"Citigroup said it now expects Spain's economy to contract by 2.2pc this year and another 2pc in 2014, pushing unemployment to 28pc.The effects of the slump will overpower any gains from fiscal austerity. The bank said public debt will surge from 88pc to 110pc of GDP in just two years." "Premier Mariano Rajoy has so far resisted a full rescue from the EU bail-out fund (ESM), fearing a political backlash and loss of sovereignty. Yet the ECB cannot purchase Spanish debt until Madrid pulls the trigger and signs a "memorandum"." "Julian Callow from Barclays said the ECB’s Mario Draghi is “itching” to buy Club Med bonds, seeing this as a way of targeting monetary stimulus on the countries in trouble - without an causing inflationary spillover in Germany - but he is paralyses until Madrid relents." Ah, when it all collapses the EU socializes private debt and gets to appoint another country's leader. Now I see what the strategy is. Meanwhile, Ireland has now a debt to GDP ratio of 120% and rising are now predictably making noises such as, forgive us our debt or else the best boy in the class is going native! Put "precautionary" loans in place as we will not be able to exit the bailout without a second bailout i.e. "precautionary loans" or if you prefer a "bailout extension" call it what you like, just make sure the money is there for us! The government are back in talks to extend their sweet heart deal Croke Park deal with the 23 public sector unions that represent government workers, so no surprises. They will be requiring additional funding to finance the Labor trade union government nexus. Labor are in coalition. As for Spain they will get their bailout from the ESM with a vicious MOU attached. They will underestimate (deliberately) how much they require, the further austerity will cause even greater unemployment and they will be on the road to Greece and the EU will be on the road to either break up or an admission that democracy has been overthrown and that you cannot rule a democratic EU. The whole project has been derailed because it was never possible to unite countries of such diverse cultures and work ethics. France wants to be socialist, therefore it needs Germany which is capitalist to pay up! Greece does not collect taxes so it wants them collected elsewhere and passed on to them otherwise they might have to pull out and it might be a systemic risk, Cyprus needs a bailout they too could be "systemic" and what about all that Russian money? Sure Russia might give a dig out? It is a tower of Babel ... I wonder whether most people in more stable Northern European countries realize just what exposure they are going to have to these bailouts via the ESM (for that is what the EU are now touting as the Spanish rescue vehicle)The ESM can make a capital call any time it likes on it's EZ members at 7 days notice and it's officers are immune from prosecution in any EU jurisdiction.. and it's records inviolable. So all those EZ member states that thought they were relatively safe are going to end up providing whatever funds a bunch of people with no accountability whatsoever demand of them. Budgetary independence and fiscal prudence gone in a flash and they never even noticed....Well, the next round of protests/riots ought to be interesting. Maybe Draghi, LaGarde, Merkel, Barroso, Van Rumpy and Rajoy could sit down with the hungry masses to explain how the worst is behind them.

SPAIN ...Merkel wins , the german boot upon the spanish neck...

Austerity is already harsh in what has traditionally been the continent's most euro-enthusiastic country - Spain. Unemployment, now affecting one in four workers, is set to continue well into next year. In the Spanish capital, a largely conservative place, the mood is of resignation rather than revolution. There will be no Athens-style protests in Madrid – or not soon, although the ongoing battles between balaclava-wearing miners and police in northern Asturias are proof that anger is spilling over elsewhere. Photographers seeking dramatic pictures on protest days travel to Barcelona, where radical left wingers see police persecution in a wave of recent arrests, while police say they are picking up those behind street violence during strikes. With the rescue money in Spain's "bailout lite" looking likely to go straight to former savings banks, the roots of its banking problem lie fully exposed. A decade-long housing boom, fueled by cheap credit thanks to low interest rates needed by Germany, has left the banks stuffed with toxic real estate. It is clear : "Europe needs fiscal integration with a fiscal authority and banking integration, a banking union with eurobonds, a banking supervisor and a European guaranteed deposit fund," Rajoy said last week. A bank bailout does not provide that. "The future of the euro is going to play out in the next few weeks in Spain and Italy," finance minister Luis de Guindos has warned. The problem is that Spain has already introduced harsh austerity measures, with official unemployment at around 25% and over 50% for those under 25. If they push that any further social explosion awaits. The further problem is that within this system there is no alternative to a very bad decision. Either you bail out the banks and shift the debt around the central banks in order to put off the awful day or you let them go to the wall and then watch the whole economic system collapse around our ears right now.

The trouble is that the orthodoxy of the last 50 years means that the IMF, World Bank, European Bank and almost every university economics department are run by Economists brought up on a paradigm that has failed spectacularly....Monetarism, Thatcherism, Hayek, Friedman, the Chicago School and the Austrian School ... all bollocks. We need a new paradigm and young economists with new ideas. Otherwise we really are screwed.

"There are none more hopelessly enslaved, than those that believe they are free."

I wonder if Van Rompuy would give me a well paid position in the "EU government".... We see Greeks are talking of a local currency, I said over a year ago this was an option, not just for Greece but us all, a local currency that cant be traded outside the country would keep some form of money circulating and provide the basics, it would also allow the Greeks to keep the bulk of their savings in euros if governments allowed the local currency to pay taxes then it will take off on its own, it will mean that local currencies will find their own level against the main currency, put as you have the option to hold money in a main currency account that to will be self limiting, now i suggested this ages ago as a way to keep people in work and in their homes and i said that it would come sooner or later because people always have the need to trade so always find a token for that....one could almost get rid of welfare and pensions cost if you paid them in a local currency....We had to watch Barroso, and Rumpoy , "Twins of Evil" talking about the Greek election, how Greece must be allowed "Democracy" said Barroso. Democracy, what Democracy?Democracy When the Brussels parliament Says so, is Not Democracy! The Greek's were denied an election a few months ago, so another Goldman Sacks puppet could be Un-Democratically installed! It's a Takeover! The poor people in Greece, and Spain, Italy, and Britain are next. Dictator's don't know where their boundaries end. They have none. They want It ALL.The slavery laws are in place. People are being enslaved by Debt. "There are none more hopelessly enslaved, than those that believe they are free." Wellll...as for me, I've got a great idea which will be a "courageous leap of political imagination" ... An EU VAT on top of all the outrageous VAT's already burdening the citizens of Europe's individual nation states. Of course start it off at a mere 5% or so....and then when the lemmings simmer down and forget about it, you can jack it up to 15 or 20% ...

And another warning: the recapitalisation of Greece's banks may now need to be raised to €50bn. The previous estimate, I believe, was €40bn.

On Monday night (feb. 21st. 2012), the eurogroup debated three options to reduce the Greek debt burden without boosting the funds. If the ECB waived its profits on its Greek bonds, experts say €15bn could be wiped off the country's debts. Politicians also discussed reducing eurozone interest rates or investigating whether national central banks could participate in a debt swap, though with costs to taxpayers these two are more controversial. Officials also reopened the tortuous private bondholder talks to see if Greece's private creditors would take a bigger than 50pc haircut on €200bn-worth of bonds..... Meanwhile, Economists have since grown more sanguine about prospects, largely as a result of the "Draghi bazooka" – the European Central Bank's emergency funding scheme for lenders named after ECB chief Mario Draghi. The ECB pumped €489bn into the banking system in December through its three-year funding operation, and is expected to do as much again on February 29. The move is widely considered to have staved off a banking crisis, preventing a catastrophic repeat of the credit crunch of 2008 and 2009. Within the OECD area, there was a wide divergence of performance. Early signs that the US will lead the world back to economic health were evident in the 0.7pc growth the world's largest economy posted in the final quarter. Europe pulled the OECD down, though, with the European Union as a whole contracting by 0.3pc. Overall, the 0.1pc growth was a sharp decline from 0.6pc in the previous thre months and the lowest since the area came out of recession in 2009

Whatever the outcome of this weekend's on - off, on again summit, it seems unlikely the 17 euro countries will get what's needed, given Germany's entrenched reluctance. As we predicted after the July 21 summit, Europe's leaders continue to fall behind the problem they're trying to solve. That's a constantly evolving debt crisis that gets bigger by the day. It doesn't stop and wait, its morbid momentum reflected in markets since early summer. What we'll see revealed in Brussels this weekend is that the euro zone is not just a flawed currency system, but it is also a flawed political system incapable of being led and incapable of making the difficult, often painful decisions required. Could it, for instance, ever impose the sort of fiscal discipline being attempted in the UK or the bank overcapitalization already complete here? I doubt it. That's not to be complacent about our own parlous position. We may be implementing fiscal and monetary policy decisions, but are they working? This crisis, whether elsewhere or in the euro zone, is like a virus mutating against a vaccine. Europe isn't using enough medicine while rest may have already administered what they can without any meaningful effect. The patient remains ill and the drugs aren't working.Markets slide on reports of deadlock between France and Germany in talks over how to expand the eurozone bailout fund, making a resolution by this weekend's crucial summit increasingly unlikely. Silvio Berlusconi has named Ignazio Visco as the new head of the Bank of Italy. He wasn't one of the favourites in the running for the job, which won't be an easy one at the moment. He's the existing deputy director general of the bank. Visco will take over from Mario Draghi, who is taking over from Jean-Claude Trichet as head of the European Central Bank.

Italian households and businesses are sitting of the biggest stockpiles of private cash in Europe. There are three reasons for this. The huge Italian black market means that many transactions go unrecorded. The arrival of the euro means that unrecorded transactions have spread into the rest of Europe and especially eastern Europe. The peculiar nature of Italy's economy. Not only does it have a massive agricultural sector and enormous tourist industry, but it also has a vast industrial base in the north made up substantially of small firms who intertrade. It is the intertrading, much of it unrecorded, between all these enterprises, industrial, agricultural and touristic, both at home and abroad, which generates stockpiles of private cash.
Add to that the high Italian savings ratio and you have the biggest deposits of private cash in Europe, all denomitaed in euros so it keeps its value. The Italian govt on the other, hand, takes all the nation's debt upon itself. Bereft of potential tax receipts, it issues more and more bonds to fund its activities. Now these bonds are being supported by Italy's eurozone partners in order to protect the euro.
Effectively Italy's public debt is being paid off by foreigners, while the Italians get to keep their mountains of private money.

Penny Market, the biggest discount chain in Romania, held by German group Rewe, posted a 4.3% sales rise last year, to over 380 million euros, according to ZF calculations based on data in the annual report of the German group. Penny Market's results round up the list of trade market leaders (Metro Cash&Carry, Carrefour - hypermarkets and Mega Image - supermarkets), which mentioned the performance of the Romanian market in their reports. France's Carrefour, the biggest player in modern retail, saw its Romanian business slip 0.44% last year, while the sales performance of Metro Cash&Carry, the biggest player in modern trade, "was markedly weaker," according to data in the group's report. On the other hand, Penny Market and Mega Image (the most extensive supermarket chain) reported sales increases, though with the help of new stores.
Romanian sales of Penny Market fared the best in the region, considering that the German discount division fell 1.2% last year and the Czech division went up 3.8%. (Z.F.)