ABOUT GREECE - "I personally believe there's no chance for Greece to become competitive [while]
in the eurozone," Hans-Werner Sinn, president of Ifo, said in a luncheon speech
in New York on Monday. "If Greece is kept in the eurozone, there will be ongoing
mass unemployment. But if they exit, they will see a very sudden recovery," he
said, as lower prices boost competitiveness. He also cited risks of other
indebted eurozone countries facing severe spending cuts and tax hikes. "Cutting
wages and prices to the extent necessary in some southern European countries is
impossible, whatever the politicians say," Sinn said. "Policy is unable to
overcome the laws of economics." Greece has received more than €100bn in aid
since its debt crisis began, and last month creditors agreed to trade their
Greek bonds for lower-valued securities.Sinn said it would have been better to
use that money to help Greece manage its exit from the eurozone. Complicating
matters are the various European Central Bank lending operations that Sinn said
amount to "unlimited credit" for troubled countries. The ECB has extended more
than €1 trillion in low-cost, low-collateral, three-year loans to eurozone
banks. Some of that money has in turn been loaned to eurozone governments to
help bring down rising borrowing costs. Sinn said these operations circumvent
parliaments and will eventually lead to a common European government bond that
removes interest rate risk and allows countries to borrow at below-market rates
rather than pay down their debt and reform their economies. "Uniform interest
rates will lead to another mis-allocation of capital in Europe," Sinn said. He
said Ireland has been successful in cutting its prices and trimming debt,
relative to other troubled eurozone countries, because its housing bubble began
to deflate before the ECB and the European Union rolled out cheap loans and
rescue programs. (SOURCE: THE TELEGRAPH.UK)
Access Investments-Building Awareness - European Union-ROMANIA
Tuesday, April 24, 2012
ABOUT GREECE....!?!?
ABOUT GREECE - "I personally believe there's no chance for Greece to become competitive [while]
in the eurozone," Hans-Werner Sinn, president of Ifo, said in a luncheon speech
in New York on Monday. "If Greece is kept in the eurozone, there will be ongoing
mass unemployment. But if they exit, they will see a very sudden recovery," he
said, as lower prices boost competitiveness. He also cited risks of other
indebted eurozone countries facing severe spending cuts and tax hikes. "Cutting
wages and prices to the extent necessary in some southern European countries is
impossible, whatever the politicians say," Sinn said. "Policy is unable to
overcome the laws of economics." Greece has received more than €100bn in aid
since its debt crisis began, and last month creditors agreed to trade their
Greek bonds for lower-valued securities.Sinn said it would have been better to
use that money to help Greece manage its exit from the eurozone. Complicating
matters are the various European Central Bank lending operations that Sinn said
amount to "unlimited credit" for troubled countries. The ECB has extended more
than €1 trillion in low-cost, low-collateral, three-year loans to eurozone
banks. Some of that money has in turn been loaned to eurozone governments to
help bring down rising borrowing costs. Sinn said these operations circumvent
parliaments and will eventually lead to a common European government bond that
removes interest rate risk and allows countries to borrow at below-market rates
rather than pay down their debt and reform their economies. "Uniform interest
rates will lead to another mis-allocation of capital in Europe," Sinn said. He
said Ireland has been successful in cutting its prices and trimming debt,
relative to other troubled eurozone countries, because its housing bubble began
to deflate before the ECB and the European Union rolled out cheap loans and
rescue programs. (SOURCE: THE TELEGRAPH.UK)
Subscribe to:
Post Comments (Atom)
7 comments:
Billions wiped off Europe's biggest companies as political rebellion rocks eurozone
More than £122.3bn was wiped off the value of Europe's biggest companies on Monday amid fears that the eurozone's commitment to austerity was being swept away by political rebellion - just as its debts hit record levels.
'The European Commission said the pact was signed by states, not governments. "Governments change but commitments on behalf of states cannot be changed without discussion with European partners," said the Commission.'
This is ludicrous; such pacts are signed by REPRESENTATIVES of states, hopefully elected (or not - as in the case of Italy and Greece). Such representatives can and should change in a democracy. Surely a good lawyer could ride a coach and horses through such an assertion...?
Whether the EU is a democracy is a moot point though...
The cleptocrats are not out as yet. They need more printing of money in order to extract a higher temporary values and are greatly assisted by David Cameron with dinners at number 10. The people in Europe begin to realise that are not benefiting by the bailing out of the banks and the globalisation where values are extracted from their assets and goods are imported from China.
The German Dax dropped more than 3.5% and the French Cac fell by 2.8%. In London £27.6bn was wiped from the value of the FTSE as it dropped nearly 2% to 5665.
The euro's poor performance, which also reflected the uncertainty surrounding the outcome of the French presidential election, left the currency trading at 81.5p against the pound.
"My fear at the moment is that [investors] appear to be panicking because the outcomes are getting more uncertain as we get further into this crisis – not less uncertain," said Paul Kavanagh, a partner at brokers Killik & Co.
The yield on Italy's benchmark 10-year bond pushed past 5.7% in the afternoon, extending the gap with German securities to 406 basis points. The Spanish 10-year yield was also unsustainably high after rising two basis points to 5.98%.
Analysts said an early look at economic surveys revealed that the European Central Bank's confidence-boosting injection of funds into the banking system had petered out and the eurozone was heading for a longer and deeper recession than expected.
The ECB has injected €350bn (£285bn) into the European banking system since December and played a part in constructing an €800bn firewall of guarantees and insurances to protect against Italy and Spain suffering a run on their debt. However, these two key measures are widely considered to be insufficient to boost confidence and revive the struggling economies of the worst-hit countries. Several European leaders have criticised the ECB for its failure to mimic the US Federal Reserve and the Bank of England, which have created electronic money under their quantitative easing programmes.
Sinn is simply playing the hindsight game :
"Sinn said these operations circumvent parliaments and will eventually lead to
a common European government bond that removes interest rate risk and allows
countries to borrow at below-market rates rather than pay down their debt
and reform their economies."
... exactly this point, in various guises, was made multiple times, over 10 years ago, about the same time that there were celebratory fireworks over Athens that they had 'joined-at-the-hip' with Europe via EMU. Don't forget that similar points were made about just about every Eurozone economy (including France) in terms of the only surplus EZ economy eventually having to face a big bill or lose face by pulling out. Germany ante'd into a lose-lose game on these terms and thanks to a co-Eurocrat running the IMF they are in a twilight zone where they think the rest of the planet might once again bail them out of the consequences of their national arrogance.
"Uniform interest rates will lead to another mis-allocation of capital in
Europe," Sinn said.
Another?? What, the entire universe missed it the 1st time? Misallocation of capital in Europe has been the lodestone of sentiment about the structural flaws in the Euro for at least the the last decade, but such sentiment has only become 'acceptable' in, oh I don't know, the last 4 or 5 years? AEP and Warner have been banging on about this forever it seems.
Sinn is no economist, historian maybe.
All the great and the good are coming out of the woodwork.
Where they all when we were laughed at and considered to be close to mental cases when we had the temerity to say when the Euro was launched that it would all end in tears?
They are as much responsible for this debacle as the exploiting anti democratic fantasists still dreaming up European domination in Brussels.
Did they stand up for democracy?
Did they stand up for common sense?
Did they lend the slightest support to those saying that the whole project was fatally flawed.
No. No. and No.
Had these people the guts and responsibility to stand up and be counted, instead of slinking in the shadows to let others take the jibes and ridicule of Euro fantasists, this complete and utter disaster might never have happened at all.
Taking a look at US markets, shares on Wall Street are also higher today:
The Dow Jones is up 0.6pc at 13,009.85, while the S&P 500 is 0.3pc higher at 1,371.75.
17.45 Ratings agency Fitch is defending itself against the earlier anger of MP David Ruffley (see 11.29 post and 15.21 video), who walked out of a Treasury Select Committee session calling Fitch MD David Riley 'complacent and smirking.'
Fitch says the MPs were working with "flawed briefing notes" which confused the research of different ratings agencies, and says it won't "accept public castigation" as a result of incorrect notes.
The agency said:
Specifically, the line of questioning which concerned Fitch's comment on the UK budget published on 21st March was, we are now satisfied, conflated with and erroneously associated with a copy of Standard & Poors BICRA Report published on January 21st 2012. This gave rise to obvious confusion when they were presented as being joint pieces of work and Fitch was asked to account for both documents.
We cannot accept public castigation which is based entirely or significantly on poorly prepared briefing notes and believe that we are entirely within our rights to respectfully correct the public record and the reputation of our analysts.
Post a Comment