Saturday, May 26, 2012

The dysfunctional eurozone.....

Uncertainty is increasing and  is unlikely to subside until Germany defines the 'new reality' for the eurozone. The fall in UK inflation re-opens the door for QE ... Watch out for action by other central banks looking for ways to stimulate growth
Eurozone --- The dysfunctional eurozone remains a major concern to all. Recessionary forces are strengthening and no sensible solutions are close to implementation. In Spain, with recession drifting towards depression and unemployment over 25%, investors are heading for the exit, leaving the local banks, funded by the ECB, as the only material buyers of government debt. Voters throughout Europe are exercising their democratic rights and are voting against further austerity. Uncertainty is increasing and is unlikely to subside until Germany defines the 'new reality' for the eurozone – a move to a more federal Europe with no leavers, partial fragmentation or breakup. No one can be certain about the outcome. Forget market manipulation by international banks and hedge funds; Germany is the ultimate insider.  In Greece, having delivered a protest vote, perhaps the Greek voters will shift back on 17/6, allowing the formation of a government that will cooperate with the EU/ECB/IMF

5 comments:

Anonymous said...

The first steps in a major restructuring of Spain's fragile banking sector were put in place on Friday night as the board of Bankia – Spain's fourth biggest bank – asked the country's government for a rescue cash injection of €19bn (£15bn).

With Spanish banks now seen as a serious threat to the euro, taxpayers are likely to end up with 90% of the deeply troubled lender.

The new bailout – taxpayers already own 45% of Bankia – is expected to be just the first part of a growing bill for cleaning up a banking sector that has been refinancing loans on toxic real estate and comes amid signs that regions within Spain are unable to take the strain. The regional government of Catalonia called for financial help from the central government.

Bankia, which holds 10% of Spanish deposits, reassured savers their cash was safe. "Clients can be absolutely assured on safety of deposits," the bank said.

The cost of rescuing Bankia has been spiralling at an alarming rate ever since it was part-nationalised two weeks ago, when the state injected €4.5bn. Estimates at the time said it would need a further €5bn, though finance minister Luis de Guindos upped that to an additional €9bn earlier this week. On Friday night the bill hit €19bn. Just two weeks ago de Guindos said the entire Spanish banking sector would need only €15bn to cope with new provisions.

Anonymous said...

Estate agents in Spain say there is a new realism in the property market as officials finally face up to the issue of the banks' toxic debts.

Henri Dovermann, of Hedrealestate.com, an agency in Torrevieja, said: "Things are changing – we are being given whole developments to sell, and pressure is on to sell them fast."

In the past foreign buyers getting into financial difficulties were quietly switched to interest-only mortgages which slashed monthly repayments for three to four years, he said. Spaniards who have got into difficulties have been allowed to stay in their home paying a rent rather than making mortgage payments. Developers, he said, that were technically bankrupt, were propped up so the banks did not have to own up to their bad debts.

But, according to Dovermann, apartments on the coast that were making €200,000 at the top are now, he said, going for €70,000-€80,000, although there are signs that those prices may be reaching the bottom, with local buy-to-let landlords starting to invest. However, villas in the €500,000 bracket still have a long way to come down, he warned in the properties.

Bargain-hunting Scandinavians, Russians and even Ukrainians have replaced Britons as the key foreign buyers, often arriving with cash generated at home.


Ben Walker, of PropertyinSpain.net, said prices away from the Costas have fallen too. He said it is now possible to buy a flat in Barcelona for €170,000 – a price unseen in the city in years. "A friend who bought a place for €800,000 a few years ago can't get interest at €470,000. It looks as though things are going to get worse before they start getting better," he said.

Anonymous said...

And that is why the Greeks will reject you and your kind at the next election. Forcing the poor for the mistakes of the ruling class is unacceptable. The neo-liberal world is about to end and not a moment to soon.

Anonymous said...

The sun drenched scenery and olive oil drenched Greek bread will be the same before the Greeks joined the Euros or after they leave. We love holidaying in Greeks because Greeks are not Germen. They should not try to become Germen.

The Greeks will still have the friendships from their friends and the love from their family members, using Drachma instead of Euros will not change that either.

However, I guess it will be quite costly using Drachma to buy BMW or Mercedes, that I am sure is nothing the Greeks will lose their sleep over.

With one vote, the Greeks will be free in June, how I envy them.

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