Re: New EC Thread

[Panda]

Economy: Trade balance in the black for the first time since 1999



2 September 2013

Presseurop
El País


With a positive balance of €35bn in the first six months of 2013 – compared to a deficit of €65.1bn in the same period last year – "the EU has reported its first half-yearly trade surplus since 1999,” reports El País, quoting Eurostat figures that are not yet available online. The UK and Germany top the list of countries contributing to the upsurge, improving their respective trade balances by €31.1bn and €13.2bn. However, the most surprising data comes from countries in difficulty, remarks the newspaper —


Italy and Spain, which weighed on the Eurozone’s emergence from recession in the last quarter, nonetheless helped the EU to progress from an overall deficit to a surplus.

Italy's deficit of €13.9bn combined with the €6.4bn of Spain — “the EU member state which posted the biggest trade deficit reduction” — complete the quartet of countries that were the main contributors to the turnaround, points out El País. However, the Spanish daily notes that the positive trend could be threatened by higher energy prices and in particular higher oil prices.

[Badboy]

SOMEONE SAID ON MY TWEETFEED THAT THE GREEK ECONOMY HAS TURNED A CORNER

[Panda]

SOMEONE SAID ON MY TWEETFEED THAT THE GREEK ECONOMY HAS TURNED A CORNER

Maybe Badboy, but the situation is still precarious and none of the Countries can say they are out of the Woods yet.

[Panda]

s












































































































































































































.
Opinion






























.
Market Data




































































































.
Personal Finance






















































.
Tech














































.
Politics


































.
Sustainability






































.
Luxury






































.
TV



































































.
Video






















.
Radio






































.
. .

.







.






.




.




.




.






.

.





Euro Lessons Unlearned as Blunders Mar Cyprus Rescue

By James G. Neuger - 2013-04-30T22:01:00Z.
.


.




Petros Karadjias/AP Photo

Protesters, right, push through barricades to the police officers during an anti-bailout protest outside of the Cyprus' parliament in Nicosia, on April 30, 2013. Cyprus' lawmakers are voting Tuesday on a multi-billion bailout agreement aimed at preventing the country from going bankrupt.

As Greece lurched toward its first bailout in early 2010, the largest bank in Cyprus was stocking up on Greek bonds.






2:10

April 30 (Bloomberg) -- Michael Amey, money manager at Pacific Investment Management Co., Robert Parker, senior adviser at Credit Suisse Asset Management, Francesco Garzarelli, co-head of macro and markets research at Goldman Sachs Group Inc., and Richard McGuire, senior fixed-income strategist at Rabobank International, discuss the outlook for the European Central Bank's interest-rate decision on Thursday. (Source: Bloomberg)



Enlarge image









Customers queue outside a Bank of Cyprus Plc branch as the doors open for the first time in two weeks in Nicosia, Cyprus, on Thursday, March 28, 2013. Photographer: Simon Dawson/Bloomberg
.
That lethal misjudgment helped drive the government in Nicosia toward a rescue of its own, a 10 billion-euro ($13 billion) project involving measures so novel -- beyond an unprecedented raid on bank deposits that sparked a global uproar -- that policy makers initially kept them under wraps.

Neither a plan for Cyprus to sell gold reserves nor one to repay a loan from the Cypriot central bank with real estate was disclosed in a statement by euro-area finance chiefs in the early morning hours March 16. The measures were cited by Jeroen Dijsselbloem of the Netherlands, the group’s chief, in a confidential recap, which was obtained by Bloomberg News.

“It’s clear they’re making stuff up as they go along: every bailout is different in an unexpectedly horrible new way,” Alexander Apostolides, an economics lecturer at European University Cyprus in Nicosia and a member of the Cypriot government’s economic-advisory council, said in an interview. “They’re not really thinking ahead.”

With another small country, Slovenia, fighting to avoid the euro region’s sixth bailout, the Cypriot misadventure raises the question of how much policy makers have learned in more than three years of straining against the debt crisis.

Hemmed in by an election campaign in Germany, along with demands of the European Central Bank and the International Monetary Fund, policy makers are fighting record unemployment, a second year of recession and austerity and bailout fatigue to keep the 17-nation currency bloc whole.

Building Institutions

European Union leaders say the shock to the euro has sparked a drive to build new institutions mirroring the effort that followed World War II. Since the Greek panic broke out, the EU has established two rescue funds, passed eight economic-governance laws, enacted a deficit-limitation treaty, held 24 summits, and ginned up at least one “roadmap” and a “blueprint” for a better-run monetary union.

And yet, once Cypriot banks were reeling from the German-instigated decision in October 2011 to slash Greek bond values in the biggest sovereign debt restructuring ever, the crisis-management apparatus sputtered. Until two late-night bargaining sessions in March 2013, little was done for Cyprus, though it makes up barely 0.2 percent of the euro economy.

Merkel’s Message

With her voters’ anti-bailout sentiment a risk to her winning a third term, German Chancellor Angela Merkel, Europe’s dominant politician, kept Cyprus at arm’s length. Her website shows no evidence of her publicly addressing the aid talks until January, and then only because she was asked in a briefing with the prime minister of Malta.

“While Angela Merkel needs to be strongly committed to the euro and strongly committed to the monetary union, domestically she cannot convey the message that she’s willing to help anybody,” Arturo Bris, a professor of finance at the IMD business school in Lausanne, Switzerland, said in an interview. “At the same time, there’s nobody else left.”

The powers in Europe -- centered on the German government in Berlin, the European Commission in Brussels and the central bank in Frankfurt -- blamed the lost time on the Cypriot political class for refusing to bow to the pain and retrenchment that come along with a rescue program.

ECB Role

More than ever before, the political logjams put the spotlight on the central bank as the ultimate guarantor of the euro’s survival. For now, it has held the currency together with a confidence trick, promising in July 2012 to unleash its bond-buying firepower on behalf of troubled countries that submit to economic discipline.

Still opposed by Germany’s central bank, ECB President Mario Draghi’s virtual intervention has defused tensions in European markets, sending bond yields in Italy, Portugal and Spain to their lowest since before the crisis.

It was little help to Cyprus.

Before pleading for financial mercy, Cyprus had a reputation as an EU troublemaker. It joined the union in May 2004, as part of the bloc’s post-Soviet eastward enlargement. Only the internationally recognized, Greek-speaking southern half of the island entered, after rejecting reunification with the north, occupied by Turkey’s army since 1974.

At a stroke, the EU -- which in 2012 would win the Nobel Peace Prize for tearing down national boundaries -- imported a border dispute. Cyprus, once prized by the British for its strategic position in the eastern Mediterranean, frustrated Turkey’s efforts to join. As the EU-Turkish question faded from the headlines, so did Cyprus.

Boundary Disputes

As a result, the fate of the 862,000 Cypriots was on few radar screens after the October 2011 summit. Europe’s crisis managers were preoccupied with Greek Prime Minister George Papandreou’s planned referendum on the aid conditions, leading to a precedent-setting threat by Germany and France to boot Greece out of the euro; then came the death throes of Silvio Berlusconi’s government in Italy and the Spanish bank rescue.

The Greek writedown was a “terrible mistake,” Athanasios Orphanides, then head of the Cypriot central bank, said at the time. Europe’s leaders tacitly agreed, labeling Greece a “unique” case.

They weren’t the only ones at fault. Bank of Cyprus Plc built up an inventory of Greek government bonds after Greece’s fiscal woes became known. Its holdings rose from 100 million euros on Dec. 10, 2009, to almost 2.4 billion euros by June 2010, according to a March 2013 report commissioned by the Cypriot central bank by consulting firm Alvarez & Marsal that was obtained by Bloomberg News.

Writedown Losses

In November 2011, the IMF estimated Cypriot banks’ losses on Greek bonds at 2.7 billion euros. The banks’ total capital needs were put at 3.6 billion euros by the European Banking Authority, equivalent to about a fifth of the wealth produced annually in the island’s economy. There was no hiding the need to pump more money into the banks.

At this point, Cyprus’s Communist President Demetris Christofias -- a Russian speaker and holder of a doctorate in history from the Institute of Social Sciences in Moscow -- made a diplomatic misdirection play. He turned to the Kremlin for a loan, hoping to parlay Cyprus’s economic relationship with Russia into more favorable terms than could be gotten from European creditors and the IMF.

Russian Front

With dual-taxation treaties turning Cyprus into a tax shelter for Russian individuals and businesses to reinvest back home, the financial links between Nicosia and Moscow were tight.

Cyprus is the top destination for Russian investment, pulling in $22.4 billion in 2011, according to the Russian central bank’s latest full-year data. The island with less than one-tenth the population of Moscow was simultaneously the prime investor in Russia, sending $13.6 billion there.

The revolving-door relationship made it a matter of course for Russia to grant Cyprus a 2.5 billion-euro loan in December 2011. It proved to be a time-buying arrangement that kept Cyprus off the European agenda, until the reckoning couldn’t be postponed any further and the costs, for the Cypriots and Europe as a whole, were higher.

The Cypriot strategy was to play Russia off against the EU. Vassos Shiarly, Christofias’s finance minister, made that clear in June, days before Cyprus asked for European cash: “Your negotiating position in talks with the European Union is much better when you have a bilateral loan already approved.”

Christofias’s Bind

It didn’t work out that way. By mid-2012, Brussels officials calculated that Cyprus would need a full-scale bailout including a loan for the government. As European officials pressed that case, Christofias squirmed to escape the economic vassalage of a full program. Selling off state assets and downsizing the banks were, for him, non-starters.

In 1995, banking and insurance generated 4.9 percent of Cypriot gross domestic product, according to European data; that figure rose to 6.5 percent in 2004, when Cyprus joined the EU, and 7.8 percent in 2008, when it adopted the euro. By 2011, Cyprus was deriving 8.9 percent of its output from finance, compared with the euro-area average of 5.1 percent.

For a long time, European authorities weren’t bothered by the shift toward financial services, which helped bring Cyprus’s per-capita wealth up to the European average in 2009. The Brussels-based commission, the guardian of the euro’s laws and regulations, authorized Cyprus in 2007 to make the currency switch partly because the island’s banks were “substantially interlinked” with the rest of Europe.

No Alarms

Nor did the ECB raise the alarm. While its pre-euro assessment made a passing reference to the emergence of a current-account deficit and the inflow of “non-resident” deposits in Cyprus, the central bank confined its non-binding policy prescriptions to a call for debt reduction, wage moderation and product and labor-market reform. Similar off-the-shelf recommendations went to other countries.

Not until late 2011, as part of the crisis-driven tightening of economic oversight, did the commission gain the power to monitor “imbalances” such as asset bubbles and punish countries that fail to correct them. And by the time it warned in February 2012 of “wide-ranging challenges” in Cyprus, including the banks’ susceptibility to Greek losses and a debt-swamped private sector, it was behind the curve.

Several months of shadow boxing pitted the Cypriot government against experts from the “troika” of the commission, the ECB and the IMF. With polls showing his party doomed to defeat in February elections, Christofias worked to put off the national humiliation on his successor. The Finance Ministry relied on short-term borrowing to postpone bankruptcy.

Poisoned Atmosphere

Parallel negotiations over a retooled Greek program poisoned the atmosphere, reminding northern European creditors of unmet pledges in the south. Demands by the IMF also rankled. The fund, headed by Christine Lagarde, who started the crisis as French finance minister, pushed for a writedown of official loans to Greece -- a no-go for the German leadership.

IMF insistence on bringing Greece’s debt down to a “sustainable” level made a deal on Cyprus harder to achieve. Creditors were contemplating loans of 17 billion euros for Cyprus. While that would be the smallest package so far in raw numbers, it would be the biggest in relative terms -- roughly 100 percent of Cypriot GDP. It was hard to see how Cyprus would pay those loans back.

‘Guinea Pig’

What was later described as “guinea pig” treatment by the new president, Nicos Anastasiades, was only getting started.

As European creditors and the IMF scuffled over Greece, bailout fatigue took on new forms in Germany. Spurred by a leaked German secret-service report that the opposition Social Democrats were elevating into an election issue, Finance Minister Wolfgang Schaeuble questioned how much of the Russian money sitting in Cypriot banks was on the level.

The stage was set for something the ECB’s Draghi would later call a “not smart” innovation: shaking down all Cypriot bank customers, rich and poor alike, to pay for the rescue.

Cypriots woke up on March 16 to the news of a “stability fee” of 6.75 percent on insured accounts under 100,000 euros and 9.9 percent on larger, uninsured sums -- the product of all-night Brussels talks that national, European, ECB, IMF and Cypriot officials all claimed wasn’t their idea.

“Accountability does exist, but it is often hard to read,” EU President Herman Van Rompuy said at an April 22 conference in Brussels. “I can understand people wonder: who exactly is politically responsible? Who is democratically accountable?”

Bank Holiday

The message went out that European-mandated minimum deposit insurance, boosted from 20,000 euros in 2010, wasn’t credible. An extended bank holiday was all that prevented the Cypriot financial system from collapsing.

As the recriminations flew, the Cypriot parliament vetoed the tax, compounding the disarray and starting the countdown toward the doomsday scenario of an unprecedented exit from the euro. A failure to reach a deal would have led the ECB to cut the lifeline of Cypriot banks, starving the country of European cash and forcing it to come up with its own medium of exchange.

While the ECB has backstopped European bond markets since 2010, lent unprecedented amounts to commercial banks and announced the still-unused “unlimited” bond-support program in 2012, the endgame on Cyprus took the politically independent central bank further away from its comfort zone than it had been before. The institution that owed its existence to the euro was one step from pushing a country out of it.

[Panda]

ECB Council Members Split in Jackson Hole Over Rate Cuts

By Simon Kennedy - 2013-08-26T09:08:03Z.
.


.



European Central Bank Governing Council members are split over whether scope remains for further interest-rate cuts as evidence mounts that the euro-area economy is on the mend.

Policy makers still can’t rule out lowering the benchmark rate from the record low of 0.5 percent, Central Bank of Cyprus Governor Panicos Demetriades said in an Aug. 24 interview in Jackson Hole, Wyoming. By contrast, Bank of Austria Governor Ewald Nowotny said on Aug. 22 he doesn’t see “many arguments now for a rate cut” after the recent “stream of good news.”





Enlarge image









Christine Lagarde, managing director of the International Monetary Fund, center, speaks with other guests at the Jackson Hole economic symposium, sponsored by the Kansas City Federal Reserve Bank at the Jackson Lake Lodge in Moran, Wyoming on Aug. 22, 2013. Photographer: Price Chambers/Bloomberg




7:57

Aug. 23 (Bloomberg) -- International Monetary Fund Managing Director Christine Lagarde talks about the need for global coordination by central banks as they plan exits from unconventional monetary policies, the outlook for the global economy and Europe's debt crisis, and turmoil in Egypt. Lagarde speaks with Sara Eisen in Jackson Hole, Wyoming, on Bloomberg Television's "Street Smart." (Source: Bloomberg)




12:06

Aug. 23 (Bloomberg) -- European Central Bank Governing Council Member Ewald Nowotny talks about the recent "stream of good news" from the euro-area economy and the outlook for interest rates. He spoke yesterday with Bloomberg Television's Mike McKee in Jackson Hole, Wyoming. (Source: Bloomberg)




3:28

Aug. 26 (Bloomberg) -- Ulrich Leuchtmann, head of currency strategy at Commerzbank AG, talks about the outlook for the euro and European Central Bank monetary policy. Leuchtmann also discusses the pound. He speaks from Frankfurt with Guy Johnson on Bloomberg Television's "On the Move." (Source: Bloomberg)



Enlarge image









Bloomberg News reporter Sarah Eisen, left, interviews International Monetary Fund Managing Director Christine Lagarde at the Jackson Hole economic symposium, sponsored by the Kansas City Federal Reserve Bank, at the Jackson Lake Lodge in Moran, Wyoming, on Aug. 23, 2013. Photographer: Price Chambers/Bloomberg



Enlarge image









Mount Moran in Grand Teton National Park is seen through a window at the Jackson Hole economic symposium, sponsored by the Kansas City Federal Reserve Bank at the Jackson Lake Lodge in Moran, Wyoming on Aug. 23, 2013. Photographer: Price Chambers/Bloomberg



Sponsored Links





Virtualized Wi-Fi Networ...

Download A Free Survey For Insights On Wi-Fi Adoption...

www.merunetworks.com





Meru Networks Wi-Fi Solu...

High-performance Wi-Fi Solutions For Education. Downl...

MeruNetworks.com/Educa...



Buy a link

.
The divisions within the 23-member council are emerging as the ECB prepares forecasts for release next month. The euro-area economy emerged from its longest recession in the second quarter with 0.3 percent growth from the previous three months. Economists predict that a European Commission report due this week will show that confidence in the bloc is the highest since March 2012, according to the median estimate of economists in a Bloomberg survey.

A rate cut “is still on the cards,” Demetriades said. “We cannot rule out that possibility, although one has to take a look at the new data. That data is more encouraging.”

Nowotny said he was “cautiously optimistic” about the outlook, though he described the recovery as “weak.” He signaled that there is no plan for a rate increase soon, saying “the most recent developments will have no immediate effects” on ECB policy.

‘Crossing Fingers’

The ECB still has “room to maneuver” after proving a “strong support” for the recovery, International Monetary Fund Managing Director Christine Lagarde told Bloomberg Television’s Sara Eisen at the conference organized by the Federal Reserve Bank of Kansas City. She urged efforts to “unclog” bank lending.

“I wouldn’t necessarily draw the conclusion that we are out of the woods and nothing needs to be done,” she said. “The latest numbers that we have received, in particular from Germany, are encouraging. It needs to be sustained over time and I’m crossing fingers for the euro zone.”

With the recovery gaining momentum, ECB officials are seeking to quell any speculation in financial markets that they will shift to tighter policy prematurely. President Mario Draghi pledged last year to do “whatever it takes” to save the euro and announced a plan to buy the bonds of stressed nations if necessary. In July this year he said he would keep the ECB’s benchmark interest rate at its current level or lower for an “extended period.”

Price Stability

Such forward guidance is not a “promise to generate inflation,” Frank Smets, the ECB’s director general for research, said at the conference. Rather it is aimed at clarifying the ECB’s assessment of the subdued inflation outlook and what it looks at when setting policy, he said.

Governing Council member Jens Weidmann said today that while the ECB has already made a significant contribution to preventing the region’s debt crisis from escalating, it must continue to focus on its primary mandate of price stability.

“Policy makers have entered unknown and also dangerous territory,” Weidmann, the president of Germany’s Bundesbank, said in Berlin. “Price stability does not stand in contrast to economic prosperity. Rather it complements and perpetuates it.”

[Panda]

A road network in Ciudad Valdeluz, Spain. The new city of Ciudad Valdeluz, 60km from Madrid, was originally intended to be home to 30,000 people; it currently has only approximately 700 residents. Photograph: Oli Scarff/Getty Images


August is traditionally Europe's holiday month, with many government officials taking several weeks off. In the process, important initiatives are put on hold until the "great return" at the beginning of September.

This year, there is another reason why Europe has pressed the pause button for August. With a looming election in Germany, few wish to undermine Chancellor Angela Merkel's likely victory. After all, Germany is central to Europe's wellbeing, and Merkel's steady hand has allowed the continent to overcome a series of challenges over the last few years. As a result, many are eager to postpone any controversial policy decisions rather than rock the German political boat.

Some of the recent economic news has seemed to justify this approach. At the end of July, the widely watched indicator of European manufacturing activity crossed the threshold signalling expansion for only the second time in 23 months.

Adding to the sense of comforting normality, several European officials have taken to the airwaves with optimistic pronouncements. Whereas the euro and the eurozone were "under threat just nine months ago", the European council president, Herman Van Rompuy, recently declared, "this isn't the case anymore."

All of this has underpinned a much-welcome calm in financial markets. Sovereign interest-rate spreads have been well-behaved, the euro has strengthened, and equity markets have risen robustly.

Yet no one should be fooled. This summer's sense of normality is neither natural nor necessarily tenable in the long term. It is the result of temporary and – if Europe is not attentive – potentially reversible factors. If officials do not return quickly to addressing economic challenges in a more comprehensive manner, the current calm may give way to renewed turmoil.

The task for Europe is not just a matter of restarting and completing the economic and political initiatives, whether regional or domestic, that have been put on hold until after the German election. In fact, these top-down decisions, while admittedly complex and certainly consequential, may be the least of Europe's challenges.

Europe must also counter and reverse micro-level challenges that are becoming more deeply embedded in its economic and financial structure. Each day that passes complicates the design and implementation of lasting solutions to four problems in particular.

First, joblessness continues to spread. The overall unemployment rate (12%) has yet to peak, led by an alarming lack of jobs among the young (24% joblessness in the eurozone as a whole, with highs of 59% in Greece and 56% in Spain).

Second, adjustment fatigue is widespread and becoming more acute. Long-struggling European citizens – especially the long-term unemployed – have yet to gain any sustained benefit from the austerity measures to which they have been subjected. And the result is not just general disappointment and worrisome social unrest. In the last few weeks, political stability in Greece and Portugal has been threatened as governments struggle with declining credibility and a rising popular backlash.

Third, bailout fatigue is apparent. Citizens in the stronger European economies are increasingly unwilling to provide financial support to their struggling neighbours; and their elected representatives will find it hard to ignore growing resentment of repeated diversion of national tax revenues, which has yielded only disappointing outcomes. Meanwhile, high levels of past exposure and weakening creditor coordination are undermining the availability of external funding, including from the International Monetary Fund.

Finally, little oxygen is flowing to the private sector. While Europe has succeeded in stabilising its sovereign-bond markets, financial intermediation for small and medium-size enterprises remains highly disrupted. With most credit pipelines already partly blocked, the shortage of corporate credit will become more severe as regulators finally force banks to embark on a proper mobilisation of prudential capital and shrink balance sheets to less risky levels.

All of this adds up to a sad reality for Europe. Despite hopeful blips in an economic indicator here and there, too many countries lack both immediate growth and longer-term growth engines. As a result, debt overhangs will remain problematic. Owners of private capital that could be allocated to productive investment will remain hesitant. And societies will continue to lack the jobs and capital investment that are essential for durable prosperity and general wellbeing.

Europe's external environment is not helping, either. On the demand side, the ongoing economic slowdown in China is starting to affect companies' orders and revenues, adding to the challenges stemming from the persistently sluggish US economy. Meanwhile, the euro's recent appreciation (particularly against the Japanese yen) limits Europe's ability to compensate for anaemic global demand by capturing greater market share.

These developments point to a much larger phenomenon: because of delayed awareness of the complex challenges (and the related slow and partial policy responses) facing much of the west, the low-equilibrium growth pattern that has prevailed in recent years (what has been called the "new normal") is becoming less stable. And Europe is a leading indicator of this.

In essence, Europe (and the west more generally) owes its recent tranquillity to a series of experimental measures by central banks to offset the troubling combination of too little demand to generate sufficient job creation, inadequate structural reforms to revamp growth engines, debt overhangs that undermine productive investment and insufficient policy co-ordination. Consequently, the resulting surface calm masks still-worrisome economic and financial fundamentals.

Let us hope that European policymakers return well rested from their August break. They will need all the energy and dedication they can muster to pivot quickly from Europe's forced normality to a more durable strategy for recovery, or at least to stop drivers of renewed prosperity from slipping farther away before they can be harnessed.
===============
Profile
Mohamed el Arian

The CEO and co-CIO of Pimco, a global investment management firm and one of the world's largest bond investors. He spent 15 years at the International Monetary Fund in Washington. His book When Markets Collide, was a bestseller. His articles are brought to readers in co-operation with Project Syndicate

[Badboy]

I HAD A TWEET THE OTHER DAY ABOUT NEW AIRPORT IN SPAIN IS NOW BEING SOLD BECAUSE IT IS SURPLUS TO REQUIREMENTS,LOT OF BUILDING PROJECTS BEING STARTED IN BOOM YEARS,NOW MOTHBALLED

[Panda]

I HAD A TWEET THE OTHER DAY ABOUT NEW AIRPORT IN SPAIN IS NOW BEING SOLD BECAUSE IT IS SURPLUS TO REQUIREMENTS,LOT OF BUILDING PROJECTS BEING STARTED IN BOOM YEARS,NOW MOTHBALLED

I wouldn't be surprised Badboy, Spain's unemployment is over 12%, Greece was another Country which sold one of it's Airports, a sign of the times unfortunately. Angela Merkel has been criticised by her opponent in the forthcoming Election saying she created such harsh measures with no incentives for the Countries receiving bail-outs that they are stagnating.

[Panda]

The EU’s future (4/4): The next Europe is… Switzerland!



6 September 2013
Foreign Affairs New York

Comment86




Shared 578 times in 10 languages
Text larger
Text smaller
Print
Send
Mayk

The EU can only gain legitimacy among its citizens and retain its role as a global economic and political player if it transforms itself into a real federal union, like its tiny neighbour, say some of Europe’s leading political figures gathered by the Berggruen think-tank.

Nicolas Berggruen | Nathan Gardels

History offers few notable examples of successful political federations. At its moment of federation, in the 1780s, the United States was a sparsely populated handful of young states with a common culture and common language, and so it does not provide many relevant lessons for Europe today. Switzerland’s experience, however, offers more, one of which is about slow gestation. “Federation needs time,” says the former Swiss diplomat Jakob Kellenberger. “It took centuries for people living in Swiss cantons to get to know each other, then a long period of confederation before the move toward full federation in 1848”.

The Swiss federation has worked, he notes, because the centre has been respectful of the autonomy of the cantons (which were never anxious to hand over their authority) and careful not to abuse its powers. All powers not specifically delegated to the federal government by the Swiss constitution, moreover, continue to be held by the cantons.

With decades of step-by-step integration already behind it and an accelerating world ahead, Europe must accomplish its shift to full political union in years and decades, not centuries, but this shift can nonetheless usefully follow much of the Swiss model. […] Like Switzerland, in other words, Europe needs a strong but limited central government that accommodates as much local diversity as possible.

Although a federal Europe must be open to all EU member states, forward movement toward it should not be blocked because some are not yet willing to go there, but nor should it be imposed from on high. The democratic public of each state will have to decide whether it is in its long-term interest to join the federation or opt out. It is an illusion to believe that a strong political union can be built on the weak allegiance that results from tweaking treaties. Its foundation must be a popular mandate.

[Panda]

IMF warns France on austerity overkill
France’s socialist government has pushed austerity too far and risks inflicting needless damage on the economy, the International Monetary Fund has warned.

Francois Hollande is in a delicate position, forced to explain to his own critics within the Socialist Party why he has pushed austerity so far Photo: AP
Get unlimited access to your Experian credit report and expert advice on monitoring and improving your financial situation. Get access now!Advertisement
By Ambrose Evans-Pritchard
7:38PM BST 13 Sep 2013
78 Comments
In a report likely to set off a political storm in Paris, the IMF said over-zealous cuts and tax rises have caused public debt levels to rise even faster, defeating the purpose.

“A more measured pace of structural fiscal tightening is appropriate in the near-term. Limiting pro-cyclicality is of the essence,” said the Fund in its latest report on G20 imbalances.

The comments have an added piquancy given that IMF chief Christine Lagarde is touted as the next Gaulliste challenger to president Francois Hollande.

They leave Mr Hollande in a delicate position, forced to explain to his own critics within the Socialist Party why he has pushed austerity so far. While he is obliged to cut the French deficit to comply with the terms of the EU Fiscal Compact, those terms were negotiated by his predeccesor and were attacked as folly by the Socialist Party at the time.

The IMF said Britain should also push through “growth-enhancing initiatives” by bringing forward planned investments. “Policy action is required to secure the recovery," it said, adding that the UK should do more to “boost availability” of homes rather than trying to push up house prices.

Related Articles
IMF fears China is courting fate as credit soars
13 Sep 2013
China to dictate tough terms on BRICS fund
06 Sep 2013
Romantic Germany risks economic decline as green dream spoils
11 Sep 2013
Eurozone industrial slump dashes recovery hopes
12 Sep 2013
Brussels fears European 'industrial massacre'
08 Sep 2013
The PM's fairly honourable defeat
30 Aug 2013
Sponsored 4G or not 4G is the wrong question


The call for less austerity reflects IMF fears that the global recovery is at risk of faltering if much of the world tightens in unison, and if the US Federal Reserve presses ahead with plans to wind down stimulus and drain the world of dollar liquidity. The mere threat of Fed tapering has already pushed borrowing costs sharply across the world, precipitating currency crises in India, Brazil, Turkey, South Africa, Indonesia, Ukraine and beyond.

The report said the eurozone’s underlying debt woes are getting worse, with risks of outright “debt deflation” in the crisis-ridden periphery. “Weak growth has contributed to deteriorating debt dynamics,” it said, warning that prolonged stagnation could slowly asphyxiate the South, where real exchange rates still remain over-valued.

It called for “policy action on multiple fronts” to head off a fresh eruption of the crisis, a rebuke to those in Brussels and Berlin who think the problem is solved.

The IMF said France had tightened policy by 2pc of GDP last year and 1.8pc this year but had failed to enjoy any improvement in the debt trajectory because recession shrank the economic base, a trap known as the denominator effect. "Amid a deteriorated macroeconomic environment, the outlook for public debt has worsened. The debt-to-GDP ratio is projected to peak at 94pc of GDP in 2015," it said. This is higher than earlier estimates.

The report said France must push through a string of labour reforms and break down barriers in the service sector to anchor long-term credibility, as well as cutting the "labour tax wedge" - the difference between take-home pay and the full cost to employers.

Germany was also reproached for doing too little to help rebalance the global system, told to shake up its internal structure to unleash consumption and narrow its current acount surplus, which ballooned to 7pc of GDP last year.

The IMF said Germany's real exchange rate is 8pc undervalued on an historical basis as result of the euro structure.

[Panda]

Madrid Street Turns Union-Branded RedAbout a million people slowly march through the Spanish capital to stand against austerity measures.6:24pm UK, Saturday 14 September 2013 One million people marched through the streets of Madrid (File Pic)
EmailRobert Nisbet

Europe Correspondent

More from Robert | Follow Robert on Twitter

It was an impressive feat by the organisers: to turn one of Madrid's iconic roads into a sea of union-branded red.

The CCOO and UGT unions claim that a million people slowly marched up the Paseo del Prado from Atocha to Colon, to show their united stand against austerity measures.

Looking at the demonstrators, it could easily have been mistaken for a good-natured, open-air festival - children with painted faces, and groups of friends walking arm-in-arm, swigging from cans of beer.

But when a police helicopter buzzed overhead, the good-natured banter and union chants gave way to whistling and unmistakable hand gestures.

There was anger here but, for many, austerity has become an unavoidable fact of life in the era of the euro crisis.

As an unemployed graduate told me: "Left or right can be in power, but the policies will stay the same. That doesn't mean I have to accept them."

The biggest success of the day for the European Trades Union Federation, which organised the event, was the breadth of the endeavour and the level of participation.

That should be remembered - not the sporadic violence. Some of the police tactics caught on film in Lisbon and Rome will not escape Amnesty's scrutiny, however.

The events constituted a unified response from countries where the debt crisis has different roots and peculiarities. In Italy, the anger is mostly about cuts to education budgets, while in Spain unemployment and evictions are the main grievances.

It showed the level and depth of feeling in organised labour against cutting too harshly and too quickly.

But what alternatives, if any, were proposed by the demonstrators?

Sky canvassed a few people on the streets who suggested more debt, forgiveness for countries like Greece, more taxation on banks and big business, more sensitivity as to how cuts - which many accept are inevitable - are applied.

This was not, however, a symposium on how to escape the debt crisis. It was a focused day of protest thrown into sharp relief by figures suggesting countries forced to enact strict austerity have seen their economies contract faster than first thought.

Governments will argue, with good reason, that bloated bureaucracies have to be hacked back, and taxes increased to weather the financial storm.

But the detractors made their point on a much larger scale than had been anticipated

[Panda]

Nostalgia for strong leadership



16 September 2013
Hospodářské Noviny Prague

Comment6


Text larger
Text smaller
Print
Send
Vlahovic

Having once welcomed the arrival of political and economic liberalism following the fall of communism, the countries of central Europe are now increasingly turning their backs on this ideology, which heralded their return to democracy.

Martin Ehl

Is the crisis over or not? Should we be optimistic or better yet cautious about the development of the economies of central Europe? The economists, politicians and entrepreneurs meeting up at the annual economic forum in the southern Polish town of Krynica in the first week of September were unable to come up with a definite answer, even when politicians, with Polish Prime Minister Donald Tusk in the lead, tried to put the most upbeat spin on it.

What came to the surface once again, and strikingly so, perhaps more than ever before, is just how far the economies of central Europe still hang on the decisions, whims and mindsets of politicians. After more than 20 years of building free-market capitalism one would expect that a business would act independently of politicians, and on the other hand, that politicians would not indulge themselves in notions such as those of Jaroslaw Kaczynski, who announced from the podium to dozens of entrepreneurs that if his party wins the election it will raise taxes. On top of that, Kaczynski argues, Poland needs a stronger state.

Polish paradoxes

The bruising reforms of the early 1990s have created a significantly more competitive market environment than Czechs had grown used to during the Klaus era of “bank socialism”

The relationship between the state and business in Poland is rather a paradox. The bruising reforms of the early 1990s have created a significantly more competitive market environment than Czechs had grown used to during the Klaus era of “bank socialism”. The Polish state, in contrast, has until today retained a strong influence in hundreds of companies.

Although many of them float shares on the Warsaw Stock Exchange, the controlling stake is held by the government. That situation creates hundreds of interesting combinations of influence and the flow of money, which the Czechs know in principle only in the case of the energy company CEZ.

Dozens of such enterprises exist in Poland and the hand of government in them is affecting the economic environment. In particular, it keeps employment high (in mines and armament factories) or takes money from the company books according to the needs of the state budget – as this year, when the insurance company PZU and at least two other companies will apparently pay out advances from this year's dividends before year’s end.

The Czech liberal environment has been left wonder-struck by the notion of Milos Zeman to spur economic recovery through state investment projects [primarily the Pharanoic plan for a Danube-Oder-Elbe canal]. Czech economists, it would appear, have weaned themselves from pondering the strong role of the state in the economy, while in Poland, Slovakia and previously liberal Hungary, governments are still the main players in it.

The wane of liberalism

Just as political liberalism has been beating a retreat in central Europe over the last few years, a similar fate is befalling its economic companion. While entrepreneurs assured themselves in the debates in Krynica that it is they who determine the development of the economy, the increasing weight of regulation and the ever more frequent and growing intervention of the state are becoming much more important than they were a decade ago. In Hungary, the unorthodox economic policy of the Orbán government – raising taxes and transferring a range of costs onto companies – has been accompanied by the bringing of several large companies back into the fold of state ownership. In Poland, the original Tusk plan for privatisation has ground to a stop. In Slovakia, new regulations practically from the beginning of the year have shut down job creation in the private sector.

In Czech debates, one often hears that voters let the state be “plundered”. In Poland, Slovakia and Hungary, in contrast, the state and its influence is growing. It is politicians who have the greatest influence and power, and for them a strong state provides the springboard they need to meet their goals and perhaps even dreams. In the Czech Republic today, President Milos Zeman is attempting something similar. Fortunately, he lacks the energy of Viktor Orbán; fortunately, the Czechs do not have such a strong relationship to history as the Poles, which could lead them to draw up the kind of negative agenda Jaroslawa Kaczynski is putting together in Poland. Fortunately, we do not have such a strong business-party base as Slovakia’s Robert Fico, whose party, Smer, is under the de facto direction of the joint-stock companies of several interest groups.

Liberal democracy in Europe has been fundamentally harmed in the course of the crisis, because politicians have been incapable of responding appropriately

Liberal democracy in Europe has been fundamentally harmed in the course of the crisis, because politicians have been incapable of responding appropriately. The space that liberals have vacated have been richly filled with illiberal politicians. Voters, poisoned by politicking and corruption, seemingly having had their fill after 23 years of the liberal experiment with freedom, would like to see once again a strong state to look after almost all of them. Liberal democracy in central Europe, it would seem, has been the biggest victim of the crisis over the long term. Something similar may be in store as well for the liberalised economy.

Translated from the Czech by Anton Baer

[Panda]

Anger as 'profligate' EU parliament spends £174m on new buildings
The European Parliament is to pay out a record amount of £174 million for new buildings in Brussels at a time of austerity and economic recession elsewhere in Europe.

The European Parliament is to pay out a record £174 million on new buildings in Brussels Photo: GETTY IMAGES
By Bruno Waterfield, Brussels
7:00AM BST 20 Sep 2013
64 Comments
Revelations over the rental and purchase of new buildings in the European Union quarter of the Belgian capital come ahead of elections to the assembly next year and risk a backlash against high-spending MEPs.

The extra office space is to be purchased and rented for growing numbers of parliamentary assistants even though the number of MEPs will shrink from 766 to 751 after EU elections in May 2014.

"This is an outrageous waste of taxpayers' money when the EU is demanding punishing cuts from ordinary households and national governments," said Paul Nuttall the deputy leader of Ukip.

"As the profligate EU wants to expand its empire or project it continues to hire more Eurocrats and increase the size and expense of its Towers of Babel."

Following questions from a Belgian MEP it has emerged that the EU assembly is to pay £77 million (€91.3bn) to rent an 11-storey office block on De Meeussquare, near to the Brussels seat of the parliament, for 12 years, money that will be spent without any prospect of owning the building.

Related Articles
European Parliament wants spending increase
11 Jul 2013
Downing Street accuses Van Rompuy of talking 'nonsense' on EU spending
13 Sep 2013
EU exit 'bad for business', say 8 out of 10 firms
12 Sep 2013
EU regulator has no power to ban short-selling
12 Sep 2013
José Manuel Barroso: Anti-EU Ukip will beat Tories to become 'first force' in British politics
11 Sep 2013
Auditors must tone down criticism of EU spending, says Van Rompuy
13 Sep 2013

The rent comes on top of the purchase for £97 million (€114.6m) of the Trebel building which is also near the sprawling Place Luxembourg EU parliament complex, that has its own shops, post office, beauty parlours and train station.

"It's probably the largest real estate transaction in Brussels this year," Jean-Michel Meersseman from property manager Jones Lang Lassalle told the Flemish Het Laatste Nieuws newspaper.

A spokesman said that the assembly needed extra space because the Lisbon treaty had increased the "areas in which parliament needs to legistate" as well as Croatia joining the EU in July this year.

"This increased the need for staff," she said. "Furthermore, MEPs indeed have the possibility to recruit more assistants and often also have trainees, all working in one single office. That is an untenable situation."

The need to expand the parliament is to house growing numbers of staff, over 6,200 civil servants and 1,525 parliamentary assistants for MEPs, who receive an increased annual allowance of £220,000 a year to pay for personal staff.

Philip Claeys, the Flemish Vlaams Belang MEP, whose parliamentary question exposed the expenditure, said: "The EU demands austerity, cuts and savings in all member states, but is clearly not willing to stop the waste of money for its own activities."

Official figures show that EU institutions currently occupy over two million square metres of office space in Brussels, Luxembourg and Strasbourg, an area the same size as Monaco.

The Organisation for European Inter-State Cooperation, a think-tank, has estimated that the EU's expenditure on buildings is £700 million this (€830m) this year alone.

Ten days ago the parliament on began a £13.5 million (€16m) advertising campaign to try and persuade the public go to the polls in next year's European elections amid growing hostility to the EU.

A 52-second video has already appeared in all 28 EU member states urging voters to "Act, React, Impact" and later election advertising will promise "this time it's different".

[Panda]

Washington: The International Monetary Fund approved today the release of 84.7 million euros ($113.1 million) in bailout funds to Cyprus.

The IMF executive board approved the funds after completing the first review of Cyprus's performance under a three-year, billion-euro loan program the IMF extended in partnership with the European Union, the IMF said in a statement.

With the new disbursement, Cyprus will have received about 169.4 million euros ($226.2 million) to date under the loan approved on May 15.

The loan, known as an Extended Fund Facility arrangement, is part of a combined 10-billion-euro financing package with the European Stability Mechanism, the EU's financial emergency fund.

The IMF board also approved the Cypriot authorities' request for modification of performance criteria on September 2013 fiscal targets, the Washington-based institution said.

The country plunged into crisis in 2012 as Greece's meltdown spilled over, leaving a number of its top banks insolvent and forcing depositors to accept reductions in the value of their bank accounts.

To get the loan package, the government had to take over major banks, agree to large spending cuts and tax hikes, and the sale of some state-owned assets.

On July 31 the IMF, European Central Bank and European Commission said in a review that the restructuring program is on track.

"The authorities have taken decisive steps to stabilize the financial sector and have already been gradually relaxing deposit restrictions and capital controls," it said.

However, it added, the short-term economic outlook was poor, with output projected to contract 13 per cent in 2013-14. Economic growth is only expected to recover in 2015.




Story first published on: September 17, 2013 11:48 (IST)

[Panda]

Market DataYour MoneyEconomyCompanies22 September 2013 Last updated at 16:00 Share this pageEmail Print Share this page

340ShareFacebookTwitter.Greece resumes talks with creditors as strikes planned More strikes are planned next week, as public sector workers face further cuts. Continue reading the main story
Related Stories
New public-sector strike hits Greece
Greek finance minister sees recovery

The so-called troika of lenders has returned to Athens for its latest audit of the Greek economy.

The visit will determine whether twice bailed-out Greece will get its latest instalment of cash.

Representatives from the European Commission, the International Monetary Fund and the European Central Bank will take stock of how effective tough austerity measures have been.

Fresh strikes are planned by public sector workers in response.

'Struggle'

Sunday's talks will decide on the continued conditions for Greece's financial aid, and a 1bn euro (£844m) instalment which Greece expected to get in October.

The EU is calling for the liquidation of Greece's defence industry, a further reduction in civil servant posts, and the health of the key privatisation programme.

The main public sector union Adedy said that it would carry out a two day strike on Tuesday and Wednesday, while other unions are following suit.

"We will continue our struggle against the destructive policies of the government and the troika," Adedy said in a statement.

This latest round of protests against austerity comes days after the Greek Finance Minister Yannis Stournaras said his country's economy is heading "slowly towards recovery" after it saw growth in the second quarter of the year.

Mr Stournaras said available evidence suggested Greece will see quarter-on-quarter growth for the first time since its economic crisis began.

Greece also reported slightly improved jobless figures for the summer period, as tourism saw a modest boost compared to the year before.
More on This Story

[Panda]

IMF's Lagarde: report of $273.2 billion bank hole misleading
inShare0Share this
Email
Print
Related NewsG8 raises Arab Spring financing pledge to $38 billlion
Sat, Sep 10 2011
HIGHLIGHTS-G7 finance ministers, c.bankers in Marseille
Fri, Sep 9 2011
G7 offers little to calm markets on growth, debt
Fri, Sep 9 2011
Top German quits ECB over bond-buying row
Fri, Sep 9 2011
WRAPUP 5-Top German quits ECB over bond-buying row
Fri, Sep 9 2011Analysis & OpinionIs the medicine for financial services turning out to be worse than the disease?
Regulatory forbearance looms as next big supervisory risk for financial giants
Related TopicsIMF »
Regulatory News »
IMF managing director Christine Lagarde holds a news briefing at the International Monetary Fund headquarters in Washington July 6, 2011.

Credit: Reuters/Kevin Lamarque

MARSEILLE, France | Sun Sep 11, 2011 9:31am EDT

MARSEILLE, France (Reuters) - IMF chief Christine Lagarde said on Saturday that reports of a draft IMF document showing a $273.2 billlion shortfall in European banks' capital were misleading and the lender was still finalizing its study.

"There has been misreporting about the 200 billion euros, this number is tentative," Lagarde told a news conference after G7 and G8 finance talks in the southern French city of Marseille.

"This is not a stress test that the IMF conducts nor is it the global capital need for European banking institutions, that it is not, and we are currently in discussions with our European partners to assess the global methodology until we reach a tentative draft. It will be published before the end of September."

(Reporting by Daniel Flynn and Robin Emmott; Editing by Catherine Bremer)

[Panda]

Banking crisis: ‘Draghi, prepared to expand ‘lending lifeline’. . . and Merkel to maintain her European policy’



24 September 2013

Presseurop
Cinco Días
Cinco Días, 24 September 2013

Speaking before the European Parliament on September 23, European Central Bank President Mario Draghi said he was willing to consider additional stimulus measures to banks to keep short-term market interest rates in check and safeguard the bloc’s fragile recovery, reports Cinco Días.

Since December 2011, the ECB has funneled over a trillion euros to eurozone banks.

According to the daily —


Two years later [...] Draghi may use the same formula to make money flow to small businesses and the real economy, instead of leaving it in the ECB’s coffers.

On a related issue, Merkel is to maintain her pro-austerity European policy in the wake of German elections. However, Brussels foresees that a grand coalition with the SPD would result in a more constructive leadership, remarks the Spanish daily.

A Trillion Euros lent to the European Banks.!!!!!!! If the ECB has so much money, why is is charging EU Countries so much for the Budget.???

[Panda]

Eurozone: IMF proposes a fiscal union and common unemployment insurance



26 September 2013

Presseurop
Die Presse, El Periódico de Catalunya
Die Presse, 26 September 2013

In its most recent bulletin, published on September 25, the International Monetary Fund (IMF) is "pushing Europe towards a fiscal union", headlines Die Presse on its front page.

To "anchor confidence in the banking system", the IMF is proposing to stabilise the Eurozone by improving the supervision of national policies, by implementing a “predetermined risk sharing”, through the launch of “centralised loans” – ie Eurobonds – and by supporting the Eurozone banks.

However, notes Die Presse, these remedies are likely to displease Berlin, which has till now refused to back measures such as Eurobonds or any pooling of the banking risk.

For its part, El Periodico stresses that the IMF


has suggested that Europe should establish common unemployment benefits within the Eurozone in order to minimise the impact of the economic crisis among the population, [and that] a greater degree of pooling of risks among member countries, including the drawing up of a common contingency fund, a European system of unemployment insurance and a common budget, would reduce the costs of any future rescue plans.

[Panda]

Latest Posts




September 24th, 2013 17:59

Germany’s economic myth will not help the eurozone

By Bruno Waterfield




Amid all the self-congratulation over the slight upturn in the eurozone’s fortunes and Angela Merkel’s personal election triumph it is worth taking a look at Germany’s economy. Germany is held to be the eurozone’s economic model, certainly in terms of public finances, balanced budgets and unit labour costs. It is the German austerity and low… Read more

2 Comments




September 23rd, 2013 9:22

'Mummy' Merkel's Pyrrhic victory – what the German vote means

By Bruno Waterfield


Angela Merkel's triumph is a Pyrrhic victory for her and the German political elite. It's a personal triumph that has wrecked Germany's political order. It means European Union deadlock and difficult coalition haggling that will tie her hands at time when Germany's economy faces difficult challenges. It is clear that the EU is a major… Read more

75 Comments




September 16th, 2013 18:35

The EU's climate policy, right or wrong

By Bruno Waterfield




What if the scientists have got it completely wrong? What if it turned out that man-made global warming did not exist? Would the EU’s climate change policy then, in turn, be wrong? ‘No,’ comes the reply from Connie Hedegaard, the EU’s climate action commissioner when I spoke to her the other day. She’s “very pragmatic”… Read more

1 Comment




September 13th, 2013 16:33

EU judges to uphold generous pay rise for themselves – and all their brothers in European officialdom

By Bruno Waterfield




The EU’s court is poised to uphold austerity-busting pay increases (see EC reponse below) for eurocrats. Now there is a surprise. Yves Bot, an advocate-general at the EU's ludicrously entitled “Court of Justice” has issued a legal opinion reinstating a generous pay rise for European civil servants. National governments blocked a 1.7% salary increase for… Read more

3 Comments




September 13th, 2013 10:38

Moral instruction, not the truth, is the EU's mission

By Bruno Waterfield


The job of officials is to give moral instruction in the benefits of EU membership. Not telling the truth or serving the public interest, but teaching the benighted public who are misled or simply foolish enough not to believe in the good works of the EU. It’s official – the EU’s most senior bureaucrat, none… Read more

3 Comments




September 12th, 2013 15:35

The ultimate EU commandment: thou shalt not hold referendums

By Bruno Waterfield




José Manuel Barroso is angry with the Tories because they have violated the ultimate EU commandment: thou shalt not hold referendums. The European Commission president’s hissy fit came in the form of a warning that Ukip could beat the Conservatives in EU elections next spring. His implication that Nigel Farage is the real thing while… Read more

3 Comments




September 6th, 2013 10:29

Germany ascendant as UK and France lose traditional EU military leadership role on Syria

By Bruno Waterfield


Britain and France are so off balance and on the back foot in terms of European diplomacy that they have abandoned winning support for military strikes against Syria. Instead the EU’s two military powers are left fighting a much more humbling rearguard battle to stop European countries condemning outright any US military action without a… Read more

2 Comments




September 5th, 2013 14:56

‘We already assume Britain has left the EU’

By Bruno Waterfield




As far as some are concerned in Brussels, Britain has already left the EU. Just back on the Brussels beat after the summer recess, I bumped into a high ranking official in the European Commission’s Berlaymont HQ earlier today. “We don't include the UK in our plans anymore. We assume you're leaving the EU so… Read more

23 Comments




July 31st, 2013 14:32

Britain's bill for EU membership has more than tripled over last 10 years

By Bruno Waterfield




Britain's bill for EU membership has more than tripled over the last decade, increasing from £2.9 billion in 2002 to £9.5bn in 2012. Britain's "net contribution" to the EU went up £1.7bn or 22 per cent last year setting a new record for the cash sum that British taxpayers handed over to Brussels. This is… Read more

479 Comments




July 31st, 2013 13:00

German voters in the dark as IMF warns of €11 billion 'financing gap' for Greece

By Bruno Waterfield




The German political elite is keeping Germany's voters in the dark. The eurozone must plug a €10.9 billion black hole in Greek finances and move more quickly to write off loans, says the IMF on Wednesday in complete contradiction with statements made by Angela Merkel, the German Chancellor, the European Commission and others. The IMF… Read mor

[Panda]

(Financial Times) -- Italy's left-right coalition government was on the edge of collapse on Saturday night after former prime minister Silvio Berlusconi pulled out his five ministers from the alliance he formed with Enrico Letta's Democrats last April.

Mr Berlusconi, leader of the centre-right Forza Italia party, said the resignations were a response to the government's decision on Friday to increase in sales tax from next month.

Mr Letta, prime minister, rejected Mr Berlusconi's explanation as an "enormous lie", and called the decision "mad and irresponsible and aimed exclusively at covering up his personal affairs" -- a reference to Mr Berlusconi's criminal conviction for tax fraud which is likely to lead to a ban on holding public office.

The unprecedented coalition of the two parties -- forced upon both sides by elections last February that ended in deadlock -- has been hanging by a thread since Mr Berlusconi lost his final appeal against tax fraud on August 1.

The crisis gathered pace on Wednesday night. Just as Mr Letta was in New York telling investors on Wall Street that Italy was "young, virtuous and credible", Mr Berlusconi's parliamentarians threatened to stage a mass resignation if a senate committee voted on October 4 to strip their leader of his seat in the upper house.

The way ahead is fraught with difficulties for Mr Letta and his ally Giorgio Napolitano, head of state, with little time to prevent a serious fallout on financial markets on Monday. Rumours were already spreading last week that Italy was heading for another downgrade by a major rating agency.

In downgrading Italy to just two levels above junk status in July, Standard & Poor's warned of a further downgrade "by one notch or more" if Italy could not demonstrate "institutional and governance effectiveness". As Mr Letta has repeatedly warned, Italy can ill-afford higher costs in servicing its €2tn of public debt, with its budget deficit for 2013 currently forecast to overshoot the 3 per cent limit agreed with the EU.

Mr Letta confirmed in his statement that he would go before parliament "where everyone will assume their own responsibility in front of the country". Commentators expected Mr Letta to address parliament on Monday, but it was not clear if he would immediately call a vote of confidence in the government.

Inconclusive elections last February left the centre-left Democrats with a majority in the lower house but 51 seats short of a majority in the senate, where the anti-establishment Five Star Movement holds the balance of power between the two mainstream parties.

Beppe Grillo, the comic-activist leader of the movement, who has ruled out supporting a government led by the Democrats, on Saturday night called for snap elections. But his autocratic style of leadership and a purge of several parliamentarians who refused to toe Mr Grillo's line have fuelled speculation that the Democrats might just be able to put the numbers together to form an alternative majority, including centrists led by former prime minister Mario Monti. Equally it is not clear whether all Mr Berlusconi's MPs will remain loyal to their billionaire leader of the past two decades who turns 77 this weekend and is facing a year of house arrest or performing community service.

Mr Napolitano, who holds the constitutional power to dissolve parliament, has repeatedly expressed his opposition to holding snap elections. But if Mr Letta's government were to fall and no alternative majority was in sight, then Italy could be faced with the unprecedented and extremely worrying prospect of staging elections before the end of the year at the risk of derailing the 2014 budget.

Stefano Fassina, a leftist deputy finance minister, warned that if Italy went to the polls then the budget would end up being written by the so-called Troika of the European Commission, European Central Bank and International Monetary Fund.

Such an outcome was averted in late 2011 when Mr Berlusconi's then-centre-right government was disintegrating under the combined pressure of internal rifts, panicking financial markets and his European peers. But instead of dissolving parliament, Mr Napolitano persuaded Mr Berlusconi to resign and replaced him with Mr Monti at the head of a caretaker government of technocrats. That experience -- ultimately unpopular with Italians and also politically destabilising -- is unlikely to be repeated.

[Panda]

A political union is light years away and not wanted. Just have a look at the elections in Austria, the political climate in France, or even the latest polls from Germany. [...] The trend is everywhere the same: No more enforced integration!

bohoo on ‘Debt targets for Greece questioned’



The IMF is just doing what it is supposed to do. This international organisation is not intended to provide financial support to Eurozone member countries forever. I dare say the planet has more pressing problems to address.

Pangloss on IMF proposes a fiscal union and common unemployment insurance



Europe should ignore Russia and start dialogue directly with the post-Soviet states. Russia has only two choices - to become a democratic and capitalist member of NATO and the EU, or to become a Chinese vassal. Putin chose the latter and nothing shows that this will change.

[Badboy]

I SEE GREECE HAS ROUNDED UP GOLDEN DAWN MPS ETC

[Panda]

1 October 2013 Last updated at 02:19 Share this pageEmail Print Share this page

120ShareFacebookTwitter.Four MPs from Greece's Golden Dawn to appear in court Party spokesman Ilias Kasidiaris is among those facing charges
Continue reading the main story
Related Stories
Golden Dawn leader appears in court Watch
Wave of protests after Greek killing
'Blackmail, terrorism and tension'

Four MPs from Greece's far-right Golden Dawn party are to appear in court.

They face charges of belonging to a criminal group, with other counts including murder, assault and money-laundering.

The four were arrested over the weekend along with the party's leader and his deputy - both of whom are due to appear in court later this week.

In all 22 people have been held amid anger over the murder on 18 September of anti-racist musician Pavlos Fyssas.

A man held for the stabbing told police he was a Golden Dawn supporter, though the party strongly denies any link.

The four MPs - Ilias Panagiotaros, party spokesman Ilias Kasidiaris, Yannis Lagos and Nikos Michos - will be formally charged on Tuesday.

Continue reading the main story
Golden Dawn - key dates

Began in 1980 but more formally established in 1985
Party banner is a Greek decorative border, often compared with Nazi insignia
In 1996 elections, won just 4,487 votes - 0.07%. European election performance in 2004 was 0.17%, in 2009 0.46%
Nikolaos Michaloliakos wins place on Athens Municipal Council in 2010 with 5.29%
Breakthrough in May 2012 election with 441,018 votes and 21 deputies, cut to 18 MPs in June re-run
June 2012 - Party spokesman Ilias Kasidiaris throws water and slaps rival politician on TV
Sept 2013 - George Roupakias (above), self-proclaimed supporter, arrested for murder of musician Pavlos Fyssas
Sept 2013 - Leader Nikolaos Michaloliakos and other party members arrested

Mr Kasidiaris previously caused controversy last year when he attacked two female left-wing politicians during a live TV debate, slapping one and throwing water over another.

The party's leader Nikolaos Michaloliakos and his deputy Christos Pappas are expected to appear in court on Wednesday or Thursday.

Prosecutors will then decide whether to keep those arrested in custody until they face trial.

Details from witness testimony have been emerging about the way in which the party operated, the BBC's Mark Lowen reports from Athens.

The testimony speaks of a strict hierarchical structure - or "'Fuehrer principle" as the indictment calls it - as well as assault squads and military-style training, our correspondent says.

Searches of the homes of some MPs have found Nazi paraphernalia, he adds.

'Shame of neo-Nazism'

Last week details emerged of the careful planning behind Greece's unprecedented clampdown on the party - the first time since 1974 that a party leader and MPs have been arrested.

According to Greek media reports, several police officers thought to have had links to Golden Dawn were suspended ahead of the operation to prevent them potentially tipping off the targets.

Police also arrested one of their own colleagues who was reportedly working as a bodyguard for the party, during a raid on its offices in the western town of Agrinio a week ago.

After the raid on Mr Michaloliakos's home, police said they had found three pistols, ammunition and thousands of euros in cash.

Pavlos Fyssas, or Killah P, rapped against racism
The crackdown has was sparked by outrage at the murder of rapper Pavlos Fyssas, 34, whose stage name was Killah P.

George Roupakias, 45, who said he was a supporter of Golden Dawn, was arrested in connection with the killing.

On Friday, Golden Dawn - which won nearly 7% of the vote in 2012 elections - threatened to pull its 18 MPs out of the 300-strong parliament.

The governing coalition headed by Prime Minister Antonis Samaras, which has 155 seats, would then face by-elections.

Speaking on a visit to the US on Monday, Mr Samaras vowed to eradicate the "shame of neo-Nazism".

In recent months, Golden Dawn has been accused of perpetrating attacks on migrants and political opponents.

Golden Dawn officially denies being a neo-Nazi movement, though its badge resembles a swastika, and some senior members have praised Adolf Hitler.

[Panda]

Portugal: The troika saves us from ourselves



1 October 2013
Diário económico Lisbon

Comment6


Text larger
Text smaller
Print
Send
Walenta

The International Monetary Fund, European Commission and European Central Bank are back in Lisbon to evaluate the results of the 2011 bailout plan. This is good because otherwise Portugal would make the same mistakes that led to the crisis in the first place.

Helena Matos

I have to admit, I fear the day the troika will stop landing on Lisbon to verify our accounts, to remind us of our commitments and to sign cheques. This fear grips me a little tighter each time I read what is promised on campaign posters by candidates for local elections [held on September 29]: free school text books; free medication; free retirement homes; free vaccinations, etc... There is a sort of madness for free things "right now" which culminated with a martial arts school's promise (free, that goes without saying) to combat crime in a northern town [Vila Nova de Gaia] and, in the south, with an equally fallacious guarantee of local programmes to fight unemployment.

Knowing that the local authorities will neither cut their expenses or their complex bureaucracies, these programs will never turn into reality. Or worse still, they will result in additional new jobs in these bureaucracies themselves or municipal enterprises – a practice which led to the need for an emergency appeal for help from the troika in 2011.

Because local authorities have abandoned neither their reckless spending habits nor their complex bureaucracies, neither these programmes will never see the light of day.

Fear grips me even tighter when I hear [Socialist Party leader] António José Seguro say that he will not accept further budget cuts but fails to explain that this is not possible without raising taxes even higher, and when I realise at what point the PSD [Social Democrat Party] and the CDS [Christian democrats] are impatient to be free of the tyranny of external control in order to immediately freely pursue new promises of things that are "free, right now".

Déja vu

I was born in Portugal in the 1960s. This is the third time I find myself in a country under external assistance and that is why I think my generation is especially thankful to the creditors who, in 1977, in 1983 and in 2011, were ready to place their money here

I was born in Portugal in the 1960s. This is the third time I find myself in a country under external assistance and that is why I think my generation is especially thankful to the creditors who, in 1977, in 1983 and in 2011, were ready to place their money here. What sensible person would have wanted to raise a family in Portugal without this outside help? Of course, we paid interest, but much less than if we had not been this protectorate so abhorred by [Deputy Prime Minister] Paulo Portas or if our political leaders had to trawl the world seeking those who would lend us the most money.

I fear the day when Portugal will, in effect, cease to be a protectorate and when these political leaders return to brandish the verbs "give" and "invest" (if they want to invest so much, why do they not do it with their own funds and start a business?) in the great mystification they call a "positive discourse" on the nation. There are things that, when you live them over and over again, become grotesque.

For it is more than certain that someone will soon appear, as [did former PM José Sócrates] in 2009, to lead Portugal in a madcap rush forward – presented as a proactive and innovative approach. One can count on the vested interests who defend their personal privileges and those of their businesses, to claim that the country can no longer stand austerity when this austerity is imposed, not by creditors, but by the ruin into which we have plummeted in our effort to protect the corporations, the state as a partner of the private sector, and rights, acquired on paper, which public finances are no longer capable of ensuring.

Blame games

Finally, there will be the losers and their speeches about the great men of the past, about the great policies of bygone days, in times when there were leaders who, due to their greatness, their wisdom and their noble principles, led us three consecutive times to poverty in just 35 years, yet still prefer, while failing to see the influx of funds they provide, to blame the creditors rather than themselves.

After three outside interventions, I am sure not only that the troika will be back, but also that it will find Portugal in much worse shape. In effect, each time we become a protectorate; rather than questioning our inability to govern ourselves we favour this irrepressible urge to repeat all the errors that made us beggars to begin with.

That is why, if I live as long as the statistics say I will, there is no doubt I will see more troikas landing in Lisbon. And that the times in between will see the flowering of all sorts of demagoguery.

[Panda]

Editorial


With Cyprus, the euro crisis has claimed its fifth victim: after Ireland, Portugal Greece and Spain, it is the Mediterranean island's turn to request a bailout from the troika of international funding agencies (EU, ECB and IMF). To avoid watching its financial institutions sink beneath the waves, Cyprus has been obliged to accept a far-reaching overhaul of its banking system and will likely have to bid farewell to its status as a tax haven, with apologies to the rich Russians who have deposited their fortunes in the country.
============================================

With the latest recruits to the EU, Romania, Slovenia etc ....how long before they ask for a bail-out.??? I wonder where all this money is coming from, the ECB should not be using the money paid in by Member States .

[Sponsored content]