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Economy Portugal: ‘16.9% – Unemployment rises and business warns of more job cuts’



14 February 2013
Presseurop Diário económico


Diário económico, 14 February 2013Unemployment in Portugal reached 16.9 per cent in the last quarter of 2012 (a year ago it was 14 per cent), according to data revealed by National Statistics Institute on February 13. Portugal has the third highest unemployment rate in Europe, just behind Greece and Spain, which have already passed 26 per cent.
Unemployment is at its highest recorded level, while economists and business experts are warning that no reversal of the cycle is likely soon.
"There are no magic formulas and only business investment can create jobs, wealth and economic growth. Acceleration of structural reforms, […] and better financing conditions, to make loans more affordable for businesses, can also accelerate the economic recovery," says Diário Económico.

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Feb 15, 2013
6:52 AM

Could
Ireland and Portugal Break The Cycle of Sovereign Downgrades?

By Tommy Stubbington


Ratings agencies have been seen as harbingers of doom for euro-zone countries
in recent times. But they may have some good news in store for two of the
countries hit particularly hard by the region’s debt crisis–Ireland and
Portugal–Commerzbank reckons.

A four-year cycle of downgrades appears to be running out of steam, and looks
set to be replaced by a period of “fine-tuning” by the major credit ratings
firms, according to David Schnautz, an interest rate strategist at the German
bank.

As ratings in general stabilize around current levels, Ireland is in pole
position for upgrades, Schnautz says. Some positive news has already arrived,
with S&P changing its outlook on Ireland to stable from negative following
last week’s deal to restructure huge debts injected by the government to prop up
the country’s struggling banks. The firm highlighted a significant reduction in
Ireland’s interest costs following the restructuring.

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Feb 14, 2013
6:09 PM

Sweden
Stands Far From the Devaluing Crowd

By William
Kemble-Diaz

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Sweden is sitting out the global currency devaluation catfight.

The country’s central bank governor Stefan Ingves said Wednesday he was
currently unconcerned about the strength of the krona as the Swedish currency
surged in response to the central bank’s decision to leave interest rates
unchanged.

The krona rose to its highest level against the euro in more than four
months, its strongest level against the dollar in almost 18 months and its
strongest level against the pound in more than 20 years.

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The rising Euro is cause for concern because it is making Exports more costly , especially Germany. Draghi has been warned not to tinker with the Euro, as has Japan , by the G20.
Bundesbank Introduces ‘Stronger Money’


Print






By Todd Buell


On Thursday, a top official of the Deutsche Bundesbank showed assembled
journalists in Frankfurt new money. It wasn’t, however, a backdoor attempt at
introducing displeasure over the European Central Bank’s plan to buy the bonds
of euro zone states in financial duress. Perhaps to the chagrin of some, no plot
to bring back the Deutsche mark was revealed.

The euro in fact isn’t breaking up. If anything, it’s getting stronger.
That’s because the ECB in conjunction with the 17 central banks of the states
that are using the euro are introducing new five-euro notes with new security
features.

This on its own isn’t new. ECB President Mario Draghi introduced the new
five-euro note, which bears the face of the Greek mythological figure Europa,
earlier this year. Yet in Frankfurt in a top floor of the Bundesbank’s edifice
on the outskirts of Frankfurt, Carl-Ludwig Thiele, the central bank’s board
member in charge of cash, passed around the new five-euro notes.

The new ones are, literally, stronger, or heavier, by about 10%, he said.
They are easier to recognize for visually impaired people. The number five is
more clearly outlined on the new note than on the old one.

The new notes come into service across the euro zone in early May and should
not only be more secure but also last longer than the current five-euro notes in
series. Though fighting counterfeiting is of course important to all central
banks, counterfeit data are not the reason for making the swap, said Mr. Thiele.
“I would like to stress that the current counterfeit data are not the reason for
the introduction” of the new bank notes, he said. Counterfeit instances have
actually fallen in recent years.

ECB data show that 280,000 bank notes were removed from circulation in the
second half of last year, versus 447,000 three years earlier, a drop of more
than one-third.

Still, those longing for their pre-euro currency can take some solace. The
designer of the new five-euro note, Reinhold Gerstetter a Berlin-based artist,
also previously designed Deutsche marks and Spain’s legacy currency, the peseta.

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As if Greece hasn't got enough to cope with:-
Arsonists attack Hellas gold mine in northern Greece



Authorities hope the Hellas
gold mine will create hundreds of jobs in the Halkidiki region, which has been
hit by high unemployment rates

Continue reading the main story
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• Greece country profile
  
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Dozens of masked intruders have
raided a gold mining operation in northern Greece, officials say.

The attackers used petrol bombs and flammable liquid to set fire to
machinery, vehicles and containers, police told the Associated Press.

The Hellas Gold site is due to open in 2015 and expected to create new jobs
in the recession-hit Halkidiki region.

But it has faced protests from environmentalists who say development would
cause irreversible damage.

Citizens' groups have been trying to halt the project since 2011, when the
Greek government allowed Hellenic Gold, a subsidiary of Canadian company
Eldorado Gold, to dig in the region.

In January, hundreds of Greeks took to the streets of Athens to demonstrate
against the new mine.
'Barely exploited'

Up to 50 intruders raided the complex at Skouries after midnight on Sunday,
fire fighters and police told AP on Sunday.

The arson attack caused extensive damage to machines, trucks and containers
used as offices, authorities said.

A security guard was reported to have been injured in the attack.


Protesters say the mine will
destroy forests and contaminate groundwater
Police detained 27 people, who were later released.

The Halkidiki area has a long history of mining for gold and other minerals,
making it the centre of frequent bitter debates between residents and
politicians.

Eldorado boss Eduardo Moura said the Hellas Gold project would "generate
approximately 5,000 direct and indirect jobs in Greece".

Authorities hope it will help to fight the crippling unemployment in the
region as the country heads into its sixth year of recession.

"No-one doubts any longer that northern Greece is a source of mineral wealth,
with a total wealth in metals exceeding 20bn euros (£17bn)," Deputy Energy and
Environment Minister Asimakis Papageorgiou said in a recent parliamentary debate
on mining operations in Halkidiki.

"We can no longer accept this being left unexploited or barely
exploited."

Critics, however, say the mining operation will destroy forests in the area,
contaminate groundwater and pollute the air with chemical substances like lead,
mercury and arsenic.

Opponents argue this will drive away tourism and damage farming and fishing.


Last year, residents launched legal proceedings to try and to stop the the
project.

But the country's highest administrative court ruled in favour of Eldorado,
citing Halkidiki's high unemployment rate.

Judges also said there were no environmental concerns stemming from the
investme

----------------------------
I have holidayed in Halkadiki , not the most picturesque of areas and Greece needs a project like mining to create jobs , difficult decisions have to be made .

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Euro-Area Economy Shrinks Most Since Depths of Recession


By Marcus Bensasson - Feb 14, 2013 11:26 AM GMT

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Euro-Area GDP Falls 0.6%, Worst Since 2009 The euro-area recession deepened more than economists forecast with the worst performance in almost four years as the region’s three biggest economies suffered slumping output.





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Euro-Area GDP Slumps Most Since Depths of 2009 Recession



Kostas Tsironis/Bloomberg
A pedestrian passes a closed store advertising sales discounts in its empty window displays in Athens.
A pedestrian passes a closed store advertising sales discounts in its empty window displays in Athens. Photographer: Kostas Tsironis/Bloomberg




4:26 Feb. 14 (Bloomberg) -- Jens Larsen, chief European economist at RBC Capital Markets, discusses the euro-zone economy, gross-domestic product data released today and European Central Bank monetary policy. The euro-area recession deepened more than economists forecast as GDP fell 0.6 percent in the fourth quarter from the previous three months, the European Union's statistics office said. Larsen speaks with Guy Johnson and Francine Lacqua on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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Gross domestic product fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office in Luxembourg said today. That’s the most since the first quarter of 2009 in the aftermath of the collapse of Lehman Brothers Holdings Inc. and exceeded the 0.4 percent median forecast of economists in a Bloomberg survey.
The data capped a morning of releases showing that the economies of Germany, France and Italy all shrank more than forecast in the fourth quarter. European Central Bank President Mario Draghi said last week that confidence in the 17-nation bloc has stabilized and the ECB sees a gradual recovery beginning later this year, though the situation is “fragile.”
“The outlook for 2013 remains subdued,” said Peter Vanden Houte, an economist at ING Group NV in Brussels. “While a gradual improvement of the world economy is likely to support European exports, domestic demand is bound to remain very weak as fiscal tightening and rising unemployment will take their toll on household consumption.”
The euro extended its decline against the dollar after the data were released. It fell 0.9 percent to $1.3328 as of 10:34 a.m. London time. The single currency also weakened versus the pound and the yen. European stocks erased gains, U.S. equity- index futures fell, and German bunds advanced.
Japanese Surprise

The European data chimed with statistics in Japan, where the economy unexpectedly shrank last quarter as falling exports and a business investment slump outweighed improved consumption. GDP fell an annualized 0.4 percent, following a 3.8 percent fall in the previous quarter. That bolsters Prime Minister Shinzo Abe’s case for more monetary stimulus to end deflation.
The euro-area economy shrank 0.9 percent in the fourth quarter from a year earlier, the statistics office said. In 2012, it contracted 0.5 percent.
Data earlier today showed the German economy, Europe’s largest, shrank 0.6 percent in the fourth quarter, while French GDP fell 0.3 percent. Both contractions exceeded the median forecasts of economists. Italy’s economy shrank 0.9 percent, also more than expected and a sixth straight contraction.
Ninth Contraction

Other releases today showed that Portugal’s GDP fell by 1.8 percent in the ninth successive quarter of contraction, while in Austria and the Netherlands, it dropped 0.2 percent. In Greece, which doesn’t publish quarter-on-quarter data, GDP fell 6 percent in the fourth quarter from a year earlier.
Measures by the ECB to stem the debt turmoil have eased the worst strains and helped to reduce sovereign bond yields. The yield on Spain’s 10-year debt is about 5.2 percent, down from more than 7.5 percent in July.
Some reports have also pointed to an easing in the recession in the euro area since the start of this year. While industrial production fell 2.4 percent in the fourth quarter, it rose 0.7 percent in December, more than economists forecast. Surveys of manufacturing and services improved in January.
Downside Risks

Still, the ECB has predicted that the euro zone’s economy will shrink 0.3 percent this year. The appreciation of the euro, which gained 8.2 percent in the past six months, is also threatening to hurt exports.
The ECB said today that professional forecasters cut their growth and inflation estimates. They predict inflation of 1.8 percent in 2013 and 2014, down from the 1.9 percent estimated for both years three months ago, the central bank said, citing a quarterly survey. Forecasters foresee zero growth this year and expansion of 1.1 percent next year.
Heineken NV, the world’s third-biggest brewer, said yesterday it sees volume weakness this year in European markets “affected by continued economic uncertainty and government-led austerity measures.” ThyssenKrupp AG, Germany’s biggest steelmaker, said on Feb. 8 that it intends to make savings in its European steel business by cutting more than 2,000 jobs.
In the 27-nation European Union, GDP fell 0.5 percent in the fourth quarter from the previous three months and 0.6 percent on the year. The statistics office is scheduled to publish a breakdown of fourth-quarter GDP next month.
“While sentiment towards the region has improved, the hard news on the economy remains distinctly weak,” said Jonathan Loynes, chief European economist at Capital Economics in London. Surveys have pointed to an “improvement in sentiment and activity in the early part of 2013. But for now at least, they are not strong enough to suggest that the euro zone has pulled out of recession.”

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Eurozone crisis: The great Portuguese sell-off

18 February 2013Le Temps Geneva

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‘Everything must go!’ Ribeira Market, Lisbon.
AFP
European leaders are counting on Portugal to set an example of how austerity can succeed when it is applied seriously. Sadly, despite a unprecedented tightening of the screw, Lisbon is still being forced to sell off its “crown jewels” to halt its spiralling debts.

François MusseauLittle by little, the Portuguese state is going down in defeat. In April 2011, when the country got a loan of €78bn from the troika (EC, ECB and IMF) to avoid bankruptcy, it committed itself to privatisation. But under the leadership of Passos Coelho, a model student of the fiscal discipline demanded by the troika, the sell-off of the “crown jewels” – what’s left of them, that is – has sped up.
The aim is to slash the public deficit. At the end of 2012, to the satisfaction of the troika, the country closed out its accounts with a deficit of 5.6 per cent of GDP, down from 6.7 per cent a year earlier. The goal is to get to 3 per cent by the end of 2014.
Like other Portuguese assets, plunged into recession and falling victim to savage budget cuts, the naval shipyards of Viana do Castelo have been put up for sale. Since 2012, Norwegian, Brazilian and Chinese parties have tried to take over the country’s leading shipyard. But negotiations with EMPORDEF, the state agency that owns the shipyard, have dragged on.
Uncertainty triggers standstill

“It’s the uncertainty that’s left everything at a standstill,” says an irritated Antonio Costa, chairman of the works council. In the end, the Russian group RSI Trading, under tycoon Andrei Kissilov, with no naval experience, should be taking it over by March for €10m. Incidentally, the state will take on the hefty liabilities of €280m. It’s a sad fate for these iconic shipyards – nationalised after the Carnation Revolution of 1974 – which, until the 1990s, were flooded with orders and employed up to 2,800 workers.
Against the backdrop of huge cranes standing still against the skyline, hundreds of workers, heads down, walk quickly towards the company canteen. It is one o’clock. Lunch is waiting. The workers are the 526 employees of the Viana do Castelo shipyards of northern Portugal, tucked between the River Lima and the Atlantic Ocean. This morning, like every morning, they came in at 8am and settled down to doing nothing for the rest of the day: playing cards, chatting, killing time; about 30 of them put in a little work repairing a ship. Since 2007 the shipyards have gone through a steady decline, and in recent months, with no orders coming in, the work has trickled almost to nothing. While a contract for two asphalt tankers – to be delivered in 2014 – was indeed signed with Venezuela for €128m, the work was stopped. Why? No one really knows.
“What we see here is psychological terrorism,” confides Antonio Costa, features drawn and face weary. “Nerves are frayed, and some people have been suffering anxiety attacks. Doing nothing, knowing nothing – it'll break your spirit.” Costa started working here at the age of 14. Most of the workers have spent forty years on these platforms: their entire working life. “Most would like to take early retirement at 55, but under the new law this isn’t possible any more,” says his friend José Pereira with a touch of sadness. A dyed-in-the-wool supporter of austerity, the conservative government under Passos Coelho has struck early retirement off the books and pegged it at 65.
Losing control of their destiny

For the 80,000 or so inhabitants of Viana, like for the rest of the country, the powerful wave of privatisation is causing a lot of worry. “Some of these state enterprises are gems, others are junk buckets, but they’re all strategic assets. And we’re losing them forever,” worries Bernardo S Barbosa, head of the local weekly Aurora do Lima. The Socialist mayor, José Maria Costa, shares a growing national concern: the feeling that the country is losing its sovereignty. In a vast room at City Hall, this engineer by training reacts very angrily to the policy of the executive: “By taking away our public assets, which are so vital, to the benefit of foreign companies, and private interests at that, we’re losing control of our own destiny. I even fear that in the end it will affect our freedom and democracy.”
Around the area, it’s the fate of the naval shipyards (ENVC) that is causing the most anxiety. After the public hospital, the municipality and the German company Enercon (which employs 1,200 people manufacturing wind turbines), ENVC is a major employer in the Upper Minho region. Especially since, once orders do come in, the work at the shipyards has a multiplier effect on all the peripheral businesses – from transport companies to SMEs manufacturing assembly parts, to local businesses. “Since the yards have shut down it’s been a depression around here,” laments hotelier Lucilia Passos Cruz. “When they’re sold off, foreign workers will fill up the restaurants and hotels. All that will be left to us will be tourism and our surfing beaches.”
There are alternatives, many believe. “Instead of selling our naval shipyards,” says Mayor José Maria Costa, “the state could retain control and go into partnership with foreign ship owners. Countries like Brazil, Mexico and Chile have a great need for ships. More than 3,000 jobs could be created.” Branco Viana, president of the Trade Union, agrees: “The state ought to keep at least 35 per cent of the shares. The Russians, the prospective buyers, have promised not to touch the jobs. In five years, though, they may well walk away, and 526 workers will be left to their fates. And we, the unions – who can we turn to then to protest? The state can wash their hands!”
On the web

• Original article at Le Temps fr
  

View from Lisbon 626,000 jobs vanished in 5 years

Portugal is losing more than 100,000 jobs per year and within five years, the Portuguese economy will have lost more jobs than the population of Lisbon, writes weekly Expresso. The Bank of Portugal's estimates for future employment levels make grim reading. At the end of 2013 Portugal is expected to have 626,000 fewer jobs than in 2008, the first year of the financial crisis.
According to data revealed by the National Statistics Institute on February 13, unemployment in Portugal reached 16.9 per cent in the last quarter of 2012.
“It was a dark period for the Portuguese labour market”, sighs Expresso, adding –

a major concern is the more than 500,000 unemployed people who do not receive any benefits. For many of them, the consequence of the situation is poverty.

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Republic lobbies EU to keep large company subsidies’

18 February 2013
Presseurop Hospodárske Noviny


Hospodárske Noviny, 18 February 2013A European Commission proposal to reduce incentives for large companies with more than 250 staff has not been welcomed by the Czech Republic. Nor is it to the taste of Poland, Slovakia or the Baltic States.
At a meeting of the EU Competitiveness Council on February 19 in Brussels, representatives of these countries will argue to keep these industry subsidies — notably incentives for investment by large companies.

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In the land of the well-behaved

15 February 2013Der Spiegel Hamburg

From left to right: SPD Merkel challenger Peer Steinbrück, former education minister Annette Schavan, FDP deputy Rainer Brüderle (above), former defence minister Karl-Theodor zu Guttenberg
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Minor stumbles can lead to big falls in Germany. Ministers are tumbling like lemmings over scandals around plagiarised theses and invitations to travel abroad. What gets the Germans so worked up? Excerpts.

Dirk KurbjuweitScandal! FDP parliamentary leader Rainer Brüderle has sparked a huge debate about sexism after allegedly uttering a few lewd words to a journalist and glancing at her breasts.
Scandal! Annette Schavan, minister for education, wrote a thesis that allegedly included some passages that were not her own. Despite having done a good job as minister, according to many, she has had to resign.
Scandal! Candidate for the Chancellery Peer Steinbrück [SPD] earned €1.25m moonlighting – entirely legally – and he did pay the proper taxes.
Scandal! Former German President Horst Koehler outraged half of Germany when on a trip to Afghanistan he remarked that the armed forces also represent the country's economic interests. Similar views had already been put down in writing in a paper by the Department of Defence.
Scandal! President Christian Wulff lost his office because of suspicions he could be bought – in the end, the price came to only €400.
A close look at the scandals rippling through Germany's current political scene at the federal level turns up a rather middling amount of dirt. The same goes for the resignation of defence minister Karl-Theodor zu Guttenberg, who had cheated on his doctoral thesis. Abroad there was some amusement that the Germans could get outraged because of such things. Either they are incredibly small-minded, the thinking goes, or they are so soft and spoiled that they have to jump at the slightest misdeed to be able to work themselves up into a fine rage.
Others have much more lurid sins to confess. In Austria, ex-minister Ernst Strasser was recently provisionally sentenced to four years in prison for corruption. In France, Dominique Strauss-Kahn, once a candidate for the presidency, was suspected of having forced a maid to give him oral sex. In Italy, former prime minister Silvio Berlusconi is accused of abuse of office and facilitating the prostitution of minors. He's also facing four years in prison for tax evasion.
Impressionable citizens, bruised politicians

Germany, on the other hand, gives the impression of being an idyllic backdrop for toy train sets. But that doesn't make it a peaceful place. All the political media have reported in depth on these affairs, and the details have snowballed into leaping headlines. The citizens have proved impressionable and the politicians, bruised by the whiffs of wrongdoing, have slumped in the polls. For so little?
A country is reflected in its political scandals. The character of a nation is shown in its outrage – just as it's shown by its lack of indignation. Italian psychoanalyst Sergio Benvenuto wrote about Italy in 2010 in Lettre International. Berlusconi, he wrote, made politics for the sports bar, for “the realm of political incorrectness”, where a certain coarseness reigns, and where politicians are hated – unless they are as unpolitical as Berlusconi. That, declared Benvenuto, was why Berlusconi was able to hold out for so long.
The sports bar is not the place that politics in Germany is made for. The centre of Germany is the organic supermarket, where men and women work with their shopping baskets at building a better world. The principles of responsibility, delicacy and propriety rule the aisles here. It's a clean and tidy place – not wicked and crude, like the sports bar. When it comes to what constitutes a political scandal, the organic supermarket has a much lower threshold.
Touchy subjects

Where lie the sensitivities? In the Schavan (CDU) and Guttenberg (CSU) affairs, it's about integrity. Politicians should not utter untruths and should not have titles they have not earned. Horst Köhler's words were able to spark a scandal because there is an extreme sensitivity in Germany to matters of war. After the two world wars, this country wants nothing to do with combat operations.
If it turns out that there are economic interests involved, it all becomes absolutely intolerable; the Germans will put up with a war only if it serves morally unblemished purposes. To a nation almost synonymous with “the German economy”, economic interests are suspect. Scandals often turn up moral double standards as well.
With Wulff (CDU) and Steinbrück (SPD) it boils down to money and the suspicion that politicians might be indulging in a lifestyle that distances them from the masses. Wulff is also suspected of having acted corruptly. Germany likes to see itself as a clean country where things work so well precisely because they are not "greased". Germany also likes to see itself as a halfway egalitarian country where wealth is frowned upon.
‘The eternally well-behaved’

All together, it gives the image of a nation that wants to do the good and proper thing; with money, war and biographies. A country that prizes social cohesion and prefers to shy away from raging controversy. We are the eternally well-behaved.
That such small misdeeds find such space to bloom into great big scandals is owed in part to the fact that the major domestic policy issues in Germany do not divide the nation into two camps. On the European crisis policy, the energy revolution and the army, the parties that represent the interests of the state agree. For another thing, hardly any serious political scandals ever come up. If finance minister Wolfgang Schäuble were ever caught for tax evasion, Steinbrück's moonlighting or Schavan's doctoral thesis would get buried in the back pages.
Naturally, this sensitivity may seem silly. At its best, though, it plays a preventative role and upholds the standards that have made this country one of the richest and best-functioning in the world. In the upwelling of angst against the little sins, lies the fear of the great ones – and that is our early-warning system.
Frumpy moral uprightness

The German disposition would never get up to the Italian way of doing things. The organic supermarket is also an anxious place, with stirrings of hope that nothing too awful will happen to the world.
Without question, there is something frumpy in the well-honed sense of moral uprightness. This is not always appealing, and even in Germany there is a great longing for Italy and reckless abandon – but in a tight spot, the German would rather defer to German justice.
By the standards of the German public, the misconduct of their politicians puts their suitability to hold office in question. That's what the scandals among the elite are good for: weeding out who is suitable for high office, and who is not.
That the standards are so high in Germany is no reason to feel better. They are the expression of a need. In the sports bar the mood is certainly often a lot merrier than in the organic supermarket; but, above all, the Germans must stay morally upright to be able to put up with themselves.

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German 'Wise Man' says Italy, Spain could face downturn as severe as Greece

Italy, Portugal and Spain could face economic downturns as severe as that of Greece within a year as the combination of austerity and recession exacerbate Europe’s sovereign debt crisis, Peter Bofinger, economist and member of the German Council of Economic Experts, told RBS.
02/01/2013











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Bofinger said struggling European economies had been smothered by "wrong policies" forcing them to narrow fiscal deficits to qualify for European Union bailout funds. In the past three years, Greece, Ireland, Portugal, Spain and Cyprus have all slashed spending and increased taxes to meet targets for external aid. Such restrictive fiscal rules mean the situation will "get worse before it gets better", Bofinger said.
"In my view, these pro-cyclical policies are putting Europe on a downward spiral that is not only affecting peripheral countries, but more and more affecting core countries," Bofinger said at a meeting with RBS clients in the German industrial city of Dusseldorf. "We should stop austerity measures until the countries reach the bottom of the economic cycle; until we can see they are back on a growth path. Only then should we talk about consolidation but not under the current conditions."
The euro area contracted 0.1 per cent in the third quarter of 2012 from the previous three months, succumbing to recession for the second time in four years. Italy’s gross domestic product fell 0.2 per cent in the same period and the Spanish economy shrank 0.3 per cent, while Portugal completed its second year in recession.
Greece contracted for a 17th straight quarter in the three months to September, with unemployment at 25.1 per cent. By the end of this year, Greek output will have dropped by a fifth since it entered its recession in 2008.
Bofinger said the region is likely to experience a prolonged period of contraction and that this would spill over to countries such as France that had so far proved resilient to the region’s sovereign debt crisis.
French unemployment rose to a 13-year high of 10.2 per cent in the second quarter as the economy shrank for the first quarter since 2009, before rebounding. Germany, which sells about 60 per cent of its goods and services to European Union countries, could fall into negative territory in the fourth quarter and into 2013, Bofinger said.
Bofinger said the decision by European Union budget enforcer Olli Rehn in November that Spain will not need further spending cuts and tax increases even though it will miss its deficit targets is an encouraging sign that fiscal policy may take a new direction. However, he believes that any changes will come too slowly to help struggling eurozone countries return to economic growth.
"The recession makes the situation of the banks worse, the situation of government financing worse and, in my view, it doesn’t contribute to better competitiveness," Bofinger said. "Some economists believe that we have to go through short-term pain for long-term gain, but in such a recession a lot of production potential is also destroyed."







Disclaimer

The statements and opinions expressed in this article are solely the views of Peter Bofinger speaking at an RBS Insight Event in Dusseldorf on November 13 2012 and do not necessarily represent the views of the Royal Bank of Scotland

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Spain: Economic doldrums and political crisis

20 February 2013El Periódico de Catalunya Barcelona

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“Yes, I am profitable. 6,500 layoffs.” Telefónica employees in Barcelona protest against layoffs announced by the operator
AFP
The prime minister's annual state of the nation speech on February 20, coincides with one of the country's worst economic, social and institutional crises, which has left no one unscathed. Rotten with corruption, the political system is threatening to implode, putting an end to Spanish democracy.

Carlos CarniceroAlthough there is no link between them, the various pressures weighing on politicians and institutions could result in the paralysis of the political system and an institutional breakdown that will mark the end of the current democratic model.
Virtually everywhere you look, on every level of the state, it is hard to find a public figure who is not facing some kind of coercive pressure. And no political party can say that it is not in danger.
Businessman Diego Torres has continued to haul his former partner, the king’s son-in-law, Iñaki Urdangarin, over the coals to the point where he has now implicated Infanta Cristina, the younger daughter of King Juan Carlos, and mounted increasingly virulent attacks on the royal family. Diego Torres’ most recent court appearance was even more spectacular because the king himself and even Prince Felipe intervened.
In the ranks of the government, the situation is no brighter. Mariano Rajoy, who has the dual role of PP and government leader, has offered no explanation to justify why Luís Bárcenas continued as People's Party (PP) treasurer for more than two years following his resignation from the Senate, and revelations of his involvement in the Gürtel case [an inquiry into corruption in which officials from the PP are implicated].
Inexplicable leniency

No one knows, nor can anyone explain, why someone who was involved with the PP’s finances for more than 20 years, and who had €22m in a Swiss bank account, should have benefited from such leniency.
Every day the people of Spain open their newspapers and surf the web to read up on yet another episode in the saga of how these criminals transformed their country into a vast quagmire of corruption. The topic is omnipresent in offices, factories and bars — so much so that the level of civic indignation is unprecedented.
In Catalonia, the political stability of the region is looking increasingly shaky as revelations emerge that detective agencies have been probing the professional activities and personal lives of prominent politicians. Dirt-digging and blackmail seems to have been the motivation for these contracts. In the weeks to come, some of the politicians most heavily involved in the push for Catalan independence could be arraigned for corruption.
It would be hard to find a constellation that could link up quite as many stars from the Spanish state. The outrage is growing day by day and gathering speed on social networks, and the movements of outraged citizens have begun to win their first victories against the parliament and the decisions of the majority parties.
If this pattern is not broken, if the King’s daughter Cristina is called to testify in the corruption charges against her husband, the Duke of Palma de Mallorca, and if senior leaders of the PP, including Mariano Rajoy, are hauled into the courts, the stability of the government itself could be undermined.
Unwilling to forgive or forget

Meanwhile, the series of extortions are provoking no reaction. Luis Bárcenas is managing his timetable and his documents efficiently. So far, he has managed it very well: Mariano Rajoy, far from initiating legal proceedings against him, dare not even speak his name.
To submit to blackmail can only draw out or worsen a weakness; better to let it all air. If the blackmailer’s demands are pegged too high, euthanasia is preferable to prolonging the suffering of the sick.
And to this catastrophic panorama we must add the systemic crisis hitting the Spanish Confederation of Business (CEOE). Its former president, Gerardo Diaz Ferran, is in prison for forging a mortgage. His successor, Joan Rossell, has been throwing fuel on the fire by questioning the official unemployment figures provided by the government and has also insulted and offended hundreds of thousands of civil servants. And the vice-president of the organisation, Arturo Fernández, who has been accused of wriggling out of paying social security contribution and taxes by making off-the-book payments to employees, will be forced to resign as soon as the fraud trial gets going.
On the same theme of illness, the continual health problems afflicting the king, his advancing age and the essential obligations related to his role are other factors burdening a hereditary institution that is not strongly enough established in the hearts of the Spaniards to avoid a delicate succession.
Everything depends on the structure of the state. If that collapses, it will be difficult to salvage the pillars that hold it up. However, the risk of destabilisation cannot and should not prevent the truth from being revealed. This time around, the people are not willing to forgive or to forget.
On the web

• Original article at El Periódico de Catalunya es
  
• El País article es
  
• La Vanguardia article es
  

Analysis Voters held to ransom by system

Spanish legal philosopher Jorge Urdánoz Ganuza has no doubts about the cause of the corruption which has struck Spain’s political class: it is the two-party system, in which the conservative People’s Party (PP) and the Spanish Socialist Worker’s Party (PSOE) continue to dominate without any real competition, he writes in El País. It follows that —

millions of Spaniards who live in small electoral districts are offered only two options: either to vote for the PP even though its list includes corrupt representatives, or to allow the PSOE to win the day. Or vice-versa: either you vote PSOE, whether you want to or not, or you will be allowing the PP to win. […] As it stands, the PP can go ahead as they are, because they know that at the next election, millions of voters “will have no other choice” but to select either them or the PSOE.

The political crisis “has eclipsed the economic crisis, […] delaying the implementation of appropriate treatment and making the situation worse,” notes La Vanguardia. The daily continues —

this political crisis has ushered in a crisis in the rule of law with two extremely serious consequences: firstly, laws and court decisions are not being properly applied, and secondly, as a result of their growing loss of credibility, state institutions are increasingly ineffective.

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On the road to the euro


20 February 2013IQ The Economist Vilnius

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Raul Arias
On January 1, 2014, Latvia will become the 18th country in Europe to use the single currency. It is a decision most Latvians would not have made, and it comes with significant risks.

Pauls RaudsepsThat the Latvian government and the central bank are firmly on course to launch the euro on January 1, 2014, despite the fact that Latvian society disapproves of it, surprises foreigners. An opinion poll commissioned by the National Bank of Latvia last August found that only 13 per cent of the people want the euro to be introduced as soon as possible. Almost 22 per cent do not support adopting it in the next few years, while 59 per cent are basically against adopting it.
However, glancing neither left nor right, the government is steaming straight ahead. In September, all the Latvian indicators were in compliance with the criteria required to enter the eurozone, and the lack of enthusiasm revealed by the opinion polls has not prevented the government from staying the course. Latvian politicians have long been used to the enduring negativity of Latvians, whatever the political issue of the day. They have also found that voters are endowed with an immense talent for believing two contradictory things at the same time. The society may express its scepticism about the euro in the polls, but Prime Minister Valdis Dombrovskis, the main – and most visible – backer of the single currency keeps racing ahead in the election polls.
Apparently the opposition parties have also grasped that coming out clearly against introducing the euro will gain them little traction. Euro-rejection is conditioned as much by the sentimental attachment to the beloved lats [Latvian national currency] as it is by a knee-jerk rejection of the new and the unknown. By no means does it arise out of a profoundly entrenched national resistance, nor from rational political and economic arguments.
Political and economic benefits

There are, as well, relatively strong arguments in favour of adopting the single European currency. Most Latvian businessmen want the euro to eliminate the risk factor for the Latvian currency. Having the euro will also save on the cost of currency conversions and promote trade. Speaking on the subject of the Central and Eastern Europe economies, Andres Aslund, a globally recognised expert, points out that if a new crisis does come along, being in the eurozone will give the Latvian banking sector access to European Central Bank funds, which for a small country that holds many foreign deposits can be a major incentive. The geopolitical benefits also play a not insignificant role. The greater the integration in all areas of the EU, the greater the decline in the area of Russian influence.
The recent crisis in the eurozone has clearly demonstrated that the mere fact of introducing the common currency is no guarantee of well-being and economic growth. However, the Bank of Latvia and the government are releasing numerous highly optimistic forecasts about the benefits to the country of ushering in the euro. Foreign investment will go up, and the country will be able borrow money at lower rates. These high-flying forecasts, though, may never get off the ground.
Election year gamble

Despite everything, a failure to see the promised benefits is a political risk much less perilous than the risks tied to an onset of inflation and having to pay into the eurozone bailout funds. The hope of escaping a new write-off of Greece debts is dwindling. This situation is by no means out of the ordinary, since similar support – which will not be paid back into the national coffers – will have to be paid out to any other country hit by the crisis.
If Latvia does end up having to give significant aid to countries much richer that Latvia, the political reaction threatens to be bitter and unforgiving. Latvians are now convinced that prices will go up.
Not only is 2014 the year the euro will be brought in, but it is also an election year for the Saeima [Latvian Parliament]. Any economic problem, and in particular a hike in prices, will be seen by the people as a consequence of introducing the euro. The new banknotes will hit wallets in January that year, and if they lose their purchasing power too quickly the coalition parties that brought in the euro will pay a high price, especially when the elections are held in October.
===============================
I would have thought the EU would suspend any new Members until the crisis is over.!!!

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Portugal: ‘European Central Bank refuses to ease Portugal’s programme’

19 February 2013
Presseurop Público


Público, 19 February 2013During a European Parliament debate yesterday, ECB president Mario Draghi told countries they can "redraw" their adjustment programmes, but only within the financial limits agreed, discounting any possibility of providing additional funds to Portugal.
A few days before the start of the Troika’s seventh regular review of Portugal, António José Seguro, leader of the main opposition party (PS, socialists) sent a letter to group's three institutions – the ECB, the European Commission and the IMF.
He asked them to assess the true state of the country, and not simply stick to the terms of the bailout agreement.

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At the bottom of the sea

18 February 2013ABC Madrid

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NOAA / Presseurop
Sailing through the first round of the presidential elections on February 17, Conservative Nikos Anastasiadis is well placed to take over from Communist Dimitri Christofias. His main aim? To negotiate a tricky rescue plan to avoid the island being dragged down by the collapse of its banks.

José de Areilza CarvajalAs with Greece, to which it bears some resemblance, the bailout being drawn up for this small European territory would not be news if it were not for the resistance of Germany and the other creditor countries](3390701) of the eurozone.
Plenty of voices in those parliaments are demanding that Cyprus be left to sink and that it later be wiped off the map of the single currency. They are the same voices that are questioning the EU aid to Spanish banks and that are shocked by the lukewarm official reaction to cases of corruption in political parties and public administration in Spain.
Above all, if Cyprus is going to collapse, savers in northern Europe do not want their money used to backstop the huge deposits of wealthy Russians](1474111), who make the most of the island's financial advantages – and its balmy winter sunshine. Critics of this mini-rescue recall, and indeed rightly, that the island should never have been admitted to the Union without having first resolved its partition into two halves.
Today, though, European aid has become inevitable. Both the Cypriot government and its banks are up to their eyeballs in Greek debt that they bought up in a mad rush. The election earlier this year of a new governor of the Central Bank of Cyprus named Panicos puts a surreal touch on events.
The European Central Bank wants no experiments, even minor ones, that could shatter the fragile confidence in the eurozone. And so Mario Draghi has, for now, persuaded European governments to restructure the island's debts following the Greek model, without harming individuals who have deposits in the country, to stem capital flight on a massive scale.
Russia, in the background to this little drama, will provide financial support to this operation; not for nothing has it been helping out its pet island in the Mediterranean since 2011. That we can count on.
On the web

• ABC website (€) es
  

View from Nicosia Spotlight turns from division to bankruptcy

"For the first time in the recent history of the country, the campaign has not been marked by the issue of the divided island but by the risk of bankruptcy, writes O Philelefteros following the first round of the presidential elections on February 17. Around a third of the country has been occupied by the Turkish army since 1974, and no president has yet come up with a workable solution.
Thus, notes Politis,

Regardless of who wins, the new Cypriot president will be forced to place the country under the budgetary supervision of the European Union and the IMF, just like Greece, to get a loan of €17bn and stave off bankruptcy.

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Angela Merkel accused of 'unholy alliance' with Britain


Angela Merkel has been accused of engaging in an “unholy alliance” with
Britain after backing David Cameron’s demands for a cut to the European Union
budget.








Angela Merkel has been accused
of engaging in an "unholy alliance" with Britain in a German Bundestag debate on
the EU budget cut.






By Louise Armitstead, Chief Business
Correspondent

12:11PM GMT 21 Feb 2013


102 Comments




Speaking in the German Bundestag this morning,
Peter Steinbruck, the SPD party’s candidate for Chancellor, lambasted Ms Merkel
for siding with Mr Cameron “of all people.”


“You have joined in an unholy budget-cut alliance with of all people a head
of government who possibly wants to leave the EU,” he said. He told her that if
Germany “wants more Europe in the future, it needs partners that also see their
future in Europe.”


Ms Merkel told the Bundestag that Germany had "achieved all its goals" in the
EU budget negotiations.


Two weeks ago the Prime Minister emerged from an all-night summit
with a deal to cut the EU budget for the first time
in its 56-year history. Reporting back to Parliament, Mr Cameron
said he had rejected proposals by Europe's "big spenders" for an increase in the
budget. "By working with like-minded allies, we delivered a real-terms cut in
what Brussels can spend for the first time in history," he said.


Ms Merkel sided with Britain and against Francois Hollande, President of
France who wanted more spending to boost economic growth. Ms Merkel, who is seen
as the architect of the tough austerity strategy being imposed across the EU,
said: “We couldn’t have explained to Europe, neither countries in crisis nor the
ones shouldering solidarity, that all have to cut spending apart from Europe
itself.”



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Yesterday, Jean-Louis Borloo, the French environment minister, told a French
radio station that there were "extremely worrying" signs that the Franco-German
axis of power in Europe was being replaced by an Anglo-German axis. "This means
that we're probably turning our back on the great European ambitions... this is
an extremely important political and diplomatic shift."
===================
Merkel faces Election in September, realised Hollande was no Sarkozy and voted with Cameron, because she too wanted a cut in the EU budget as for the first time the German economy is faltering .
Germany and Britain are two of the biggest contributors to the EU and the cut was not very big anyway.

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Italy: Failing the invisible generation


21 February 2013Corriere della Sera Milan

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At the Internazionale festival in Ferrara in October, 2011
Francesco Alesi / Internazionale
Never have the under-30s had to face such precarity, while at the same time, disregard for their generation has reached an all-time high in the current election campaign.

Beppe SevergniniNo one will be able to accuse the future government of breaking its promises to young Italians, simply because it will simply not have made any.
As it stands, first-time voters have been completely overlooked in the election campaign. For them, politics is like a disco guarded by musclemen who refuse to let them in.
Gesticulating and strutting about in their bid to attract the limelight, the five coalitions in the running appear to be inspired by the 2011 pop hit Gangnam Style. But they have failed to impress a young generation of Italians, which watches them on TV while leaving disappointed comments on social networks. Many of them are tempted not to vote, but this impulse will only play into the hands of the bouncers who are eager to keep them out of the political game.
Traditional social networks are slowly crumbling. Families have exhausted their reserves of patience and money: as evidenced by the number of “we buy gold” shops, declining property prices and the fall-off in the sale of durable goods. The rate of unemployment among 15-24 year-olds on the labour market has reached 37 per cent, its highest level since 1992. And this is the national average. Just imagine how bad it is in southern Italy. Over the last 10 years, the percentage of Italian graduates who leave to seek their fortunes abroad has risen from 11 to 28 per cent.
Sacrificing the young

Faced with phenomena of this magnitude, you would expect a response from the world of politics. You would expect to see deliberation, decisions, detailed strategies and concrete measures, because no country can decently allow itself to sacrifice an entire generation. But any such expectation will be in vain. Our candidates are fighting tooth and nail over taxes and pensions. But they only address themselves to those who have work, or who had it in the past. It is as though the others, those who run the risk of never finding work, count for nothing. The generation of under-30s is slowly becoming transparent. The frustration and the anger that this will inevitably generate could have dramatic consequences. And there are many signs that this will soon be the case.
The orgy of airtime accorded to veteran politicians – 63 hours for Silvio Berlusconi, 62 for Mario Monti, 28 for Pier Luigi Bersani (of the left-wing Democratic Party) between December 2, 2012 and January 14, 2013 – will likely be perceived as a provocation. When Antonio Ingroia (the anti-mafia judge at the head of the hard-left Civil Revolution) goes on TV, a melee ensues. Away from the cameras, Beppe Grillo (of the Five Star Movement) is hardly any better. Everything has an air of déja-vu. We have heard it all before. In 2013, Italian politics increasingly resembles the small town in Groundhog Day, where the protagonist, played by Bill Murray, is condemned to relive the same 24 hours over and over again.
Reaping what you sow

The youthist fervour of the Monti government has been limited to such measures as the reintroduction of apprenticeships and a “Digital agenda” [designed to promote innovation and the digitisation of administrative data], which will be difficult to implement. The Five Star Movement is proposing “guaranteed unemployment benefit” but has neglected to say how it will be financed. The right, which avoids mentioning the subject, has cleared young people from its lists in order to make room for its leader’s Pretorian Guard. The left, even though it does have some new faces, has not come up with any radical measures to improve the lot of young citizens. The honour loans proposed by Anna Finocchiaro [the former Minister for Equality and president of the Democratic Party group in the senate] will amount to little more than a band aid on a fracture, which should be treated with a dose of labour market flexibility to facilitate recruitment and layoffs.
If we want a new and vigorous authority to take the helm in Italy, we should not be so disdainful of the pilots of tomorrow. Otherwise, they will simply leave us by the wayside, and they will be right. Even more importantly, we should not pretend that we want to help them, when we are not willing to make even the slightest concession for their future.

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Eurozone downturn and deficits to persist, Commission
says


Comments (339)
The scale of Spain's spending
cuts has been unpopular, but it will have to go further if it is to meet EU
targets
Continue
reading the main story

Eurozone in Crisis

• Who's afraid of the euro crisis?
  
• Is
  it game over for Greece?
  
• EU
  austerity drive by country
  
• Why Greece's problems matter
  

The eurozone recession will persist
into 2013, the European Commission has conceded in its latest forecast.

Governments face an uphill battle to rein in their overspending, with Spain,
France and Portugal all failing to cut their deficits to agreed targets.

Spain's deficit, at 10.2% of GDP in 2012, was well above its 6.3% target, and
would stay above target into 2014.

The eurozone economy would shrink 0.3% in 2013, the Commission said, making
the governments' task even harder.

Previously, the Commission had expected the 17 economies in the eurozone to
collectively enjoy 0.1% positive growth this year. In 2012 the economy is
estimated to have shrunk 0.6%.

Delivering
its winter forecast, Commission Vice-President Olli Rehn said that
unemployment across the single currency area expected to continue rising to
12.2% this year as the recession lingers. Last year's jobless rate was
11.4%.

However, he said the eurozone was expected to rebound in the last three
months of this year, registering 0.7% growth in the fourth quarter.

The forecast appears somewhat more pessimistic than the European Central Bank
President Mario Draghi, who last month said he believed the eurozone would begin
recovering in the second half of this year.

Continue reading the main story
“Start Quote

The French need to do their homework”

End Quote Michael Fuchs
Deputy leader of Angela Merkel's CDU party
faction
The Commission's acknowledgement that the eurozone is in
worse economic shape than previously mirrors a change in the International
Monetary Fund's thinking. The IMF said in January that it expected the eurozone
to experience a "mild recession" in 2013, having previously predicted
growth.
Plea for more time
The austerity measures being implemented by eurozone governments are widely
blamed by economists as a major contributor towards the Continent's economic
woes, although there is disagreement among economists as to whether governments
should therefore go easy on the spending cuts.

Spain, which has one of the biggest budget deficits, made the least headway
in bringing its finances back under control, and faces one of the nastiest

recessions.

Of its 10.2% deficit in 2012, 3.2 percentage points was due to the cost of
cleaning up its banking system, which has been decimated by loans made to
property developers and speculators during the last decade's housing bubble that
have since proved unrepayable.

More worryingly, the Commission does not expect Spain to improve greatly over
the next two years. Its deficit is forecast to be 6.7% this year, compared with
a 4.5% target, and 7.2% in 2014, compared with a 2.8% target.

Spain cannot simply blame its weak economy for this outcome, the Commission
implied. Madrid's structural deficit - which strips out the effect of the
recession - fell only by 1.4% of GDP last year, barely half the 2.7% target set
by the Commission.

However, overspending by governments across the eurozone as a whole is still
expected to fall on average this year. That is despite the persistent economic
downturn, which typically reduces governments' tax revenues and increases their
benefit bills.


European Commission forecasts Country Growth Deficit* 2012 estimate 2013 forecast 2012 estimate 2013 forecast

*Negative figures denote deficits, positive figures surpluses Source: European Commission
France	0.0%	0.1%	-4.6%	-3.7%
Germany	0.7%	0.5%	0.1%	-0.2%
Greece	-6.4%	-4.4%	-6.6%	-4.6%
Ireland	0.7%	1.1%	-7.7%	-7.3%
Italy	-2.2%	-1.0%	-2.9%	-2.1%
Netherlands	-0.9%	-0.6%	-4.1%	-3.6%
Portugal	-3.2%	-1.9%	-5.0%	-4.9%
Spain	-1.4%	-1.4%	-10.2%	-6.7%
Eurozone	-0.6%	-0.3%	-3.5%	-2.8%
UK	0.0%	0.9%	-6.3%	-7.4%
European Union	-0.3%	0.1%	-3.8%	-3.4%

The Commission said that the aggregate deficits of the 17 eurozone
governments would fall from 3.5% of economic output or GDP last year, to 2.8%
this year.

Meanwhile, the Commission was concerned about a "surprise" fall in Portugal's
economy, which shrank 3.2% in 2012 and is forecast to contract by another 1.9%
in 2013.

The country may need to be granted an extra year to bring its deficit within
the long-term target of 3% of GDP from an expected 4.9% this year, Prime
Minister Pedro Passos said, at a specially-called press conference.
'Problem child'
The Commission is also considering giving France one more year, until 2014,
to get its finances under control, according to Mr Rehn. Paris is expected to
record a 3.7% deficit this year, well above the 3% target.

Earlier on Friday, France had been dubbed a "problem child" by Michael Fuchs,
a senior member of German Chancellor Angela Merkel's CDU political party.

"The French need to do their homework - they're very, very behind other
countries and that is alarming because France is the second biggest economy in
Europe," Mr Fuchs told Germany's Deutschlandfunk radio.

The French government is under pressure to loosen up labour market rules -
including the ditching of its 35-hour week - in order to regain international
competitiveness.

Meanwhile, the Commission told the British government that it would need to
take additional austerity measures.

The Commission said the UK was also not on target with its deficit reduction,
with government overspending expecting to increase to 7.4% of GDP this year, the
worst in the European Union, from 6.3% in 2012.

The UK economy was predicted grow 1% in 2013, compared with the 1.1%
previously forecast.

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Parliamentary Upheaval
By Andrew Frye & Chiara Vasarri - Feb 22, 2013 10:43 AM GMT

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Elisa Dalbosco says she lost her job when it came time for her former employer, a refugee shelter in northern Italy, to either offer her a permanent contract or let her go.
“I have a college degree and it would have cost too much,” said Dalbosco, who at 26 is now unemployed and poised to vote for self-described populist Beppe Grillo in elections on Feb. 24 and Feb. 25.





Enlarge image
Monti’s Austerity Pushes Italians Toward Parliamentary Upheaval



Alessia Pierdomenico/Bloomberg
A pedestrian holds his goods in shopping bags as he stands at street market stall in Turin, Italy. Italy's prime minister Mario Monti’s focus on austerity and liberalizations “annoyed a lot of people,” said Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London.
A pedestrian holds his goods in shopping bags as he stands at street market stall in Turin, Italy. Italy's prime minister Mario Monti’s focus on austerity and liberalizations “annoyed a lot of people,” said Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London. Photographer: Alessia Pierdomenico/Bloomberg




4:11 Feb. 22 (Bloomberg) -- Giuseppe Ragusa, assistant professor of economics at the LUISS Guido Carli University, discusses support for former comedian Beppe Grillo in the upcoming Italian elections. He speaks in Rome with David Tweed on Bloomberg Television's "On the Move." (Source: Bloomberg)




4:39 Feb. 22 (Bloomberg) -- Riccardo Monti, head of the Italian Trade Promotion Agency, discusses the country's export industry and the upcoming Italian elections. He speaks in Rome with David Tweed on Bloomberg Television's "The Pulse." (Source: Bloomberg)



Enlarge image
Italy's Prime Minister Mario Monti



Alessia Pierdomenico/Bloomberg
Mario Monti, Italy's prime minister, a divisive figure at home, is celebrated abroad for replacing a discredited Silvio Berlusconi 15 months ago and calming the European sovereign debt crisis.
Mario Monti, Italy's prime minister, a divisive figure at home, is celebrated abroad for replacing a discredited Silvio Berlusconi 15 months ago and calming the European sovereign debt crisis. Photographer: Alessia Pierdomenico/Bloomberg



Enlarge image
Monti’s Austerity Pushes Italians Toward Parliamentary Upheaval



Victor Sokolowicz/Bloomberg
The national flag of Italy flies in front of a monument to the unknown soldier in Rome.
The national flag of Italy flies in front of a monument to the unknown soldier in Rome. Photographer: Victor Sokolowicz/Bloomberg



Enlarge image
Italy's Democratic Party Leader Pier Luigi Bersani



Alessia Pierdomenico/Bloomberg
Pier Luigi Bersani, leader of Italy's Democratic Party, major policy challenge” for the next government. Bersani, who polls show is the likely winner in the lower house, needs to triumph in the Senate races in the swing regions of Lombardy, Campania and Sicily to gain control of the government.
Pier Luigi Bersani, leader of Italy's Democratic Party, major policy challenge” for the next government. Bersani, who polls show is the likely winner in the lower house, needs to triumph in the Senate races in the swing regions of Lombardy, Campania and Sicily to gain control of the government. Photographer: Alessia Pierdomenico/Bloomberg
Dalbasco’s disappointment shows why Italy is braced for its biggest political upheaval since 1994. Dalbosco, whose ballot five years ago went to an ally of front-runner Pier Luigi Bersani, won’t vote for anyone tied to incumbent Mario Monti because she says his austerity policies in a shrinking economy put the interests of banks ahead of everyone else’s.
Monti, a divisive figure at home, is celebrated abroad for replacing a discredited Silvio Berlusconi 15 months ago and calming the European sovereign debt crisis. While some of his European counterparts say Monti deserves a second term as head of government -- and steward of Italy’s $2.6 trillion of debt load -- voters may push the nation away from his rigor that has driven financial-market gains.
“The fear remains that the general election produces a significant no-confidence vote on the current austerity plan and the need to reform further,” Raj Badiani, principal IHS Global Insight economist for Italy, said in a research report this week. “This could spark an immediate spike in bond yields in the aftermath of the election.”
‘Major Challenge’

Royal Bank of Scotland Group Plc is advising clients to bet against Italian bank debt. JPMorgan Chase & Co. economist Alex White predicted yesterday in a research report that Grillo would be “a big winner” in the election and his voters will “pose a major policy challenge” for the next government. Riccardo Barbieri, of Mizuho International Plc in London, cited Italian comic Claudio Bisio who said on state-broadcaster RAI this month that voters have the leaders they deserve.
“Italy does not need to change its politicians, it needs to replace its voters,” Barbieri said, paraphrasing Bisio.“The latest press reports echo that message as they suggest”Grillo is gaining ground, said Barbieri, chief European economist, in a research note published today.
Italian stocks have lagged behind European benchmarks this year as the campaign progressed. Italy’s FTSE MIB Index (FTSEMIB) slipped1.6 percent this year through yesterday, while the Stoxx Europe 600 Index advanced 1.9 percent. Last year, the Italian index gained 7.8 percent as the Stoxx Europe climbed 14 percent.
Swing Regions

Bersani, who polls show is the likely winner in the lower house, needs to win in the Senate races in the swing regions of Lombardy, Campania and Sicily to gain control of the government. If he falls short in the upper house, he and Monti have said they may form a coalition. Berlusconi is seeking to overcome a deficit in opinion polls to steal the victory from Bersani, while Grillo has embraced the role of spoiler and has said his goal is to send Italy back to the polls as soon as possible.
Investors prospered during Monti’s tenure as his tax increases deepened the fourth recession since 2001 and helped push unemployment to a 13-year high of 11.2 percent. Monti, an economics professor and former Goldman Sachs Group Inc. adviser, has handed bondholders returns of 28 percent since Nov. 16, 2011, when he was named premier by President Giorgio Napolitano.
Bonds Gain

Italian 10-year bonds rose today, sending the yield down 2 basis points to 4.47 percent at 11:10 a.m. in Rome, even as the European Commission said the recession was worse than expected.
Italy’s economy will shrink 1 percent this year after a 2.2 percent decline in 2012, the Brussels-based commission said today in revised forecasts. That’s deeper than the 0.5 percent contraction it predicted in November. Unemployment will probably reach 12 percent, the commission said.
With the backing of 80 percent of lawmakers, including Bersani’s party and Berlusconi’s allies, Monti succeeded in implementing budget rigor. He imposed 20 billion euros ($26 billion) of austerity measures and raised the retirement age. He says he fell short in his bid to deregulate the labor market to encourage hiring.
“There were forces on both sides of the spectrum against this strategy, especially the Left,” Monti said yesterday in a televised interview on Canale 5, according to newswire Ansa.
Monti remains under attack from both Grillo, a 64-year-old former comic, and a resurgent Berlusconi.
Anti-Austerity Push

The push against EU-imposed austerity has animated the electorate in the campaign’s closing month and sapped strength from Monti and Bersani, who have emphasized its importance. Grillo, wrapping up a 73-stop tour of Italy today in Rome, has filled city squares. Berlusconi has garnered headlines with a pitch to turn back Monti’s policies.
Monti has “annoyed a lot of people,” said Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London.
Since the campaign began in December, Bersani lost support in opinion polls. The 61-year-old former communist and ex-industry minister struggled to galvanize voters as Berlusconi did with a proposal to hand out tax refunds of more than $5 billion in cash as his first act in office.
Bersani’s career as a politician has also hurt him with voters looking to rattle established interests. Cologero La Placa, a 51-year-old retired veteran of the Afganistan war, and Silvano Saba, a 45-year-old worker at an arms maker, are deserting Bersani’s Democratic Party, or PD, for Grillo.
Opinion Polls

The leader had 33.8 percent support in an SWG Institute survey published Feb. 8, when a two-week poll blackout began, down 1.1 percentage points from Jan. 9. Berlusconi gained 2.5 percentage points to 27.8 percent over the same period, while Grillo rose 2.9 points to 18.8 percent. Monti, running fourth, slipped 0.4 points to 13.4 percent, according to SWG.
Bersani is running against two experienced showmen in Grillo and Berlusconi, and his spread-the-wealth campaign has paled next to the appeals of the performers. Bersani talks about the need for budget rigor and respect for rules, while Berlusconi, standing trial on charges of paying for sex with a minor, promises tax amnesties and a tougher negotiation stance against German demands for balanced budgets.
Grillo, who embraces the term populist, tells crowds at his two-a-day rallies that Italy must institute stipends of 900 euros for the unemployed and cut the work week to 20 hours. Italy’s debt should be renegotiated, and all lawmakers must be swept out, he says. Grillo, who isn’t running himself due to a manslaughter conviction in the 1980s, chose the candidates of his 5 Star Movement in what he called an online primary.
“He’s the only one singing out of tune,” La Placa, the ex-soldier, said in an interview in the mountain town of Bolzano in northern Italy after Grillo spoke to a rally of about 2,000 people. Grillo wants “to bring normal people into an abnormal world, that is, our parliament.”

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Parliamentary Upheaval
By Andrew Frye & Chiara Vasarri - Feb 22, 2013 10:43 AM GMT

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Elisa Dalbosco says she lost her job when it came time for her former employer, a refugee shelter in northern Italy, to either offer her a permanent contract or let her go.
“I have a college degree and it would have cost too much,” said Dalbosco, who at 26 is now unemployed and poised to vote for self-described populist Beppe Grillo in elections on Feb. 24 and Feb. 25.





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Monti’s Austerity Pushes Italians Toward Parliamentary Upheaval



Alessia Pierdomenico/Bloomberg
A pedestrian holds his goods in shopping bags as he stands at street market stall in Turin, Italy. Italy's prime minister Mario Monti’s focus on austerity and liberalizations “annoyed a lot of people,” said Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London.
A pedestrian holds his goods in shopping bags as he stands at street market stall in Turin, Italy. Italy's prime minister Mario Monti’s focus on austerity and liberalizations “annoyed a lot of people,” said Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London. Photographer: Alessia Pierdomenico/Bloomberg




4:11 Feb. 22 (Bloomberg) -- Giuseppe Ragusa, assistant professor of economics at the LUISS Guido Carli University, discusses support for former comedian Beppe Grillo in the upcoming Italian elections. He speaks in Rome with David Tweed on Bloomberg Television's "On the Move." (Source: Bloomberg)




4:39 Feb. 22 (Bloomberg) -- Riccardo Monti, head of the Italian Trade Promotion Agency, discusses the country's export industry and the upcoming Italian elections. He speaks in Rome with David Tweed on Bloomberg Television's "The Pulse." (Source: Bloomberg)



Enlarge image
Italy's Prime Minister Mario Monti



Alessia Pierdomenico/Bloomberg
Mario Monti, Italy's prime minister, a divisive figure at home, is celebrated abroad for replacing a discredited Silvio Berlusconi 15 months ago and calming the European sovereign debt crisis.
Mario Monti, Italy's prime minister, a divisive figure at home, is celebrated abroad for replacing a discredited Silvio Berlusconi 15 months ago and calming the European sovereign debt crisis. Photographer: Alessia Pierdomenico/Bloomberg



Enlarge image
Monti’s Austerity Pushes Italians Toward Parliamentary Upheaval



Victor Sokolowicz/Bloomberg
The national flag of Italy flies in front of a monument to the unknown soldier in Rome.
The national flag of Italy flies in front of a monument to the unknown soldier in Rome. Photographer: Victor Sokolowicz/Bloomberg



Enlarge image
Italy's Democratic Party Leader Pier Luigi Bersani



Alessia Pierdomenico/Bloomberg
Pier Luigi Bersani, leader of Italy's Democratic Party, major policy challenge” for the next government. Bersani, who polls show is the likely winner in the lower house, needs to triumph in the Senate races in the swing regions of Lombardy, Campania and Sicily to gain control of the government.
Pier Luigi Bersani, leader of Italy's Democratic Party, major policy challenge” for the next government. Bersani, who polls show is the likely winner in the lower house, needs to triumph in the Senate races in the swing regions of Lombardy, Campania and Sicily to gain control of the government. Photographer: Alessia Pierdomenico/Bloomberg
Dalbasco’s disappointment shows why Italy is braced for its biggest political upheaval since 1994. Dalbosco, whose ballot five years ago went to an ally of front-runner Pier Luigi Bersani, won’t vote for anyone tied to incumbent Mario Monti because she says his austerity policies in a shrinking economy put the interests of banks ahead of everyone else’s.
Monti, a divisive figure at home, is celebrated abroad for replacing a discredited Silvio Berlusconi 15 months ago and calming the European sovereign debt crisis. While some of his European counterparts say Monti deserves a second term as head of government -- and steward of Italy’s $2.6 trillion of debt load -- voters may push the nation away from his rigor that has driven financial-market gains.
“The fear remains that the general election produces a significant no-confidence vote on the current austerity plan and the need to reform further,” Raj Badiani, principal IHS Global Insight economist for Italy, said in a research report this week. “This could spark an immediate spike in bond yields in the aftermath of the election.”
‘Major Challenge’

Royal Bank of Scotland Group Plc is advising clients to bet against Italian bank debt. JPMorgan Chase & Co. economist Alex White predicted yesterday in a research report that Grillo would be “a big winner” in the election and his voters will “pose a major policy challenge” for the next government. Riccardo Barbieri, of Mizuho International Plc in London, cited Italian comic Claudio Bisio who said on state-broadcaster RAI this month that voters have the leaders they deserve.
“Italy does not need to change its politicians, it needs to replace its voters,” Barbieri said, paraphrasing Bisio.“The latest press reports echo that message as they suggest”Grillo is gaining ground, said Barbieri, chief European economist, in a research note published today.
Italian stocks have lagged behind European benchmarks this year as the campaign progressed. Italy’s FTSE MIB Index (FTSEMIB) slipped1.6 percent this year through yesterday, while the Stoxx Europe 600 Index advanced 1.9 percent. Last year, the Italian index gained 7.8 percent as the Stoxx Europe climbed 14 percent.
Swing Regions

Bersani, who polls show is the likely winner in the lower house, needs to win in the Senate races in the swing regions of Lombardy, Campania and Sicily to gain control of the government. If he falls short in the upper house, he and Monti have said they may form a coalition. Berlusconi is seeking to overcome a deficit in opinion polls to steal the victory from Bersani, while Grillo has embraced the role of spoiler and has said his goal is to send Italy back to the polls as soon as possible.
Investors prospered during Monti’s tenure as his tax increases deepened the fourth recession since 2001 and helped push unemployment to a 13-year high of 11.2 percent. Monti, an economics professor and former Goldman Sachs Group Inc. adviser, has handed bondholders returns of 28 percent since Nov. 16, 2011, when he was named premier by President Giorgio Napolitano.
Bonds Gain

Italian 10-year bonds rose today, sending the yield down 2 basis points to 4.47 percent at 11:10 a.m. in Rome, even as the European Commission said the recession was worse than expected.
Italy’s economy will shrink 1 percent this year after a 2.2 percent decline in 2012, the Brussels-based commission said today in revised forecasts. That’s deeper than the 0.5 percent contraction it predicted in November. Unemployment will probably reach 12 percent, the commission said.
With the backing of 80 percent of lawmakers, including Bersani’s party and Berlusconi’s allies, Monti succeeded in implementing budget rigor. He imposed 20 billion euros ($26 billion) of austerity measures and raised the retirement age. He says he fell short in his bid to deregulate the labor market to encourage hiring.
“There were forces on both sides of the spectrum against this strategy, especially the Left,” Monti said yesterday in a televised interview on Canale 5, according to newswire Ansa.
Monti remains under attack from both Grillo, a 64-year-old former comic, and a resurgent Berlusconi.
Anti-Austerity Push

The push against EU-imposed austerity has animated the electorate in the campaign’s closing month and sapped strength from Monti and Bersani, who have emphasized its importance. Grillo, wrapping up a 73-stop tour of Italy today in Rome, has filled city squares. Berlusconi has garnered headlines with a pitch to turn back Monti’s policies.
Monti has “annoyed a lot of people,” said Nicola Marinelli, who oversees $180 million at Glendevon King Asset Management in London.
Since the campaign began in December, Bersani lost support in opinion polls. The 61-year-old former communist and ex-industry minister struggled to galvanize voters as Berlusconi did with a proposal to hand out tax refunds of more than $5 billion in cash as his first act in office.
Bersani’s career as a politician has also hurt him with voters looking to rattle established interests. Cologero La Placa, a 51-year-old retired veteran of the Afganistan war, and Silvano Saba, a 45-year-old worker at an arms maker, are deserting Bersani’s Democratic Party, or PD, for Grillo.
Opinion Polls

The leader had 33.8 percent support in an SWG Institute survey published Feb. 8, when a two-week poll blackout began, down 1.1 percentage points from Jan. 9. Berlusconi gained 2.5 percentage points to 27.8 percent over the same period, while Grillo rose 2.9 points to 18.8 percent. Monti, running fourth, slipped 0.4 points to 13.4 percent, according to SWG.
Bersani is running against two experienced showmen in Grillo and Berlusconi, and his spread-the-wealth campaign has paled next to the appeals of the performers. Bersani talks about the need for budget rigor and respect for rules, while Berlusconi, standing trial on charges of paying for sex with a minor, promises tax amnesties and a tougher negotiation stance against German demands for balanced budgets.
Grillo, who embraces the term populist, tells crowds at his two-a-day rallies that Italy must institute stipends of 900 euros for the unemployed and cut the work week to 20 hours. Italy’s debt should be renegotiated, and all lawmakers must be swept out, he says. Grillo, who isn’t running himself due to a manslaughter conviction in the 1980s, chose the candidates of his 5 Star Movement in what he called an online primary.
“He’s the only one singing out of tune,” La Placa, the ex-soldier, said in an interview in the mountain town of Bolzano in northern Italy after Grillo spoke to a rally of about 2,000 people. Grillo wants “to bring normal people into an abnormal world, that is, our parliament.”

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Italy: Beppe Grillo: The Europhobe comet

18 February 2013Linkiesta Milan

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Beppe Grillo, as the Devil, among a host of caricatured Italian political leaders during last week’s Viareggio Carnival parade in Tuscany
AFP
Just a few days ahead of the February 24 and 25 elections, the Italian media are ignoring the success of the former comic and self-declared populist. However, according to the polls, Grillo and Berlusconi could give rise to an unprecedented coalition of anti-Europeans.

Massimiliano GalloInterviewed a few days ago on a popular TV show, outgoing prime minister Mario Monti admitted he did not know how to use Twitter, or what Fifty Shades of Grey referred to, while carefully avoiding talk of civil partnerships, and passing quickly over the San Remo Song Festival.
At the same time, the former comedian and founder of the Five Star Movement (M5S) Beppe Grillo was haranguing a crowd in Marghera near Venice. In the crowd were ordinary people, embodying the problems and anxieties of everyday life: work, childcare, motherhood, the difficulties SME owners face. Wrapped up in hats and coats, they stood there in the cold, in great numbers, from the afternoon into the evening, listening to Grillo and others who came out onto the platform.
And yet the next day neither La Repubblica nor Corriere della Sera devoted a single line to Beppe Grillo. As if he does not exist. But they'll get a rude awakening. [Since then, the two most widely read newspapers in Italy have devoted several articles to the candidate's breakthrough in the polls.]
Something is going on in Italy. Is this movement good or bad? Of course, we can discuss that. But either way it is a major phenomenon. The Five Star Movement is standing at 17 per cent in the polls, a figure that very few parties in Italy have been able to get past.
“We will open up Parliament like a can of tuna,” Grillo declares. And the crowd goes wild. “The era of representation is finished. We no longer believe in it. We will break the bank. And if not today, then a year from now. It's just a matter of time. And really, we may just get there today.” Beppe Grillo never stops. “Populists? Yes, we are populist – and let them hear it!” And the crowd chants aloud: “Po-pu-li-sti!”
Treated like a little dictator

The "Tsunami Tour", as he has named it, recalls old-fashioned politics, but also the kind adopted by a certain Barack Obama – who knows how to use Twitter (and how!). And who certainly knows about the existence of Fifty Shades of Grey, if he has not already read it. Because it is obvious that as long as you do not come down to the street, you do not exist, and you have no credibility.
During his meetings, Beppe Grillo often mentions the foreign television crews that have come to follow his campaign. From all around the world, from Denmark to Canada. Journalism, after all, is not limited to analysis and interpretation; it is also a story, a narrative. If a foreigner were to flip open La Repubblica or the Corriere della Sera, he would learn nothing of what has happened during this election campaign. He would be unable to get any idea of the state of mind of the Italians and of the two questions that worry the country: who will vote for the Five Star Movement, and who shudders at the mere thought of it?
The media who think of themselves as the benchmark treat Beppe Grillo like a little dictator. The Five Star Movement only makes the news when someone in it rebels against its leader, or when there is something to spill about the “guru” Gianroberto Casaleggio, co-founder of the movement with Beppe Grillo. As if all those people, all those Italians who braved the cold to gather in the street on a weekday, were lobotomised second-class citizens. One may wonder how a comedian is proving so successful. To write about it may even be a duty. In any case, the movement cannot be ignored.
A place in government?

For the rest, it's enough to look at the polls. Published on February 6, the latest survey of voter intentions for the senatorial elections from [pollster] SWG (Studi e Proiezioni Elettorali) gives the centre-left coalition 34.4 per cent (the Democratic Party 29.6 per cent), and the Monti coalition 11.5 per cent. On polling day, it may happen that Monti and his allies fail to get past 10 per cent. That would mean the centre-left and Monti together would fall short of 45 per cent threshold.
The same number can be arrived at by adding the 28.7 per cent of the centre-right (the People of Freedom is at 19 per cent) and the 17.5 per cent of Beppe Grillo (18 per cent for the Chamber of Deputies). If we look just at the numbers, the Berlusconi-Grillo tandem (46.2 per cent), as hypothetical and unimaginable as it may be, is rallying more votes across the country today than the Bersani-Monti duo (45.8 per cent). And yet the newspapers are talking only about the latter.
To state things clearly, in the very unlikely event that Beppe Grillo and Silvio Berlusconi were to forge an alliance, it would be difficult for the head of state not to ask one of the two men to form the government.
An Italy split in half

Worrying figures? Fantasy scenarios? Yet these are real numbers. And more than numbers, they represent minds, hearts, people, and families. There are two Italies. One that we could briefly be described as European – responsible, credible, but given to procrastinating and getting lost in squabbles and unnecessary debate. And one that is difficult to identify. Because Beppe Grillo and Silvio Berlusconi are not alike, even if they do have some things in common.
Italians who will vote for Bersani or Monti are as numerous as those who will vote for Beppe Grillo or Berlusconi. And the elections are only 17 days off! This is the reality. Let us act. Something is going on in Italy. Something strong. Something intense. And that has nothing to do with the little dog of Mario Monti. Notify the Twitter stars. And perhaps even the political leaders, can yet turn things around.

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Greece, Cyprus, Belgium, Portugal, Ireland, Spain, all receiving bail-outs, France and Italy may be the next......how can the ECB cater for all these needs, how long can the EURO last?

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EU Says Euro Area to Shrink in 2013 as Unemployment Rises


By Rebecca Christie - Feb 22, 2013 12:48 PM


The euro-area economy will shrink in back-to-back years for the first time, driving unemployment higher as governments, consumers and companies curb spending, the European Commission said.
Gross domestic product in the 17-nation region will fall 0.3 percent this year, compared with a November prediction of 0.1 percent growth, the Brussels-based commission forecast today. Unemployment will climb to 12.2 percent, up from the previous estimate of 11.8 percent and 11.4 percent last year.





Enlarge image
Euro Area to Shink Again in 2013 as Unemployment Rises: EU



Jock Fistick/Bloomberg
The headquarters of the European Union commission at the Berlaymont Building, in Brussels.
The headquarters of the European Union commission at the Berlaymont Building, in Brussels. Photographer: Jock Fistick/Bloomberg




7:07 Feb. 22 (Bloomberg) -- Hans-Werner Sinn, president of the Ifo research institute, talks about German business confidence, European Central Bank monetary policy and the euro-zone economy. He speaks from Munich with Francine Lacqua and Guy Johnson on Bloomberg Television's "The Pulse." (Source: Bloomberg)



Enlarge image
Euro Region to Shrink Again as Unemployment Increases: Economy



Michele Tantussi/Bloomberg
The commission cut its forecast for the German economy, Europe’s largest, to 0.5 percent growth this year, from 0.8 forecast in November, due to a drop in euro-area demand that damps export and investment.
The commission cut its forecast for the German economy, Europe’s largest, to 0.5 percent growth this year, from 0.8 forecast in November, due to a drop in euro-area demand that damps export and investment. Photographer: Michele Tantussi/Bloomberg

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Economic and Monetary Affairs Commissioner Olli Rehn said authorities must press on with reforms to end the region’s debt crisis and help the recovery. While “hard data” has been disappointing, there also has been more encouraging “soft data” that points to better times, he told reporters today.
A strengthening of the euro economy later this year may be led by Germany, where investor confidence rose in February to a 10-month high. The commission’s weak outlook reflects government austerity measures and efforts by companies and consumers to reduce debt. The European Central Bank said today banks will next week return 61.1 billion euros ($80.5 billion) of its second three-year loan, a measure introduced to aid lending at the depths of the financial crisis.
“We clearly have a decoupling with different recovery trends, with Germany certainly recovering at a much faster pace,” said Marco Valli, chief euro-area economist at UniCredit Global Research in Milan. “We still have a lot of noise and volatility in the monthly data, but the bottom line is that the euro zone as a whole has already turned.”
German Confidence

The commission cut its forecast for the German economy, Europe’s largest, to 0.5 percent growth this year, from 0.8 forecast in November, due to a drop in euro-area demand that damps export and investment.
In a sign that Europe’s largest economy is anticipating better times, the Ifo institute in Munich said its business climate index climbed to 107.4 from 104.3 in January. That’s the biggest increase since July 2010 and the fourth straight monthly gain. Earlier this week, the ZEW gauge of investor sentiment rose to the highest in almost three years.
Separately today, the ECB said 356 financial institutions will repay money on Feb. 27 from its second long-term loan. The 61.1 billion-euro figure is about half the 122.5 billion euros forecast by economists. The ECB flooded markets with more than 1 trillion euros in three-year loans a year ago and banks have the option of repaying after 12 months. They started returning the initial loan last month.
“The second LTRO was used by a wider range of institutions with poorer collateral and given the positive carry still on offer, it makes sense for many of these institutions to hold on to these funds,” said Elsa Lignos, a currency strategist at Royal Bank of Canada in London. “We wouldn’t take this as a sign that financial tensions are returning.”
Budget Deadlines

The Stoxx 600 Index (SXXP) rose 1.1 percent as of 12:33 p.m. London time, bringing its advance for the year to 3 percent after a 14 percent gain last year. The euro slipped 0.1 percent versus the dollar to $1.3172. It has strengthened 6 percent over the past six months.
On the euro area, Marco Buti, head of the commission’s economics department, said the labor market “is a serious concern.”
“This has grave social consequences and will, if unemployment becomes structurally entrenched, also weigh on growth perspectives going forward,” he said.
Domestic Demand

The commission said domestic demand won’t improve until 2014, when it should take over as the main driver of growth. Investment is expected to be a drag on the economy this year, subtracting 0.3 percent from GDP, before offering a 0.4 percent contribution in 2014.
Seven euro-area economies are expected to contract in 2013, with the Netherlands joining Italy, Spain, Portugal, Greece, Cyprus and Slovenia in the new forecast.
The EU’s outlook for next year was more upbeat, with 2014 forecasts of 1.4 percent growth and 12.1 percent unemployment in the euro area. Across the 27-nation European Union, the commission projected 0.1 percent growth for 2013 and 1.6 percent growth in 2014, after the bloc shrank 0.3 percent last year.
“Some signs of a turnaround are now discernible,” Buti said. “The present forecast projects a return to moderate growth in the course of this year, as confidence gradually recovers and the global economy becomes more supportive.”
Budget Shortfalls

Rehn urged nations to keep cutting budgets and overhauling their economies in the face of slowing growth. In a statement, he said any shift away from fiscal consolidation would prolong the downturn.
“The decisive policy action undertaken recently is paving the way for a return to recovery,” Rehn said. “We must stay the course of reform and avoid any loss of momentum, which could undermine the turnaround in confidence that is under way, delaying the needed upswing in growth and job creation.”
Still, he said deadlines may be extended because of the poor short-term economic outlook, giving deficit violators such as Spain and France room to avoid penalties or draconian cuts.
The EU is close to agreement on how to install the ECB as a common bank supervisor for the euro area, as well as how it will apply new global standards on how much protective capital banks should hold, Rehn said. These steps also will help set the stage for improvement in future years, he said.
The euro area as a whole is expected to post a budget deficit of 2.8 percent in 2013, according to the EU report. Spain is projected to show a 10.2 percent deficit for 2012, falling to 6.7 percent in 2013. The Spanish economy is projected to shrink 1.4 percent in 2013, the same as in 2012, with unemployment rising to 26.9 percent in 2013.
France, where President Francois Hollande has tussled with EU calls for more austerity, is projected to post a 4.6 percent deficit in 2012 and a 3.7 percent gap in 2013, the commission said. Without any changes, France’s deficit would rise to 3.9 percent in 2014 and Spain’s would rise to 7.2 percent, the commission said.
Rehn said it’s too soon to determine whether the commission will call for France to take additional steps.

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Fears Of Chaos As Italy Goes To The Polls


Italy goes to the polls amid fears that comedian Beppe
Grillo could take up to a fifth of the vote, throwing parliament in chaos.


12:11pm UK,
Sunday 24 February 2013



Video: Italy Poll: No Clear Front
Runner
Enlarge
Outgoing PM Mario Monti votes in Milan

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;Robert Nisbet, Europe Correspondent

Polls have opened in Italy amid concern the elections could lead
to political gridlock in Europe's fourth largest economy.

The country is in its worst recession in two decades, unemployment is above
11% and rising, while the public debt mountain as a proportion of GDP is second
only to Greece in the eurozone.

The current administration, led by the unelected economist Mario Monti, has
prescribed a tough medicine of economic reform, budget cuts and tax
increases.

While the austerity programme was welcomed by those trying to stabilise the
single currency, it has been deeply unpopular among Italian voters.

Support for his small coalition of centrist parties has foundered, while
those who have taken an EU-critical, anti-austerity position have seen their
popularity increase.

Voter intention surveys are banned in the days leading up to elections in
Italy, but pollsters use elaborate ruses to disguise their findings. The most
common features the political parties as competitors in fictional horse
races.
Beppe Grillo at a rally in the run-up to the
election
They suggest the unconventional anti-corruption Five Star Movement, led by
the comedian Beppe Grillo, could take up to 20% of the vote, which political
analysts believe could throw parliament into chaos.

Franco Pavoncello, the president of Rome's John Cabot University, told Sky
News: "Mr Grillo will not even be a member of parliament (because of a
conviction for vehicular manslaughter in 1981).

"So the question is what's going to happen when you have 70 young and
inexperienced people as MPs without the leader who got them elected?

"I think we might be in for some very interesting phenomena after the
election."

Italy's European neighbours, including Britain, don't want interesting
phenomena. They want calm in the crisis-wracked eurozone.

Because of the quirks of the Italian electoral system, it seems unlikely the
two-day poll will deliver a clear working majority for any single
party.
Can Berlusconi make a comeback? His career had
largely been written off
While the centre-left's Pier Luigi Bersani, leader of the Democratic Party,
is likely to emerge as Prime Minister – thanks to a bonus of 55 seats awarded to
the biggest vote-getter in the lower Chamber of Deputies - he may find it hard
to win over the Senate.

A law brought in by former leader Silvio Berlusconi apportions extra seats in
the upper house to the most populous regions. That favours the media magnate's
centre-right PdL party, which is polling well in areas such as Sicily and
Lombardy.

Mr Berlusconi, who was considered a spent force after his resignation in
November 2011, may find he holds the balance of power as any law needs the
approval of both houses.

Giovanni Ragusa, an economist from LUISS University, says a political
stalemate could be disastrous for Italy and for Europe.

"When Italian voters realise there's not going to be a strong government able
to pass new laws and that the tax increases they have been subjected to for the
past few years are not going to be temporary, then the discontent is going to
spill over onto the streets," he warned.

Any political problems in Italy could effect the ability of the EU to bring
about reforms which would ensure the stability of the Euro, which the British
Government insists is necessary to help the struggling UK economy.

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Topless Protest At Berlusconi As Italy Votes


Half-naked feminists target the former Italian leader amid
concerns the leadership election could lead to political gridlock.


3:40pm UK, Sunday
24 February 2013



Video: 'Enough, Silvio!': Italy Election
Protest
Enlarge
Mr Berlusconi casts his vote

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• 
  
  
  
  
  
  By Robert Nisbet, Europe Correspondent
  
  Three topless feminists lunged at Silvio Berlusconi as he arrived
  at a polling station in Milan to vote in Italy's general election.
  
  Polls opened in the country earlier amid concern the outcome could lead to
  political gridlock in Europe's fourth largest economy.
  
  As voters queued at a polling station at a Milan school, the three half-naked
  women, who had the slogan "Basta Berlusconi" ("Enough With Berlusconi") scrawled
  on their backs, broke through a crowd of journalists.
  
  The topless trio then jumped over some tables toward the former leader, but
  they failed to reach him.
  
  They were quickly detained by police and dragged away screaming.
  
  Italian news reports said the three were members of the Femen protest
  group.
  Beppe Grillo at a rally in the run-up to the
  election
  Mr Berlusconi, the former Prime Minister, is leading a centre-right coalition
  in the election and polls indicate he will come second to the centre-left.
  
  Italy is in its worst recession in two decades. Unemployment is above 11% and
  rising, while the public debt mountain as a proportion of GDP is second only to
  Greece in the eurozone.
  
  The current administration, led by the unelected economist Mario Monti, has
  prescribed a tough medicine of economic reform, budget cuts and tax
  increases.
  
  While the austerity programme was welcomed by those trying to stabilise the
  single currency, it has been deeply unpopular among Italian voters.
  
  Support for his small coalition of centrist parties has foundered, while
  those who have taken an EU-critical, anti-austerity position have seen their
  popularity increase.
  
  Voter intention surveys are banned in the days leading up to elections in
  Italy, but pollsters use elaborate ruses to disguise their findings. The most
  common features the political parties as competitors in fictional horse
  races.
  
  They suggest the unconventional anti-corruption Five Star Movement, led by
  the comedian Beppe Grillo, could take up to 20% of the vote, which political
  analysts believe could throw parliament into chaos.
  
  Franco Pavoncello, the President of Rome's John Cabot University, told Sky
  News: "Mr Grillo will not even be a member of parliament (because of a
  conviction for vehicular manslaughter in 1981).
  Former PM Mario Monti casts his
  vote
  "So the question is what's going to happen when you have 70 young and
  inexperienced people as MPs without the leader who got them elected?
  
  "I think we might be in for some very interesting phenomena after the
  election."
  
  Italy's European neighbours, including Britain, don't want interesting
  phenomena. They want calm in the crisis-wracked eurozone.
  
  Because of the quirks of the Italian electoral system, it seems unlikely the
  two-day poll will deliver a clear working majority for any single party.
  
  While the centre-left's Pier Luigi Bersani, leader of the Democratic Party,
  is likely to emerge as Prime Minister - thanks to a bonus of 55 seats awarded to
  the biggest vote-getter in the lower Chamber of Deputies - he may find it hard
  to win over the Senate.
  
  A law brought in by Mr Berlusconi apportions extra seats in the upper house
  to the most populous regions.
  
  That favours the media magnate's centre-right PdL party, which is polling
  well in areas such as Sicily and Lombardy.
  
  Mr Berlusconi, who was considered a spent force after his resignation in
  November 2011, may find he holds the balance of power as any law needs the
  approval of both houses.
  
  Giovanni Ragusa, an economist from LUISS University in Rome, says a political
  stalemate could be disastrous for Italy and for Europe.
  
  "When Italian voters realise there's not going to be a strong government able
  to pass new laws and that the tax increases they have been subjected to for the
  past few years are not going to be temporary, then the discontent is going to
  spill over onto the streets," he warned.
  
  Any political problems in Italy could affect the ability of the EU to bring
  about reforms which would ensure the stability of the euro, which the British
  Government insists is necessary to help the struggling UK economy.
  

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February 2013 Last updated at 13:00

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Horsemeat found in Ikea meatballs in Czech Republic





How does meat get from processing plant to hungry mouth?

Continue
reading the main story

Horsemeat scandal

• Table
  of test results
  
• Q&A:
  Meat scandal and response
  
• What is
  the FSA?
  
• Horsemeat - food fraud, not food safety
  

Ikea has withdrawn meatballs for sale
in much of Europe after Czech inspectors found traces of horsemeat in a batch
manufactured in Sweden.

The discovery comes as European Union agriculture ministers meet in Brussels
for talks widely expected to focus on the growing horsemeat scandal.

Czech officials said horse was found in "beef and pork" meatballs in the UK,
Netherlands, Portugal and others.

The scandal began with frozen meals and burgers in the UK and Ireland.

Since the first horsemeat was discovered last month, traces have been found
in food across the EU.

Supermarkets across Europe have had to withdraw affected prepared meals from
their shelves.

Ikea's announcement came after some 760kg (1,675lb) of the Swedish-style
meatballs were intercepted and stopped from reaching Czech shelves, according to
the Associated Press.

Horsemeat was also found in beef burgers imported from Poland, the Czech
State Veterinary Administration said.

In a posting on its Swedish
Facebook page, Ikea first confirmed it was halting all sales of meatballs at
its stores in the country.

Shortly afterwards, the company announced that the affected batch of
Swedish-made meatballs had been sold in the Czech Republic, Slovakia, Hungary,
the UK, the Netherlands, Belgium, Portugal and France.

Ikea insisted that it had not found any horsemeat during in-house tests on
its own range of food products, carried out two weeks ago, but said new tests
would now be carried out.

"We do not tolerate any other ingredients than the ones stipulated in our
recipes or specifications, secured through set standards, certifications and
product analysis by accredited laboratories," Ikea said in a statement.

The labelling and traceability
of products will be high on the EU's agenda 'Concrete action'
The labelling of the origin of meat and the traceability of the products will
be high on the agenda at the EU ministers' meeting.

Europe's food retailers depend on a complex network of brokers, cold stores
and meat-cutting plants around the continent from which to source the
ingredients wherever they are cheapest, says the BBC's Christian Fraser, in
Paris.

The evidence of the past few weeks shows that national food safety
authorities have failed to identify a problem in the supply chain over a
significant period of time, he adds.

While the original agenda of the EU meeting included support for rural
communities and the common fisheries policy, it is expected ministers will now
try to come up with measures to tackle the horsemeat scandal.

Those could include a pan-European labelling project for frozen food, a move
which has the backing of France and Germany.

Continue reading the main story
Meat scandal

• In mid-January, Irish food inspectors announced they had found horsemeat in
  some burgers stocked by UK supermarket chains
  
• Subsequently, up to 100% horsemeat found in several ranges of prepared
  frozen food in Britain, France and Sweden
  
• Concerns that a drug used to treat horses, and which may be harmful to
  humans, could be in food chain
  
• Meat traced from France through Cyprus and the Netherlands to Romanian
  abattoirs
  
• Investigation suggests adulteration was not accidental but the work of a
  criminal conspiracy
  

Paris and Berlin both want compulsory labelling and
traceability.

UK Environment Secretary Owen Paterson said on Friday that he would "continue
to insist on concrete, co-ordinated action right across Europe when I meet
European agriculture ministers on Monday".

But a workable deal could be difficult, our correspondent says. The discovery
of horsemeat comes in long, complex and poorly regulated supply chains in the
meat industry.

At least a dozen countries are involved in the horsemeat affair, which
implicates some of the biggest meat processors and food producers.

Italy joined the list on Saturday, reporting horsemeat in some lasagne
products.

On Friday, Germany's consumer affairs ministry announced it had found traces
of horse DNA in 67 of 830 food products tested.

Irish authorities on Friday suspended production at one processing plant
after horsemeat was found labelled as beef.

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1. 
   

Italy's Pier Luigi Bersani poised to win election: exit polls


The centre-left coalition led by Pier Luigi Bersani looks likely to win the
Italian election, according to exit polls, with Beppe Grillo's
anti-establishment movement likely to win around one fifth of the vote.








Bersani's centre-left coalition
looks likely to win the Italian election Photo:
Reuters





By Our Foreign Staff

2:21PM GMT 25 Feb 2013


25 Comments




The main Democratic Party led by Mr Bersani and its smaller leftist allies
were ahead with between 34.5 and 37 per cent, beating the 29 to 31 per cent for
a coalition led by the scandal-tainted former prime minister Silvio Berlusconi.



A projection by the SkyTG24 news channel said the left would manage to win a
majority in both chambers of parliament, following fears that it would fail to
snag a majority in the upper house Senate.

The newcomer Five Star
Movement led by former-comedian-turned-activist Beppe Grillo, who has channelled
growing disenchantment with traditional politicians and rising social
discontent, was given around 20 per cent in the exit polls.


The poll showed the centre-left and Mr Berlusconi's alliance neck and neck in
the Senate race in the key region of Lombardy, with the centre-left ahead in the
regions of Sicily and Campania and Mr Berlusconi's bloc well ahead in Veneto.



Polls closed at 3pm (2pm GMT) today, ending two days of voting in an election
being closely watched by Italy's eurozone partners as
well as international investors trying to decide if they consider the
third-largest economy in the Eurozone a good bet.

Italian bonds and shares
gained as the poll showed the populist campaigns of Mr Grillo and Mr Berlusconi
fell short against the austerity advocates. Staying the course in the world’s
third-biggest debtor is crucial to Europe’s effort to contain the turmoil that
forced Berlusconi out of office in 2011.






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  25 Feb 2013
  
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  24 Feb 2013
  
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  24 Feb 2013
  
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  Italian election: Is this the final curtain for
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^{Italy's FTSE MIB index rose strongly after exit polls showed Berlusconi
was likely to be beaten. Graph: Bloomberg}

The main FTSE MIB stock market index rose 3.7pc in early afternoon trading,
while the bond yield spread between 10-year Italian and German bonds dipped
below 260 basis points, its lowest since the start of February.

"The
market didn't want Berlusconi back in the driving seat and the polls are showing
the centre-right is coming out a loser. It will be Bersani who decides whether
he needs (centrist Prime Minister Mario) Monti or not," said a fund manager at a
large Milan investment house.

A lacklustre turnout however
reflected widespread frustration among voters fed up with austerity cuts and a
grinding recession.

In the first day of voting on Sunday, turnout was 55 per cent - seven
percentage points lower than at the same time in the last elections in 2008.


Outgoing prime minister Mario Monti was slated for fourth place according to
the exit polls, with only around 10 percent of the vote
===============
Just Announced, Bersani has won.

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