Friday, June 21, 2013

Christine Lagarde, one of the most powerful women in the world as head of the International Monetary Fund, is facing acute embarrassment after a letter in which she urged former French President Nicolas Sarkozy to "use me" was found during a police raid on her Paris flat. An undated copy of the letter was found at Mrs Lagarde’s flat in Paris during a raid by police investigating a spiraling financial scandal surrounding payments to businessman Bernard Tapie.
"I'm on your side to serve you and serve your projects for France," she said in the letter.
"Use me during the time that suits you best and fits your action and your cast....If you decide to use me, I need you as guide and supporter: without guide, I might be ineffective, without support I might be implausible."
She signed off: “With my immense admiration, Christine L.”
She also claimed that she does not have "personal political ambitions" and remarked she does not want to become "an ambitious servant", referring to some members of Sarkozy's entourage.
The letter was leaked to French newspaper Le Monde, and its publication has caused acute embarrassment for the head of the IMF.
Ms Lagarde was finance minister during Mr Sarkozy's term as President, before stepping down to become managing director of the Washington-based IMF in 2011.
Her Paris flat was raided as part of an investigation into her handling of a 2008 compensation payment to a businessman supporter of ex-president Nicolas Sarkozy, her lawyer said.
Police are investigating claims that Lagarde, when French Finance Minister under Sarkozy, acted illegally in approving the €285m arbitration payout to Bernard Tapie. Ms Lagarde denies any wrongdoing.


Anonymous said...

Stock markets worldwide plummeted on Thursday, after Federal Reserve chairman Ben Bernanke rattled investors by signalling an end to America's drastic recession-busting policy of quantitative easing.

Share prices across the globe have surged over the past year, helped by an unprecedented injection of cheap money, with the Fed buying up $85bn (£55bn)-worth of bonds every month, and the Bank of Japan pledging "shock and awe" QE to revive a stagnant national economy.

But when Bernanke laid out a timetable on Wednesday night for cutting off the Fed's bond purchases by mid-2014, his words sparked a violent sell-off, which began in New York after European markets were closed, and ricocheted around the world on Thursday, from Tokyo to Istanbul and Oslo to Jakarta. In London, the 2.98% decline in the FTSE 100 index was the steepest since September 2011.

Elsewhere in Europe shares suffered their biggest one day fall in 19 months, with Spain's IBEX losing 2.9%, and the German, French and Italian markets all down by more than 3%. The Brazilian stock market fell by more than 3%, while the real hit a four-year low against the dollar.

The slide on Wall Street resumed when US markets reopened on Thursday. By lunchtime, every share in the Dow Jones industrial average index had fallen.

"We've had a market that for some years has been addicted to stimulus, and it's taken a brave man to say it has to end somewhere," said Neil Mellor, of BNY Mellon. He added that the true test of whether the US economy is strong enough to cope without QE will come when the prop of cheap money had been removed. "We don't know if there's a credible recovery there: we're peeling back the plaster."

Anonymous said...

The hedge funds went short a few weeks back. Lots of puts and lots of short sales in stocks. Now they promote news which works their positions. The Bill Flickenstiens of the world are now front and center on Financial News Media. The sky is falling, woe be us.. blah blah. When the tide goes out, all boats sit lower in their moorings, so why fight the tie. The world will be fed a constant diet of fear for the next six months, so get out and sit in cash.

Anonymous said...

In the real world, not the world of financial instruments, or the Casino economy of the City, almost everything I consume in the way of goods and services: electricity, gas, food, drink, water, housing, car, medical services, education, consumer goods, roads, railways, defence, and so on is actually produced by working people in the 90%. While I respect those in the 10% ,who as I did, organize the efficient production of goods and services, the parasites are not the 90% who produce the food, goods and services you consume. In main they are not out to rip anyone off; they just want fair pay for fair work in doing needed value add and some respect from their management.

And a sizeable proportion of the top 10%, let alone the top 1% add no value at all are tax evading free riders who have a massive entitlement complex as you I think suggest. I know many of them. Just go to say Palm Springs and find out how they made their money: a fair proportion via organized crime . Very few from adding real value.

And in the case of the US, and even to a limited extent the UK, manufacturing is surging back and outsourcing to China uneconomic for many products given its long supply chain, high wage inflation around 16% and ripping off of intellectual property if you make your products there. There is a great opportunity to redirect the economy and end the situation you somewhat pessimistically suggest.

Anonymous said...

Greece Faces Fresh Threats
Greece's shaky coalition government was hit with a double blow as talks over the shutdown of the state broadcasting company threatened to fracture the government and new worries over the financing of the bailout program emerged.

Anonymous said...

New Greek turmoil

Over in Greece, the Government's coalition could be about to lose one of its members.

Leaders from the small Democratic Left party are currently meeting to decide if it should leave PM Anotonis Samaras's coalition, angry at the decision to to shut down the state broadcaster ERT last week.

Samaras said

I want us to continue together as we started but I will move on either way.

Our aim is to conclude our effort to save the country, always with a four-year term in our sights. We hope for the Democratic Left's sopport.

The unrest - coupled with the market volitility and threats from the IMF - sent ten year Greek bond yields to their highest since late April. They were up 70 basis points to 11.41%.

Anonymous said...

ATHENS, June 21 (Reuters) - The smallest party in Greece's ruling coalition was set to pull out of the government on Friday after a row over the abrupt closure of the state broadcaster, leaving Prime Minister Antonis Samaras with a sharply reduced majority in parliament.

A majority of lawmakers from the Democratic Left party were in favour of pulling their ministers from Samaras's government as they held emergency talks, a senior party official said.

In a defiant address to Greeks after midnight, Samaras said he was ready to press ahead without the leftists.

"I want us to continue together as we started but I will move on either way," Samaras said in a televised statement following the collapse of three-party talks on the future of the ERT radio and television station.

Anonymous said...

"Our aim is to conclude our effort to save the country, always with a four-year term in our sights. We hope for the Democratic Left's support."

Party officials said Democratic Left leader Fotis Kouvelis had advised the party's 14 lawmakers to pull their two ministers and two deputy ministers out of the cabinet. At least one of the lawmakers was in favour of staying in government.

The row coincided with a new hitch in Greece's international bailout with the discovery of a potential funding shortfall due to the reluctance of some euro zone central banks to roll over their holdings of Greek government bonds.

Ten-year Greek government bond yields rose to their highest since late April, on course for their biggest daily rise since July 2012, while Greek stocks tumbled 4 percent.

Samaras's conservative New Democracy party and its Socialist PASOK ally jointly have 153 deputies, a majority of three in the country's 300-member parliament.

That means they could manage without the Democratic Left, but a departure of the party would be a major blow, making it tougher to pass unpopular reforms demanded by foreign lenders and emboldening the hard left opposition waiting in the wings.

"The government can't last for long in its new shape. The horse-trading will begin, there will be more crises, they won't be able to push reforms," said John Loulis, a political analyst.

"At some point we'll have early elections whose outcome can't be predicted."

Officials from all three parties ruled out snap elections for now, which would derail the bailout programme.

An ongoing inspection visit to Greece by the European Union and the International Monetary Fund needs to be completed as planned in July to avoid funding problems, the lenders said on Thursday. That may require new savings measures to plug the gap.

At least two independent lawmakers have suggested they would back Samaras's government, which came to power a year ago in an uneasy pro-bailout coalition aimed at ensuring Greece stayed in the euro zone after nearly going bankrupt.

The coalition has bickered over a range of issues from austerity policies to immigration, and lawmakers from Samaras's parties have accused Democratic Left of blocking public sector reforms needed to secure bailout funds.


The latest crisis began 10 days ago when Samaras abruptly yanked the ERT public radio and television station off air and fired its 2,600 workers, sparking an outcry from his two allies, unions and journalists.

Calling it a "sinful" and "wasteful" hotbed of political patronage, Samaras said the move was necessary to hit public sector layoff targets set by Greece's EU and IMF lenders.

After initially refusing to restart ERT, Samaras said on Thursday he had offered during talks with his allies to re-hire about 2,000 workers at a new broadcaster, a compromise accepted by PASOK but rejected by the Democratic Left.

"We will no longer have black screens on state TV channels but we are not going to return to the sinful regime," he said.

But Kouvelis insisted on behalf of Democratic Left that all workers be rehired, saying the issue at stake was far bigger than state television broadcasts.

"This issue is ... fundamentally an issue of democracy," said Kouvelis. "We are not responsible for the fact that no common ground was reached."

Evangelos Venizelos, leader of PASOK, the mainstream socialist party which has been decimated by Greece's debt crisis and would likely lose more ground in a new election, also called on Kouvelis to stay in the coalition.

"The situation for the country, the economy and its citizens is especially grave," said Venizelos. "We want the government to continue as a three-party government."

Anonymous said...

EU finance ministers back calls for French pension reform

EU finance ministers have put more pressure on France to revamp its pension system and cut labour costs in return for getting longer to shrink its budget deficit to within EU limits. According to Reuters:

The ministers backed the European Commission's detailed recommendations on how France should proceed with those reforms, despite Paris's instance that Brussels cannot "dictate" its policies.

Recommendations by the Commission last month on the details of the reforms, and especially the pension system, hit a raw nerve, with President Francois Hollande insisting France would go at its own pace.

EU finance ministers underscored the same message as the Commission on Friday, saying possible measures included increasing full-pension contribution periods and reviewing special schemes while avoiding an increase in employers' social contributions.

"The pension system will still face large deficits by 2020 and new policy measures are urgently needed to remedy the situation," finance ministers said in a statement.