 29% voting No, and 26% undecided. A Sunday Independent poll found 37% for, 26% against and 15%
don't know.

[Panda]

But the fact it is preparing a list at all speaks volumes. Barring a "miracle," as Louise Armitstead puts it, Greece will almost certainly have to activate collective action clauses to get sufficient participation in the debt swap, and the ISDA has said all along that:

the use of [CACs] to effect a reduction in coupon or principal or one of the other events set out in the definition of the Restructuring Credit Event could trigger [a credit event] if the other requirements of the Restructuring Credit Event were met (for example decline in creditworthiness), as its effect would be to bind all holders of the relevant debt.

11.48 It is prudent for ISDA to be prepared in the event that a credit event is determined to have occurred.

That was the declaration yesterday from the International Swaps and Derivatives Association, which is the body that officially decides when a "credit event" has occured, and credit default swaps (CDSs) paid out.

In fact, the ISDA is so prepared that it has drawn up a list of "potential deliverable obligations" that market participants "reasonably believe are likely to be delivered into standard credit default swap contracts".

In other words, financial institutions have submitted to the ISDA a list of bonds they think are covered by CDS insurance. These bonds will be reviewed by the ISDA if a "credit event" occurs - although the ISDA warned that:

Inclusion of an obligation in the list does not imply that the contributor, ISDA or the EMEA Determinations Committee has verified that the obligation actually is deliverable under the terms of a standard credit default swap contract.



11.05 German industrial output rose by 1.6pc in January, versus a revised 2.6pc fall in December, according to figures just released by Germany's economy ministry.

This was higher than the 1.1pc rise forecast by economists in a Bloomberg survey.

Yesterday, a surprise fall in German industrial orders saw seasonally and price-adjusted order intake fall by 2.7pc, as orders from outside the eurozone fell by 8.6pc.

10.31 Greece's decline in 140 characters or less:

Twitter: Alberto Nardelli - #Greece youth unemployment rate has risen to 51.1%. It was 39% in 2010, 28.9% in 2009, 26.3% in 2008, 24.5% in 2007

10.26 CHF17.8bn (£12bn). That's how much it cost the Swiss National Bank (SNB) to keep the Swiss economy competitive last year, according to the central bank.

The SNB said it spent nearly CHF18bn to stem the "massive overvaluation" of the Swiss franc and enforce the minimum exchange rate of 1.20 versus the euro.

10.10 BREAKING

The unemployment rate in Greece hit a record high of 21pc in December, according to figures just released.

This compares with a rate of 14.8pc in December 2010, and 20.9pc in November, the Hellenic Statistical Authority reported.

Youth unemployment now stands at a staggering 51.1pc.






...
This is the FT's take on PSI participation, while the Wall Street Journal has opted for a more classic look. This tweet from the FT's Peter Spiegel made me chuckle this morning:

09.44 Earlier, a government official told Reuters:

The pace of responses to the bond offer is good, the percentage of bondholders tendering voluntarily is very high.

According to an emailed statement, Greek PM Lucas Papademos will hold a cabinet meeting this afternoon that will include a briefing by finance minister Evangelos Venizelos on what the Greek government needs to do before its second bailout can be finalised.

09.32 Even if Greece's debt swap goes through, the country will require "real debt relief" within the next 12 months to put the country on a sustainable path, Peter Bofinger, economic adviser to the German government, told Bloomberg this morning.

Despite finance minister Wolfgang Schaeuble's admission yesterday that he had openly discussed a Greek euro exit with its finance minister Evangelos Venizelos, Mr Bofinger insisted that an exit is considered by "nobody" in Germany.

He added that the country was the exception rather than the rule, and no other writedowns would follow Greece.

09.13 This afternoon will also see interest rate decisions in the UK and eurozone. Both rates are expected to remain unchanged at 0.5pc and 1pc respectively.

ECB chief Mario Draghi's press conference at 1.30pm GMT should prove more interesting.

You can expect him to be quizzed on the bank's latest long term refinancing operation (LTRO) and of course, any more hints on Greece.

Overnight deposits at the ECB fell to €806.9bn last night, and despite several rumours following the second LTRO, the ECB hasn't bought any bonds via its Securities Markets Programme (SMP) since mid-February.

08.50 Deputy editor Benedict Brogan says the idea is "bold, but don’t expect the Chancellor to embrace [it]". More from his Morning Briefing:

Not only would it be extremely costly - at a cost of around £1,000 per pensioner - it would also primarily benefit relatively better-off pensioners (as those without other sources of income are already protected from tax by the personal allowance).

If anything, as The Times reports , he’s more likely to go for people with private pension pots than help them out: their p3 headline is “pensions in red as Treasury plots its raid”. Not only is QE driving up the size of deficits in corporate pension funds (as the FT reports in its splash ), the Government is likely to cut pension relief even further, perhaps reducing the maximum amount that anyone can contribute to a pension tax-free in a year to £30,000.

08.46 More than 5m middle-class retired people could be freed from paying income tax on their state pensions, the Treasury’s tax advisers have suggested. James Kirkup reports:

In a move that would be worth up to £1,000 a year each, the Office for Tax Simplification said that scrapping the levy should be considered because many pensioners considered it “unjust”.

The advisers, an independent body set up by the Chancellor, George Osborne, made the suggestion in a report that condemned “confusing”, over-complex tax rules facing people in retirement.

Almost 5.6 million people receiving the basic state pension pay income tax, HM Revenue and Customs estimates. Usually it is because private pension payments and savings interest take their total income above the tax threshold.

More than 1.5 million of them have to fill in a self-assessment form.

08.38 Let's take a quick look at this morning's business headlines:



08.31 After edging back above 5pc on Tuesday, Italian and Spanish borrowing costs have fallen today. Yields on 10 year Italian bonds are currently down 10 basis points at 4.811pc, while Spanish 10 year yields have fallen 8 basis points to 4.965pc.

08.25 Europe's stock markets are open. The FTSE 100 is up 0.5pc at 5,819.61, while the CAC 40 in Paris is up 0.8pc at 3,419.04 and Frankfurt's DAX 30 is up 0.65pc at 6,714.48.

08.19 But its problems don't end there. As the FT's Sam Jones highlights, another thorn in Greece's side is the €29bn of Greek bonds issued under foreign law:

When, on Tuesday, the Greek debt management agency declared that it simply did not have the money to pay stubborn bondholders who rejected a debt restructuring it did so with one group in mind: investors holding the €20bn or so of Greek bonds issued under foreign, as opposed to Greek, law.

The problem laid bare by Athens is simple. The Greek government was able to retrofit €177bn of bonds issued under its own law with one single, overarching “collective action clause” by which recalcitrant bondholders can be made to swallow a restructuring by majority vote of all bondholders. But no such force can be easily brought to bear on the foreign-law issuance.

Instead, Greece can only force holders of foreign-law bonds to participate by use of CACs on a bond issue-by-issue basis, making it much easier for hedge funds to assemble blocking stakes.

In key foreign-law bond issues, some hedge funds have now done so.

“There are bonds trading north of 40 cents on the euro,” says a portfolio manager at one large London-based global macro hedge fund. “The people that are buying them at those levels – they’re almost certainly holdouts.”



For the hedge funds that hope to profit by second-guessing the Greek government’s actions, blocking-stakes in key foreign-law Greek bonds could be wildly successful bets

07.58 Economists at Societe Generale also looked into their crystal balls last night, outlining the possible outcomes and probabilities in a note. Like many analysts, SogGen believes the bond swap will proceed, but only with a bit of arm twisting.

In its view, a disorderly default:

is highly unlikely [...] given the number of banks and investors that have accepted to go to the offer and said so publicly.

Equally:

We think it is unlikely that participation would be above 90%, even if the late threat from Greece to treat hold outs unfavourably causes a late rush on Thursday.

SocGen also highlights a grey area:

Where participation in the offer is between 75% and 90% and the consent solicitation is accepted. Then ‚the Republic, in consultation with its official sector creditors, may proceed to exchange the tendered bonds without putting any of the proposed amendments [CACs] into effect.

It isn’t clear, based on the current available information, whether participation will be below 75% or above. But it is likely that the 66% threshold on consent solicitation will be reached. So the PSI exchange will proceed.

We suspect that participation will be too far from 90%, hence CACs would be activated.

07.49 Louise has also compiled a handy guide to the the possible outcomes of the debt swap. In her words, there are are three ways this could play out:

1.) A miracle

2.) A forced deal

3.) Armageddon

How comforting.

07.38 Three British banks signed up to the deal yesterday. However, reception elsewhere has been lukewarm, leaving Greece on the brink of default. Louise Armitstead reports:

The Royal Bank of Scotland, Barclays and HSBC joined 30 European banks and institutions in declaring their acceptance of the deal - but the tally was still far short of the 95pc needed to avoid being officially declared in default.

The International Institute of Finance (IIF), the body that has negotiated with the Greek government on behalf of bondholders, put out several announcements on Wednesday, counting the proportion of the vote as it inched up. The latest statement said bondholders “amounting in aggregate to €84bn, or 40.8pc of the €206bn total eligible debt” would support the deal.

The regular updates coincided with provocative comments from Germany’s finance minister, Wolfgang Schaeuble, who said he had discussed with Greece’s finance minister Evangelos Venizelos whether it would be better for the country to leave the euro.



07.32 To swap or not to swap, that is the question. Tonight is the final deadline for Greece's private sector investors to decide whether they want to sit in the barber's chair and take a 53.5pc haircut on the value of their debt.

07.30 Good morning and welcome back to our live coverage of the eurozone debt crisis.

Debt crisis live: archive































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Graphic: EU treaty deadlock explained





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Greek Debt Deal 'Likely' Ahead Of Deadline
9 Comments
Greece's austerity measures to cut its debt have sparked widespread protests
2:06pm UK, Thursday March 08, 2012

Greece looks to be on course to avoid a messy default on its vast debts as its private bondholders have reportedly agreed to write down the value of their investments hours before the deadline.
According to Greek state TV, 69% of private bondholders have agreed to take a cut in the value of their investment in Greek debt.

This comes ahead of a deadline set for 8pm GMT tonight.

Some 66% of private bondholders need to agree to the so-called haircut, incurring losses of up to 70%, to prevent a potentially catastrophic national default.

At lunchtime Italian Prime Minister Mario Monti said a "solution was close", with "over 60%" of bondholders agreeing to take part in the debt swap ahead of the deadline.

The reports from Greek state TV came simultaneously.

Having two-thirds of the creditors back the bond swap was a key condition for securing Greece's 130bn euro (£109bn) second bailout from the EU and IMF and avoid bankruptcy.

The planned restructuring of its finances will cut Greece's debt burden by 100bn euros (£84bn).

While there is a requirement that 90% of Greece's private investors voluntarily sign up to the deal, Athens can force it through - calling upon legalislation to force bondholders to take a cut - if two-thirds vote in favour.

Greece's Finance Ministry has said that 75% of bondholders who own 25bn euros (£21bn) of bonds under English law must also sign up for the deal to go ahead.

If the benchmarks of investors do not agree, Greece would not have the money to meet a big bond repayment due on March 20.

This means the embattled nation would officially default on its debt, prompting renewed turmoil in the financial markets and knocking the confidence of the global economy.

An official announcement on Greece's bond swap will be posted on the Greek Finance Ministry website at 6am (GMT) tomorrow.

On Thursday, global markets appeared confident a deal would go through, while the Greek government said all is currently going to plan.

Major banks, pension funds and other investors pledged to take part.

However, some creditors, notably hedge funds, are expected to hold out, hoping that scuppering the deal would trigger the payment of credit default swaps - essentially insurance against default.

Gary Jenkins, managing director of Swordfish Research, said: "Obviously for the majority of bondholders it does make sense to accept the deal as it is better to get something rather than nothing."

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Greek crisis

Thessaloniki shows the way forward


8 March 2012
Die Zeit Hamburg Comment




Vineyards of the Kir-Yianni domain at Naoussa, Greece.

Kir-Yanni




The Greek capital is bogged down in grievances over recession and the country’s loss of autonomy. But further east, in the Thessaloniki region, new business ideas are cropping up – and new hopes blooming. Die Zeit visited the Greeks who are trying to live off the fruits of their own hard work.


Michael Thumann

The bright red liquid spills up to the edge of the glass. Swirl, sniff, rinse, taste – and spit it out again. Stellios Boutaris is tasting the latest blend from the Kir Yanni winery. “This’ll be something!” he declares, pleased with the resulting rosé champagne that he hopes will conquer Northern Europe. “Germany is a champagne country; we’ll find buyers there.”

An hour west of Thessaloniki, in the village of Yannakohori, the reasons for the optimism become apparent. A gentle winter sun hangs over the Kir Yanni winery. Above the weak green and grey of the slopes, snow still lies on the mountains.

The business model that Stellios Boutaris believes is the model for Greece is getting off the ground here: “To do what we can do and do it really well.” For example, a good wine. Retsina, the notorious throat-scratcher from the Greeks down the street – that was yesterday. Kir-Yanni is being poured at gourmet restaurants in Athens, Thessaloniki – and, increasingly, by foreign customers.

Kir-Yanni is becoming a brand. The new Greece is growing in this Macedonian village and in the streets of the district capital of Thessaloniki, and it’s being nurtured by those Greeks who no longer expect anything from the state. Perhaps that is why it is so hard to find in Athens, among the union bosses of yesterday and the corrupt politicians who blocked reforms to serve the interests of their clientele, and the deputies who stashed millions of euros abroad.

Up in Thessaloniki, Yannis Boutaris – the father of Stellios Boutaris – was at retirement age when he found himself in a warm office in the City Hall. Until a few years ago he had managed the winery, which he had founded in 1996, by himself. Then the now 69-year-old went into politics, and a year ago he was elected mayor of the second largest city in Greece. He got there on his reputation as a successful businessman, as one who lives off his own hard work, as an anti-politician.

Congress against the ossified capital

This city on the Mediterranean Sea was once the Manchester of Macedonia. After the fall of the Iron Curtain, though, the textile mills, leather, knitting, and wool-dyeing factories migrated north to ex-Yugoslavia and Bulgaria.

Yannis Boutaris is popular with the townspeople and visitors from the EU, and that has something to do with his reforms. Boutaris brought a new broom to the city administration, cut the number of directorates, and for the first time had a job description drawn up for every city employee. That way, everyone knew who to go for for what. “This is my biggest challenge,” he says. Yannis Boutaris is expected to open up new horizons for Thessaloniki’s frustrated townspeople.

Public calls by German ministers for a Greek exit from the eurozone have helped a little there. The fact is that Thessaloniki would have nothing to offer when it comes to cheap mass-produced goods for export, so it must find something else.

So what kind of future is Greece’s second largest city planning for itself? “Small is beautiful,” Yannis Boutaris exclaims in English. Greeks should focus on the little things that they know well, he says, and then produce these at excellent quality. “We don’t sell ourselves and our products well enough,” he says, citing the example of Greek olive oil traded to Italy and rebottled as Italian olive oil. Greece, he suggests, ought to learn from the Italians how to maintain quality and brands.

Many agree. At a business conference not far from the Mayor's Office, entrepreneurs from northern Greece are gathering. Unlike in Athens, there is little whining here about the programmes of the EU and the International Monetary Fund. The meetings is a congress against the ossified capital, Athens, and the impotent central government. It’s a forum for liberal criticism of a bloated administration.

Freshen up blurry image of Thessaloniki abroad

“The state is our crisis,” says economics professor Moise Sidoropoulos. “We don’t want business people looking for handouts from the state,” calls out another. “We want entrepreneurs who go into the markets and fight.” That sounds truly scrappy. Where would the Greeks, then, find their markets?

Moise Sidoropoulos reads off a respectable list. The great fleets of Greek ship-owners must be brought back to Greece, by reducing taxes and levies on them. Alternative energy can be produced domestically: Greece has abundant wind and solar power, and a small but strong pharmaceutical industry that focuses on generic brands. Greek agriculture needs to export more quality products, and fish farms must replenish the over-fished Mediterranean. The most important industry, however, is tourism. Greece’s major resource is the beauty of the country.

That’s just how Yannis Boutaris sees it. As mayor, he has tried the freshen up the somewhat blurry image of Thessaloniki abroad, and has persuaded airlines to establish direct connections. Visitor numbers are going up fast. Trying now to bring in cruise ships, he recently visited Hamburg to learn from its successes with huge boats.

The Kir Yanni winery also figures in the mix of idyllic and modern. Stellios Boutaris no longer has anything in common with the gnarled Greek farmer of yore. Apart from growing the grapes and making the wine, he hunts for clients at wine fairs in Europe and America, and wants to sell to China too. E-shopping has long been part of his arsenal. At the click of a mouse, the Kir-Yanni wines can be delivered to your home.

This could be the look of the new Greece, if the plans works out.

Translated from the German by Anton Baer

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Millstein, a former U.S. Treasury spokesman says it will be a tough and the Euro is proving a hindrance for not only Greece, but other Euro Countries
who can do nothing to adjust the currency.He also says the EU, IMF and ECB are all Creditors so how does Greece propose to repay those debts ?
Since these Creditors do not want to partake in the Bond swap, this is a default of 100 billion Euros of debt.
The whole concept of a currency without a Central bank has now proven impossible to monitor .

Draghi says the fiscal policy will work and it is essential for Euro Countries to abide by the rules. Growth outlook remains subject to downside risks.
The IMF says it will lend to other Countries.

One analyst says he sees Greece and the Netherlands leaving the Euro by the end of the Year, and Spain and .Ireland considering their position.
If there is no upturn in the World economy over the next few months the Euro could collapse.

Greece needs at least 66% of bondholders to swap to save any money.

At the moment without confirmation, it is estimated that 60% of bondholders have swapped, but the result is not expected until early hours of the
morning.
Even if they get 75%, those who havn't signed up to the deal could complain to the ISDA and it could turn out that the deal will be regarded as a default because those who held out could have made an insurance claim and were co-erced, and it may be deemed a Sovereign Debt.

CityGroup says with a 160% GDP Greece will need more bail outs until their economy picks up and this debt will take many years to pay off, the Country
could still default.

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