Re: New EC Thread

[Panda]

Luis Guindos , Spains' Economics Minister is confident that Spain will not need a bail-out because he says property values have been under-rated
and Spain has recouped a lot of lost trade .

The unemployment in Spain has risen to 24% and 10 yr Bond Yields have increased.

Italian 10 yr bond yield has increased but Germany's has decreased.

The Euro has fallen again, partly due to all the upcoming elections shortly taking place.

[Panda]

27 April 2012 Last updated at 16:05


An explosion in the centre of the Syrian capital Damascus has killed at least 10 people and wounded 20 others, state media say.

The reports said a "terrorist suicide bomber" caused the blast near a mosque in the Midan area, but opposition activists blamed the Syrian government.

TV showed graphic images of the scene.

The incident came after UN Secretary General Ban Ki-moon warned that the government was "in contravention" of a UN and Arab League-backed peace plan.

Mr Ban demanded that Damascus complied with the peace plan brokered by envoy Kofi Annan without delay.

Syrian state TV said civilians and security force members were among the casualties in the Midan explosion, which it said happened as worshippers were leaving Friday prayers at the nearby Zain al-Abidin mosque.

Continue reading the main story
Analysis

Jim Muir

BBC News, Beirut

--------------------------------------------------------------------------------
Syrian state TV was quick to blame what it called "terrorists" for the attack, implying it was part of the anti-regime campaign.

But activist organisations accused the regime itself of carrying out the attack to distract attention from the repression of demonstrations after Friday prayers, and to justify the presence of the army in towns and cities in contravention of Kofi Annan's peace plan.

In the past, opposition groups, including the rebel Free Syrian Army, have strongly denied involvement in such big, indiscriminate explosions, which first started happening in Damascus in December.

Midan has been the scene of frequent anti-government protests. An explosion in the same district in January reportedly killed at least 26 people and wounded 63.

'Troubled'

Earlier on Friday, a separate explosion was reported in an industrial area of Damascus. However, it was unclear if there were casualties from that blast.

Meanwhile, activist groups said at least three people had been killed by security forces opening fire on anti-government protests across Syria on Friday.

The UK-based Syrian Observatory for Human Rights said one person had died in a village outside Damascus, another in the second city of Aleppo, and the third in the eastern city of Deir al-Zour.

The reports could not be independently verified due to government restrictions on the media.

Anti-government protests regularly take place after Friday prayers.

Mr Ban remained "deeply troubled" by the continued presence of heavy weapons and troops in population centres as reported by UN monitors, his spokesman said on Thursday evening.

The UN currently has about 15 observers in Syria monitoring a shaky ceasefire, which came into force on 12 April, and hopes to have the full advance team of 30 in place by Monday. The Security Council has approved the deployment of up to 300.

Continue reading the main story
Annan's six-point peace plan
1. Syrian-led political process to address the aspirations and concerns of the Syrian people

2. UN-supervised cessation of armed violence in all its forms by all parties to protect civilians

3. All parties to ensure provision of humanitarian assistance to all areas affected by the fighting, and implement a daily two-hour humanitarian pause

4. Authorities to intensify the pace and scale of release of arbitrarily detained persons

5. Authorities to ensure freedom of movement throughout the country for journalists

6. Authorities to respect freedom of association and the right to demonstrate peacefully

An estimated 9,000 people have died in Syria since the uprising against President Bashar al-Assad started in March last year, according to UN figures. In February, the Syrian government put the death toll at 3,838 - 2,493 civilians and 1,345 security forces personnel.

On Friday the US expressed its "disappointment" in the Syrian government's actions since the ceasefire was agreed, and said it would increase pressure on President Bashar al-Assad.

"We intend to continue to ramp up the international pressure against the Assad regime and encourage them in the strongest possible terms to live up to the obligations and commitments that they made in the context of the Kofi Annan plan," White House spokesman Josh Earnest told reporters aboard Air Force One.

France has said that if the peace plan fails it will press for a "Chapter Seven" resolution at the UN, which allows for action that could be backed by force.

Other Western powers have said they intend to push for an arms embargo and UN sanctions.

Russia and China, however, say they will veto any attempt to authorise military action in Syria and also resist the idea of sanctions. They have already blocked two Security Council resolutions condemning the crackdown on dissent

[Panda]

Spanish Economy Minister Luis de Guindos expects foreign investors and real-estate funds to help offload property assets from banks’ balance sheets and ruled out using public funds to shore up the industry.

“A third-party partner is going to enter into this asset management company if the valuation is the correct one,” said Guindos, 52, in an interview in Madrid late yesterday. The government “will set the general rules to do that but without any kind of subsidy. We are not going to put in any money.”













A for sale sign at an apartment in Truyols, Murcia, Spain. Photographer: Xabier Mikel Laburu/Bloomberg





Play Video


April 27 (Bloomberg) -- Spanish Economy Minister Luis de Guindos discusses the European sovereign-debt crisis, Spanish banks and the outlook for the economy. He spoke yesterday in Madrid with Bloomberg's John Fraher. (Source: Bloomberg)





Play Video


April 27 (Bloomberg) -- Moritz Kraemer, head of European sovereign ratings at Standard & Poor's, talks about the downgrade to Spain's credit rating and the European Central Bank's role in the region's debt crisis. He speaks from Frankfurt with Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)



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Spanish Economy Minister Luis de Guindos speaks during a Bloomberg Television interview at the economy ministry in Madrid. Photographer: Angel Navarrete/Bloomberg
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Less than three months after tightening rules to force lenders to recognize deeper real-estate losses, Spain is seeking new ways to convince the bond market that bank losses won’t overburden public finances. De Guindos was speaking just hours before Standard & Poor’s cut Spain’s credit rating to within three steps of junk and data showed the nation’s unemployment rate surged to 24.4 percent, the highest in 18 years.

Spain’s 10-year bond yield rose to 5.987 percent at 9:05 a.m. in Madrid, pushing the gap over equivalent German securities to 433 basis points.

Transparent Valuation

De Guindos said that any third-party investors in the new pooled property entities won’t need the reassurance of public money because the assets they will contain are becoming more realistically priced.

“The key element is going to be transparency and valuation,” said the minister, who used to run the Iberian unit of Lehman Brothers Holdings Inc. When asked whether the plan would create additional losses for banks, he said assets are already priced at market value.

Spain will draft rules in the coming months to allow banks to move real-estate holdings into asset-management companies run with third-party investors, de Guindos said. The mechanism, which will be voluntary, affects assets for which provisions have already been made.

Spain is in the midst of the third effort to clean up its banking industry since the bubble burst in 2008. In February, the government increased the ratio of provisions to be set aside for land to 80 percent, while raising the ratio on unfinished developments to 65 percent and to 35 percent for other troubled assets including finished houses. The new provisioning rules cover about 170 billion euros ($224 billion) of assets.

Conflict of Interest

“We think these valuations are much closer to the valuations of the market place,” de Guindos said. He declined to specify who will value the assets, indicating he wouldn’t copy Ireland’s decision to use BlackRock (BLK) Inc., the world’s biggest asset manager, to price assets.

“In the case of Ireland it was BlackRock, don’t you think BlackRock wants to buy assets in Spain?” he said. “If you are going to be the referee and at the same time you want to buy assets there’s a very clear conflict of interests.”

Spanish 10-year bond yields rose above 6 percent this week amid concern that lenders’ bad loans risk swamping national finances just as the government tries to rein in the euro region’s third-largest budget deficit. Highlighting Spain’s challenges, Standard & Poor’s late yesterday cut its rating on the country by two levels to BBB+, citing concern that it will need to pour more money into its banks.

Spanish Recovery

Spain’s deficit-cutting efforts may be undermined by the economy’s relapse into its second recession since 2009, which has now pushed the unemployment rate to more than 24 percent, with more than half of young people out of work.

At the same time, de Guindos said he expects the economy to return to growth in 2013 and stressed that Spain is starting to recover some of the competitiveness lost over the first decade of euro membership.

Giving his first forecasts for 2013, de Guindos said that the economy will show “small but positive growth,” after contracting 1.7 percent this year. The International Monetary Fund expects an expansion of 0.1 percent next year, an estimate Guindos said is “reasonable.”

The jobless rate will peak at between 24 percent and 25 percent and stabilize next year, he said.

As exports grow, the nation will next year post its first current-account surplus since 1986, eliminating a gap that amounted to about 10 percent of gross domestic product during the debt-fueled boom.

Spanish Surplus

“Next year we will be in surplus, that is the adjustment of the Spanish economy,” de Guindos said. “There’s a very clear improvement in the competitiveness of the Spanish economy.”

De Guindos joined Prime Minister Mariano Rajoy’s government in December after the pro-business People’s Party won the biggest majority any Spanish party has secured since 1982. He is set to propose a new head of the Bank of Spain as Governor Miguel Angel Fernandez Ordonez, appointed by the former Socialist government, comes to the end of his six-year term.

“It’s going to have a very technical profile: it’s going to be a professional, a person with a reputation in the international and domestic arena,” he said, declining to give names and saying it wouldn’t be a banker. “I have someone in mind.”

[Panda]

country and Europe

Apr 28th 2012 | from the print edition


The Economist


..






IT IS half of the Franco-German motor that drives the European Union. It has been the swing country in the euro crisis, poised between a prudent north and spendthrift south, and between creditors and debtors. And it is big. If France were the next euro-zone country to get into trouble, the single currency’s very survival would be in doubt.

That is why the likely victory of the Socialist candidate, François Hollande, in France’s presidential election matters so much. In the first round on April 22nd Mr Hollande came only just ahead of the incumbent, Nicolas Sarkozy. Yet he should win the second round on May 6th, because he will hoover up all of the far-left vote that went to Jean-Luc Mélenchon and others and also win a sizeable chunk from the National Front’s Marine Le Pen and the centrist François Bayrou.





Mr Sarkozy has a mountain to climb. Many French voters seem viscerally to dislike him. Neither Ms Le Pen (who, disturbingly, did well) nor Mr Bayrou (who, regrettably, did not) is likely to endorse him, as both will gain from his defeat. So, barring a shock, such as an implosion in next week’s televised debate, Mr Hollande can be confident of winning in May, and then of seeing his party triumph in June’s legislative election.

This newspaper endorsed Mr Sarkozy in 2007, when he bravely told French voters that they had no alternative but to change. He was unlucky to be hit by the global economic crisis a year later. He has also chalked up some achievements: softening the Socialists’ 35-hour week, freeing universities, raising the retirement age. Yet Mr Sarkozy’s policies have proved as unpredictable and unreliable as the man himself. The protectionist, anti-immigrant and increasingly anti-European tone he has recently adopted may be meant for National Front voters, but he seems to believe too much of it. For all that, if we had a vote on May 6th, we would give it to Mr Sarkozy—but not on his merits, so much as to keep out Mr Hollande.

With a Socialist president, France would get one big thing right. Mr Hollande opposes the harsh German-enforced fiscal tightening which is strangling the euro zone’s chances of recovery. But he is doing this for the wrong reasons—and he looks likely to get so much else wrong that the prosperity of France (and the euro zone) would be at risk.

A Socialist from the left bank

Although you would never know it from the platforms the candidates campaigned on, France desperately needs reform. Public debt is high and rising, the government has not run a surplus in over 35 years, the banks are undercapitalised, unemployment is persistent and corrosive and, at 56% of GDP, the French state is the biggest of any euro country.

Mr Hollande’s programme seems a very poor answer to all this—especially given that France’s neighbours have been undergoing genuine reforms. He talks a lot about social justice, but barely at all about the need to create wealth. Although he pledges to cut the budget deficit, he plans to do so by raising taxes, not cutting spending. Mr Hollande has promised to hire 60,000 new teachers. By his own calculations, his proposals would splurge an extra €20 billion over five years. The state would grow even bigger.

Optimists retort that compared with the French Socialist Party, Mr Hollande is a moderate who worked with both François Mitterrand, the only previous French Socialist president in the Fifth Republic, and Jacques Delors, Mitterrand’s finance minister before he became president of the European Commission. He led the party during the 1997-2002 premiership of Lionel Jospin, who was often more reformist than the Gaullist president, Jacques Chirac. They dismiss as symbolic Mr Hollande’s flashy promises to impose a 75% top income-tax rate and to reverse Mr Sarkozy’s rise in the pension age from 60 to 62, arguing that the 75% would affect almost nobody and the pension rollback would benefit very few. They see a pragmatist who will be corralled into good behaviour by Germany and by investors worried about France’s creditworthiness.

If so, no one would be happier than this newspaper. But it seems very optimistic to presume that somehow, despite what he has said, despite even what he intends, Mr Hollande will end up doing the right thing. Mr Hollande evinces a deep anti-business attitude. He will also be hamstrung by his own unreformed Socialist Party and steered by an electorate that has not yet heard the case for reform, least of all from him. Nothing in the past few months, or in his long career as a party fixer, suggests that Mr Hollande is brave enough to rip up his manifesto and change France (see article). And France is in a much more fragile state than when Mitterand conducted his Socialist experiment in 1981-83. This time the response of the markets could be brutal—and hurt France’s neighbours too.

Goodbye to Berlin

What about the rest of Europe? Here Mr Hollande’s refusal to countenance any form of spending cut has had one fortunate short-term consequence: he wisely wants to recast the euro zone’s “fiscal compact” so that it not only constrains government deficits and public debt, but also promotes growth. This echoes a chorus of complaint against German-inspired austerity now rising across the continent, from Ireland and the Netherlands to Italy and Spain (see Charlemagne).

The trouble is that unlike, say, Italy’s Mario Monti, Mr Hollande’s objection to the compact is not just about such macroeconomic niceties as the pace of fiscal tightening. It is chiefly resistance to change and a determination to preserve the French social model at all costs. Mr Hollande is not suggesting slower fiscal adjustment to smooth the path of reform: he is proposing not to reform at all. No wonder Germany’s Angela Merkel said she would campaign against him.

Every German chancellor eventually learns to tame the president next door, and Mr Hollande would be a less mercurial partner than Mr Sarkozy. But his refusal to countenance structural reform of any sort would surely make it harder for him to persuade Mrs Merkel to tolerate more inflation or consider some form of debt mutualisation. Why should German voters accept unpalatable medicine when France’s won’t?

A rupture between France and Germany would come at a dangerous time. Until recently, voters in the euro zone seemed to have accepted the idea of austerity and reform. Technocratic prime ministers in Greece and Italy have been popular; voters in Spain, Portugal and Ireland have elected reforming governments. But nearly one in three French voters cast their first-round ballots for Ms Le Pen and Mr Mélenchon, running on anti-euro and anti-globalisation platforms. And now Geert Wilders, a far-right populist, has brought down the Dutch government over budget cuts. Although in principle the Dutch still favour austerity, in practice they have not yet been able to agree on how to do it (see article). And these revolts are now being echoed in Spain and Italy.

It is conceivable that President Hollande might tip the balance in favour of a little less austerity now. Equally, he may scare the Germans in the opposite direction. Either way one thing seems certain: a French president so hostile to change would undermine Europe’s willingness to pursue the painful reforms it must eventually embrace for the euro to survive. That makes him a rather dangerous man.


.

[Panda]

European Commission president Herman Van Rompuy
Reuters


By RFI

European Union president Herman Van Rompuy has warned of a rise of “populism” and “extremism” across the continent in the aftermath of the Front National’s 18 per cent vote in France’s presidential first round. Interior ministers are to discuss changing the rules of free movement within the EU on Thursday




"Nationalist and extremist movements are on the rise; many of them blame 'Brussels' for bad news. There can only be one response. Telling the truth," Van Rompuy wrote on Twitter during a visit to Romania on Wednesday.









All about 2012 election











"Regrettably, the winds of populism are affecting a key achievement of European integration: the free movement of persons within the EU," he wrote.

European interior ministers meet in Luxembourg on Thursday to discuss a Franco-German proposal to allow states to re-establish border controls within the area covered by the Schengen agreement on passport-free travel.

French Interior Minister Claude Guéant will defend the proposal, which was first raised in March last year.

On Monday President Nicolas Sarkozy, who is trying to win far-right votes in the 6 May final round of France’s presidential election, declared that the French have had enough of a “sieve Europe”.









Dossier: Eurozone in crisis











“If Europe can’t defend its borders, France will,” he told a campaign meeting.

But several countries are opposed to the proposed change.

It “smells very bad”, Luxembourg’s Foreign Affairs Minister Jean Asselborn told the German magazine Der Spiegel.

“Europe’s leaders should show leadership instead of giving in the forces of the far right,” said European internal affairs commissioner Cecilia Malmstrom.


t

[malena stool]

“Europe’s leaders should show leadership instead of giving in the forces of the far right,” said European internal affairs commissioner Cecilia Malmstrom.

Cecilia Malmstrom has, like all present day elected leaders and their underlings got it wrong.
They should abide by the mandate that took them into power and listen to the words their electorate tell them!

[Panda]

“Europe’s leaders should show leadership instead of giving in the forces of the far right,” said European internal affairs commissioner Cecilia Malmstrom.

Cecilia Malmstrom has, like all present day elected leaders and their underlings got it wrong.
They should abide by the mandate that took them into power and listen to the words their electorate tell them!

Hi malena, don,t you think though that the Whole World is in such a mess, the Middle East, Asia, the emigration and immigration affecting everyone. As
for Politicians, their reputation is at it's lowest that I can ever remember and maybe the only way out of this mess is to have a few years of poverty
and the demise of the EU which has such a diverse population it can never survive by only Germany dictating the way everyone lives.

[Panda]

Cyprus named Panicos Demetriades as its central bank governor, an economist who called for Germany to ditch the euro.

Demetriades will succeed Athanasios Orphanides as head of the Central Bank of Cyprus on May 3, government spokesman Stefanos Stefanou told reporters in Nicosia today. Because Cyprus is part of the 17-nation euro area, Demetriades will join the European Central Bank’s Governing Council for his five-year term and help set interest rates for the region.











A euro sign sculpture stands in front of the European Central Bank (ECB) in Frankfurt, Germany, on Wednesday, Nov. 3, 2010. Photographer: Hannelore Foerster/Bloomberg
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Demetriades inherits an economy in turmoil, with banks reeling from losses on their exposure to Greece and the government unable to borrow on financial markets. Orphanides, a policy maker with 17 years’ experience at the U.S. Federal Reserve, failed to win a second term in office after clashing with the island’s government over fiscal policy and slow pace of economic reforms.

Cyprus, the euro area’s third-smallest economy, needs “serious reforms to improve competitiveness, to improve the functioning of markets, and we have not dealt at all with these key issues,” said Zenon Kontolemis, a former International Monetary Fund economist who now teaches at the University of Cyprus. “We also need reforms of the public sector and of institutions.”

The island’s economy will shrink 0.5 percent this year, according to the ministry of finance. The government on Dec. 23 signed a 2.5 billion euros ($3.3 billion) loan agreement with Russia to finance its 2012 fiscal deficit and maturing debt. The government has also called on the ECB to start buying its sovereign bonds.

‘Germany’s Exit’

Demetriades may not find support among European policy makers for his view that Germany should exit the euro to help peripheral nations regain competitiveness.

“Without Germany in the euro zone, the euro would quickly depreciate to a level that would help reinstate the competitiveness of the periphery,” Demetriades wrote in a letter to the Financial Times published on May 11 last year. Germany’s exit would be preferable to imposing austerity on struggling nations or allowing them to depart, he said.

Demetriades, 53, has a PhD in economics from Cambridge University. He began his career at the Central Bank of Cyprus in 1985 and in 1999 worked in the office of then World Bank Chief Economist Joseph Stiglitz, according his curriculum vitae. Demetriades has been professor of financial economics at the University of Leicester since 2000.

“We wish Panicos Demetriades success in the difficult task he assumes,” Stefanou said.

Orphanides

Orphanides was appointed central bank governor in 2007 to help Cyprus with its transition to the euro in 2008. The former Fed economist became a closely watched ECB policy maker, helping Cyprus punch above its weight.

At home, his Frankfurt-honed views on central bank independence led to an increasingly difficult relationship with President Demetris Christofias. In 2008, Orphanides refused to sell the central bank’s gold reserves and transfer the profit to the government. He also angered Christofias with repeated criticism of budget policy.

A year ago, Christofias accused Orphanides of not doing enough to prevent Cypriot banks from investing in Greek government bonds. The two largest Cypriot lenders, Bank of Cyprus and Cyprus Popular Bank, posted losses of 1.4 billion euros and 3.3 billion euros respectively for 2011, resulting mainly from writedowns of Greek debt.

Explosion

Finance minister Vassos Shiarly, a former executive of Bank of Cyprus, said on April 23 that the government may need to support one of its lenders with as much as 1.5 billion euros.

Orphanides was among the demonstrators on Nicosia’s streets in July last year demanding the president’s resignation over his handling of an explosion at a naval base that killed 13 people and knocked out 50 percent of the island’s electricity production capacity.

Orphanides also urged Christofias to take additional and tougher steps to support the economy in a letter dated July 18.

“Orphanides’s departure is a loss but I am confident that the new governor will follow in his footsteps,” said Spyros Episkopou, chief executive officer of the Nicosia-based Epicentral Consultancy Ltd and formerly general manager of the Nicosia-based USB Bank Plc. (USB) He will have to convince “markets and investors as to the continuity with regards to the protection of the reputation of the Cypriot banking system,” he said.

[Panda]

I was visiting a Friend in Northern Cyprus a couple of Years ago and it was very noticable that the Casinos were owned by Russians and Oligarks have bought Properties there. My Friend sold her brand New House a year later because torrential rain had let in water. A Russian Woman came to view,
said she wanted to buy it for her Son, also bought a lot of the Furniture because my Friend was moving to a smalller Property, even bought a Car
which my Friends' friend was selling and paid cash for all of it, over £100,000 !!!!

No wonder Cyprus is able to borrow from Russia.

[Panda]

Spain Downgraded, Eco Minister Says No Bailout

Spanish Economy Minister Luis de Guindos ruled out seeking a bailout hours before Standard & Poor’s cut the country’s credit rating to three levels above junk and a report showed unemployment jumped close to a record.

“Nobody has asked Spain, either officially or unofficially” to turn to Europe’s bailout mechanisms, he said in an interview in Madrid late yesterday. “We don’t need it.”





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Luis de Guindos, Spain's economy minister, during a news conference at the Moncloa palace in Madrid. Photographer: Denis Doyle/Bloomberg





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April 27 (Bloomberg) -- Spanish Economy Minister Luis de Guindos discusses the European sovereign-debt crisis, Spanish banks and the outlook for the economy. He spoke yesterday in Madrid with Bloomberg's John Fraher. (Source: Bloomberg)





Play Video


April 27 (Bloomberg) -- Colin McLean, chief executive officer of SVM Asset Management, discusses Barclays Plc's investment banking unit, executive pay and provisioning in southern Europe. He speaks from Edinburgh with Linzie Janis on Bloomberg Television's "Countdown." (Source: Bloomberg)





Play Video


April 27 (Bloomberg) -- Gayle Allard, professor at IE University, discusses Spain's credit rating downgrade and the country's banking system. She speaks from Madrid with Manus Cranny on Bloomberg Television's "Last Word." (Source: Bloomberg)





Play Video


April 27 (Bloomberg) -- Spanish Economy Minister Luis de Guindos discusses the European sovereign-debt crisis, Spanish banks and the outlook for the economy. (Source: Bloomberg)



Enlarge image









Spanish Economy Minister Luis de Guindos said, “Nobody has asked Spain, either officially or unofficially” to turn to Europe’s bailout mechanisms. Photographer: Angel Navarrete/Bloomberg
.
Spanish unemployment, already the highest in the European Union, rose to 24.4 percent in the first quarter, just below the 24.55 percent record of March 1994, the National Statistics Institute said today. The increase in first quarter joblessness will mean 953 million euros ($1.3 billion) of lost revenue for the government, the tax inspectors association said today.

De Guindos spoke at the end of a month that has seen Spanish bond yields rise above 6 percent for the first time since early December on concern that banking losses will swamp the government. That sparked speculation that Spain will need to seek an international rescue for its lenders and prompted one minister to call on the ECB to buy the country’s bonds.

“This is not the real cure for the problems and the volatility of the market,” de Guindos said. “I don’t think that we need any further liquidity injections after the two LTROs that the ECB has implemented over the last three or four months.”

Rating Cut

Just hours after de Guindos spoke, Standard & Poor’s cut its rating on Spain by two levels to BBB+, citing concern that the country will need to pour more money into its lenders. The downgrade was the second this year by S&P and puts Spain at the same level as Italy.

S&P’s decision did not mean that the rating company expected Spain to need a bailout, Marko Mrsnik, director for sovereign ratings for Europe, said today in a conference call. Still, EU aid to Spanish banks would “ease pressure” on the sovereign rating, he said.

The yield on Spain’s 10-year benchmark bonds rose 6 basis points to 5.89 percent at 3:30 p.m. in London, pushing the spread with similar German maturities to 421 basis points from 415 basis points yesterday. The country’s benchmark IBEX 35 stock index erased early declines and advanced 1.1 percent to 7100.3.

The downgrade “raises the chance of Spain accessing external official funding for its banks alongside a robust external audit,” London-based Barclays Capital analysts Marcus Widen and Laurent Fransolet wrote in a note today.

No Bailout

Spain is sticking to its line that austerity should be the main driver of policy as it tries to quash concerns that it will be pushed to follow Ireland, Portugal and Greece into a bailout. As French presidential frontrunner Francois Hollande presses to renegotiate a euro-wide fiscal treaty backed by German Chancellor Angela Merkel, de Guindos said that Europe can’t afford to twin such a pact with stimulus measures.

“A growth pact has to be focused on structural reforms,” de Guindos said. “I do not see that the growth pact should involve any sort of fiscal boost or stimulus.”

De Guindos announced today that Spain will shift the burden of taxes onto consumption and reduce levies on employing workers. The government will raise indirect taxes such as those on sales, cigarettes and alcohol from next year under the plan that aims to eliminate the budget deficit by 2016. The shortfall reached 8.5 percent of GDP last year.

Fixing Economies

“We have to put on the table a much more comprehensive growth program that has to be much more focused on performance on the structural side,” De Guindos said in the interview.

ECB bond purchases wouldn’t help to calm European markets either as governments instead need to show how they can fix their economies, de Guindos said.

The International Monetary Fund said on April 17 that budget deficits will persist till at least 2017 in Spain, where the economic recession will be deeper than in other euro-region countries. The IMF forecasts a 1.8 percent contraction this year and growth of 0.1 percent next year.

[Badboy]

not sure if already mentioned,FT HAD FRONT HEALINE SAYINF 1 IN 4 OR 5 IN SPAIN ARE UNEMPLOYED.

[AnnaEsse]

not sure if already mentioned,FT HAD FRONT HEALINE SAYINF 1 IN 4 OR 5 IN SPAIN ARE UNEMPLOYED.

I think it's 1 in 4, being just over 24%

[Panda]

(CNN) -- The campaign of French presidential front-runner Francois Hollande called for a criminal investigation into President Nicolas Sarkozy after a media report Saturday accused the president of taking 50 million euros ($66.3 million) for his 2007 campaign from then-Libyan strongman Moammar Gadhafi.

Mediapart, a French online magazine, claimed in its report to have a Gadhafi government document, detailing an agreement to fund the campaign. The alleged document, dated December 10, 2006, states that then-Libyan intelligence chief Moussa Koussa authorized secret payments to Sarkozy through an intermediary, Mediapart reports.

CNN was not immediately able to confirm the authenticity of the published document.

Sarkozy has dismissed the allegation as "grotesque."

During a television interview aired by TF1 last month, Sarkozy addressed the accusation, which has surfaced periodically since at least last year: "If (Gadhafi) had funded (my campaign), frankly, I would not have been very grateful," he said.

France supported the 2011 NATO intervention in Libya that helped to topple the longtime leader. Gadhafi was ousted, then was fatally wounded in a gunbattle that broke out after his capture on October 20. His son and one-time heir apparent Saif al-Islam Gadhafi was captured by Libya's new authorities and is awaiting trial.

During a televised interview with Euronews in March 2011, after France recognized the National Transitional Council as the legitimate authority in Libya, Gadhafi's son claimed Libya contributed to the Sarkozy campaign.

"The first thing we want this clown to do is give the money back to the Libyan people. He was given assistance so he could help them, but he has disappointed us," Saif al-Islam Gadhafi said.

The deposed Libyan leader's son then claimed that Libya had "all the bank details for the transfer operations." Despite pledging to make these transactions public, the Gadhafi regime, before and after its downfall, never produced any evidence it financed the Sarkozy campaign.

"When one quotes Mr. Gadhafi, who is dead, or his son, who is standing trial, the credibility is zero. And when you drag up their accounts with these questions you are asking, you quite degrade this political debate," Sarkozy said in the TF1 interview.

But Hollande's campaign is calling for the president to come clean.

"The fact that these revelations take place within days of the second round of the presidential election is not sufficient to demonstrate that they are 'grotesque.' It is now up to justice to reveal the truth: Either establish the facts and prosecute, or otherwise provide proof that these are false allegations," said Hollande spokeswoman Delphine Batho.

French records for the 2007 presidential election show that the Sarkozy campaign declared 21.3 million euros ($28.2 million) in contributions it received, according to the National Commission for Campaign Accounts and Political Financing, the French government body that monitors and records campaign financing.

Hollande and Sarkozy face a runoff vote for the presidency on May 6. Sarkozy, who leads the center-right UMP party, received 27.2% of the vote in the first round of voting, just behind Hollande's 28.6%. Hollande is a member of the center-left Socialist party.

If elected, Hollande would be France's first left-wing president since Francois Mitterrand left office in 1995. Sarkozy has been president since 2007.

The two contenders are expected to take part in their first head-to-head televised debate on Wednesday.

[frencheuropean]

AFP : the "interview" given recently by Dominique Strauss-Kahn to the Guardian, is, according to Dominique Strauss-Kahn, a fake, a montage from a future book:


"Dominique Strauss-Kahn a fait savoir dimanche à l'AFP qu'il n'avait "donné aucune interview au Guardian" et qu'il s'agissait "d'un montage fait à partir d'un livre à paraître de M. Epstein".

"Ce livre écrit au style indirect ne contient par ailleurs aucune citation entre guillemets de Dominique Strauss-Kahn", a ajouté l'entourage de l'ancien directeur du Fonds monétaire international."

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28 April 2012 Last updated at 18:37 Share this pageEmail Print Share this page

823ShareFacebookTwitter.France President Nicolas Sarkozy snaps at Strauss-Kahn Campaigning has not been easy for President Sarkozy in this year's election Continue reading the main story
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French President Nicolas Sarkozy has rejected claims by Dominique Strauss-Kahn that his party was behind the former IMF chief's downfall.

Mr Sarkozy told reporters Mr Strauss-Kahn should keep quiet and "spare the French his remarks."

Mr Strauss-Kahn told Britain's Guardian newspaper that sex allegations against him were orchestrated by opponents.

He said although he did not believe he had been set up, events were "shaped by those with a political agenda".

The Guardian said it was clear that he was referring to people working for Nicolas Sarkozy and his UMP party.

Mr Strauss-Kahn was forced to stand down as head of the International Monetary Fund (IMF) in May last year when he was arrested in New York and accused of sexually assaulting a hotel maid.

The charges were later dropped, but he has since been embroiled in new allegations that he was involved in a prostitution ring.

On the campaign trail Mr Sarkozy dismissed Mr Strauss-Kahn's interpretation of events.

"Enough is enough!" he said, "I would tell Mr Strauss-Kahn to explain himself to the law."

Libyan 'support'

Mr Sarkozy is trailing in the polls in the run up to the second and decisive round of France's presidential election on 6 May.

And he is faced with further damaging allegations about his links to Libya under former leader Col Muammar Gaddafi.

A left-wing political website, Mediapart, claims to have documentary evidence that Mr Sarkozy's 2007 presidential campaign received 50m euros ($66m) from the Gaddafi regime.

The document - dated 2006 and written in Arabic - appears to have been signed by the then Libyan foreign intelligence chief Musa Kusa.

It refers to an "agreement in principle to support the campaign for the candidate for the presidential elections, Nicolas Sarkozy, for a sum equivalent to 50m euros."

The website made similar claims last month.

Mr Sarkozy said the claims were "grotesque", and said that if Gaddafi had financed his campaign "I wasn't very grateful" - a reference to the role he played in the former leader's overthrow in 2011.
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Europe Seeks to Restore Calm After Spain Downgrade, Growth Spat

By Patrick Donahue - Apr 29, 2012 11:01 PM GMT+0100
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European leaders will seek to restore market calm this week after Spain was cut by Standard & Poor’s and a German-led austerity agenda to resolve the debt crisis came under fire ahead of elections in France and Greece.

With Spain’s largest unions leading marches involving thousands of protesters in 55 cities yesterday, Prime Minister Mariano Rajoy’s government battled to prevent Spain from becoming the next country to seek bailout aid. In France, the final round of presidential elections on May 6 and the prospect of victory for Socialist candidate Francois Hollande steered debate toward whether a focus on budget cuts worsens the crisis.

“Watching Spain now is exactly like watching Ireland around October 2010 before Ireland was forced into its bailout,” Megan Greene, a senior economist at Roubini Global Economics LLC, told Bloomberg Television’s “Street Smart” on April 27. “The government can’t win no matter what it does.”

As Spanish unemployment last week reached almost one in four of the working-age population, Hollande demanded that euro- area leaders move to promoting growth from cutting budgets, as agreed by 25 European government in the so-called fiscal pact. German Chancellor Angela Merkel drew the line at re-opening talks on the fiscal treaty, though she said growth could be boosted with labor-market reform and European Union funding.

“There will be no new negotiations on the fiscal pact,” Merkel told the Leipziger Volkszeitung in an interview published on April 28. Even so, EU leaders may consider measures such as strengthening the European Investment Bank as part of a package of growth initiatives to be discussed at their summit meeting in June, she said.

‘Years Rather Than Months’

The debate was spurred on by European Central Bank President Mario Draghi last week after he called for a “growth compact” consisting of structural changes and improvements in competitiveness to enhance the fiscal pact.

“If the conversation has shifted toward this, then it shows that they’re moving toward a way to put their economy and their currency on a more stable footing,” William Adams, a senior international economist at PNC Bank NA, said in an interview from Pittsburgh. “It’s a process you’re going to measure in years rather than months.”

The EU is working on an investment package of 200 billion euros ($265 billion) for infrastructure, renewable energy and technology in the euro-area’s worst-hit countries, El Pais newspaper reported, citing unidentified officials familiar with the plan. The funds will come from 12 billion euros from the European Financial Stabilisation Mechanism to boost the capital of the EIB, El Pais said.

‘New Focus on Growth’

A war of words erupted last week between Hollande, who decried Germany’s fiscal-focused leadership in the two-year-old financial crisis, and Merkel, who said that the turmoil can’t be resolved without cutting debt. Polls show that Hollande is likely to succeed Nicolas Sarkozy as France’s next president after winning the first round of voting April 22.

“You, the French people, are going to vote to give Europe a new focus on growth, on progress, on the future,” Hollande told 17,000 campaign supporters yesterday in Paris. “The head of the ECB can also see that some government heads also understand that austerity alone won’t help cut debt. They are starting to hear what we are saying,” he said.

Greece will also hold elections on May 6, with polls indicating no party will win enough votes for a parliamentary majority. The lack of a clear mandate could complicate Greek bailout efforts, since the new government must spell out to global creditors in June how it will make fresh budget cuts.

Spanish Yields Rise

Spain figured at the center of last week’s debate, with borrowing costs climbing after S&P cut the kingdom’s sovereign credit rating for the second time this year, to BBB+ from A, on concern about further fiscal tightening and the country’s banks.

Spain’s 10-year yield climbed as high as 6 percent April 27, bringing the gain this year to almost a percentage point.

Roubini’s Greene said that concerns on Spanish debt were self-sustaining as markets gyrated from worries about the effects of more austerity to a lack of budget discipline. She predicted Spain would seek bailout aid early next year.

“Yields rise and the Spanish government announces further austerity measures -- the markets freak out because they worry about the impact of those austerity measures on growth,” Green told Bloomberg. “If the Spanish government doesn’t announce austerity measures, the markets don’t think that the Spanish government is serious about reining in its fiscal dynamics.”

Bank Recapitalization

The Bank of Spain said April 23 that the economy shrank by 0.4 percent in the first quarter, tipping the nation into its second recession since 2009. Rajoy in March scrapped Spain’s aim to cut its budget deficit to 4.4 percent of output this year after a slumping economy threw the nation’s ambition to consolidate its finances off course.

As Spain pushes through the deepest budget cuts in at least three decades, the country’s banks probably need 50 billion euros in capital, according to Morgan Stanley estimates.

Protesters in Madrid yesterday filled the city’s Puerta del Sol square despite the rain, with placards reading “No bread, no peace.” The protests follow a report last week showing that Spain’s unemployment rate rose to 24.4 percent in the first quarter, the highest level in 18 years.
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German Retail Sales Rebounded in March on Job Creation

By Jana Randow - Apr 30, 2012 7:00 AM GMT+0100
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German retail sales rebounded in March as declining unemployment, slowing inflation and higher wages bolstered households’ purchasing power.

Sales, adjusted for inflation and seasonal swings, rose 0.8 percent from February, when they fell a revised 0.9 percent, the Federal Statistics Office in Wiesbaden said today. Economists forecast a gain of 1 percent, the median of 26 estimates in a Bloomberg News survey showed. Sales increased 2.3 percent from a year earlier.

With German unemployment at a two-decade low and the economy outperforming most of its euro-region peers, workers are winning some of the highest pay increases since the early 1990s. Business confidence unexpectedly rose to a nine-month high in April and inflation slowed to the lowest level in more than a year, boosting consumers’ disposable income.

“Conditions for retail sales are good,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “People that are less concerned about unemployment are more willing to spend money. At the same time, we have higher wage growth this year, which should also boost consumer spending sooner or later.”

IG Metall, Europe’s biggest trade union representing 3.6 million workers, is demanding a 6.5 percent pay raise. German unemployment probably fell in April, a Bloomberg survey shows. The Federal Labor Agency will release the report on May 2.

Hugo Boss AG (BOS), the German luxury-clothing maker controlled by Permira Advisers, said last week that first-quarter operating profit gained 13 percent and confirmed a forecast for sales to gain 10 percent this year. Praktiker AG (PRA), Germany’s third-largest home-improvement retailer on April 26 reported first-quarter sales that beat analysts’ estimates.

“If the labor market continues to develop as positively as is currently being forecast, it can be assumed that the consumer climate will be able to develop in an overall stable manner in the coming months,” market research company GfK said.

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Phillip Inman, economics correspondent

The Guardian, Monday 30 April 2012
Article history



A protest march in Madrid against the Spanish government's austerity measures. Photograph: Susana Vera/Reuters


Social unrest is expected to grow in Europe as governments impose steep welfare cuts and fail to implement policies to reduce unemployment, according to a report by the International Labour Organisation.

As German engineers embarked on a wave of strikes in pursuit of a 6.5% pay increase and Spanish workers took to the streets of 50 towns to protest at welfare cuts and a jump in unemployment, the ILO said the situation in the 27 EU countries was becoming more unstable.

It said: "Society is becoming increasingly anxious about the lack of decent jobs. In 57 out of 106 countries, the Social Unrest Index increased in 2011 compared with 2010." The report highlighted Europe, the Middle East, North Africa and sub-Saharan Africa as the areas most affected by strikes and protests.

IG Metall, Germany's powerful industrial trade union, said stoppages and demonstrations that began across the country would intensify after Tuesday's May 1 public holiday. Factories in Bavaria in southern Germany were the worst affected.

While manufacturing workers have kept their jobs, they have missed out on rewards enjoyed by shareholders and company executives. The employers' organisation has offered a 3% pay rise over 14 months, which amounts to a freeze once inflation of 2.7% is taken into account.

In Spain, thousands protested against spending cuts introduced by prime minister Mariano Rajoy's conservative government. The cuts, being particularly severely felt in the education and healthcare sectors, are aimed at tackling a debt crisis that has pushed the country back into recession and driven unemployment close to 25%.

Speaking at a party rally, Rajoy, who on Friday announced a new set of tax hikes to come into effect next year, said he had "no alternative". He added: "Spain needs deep structural change, not makeup."

Protesters in northeastern Barcelona, northern Bilbao, eastern Valencia and many other regional capitals carried banners urging Rajoy to not "mess around with health and education". Labour unions called for large-scale protests to continue in coming months to persuade Rajoy and regional governments to implement measures to stimulate growth.

So far the number of protesters has remained small, though organisers blamed the rain over the weekend for the low turnout.

"People are not protesting in huge numbers; I don't know what it's going to take for the people to really stand up. The disenchantment is so brutal that people will not stand up and protest," said Julian, a pensioner.

The ILO said it was concerned at the way young people were being shut out of labour markets and the rise of short-term contracts, which also hit the young and women more than other groups.

"Four years into the global crisis, labour market imbalances are becoming more structural, and therefore more difficult to eradicate. Certain groups, such as the long-term unemployed, are at risk of exclusion from the labour market. This means that they would be unable to obtain new employment even if there were a strong recovery.

"In addition, for a growing proportion of workers who do have a job, employment has become more unstable or precarious. In advanced economies, involuntary part-time employment and temporary employment have increased in two-thirds and more than half of these economies respectively," it said.

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At times of economic crisis, politicians like to blame investors, preferably foreign investors.

Harold Wilson, the British prime minister in the 1960s, pointed the finger at bankers in Zurich. Prime Minister Mahathir Mohamad of Malaysia accused George Soros of undermining his country’s financial stability in the late 1990s. And in parts of Europe today, it is increasingly common to blame hedge funds, “locust”-like investors, or even credit-default swaps for the euro-area crisis.



About Simon Johnson

Simon Johnson, who served as chief economist at the International Monetary Fund in 2007 and 2008, is a professor of entrepreneurship at the Massachusetts Institute of Technology's Sloan School of Management.
More about Simon Johnson .
This is almost entirely a smokescreen. To be sure, politicians worked closely with global megabanks in building up public and private debt in recent decades. But the idea that investors are now responsible for Europe’s debt crisis -- or could somehow fix it if they stopped “speculating” -- reads like something from the Soviet Union in the 1920s.

Europe’s politicians are to blame. They are the ones who built an unsustainable gold-standard-type structure, in which currencies are fixed in relative values and it is costly (and frightening) to change those values. Many gold enthusiasts believe that such monetary arrangements lead to stability, which is completely at odds with the historical record.

The gold standard era was characterized by repeated boom- bust cycles. Low interest rates encouraged public- and private- sector borrowing and episodes of overborrowing were the norm, not the exception. Convertibility into gold was suspended at regular intervals, including every 15 years or so in the U.S.

Fiscal Union

Euro-area governments unfortunately cannot suspend convertibility. It is even harder to alter exchange rates today than it was under the gold standard, when everyone kept a domestic currency and only its price against gold was in question. The European Union could introduce a full fiscal union, as the U.S. did after the Constitutional Convention of 1787. But it’s hard to see it adopting the complete Alexander Hamilton solution. In 1789, as the first Treasury secretary, he had the federal government take over much of the states’ debt.

Today, euro-area debt is significantly higher, relative to the size of Europe’s economies, than the U.S.’s was in 1790. Federal debt, post-Hamilton, was about 40 percent of gross domestic product. Average debt in the euro area is about 90 percent of GDP, with the most indebted above 100 percent; the details are in table 5 of the International Monetary Fund’s most recent Fiscal Monitor.

More important, Hamilton’s move was justified by the fact that most state-level debt had been incurred to fight the war of independence. Even so, Thomas Jefferson and James Madison, for a time, strenuously opposed the assumption of state debt by the federal government.

One of the biggest problems flowing from the euro area’s fixed currency is that wages and prices are too high in heavily indebted states, compared with Germany and a few others, leaving the higher-wage countries uncompetitive. Cutting wages in the troubled periphery would be difficult politically. Lower wages would also make it harder to pay mortgages, compounding the problems for banks and probably for public finances, too.

The solution involves a move straight out of the gold- standard playbook, with a modern twist. Since monetary union began, Germany has had substantial productivity gains and only moderate wage increases, making it highly competitive. Eurostat reports that German wages rose 2 percent a year from 2000 to 2009, while Spanish wages increased by 4.7 percent a year in the same period -- more than twice as fast. Because the currencies are the same, Germany’s competitiveness has made it tough for Spain and the other weaker states to sell their products in the euro area.

Union Cavalry

But the cavalry may show up in the unlikely form of German trade unions, which are seeking big wage increases this year. Recent demands by German workers range from 3 percent to 6 percent. As Bloomberg News reported, IG Metall, Europe’s biggest labor union with about 3.6 million workers, is demanding 6.5 percent more pay at a time when inflation is about 2 percent.

This isn’t crazy. German unemployment is at its lowest level in two decades. German exports have been doing well around the world. To some monetary purists, talk of higher wages suggests that the European Central Bank’s policy is too loose for current German conditions. But this is really taking an idealized version of the gold standard too far.

The point is to have relative wages and prices adjust -- higher for Germany and lower for its European trading partners. If German incomes rose, German consumers would have more disposable income with which to buy imported goods. And lower labor costs in other European countries would make their goods and services less costly, giving them a leg up against Germany’s export machine.

If the people in charge -- mostly Germans at this point -- insist that the adjustment must come entirely through a fall in the absolute level of wages and prices in countries with current-account deficits and large amounts of debt, then Europe is in for a difficult, and perhaps lost, decade.

But if part of the adjustment can come through higher German wages -- recognizing productivity gains and consistent with continued prosperity -- the path forward will be easier.

Don’t blame the investors. Don’t wait for the politicians to sort out the mess they created. Hope that, in an increasingly globalized world, German trade unions still have enough muscle to get significant wage increases.

(Simon Johnson, a professor at the MIT Sloan School of Management as well as a senior fellow at the Peterson Institute for International Economics, is co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.” The opinions expressed are his own.)

[Badboy]

DAVID CAMEROON HAS SAID THE EURO CRISIS WILL LAST YEARS.

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DAVID CAMEROON HAS SAID THE EURO CRISIS WILL LAST YEARS.

Yes it will Badboy, Spain is in recession again Greece is a no hoper with all the debt they have, Portugal is in dire straits and many of their young
people emigrating to former Portugese Colonies ,Ireland may need help, Belgium too is floundering. The talk is there will be defaults before the end of
the Year . It is clear now that because there is one Currency , none of those on trouble cannot do anything , like lower interest rate or print more
money. Obviously there is a need for austerity , but Merkel misjudged the way it should have been handled.

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Spain, for the second time since 2009 is back in recession , unemployment is 24.4%,

S & P to take negative rating on 11 Spanish Banks and 6 others placed on watch .
Still says it does not need another bail-out and Banks trying to offload some of it's Housing Mortgage debt.

Credit Agricole says Spains' new government made a big mistake , first of all to ask for time , then to take no action.

An unexpected meeting of the EU will meat to discuss the crisis. One proposal is to increase the Capital Rule to 7% . Sweden rebuts this and wants a 10% for two years rising to 12 %

Another potential rule is Banks may face a 3% surcharge .

The Danish Government wants a decision made and signed before their Presidency ends in May.

Germany is blamed for the debt in Europe. While other countries were paying Labour costs of 4.5 to 6 %, Germany was paying 2%. However, Unions are
seeking a 6.5% which if accepted will give a fairer trade between Euro Countries because German workers will have more money to spend

The 10 yr Greek Bond has a yield of 20.53% after the recent write down , Investors are wary of buying Greek Bonds .

Analysts are warning that the Euro is in danger of collapse because of the risk of other Countries avoiding recession.

There is also the increasing unrest among the population of these beleagured Countries and the number of General Elections in Europe this year probably
resulting in Coalition Government .

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30 April 2012 Last updated at 14:38 Share this pageEmail Print Share this page


The leader of the Greek Socialist Pasok party, Evangelos Venizelos, has warned of a rise of the far right in elections in the country on 6 May.

Mr Venizelos told a rally in Patras that voters should not allow neo-Nazis to "goose-step into Parliament with Hitler salutes".

Polls suggest the far-right Golden Dawn could win seats for the first time.

The election will be Greece's first since it sought two EU/IMF bailouts and announced deep spending cuts.

'Extreme phenomenon'

Opinion polls suggest parties opposed to austerity could make big gains. Golden Dawn (Chrysi Avgi in Greek) opposes the EU bailouts that have led to the Greek government's tough economic measures.

Last month Athens secured a second international bailout of 130bn euro ($171bn; £105bn) after reaching a deal with private creditors for a credit swap aimed at reducing its debt burden.

Mr Venizelos described the far-right party as an "extreme phenomenon", and "an offence to our history and to our parliament", Reuters newsagency said.

Opinion polls show that Mr Venizelos's Pasok party is trailing in second place to the centre-right New Democracy party. The two parties combined are set to win less than 50% of the vote.

This leaves the rest of the votes going to several groups that oppose the austerity measures.

One of Golden Dawn's proposals is to tighten Greece's borders and expel immigrants as illegal immigration has become a key issue.

On Sunday, Greece opened its first detention centre for illegal migrants at Amygdaleza, northwest of Athens.

The Deputy Mayor of Amygdaleza, Chrysanthos Kontaris, said that a lawsuit had been filed against the police and the citizens' protection minister for setting up of the camp and described the move as a "pre-election firework".
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Global Econo

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By Jessica SALTZ in Berlin (video)
News Wires (text)





REUTERS - German Chancellor Angela Merkel added her voice on Saturday to calls to bolster the European Investment Bank (EIB) and to use EU infrastructure funds more flexibly to help spur economic growth in Europe.

Her comments are part of a new German emphasis on growth-boosting measures to complement painful tax hikes and spending cuts that have triggered a political and popular backlash against austerity across the euro zone.

The change of rhetoric is also a response to the likelihood that Socialist Francois Hollande will win a French presidential runoff on May 6. Hollande has criticised Merkel's emphasis on budget cuts and structural reforms.

"I can imagine that we further strengthen the capabilities of the European Investment Bank (EIB)," Merkel told the Leipziger Volkszeitung, according to a brief preview of her interview that gave no further details.

Last week, EU Economic and Monetary Affairs Commissioner Olli Rehn proposed boosting the capital of the EIB, the EU's investment arm, by 10 billion euros, telling Reuters this would raise the bank's lending by 60 billion and result in a total investment impact of 180 billion euros.

Hollande has also called for a more robust financing role for the EIB and the more efficient use of EU structural funds.

EU finance ministers are due to discuss the EIB issue at their next meeting in mid-May.

Merkel backed a more flexible use of European Union 'structural funds' earmarked for infrastructure, training and other areas, saying they could give a boost to small and medium-sized firms.

However, she said there could be no question of renegotiating a 'fiscal compact' on budget discipline agreed by 25 of the EU's 27 member states last December to include a growth component.

Hollande has rowed back from earlier calls to re-open the 'compact' or to seek changes to the mandate of the European Central Bank (ECB), another taboo for Berlin.

Merkel has publicly backed incumbent Nicolas Sarkozy in the French presidential race but said in her newspaper interview she could work well with whoever won the election.

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Greek legislative elections scheduled for May 6, the first since the start of the financial crisis, could become a protest vote against austerity policies and the political parties that implement them. If so, this could benefit the extreme right, which, little by little, is gaining legitimacy.

Ilia Maglini

Perhaps a few things need to be brought to mind, now that the countdown to the legislative elections has begun – beginning with the book by American historian, Robert Paxton, The Anatomy of Fascism. For nearly half a century, the historian has studied fascism, with, as reference point, the French Vichy Government. I met with him in 2010. Already at that time, the rise of extremes in Greece, (but not only) was a sensitive, hotly-debated issue. "In times of economic crisis, democracy is threatened," Robert Paxton said at the time. For him, "the new fascist groups are violent, but, at the same time, too weak to influence political life".

The French example

The veracity of that remark can be posed today regarding Greece. What more can the extreme right hope for but the entry of a violent group into the Parliament? This is not a question concerning a socio-political hypothetical debate, it is a reality. About two years ago, the extreme right wing Chryssi Avgi [Golden Dawn] which has no seats in Parliament, loudly accused the ultra-conservative LAOS [Peoples' Orthodox Rally] which entered Parliament in 2007, of making compromises and of having "sold out" its patriotic values. Today, it is on the eve of also making an entry into Parliament. "When the extreme-right parties gain recognition, they sway the political debate in their direction," Paxton also said. Again, he pointed to France as an example. In the summer of 2010, French President Nicolas Sarkozy adopted the far right's ideas by attacking the Roma people. Two years later, one can but note the return of the [extreme-right] National Front (FN) in the political limelight, as confirmed by its showing in the first round of the French presidential election [18%]. And the FN will continue to be talked about since the legislative elections are scheduled for June, soon after the runoff for the presidency.

In Athens, the situation is just as worrisome but not for the same reasons. The centre-right New Democracy Party (ND) has already welcomed within its ranks the recently expelled from LAOS, hardline-conservative transport minister Makis Voridis and is counting on his precious support. Of course, Makis Voridis' popularity is not derived only from the positions he has taken as transport minister but is also due to certain personality traits to which we are sensitive. He charms with his rhetoric, his manners, and his style which make us forget the notion of a public figure. Here we are today discussing the probable entry of neo-Nazis into the Parliament.

To conclude, a word regarding the Greek left, which also bears its share of responsibilities in the rise of extremism. The extreme-left has also taken violent action, that is sure, but what must really be noted is the left's naïve stance on immigrants while residents of ghetto neighbourhoods abandoned by the State are demonised. All of this is grist to the neo-Nazi mill.

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