Re: New EC Thread

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Ireland is opting for bulldozers rather than bankers as it starts to clear the legacy of the housing boom whose collapse brought the economy to its knees.





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A row of half-built homes sit empty on an abandoned housing development in Keshcarrigan, Ireland. Photographer: Aidan Crawley/Bloomberg



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Abandoned construction equipment sits outside unfinished homes on a stalled housing development in Longford in April 2012. Photographer: Aidan Crawley/Bloomberg
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About 1,850 housing developments, unfinished after the bubble burst in 2008, pockmark the Irish landscape, according to government figures. This week, Ireland’s National Asset Management Agency, the state agency set up in 2009 to purge banks of their most toxic commercial property loans, started the destruction of an apartment block for the first time.

“There’ll be some places where the most sensible decision that can be made will be to demolish,” Housing Minister Jan O’Sullivan said in an interview in her Dublin office on July 10. “If nobody wants to live in them, then the most practical thing to do possibly will be to demolish what is there.”

The so-called ghost estates are the most visible scar left by Western Europe’s worst real-estate crash, which led Ireland to follow Greece in seeking international financial help. In all, about 15 percent of Irish homes are vacant, the country’s statistics agency estimates.

The death of a two-year-old who wandered into an unfinished development in February underscored the problem of leaving the estates empty. The building in Longford in central Ireland was bulldozed on July 18 on safety grounds after a sewage-related explosion in a home on the site earlier this year.

“The people that bought into a dream inherited a nightmare,” said Peggy Nolan, a local lawmaker in Longford. “The taxpayers have paid enough, as far as I am concerned, shame on these developers.”

Out of Control

About 553,000 houses were built in the 10 years through 2005 in the country of about 4.5 million people, as homebuilding expanded at twice the pace of the rest of Europe. About 294,000 homes now lie empty, as prices halved. In Dublin, prices have dropped 64 percent from the 2007 market peak, according to Irish real estate agent Lisney in a report this week.

“There wasn’t proper planning, wasn’t proper control and there wasn’t proper regulation of lending institutions,” said O’Sullivan, 61, who took over as housing minister in December. “We have had a very salutary and very hard lesson.”

The asset agency, known as NAMA controls or is linked to about 10 percent of estates.

The agency this week demolished a 12-unit apartment block at the Gleann Riada, about 115 kilometers (72 miles) from Dublin. While 220 houses, and three apartment blocks were planned for the site, only about 90 houses were completed and a block in part.

Property Noose

The demolition was “great to see because it was an eyesore and brought a lot of antisocial behaviour,” said Alan Hogan, 31, who is renting out his house elsewhere on the estate to cover the mortgage. “For myself, I’d like to have that noose around our necks gone.”

Concerns about the safety of such estates mounted after a toddler drowned in a pool of water in an unfinished estate in the Irish midlands earlier this year.

The government and NAMA have earmarked about 8 million euros ($9.8 million) to address the most urgent safety issues. Some 128 developments had been prioritized for action.

O’Sullivan is drawing together developers, local authorities, banks, NAMA and residents to formulate “site resolution plans” for each estate. The government envisages that “substantially completed” developments will be finished and potentially sold or used for social housing, O’Sullivan said. Others will be demolished and returned for farming.

The plan is to “get rid of this blot on our landscape, and this blot on our communities,” she said.

[Badboy]

SEWAGE RELATED EXPLOSION,NEVER HEARD OF THAT

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The latest development is not very encouraging. The Troika have said Greek Bonds can not be used as collateral.

Spain is out of control now, Valencia is looking for a bailout. Spanish Banks will have to provide detailed reports on their efforts to become solvent.
The Spanish people are very militant and will not tolerate any more austerity.

The Euro has weakened again and stocks around the World have fallen .

Analysts are saying the ECB must get involved now and Countries are getting annoyed that the EU is incapable of decisive action .

U.K. under pressure because Osborne has overshot it's target borrowing.

Italian Bond yields climbing and it is becoming more apparent that the fiscal policy demanded by Merkel cannot be sustained.

Interestingly , the reason the German Bond Yield is negative, in other words Investors are paying Germany to buy Bonds. Finland and Austria are
also seen by Investors as a good bet. The reason for this is , if the EURO fails as a currency and the less indebted Countries opt out , reverting to their own currencies, these will be worth much more than the Euro . This would suggest seasoned Investors anticipate the fall of the Euro.

[Panda]

Two years have passed since, May 9, 2010, when the 27 Eurozone leaders believed all that was needed to avert the danger of euro collapse was to create a €750 billion emergency fund.

But the crisis continued to spread, affecting major countries like Spain and Italy. The money earmarked for struggling countries has not prevented financial markets from destabilising the single currency. And austerity measures have only had the effect of weakening economies and deteriorating the living conditions of Europeans.

We must find something else. In 2012, it is growth and debt pooling that are central to the debate. But for that, the Europeans may have to enter into greater political union. A new Europe to negotiate its way out of the crisis? This is the challenge that this report aims to tackle.

[Panda]

Some comments on the EURO Crisis

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mancuk01
5:51 PM on 20/7/2012



Total joke. Why are banks being bailed out, over and over again. They are a business just like any other. If they have made foolish decisions that's their problem. Isn't that what is said about the struggling families-billions worth of help for the rich and bankers but nothing, unless you sign your and your families lives away, for the normal average hard working person!
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John Phillips
5:27 PM on 20/7/2012




The 'death throes' of the stupid Euro get worse day by day; it needs to be finished off and in total left in the past where it belongs! - But that would require the creaters of the Euro to finally admit that they were wrong to believe it could ever work for 26 different countries, each with its own economy! - But politicians can never admit wrong and so the Euro agony continues!
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SweetieCutie
5:26 PM on 20/7/2012

"Despite Spain Bank Bailout.."?
I think you mean "Because Of...."3:56 PM on 20/7/2012


Is it true that Italy who has to lend part of the money to Spain at 3% has to borrow the money at nearly7%.The whole of the Euro zone is going down. We need to get out of the EU ASAP so we can at least have free trade with the rest of the World.Tick tock, the clock is ticking.


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Oricus
3:08 PM on 20/7/2012





This is fast becoming a bloody joke - I'm sick of the EU and our failing government! We are heading for financial meltdown all because of governing morons who cannot manage their countries finances!

Furthermore, as for Peter Pan Cameron, well he is living in some lost world and needs to grow up. His arrogance towards the British public makes me sick! Labour can't be trusted, Lib Dems are beyond help. Who in their right mind would vote for any of the latter three again!

3:00 PM on 20/7/2012

called it months ago - should have cut the weak ones loose.

Just good money after bad
2:36 PM on 20/7/2012


It's the header line that is making me laugh - heal it's fiscal wounds?

No-one, not one single person has even come close to trying to do that, not by far. It's been plaster after plaster or more good money follows bad yet nothing of substance in the structural change that is the only thing that will start to reverse the sorry situation.

I've said this countless times, but it's quite true - it's an all or nothing thing. You either have a true federal united states of europe or you don't. There is no middle ground on that one & until people address that, it will continue, with country after country failing. A common market great, a single currency great, skip the EU, and for those member countries of a single currency, the ECB or nothing.

The rest is posturing that is repeatedly failing.

[Panda]

Debt crisis: as it happened - July 20, 2012

Published on July, 20 2012 - by The Daily Telegraph




Business


European Bank Crisis- Spain- U.K.



Spanish borrowing costs climb back above 7pc, as eurozone ministers hold a teleconference to approve up to a €100bn bank rescue.
• Spain to remain in recession until 2014
• Sterling hits three-and-a-half-year high against euro
• UK borrowing rises more than expected
• IBEX's biggest one-day loss in two years as yields soar past 7pc
• Spanish debt crisis returns as Germany nears bailout fatigue

Latest
17.03 That's where we leave our live coverage for this week. We'll be back first thing on Monday to pick up where we left off. In the meantime, keep an eye on our finance page for the latest business and economic news. Have a great weekend.
16.46 European markets have now closed for the day, and the week. There were losses across the board, while Spain's IBEX suffered the worst one-day drop in two years. The country's Valencia region announced today that it would be seeking a bailout. Ed Shing, head of European equity strategy at Barclays, said:
There is very little to stop Spanish bonds moving up at the moment and that is a big concern... This is just another piece of bad news reminding people that it is not just that government that has issues but also the regional governments.
The FTSE 100 has slipped 1.06pc, the CAC by 1.91pc and the DAX by 1.82pc. Spain's IBEX tumbled 5.79pc and Italy's FTSE Mib lost 4.4pc.
Across the Atlantic, Wall Street has also seen losses in early trading on mixed earnings reports and renewed concerns about Spain's increasing borrowing costs.
The Dow Jones lost 0.69pc, the S&P 500 was 0.71pc lower and the Nasdaq dropped 0.88pc.
15.59 A quick update as we head towards the end of the the trading session in Europe.
The FTSE 100 has slipped 1.06pc, the CAC by 2.02pc and the DAX by 1.77pc. But the biggest losers of the day are Spain's IBEX, which tumbled 5.79pc, and Italy's FTSE Mib, losing 4.64pc.
15.35 Spanish benchmark borrowing costs are now at 7.28pc - matching June's intra-day high.
15.21 Meanwhile, the protests continue.
Spaniards are out for a second day to protest against harsh austerity measures passed by the government yesterday, while in Greece, riot police used tear gas against striking steel workers to break up picket lines that have closed a factory outside Athens.
14.45 Spain's IBEX 35index has now tumbled by more than 5pc. The FTSE Mib in Italy has fallen 4pc.
14.22 Christine Lagarde, managing director of the IMF, has issued a statement on the Spanish bank bail-out agreement. She said:
We welcome the decision made today by the Eurogroup to grant financial assistance from the European Financial Stability Fund (EFSF) to Spain to recapitalize its banking sector. The recapitalization of weak banks and the other reforms attached to the agreement are consistent with the IMF's recommendations in the recent Financial Sector Stability Assessment (FSSA) and Concluding Statement of the Article IV Consultation mission. The implementation of these measures will contribute to significantly strengthen Spain’s financial system, an essential step in restoring growth and prosperity in the country.
14.14 One winner from Spain's turmoil today is sterling. The pound climbed to a three-and-a-half year high of €1.2863 against the euro on the back of the dismal news
13.54 Earlier today, the Spanish region of Valencia said it would be the first to tap a special €18bn funding pot designed to help struggling regions meet commitments. The fund was approved last week.
13.47 ...make that 7.22pc.
13.32 And those Spanish borrowing costs just keep on rising. The yield on ten year government debt is now at 7.17pc.
13.24 Stock markets in Spain and Italy have taken a nosedive this afternoon. The IBEX 35 in Madrid has fallen 3.7pc to 6,393.05, while the FTSE Mib in Milan is down 3.5pc at 13,187.33.
13.21 In a separate statement, Olli Rehn, the EU's economic and monetary affairs commisioner, said:
Today's unanimous endorsement by the Eurogroup of the sectoral programme for Spain opens the way to the necessary recapitalisation and repair of the country's financial sector. The aim of this programme is very clear: to provide Spain with healthy, effectively regulated and rigorously supervised banks, capable of nurturing sustainable economic growth [...] Spain will be expected to maintain its commitments to correct its excessive deficit in a sustainable manner by 2014 and to adopt the structural reforms set out in the country-specific recommendations adopted by the Council on 10 July. The explicit link between these obligations and the sectoral programme is deliberate and pertinent. It is only through determined action across all of these fronts that Spain can create the financial stability and competitive, dynamic economy that will bring about a steady and lasting fall in unemployment.
13.15 Spain's rescue loans will have a maximum maturity of 15 years, and will average 12.5 years, the Eurogroup said in a statement .
13.09 Cristóbal Montoro, Spain's finance and public administration minister, said Spain would pay an extra €9.2bn (£7.1bn) to service its debt next year.
13.02 Unemployment in Spain will remain close to its current level of 24.6pc until the end of 2013, the government has said.
In a statement published today after a cabinet meeting, the government said that the Spanish economy would not return to growth until 2014.
It forecasts that the economy will contract by 0.5pc in 2013, compared with previous estimates of 0.2pc growth.
12.48 BREAKING Eurozone finance ministers have approved Spain's bank bail-out. Luxembourg's finance minister Luc Frieden did not specify a figure for the rescue, and told reporters that audits were ongoing.
12.16 Mr Katainen also rejected that the idea that Finland's low borrowing costs would compensate for a decline in demand. He stressed:
Finland isn’t benefiting from the crisis [...] We’re an export-driven economy and once the European market isn’t doing well, we suffer a lot.
Finland's two-year borrowing costs turned negative this month, meaning investors are effectively willing to pay to lend to the country.
12.08 Finland has denied suggestions that it is mulling a euro exit. Jyrki Katainen told Bloomberg:
We will not and do not consider exiting the euro [...] We want to be at the heart of European development. A stronger euro, a better euro is the only, and reasonable, thing for Finland.
Economists including Telegraph columnist and Wolfson Prize winner Roger Bootle and Nouriel Roubini have suggested that Finland could be better off outside the euro-area.
11.43 The pain in Spain means our holidays there could become a lot more expensive. Ryanair has cancelled 11 routes out of Madrid and four out of Barcelona because of the government's decision to double taxes at these airports. Several routes will also be reduced, the low cost airline said in a statement.
Ryanair boss Michael O’Leary said:
Ryanair objects to the Spanish government’s decision to double airport taxes at both Madrid and Barcelona airports. Sadly, this will lead to severe traffic, tourism and job cuts at both airports this winter. Ryanair’s cuts alone will cause a combined loss of 2.3m passengers and over 2,000 jobs at Madrid and Barcelona El Prat airports to other lower cost airports elsewhere in Europe, where Ryanair continues to grow.
The announcement confirms reports in Spanish business daily Expansion of the cuts .
11.24 One record that has already been broken today is the difference between Spain and Germany's borrowing costs.
The "spread" between Spanish and German 10-year yields widened to 590 basis points - a euro-era high.
11.09 This is below the intra-day high of 7.28pc hit on June 18. However, if the yield (which has just hit 7.11pc), stays at this level - it will surpass the current closing euro-era high of 7.07pc.
11.02 Spanish bond yields have crept back above 7pc. The yield on 10-year government bonds is currently at 7.09pc.
10.38 France's lower house of parliament has passed a new budget that will raise about €7bn (£5.5bn) in new revenue by targeting the big corporations and the wealthy. The measures reverse measures passed under former French president, Nicolas Sarkozy.
The vote goes to the Senate on Tuesday.
09.54Howard Archer, an economist at IHS Global Insight, said:
Another month, another set of bleak public finance data that make very worrying reading for the Chancellor. Three months into the fiscal year, and Mr. Osborne is already facing an almighty struggle to meet his fiscal targets for 2012/13 and looks ever more likely to miss them.
[...]The Chancellor desperately needs the economy to quickly return to growth and then sustain that, or else he faces suffering a significant shortfall on his public finance targets. Furthermore, the longer the economy continues to flounder, the more pressure the government will come under to ease back on the fiscal austerity in the near term at least. This was highlighted by the IMF’s comments this week.
Meanwhile, extended weakened economic activity and poor public finances is posing an ever growing threat to the UK’s AAA credit rating which is so prized by the government.
09.50 Commenting on the UK borrowing figures, a Treasury spokesman told Reuters:
It is too early in the financial year to draw conclusions about the year as a whole. This is volatile data and is prone to revision: borrowing for last year has been revised again and is now estimated to be below the OBR's forecast.
09.43 The UK government borrowed more than expected last month, as official figures showed Britain's recession-hit economy is now on course to miss full-year targets.
Public sector net borrowing (excluding financial interventions such as bank bail-outs) climbed to £14.4bn in June, according to the Office for National Statistics .
This was higher than the £13.4bn expected by economists surveyed by Bloomberg, and the £13.9bn borrowed by the government in June 2011.
The government has been set a borrowing target of £120bn by the Office for Budget Responsibility (OBR) this financial year. If June's trend continues, borrowing will come in at around £140bn.
09.32 However, unlike the IMF, which urged the ECB this week to consider "sizeable" QE, Goldman is sceptical of the benefits of mass money printing by the ECB. More from Mr Schumacher:
The ECB could in principle also buy a weighted basket of Euro area sovereign debt. However, such a Euro area wide Quantitative Easing approach would have few additional benefits, in our view. It is not clear why reducing long-term yields in the core countries would be needed at this point. Moreover, purchases of government debt would add liquidity to the banking system if the ECB did not sterilise its purchases. But the ECB’s LTROs and changes to the collateral framework seem to be by far the more effective way to increase liquidity
09.29 The ECB has a number of orthodox tools it can use, including cutting benchmark and deposit rates, the latter of which has seen the difference between German and French borrowing costs narrow (see chart below), as investors seek higher returns thnt the zero rate now offered by the ECB.
It also has a few unorthodox, or, as the ECB likes to call it "non-standard measures" it can use. These include more longer term refinancing operations (LTROs), changes to collateral requirements, and even quantitative easing.
09.21 What can the European Central Bank do to ease the crisis? Quite a lot, according to economists at Goldman Sachs.
Mario Draghi, the ECB's president, has reminded us on several occassions that the direct funding of governments by the ECB is forbidden. However, Dirk Schumacher at Goldman highlights that the central bank has enough monetary gadgets in its toolbox to deal with the crisis effectively.
Mr Schumacher highlights two reasons why the ECB has decided not to spring into action thus far:
For one, the ECB is worried about the potential negative side effects of further measures on its credibility, as well as how these are viewed by the general public. Moreover, the ECB sees itself as being engaged in a strategic game with governments. A proactive stance risks governments reducing their efforts to stabilise the system. Thus, a deterioration in the situation is, to some extent at least, a necessary condition for further ECB action.
08.46 Finland has approved Spain's bank bail-out this morning. Parliament voted 109 to 73 in favour of the deal.
Finland struck a deal with Spain this week to receive collateral worth up to €770m (£601m) in exchange for the aid.
The country struck a similar deal with Greece last year.
08.42 Germany expects economic growth to be "somewhat lower" in the second quarter of the year, according to the country's finance ministry.
In its monthly report, the finance ministry added that growth for the rest of 2012 was likely to be "moderate".
08.37 European stock markets have opened flat this morning. The FTSE 100 in London is down 0.2pc at 5,701.01, while the CAC 40 in Paris is down 0.2pc at 3,257.26 and Spain's IBEX 35 index is down 0.15pc at 6,642.70.
Spanish borrowing costs have also ticked up this morning. The yield on benchmark 10-year debt is up by 2 basis points this morning to 6.946pc, while in Italy, yields are close to hitting 6pc once again.
08.30 On the domestic front, the International Monetary Fund (IMF) warned yesterday that Britain should rein in its austerity programme and cut taxes or increase infrastructure spending. It also said British homeowners faced an “extended housing market slump” . Prices are still too high, it said, and could drop by a further 10-15pc relative to Britons’ salaries.
08.28 Eurozone finance ministers will hold a conference call at 11am today where they are expected to approve a bail-out of up to €100bn to shore-up the country's ailing financial sector.
We're still uncertain of how much of the €100bn Spain's banks will need. The amount is not expected to be finanlised until September, when a round of in-depth audits are completed.
08.15 The protests continued into the night, as Spain ratified €65bn in budget cuts announced by prime minister Mariano Rajoy before the weekend. Earlier this week he said:
This government cannot choose between good and bad options, but between bad and worse, which is what we are doing. If we maintain this common-sense policy, Spain will emerge from the crisis.
08.08Spain's borrowing costs surged to euro-era highs yesterday despite draconian fiscal cuts and backing from the German parliament for the country’s €100bn bank rescue package. A raft of new austerity measures sparked protests in cities all over the country, including Barcelona, below.
08.05 Good morning and welcome back to our live coverage of the European debt crisis.
Debt crisis live: archive

[Badboy]

[quote="Panda"]


Debt crisis: as it happened - July 20, 2012

Published on July, 20 2012 - by The Daily Telegraph




Business


European Bank Crisis- U.K.


:
There is very little to stop Spanish bonds moving up at the moment and that is a big concern... This is just another piece of bad news
Another month, another set of bleak public finance data that make very worrying reading for the Chancellor. Three months into the fiscal year, and Mr. Osborne is already facing an almighty struggle to meet his fiscal targets for 2012/13 and looks ever more likely to miss them.
[...]The Chancellor desperately needs the economy to quickly return to growth and then sustain that, or else he faces suffering a significant shortfall on his public finance targets. Furthermore, the longer the economy continues to flounder, the more pressure the government will come under to ease back on the fiscal austerity in the near term at least. This was highlighted by the IMF’s comments this week.
Meanwhile, extended weakened economic activity and poor public finances is posing an ever growing threat to the UK’s AAA credit rating which is so prized by the government.
09.50 Commenting on the UK borrowing figures, a Treasury spokesman told Reuters:
It is too early in the financial year to draw conclusions about the year as a whole. This is volatile data and is prone to revision: borrowing for last year has been revised again and is now estimated to be below the OBR's forecast.
09.43 The UK government borrowed more than expected last month, as official figures showed Britain's recession-hit economy is now on course to miss full-year targets.
Public sector net borrowing (excluding financial interventions such as bank bail-outs) climbed to £14.4bn in June, according to the Office for National Statistics .
This was higher than the £13.4bn expected by economists surveyed by Bloomberg, and the £13.9bn borrowed by the government in June 2011.
The government has been set a borrowing target of £120bn by the Office for Budget Responsibility (OBR) this financial year. If June's trend continues, borrowing will come in at around £140bn.
similar deal with Greece last year.
08.30 On the domestic front, the International Monetary Fund (IMF) warned yesterday that Britain should rein in its austerity programme and cut taxes or increase infrastructure spending. It also said British homeowners faced an “extended housing market slump” . Prices are still too high, it said, and could drop by a further 10-15pc relative to Britons’ salaries.
HERE'S A THOUGHT,GEORGE OSBORNE COULD SAVE POTENTIALLY MILLIONS OF PUBLIC MONEY BY ENCOURAGING PEOPLE ON IS/ESA ETC TO DO PAID SURVEYS,FOCUS GROUPS AND OTHER BONA FIDE HOMEWORKING OPPORTUNITIES,EVEN SAVING A FEW POUNDS PER PERSON PER WEEK WOULD ADD UP TO QUITE A LOT OF MONEY,THE EXTRA MONEY BY SUCH PEOPLE COULD LEAD TO EXTRA ECONOMIC STIMULARLY ACTIVITY BOOSTING THE ECONOMY(I MIGHT SPEND THE EXTRA MONEY CLEARING A BOOKSHELF OF BOOKS IN WATERSTONE AND/OR SMITH'S).
I MAY HAVE TO CALCALCUTE(SP?) POTENTIAL SAVINGS.

[Panda]

AFP


On July 19, hundreds of thousands of people demonstrated against the austerity policies of the Mariano Rajoy government. Today, when a leap forward is needed, the trust between Spaniards and those who govern them has broken down, deplores sociologist Fernando Vallespín.

Fernando Vallespín


During the previous legislature we were already in a state of emergency, but at the time those who are in office now did not want to mention it. Their priority then was not the country, but their own electoral interests.

Later, once they had been voted in, they started to put into practice everything they had promised us they would not do. Perhaps if they had done it all of a sudden and just after getting in, at least they would have achieved some efficacy.

But no: the treatment had to be homeopathic, not a shock treatment, because there were still some political loose ends to be tied up, like the elections in Andalusia.

The governors of that time, for their part, did not begin to act decisively until, almost literally, Europe landed on their heads. In both cases the political interests of each party won out over what the urgency of the situation dictated be done.

We have been deceived

The result: a political class that has already disgraced itself is now filled with shame. Those who ought to be the solution for these times of such embitterment are now seen by an increasingly sceptical population as the problem.

No one believes in anything anymore, or in anyone. Neither the politicians nor the experts nor technocrats, nor anything that could come from the elites or people or institutions that once enjoyed being the authorities.

We find ourselves in the worst scenario possible, because we have no one to trust in. And, what’s worse, no one trusts us; overnight we have turned into a pariah state. Suddenly, we the citizens have grasped that we are alone.

And this loneliness and helplessness in the situation we are caught in leads to despair, if not to the greatest of nihilisms. No collective can live without a future, without knowing its own destiny.

Even so, we can put up with almost everything – except the knowledge that we have been deceived. With the promise of public services that can no longer be paid for; with a deceitful model of economic development, built on nothing, which created a false image of prosperity; with a Europe that was supposed to help empower and strengthen our sovereignty rather than subvert it. We no longer recognise ourselves in the mirror – because, among other reasons, those who are holding it up for us are naked.

Leadership is key

All the same, we have only two options: either to shatter the mirror, tear off our clothes and break down utterly into a collective depression in an aimless, zombified country, or to build on the virtues we still have – which, incidentally, are not insubstantial.

Moreover, at the moment, though alone, we are more united than ever. As Borges once put it so well: “It’s not love that unites us, but dread.” And we already know from Hobbes that the passion that drives us to work together is not altruism, but fear.

Our greatest problem at the moment is how to transform our mistrust, perplexity and scepticism into positive action: how to translate the difficulties before us into effective solutions.

For this, though, we need a project inside which the lines of action can be laid down, the necessary distinguished from the superfluous, the deprivations and shortfalls of today translated into clear expectations for improvements tomorrow. And in that, leadership is key – yet it’s also what’s thinnest on the ground.

Those in government right now limit themselves to beating down fires without rhyme or reason, with no guide to the future to lend some resolve to their action; and for those being governed, what else is left to them but to defend in the street what is being taken from them up in the offices?

What’s missing is the setting – something to cement us in a collective project that will gradually restore the lost confidence. We can choose between the nihilistic conflict we see in Greece, or the more positive cohesion we see in Iceland; we can let the fright turn into a paralysing state of shock and sense of victimisation, or guide it into a responsible and creative energy. And that depends, indeed, on all of us.

Translated from the Spanish by Anton Baer

[Panda]

European policy makers received another vote of no-confidence in their efforts to stem economic turmoil as the euro fell to its lowest in more than two years following final approval for a bailout of Spanish banks.

The decision by euro finance chiefs failed to offset trouble elsewhere. Spanish Prime Minister Mariano Rajoy forecast a second year of recession and Valencia became the first state to say it would seek a rescue from the central government. Italian Prime Minister Mario Monti blamed unrest in Spain for surging borrowing costs, and an ally of German Chancellor Angela Merkel endorsed the prospect of Greece exiting the euro.



















Spanish Prime Minister Mariano Rajoy forecast a second year of recession and Valencia became the first state to say it would seek a bailout from the central government. Photographer: Jock Fistick/Bloomberg
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“We’re looking at a situation when people are realizing we’re at a point of debt restructuring and repudiation,” Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London, said in an interview yesterday. “It’s cold-hearted reality. The great blag and bluff of the euro zone has always managed to kick the can down the road, but it is no longer a viable strategy. We’re getting to a crunch point.”

The market declines came exactly a year after European leaders pledged a second bailout for Greece and empowered their rescue fund to aid banks and extend credit lines to safeguard Spain and Italy. Those efforts have fallen short, and Greece is now fighting for more help after the biggest debt restructuring in history. Spain is meanwhile paying record costs to borrow.

Markets Slide

The euro fell 1 percent to $1.216 at 7:59 p.m. in Brussels yesterday. The Euro Stoxx 50 Index slid 2.8 percent, led by Italian banks. The risk premium to lend to Spain instead of Germany rose to the highest on record. In Italy, that spread climbed to the most since January. Investors who pay to lend to Germany for two years drove those securities higher.

“It looks like a lack of willingness of traders to hold positions over weekends,” said Tom Russo, a partner at Lancaster, Pennsylvania-based Gardner Russo & Gardner, which oversees $5 billion including U.S.-traded shares of Nestle SA (NESN) and Heineken NV. (HEIA) “Because you just never know. You have two days’ worth of risk and you can’t trade. Why not just de-risk your portfolio for the weekend?”

Even with euro-area finance ministers signing off on providing aid of as much as 100 billion euros ($122 billion) to Spanish banks, the officials continue to squabble over whether the burden of the emergency loans will be assumed by the Spanish government or the banks.

Greek Redemption

Next, attention turns to the concerns looming over Greece. The country owes a 3.1 billion-euro bond payment, mostly to the European Central Bank, in August and the so-called troika of international creditors is due to arrive in Athens next week to begin quantifying how far off bailout targets Greece is.

While European officials have said the bond redemption won’t be an issue for cash-strapped Greece, they have declined to specify how they’ll ensure the payment gets made.

“Over the summer, we’re not going to see much progress and markets remain nervous,” said John Stopford, head of fixed income at Investec Asset Management in London, which oversees $98 billion. “The crisis is happening. The euro is disintegrating from the inside with a lack of cross-border lending.”

Monti, speaking in Rome, said the surge in his country’s borrowing costs resulted from anti-austerity demonstrations in Spain that are adding to investor concerns about European debt.

The difference between the yield on 10-year Italian debt and similar maturity German bunds rose 22 basis points to 500 basis points yesterday. Italian spreads haven’t ended a trading day above that level since Jan. 11.

Contagion Concerns

“It’s difficult to say to what extent the contagion comes or came from Greece, or from Portugal, or from Ireland, or from the situation of the Spanish banks, or of the one apparently emerging from the streets and the squares of Madrid,” Monti told reporters. “Obviously, without the problems in those countries, Italy’s interest rates would be lower.”

The ongoing crisis will force the ECB to cut its benchmark 0.75 percent interest rate in October and also reduce the rate it pays on overnight bank deposits to below zero, Greg Fuzesi, an economist at JPMorgan Chase & Co., said in a report.

The aim would be to reduce funding costs for banks in the periphery reliant on ECB support, pulling down market borrowing costs and forcing investors to buy riskier-assets, he said.

In Spain, Rajoy is fending off international investors, domestic protesters and his own states as the slump in the fourth-biggest euro economy deepens. The Ibex stock index tumbled 5.8 percent, the biggest daily drop since May 2010. Ten- year yields rose to 7.28 percent, driving the gap with German bonds to a euro-era record of 610 basis points.

Economy Shrinks

Gross domestic product will fall 0.5 percent in 2013 instead of rising 0.2 percent as the government predicted April 27, Budget Minister Cristobal Montoro said after the Cabinet met in Madrid. The government will spend 9.1 billion euros more paying interest than in 2012, he said.

Meantime, Valencia, Spain’s second-most indebted state, said it would tap an 18 billion-euro emergency fund Rajoy set up last week for bailing out regions.

“This is a region which we’ve known for some time, which has been widely known for some time, has been facing difficulties,” European Union spokesman Simon O’Connor said in a Bloomberg Television interview. “The financial assistance comes with very strict conditionality which in many ways mirrors the system that we’ve put in place for the euro zone.

[Panda]

CNN) -- With Greece probably heading for an exit from the euro, the European and global economies may be facing disaster. However, there is still time for European leaders to reverse this destructive dynamic with one simple, outside-the-box solution: Instead of pushing Greece out of the eurozone, Germany should voluntarily withdraw and reissue its beloved deutsche mark.

The analysis of the problems of the euro and the European Union has long been upside down, focused on the debt and competitive weaknesses of the so-called peripheral countries (Greece, Italy, Spain, Portugal and Ireland) and especially of Greece. But issues of debt and competitiveness existed and were dealt with rather easily long before the euro arrived, through periodic devaluation of the currencies of the less-competitive countries against those of the more competitive countries, and especially against the deutsche mark.

The problem now is not the weaknesses of the periphery, it's the excessive competitive strength of Germany. Not only is the German economy inherently strong as a result of the high productivity of its workforce, its exports have added competitiveness because the euro is undervalued as far as Germany is concerned. Because it is the common currency of the eurozone countries, the value of the euro reflects the average of their combined competitiveness. But Germany's competitiveness is far above the average. So, for Germany, the euro is too weak. This is why Germany has been accumulating chronic trade surpluses on the scale of the Chinese.

As long as the rest of the eurozone countries are locked in the euro with Germany, the only way for them to become more competitive is to become, well, more Germanic, through austerity measures that cut government spending, reduce welfare budgets, cut wages and raise unemployment. This is, of course, what they have been doing for the past two years.

The aim has been to achieve export-led growth. But because Germany is so hypercompetitive and has been unwilling to stimulate its own economy to achieve higher consumption, its eurozone partners have not been able to increase exports to it and have had thus to compete with it in exporting to the likes of China and the United States.

That hasn't been working very well, and now the consequences of grinding austerity are beginning to tear the political and social fabric even of countries like the Netherlands, which until quite recently were enthusiastically echoing the German call for austerity and growth led by trade with countries outside the EU.

But it is not clear that the eurozone can sustain the social and political pain of austerity long enough and on the scale necessary to eventually achieve competitive parity with Germany.

The alternative is for Germany to revert to the deutsche mark. That would immediately result in appreciation of the German currency and competitive devaluation of the euro for the remaining eurozone countries. Germany would tend to buy more while selling less, and vice versa for the rest of the eurozone. The extra consumption that Germany will not deliver via stimulus policies would be automatically delivered by currency revaluation.

The single most essential element of a euro rescue has always been one form or another of a euro bond guaranteed jointly by all eurozone member countries. What the U.S. Treasury bond is to the U.S. economy, the euro bond would be to the EU. The main obstacle has been Germany's insistence that it would not guarantee payments on bonds for the benefit of other European countries.

German reversion to the deutsche mark would remove this obstacle, and with no further German opposition, the remainder of the eurozone could move ahead to establish a true euro bond, along with a unified treasury function to match the unified banking function of the European Central Bank.

Some may object that German backing would still be required for the eurozone and a euro bond to be viable. That is correct, and Germany would indeed remain committed to the eurozone for a number of reasons. It would need the eurozone more than ever to buy its increasingly expensive exports. The Bundesbank (Germany's central bank) would undoubtedly sell deutsche marks against euros to mitigate appreciation, and the resulting accumulation of euros would be invested in the new euro bonds. This in turn might inspire the European Central Bank to initiate quantitative easing programs that would stimulate the entire EU economy.

The cost to Germany of saving Europe will be a hit to exports and perhaps a temporary rise in unemployment, but a return to the deutsche mark would attract a flood of capital to Germany and thereby spur investment while holding interest rates and inflation down.

The real question is whether the cost of slower export growth and increased unemployment is less than that of paying for Greece, then Spain, etc. Somehow, the "unknown" risks of a German exit from the euro appear more manageable, more quantifiable and in some ways more familiar a challenge than endless austerity, social unrest and political polarization.

The opinions expressed in this commentary are solely those of Clyde Prestowitz and John Prout. CNN

[Panda]

Maybe these CNN Reporters have got the right answer to the Euro crisis, today, the news is bad.

1.The Catalonian Goverment an autonomous region of Spain may request State aid of E3.5 billion.

2.Recession in Spain deepens as economy contracts for 3rd quarter , the 10 yr Spanish Bond yield has increased to 7.53%

3. Italy 10 year Bond up to 6.33% yield as questions asked of Italian economy.

4. French Banks under pressure.

5. German Vice Chancellor says Greece cannot expect any more money and will await the Troika report on Greece.

6. The Euro plunges to new low.

It is looking more serious but whereas in the beginning, over two years ago , Germany was doing everything to keep Greece in the EuroZone. Now, it
is quite happy to let Greece default because of the contamination. Pity they hadn't said this before the Greek Election , the Greeks would have voted more for Syriza.

[Panda]

Spanish 10-year bond yields have shot up to as much as 7.56%, as markets in Europe and Asia come under increasing strain amid the eurozone debt crisis.

The Spanish Ibex stock exchange was down by as much as 5% in early Monday trading, and the Greek market plunged by 6%.

Spain's economy minister Luis de Guindos ruled out that the country could need a full-scale bailout, as the yield rates - the government borrowing cost - reached the highest level since creation of the euro.

Asked about this possibility on the sidelines of a congress hearing about the European aid to ailing Spanish lenders, Mr De Guindos said: "Absolutely not."

Although German officials tried to calm markets its finance minister Wolfgang Schaeuble then announced a decision to meet Mr de Guindos on Tuesday.

The market strain comes as the Bank of Spain said the country's economy contracted by 0.4% on a quarterly basis in the three months from April to June, having contracted by 0.3% in the first quarter of the year.

In a monthly report the central bank also estimated the economy contracted by 1.0% on an annual basis, compared with a fall of 0.4% in the preceding quarter.

Bank of Spain deputy governor Fernando Restoy said the solution to the current debt crisis was to make more cuts, more reforms, and more mechanisms to strengthen the eurozone economy.

"Current market problems reflect problems in Spain as well as the eurozone," he said.

The Spanish market slide has occurred as the autonomous region of Valencia asked for a lifeline from central government after running out of money, and the Murcia region reportedly sought 300m euro (£233m) help.

The Italian stock market also plunged by more than 3%, as nervous investors watched Spain's spiralling borrowing costs having a knock-on effect on Italy.

On Friday, eurozone finance ministers held a conference call to approve an aid package for Spanish banks of up to 100bn euro (£77bn).

But by late Friday afternoon the Ibex dropped by as much as 5.8%. Italy's Mib was down by as much as 4.5%. In London, the FTSE 100 closed 1.09% down and the Dow Jones was off 0.93%.

Meanwhile, the euro reached an 12-year low against the yen as Asian investors moved out of the troubled currency.

The Nikkei closed 2.99% down and the Hang Seng ended 1.86% lower on Monday.

:: The FTSE 100 dropped by up to 1.42% in early Monday trading, with financial institutions hard hit.
Gallery:
Madrid Protests Ahead Of EU Bailout Police attack protesters in the Spanish capital with tear gas during a demonstration against austerity cuts and EU bailout conditions.


Eurozone finance ministers have approved an aid package for Spanish banks of up to 100bn euro, according to eurogroup sources.

Ministers of the 17-nation eurozone gave their green light to the unprecedented package during a telephone conference that lasted for nearly two hours.

The plan aims to restore confidence in Spain's financial system and avert a full rescue for the eurozone's fourthlargest economy.

One of the conditions involves the formation of a bad bank to take on foreclosed property, undeveloped land and bad loans to house-builders, in order to free up banks' balance sheets andget credit flowing once more.

Spain's banks are burdened with 184 billion euros of toxic real estate, equivalent to more than half of their total exposure to property after a housing bubble burst in 2008.

The approval of the much-anticipated injection of funds comes as the Spanish government releases the latest growth figures.

Spain's economy is expected to contract by 0.5% in 2013, after shrinking by 1.5% this year.

The revised forecasts will now be used as a base to draw up the 2013 budget.

The government also expects the economy to grow by 1.2% in 2014 and 1.9% by 2015, treasury minister Cristobal Montoro said.

At a media conference he said unemployment would be 24.6% this year before falling slightly to 24.3% next year.

It is forecast to further slip to 23.3% in 2014, Mr Montoro said.

The government's spending limit for the 2013 budget would be 127bn euro (£98.8bn), compared to a ceiling of 119bn euro (£92.6bn) set for this year's budget, while the costs of funding the country's debt are set to rise by 9.1bn euro (£7bn) in 2013.

He also said the Valencia region, one of Spain's most heavily indebted, has asked the government for liquidity.

The Ibex stock index fell 3.5% on Friday, while the 10-year bond yield rose 11 base points to 7.227% within an hour of the EU funding approval.

Meanwhile in Italy, the misery caused by financial crisis could spark a "civil war" in the southern island of Sicily, the mayor of regional capital Palermo said.

"Because of an explosive mix of despair felt by many families and the stranglehold of organised crime, a civil war could even break out," mayor Leoluca Orlando said.

"Sicily is the Greece of Italy," Mr Orlando, a member of the anti-corruption Italy of Values party and a staunch anti-Mafia champion, said.

"Many businesses are shutting, families on low incomes can no longer pay their electricity bills," he said.
Enlarge Article:
Spain Pays Price For Euro Jitters Spain Pays Higher Price For Euro Jitters
Updated: 1:53pm UK, Thursday 19 July 2012

Spain's ability to finance itself has been called into question again after investors demanded a euro-era record interest rate for the debt-laden country at its latest bond auction.

Madrid managed to sell 3bn euros (£2.35bn) in medium-term debt but the yield on the five year bonds grew to 6.46% compared to 5.54% at the last auction just a fortnight ago.

In another clear indication of a lack of investor confidence in Spain - and the eurozone's £100bn euro plan to rescue its banks - the interest rate on its 10 year bonds today crept back up above 7%, the level seen as unsustainable in the long term.

It means Spain is having to pay far more than it can afford to borrow money.

Today's auction, which meant Spain had to pay far more than it can afford to borrow money, was held against the backdrop of a Parliamentary debate on a controversial package of tax hikes and civil service pay cuts that have triggered daily protests.

Treasury Minister Cristobal Montoro, who recently declared there was "no money" to pay civil servant wage demands because of the recession, said Spain could simply not go deeper into debt.

"Financing public services with more deficit and more debt will doom us," he told MPs.

The austerity package proposed by the centre-right government is designed to save an additional 65bn euros (£51bn) through 2015.

It is expected to win passage but without support from any opposition parties.

A nationwide wave of rallies is planned for Thursday evening - hours before a conference call of eurozone finance ministers on Friday which will discuss progress on the Spanish bank bailout.

There is speculation the 100bn euro package may even get the green light, especially if it clears a hurdle in the German Parliament on Thursday.

The result of today's auction by Spain triggered a fall in the value of the euro and trimmed gains on European stock markets.

Shares fell further when the European Commission moved to clarify its position that the bank bailout could not be used by Spain for any other purpose but to recapitalise lenders in the wake of the collapse of the country's property bubble.

Market strategist at RBS, Harvinder Sian, said of Spain's plight: "The general context is that these guys aren't getting much love from the bond market."

[Badboy]

other regions like mancha la castile and andalucia migh need BAILOUT.

[Panda]

other regions like mancha la castile and andalucia migh need BAILOUT.

Yes Badboy there are about 6 semi-autonomous regions seeking aid from the Spanish Government but there is just not enough money available. Some
Analysts are saying Greece will default when the Troika reports in September on its attempts to reduce its debt. They should have allowed the Country to default over two years ago instead of incurring all this extra debt.

[Badboy]

THINGS MUST BE VERY BAD WHEN YOU HAVE SOMEONE SAYING THERE IS A THREAT OF CIVIL WAR IN PLACES LIKE SICILY ETC

[Panda]

The Spanish problem has been made worse because the austerity measures the Government has taken has stifled growth. The People continue to march in protest and now we have the Autonomous and semi Autonomous regions seeking help from the Government . There has to be a relaxation
of the austerity measures because the World is practically in recession.

Quinlan, a Financial Advisor says China is heading for recession and the American economy is fragile.

She also thinks Finland and Italy may leave the EURO...Finland's economy is not doing too badly and the Government has already said it will not accept
any more bail-outs to Greece.

Another theory of hers is that Italy has problems but manufactures and rather than face more austerity measures Berlesconi is proving more popular
than Monti and is tipped to return to Power and will relax the austerity rules.

Greece has no option but to stay in the Euro because it does not manufacture and only recently voted to stay in the Euro. Germany is the only
Country benefitting from the decline in the EURO but despite the rhetoric threatening Greece, a way will be found to keep Greece in the Euro because
to default would reflect on the EU and make Bond purchases in other EURO Countries more expensive.

It's all one big mess and how it is resolved is anyone's guess.

[Panda]

ECB is making things worse


23 July 2012
ABC Madrid Comment1

ECB chief Mario Draghi in Frankfurt, July 5 2012



What with market pressures, nationwide anti-austerity demonstrations and regional government on the brink of financial collapse: the Spanish government doesn’t have much room for manoeuvre. And the ECB seems to be doing everything to force a full bail-out with outside supervision, laments an ABC writer.

Ignacio Camacho


In the statement of the last European Council conclusions there is a paragraph that brings into force the agreement for the European Central Bank to intervene in extreme cases of the sovereign debt crisis.

This is no euphemism: it is written down in black on white in a paper that Rajoy carries in his briefcase as if it were a moral safe-conduct pass. It’s why the Prime Minister mulls over the financial indices with some perplexity and never ceases wondering in private at what he considers a flagrant breach on the part of the EU.

His anger is more than remarkable; he has the feeling that the European institutions do not take themselves too seriously. Perhaps now, with the premium and the bond rate on the verge of melt-down, he may already have grasped that the problem may not lie so much in the Community’s lack of seriousness as it does in an undeclared but firm intention to force the bailout of a state.

Draghi’s impassivity

The impassivity of Mario Draghi can only be strategic; beneath the gestures and even the official decisions there seems to be a taxation plan afoot that condemns Spain to a formal intervention under the threat of putting a stop to the payments.

If on Monday the ECB does not cool down the markets by a massive purchase [the prime rate today hit 6.40 percent, its highest, and there has been no announcement that the ECB will buy up Spanish bonds] it will be because Merkel has given the thumbs down in private while holding it up in public, defending before the Bundestag the need to shore up our financial system.

Delayed by their initial mistakes, the Spanish cabinet has somehow carried out its part of the deal; it has improvised – yes, improvised – an extremely hard adjustment that has filled the streets with protests; it has alienated its own electoral base with further tax increases and has drafted an even more stringent budget for 2013.

Prime-minister has 48 hours

But for nothing. Markets have been free to do as they please, scuppering all expectations, and no one in Frankfurt has moved a muscle to put a stop to the punishment. The distrust is much more profound: it has spread not just to the government, but to the state. To the entire country.

There are reasons, of course, for that visceral distrust. The over-indebted economy, governmental resistance to pruning the bureaucracy, the mutiny of the autonomous regions against the need to reduce the deficit, the technical bankruptcy of some communities, the white flag raised in Valencia, and the huge and intact apparatus of regional and local authorities. And the civil unrest that reveals a society incapable of grasping the seriousness of the emergency.

But all that was already there when the European Council, the Eurogroup, Ecofin and all the other leaders signed the commitment to act through the only possible instrument of monetary policy. It was a quid pro quo that the contracting party to the other half of the deal has, with cold impassivity, failed to honour. That silence may echo loudly this weekend in the garden solitude of La Moncloa; the prime-minister has 48 hours to see if they have abandoned him – abandoned us.

Translated from the Spanish by Anton Baer

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23 July 2012 Last updated at 22:59 Share this pageEmail Print Share this page

.Moody's warns on Germany's AAA credit rating Germany could follow France by having its AAA credit rating downgraded
The credit ratings agency Moody's has warned the outlook for Germany's AAA credit rating is negative, the first step towards a possible downgrade.

The ratings for the eurozone's other top-rated economies the Netherlands and Luxembourg were also put on negative outlooks.

Moodys said the countries were at risk from wider eurozone troubles and a possible Greek exit from the euro.

France and Austria lost their AAA ratings earlier this year.

=======================================================

This is because Germany is bailing out Greece and other Countries and is itself now facing a downturn in its economy. This is probably why Troika is
in Greece to look at the books and the German Vice Chancellor announced yesterday that Greece will not receive any more money. Spain is a cause
for concern as is Italy so don't be surprised if Germany opts out of the EURO rather than have its credit rating downgraded.

[Panda]

Germany, Netherlands Rating Outlooks Lowered by Moody’s

By John Detrixhe and Meera Louis - Jul 24, 2012 4:35 AM GMT+0100
.

..
Germany, the Netherlands and Luxembourg had the outlooks for their Aaa credit ratings lowered to negative by Moody’s Investors Service, which cited “rising uncertainty” about Europe’s debt crisis.

Risks that Greece may leave the 17-nation euro currency and “increasing likelihood” of collective support for European countries such as Spain and Italy were among reasons for the change, Moody’s said yesterday in a statement.











With "Germany's central position in the euro zone, the idea that it could be somehow isolated from the general deterioration of the euro area is not realistic,” said Nicolas Veron, senior fellow at Bruegel, a Brussels-based research organization. Photographer: Michele Tantussi/Bloomberg













German Chancellor Angela Merkel, left, and German Finance Minister Wolfgang Schaeuble during a session of the Bundestag, the lower house of parliament in Berlin on July 19, 2012. Photographer: Johannes Eisele/AFP/Getty Images
.
“Given the greater ability to absorb the costs associated with this support, this burden will likely fall most heavily on more highly rated member states if the euro area is to be preserved in its current form,” Moody’s said.

Europe was plunged into fresh market turmoil yesterday as the first call for bailout aid by a Spanish region sent that nation’s borrowing costs surging, while Spain and Italy reinstated a ban on betting on stock declines. Equities slumped for a third day in Asian trading, with haven demand for Australia’s government bonds sending yields on its 15-year securities to a record low.

“The euro is set to continue falling across the board,” with some investors seeking safety in non-euro region top-rated government debt, including Australia’s and Canada’s, UBS AG currency analysts led by Mansoor Mohi-uddin in Singapore wrote in a note. “Germany’s ratings outlook downgrade on Monday only adds to such pressure.”

Stocks, Euro

The MSCI Asia Pacific Index of shares dropped 0.3 percent as of 12:25 p.m. in Tokyo, after a 2.1 percent tumble yesterday. The euro was little changed at $1.2118 after it slipped yesterday below its lifetime average against the dollar.

With “Germany’s central position in the euro zone, the idea that it could be somehow isolated from the general deterioration of the euro area is not realistic,” said Nicolas Veron, senior fellow at Bruegel, a Brussels-based research organization. “From this standpoint, the downgrade sounds logical.”

Yields on German 10-year bonds were 1.18 percent yesterday, down from 1.83 percent at the end of last year. The Netherland’s securities of the same maturity yield 1.63 percent, while those of Luxembourg yield 1.71 percent.

Almost half the time, yields on government bonds fall when a rating action by Standard & Poor’s and Moody’s suggests they should climb, according to data compiled by Bloomberg on 314 upgrades, downgrades and outlook changes going back as far as the 1970s.

Ratings Ignored

After S&P stripped France and the U.S. of AAA grades, interest rates paid by the countries to finance their deficits dropped rather than rose. The U.S. 10-year Treasury yield yesterday fell as low as a record 1.3960 percent. That compares with an average of 3.76 percent over the past 10 years, according to data compiled by Bloomberg.

Greece’s creditors meet this week amid doubts that the country will meet its bailout commitments. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece.

By the end of September, Moody’s also will examine the implications of the recent uncertainty on Aaa-rated Austria and France, whose rating outlooks were moved to negative from stable on Feb. 13, according to Moody’s. “Specifically, Moody’s will review whether their current rating outlooks remain appropriate or whether more extensive rating reviews are warranted,” the ratings company said.

Greece’s Fate

German Deputy Foreign Minister Michael Georg Link warned against “talking up” the collapse of the euro and said decisions on Greece’s fate will be made after an economic assessment is made by the “troika” of international monitors.

The crisis has been compounded as Spanish Prime Minister Mariano Rajoy confronts 15 billion euros ($18.2 billion) of debt redemptions in regions in the second half of this year. In addition to Catalonia, the most indebted region, Castilla-La- Mancha, Murcia, the Canary Islands and the Balearic Islands may follow Valencia in seeking aid from Madrid, El Pais newspaper reported.

Spain’s Economy Minister Luis de Guindos will visit Berlin tomorrow for talks with German Finance Minister Wolfgang Schaeuble. No press conference is planned.

Italian Prime Minister Mario Monti, his country burdened by rising borrowing costs, said last week that unrest in Spain, where protesters derided the country’s 65 billion-euro austerity package, added to euro concerns.

Euro-area finance ministers gave final approval to a bank bailout for Spain of as much as 100 billion euros on July 20. The decision paved the way for a first payment from Europe’s temporary rescue fund, the European Financial Stability Facility.

Finland’s top ranking retained its stable outlook from Moody’s, which cited the country’s lack of debt on a net basis, its small and domestically oriented banking system and its limited exposure to the euro area in terms of trade.

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Beppe Giacobbe


The EU is criticised for being bureaucratic, wasteful, and in thrall to lobbies... and not just from dyed in the wool eurosceptics. Dutch weekly De Groene Amsterdammer has decided to sift true from the false with a collection of 10 “euromyths”. First up — the democratic deficit.

Reinier Bijman | Yasha Lange


The infamous democratic deficit of Europe. A weak European Parliament without legitimacy, a Council of Ministers with a lack of transparency and accountability, euro commissioners who can't be sacked if they make a hash of things. For Europhobes these are strong arguments for being against the Union, while Europhiles seize upon them as grounds for further integration. But does such a democratic deficit indeed insist? And if so, how big or bad is it?

In short: European democracy is an indirect democracy. Not one like we are used to, it is indeed “different”. But not by definition worse or undemocratic. “The EU as a whole is of course not one state with one parliament that controls one government. It is an interplay of 27 national democracies and a piece of European democracy,” explains Luuk van Middelaar, author of The passage to Europe and member of the Cabinet of EU President Herman Van Rompuy.

Much of the criticism stems from this structure. While it is true that the European Parliament has increasing powers and participates in decision-making on practically all laws, it does not function as a national parliament that can remove individual ministers from office. Similarly, the European Commission is not a government, but an apolitical collection of technocrats, led by appointed commissioners. But would we, experts ask, want it to be otherwise? We don't want a European government do we? No. Exactly.

“Decisions are not taken, rather they come into being”

And that is why things are arranged indirectly. The Council of Ministers, which takes the important decisions, is accountable to national parliaments. Thus no direct European representation, but instead national control, which is, at least in theory, firmly anchored.

Of course, that too can give rise to criticism. The fact that the elected European Parliament must work with a Council of Ministers consisting of 27 countries logically means that decision-making is a process involving many steps. “Decisions are not taken, rather they come into being,” says Sebastiaan Princen, senior lecturer on European Administration. That makes exercising control more difficult. What's more, voters' influence is diluted by the multiple layers involved: up to now there has been very little relationship between the outcome of national elections and decisions in Brussels. That may change now that “Europe” has become an electoral theme.

But these are not the old objections that fed the myth of the “democratic deficit” in Europe. Those concerned the weak European Parliament and lack of transparency. Objections that have since been largely addressed. “The real democratic deficit can now be found in national parliaments,” says Professor of Political Science Rinus van Schendelen. “They have failed to keep pace with ongoing Europeanisation.” In other words: the democratic deficit is a lot smaller than often alleged, if the national parliaments performed their control function properly.

Translated from the Dutch by Kelly Boom

[Badboy]

SPAIN'S REGION HAVE OVER 100BILLION EUROS OF DEBT.(CATALONIA IS BIGGEST DEBTOR)
SPAIN MIGHT NEED 400 BILLION EUROS TO BE BAILED OUT.
SPAIN MIGHT BE THE NEXT GREECE.
THE EUROPS'S/ WORLD'S ECONOMIC CRISIS MUST BE BAD WHEN MCDONALDS AND COCA COLA ARE HAVING PROFIT PROBLEMS.

[Panda]

SPAIN'S REGION HAVE OVER 100BILLION EUROS OF DEBT.(CATALONIA IS BIGGEST DEBTOR)
SPAIN MIGHT NEED 400 BILLION EUROS TO BE BAILED OUT.
SPAIN MIGHT BE THE NEXT GREECE.
THE EUROPS'S/ WORLD'S ECONOMIC CRISIS MUST BE BAD WHEN MCDONALDS AND COCA COLA ARE HAVING PROFIT PROBLEMS.

Badboy, it's looking pretty dismal around the world even the emerging markets have slowed down. Now Germany is furious at being down-graded and
the only EURO Country to retain it's AAA rating is Finland which doesn't have a debt problem and is on the periphery.

It is getting to the stage where Countries are annoyed that after 2 years the EU has failed dismally to resolve the crisis, even South Korea is affected now . Traders are saying that the Euro could collapse , we shall have to see.....it's not just Greece any more and unless the ECB gets involved and
prints more money, they bailouts cannot be paid.

[Badboy]

A THOUGHT EARLIER IS WILL THE CRISES ETC EQUAL THE AMOUNT TRASHED AWAY BY THE RICH IN TAX HAVENS,ONLY A THOUGHT MIND YOU.

[Panda]

A THOUGHT EARLIER IS WILL THE CRISES ETC EQUAL THE AMOUNT TRASHED AWAY BY THE RICH IN TAX HAVENS,ONLY A THOUGHT MIND YOU.

More than that Badboy, was it £1.3 or 13 Trillion estimated to be banked in Tax havens? The Bailouts so far are several Billion , add to that the Loans
made to the European Banks by the ECB for 3 years looking unlikely to be re-paid, the decreasing value of the Euro, the interbank loans including the
U.K. exposure to European Banks for starters.....depressing i'snt it?

[Badboy]

I REMEMBER I THOUGHT ON THE CAN YOU TRUST THGE BANKS PROGRAMME,IT WAS SUGGESTED THAT THE MANIPULATION OF LIBOR RATE MAY HAVE SOMETING TO DO WITH EURO CRISIS.

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