Showing posts with label M.Press. Show all posts
Showing posts with label M.Press. Show all posts

Thursday, May 2, 2013

BAD NEWS FOR THE EUROPEANS ...

New Spanish tax laws affecting an estimated 200,000 British expats, have sparked panic, prompting some to leave the country or hand in their residence cards at town halls before today's deadline (30 April), fearing a Cyprus-style money grab.
Opponents, including Spanish politicians, have branded the new asset declaration law discriminatory, and fear an exodus of EU residents from the fragile economies of the coastal towns.  Russell Thomson, the former British Consul for Alicante, Spain, has led a petition to the EU, branding the law unlawful and discriminatory against non-Spanish residents.
The Spanish government requires that any resident with an overseas asset worth more than €50,000 and who lives in Spain at least six months (183 days) of the year is affected – and must declare what they own abroad.
Failure to declare or any errors in any of the 720 online forms will result in a penalty of €10,000 or more. As relatively few Spaniards have assets outside of Spain, those most affected are EU residents, the vast majority of which are British pensioners and retirees who have homes in the EU and, or, rely on EU pension funds and trusts for their income. They are required to declare EU bank account numbers, mortgages and other details, via professional intermediaries, in an online format, considered risky by many.
Any delays or errors will attract hefty penalties. No information has been given as to what will be done with the data. The new law was passed in November 2012, but the majority did not find out until several months ago via the local English-language newspapers.

Tuesday, April 23, 2013

The Eurozone is in recession because it is an exporting bloc and its' key markets (not least countries like Britain) are just not buying. You would hardly know it from reading the British press but the Eurozone as a whole still has a TRADE SURPLUS with the rest of the world. When was the last time that Britain ran a trade surplus? The 1980's? Yet this article (and hundreds like it) paint a picture of a frustrated UK economy, raring to go, just waiting for an enfeebled Eurozone to buck its ideas up. It’s back-to-front new-speak garbage - the Eurozone will be out of recession the moment its customer countries (like Britain) start buying again.
You can’t suddenly decide to have an export-led economy when a crisis hits and it’s clear that your financial and services sectors are a parasitic dud or that running an economy based on bumping house prices and buying from each other is a daft Ponzi scheme. Manufacturing reputations take decades to establish and Britain comprehensively trashed its reputation in the 60’s, 70’s and 80’s with crap products and poor leadership.
The entire world economy is in trouble right now and every country is hoping that ‘exporting’ will dig it out of a hole. That’s why Japan has just pledged to rubbish the value of its currency and invite inflation in through the front door. Britain trashed the value of the pound against the Euro as soon as the crisis hit, but as a net importer, it has only served to stoke the deficit.
There is a bigger picture here which has a lot to do with global energy availability (don't believe the recent 'revolutionary' shale hype, it's yet more PR garbage), landfill consumerism and environmental awareness. We can see that with even a relatively modest drop in demand, the world economy comes crashing to a halt. Yet for the sake of the environment, demand for all kinds of useless, pointless consumer crap needs to collapse still further…much, much further.
The ‘return to growth’ mantra is getting boring and showing up humanity as an uncreative, unimaginative race of lemmings. Actually, on second thoughts, I credit lemmings with more sense...
Dixon at Commerzbank says politicians will have to give up on the idea of a quick fix: "There's been a realization among policymakers that we're not going to get the typical V-shaped recovery, and the sooner we all get used to that, the better. You get seven fat years and then you get seven lean years, as the Bible says: it's not a new phenomenon."
Is that the Gideon's Bible?


Sunday, March 31, 2013

Where is the money going? It is being transferred onto the balance sheets of bankrupt banks from the taxpayers. Banks then use it hike their salaries repair their pension funds. Then the attempt to repair and cover up for their disastrous lending practices.
They starve the real economy of working capital. It was decided in the European looney union that every banks was too big to fail. Now they have decided to let whole countries go to the wall because their banking policies were another disaster. Hans Werner Sinn suddenly copped that the obligations of the top 6 debtor countries is over 8.3 trillion. The gloves are off and now they are in confiscatory mode not just hitting bond holders but large depositors who are going to have to flee very fast if they are to escape with their wealth.Make you laugh when you see Osborne, in the middle of all this, trying to buy the next election taking people for complete fools by handing them loans they would otherwise be able to afford. People should consider that act of treachery as tantamount to being handed a long length of rope with which to hang themselves and their families. Forget Osborne and his ilk, keep saving and you will get them for the price of your savings in due course.

Sunday, January 20, 2013

Gross domestic product (GDP) in the world's second-largest economy expanded 7.8pc last year in the face of weakness at home and in key overseas markets, the National Bureau of Statistics (NBS) announced on Friday.  But it grew 7.9pc in the final three months of 2012 as industrial production and retail sales growth strengthened at the end of the year, snapping seven straight quarters of slowing growth in a positive sign for the spluttering world economy.
The official statistics come as optimism grows among analysts that China will pick up steam in 2013 after two years of relative weakness, although they - and the government - caution that the improvement will not be dramatic. "The international economic environment remains complicated this year and... there are still unbalanced conflicts in the Chinese economy," NBS spokesman Ma Jiantang told reporters.  Still, Ma added: "We expect China's economy to continue to grow in a stable manner in 2013."  The problem is that the economic and social arrangements that have emerged in China on the back of a decade or so of double-digit growth don't work, ie are unsustainable when the growth rate subsides. This is what worries the hell out of the Chinese leadership. The risk is that Chinese society becomes unstable. It's really no different to us over here having got used to trend economic growth of, say, 2.0% - 3.0% pa trying to sustain our own massively indebted complex societies on annual growth rates of 1.0% - 1.5%. In essence, we're going bust....The fundamental issue in all of this is that politicians won't tell their societies that they/we are indeed going bust. By the same token, many/most folk don't fully appreciate that a society that has emerged on the back of 60 years of a trend of, say, 2.5% pa growth (as is the case in the UK) cannot survive in recognisable form for more than about 5 years, 10 years at the very most, without that society fracturing. China certainly has its problems; we certainly have ours. Our mutual predicament is that "infinite" economic growth predicated on "infinite" supplies of cheap energy, primarily cheap oil, is by definition unsustainable. .....We have entered interesting times.

Wednesday, January 9, 2013

Protests on the streets of Madrid on Monday highlighted the tensions inside the euro area after banner-waving protesters blamed Brussels, Berlin and the right of centre PP government of Mariano Rajoy for privatisations and cuts in healthcare spending.
Elga Bartsch, an analyst at Morgan Stanley, said she was anxious that Barroso and his colleagues in Brussels would fail to resolve long-running disputes over the EU's new institutions.
"The euro crisis seems contained for now. But we think it is not resolved for good. In addressing the fundamental flaws in the euro's institutional set-up, progress on banking union will be key. Assuming no crisis escalation, the euro area should re-emerge from recession and return to sub-par growth. Politics is the main risk," she said. Political deadlock, which has also characterised the reform agenda in Washington and Tokyo, could allow social unrest to grow and wreck any coherent reform plans, she said.
"An extended recession, diverging political positions and several elections create a difficult backdrop for in-depth reforms. We therefore expect only limited progress on an effective resolution of the crisis this year. We believe that progress on banking union, where preparations are under way for a Single Supervisory Mechanism (SSM) and where discussions continue on harmonising, and possibly pooling, bank resolution and deposit guarantee schemes, will be key."  Merkel faces a general election in the autumn against a resurgent Social Democratic party (SPD) while the Italians are expected to go to the polls next month in an election that could see a revived Silvio Berlusconi with enough votes to block reform measures.  Global stock markets, which have warmed to the message that the euro crisis is abating, drifted lower as some investors sought to cash in on last week's strong gains and worries grew of more political brinkmanship in Washington. Major indices surged last week after the US Congress passed a bill to avoid a "fiscal cliff" combination of government spending cuts and tax increases.
The deal, however, remains incomplete. Politicians will face another deadline in two months to agree on more spending cuts while a debate over the country's $16 trillion (£9.9tn) debt ceiling is also looming.  Concerns that the eurozone will suffer another year of economic downturn after entering recession last year were heightened by comments from OECD boss Angel Gurría who said the 17 member zone could continue contracting into 2014.
Britain's FTSE 100 fell 0.4% to 6064 while Germany's Dax was down over 0.7% to 7719.78. France's Cac-40 lost 0.8% to 3701.06.
Wall Street opened lower as well, with the Dow shedding 0.4% to 13,377.13 and the broader S&P 500 falling 0.4% to 1460.14.
The one bright spot for the markets was the banking sector, where stocks were up after global regulators eased new rules obliging lenders to set capital aside. The so-called Basel III rules are a set of new international standards to make sure banks protect themselves from the same trouble that caused the 2008 financial crash. On Sunday, the officials setting those rules delayed the date by which banks needed to have certain amounts of cash readily available.

Wednesday, October 10, 2012

I think that it is extremely important for Romania


Two months ago, this information appeared on the market that a group made up of over ten businesspeople, with names which allegedly would include Gabriel Popoviciu, Gruia Stoica or Dorel Umbrărescu, as well as the five SIFs, would acquire the Romanian division of ATE Bank.
"ATE Bank" Romania, recently acquired by "Piraeus Bank", will be partially bought by several Romanian investors and initially capitalized up to 60 million Euros, and in 2013 more investors will be co-opted, including the financial investment companies (SIFs), and its equity will reach 200 million Euros.
"The negotiations with < Piraeus > are at a very advanced stage. Not only the license of < ATE Bank > will be acquired, but part of the assets and liabilities of the bank as well. The completion of the deal is just a matter of days", sources close to the transaction said, quoted by Mediafax.
Based on the information available at this time, the new bank will be aimed exclusively at companies, particularly those operating in industry and agriculture.
According to the quoted sources, starting next year, the new bank will be led by former "Raiffeisen Bank" vice-president Marinel Burduja, who is also the man leading these negotiations....about month ago, Marinel Burduja said: "It is every Romanian banker's dream to lay the foundation for a Romanian owned bank, and this will happen once the time is right. I think that it is extremely important for Romanian capital to one day be present on the domestic market. This would also increase interest of foreign investors".

Thursday, October 4, 2012

Bad news...

BRUSSELS -- Unemployment across the 17 countries that use the euro remained at its record high rate of 11.4 percent in August renewing concerns that efforts to slash debts have sacrificed jobs.
While European leaders have calmed financial markets in recent months with promises to cut spending and build a tighter union, they haven't solved the eurozone's deep-rooted economic problems and the rising tide of joblessness. In August, 34,000 more people lost their jobs in the eurozone, according to data released Monday by the European statistics agency, Eurostat. The unemployment rate – the highest since the euro was created in 1999 – is the same as July's, which was revised up from 11.3. Europe's problems are dragging down the global economy. The region is the U.S.'s largest export customer and any fall-off in demand will hit American companies – as well as President Barack Obama's election prospects. The U.S.'s 8.1 percent unemployment rate is already making re-election an uphill battle for the president. The eurozone is in danger of slipping into recession this year after its economic output dropped 0.2 percent in the second quarter. Six countries in the eurozone – Greece, Spain, Italy, Cyprus, Malta and Portugal – are already in recession. Howard Archer, the chief economist for IHS Global Insight, said it will take some time before Europe's labor market rebounds. "There looks to be a very real danger that the eurozone unemployment rate could reach 12 percent in 2013," he said. He thinks that will be the high-water mark, hit somewhere around the end of next year. While austerity measures were introduced to ease the financial crisis by lowering public debt, they are also slowing down economies as government spending drops off. This is also pushing unemployment higher and threatening the continent with recession. Some experts urge leaders to instead loosen spending to encourage growth.

MEANWHILE - a dengerous development :
Turkey's military have struck targets inside Syria in response to a mortar bomb fired from Syrian territory which killed five Turkish civilians, Prime Minister Recep Tayyip Erdogan's office said in a statement.
The mortar fired from the Syrian side into the region of Akçakale sparked an urgent round of meetings with military chiefs and led the Turkish foreign minister, Ahmed Davagotlu, to formally complain to UN secretary general Ban Ki-moon.
"Our armed forces in the border region responded immediately to this abominable attack in line with their rules of engagement; targets were struck through artillery fire against places in Syria identified by radar," the statement from Erdogan said. "Turkey will never leave unanswered such kinds of provocation by the Syrian regime against our national security."
Nato said it was following developments and senior officials would meet urgently to discuss the issue. Turkey is a member state of the powerful body and earlier this year invoked a clause in the Nato treaty which called on it to respond to an earlier clash in which a Turkish jet was shot down from inside Syria.
The escalating border tensions came amid a day of grave violence inside Syria, with central Aleppo ravaged by three large explosions that killed at least 41 people and the capital Damascus again the scene of fierce clashes between loyalists and rebels and security sweeps by regime forces.
The Aleppo bombings were among the biggest seen in Syria in 18 months of uprising. Attackers, believed to have been dressed in military fatigues, are thought to have convinced regime soldiers stationed in Saadallah al-Jabiri Square to let them enter the secure zone. They are then thought to have detonated the bombs believed to have been packed into cars

Friday, September 21, 2012

Angela Merkel has declared that she and François Hollande will discuss how to strengthen the eurozone, when they meet on Saturday....Merkel also said that she and Hollande has a 'trusting' relationship, and would look for solutions that were "good for all of Europe." ....Meanwhile ...
Finland's prime minister, Jyrki Katainen, has questioned whether the European Central Bank's new bond-buying scheme will really help. Nearly two weeks after the ECB announced its Outright Monetary Transactions programme, to much fanfare, Katainen downplayed its significance, telling reporters that It has led to a positive situation, but I'm not fully sure if it will help in the long run....The prospect of OMT has helped ease borrowing costs for peripheral countries. However it can't kick in until a request for help is made... Katainen also argued that countries who are suffering from high yields must "sacrifice faster short-term growth" in favor of fixing their economies, bolstering competitiveness, and restoring confidence.GREECE CONFIRMS PLANS TO SELL OFF BUILDINGS OVERSEAS....We have confirmation from Greece that the Greek government is planning to sell off some of its prime overseas properties. As flagged up at 8.55am, this could include the Greek consul's home in West London.  The foreign ministry's spokesman Gregory Delavekouras has just confirmed that Greece will seek to sell a host of properties abroad but potential buyers should not hold their breath: the foreign ministry's finance office has to draw up a list of the assets first and investigate market conditions.  The good news is that the foreign ministry actually knows what the properties are - unlike the Greek state which has little idea of what it owns in a country that has long lacked a land registry.  "There is a decision to make use of properties that for various reasons are not being used," he told me. "But no decision has been made about specifics and I can't tell you which buildings would be available."  Since the outbreak of debt-burdened Greece's great economic crisis, diplomatic staff have been scaled back - the general consulate in London, home of a thriving Greek community, was one such victim -- as the government has tried to reign in expenditure.

Wednesday, September 19, 2012

There isn't a banking union, and no chance it will happen

As regards any idea of a Federal Europe is concerned it's interesting to see what's happening in Spain which is apparently in danger of fragmentation......"Hundreds of thousands of Catalans took to the streets of Barcelona  in an unprecedented show of mass support for autonomy from Madrid, blaming Spain’s economic crisis for dragging their wealthy region down.The central government said the crowd was 600,000 strong. Catalan police gave figures as high as 1.5 million...They held up banners and signs saying “No to the Fourth Reich”, “No to Europe”, “Independence Now!” and “Catalonia: the New European State”.  Catalans complain of paying billions of euros more in taxes than they receive back from Madrid, even as their regional government has been forced to fire workers and cut services."  In general people don't like the idea of supporting other populations, even within their own country. Asking nations to do it within a federation simply won't work.  There isn't a banking union, and no chance it will happen. They're talking about common banking regulation and Germany has said 'Nein' to Draghi's suggestion.....Reuters - Schäuble said that, despite the current crisis in the Euro zone, the Euro will ultimately emerge as the common currency of the entire European Union. He said he “respects” Britain’s decision to keep the pound, but insisted that the survival and eventual stabilisation of the Euro will convince non-members to join the currency club. “This may happen more quickly than some people in the British Isles currently believe,” he added....I say: Yet another example of the EU apparatchiks trying to gain control of the UK's financial structure by stealth....(and the other non Euro countries) - but the UK is the big target here.   Come on Great Britain! ... cut the head off this serpent and tell the EU to bugger off ... you'll be doing yourselves a great favor, not to mention the rest of Europe...Does anyone in their right mind think trade with the UK will stop if they leave the EU?   The vast majority of UK exports come here to the USA, Germany second, then France. A vast majority of UK imports come from Germany, USA second, then China, Netherlands, Norway, and France.  50 million quid a day dumped into this black hole the EU, and for what?!  Will Germany stop selling to the UK if they drop out of the EU?
Hell no! it's a major part of their economy.

Tuesday, August 7, 2012

The biggest myth about current economic problems is that historical precedents have much value for understanding them. The next biggest myth is that the problems primarily have to do with difficulties in the financial system. The other big myth is that they are part of some short tem business cycle. The reality is that the post World War II era is winding down in a period of unprecedented change. Several different threads of that change that are difficult to factor are the primary agents creating global economic problems. Certainly the role of automation in ushering in post industrial society is one big factor. So is the global competition from the arrival of most of the world's population into the industrial age. Another factor is less certain, but perhaps more basic. That is the possibility that endless economic growth is not really a human priority. Japan may be the more realistic model of human behavior that is satisfied with some level of reasonable economic well being....After the goldrush: between the 1970s and now there has been almost no growth in real wages, whilst the growth in returns on capital have been almost exponential. People felt their standard of living was rising because of almost unlimited credit. That credit has gone. This has left industries, both manufacturing and service, that are in effect crack addicts. Nobody will borrow personally again until growth returns.. People need to be paid more. That way they'll spend all that money on the wonderful things the rich get richer by making and doing. Companies can either strip costs until their markets are dead, or invest in their wet skills through higher pay....
Of course we need to fix the causes of this crisis, but that is going to do bugger all in the short-medium term to fix symptoms. "The attempt to solve a crisis caused by credit with even more credit has, predictably enough, proved a failure. It has been a bit like the motorist desperately pumping air into a tyre with a slow puncture: it works for a while, but eventually the tyre goes flat again."
Nonsense. A fallacy in place of a reasoned argument.  'Debt caused the problem so debt can't solve it' is based on the fallacy that all debt is equally bad. The problem is not the amount of debt but who holds it - governments with their own currencies paying record low levels of interest vs private individuals and businesses who are depressing the economy by all de-leveraging at once. The former is absolutely sustainable at much higher levels than at present - and the use of this debt to produce stimulus the only obvious way out of this crisis that doesn't take years and condemn millions to the scrapheap. (Of course, if you're unlucky enough to be under the Euro, you are doubly screwed: not only is this path not an option - as the ECB won't back your debt sufficiently to make it sustainable - you can't even devalue.)

Thursday, June 28, 2012

Euro crisis -- Markus Huber at ETX Capital said that tight trading in European equities was likely to continue for at least the first half of today's trading session ahead of the anxiously awaited EU summit:
The problem with the EU meeting is that although expectations are very low for a positive outcome investors are increasingly running out of patience which is putting additional pressure on politicians. Unfortunately it is not all about Germany just agreeing to Eurobonds and everything will be fine but also about important and necessary reforms which need to be implemented by all countries in order to avoid a much more severe crisis in the future. The question is if politicians indeed have the necessary time available which will be needed in order to negotiate and implement these reforms, however any progress being made towards a more stable and financially viable Euro-zone would certainly be welcomed by investors and bring periphery yields down to more sustainable levels in the long run.... Spanish bond yields last week jumped to the dangerously-high level of 7pc and the country yesterday saw its borrowing costs rise sharply in an auction of short-term debt. But today, the yield on Spain's 10-year bond is down 4.7 basis points to 6.7pc.
It turns out that Mariano Rajoy has been speaking in the Spanish parliament this morning, saying that he will ask ask other European Union leaders at a summit this week to use existing EU instruments to stabilise financial markets. He said:
I will propose measures to stabilise financial markets, using the instruments at our disposal right now. The most urgent issue is the one of financing. We can't keep funding ourselves for a long time at the prices we're currently funding ourselves.

Tuesday, June 26, 2012

The need to redenominate contracts from euro into new currencies.

“...Europe a nest of squabbling nations. Even the continent’s democratic achievements seem under threat, as dire economic conditions create a favorable environment for political extremism. Who could have seen such a thing coming? Well, the answer is that lots of economists could and should have seen it coming, and some did...” Well if they did, their silence was f**king deafening---I, and many others didn’t need to take in the econo-babble of so-called experts – common sense told you it wouldn’t work – if you were lacking that, then the example of the Soviet Union rubbed your nose in the dog shit that is collectivism. Over countless centuries, the people of Europe divided themselves naturally into what became nation states. There was some squabbling and not a little bloodshed along the way – most of this was caused by politicians (in those days they called themselves Kings and Priests)  ... Left to their own devices, these nations created their own languages, culture, sexual deviations, food preferences and currencies – they traded with each other, and by and large, the market was self-regulating..And then, some twats invented the European f**king Union...

The rest, as they say, is bollocks – sorry I mean historyThe most realistic scenario for euro break-up....
is that Greece, or one or more of the weaker peripheral countries, will leave the eurozone, introduce a new currency which then falls sharply, and default on a large part of their government debt. Preparations for exit must be made in secret and acted on straightaway. Just before departure, some form of capital controls will be essential, including temporary closure of banks and ATMs. With no time to print new notes, euro notes and coins should continue to be used for small transactions. The new currency should be introduced at a one-for-one rate with the euro. But it will soon depreciate by something like 30-50% giving a boost to Greece's international competitiveness. The government should redenominate its debt in the new national currency and make clear its intention to renegotiate the terms of this debt. They must announce robust measures to keep inflation in check but, with them, markets may well lend to the exiting country again the medium term. Importantly, the exiting country has an opportunity to break free from a crippling debt strait jacket....
A break-up of the eurozone implies a need to redenominate contracts from euro into new currencies. This is relevant for bonds, loans, deposits and other financial instruments. This process is complicated by various legal constraints. Different financial instruments are governed by different laws, and many euro denominated instruments are governed by foreign laws, especially English laws. Eurozone governments cannot change laws of foreign countries and they cannot easily redenominate foreign law assets. Since there are tens of trillions of euro-denominated contracts in existence under foreign law this is a very large potential problem. This plan stresses the importance of facilitating an orderly currency redenomination process in all break-up scenarios. This includes the need for an ECU-2 currency basket to settle euro claims in a full-blown break-up, where the euro ceases to exist. The ECU-2 would constitute a bridge between the euro (which no longer exists in a full blown break-up) and the new national currencies. The ECU-2 concept would thereby help avoid arbitrary currency conversions and prolonged legal battles about redenomination. In the absence of an efficient process for redenomination, a full-blown break-up of the eurozone is likely to be devastatingly disruptive and could see a complete freeze of the global financial system.
ATHENS NOW --- Greece's finance minister, Vassilis Rapanos, resigned on Monday after being ill in hospital for several days. The prime minister's office said that Mr Rapanos had sent a letter of resignation to the prime minister, Antonis Samaras, who had accepted it. The country's new coalition government, comprising Democratic Left, Pasok and New Democracy, was formed last week following months of political turmoil and two inconclusive elections.----- Now we know the truth, Samaras couldn't or didn't want to see what he was getting himself into and Rapanos fainted the moment he did. Great stalwart team to implement what their Greek countrymen and women elected them for; putting an end to Teutonic austerity while remaining in the EMU. Both gents must know this combination is not on Frau Merkel's menu. I'd give them a month, about the time it will take Greeks to realize their election manifesto was a fraud !!!!!
The developments so far today:
- Spain saw its short-term debt costs almost triple in an auction this morning as its request for a €100bn rescue package for the country's banks failed to stem market fears.
- A report compiled by Barroso, Van Rompuy, Draghi and Juncker ahead of this week's eurozone summit presents a plan for rescuing the eurozone including creating a closer fiscal and banking union that would turn Brussels into a finance ministry for all eurozone members. Under the plan, the European Union could be handed powers to change countries' budgets if they breach debt and deficit rules.
- Finance chiefs of the eurozone's four biggest economies - France, Germany, Italy and Spain - will hold last-minute talks in Paris on Tuesday evening to try to narrow differences on the currency area's future
- Mervyn King has warned that the outlook for the UK economy has worsened during recent weeks due to the eurozone turmoil; that came as public sector net borrowing rose much more than expected

Thursday, April 19, 2012

Portugal's prime minister has admitted that his country may require more help. Writing in the Financial Times today, Pedro Passos Coelho said there were "no guarantees", but insisted that he will deliver on economic reforms. Full details and reaction shortly....Elsewhere... the International Monetary Fund's spring meeting continues in Washington. Today we get the Global Financial Stability Report.
In the UK, the latest unemployment data is released this morning, along with minutes from the last meeting of the Bank of England's monetary policy committee....City traders reckon European stock markets will open calmly after yesterday's rally.The Bank of England was split last month over whether to leave its quantitative easing programme unchanged, or pump even more electronic money into the economy. Minutes from the last meeting were just released, showing that David Miles wanted to increase the QE budget by another £25bn to £350bn. The rest of the committee voted to leave the asset purchase programme unchanged. According to the minutes, Miles took a 'finely balanced' decision that another stimulus measure was needed....Adam Posen, though, the long-time dove on the MPC, did not call for more QE. If anyone would want an extra dose, he seemed the most likely.
GERMANY - Schröder's labor market reforms remain controversial today in Germany. They included the combining of unemployment and welfare benefits, drastic cuts for the long-term unemployed, the deregulation of temporary work and the creation of mini-jobs, essentially limited part-time work that has no effect on welfare payments. Critics say the changes meant primarily that the unemployed were now expected to accept poorly paid jobs. Some 41 million people have a job in Germany today -- the highest employment figure ever, which could provide Schröder with some delayed satisfaction. But the flip side of the coin is that 23 percent of them work in the low-wage sector, and that real wages have in fact declined by 3 percent in the last 11 years.  By contrast, no one in the southern European countries was asked to make any sacrifices in the years leading up to the crisis. The boom on borrowed funds led to wage increases, but it also ensured that rigid labor market laws remained unchanged.
A de facto ban on dismissals persisted in southern Europe until recently, usually benefiting the individual, but not society as a whole. The unpleasant truth that employers only create jobs if they are also permitted to lay off workers in times of crisis was ignored.
Italy is a case in point. Even today, unlimited full-time employment and protection against dismissal are practically sacrosanct in Italy. A number of governments on the left and the right have already tried to tackle Italy's big taboo, a deregulation of the labor market, but have always ended up yielding to public opinion. Protection against dismissal is codified in Article 18 of the labor code, a symbol in the struggle between employer and unions for years.

Monday, April 2, 2012

European finance ministers urged a prompt decision on ramping up the International Monetary Fund's crisis-fighting resources, a day after they agreed to commit more funds to their own so-called firewall. After two days of talks on efforts to enhance their response to the sovereign-debt crisis, finance ministers from the 27 member nations of the European Union and central bank governors said that despite signs of stability and easing tensions in the financial markets there shouldn't be complacency. Danish economy minister Margrethe Vestager, who hosted the talks, said on Saturday that it is crucial that a global agreement is reached on boosting IMF's resources. "It's important to ensure the IMF has sufficient resources to play its systemic role in the global economy," Ms. Vestager told a news conference at the end of the talks. "Yesterday's decision…is very important in this respect. What we are hoping for is an agreement in Washington." On Friday, euro-zone finance ministers agreed to expand the currency bloc's capacity for crisis lending to €700 billion ($934 billion) by combining new funds into a permanent rescue mechanism with existing bailout loans. But funds available for new loans will be capped at €500 billion after July 2013, when a temporary bailout mechanism will expire. The combined lending ceiling of €700 billion includes €200 billion in existing loans to Greece, Portugal and Ireland. Source : WSJ

Saturday, March 31, 2012

The Copenhagen meeting degenerated into acrimony and some chaos when the Austrian finance minister, Maria Fekter, upstaged the eurozone leaders by first announcing an €800bn firewall. The deal agreed on Friday conformed to German prescriptions for a minimalist bailout fund, a recipe that the European commission in advance described as inadequate to the challenges confronting the euro. Ministers endeavored to impress the bond markets, the Americans, and the Chinese, trumpeting the agreement as worth "more than a trillion dollars" in the hope that this will press the big IMF donors into doubling the monetary fund's reserves to a similar figure next month. "We are now in a strong position for discussion on the IMF in April. It is a good signal," said the French finance minister, Francois Baroin. "All together the euro area is mobilising an overall firewall of approximately €800 bn, more than $1tn," said a Eurogroup statement. Jena-Claude Juncker, the veteran Luxembourg prime minister who has been chairing the eurogroup for eight years and whose term expires in June, threw a wobbly and abruptly cancelled a media conference at which he was to unveil the decisions. The new money comes in the form of the European Stability Mechanism (ESM), the permanent eurozone bailout kitty and embryonic European Monetary Fund which starts in July. The ESM's launch has already been brought forward and ministers on Friday also agreed to speed up the process of paid-in capital to get the fund fully operational within two years. Its lending capacity was capped at €500bn, as has long been planned. Friday's agreement represented yet another win in the long-running euro saga for Berlin in dictating the terms of the eurozone's response to the crisis. France and others had argued for a trillion-euro firewall. Germany insisted the permanent fund should not exceed €500bn and on Monday conceded the €200bn of current bailouts could run concurrently. "The euro area made substantial progress over the past 18 months to address the challenges stemming from the sovereign debt crisis," the ministers declared. "Important improvements were made to improve the governance of the euro area … robust firewalls have been established. This comprehensive strategy has paid off." I may have missed a statement somewhere, but I'm not aware of either Barroso or Rehn saying any such thing - the calls for an (even) bigger firewall, at €1 trillion or so, were from the head of the OECD and the French Prime Minister Barroin, I think. That's not the way the German press reported the concession, about ESM and EFSF to run concurrently, that Germany made on Monday. Lots of talk about "climb-downs" and "bowing to unprecedented international pressure" and so on.
Mircea Halaciuga, Esq.

Thursday, March 29, 2012

Italian Prime Minister Mario Monti on Wednesday said the root of Europe's debt woes lay partly in the irresponsible parenting of Germany and France during the bloc's infancy. Monti told reporters in Tokyo that because the eurozone's two largest players had not abided by fiscal rules, they had set a bad example for the rest of the continent.
"The story goes back to 2003 (and) the still almost infant life of the euro," Monti said. "It was in fact Germany and France that were loose concerning the public deficits and debts." The widely-respected technocrat, who replaced billionaire media magnate Silvio Berlusconi in November as head of the eurozone's third largest economy, said the flouting of rules allowing for an annual budget deficit of no more than three percent of GDP was the issue. He said despite recommendations, a meeting of ministers from European Union governments had decided not to punish France and Germany for going beyond the deficit limit. "So the two largest countries in the eurozone had the (deficit) with complicity of Italy, which was then chairing under the rotation system the council of prime ministers of European Union. "Of course if the father and mother of the eurozone are violating the rules, you could not expect... (countries such as) Greece to be compliant."  Monti, who was speaking during a visit to Japan, was a member of the European Commission in the early 2000s when it recommended sanctions be levied against countries that were running over-the-top deficits. The European Council -- comprising elected politicians -- vetoed the move. Monti's visit to Japan comes as Europe continues to stagger under the weight of runaway sovereign debt, with Greece at the forefront. The eurozone is under pressure to boost the firepower of its debt rescue fund, with the 34-nation OECD on Tuesday pressing for a safety net of at least 1.0 trillion euros ($1.33 trillion).

Sunday, March 25, 2012

It's very simple but few seem to learn - don't use a bank.

Credit card companies are using "shameful practices" to maximise profits from customers on interest-free balance transfer deals, the managing director of a bank has claimed. Brian Cole, of Capital One in the UK, the bank that first introduced zero-interest balance transfers to Britain in the 90s, says: "There's a lot of practice in the [banking] marketplace that is shameful, and credit card companies are not immune. [Balance transfer] customers think they're going to progress in getting out of debt, and get some relief from interest payments. But make a mistake and you will end up making money for your credit card company." Cole stopped Capital One making interest-free balance transfers available to mainstream customers in 2008. He says: "When we first introduced the interest-free balance transfer it was a very different product to now. The interest-free period lasted six months and it was a loyalty based play: we hoped the customer would stay at the end of the interest-free period, but if they didn't, we didn't lose lots of cash." Borrowers loved the idea of interest-free credit, and soon banks were vying for business by extending the interest-free period. The longer it became, the more difficult it was to make money, says Cole: "The pressure for issuers to find that revenue intensified, and on the back of that came sharp practices." Andrew Hagger of product comparison website MoneyNet says he was surprised that credit card companies not only continued offering zero-interest balance transfers after the credit crunch, but extended the length of the deals. In September 2007 there were 86 deals on offer with an average interest-free term of 9.14 months. Now there are 74, but the average term has increased to 12.64 months and Barclaycard and the Halifax are both offering 22-month deals. "It's surprising to see the balance transfer market still apparently thriving in this post-crunch era – however, while the number of deals remains high, the volume of people being declined is likely to have increased markedly as borrowers focus on consumers with a squeaky clean credit history. Offering long-term 0% balance transfer deals is a great way for card providers to get free advertising via the best buy tables," says Hagger. So how do banks make money out of what seems to be such a bargain for those who qualify? Banks lose money during the interest-free period, as they will be paying interest on the money lent to you. But they can recoup some of that with the balance transfer fee. Cole says: "If you're transferring £10,000 with a 2% balance transfer fee, that's costing you £200. That's quite a sizeable amount, but it still doesn't feel much to the customer because it doesn't come directly out of their pocket – it's added on to the credit balance.".....It's very simple but few seem to learn - don't use a bank. You want a better life - don't use banks. This is your choice. Credit Card use fuels the fractional reserve banking system which is the root of all the debt issues.

Saturday, March 24, 2012

Post for ....3/25/2012

"To me, we are still in a crisis," Mr Trichet said. "It is not just the privilege of Europe to still be in a crisis." Starting 35 years ago with Latin America and Asia, the global economy remains in period of structural adaptation, he aid, with major western economies currently the focus. Mr Trichet : a mix of globalization and the instant transmission of information to investors made possible by the internet may have made a permanent change to the financial system. Without defining it, Mr Trichet suggested it may present a new "tail risk" to policymakers. "That is something to do with behavioural contagion that is not captured by traditional modelling." In a visit to Harvard University earlier this week, Mr Trichet insisted that "I don't regret anything " about the ECB's policy while he was leading it during the crisis. The ECB was widely criticised for raising interest rates last April. The increase has since been reversed.I would have thought that technological innovation and emerging markets should have boosted the real economy in the last decades. But unfortunately the real economy is infested with financial parasites, and the structural adaption he talks about is the transformation of the world into a latin american society - some mega-rich corrupt parasites, the rest starving and treated like domestic animals.

Thursday, March 15, 2012

The Brussels top brass insist that we've entered a quiet patch. Yesterday, EC president Jose Manuel Barroso called for an end to "constant drama" over the euru. We'll see what we can do....Yes, it's a quiet patch. But it ain't going to last long. Greece has an awful lot of activities it's supposed to complete by end of march 2012. Now, call me cynical, but I don't think ministers minds are going to be on ticking off the action items for the Troika, with elections in late april / early may, and most of the electorate up for grabs.,,,,So come early april, the loud grumbling from Troika and various EZ finance ministers will resume.....A bit more on Evangelos Venizelos's resignation, which broke in the last few minutes. The finance minister made clear that he would resign by Monday, Helena Smith confirms. And here's a quote from the Pasok leader in waiting: I cannot continue to have a double role. As soon as I assume duties as the leader of the biggest party in parliament, I must dedicate myself to those duties. Helena adds that a poll in the satirical weekly To Pontiki, to be published tomorrow, shows that nine parties are expected to win seats in the next parliament -- a multi-party presence not seen since the 1950's in Greece. Speaking of double roles, I'm reminded that Mario Monti rebuffed the idea that he might chair the eurogroup (made up of eurozone finance ministers). Monti is a contender because he is Italy's economy minister, as well as being prime minister. The former European Commissioner has quite the CV, as financial reporter Fabrizio Goria of Linkiesta pointed out on Twitter last night.


Angela Merkel's constant mantra in recent months has been austerity, austerity, austerity. But apparently the German chancellor hasn't been quite as strict when it comes to her own country's budget. SPIEGEL reports this week that the German government didn't reach even half of its planned savings in the federal budget. Only 42 percent of the spending cuts named by Merkel's coalition government, comprised of the conservative Christian Democrats and the business-friendly Free Democratic Party, were actually implemented. Calculations made by the influential Cologne Institute for Economic Research indicate that only €4.7 billion ($6.16 billion) of the €11.2 billion in austerity measures stipulated by the savings package actually took shape in 2011. The government is also falling behind on its targets for this year. Of the originally planned €19.1 billion in savings, less than half has been implemented. For the coming year, the concrete measures that have been agreed on so far cover just one-third of the announced amount of savings. Merkel's cabinet is hoping to agree to the basic foundations of the 2013 federal budget in March.

Tuesday, March 13, 2012

Whatever you believe, the latest phase of the rescue should at least allow Greece to repay a €14.4bn bond due in just over a week's time

Unfortunately the restructuring merely signalled the end of the first act. Yes, the €206bn bond exchange - the largest in history - is a step forward with investors agreeing to take a significant haircut. The International Swaps and Derivatives Association belatedly announced that this was a credit event meaning holders of Credit Default Swaps (insurance against this happening) would be paid some $3.2bn. However, the restructuring is only likely to be the first of many.German Finance Minister Wolfgang Schaeuble has said Greece is a "completely unique" event and praised Spain for making "great progress". He stated that "Spain is not the next Greece". He added that the second Greek bailout is to be signed this week and that his goal is a financial transaction tax at EU27 level "The deal has wiped some €105bn off Greece's €350bn debt mountain and secured a next round of financial support. Eurozone finance ministers have already agreed to lend €35bn upon completion of the exchange and may make a further €95bn available. "But the aim of reducing the country debt-to-GDP ratio from 160pc to 120pc by 2020 still looks an impossible task without further write-offs; Greece's economy contracted by 7.5pc in the last quarter of 2011. This comes at a time when the government is pushing through further austerity measures, including spending cuts equal of 1.5pc of output, meaning more job losses. The country may well be in the midst of one of the longest recessions in modern history.German Finance Minister Wolfgang Schaeuble has said Greece is a "completely unique" event and praised Spain for making "great progress". He stated that "Spain is not the next Greece" ....Portugal has already been sacrificed by the eurocrats, I see, as their talk now jumps to "Spain is not Greece"... They're already trying to draw up a defensive line at Spain. Yeah, that'll work - especially after the financial world will have by then already broken two eurozone countries, and is then focusing all its attention on Spain.-----It's going to be a long, hot summer I'm afraid !!