Re: New EC Thread

[Panda]

Political instability causes panic in Lisbon stock exchange’

4 April 2013
Presseurop Diário económico


Diário económico, 4 April 2013
The Lisbon stock exchange index fell by 3.54 per cent on April 3, triggered by ongoing political instability, despite a vote of no confidence on the government being defeated by 137 votes to 97.
Further turmoil is expected when the constitutional court [gives its ruling on the constitutionality of elements of the 2013 budget and due to the ongoing impact of the Cyprus crisis, says the newspaper.
“The nervousness in the national market is evident, caused by the first bailout proposal to Cyprus, combined with the political stalemate caused by the vote of no confidence, the uncertainty over the decision of the Constitutional Court, the rumours of a possible government resignation and the need for a second bailout,” writes the daily.

[Panda]

Caught in a democratic tangle

3 April 2013Trouw Amsterdam

Tools

• Comment20
  
• 
  
• 
  

Shared 167 times in 10 languages

• Text larger
  
• Text smaller
  
• Print
  
• Send
  

Kazanevsky
It is often said that the measures taken against the crisis in the EU are opaque and undemocratic. But it is the result of processes accepted by all. It is these processes which must be debated, argues a Dutch academic.

Femke van EschSince the euro crisis started in early 2010, a whole package of measures has been implemented at the European level with a view to turning the tide. This raised widespread fear that we may have set out on a one-way track towards the creation of a European superstate in which there is no opportunity for citizens to have their own say.
However, are the measures taken to combat the European crisis really so undemocratic, and are citizens only supporting decisions taken by their own representatives? Recent history suggests we should not assume the answer to these questions is simply “yes”.
Following legislative procedure

Take the Six-pack – this often fiercely contested package of measures makes it more difficult for member states to ignore the European regulations relating to budget deficits and debts with impunity. The decision on this issue was largely reached by means of the ordinary legislative procedure: while the (unelected) European Commission put forward the proposal, the directly elected European Parliament and the Council of Ministers actually took the decision. While the turnout for the European Parliament elections is indeed rather low and the Council sometimes convenes in private, this can hardly be termed entirely undemocratic or a “dictate by Europe”.
Another example: the aid fund ESM (European Stabilisation Mechanism). This was a measure jointly implemented in consultation with the member states. The ESM treaty was signed by the former Dutch Minister of Finance, Jan Kees de Jager. It was subsequently discussed at length in the nation’s lower house, and adopted by a majority of its MPs. They therefore agreed not only to the foundation of the fund, but also to both the level of the loans and the conditions applicable.
There is nothing untoward about these decisions in terms of parliamentary participation. The aid funds in particular nevertheless remain under debate. This is a clear example of a case in which complete national parliamentary participation does not necessarily imply that there is public support.
ECB independence

A third example: the ECB’s purchase of debt instruments issued by ailing member states in the form of Outright Monetary Transactions (OMT). These financial interventions were thought up by the Governing Council of the European Central Bank (ECB). This body comprises the unelected presidents of the various member states’ central banks and is entirely independent of political and democratic interference. Despite this fact, the interventions have raised relatively little objection in the Netherlands. The Netherlands is, after all, accustomed to having an independent central bank, and therefore appreciates the benefits: complex monetary matters are decided upon by experts and are not subject to the electoral considerations of sitting politicians.
These three examples show that there is no question of Europe dictating terms, but on the contrary that those measures that were taken wholly democratically are the ones which have raised the most objections, while those taken without any parliamentary input whatsoever can count on the greatest public support.
Europe is too slow and divided

We want European leadership and decisive solutions to problems that we cannot resolve ourselves. At the same time, however, we want to voice our opinions and maintain our separate national identities. Europe is too slow and divided in our view. It simply takes time to formulate a decree which enjoys the democratic support of 27 member states, which also implies that consensus needs to be sought, negotiated and expanded upon.
And this is not always a pleasant, simple or efficient task. Those who insist on decisiveness, efficiency and unambiguous solutions, should therefore vote for centralisation, depoliticisation and unequivocal enforceable regulations, or rather a European super-commissioner. However, such an officer would not make exceptions for anyone whatsoever.
Debate on decision making

And this neatly returns us to the crux of politics at every level, local, national and European alike. The matter of achieving that delicate balance of fundamental, though not necessarily compatible values, such as democracy and efficiency, equality and autonomy. The classic problem of public administration: What degree of centralisation of power is required in order to act effectively, and how many checks and balances to vouch for sufficient public support?
A principled debate between supporters and opponents as to whether we should become a United States van Europe or not, would not help at all in this regard. However, presenting a realistic impression of European decision-making processes would. And, much the same way as it occurs in our own country, the balance of opinion is bound to fall differently in each field, which implies that the outcome is more likely to be a shade of grey, rather than black or white.
And if further – broadly supported – progress is to be made in Europe, then this balance needs to become the subject of public debate. If politicians are prepared to make time during this European Year of Citizens to allow this to take place, then they can certainly count on my vote.

[Panda]

Subprime mortgage crisis

Major dimensions Great Recession 2000s energy crisis Automotive industry crisis of 2008–2010 Dodd–Frank Wall Street Reform and Consumer Protection Act European sovereign-debt crisis Financial Crisis Inquiry Commission Subprime crisis impact timeline Financial crisis of 2007–2008 United States housing bubble United States housing market correction

Causes Causes of the 2007–2012 global financial crisis Causes of the 2008–2012 global recession Causes of the United States housing bubble Credit rating agencies and the subprime crisis Government policies and the subprime mortgage crisis

Summits 34th G8 summit (July 2008) 2008 G-20 Washington summit (November 2008) APEC Peru 2008 (November 2008) 2009 G-20 London Summit (April 2009)

Legislation and spending Banking (Special Provisions) Act 2008 Economic Stimulus Act of 2008 Emergency Economic Stabilization Act of 2008 Housing and Economic Recovery Act of 2008 Term Asset-Backed Securities Loan Facility Troubled Asset Relief Program (TARP) American Recovery and Reinvestment Act of 2009 Green New Deal 2008–2009 Keynesian resurgence Emergency Economic Stabilization Act of 2008 Economic Stimulus Act of 2008 American Recovery and Reinvestment Act of 2009 Federal Reserve responses to the subprime crisis Government intervention during the subprime mortgage crisis National fiscal policy response to the late 2000s recession Regulatory responses to the subprime crisis Subprime mortgage crisis solutions debate 2008 European Union stimulus plan Chinese economic stimulus program China–Japan–South Korea trilateral summit

Company bailouts List of banks acquired or bankrupted during the Great Recession General Motors Chrysler

v t

Long-term
interest rates (secondary market yields of government bonds with maturities of
close to ten years) of all eurozone countries except Estonia^[1] A yield of 6% or more indicates that
financial markets have serious doubts about credit-worthiness.^[2]
The European sovereign debt crisis (often referred to as the Eurozone crisis) is an
ongoing financial crisis that has made it
difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the
assistance of third parties.

In 1992, members of the European Union signed the Maastricht
Treaty, under which they pledged to limit their deficit spending and debt levels.
However, in the early 2000s, a number of EU member states were failing to stay
within the confines of the Maastricht criteria and turned to securitising
future government revenues to reduce their debts and/or deficits. Sovereigns
sold rights to receive future cash flows, allowing governments to raise funds
without violating debt and deficit targets, but sidestepping best practice and
ignoring internationally agreed standards.^[3] This allowed
the sovereigns to mask their deficit and debt levels through a combination of
techniques, including inconsistent accounting, off-balance-sheet transactions as
well as the use of complex currency and credit derivatives structures.^[3] Germany, for example, received
€15.5 billion from the securitization of pension-related payments from Deutsche
Telekom, Deutsche Post, and Deutsche Postbank in 2005‒06, but guaranteed
payments so investors bore only the risk of the German government's credit and
the transactions were ultimately recorded in Europe's fiscal statistics as
government borrowing, not asset sales.^[4]

From late 2009, fears of a sovereign debt crisis developed
among investors as a result of the rising private and government debt levels
around the world together with a wave of downgrading of government debt in
some European
states. Causes of the crisis varied by country. In several countries,
private debts arising from a property bubble were transferred to sovereign
debt as a result of banking system bailouts and government responses to slowing
economies post-bubble. In Greece, high public sector wage and pension
commitments helped drive the debt increase.^[5] The structure of
the Eurozone as a monetary union (i.e., one currency)
without fiscal
union (e.g., different tax and public pension rules) contributed to the
crisis and harmed the ability of European leaders to respond.^[6][7] European banks own a significant amount of
sovereign debt, such that concerns regarding the solvency of banking systems or
sovereigns are negatively reinforcing.^[8]

Concerns intensified in early 2010
and thereafter,^[9][10] leading European nations to implement a
series of financial support measures such as the European Financial
Stability Facility (EFSF) and European Stability
Mechanism (ESM).

Aside from all the political measures and bailout programmes being
implemented to combat the European sovereign debt crisis, the European Central Bank (ECB) has
also done its part by lowering interest rates and providing cheap
loans of more than one trillion Euros to maintain money flows between European
banks. On 6 September 2012, the ECB also calmed financial markets by announcing
free unlimited support for all eurozone countries involved in a sovereign state
bailout/precautionary programme from EFSF/ESM, through some yield
lowering Outright Monetary
Transactions (OMT).^[11]

The crisis did not only introduce adverse economic effects for the worst hit
countries, but also had a major political impact on the ruling governments in 8
out of 17 eurozone countries, leading to power shifts in Greece, Ireland, Italy,
Portugal, Spain, Slovenia, Slovakia, and the Netherlands.

	Table of Contents 1 Causes 2 Evolution of the crisis 2.1 Greece 2.2 Ireland 2.3 Portugal 2.4 Spain 2.5 Cyprus 3 Policy reactions 3.1 EU emergency measures 3.1.1 European Financial Stability Facility (EFSF) 3.1.2 European Financial Stabilisation Mechanism (EFSM) 3.1.3 Brussels agreement and aftermath 3.2 European Central Bank 3.3 European Stability Mechanism (ESM) 3.4 European Fiscal Compact 4 Economic reforms and recovery proposals 4.1 Direct loans to banks and banking regulation 4.2 Less austerity, more investment 4.3 Increase competitiveness 4.4 Address current account imbalances 4.5 Mobilization of credit 4.6 Commentary 5 Proposed long-term solutions 5.1 European fiscal union 5.2 European bank recovery and resolution authority 5.3 Eurobonds 5.4 European Monetary Fund 5.5 Drastic debt write-off financed by wealth tax 6 Controversies 6.1 EU treaty violations 6.2 Actors fuelling the crisis 6.2.1 Credit rating agencies 6.2.2 Media 6.2.3 Speculators 6.3 Speculation about the break-up of the eurozone 6.4 Odious debt 6.5 National statistics 6.6 Collateral for Finland 7 Political impact 8 Projections 9 See also 10 References 11 External links

[edit]
Causes


Main article: Causes of
the European sovereign-debt crisis
The European sovereign debt crisis resulted from a combination of complex
factors, including the globalisation of finance; easy
credit conditions during the 2002–2008 period that encouraged high-risk lending
and borrowing practices; the 2007–2012
global financial crisis; international trade imbalances; real-estate
bubbles that have since burst; the 2008–2012

[Panda]

British tabloids and their Euromyths

9 April 2013Mladá Fronta DNES Prague

Tools

• Comment16
  
• 
  
• 
  

Shared 58 times in 10 languages

• Text larger
  
• Text smaller
  
• Print
  
• Send
  

Kazanevsky
The EU has ruled on the curves of cucumbers, forbidden hairdressers from wearing heels, and even financed a porn film. These urban legends about decisions taken in Brussels are as endless as they are false. And they all get the kiss of life in the same place: the British tabloids. Excerpts.

Lenka PetrášováRemember how fresh doughnuts vanished from bakery shop counters, to be replaced by packages of doughy lumps, once fresh, squeezed under plastic wrap? Another regulation from the European Union, shopkeepers ruefully explained. Wrong. It was a myth.
Personally, I like the one about Robert Rosenberg, Czech porn king, and the EU grants for his film. It’s beautiful to see the snowball effect at work on this euromyth – how some information clings to other bits, and then more, until it all rolls into: “Another stupidity thought up by the European Union.” What does it matter if there’s barely a shred of truth in it?
How such myths take shape

Pavel Poc, MEP from the CSSD, who collects the urban legends in circulation about the mad rubber stamping of the European Union, is busy deconstructing them and tracing them back to the dubious truth that got the snowball rolling.
His collection has some real gems – like the myth that the European Union is set to regulate the size of condoms. Looking deeper into how the myths arise, he noted that most got their start in the UK media.
“The standard method is that a British tabloid pulls out a few lines from new European directives or events in Brussels and slaps on one of its beautifully bombastic headlines, and that’s what journalists in other countries pick up on. Then, partly perhaps because of inaccurate translation in each country, the headline gets embellished a little, for example with comments by local politicians, who are all too pleased to dump it all at the door of the European Union. And with that,” Poc explains, “the myth is out there for good.”
The EU funds porn?

“Unbelievable!” trumpeted Czech tabloids last September. “While hospitals or schools struggle to get a few crowns from the European Union for essential equipment, retired porn actor Robert Rosenberg gets subsidies to shoot a documentary about his life before the camera as a porn star.” The Internet news website Parlamentní listy cooked it up a bit more and then asked Czech politicians what they made of the shocking report. What else? Many of them were not at all surprised, and for them it simply confirmed that the European Union is just one big whorehouse. What’s the real story? The European Union does support film-making, through the MEDIA programme. However, the only link between the former porn actor and the European Union is that his films are still bought and sold there, and possibly because a documentary film about him was being prepared in Slovakia at that time – or rather, about how the king of porn was living in retirement. The director of the documentary did sign up for two European workshops, but one turned her down and she withdrew the screening of the documentary from the second herself. That’s all.
Hair stylists high heels ban?

It seemed like such good news. In April last year, Czech web sites were flooded with stories that EU officials were preparing directives banning hair dressers from wearing heels for safety reasons. In fact, there was no directive. “It was just that, by coincidence, the Congress of the European Association of Employers’ Organisations in Hairdressing was being held in Brussels – that is, employers were getting together with the trade unions. Both parties reached an agreement on improving the working conditions of hairdressers. Here’s where the British tabloids picked up the story and muddied the waters in their own style, and that was the story that got back to the Czech Republic. Shortly afterwards, Pavel Poc got an email from the Czech Association of Hairdressers calling on him to put an end to the absurdity. Although the Czech organisation is a member of the association that concluded the agreement, by the time the tabloids in London were through with it, the members in Prague no longer recognised the connection with their meeting.
The EU bans blow-up balloons?

British tabloid newspapers spread the news in autumn 2011 that Brussels was prohibiting traditional toys. Under the new regulations, children may not inflate balloons, blow whistles or catch plastic fish by angling for them with magnets.
Wrong. European rules merely protect children from the dangers of inhaling small parts that come with the toys. The packaging must therefore display a warning to parents that children under eight years of age should be supervised. If, however, they let the children blow up balloons at a birthday party, or feel it’s safer to blow them up themselves, it's purely their affair. And one more thing: the regulations on protecting children from inhaling small toy parts have been in place since 1988.
Abnormally bent bananas and cucumbers

A proper cucumber, which it will henceforth be permitted to sell, shall not have an angle of curvature greater than 20 degrees. That regulation is merely to help make it easier to count how many cucumbers are in one package and to fit in more of them.
Under pressure from greengrocers, disparate national standards were unified, and straighter cucumbers and bananas fall into a different category than those with greater bends. Similar standards set maximum heavy metal levels in foodstuffs. States themselves had already regulated this in their national standards, which were harmonised some time ago.
And the story behind those packaged doughnuts? False alarm. The European Union said only that customers have the right to buy packaged doughnuts placed next to the fresh doughnuts, if they’re worried that the fresh doughnuts may have have been touched by someone else’s fingers. Nothing more than that. When the truth came out, the doughnut vendors took off the wraps.
Translated from the Czech by Anton Baer

[Panda]

United Kingdom: The face of the conservative revolution

9 April 2013
Presseurop Die Welt, Libero, Libération & 3 others

Tools

• Comment1
  
• 
  
• 
  

• Text larger
  
• Text smaller
  
• Print
  
• Send
  

Shooty / Caglecartoons.com
Adored by those who appreciated her style and uncompromising policies, hated by others for a lack of empathy and her ultra-free-market liberalism, Margaret Thatcher left no-one in Europe indifferent. Following her death at the age of 87, the European press reacts with a wide range of feelings.

For Die Welt, “Maggie’s” influence continues to be felt long after she left Downing Street: “Thatcher’s relationship with the European continent still defines British policy towards Europe today,” writes the conservative German daily.

The ‘Iron Lady’ leaves a legacy that is still even now felt well beyond Britain’s borders: her relationship towards the EU, initially open, increasingly strained, ultimately turned hostile. Even today, a civil war rages inside the Tory party over [the United Kingdom’s membership in the EU], an issue which may well end up splitting the Conservatives.

The right-wing Italian daily Libero bids farewell to “the Iron Lady that Italy could now use.” “Thatcher leaves us alone with the Merkel-euro nightmare,” the paper headlines, and asks: “What kind of Europe would we have now if Thatcher had not resigned in 1990?”

Would it have turned out the same way, crushed under the heel of Merkel’s Germany, with the common currency, the fiscal compact and everything else that is choking us? Probably not. [...] That lady, who resembled an aged aunt, would never have allowed a Europe like the one in which we live today. She considered Maastricht federalism a son of the type of socialism she had always fought against. [...] She saw the euro as a loss of sovereignty. She didn’t like the fideistic creed of some federalists. She wanted a united Europe, not a dead or soulless one. [...] What many others came to realise 20 years later, the Iron Lady had already imagined – and, alas, fought against in vain.

For Libération, it is “the Grim Robber” who has departed. The left-wing daily does not hide its aversion towards the woman who “invented an ideology: Thatcherism, that continues to thrive, despite its manifest failures.” “The crisis of the 2000s is also the crisis of Thatcherism, which her henchmen carried to extremes,” the newspaper adds.

For 11 years, she embodied the triumphant free-market liberalism of the 1980s. A few simple ideas that she knew how to peddle like a new Gospel: glory to privatisation, deregulation, especially of the financial sector, labour flexibility – and attacks, typically, against trade unions. She applied these ideas with the conviction of a preacher, promulgating them with her famous ‘TINA’ (There Is No Alternative). The miners, the Argentines, the Irish hunger strikers – all fell victim to her unshakeable convictions. [...] She imposed her vision of society on her party and her country before pollinating the rest of the world with it, including Reagan’s America in particular, and the European left as well.

In Prague, Hospodářské noviny =59655630]reports that, together with Ronald Reagan and Jean-Paul II, Margaret Thatcher helped dismantle the Soviet bloc and end the Cold War. This untouchable “icon of the economic transformation of Czechoslovakia”

pointed out the path from a rotting society to a dynamic one, grounded in market and individual freedoms. Recalling the euphoria of the revolutionary years of the 1990s, a highly idealised view predominates among the Czechs, who do not mention her conservative reforms and their consequences: the stifling atmosphere as well as the social crisis within the United Kingdom.

In Estonia, a former Soviet Republic, Margaret Thatcher’s pivotal role in the collapse of the Communist bloc is also stressed. Postimees qualifies her as an “anti-communism icon,” whose style of governance served as a model for many post-Communist leaders:

Her buzzwords, such as “minimal state”, “market” and “privatisation”, sold like hotcakes in the post-Communist countries of Eastern Europe. […] Thatcher was a Eurosceptic in her own way, without, however, stooping to populism. She predicted that a more integrated European Union would run into problems and was [a utopian project]; she saw it, instead, as a vast free-trade area. We will remember her primarily as the “Iron Lady” who, with [Ronald] Reagan, won the Cold War, brought down the Soviet Empire and continued to support us long after these events.

In Bucharest, Adevărul demolishes a few myths that have been circulating about Margaret Thatcher and her “very tough style of governance”:

“She was a formal and moralistic person.” Not true. She had a great sense of humour, and she was indifferent towards the behaviour of her male colleagues, who were often caught up in sex scandals. “She opposed European unification.” Completely false: Thatcher passionately defended European unification. In 1975 she led the “Yes” campaign [for accession to the European Community], promoted by the Conservative party. The Single European Act of 1986, which modernised the Treaty of Rome and expanded ECE powers, was her initiative. “Thatcherism has brought about the financial crisis.” Could not be more wrong: the banking deregulation that Thatcher advocated has nothing in common with the lack of surveillance that caused the crisis that started on Wall Street. The Lady was for strict banking regulations.

[Badboy]

MY CARER YESTERDAY WAS SAYING THAT MRS THATCHER WAS NO-NONENSE ON THE EURO,WOULDN'T JOIN,COULDN'T JOIN AND ARGUED FOR A REBATE.

[Panda]

MY CARER YESTERDAY WAS SAYING THAT MRS THATCHER WAS NO-NONENSE ON THE EURO,WOULDN'T JOIN,COULDN'T JOIN AND ARGUED FOR A REBATE.

Which she got Badboy, she was a the bane of the EU and always fought Britain's corner, not like the Labour Party and LibDems who could which could not see what was happening to Britain.

[Panda]

French failure to reform threatens euro, warns Brussels


France, the eurozone's second biggest economy, has been singled out for
harsh criticism by the European Commission with a warning that low French
competitiveness and high debt threaten the EU's single currency.








The commission used
unprecedentedly strong language to criticise France in a stinging assessment
that covered Francois Hollande's first year as French President. Photo: Rex
Features






By Bruno Waterfield,
Brussels

2:30PM BST 10 Apr 2013


91 Comments




The European Commission on Wednesday published a report on "macroeconomic
imbalances" on 13 EU countries, including Britain, singling out Spain and
Slovenia for warnings over "excessive" failings.


Both countries faces EU sanctions including massive fines - unless they step
up structural economic reforms and take additional measures to cut debt by the
end of May.


"In two member states, Spain and Slovenia, imbalances can be considered
excessive," said Olli Rehn, the EU's commissioner for economic and monetary
affairs.


"In Spain, the very high domestic and external debt levels continue to pose
serious risks for growth and financial stability. In Slovenia, the risks for
financial sector stability are substantial, including through inter-linkages
with public finances."


The commission used unprecedentedly strong language to criticise France in a
stinging assessment that covered Francois Hollande's first year as French
President.



Related Articles

• 
  Eurozone's North-South divide widens
  
  10 Apr 2013
  
• 
  Cyprus to sell €400m of gold to help fund
  bailout
  10 Apr 2013
  
• 
  Slovenia could avoid full-blown bail-out: IFF
  
  10 Apr 2013
  
• 
  Germany should back eurobonds or quit euro
  
  09 Apr 2013
  
• 
  Slovenia faces 'severe banking crisis'
  
  09 Apr 2013
  
• 
  Greek war claims against Germany explode like a
  'time-bomb'
  09 Apr 2013
  

In a bleak analysis of the French Socialist president's performance, the EU's
executive warned that France's diminishing growth prospects are toxically
combined with soaring sovereign debt levels, expected to rise to 93.8 per cent
of economic output next year.

"France's public sector indebtedness represents a vulnerability, not only for
the country itself, but also for the euro area as a whole," the commission
report said.

"The resilience of the country to external shocks is diminishing and its
medium-term growth prospects are increasingly hampered by longstanding
imbalances."

While noting President Hollande's attempts to make reforms, the Brussels
report signalled that France could be threatened with sanctions because measures
to restore competitiveness are currently inadequate.

"While these reforms are steps in the right direction, they will not be
sufficient to solve the competitiveness issues and, in view of the challenges
ahead, further policy response will be needed," the report said.

Indicating growing concern over France, rather than so-called eurozone
"periphery" countries such as Spain, Mr Rehn emphasised that the EUﾒs single
currency could be threatened by the lack of progress.

"France is a core country - in terms of its size and its geo-economic
position," he said. "Its health has a very direct impact on the overall health
of the eurozone."

The commission report also highlighted flagging competitiveness in Britain,
with a continuing credit crunch jeopardising growth and Government atampts to
cut public debt.

"High and increasing level of government debt remains a concern and, although
the government deficit is still forecast to fall gradually, progress on fiscal
consolidation has slowed in a context of weak economic growth," said the report.


"Continuing balance sheet repair in the financial sector, which is among the
most highly leveraged in the EU, means that bank liabilities are not expected to
expand rapidly, although the scarcity of credit is in turn holding back economic
growth and hence progress on fiscal consolidation."

Share

Facebook

Financial Crisis

• 
  Italy »
  
• 
  Spain
  

• 
  
  The best way to transfer money
  overseas
  

In Financial Crisis




Cyprus bailout protests





EU budget: who pays what and how it is spent






Dairy farmers protest





Strikes across Europe





EU budget talks collapse

[Panda]

Offshore Leaks : Tax havens are killing our democracies

4 April 2013Le Monde Paris

Tools

• Comment39
  
• 
  
• 
  

Shared 1759 times in 10 languages

• Text larger
  
• Text smaller
  
• Print
  
• Send
  

Ruben L. Oppenheimer
A major investigation of leaked data undertaken by several newspapers including Le Monde has highlighted the vast international scale of offshore banking. For the French daily’s editorial director, it should be viewed as a warning that our political systems are under threat.

Natalie Nougayrède 
The global financial convulsion of 2007-2008 was followed by the resounding announcement of new priorities: international finance was to be better regulated and there was to be no mercy in the fight against tax havens. In short, we were to put an end to the black holes in a system that was wide open to abuse — at least if the very virtuous conclusions of the G20 held in London were to be believed.
The states represented at this exclusive meeting promised “measures against tax havens” that were to be backed by the threat of sanctions, and hurriedly proclaimed that “the era of banking secrecy was over.” In the wake of the crisis that has recently rocked Cyprus, the offshore banking centre of choice for Russian oligarchs and other shady business operators, here in France, we have been plunged into the whirlwind over the Cahuzac affair — a scandal that has called into question politicians’ – and in particular high-ranking politicians’ – observation of basic standards of probity and transparency.
On occasion, the world of current affairs is marked by surprising connections. But to set the record straight: the series of reports on the shadowy international world of tax havens and their many and varied beneficiaries, which Le Monde, in partnership with the The Guardian, Süddeutsche Zeitung, Le Soir and the The Washington Post], has begun to publish today, was not prompted by recent chaos in Nicosia or the tangled affairs of Mr Cahuzac.
2.5m records studied

This investigation, which has been underway for months, was launched when an international consortium of journalists gained unprecedented access to a gigantic database that reveals many secrets of offshore banking. Some 2.5m records were studied, compared, and cross-checked. The result is an extraordinary portrait of the dense web of relationships that exists in the shady world of unregulated finance. In this mass of documents, two French banks are mentioned. So too is the co-treasurer of François Hollande’s 2012 campaign, Jean-Jacques Augier, who claims he did nothing illegal when he set up an offshore company for a Chinese business partner.
Revelations of individual cases, no matter how fascinating they are, should not be allowed to distract attention from the underlying problem: tax havens are a threat to democracy. They undermine the rule of law through their systematic use of secrecy.
Urgent need for regulation reform

They are an absolute godsend to all kinds of fraudsters, and they promote the embezzlement of public funds in states undermined by misappropriation and corruption. In this world of apparently unlimited legal creativity, colossal sums are concealed inside shell companies, where rich individuals have stashed the equivalent of the combined GDP of the United States and Japan.
In the light of this investigation, no one will be able to claim that politicians have decided to practice what they preach and have given themselves the means to take action. There is urgent need for reinforced regulations, supervisory mechanisms, and cross border cooperation, without which it will be impossible to make any headway in the fight against money laundering. And western banks that specialise in the creation of opaque structures will have to provide clear answers to the questions posed by these revelations. All the more, if, in a time of crisis, they want any credence to given to the claim that their business is governed by an “ethical” code of conduct.
Translated from the French by Mark Mc Govern

[Panda]

11 April 2013 Last updated at 15:47







Cost of Cyprus bailout 'rises to 23bn euros'



Cyprus must find even more
money for its bailout

Continue reading the main story
Related Stories

• Is
  Cyprus's euro membership viable?
  
• Why does Cyprus need capital controls?
  
• Cyprus to sell off gold reserves
  

The cost of the bailout for Cyprus
has increased to 23bn euros ($30bn; £19.5bn), according to a draft document
prepared by the country's creditors.

The original cost of the bailout was put at 17.5bn euros.

But the new total, disclosed in a document seen by news agencies, means
Cyprus will have to find 13bn euros to secure 10bn euros from the European Union
and the IMF.

Previously it was thought that Cyprus would have to raise 7.5bn euros.

Government spokesman Christos Stylianides said: "It's a fact the memorandum
of November talked about 17.5bn (euros) in financing needs. And it has emerged
this figure has become 23bn.

"Who is responsible for this? How did we get here? It was the fear of
responsibility and indecision of the previous government," he added.
Gold sell-off

Analysts are now questioning if Cyprus can raise such a sum.

The winding up of one Cypriot bank, Popular, and the writing-off of a large
portion of secured debt and uninsured deposits in the largest bank, Bank of
Cyprus, should raise a total of 10.6bn euros.

Cyprus is also set to sell off a large portion of its gold reserves, in a
move that will raise another 400m euros.

"The sheer size of the increase has underlined the extent of the enormous
challenges facing Cyprus itself,'' said Jonathan Loynes of Capital Economics in
an analyst note.

The Cypriot economy is only worth about 18bn euros and accounts for less than
0.2% of the eurozone total. Several analysts now think the Cypriot economy may
shrink by more than 10% this year alone.

"If everything goes according to plan, the growth figures might at least be
in a realistic range, if too optimistic,'' said Christoph Weil of Germany's
Commerzbank.

"If there are any problems, and there are significant downside risks, then it
could be much worse, and a combined contraction of 20% is within the range of
the possible."





More on This Story


.related-links-list LI {
POSITION: relative
}
.related-links-list .gvl3-icon {
POSITION: absolute; TOP: 0px; LEFT: 0px
}



Related Stories

• 
  Is Cyprus's euro membership viable? 04 APRIL 2013, BUSINESS
  
• 
  Why does Cyprus need capital controls?
  27 MARCH 2013, BUSINESS
  
• 
  Cyprus to sell off gold reserves 11 APRIL 2013, BUSINESS
  
• 
  Laiki customers escape Cyprus levy 02 APRIL 2013, BUSINESS
  
• 
  First Cyprus plan 'not smart' - ECB 04 APRIL 2013, BUSINESS
  

[Panda]

Eurozone: Germany: Europe’s poor relation

11 April 2013Frankfurter Allgemeine Zeitung Frankfurt

Tools

• Comment3
  
• 
  
• 
  

• Text larger
  
• Text smaller
  
• Print
  
• Send
  

Hajo
According to the ECB, the Germans did not take advantage of the crisis and are even poorer now than other Europeans. For the Frankfurter Allgemeine Zeitung, this is proof that they should not pay for the mistakes of others, and they need to better allocate their wealth.

Holger SteltznerThe data from the European Central Bank contains political dynamite. For the first time, official bodies across Europe have wheeled out representative and methodologically comparable surveys to determine the wealth of European households.
With average household assets of €51,000, Germans turn out to be poorer than Slovaks, only half as rich as Greeks (€102,000) and almost needy in comparison with Luxembourg (€398,000) or Cypriots (€267,000). The distribution of the assets may come as a surprise, but it is hardly a scandal. It merely describes the reality that more and more politicians and media in this country rarely care to take note of, for whatever reason.
What is truly a scandal is that the ECB held back this data until the "rescue" of Cyprus was agreed, which shows just how deeply the ECB itself has stepped into the euro crisis as a political player.
The financial situation does not square with the politically cultivated image of a wealthy Germany that some like to draw. In Brussels one hears time and again that Germany, with its export muscle, has driven southern Europe into a corner of consumption binges and far too much debt. But that’s as false as the fairy tale that Germany has prospered from the monetary union far more than any other Eurozone country.
Eurobonds gather dust

On the contrary, after the euro was brought in, Germany fell back a few ranks in per capita income and growth. It is also true that the former soft currency countries could think of nothing better to do with the greatest of gifts, the euro and the low interest rates, than to get mired even deeper in debt.
Even German politicians are still in denial about that. They want fiscal equalisation throughout the Eurozone and demand more solidarity through Eurobonds. The Germans, French, Dutch, Austrians and Finns, fleeced by their taxmen, would then have to guarantee the sovereign debts of unsound Eurozone countries – yet without being as rich as the Italians, Spaniards, Belgians, Maltese or Cypriots.
Since that would hardly be fair, plans for Eurobonds will hopefully keep gathering dust in drawers in Brussels. However, we cannot be sure they won’t be pulled out again, as the financial situation is being assiduously reinterpreted. The assets across Europe are, supposedly, not comparable, as the real estate values were not entirely assessed in 2010, but partly in 2008. This applies, however, only to Spain.
In addition, the size of households varies. This isn’t true either, though: with just over two persons per household, Germany lies just below the European average of 2.32.
Skewed German wealth

Some want to count the Germans as "rich" thanks to their allegedly lavish pensions. Now, this is peculiar. Since when have assets been generated by a pay-as-you-go system? The German pensioner or retiree may have a legal claim to a certain amount that could be considered as an "asset", but their pensions must be paid from the current income of today’s workers. This is not comparable to capital accumulation through life insurance, funds or savings accounts. That is why only the latter was taken into account in the European asset comparison, as were houses and apartments (minus debt), cars, jewellery and works of art.
Maybe another bitter truth for Germany in what the statistics have uncovered will wake up those who want to “save” southern Europe even at the price of turning a blind eye to the subject of assets: nowhere in the Eurozone are assets as unequally distributed as in Germany, as shown by the large gap between average and median wealth (that is, there are some Germans who are very wealthy indeed, skewing the statistical distribution). Why?
As the study concludes, the assets of the average household in Germany are the lowest in the monetary union, as a consequence of reunification and, as well, of the world wars that Germany started. The richest Europeans live in small countries with oversized banking systems – in Luxembourg, Cyprus and Malta. And where wars were not handed down from generation to generation, great fortunes built up, as in Belgium, Spain, Italy, France and the Netherlands.
Real estate ownership anomaly

Interestingly, even households in Slovenia or Slovakia have created more wealth since the fall of the Iron Curtain than households in this country. The answer to the puzzle reveals the great weakness of capital formation in Germany.
In the former Eastern bloc countries, real estate ownership was often transferred at very low cost from the post-communist state to the residents of those apartments and houses, which explains why the percentage of homeowners in those states ranges from 82 to 90 per cent, while in Germany it’s at only 44 per cent.
Most Germans continue to keep their money in a bank at paltry interest rates, even though they are losing money because inflation outstrips the interest rate. Often it would make more sense to put money into residential property. By exercising discipline in saving and spending, many property owners build up their wealth over the long term. Here is where we must start – and that will also help to distribute assets better in Germany as well.
Translated from the German by Anton Baer
======
Well who would have thought it!!!!! I remember reading that the West Germans did not have a pay rise for 12 years to help pay for the reunion with East Germany , what happens if Merkel does not win the Election in September , will whoever succeeds her refuse to bail out any more Countries and instead form a Union with other Northern Countries?

[Panda]

Europe to blame for Republic’s junk-bond rating - Moody’s

Agency not reassessing State’s creditworthiness in light of domestic gains


Moody’s, one of a trio of agencies that assess countries’ and corporations’ ability to repay their debts, provoked controversy yesterday by re-affirming its long-standing rating of the Republic’s national debt at Ba1 with a negative outlook. Photograph: Scott Eells/Bloomberg



Barry O'Halloran

• Topics:
  
• Business
  
• Joseph Mcginley
  
• Kristin Lindow
  
• Stephen Lyons
  
• Eu
  
• European Central Bank
  
• National Treasury Management Agency
  
• More Topics
  
  
  
  • Ireland
    
  • Europe
    
  • Cyprus
    
  • Moody's
    
  • Fitch
    
  
  

Fri, Mar 29, 2013, 06:00

First published: Fri, Mar 29, 2013, 06:00

• 
  
  
• 
  
• 
  
  
• More Sharing Services
  

Ratings agency Moody’s said yesterday the Republic’s vulnerability to Europe’s continuing financial crisis was the main reason behind its decision to assign junk-bond status to the State’s sovereign debt.
Moody’s, one of a trio of agencies that assess countries’ and corporations’ ability to repay their debts, provoked controversy yesterday by re-affirming its long-standing rating of the Republic’s national debt at Ba1 with a negative outlook.
The rating means the agency believes there is a substantial risk the State will be unable to repay its debts, and that investors should treat it as speculative grade, or “junk”.
Its rivals – Fitch and Standard & Poor’s – both upgraded the Republic’s rating to investment grade last year, meaning they regard it as carrying a far lower risk, but Moody’s has consistently refused to follow them.
Repercussions for interest
The agencies’ view of the State’s creditworthiness can affect the interest paid on its debts; as a low rating implies a high risk, lenders will seek higher interest rates from the borrower.
Moody’s analyst [url=http://www.irishtimes.com/search/search-7.1213540?tag_person=Kristin Lindow&article=true]Kristin Lindow[/url] told The Irish Times yesterday the agency is not changing its rating because the overall European situation remains volatile.
“The bailout of Cyprus and the dislocation that that has caused demonstrates this,” Ms Lindow argued, adding that Europe is still dealing with a deep financial crisis.
Her formal statement, issued late on Wednesday night, explains that the Republic’s high debt levels and its banks’ poor asset quality leave it susceptible to events in the wider euro area.
Ms Lindow goes on to say the EU’s unprecedented decision to fund the Cyprus bail out by levying bank deposits illustrates the risks that arise from that susceptibility.
“The move has significantly heightened fears surrounding the safety of bank deposits in other European systems,” she says. More generally, she says the uncertainty created by EU policymakers’ handling of the Cypriot crisis underlines the Republic’s vulnerability to wider euro area pressures.
Ms Lindow also said the poor quality of assets held by the banks, which is preventing them from meeting increased demand for credit, was the second driver behind leaving the State’s credit rating unchanged.
“Moody’s notes that Irish banks have not yet begun implementing the Central Bank of Ireland’s new requirement to repossess homes when mortgages have been non-performing for a lengthy period, nor to adequately provision for their non-performing portfolios,” she says.
She argues the banks have enough capital to be able to accommodate dealing with these issues without adding new liabilities to the State’s balance sheet.
Reluctance to lend
Speaking yesterday, Ms Lindow agreed Irish banks are now very well capitalised. However, she said their reluctance to lend
money to those who want to borrow is likely to continue until they deal with debts that are not being repaid.
In the medium term, Ms Lindow did suggest the Republic would be the first “programme country” to exit its bailout and be able to borrow normally from the capital markets, but she argued that the [url=http://www.irishtimes.com/search/search-7.1213540?tag_organisation=European Central Bank&article=true]European Central Bank[/url] was likely to have the final say about this.
Moody’s statement prompted [url=http://www.irishtimes.com/search/search-7.1213540?tag_person=Stephen Lyons&article=true]Stephen Lyons[/url] and Joseph McGinley, credit analysts at stockbroking firm Davy,s to say the agency was using a “Cypriot figleaf” to justify its position. They argued that the agency is using the wider European picture to obscure progress on the domestic front.

[Panda]

Is Cyprus Euro-Exit Talk More Than Talk?

By James Neuger

• View Profile
  
• Email
  

| March 26, 2013 9:44 AM EDT | Posted in austerity, bailouts, banks, bonds, debt, euro, European Union (EU), Greece, Politics

|7 Comments












Bailed-out and bankingly challenged Cyprus is a “unique case,” the entire European policy establishment tells us.
One under-reported way in which Cyprus is unique is that chatter about eventually leaving the euro isn’t limited to the fringes. It’s part of the mainstream discourse, as Cypriots wake up to what they’ve gotten themselves into.
No less an authority than Christopher Pissarides, who has brought his Nobel prize-winning credentials to the job of running the new government’s economic policy council, wants to “think very carefully” — at some indeterminate point, once a semblance of normality has returned — about staying or going.
In more of a hurry is a major player in parliament, Nicholas Papadopoulos, head of the finance committee. Pulling out is “a valid point that has to be explored,” he said yesterday.
Higher-ups haven’t gotten that memo, yet. Speaking like the two above-mentioned doubters in a Bloomberg Television interview, Finance Minister Michael Sarris said today that merely entertaining the idea would be “catastrophic.” If so, the catastrophe is already upon us.

[Panda]

39,000 families lost their mortgaged homes in 2012’

12 April 2013
Presseurop La Vanguardia


La Vanguardia, 12 April 2013
According to a report from the College of Property Registrars on the impact of mortgage default, the country’s banks filed for 65,000 foreclosures in 2012, of which 39,000 resulted in property owners losing their homes.
In a third of cases (14,200), repayment deals, allowing distressed borrowers to cease paying their mortgages once their properties had been repossessed, were negotiated with the banks.

[Panda]

: ‘Appeal to Olli Rehn’


12 April 2013
Presseurop O Phileleftheros


O Phileleftheros, 12 April 2013
On the eve of the Eurogroup meeting in Dublin on April 12-13, which will notably finalise the details of the Cypriot bailout, Greek President Nicos Anastasiades has written to Economic and Monetary Affairs Commissioner Olli Rehn to request additional financial assistance.
In spite of its harsh measures, the €17bn bailout adopted by the troika of the EU-ECB-IMF on March 25 will no longer be enough to mop up the Cypriot deficit.
The Mediterranean country now needs €23bn, of which €13bn will have to be found by the government in Nicosia.

[Badboy]

SPAN AND SLOVENIA MIGHT BE NEXT FOR A BAILOUT.

[Panda]

SPAN AND SLOVENIA MIGHT BE NEXT FOR A BAILOUT.

yes Badboy , that was on the News as was the suggestion that Germany will not agree to Cyprus receiving any more bail-out money to cover the shortfall of over E4 billion they need in addition to the E8 billion the ECB granted. With all these bailouts, where is the money coming from ? Is it being printed?is it part of the money non EU members contribute? Also in the news. Ireland and Portugal have received a seven year extension on their bail out repayment.

[Panda]

Germany: Enter the anti-euro challengers

12 April 2013Der Spiegel Hamburg

Tools

• Comment54
  
• 
  
• 
  

Shared 120 times in 10 languages

• Text larger
  
• Text smaller
  
• Print
  
• Send
  

Unveiling Alternative für Deutschland at Oberursel, in the Hesse region, on March 11
Kai Pfaffenbach/Reuters
The "Alternative for Germany" party, which will be officially launched on April 14, aims to take the federal republic out of the euro. Although its founders lack a well-defined roadmap, they could still bother Angela Merkel in September's general elections.

Ralf Neukirch | Merlind TheileSeeming a little tense in the runup to the founding congress on Sunday, April 14, Alexander Gauland arranged to meet us in one of the quietest restaurants in the Regierungsviertel [Berlin’s government neighbourhood]. Recognisable with his tweed jacket and salt-and-pepper hair, when he arrives this impression is confirmed: the hoopla over his new party has begun to make him a little uneasy.
At age 72, Gauland is the co-founder of Alternative für Deutschland (Alternative for Germany) (AfD). As of Friday, April 5, close to 1,500 people have already registered to take part in the congress, more than the capacity of the conference room, which has been reserved for the occasion at Berlin’s Hotel InterConti. "After all, you never know who is coming," explains Alexander Gauland. While others have welcomed this success, he is worried about too many cranks taking the floor.
Starting on April 14, Germans who are disenchanted with Angela Merkel’s insistence that "there is no alternative" will perhaps have an “alternative”. Although it targets the cartel of traditional parties and the power of banks, AfD’s main enemy is the euro. The organisation wants a return to the Deutsche Mark, and if it succeeds in getting a foot in the door of the Bundestag this autumn, the AfD will be fighting for the dissolution of the single currency.
A recent poll found that 26 per cent of respondents would be willing to vote for an anti-euro party. At the beginning of April, AfD had already secured the support of 6,000 members. Its public platform, the party will likely attract voters from the extremes of the political spectrum and its leadership has already been obliged to exclude a certain number of far-right sympathisers. But it is clear that most of the AfD’s supporters will mainly be poached from the ranks of the traditional right. In particular, it is targeting disaffected CDU [Christian Democrat] and FDP [liberal] voters. As CDU MP Klaus-Peter Willsch has pointed out, "This kind of party is a danger for us."
‘The euro doesn’t work’

Alexander Gauland, who is himself one of these defectors, first became a card-carrying member of the CDU 50 years ago. At the time, things were much clearer and it was easier to do politics. The CDU stood for nuclear power, military service and traditional family values. The mark was the strongest currency in Europe. Today, everything has changed, and it is a difficult time for conservatives. When Angela Merkel pushed through a change to the law on energy transition, Alexander Gauland began to have doubts about his party. Thereafter, when she spent billions saving the euro, he felt a line had been crossed. "The euro doesn’t work," he insists. "The currency is not uniting the continent, but dividing it." A few weeks ago, he left the CDU, slamming the door behind him, and set out in search of a new haven of conservatism.
Like Gauland, many AfD members are former CDU. Much of the party leadership is composed of elderly academics. In fact the average age of the party’s supporters is not that far removed from the average age of the Vatican conclave. It is as though, the professors of 1968, rather than the students, have now decided to revolt.
At 50, Bernd Lucke has been hailed as the antidote to this predominance of white-haired luminaries. The youthful economics professor, who has been tipped to win the election to lead the party, has a gift for presenting his point of view in a clear and comprehensible manner. His tone, which is far from professorial, is refreshing.
However, the professors may have some difficulty in taking control of what many want to be a mass movement. Bernd Lucke has already tried his luck in regional elections in Lower Saxony, where he joined forces with an alliance of independents. Not content to campaign on his own behalf, he also proposed that each of the candidates in the group organise a conference on the euro in their respective constituencies. However, the campaigners were less than enthusiastic about the offer of a free lecture.
Halting the transfer payments

All the more since Bernd Lucke does not offer many details of the alternative to Angela Merkel’s pro-euro line. He explains that within the party there is no unanimous view as to the exact course of action. However, [in the EU] decisions have to be backed by a consensus. In other words: the countries that Germany wants to kick out of the euro will have to agree to leave. But why would they, if Germany is willing to foot the bill? That is the key arguement proposed by the party, affirms Lucke. "There will be no more transfer payments." And the resentment of Germany that this might trigger? Naturally we would have to be very vigilant on this point. "We will have to sit down at the table and explain to the others that it is impossible to continue like this." Angela Merkel will also have to discuss the question with François Hollande and politely ask him to leave the euro. All she has to say is, "Promise me François, you won’t be annoyed. Will you?" Lucke might as well be demanding the abolition of long winters.
Having said that, political parties do not necessarily need realistic plans to be successful. At the same time, pollsters are not convinced that the AfD will succeed in obtaining the 5 per cent of the vote it will need to enter parliament after September’s general elections. "In economic terms, Germany is still doing well, which reduces the chances of protest parties," points out Richard Hilmer, of the Infratest Dimap Institute. And we should also bear in mind that, in spite of the Eurozone crisis, the population still has confidence in the federal government. "European policy is Angela Merkel’s major strong point." AfD could nonetheless be a threat to the chancellor in the elections in a situation where the CDU/FDP and SPD/Green alliances finish neck and neck.

[Panda]

Spain: ‘Rajoy demands ECB cash injection to save economy’

9 April 2013
Presseurop El País


El País, 9 April 2013
The Spanish Prime MInister has demanded "radical change" to EU austerity policies and intervention by the European Central Bank (ECB) to relieve countries like Spain and Portugal, which have implemented policies requested by the EU.
Mariano Rajoy wants the ECB to inject money into the economy, a policy already implemented by the US Federal Reserve and the Bank of Japan. Rajoy’s declaration came shortly after German Minister of Finance, Wolfgang Schäuble, publicly stated that he did not believe such a measure would "adequate".
The daily calls for a "monetary revolution", and argues that ECB intervention could also boost the competitivity of the Eurozone.

[Panda]

The European Union will tell its counterparts in the Group of 20 nations that a shaky economic recovery requires renewed commitment to budget cuts and other structural reforms.
“The situation remains fragile” in the euro area, the EU said in a planning document prepared for this week’s G-20 meeting in Washington and obtained by Bloomberg News. The document affirms the EU’s “fiscal consolidation strategy” and calls on other countries to speed up similar efforts.
One of the main threats facing the world economy is “the lack of credible medium-term fiscal consolidation plans in the U.S. and Japan,” according to the EU document. It also sees risks stemming from a renewed slowdown in emerging-market nations, political tensions that could boost oil prices and the euro-area’s three-year-old sovereign debt crisis.
The currency bloc is now in its second year of recession, battered by a debt crisis that so far has forced five of its 17 members to take bailouts. U.S. Treasury Secretary Jacob J. Lew has urged Europe to focus more on boosting demand to balance out its emphasis on fiscal discipline.
Mild recovery should take root in the euro region toward the middle of this year, strengthening through the end of 2013 and into 2014, according to the EU planning document. It says the EU’s experience shows “the importance of a more ambitious debt anchor,” such as a target ratio of debt to economic output. This should be coupled with a “consolidation path that is carefully calibrated to sustain the recovery.

[Panda]

Schaeuble Favors ‘Liability Hierarchy’ in European Bank Bailouts


By Rainer Buergin - Apr 13, 2013 5:00 PM GMT

• 
  

German Finance Minister Wolfgang Schaeuble said he wants to see a “liability hierarchy” where owners and creditors of banks are first in line to bail them out before governments bolster equity and the European Stability Mechanism provides international aid.
“It is not so that all banks can in future cover their capital requirements at the ESM,” Schaeuble told reporters in Dublin after a two-day meeting of European Union finance ministers and central bank governors. “Before the state gets involved in the liability hierarchy, owners and creditors of banks” will be asked to contribute, and the ESM will help if“the government itself can’t because its access to financial markets is restricted,” he said.
Independently of the fact that Cyprus was a “unique case, we will no longer accept the moral hazard problem,” Schaeuble said. “In the future, it will have to be possible to wind down troubled banks just like any other company, without risking the stability of the financial sector as a whole.”
To the extent necessary, a troubled bank’s home state has to ensure the provisioning of capital, Schaeuble said.

[Panda]

1. Home»
   

1. Finance»
   

1. Financial Crisis
   

Wealth tax to pay for EU bail-outs


Wealthy households would face new taxes on property and other assets under
German plans to prop up the struggling eurozone.








Merkel's possible new wealth tax
could see Britons with holiday homes dragged deeper into eurozone
crisis. Photo:
AP






By Ambrose Evans-Pritchard

9:36PM BST 14 Apr 2013

809 Comments




Senior advisers to Chancellor Angela Merkel are pushing for better-off
households to pay towards the cost of any future bail-outs for the weaker
members of the single currency.


The proposals, from members of Germany’s council of economic experts, raise
the prospect of taxes being imposed on property in a country like Spain if its
government was forced to seek a bail-out.


The council, known as the “Five Wise Men”, is often used to test new policies
that are later adopted officially.


The German suggestion is the latest sign that Berlin is intent on imposing
even tougher rules on weaker southern euro members in exchange for using its
economic might to support their finances.


As well as inflaming tensions between Germany and its smaller southern
partners, the suggestion could also mean that Britons with holiday homes are
dragged deeper into the eurozone crisis.



Related Articles

• 
  Cyprus offers passport to big foreign
  investors
  14 Apr 2013
  
• 
  Financial crisis caused by too many bankers
  taking cocaine, says former drugs tsar
  14 Apr
  2013
  
• 
  Euro banking union 'could need treaty
  change'
  13 Apr 2013
  
• 
  Portugal's people paying the price as PM
  promises more austerity
  13 Apr 2013
  
• 
  Cameron and Merkel pledge to make EU more
  competitive
  13 Apr 2013
  

Around 400,000 Britons live or own homes in the south of Spain, which is
suffering a deep recession that is hampering Madrid’s attempts to balance the
public finances and stave off a bail-out.

Senior figures in Germany are now arguing that some richer home owners in
countries like Spain, Portugal and Greece have so far avoided paying their fair
share to rescue the euro, leaving Germany paying too much.

Taxes on property or other assets would mark a significant change in Europe’s
approach to funding bail-outs for eurozone members. Until now, the cost of
rescue packages for countries like Ireland, Greece and Portugal has fallen
largely on people who invest money in either those countries’ bonds or – in the
case of Cyprus – bank accounts.

Prof Peter Bofinger, an adviser to Mrs Merkel, said that levies on bank
accounts are the wrong way of funding bail-outs, because rich people are able to
shift their money out of the country.

“The resourceful rich just move their money to banks in northern Europe and
avoid paying,” Prof Bofinger told Der Spiegel, a German magazine.

Instead of taxing cash, European Union governments should in future target
property and other, less mobile assets, he said.

“For example, over the next 10 years, the rich should give up a portion of
their assets,” Prof Bofinger said. Spain was last year forced to seek
international help to prop up its banks. Despite recent signs of progress, some
analysts believe the Spanish government itself could also have to seek a
bail-out in order to pay its debts.

Spain is suffering from the bursting of a huge property bubble that has left
many home owners struggling to sell houses for much less than the price they
paid.

A “sovereign rescue” of Spain would dwarf any previous eurozone bail-out
package, with Germany again likely to pay the lion’s share.

Mrs Merkel, who seeks re-election later this year, is coming under increasing
pressure to drive an even harder bargain in Europe from German voters unhappy at
footing the bill for what they see as southern profligacy.

Southern eurozone governments have argued that it is right for Germany to pay
more because it is wealthier and because its economy has gained so much from the
single currency.

But German economists are now challenging that argument. They say that new
figures taking into account property values show that people in many southern
countries are actually wealthier than their German counterparts.

Prof Lars Feld, another “wise man”, highlighted a recent study by the
European Central Bank, which Germans say show that the people in bailed-out
countries are often better-off than those in Germany. Less than half of Germans
own their own home, lower than the rate in many southern eurozone members.

The ECB study found that the “median” wealth in Cyprus is €267,000
(£227,600), compared to just €51,000 in Germany.

The median or midpoint level – which strips out the distorting effect of the
super-rich – was €183,000 for Spain, €172,000 for Italy, and €102,000 for
Greece, and even €75,000 for Portugal.

Average wealth in Cyprus is €671,000, far higher than in the four AAA
creditor states: Austria (€265,000), Germany (€195,000), Holland (€170,000),
Finland (€161,000).

Prof Feld said the report showed that people in the crisis countries are
richer than the Germans. “This shows that Germany has been right to take a tough
line of euro rescue loans,” he said.

Alternative für Deutschland, a German eurosceptic party, is putting Mrs
Merkel under increasing pressure in her response to the eurozone’s prolonged
crisis.

Many members of the new party, which held its first conference on Sunday,
want Germany to pull out of the euro and revert to the Deutschmark.
===========================
There is a limit to what can be done to prop up the Euro...I think it will all prove fruitless and what about the newcomers, all poor Countries ....will they join the Euro and be looking for bailouts in a couple of years time? Margaret Thatcher was right to be sceptical about the EU which Edward Heath cynically led us to believe was a "Common Market".

[Panda]

Eurozone: ‘IMF sounds the alarm for European failure to respond to the crisis’

15 April 201 El País


El País, 15 April 2013
In its World Economic Outlook for 2013, the International Monetary Fund predicts that the Eurozone will remain at the "epicentre" of the crisis, with a decline of 0.2 per cent of GDP.
The international organisation, which will prepare its spring meeting this week, believes that the US and emerging countries have overcome the crisis, while Europe continues to be hampered by major obstacles: in particular, low liquidity and the slow progress towards a banking union.
El País points out that the figure forecast for growth in Japan is also low, however, there is a "significant difference" with regard to Europe: “the Japanese government has just launched an aggressive plan for growth," while austerity continues "to call the tune" in Europe.

[Panda]

Protecting the eurozone at all costs is undermining IMF’s validity


Of all the international organisations to have emerged from the ruins of the
Second World War, the International Monetary Fund, which holds its spring
meeting this week, can reasonably claim to be one of the more successful.








Photo:
AFP






By Jeremy Warner

8:32PM BST 15 Apr 2013


71 Comments




OK, so let’s rephrase that: up until quite recently, it could claim to be one
of the more successful. On its website, the IMF describes itself as “an
organisation of 188 countries, working to foster global monetary co-operation,
secure financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce poverty around the
world”.


In the period from its inception in 1946 up until the financial crisis, the
IMF broadly succeeded in these goals. Along the way, of course, there were
crises and setbacks aplenty, but none to compare to the chaos of the inter-war
years; broadly speaking the IMF succeeded in its task of promoting financial
stability and monetary co-operation.


So much so, in fact, that by 2007 many had begun seriously to question the
organisation’s continued purpose. Was there really any need to keep all those
highly paid economists in Washington DC, when the capital markets were doing
such an apparently splendid job in guaranteeing financial and economic
stability?


With the advent of the credit crunch, the IMF briefly rediscovered its raison
d’etre. Momentarily distracted from carnal pursuits, the IMF’s erstwhile
managing director, Dominique Strauss-Kahn, set about galvanising an
international response which was not without its early successes.


Here was a global implosion for which the organisation seemed to have been
tailor made. Yet five years after the event, we are still lurching from one
failed bail-out to the next and final resolution seems as far away as ever. The
IMF is busy as never before, but to what purpose is ever less clear.



Related Articles

• 
  Merkel: Germany too weak to withstand more
  stimulus
  15 Apr 2013
  
• 
  Greece to sack state workers to unlock
  bail-out
  15 Apr 2013
  
• 
  Estimating property supply and demand is a
  dangerous game
  15 Apr 2013
  
• 
  Risk avoidance leaves small firms unable to
  grow
  15 Apr 2013
  
• 
  Surging tomato prices stoke Brazilian inflation
  rage
  15 Apr 2013
  
• 
  Disappointing Chinese growth spooks markets
  
  15 Apr 2013
  

What’s finally flummoxed the IMF is the eurozone, a crisis within the wider
crisis which the IMF is basically too compromised to be able properly to
address, though this hasn’t stopped it from trying. In becoming part of the
hated “troika” which imposes apparently counter-productive austerity on weaker
members of the euro, the IMF has badly discredited itself and by doing so is
steadily undermining its validity on the wider international stage.

The IMF’s starting point is that the euro is too systemically important to be
allowed to break up. Like the larger banks, it has become too big to fail, and
must therefore be propped up for fear of the wider economic damage if it went
down in flames.

So along with the European Commission and the European Central Bank, it has
become part of the hated “troika”, imposing fiscal austerity and structural
reform on weaker eurozone nations in return for handouts.

Fair enough, as far as it goes. Countries that become insolvent must expect a
fair degree of punishment. Up to a point, what the troika is doing conforms to a
standard IMF programme. These are generally… well, for want of a better term in
a week when the Iron Lady is once again top of the news, quite “Thatcherite” in
their approach. They are very much short, sharp, shock therapy. The sticking
plaster gets ripped off in one go, as it were, rather than gently removed in a
prolonged and painful process.

Yet there is one, absolutely essential, missing ingredient. Alongside the
austerity and the supply side reform, the IMF will normally demand a substantial
devaluation to give a short-term boost to competitiveness. Monetary activism can
also be used, within reason, to ease the pain of the austerity.

These palliatives are denied to members of the eurozone, where to boot,
programmes seem to be set more to satisfy the demands of German voters than the
wider cause of economic stability and prosperity.

The IMF therefore finds itself ever more associated with the narrow self
interest of German electioneering, an extraordinarily dangerous position for an
international organisation to get itself into. It’s lucky that the sums involved
in the Cypriot “rescue” are basically too small to matter, for this was a truly
shameful bail-out that everyone knows from the outset won’t succeed in setting
Cyprus back on its feet. The intention was more to punish than to redeem.

Small wonder that when approached for a “special contribution”, on account of
British military bases on the island, the UK Treasury ran a mile. Even if you
thought the money secure, you wouldn’t want to be seen anywhere near such a
shambles.

Yet the IMF is in it up to its neck. Saving the euro at any cost seems to
have become the IMF’s touchstone. What Asia and Latin America can make of an
organisation which has become as beholden to the European elites as this one is
anyone’s guess.

The mess Europe has made for itself is apparent from a recent survey of
household wealth in the eurozone by the European Central Bank. Understandably,
this has caused fury in the German popular press, for it shows that in terms of
the median for household wealth, Cypriots are five times richer than Germans.
Spanish, Italian, Maltese and even Greek households are also substantially
wealthier.

The fact that this is almost wholly explained by housing wealth – Germans
tend to rent their houses, rather than is common elsewhere in Europe, owning
them – doesn’t make it any more palatable. German taxpayers are being asked to
dip their hands into their pockets to bail out countries which on paper at least
seem to be much wealthier than they are.

Worse, it’s partly German credit which has pumped up the house prices in the
first price. Now that credit too is at risk. Unsurprisingly, Germans question
whether they are as much beneficiaries of the single currency as is sometimes
made out. Nor is the anger confined to housing wealth. For the time being at
least, median household income in Cyprus is as high as Germany, Austria and
France, according to the survey. Surely some mistake? Well no, it’s just the
distortions of the euro, without which these cloud cuckoo land disparities and
imbalances wouldn’t exist.

The single currency has caused prices and incomes between member countries to
converge, regardless of competitiveness. The catchup in the periphery has been
funded by the credit of the core, which, uncorrected by currency depreciation,
has also caused asset prices in the periphery to spiral. Resentment among
taxpayers in the core, who believe they have been taken for a ride, is proving
as potent as the austerity-induced grievances of the periphery.

Haircutting depositors among periphery country banks is therefore no longer
seen as a sufficient degree of burden sharing. Rich depositors can escape such
sanctions simply by shifting their euros into more solvent northern banks. So
Germany’s Council of Economic Experts has suggested that some way of haircutting
property wealth might be found too, even though this will induce further capital
flight, trapping the periphery in even deeper depression. Is the IMF sheepishly
to go along with this insanity as well? The way things are going, the euro will
end up poisoning the IMF as comprehensively as its member states.

=============This is an excellent Article and there was controversy over La Garde's Appointment. Traditionally a European headed the IMF and America G12 but the emerging markets were annoyed because they weren't considered for Election. Mdme La Garde, as a Frenchwoman is too close to the EU to act independently and it is true that the Euro Crisis is nowhere near being resolved.

[Panda]

Greece to sack 4,000 state workers to unlock bail-out cash


Greece will fire 4,000 civil servants this year as part of programme of
austerity measures agreed with the EU-IMF “troika” as the condition for the next
€8.8bn of payments in its €270bn bail-out.








Greek Finance Minister Yannis
Stournaras (L) speaks on Monday next to International Monetary Fund (IMF) deputy
director and mission chief to Greece Poul Thomsen at a conference. Photo: AFP






By Bruno Waterfield,
Brussels

1:39PM BST 15 Apr 2013


256 Comments




The redundancies will begin a savage round of job cuts in the Greek public
sector, with another 11,000 officials due to be sacked by the end of next year.



Greece is in deep recession,
GDP has contracted by 22pc since 2008 and unemployment has spiralled to 27pc as
the Greek government has implemented deeply unpopular EU-IMF austerity measures
or “fiscal adjustment” in return for loans.


“Our society has reached its limits. But finally we are meeting our targets
and the programme is being improved,” said Antonis Samaras, the Prime Minister,
in a nationally televised address.


“Soon, Greece will not depend on the memorandums. Greece will have growth, it
will be competitive and outward-looking. In other words, we will have a strong
Greece.”


The troika agreement means that eurozone finance ministers and the IMF board
are “expected to consider approval of the review in May”, giving a green light
to €2.8bn in outstanding bailout instalments for Greece.



Related Articles

• 
  Merkel: Germany too weak to withstand more
  stimulus
  15 Apr 2013
  
• 
  Wealth tax to pay for EU bail-outs
  14 Apr 2013
  
• 
  Financial crisis caused by too many bankers
  taking cocaine, says former drugs tsar
  14 Apr
  2013
  
• 
  Cyprus offers passport to big foreign
  investors
  14 Apr 2013
  
• 
  German 'Wise Men' push for wealth seizure to fund
  bail-outs
  14 Apr 2013
  
• 
  Portugal's people paying the price as PM promises
  more austerity
  13 Apr 2013
  

“Greece has indeed come a very long way,” said Poul Thomsen, the IMF's troika
representative. “The fiscal adjustment in Greece has been exceptional by any
standard.”

The EU and IMF have predicted that Greece can meet budget targets without
further austerity and that the Mediterranean country will shrug a GDP
contraction of 4.4pc this year to return to growth in 2014.

All previous EU-IMF growth forecasts for Greece since the crisis began in
2009 have been wrong.

The civil service redundancies, with a target of 15,000 by the end of next
year will target “disciplinary cases and cases of demonstrated incapacity,
absenteeism, and poor performance, or that result from closure or mergers of
government entities”.

The sackings will overturn a Greek constitutional guarantee of jobs for life
for civil servants, aimed at protecting public sector workers from unfair
dismissal due to their political affiliations.

The special protections and widespread political cronyism or corruption led
to the Greek civil service becoming bloated, with 700,000 officials in a country
of less than 11m people.

“It's still a taboo to dismiss people from the public sector. There have been
no forced dismissals of employees whose positions are eliminated or who for some
reason do not perform,” said Mr Thomsen.

“This dramatic rebalancing of the economy has caused a sharp increase of
unemployment in the private sector while public sector employees have been
protected. This is another source of the sense of lack of fairness in the
process.”

Alexis Tsipras, head of the main opposition, Left-wing Syriza party, attacked
the plan. “We will not consent to human sacrifice, to the beheading of civil
servants,” he said.

Yannis Stournaras, the Greek finance minister, announced that his government
was seeking to achieve a primary budget surplus of the budget, which does not
interest payments on existing loans by this year.

If the target is met, Greece can ask the eurozone to reduce its debts, most
likely to be done easing the terms of EU-IMF loans, rather than by writing down
bonds that primarily held by public institutions, such as central banks.

“In my opinion, the major target now is to achieve a primary budgetary
surplus this year so that we can ask for a drastic reduction in the public
debt,” said Mr Stournaras.

“That will create a very positive boost in developments and would speed up
our exit from the crisis.”

[Sponsored content]