Showing posts with label Merkel. Show all posts
Showing posts with label Merkel. Show all posts

Saturday, December 5, 2015

Confidence among shoppers in Germany has dipped according to a survey, amid worries over Europe's largest economy.  The forward-looking GfK consumer sentiment indicator fell to 9.3 points for December from 9.4 points in the previous month.  The score is the lowest since February, but was above analysts' predictions.   Confidence in the economy among German consumers dropped for the sixth consecutive month, although the pace reduced.  Concern about the labour market led the way, according to the survey of 2,000 shoppers, with 69% of all those surveyed expecting an increase in unemployment due to the influx of asylum seekers this year.   This month's survey was conducted before the attacks in Paris on 13 November.  In contrast to general sentiment, optimism for making a big purchase improved, with the sub-index for willingness to buy climbing by three points to 48.9.
GfK analyst Rolf Buerkl said he was optimistic for this year's Christmas sales, as customers might be tempted to shop online if they are concerned for public safety.  "It is possible that a few people here and there will avoid going to the Christmas market or visiting a shopping mall," Mr Buerkl said.

Monday, November 16, 2015

In speeches and interviews, Juncker has always claimed that Luxembourg has in no way enriched itself "at the expense of its neighboring countries," and especially not by encouraging tax avoidance. In everyday political life, however, Juncker's people fought for precisely the kinds of corporate advantages their boss used such rich language to denounce. In order to attract as much corporate money as possible into the country, his officials played around with tax models like "hybrid financial instruments" and, especially, so-called "patent boxes." Introduced in order to spur technological advancement, finance policy experts in Belgium, the Netherlands and Luxembourg led the pack in transforming tax advantages into an instrument allowing corporations to steer proceeds from patents or licenses to their Benelux subsidiaries in order to pay lower taxes there. Under the system, national subsidiaries of large corporations in countries with higher corporate tax rates would pay large patent and licensing fees to subsidiaries in lower tax countries. The system ensured that money got pumped into the government coffers of the Benelux countries, but it also put other EU countries at a disadvantage, in addition to the majority of small- and middle-sized businesses for whom such preferential treatment wouldn't even be considered.  Representatives of the other EU member states knew very well what was going on. The German representative in the Working Group on Tax Questions, for example, filed a cable to Berlin in March 2013 in which he noted there had been repeated "doubts about the harmlessness" of a few of the tax models, "mostly having to do with the license box rules of LUX and NDL," the abbreviations being references to Luxembourg and the Netherlands.  But nothing was done about it for years. Each time the Working Group on Tax Questions proposed changes, Luxembourg, Belgium and the Netherlands warded them off successfully. It's no wonder, either, given that representatives of the Benelux countries regularly coordinated their decisions in advance at their own meetings... It's not just European Commission President Juncker whose past as the leader of the tax-haven Luxembourg is catching up to him. Another important man at the top of an EU institution also now has some uncomfortable questions to answer: Dutch Finance Minister Jeroen Dijsselbloem. Even after ascending to his current position as head of the Euro Group, his country continued to block every call for change.  Sven Giegold, 45, has spent years trying to shed light on the darkness of EU corporate taxation arrangements. A member of the European Parliament with the Green Party, he's used to resistance. But what he experienced when he requested access to meeting transcripts from the secretive tax groups was an altogether new experience.  First, the European Council stonewalled and then the European Commission delivered documents in which important sections had been redacted. Despite all the blacked out passages, Giegold was forbidden from bringing his mobile phone into the room in one of the Commission's buildings in Brussels where he was allowed to view a few of the documents. Officials allowed him to take notes using a pencil and paper, but they didn't let him take his notes with him when he left the building.   The documents seen by SPIEGEL reveal that what EU agencies have long been denying, is in fact mass-scale cheating with the help of the tax law. Internal EU documents show how companies took advantage of patent boxes to simply sign their licenses, copyrights, patents or marketing rights over to their subsidiaries in Luxembourg or The Hague, allowing them to cash in on sweetheart corporate tax deals in those countries. It didn't matter whether the research had actually taken place in those nations, either. 

Thursday, October 1, 2015

Useless, useless, useless - Germans have "Dachau and such" ready !!!!

Blowing hot air = UK Prime Minister David Cameron spoke of a comprehensive approach; Viktor Orban, the normally fiery Hungarian leader told me everyone had to co-operate and Angela Merkel insisted, "What we cannot say is Europe cannot deal with this. I say it again and again, we WILL do this!"
EU leaders do actually agree on a number of key issues:
  • Cracking down on people smuggling rings
  • Getting asylum claims processed faster, so failed claimants can be deported more rapidly
  • The need to secure Europe's external borders
  • Boosting aid to the sprawling, squalid refugee camps around Syria, so fewer people feel tempted to come to Europe
  • Stepping up attempts to try to end the war in Syria
But common resolve is one thing. Effective, immediate action is quite another. And some of the leaders' goals are more realistic than others. At a press conference after the summit, the German chancellor spoke of the need to talk to Syria's President Bashar al-Assad as part of a new European push for peace in his country. The conflict has now reached Europe, and Germany in particular. It is the European country of choice for Syrian refugees. In the past, Germany has joined other Western leaders in calling for President Assad to step aside. So these talks would be delicate and controversial, they will not happen overnight and their chances of success are limited, to say the least. Then there's the question of building what is often dubbed Fortress Europe - or what Donald Tusk described last night as "closing Europe's doors and windows".

Monday, September 21, 2015

“The real pr0blem Despite the incessant jawboning to the contrary by Fed and central bank mouthpieces - who under an honest system would be charged with currency manipulation - there is zero possibility of a rate rise. You can't taper a Ponzi scheme, and central bankers are not about to give up their most effective tools for asset-stripping the 99% and transferring their wealth to the .1% in the financial sector. The City of London and Wall Street must keep luring in new suckers and new money, and since the supply of Greater Fools is running out and the retail investor herd is starting to get spooked, the Fed has no option but to maintain ZIRP. Moreover, it will need to print new trillions in QE4/helicopter money and shower them on its TBTF banker cohorts to keep the Ponzi levitated long enough to lure in the last of the retail bag-holders before the pump & dump. So on Thursday Yellen will announce continued ZIRP and foreshadow a new round of "stimulus." No other outcome is possible. The con game is becoming more brazen even as people are finally waking up and rejecting the crony capitalist status quo, as seen by the meteoric rise of anti-establishment political contenders in the US and UK. problem isn’t what the Fed may do, but the ultimately unavoidable consequences of what the Fed has already done. The cost of reckless Fed-induced yield seeking will likely be felt first in the financial markets as  previous paper gains evaporate, while defaults on excessive low-quality covenant-lite credit will emerge over the course of the economic cycle, and the  impact of investment will be to limit productivity and economic growth over the longer run. This is all rather inevitable except in the eyes of those who haven’t watched and memorized a dozen adaptations of the same movie…my view is that activist Fed policy is both ineffective and reckless (and the historical data bears this out), and that the Federal Reserve has pushed the financial markets to a precipice from which no gentle retreat is ultimately likely. Similar precipices, such as 1929 and 2000, and even lesser precipices like 1906, 1937, 1973 and 2007 have always had unfortunate endings... A quarter-point hike will not cause anything. The causes are already baked in the cake. A rate hike may
be a trigger with respect to timing, but that’s all. History suggests we should place our attention on valuations and market internals in any event.”

Wednesday, March 11, 2015

EU - Observer -- Greek prime minister Alexis Tsipras has put the painful question of German war reparations back on the table, saying his country was never paid for the infrastructural damage inflicted in World War II.  In a highly emotive speech before parliament on Tuesday (10 March), peppered with references to Nazism, the Third Reich, and the Holocaust, Tsipras said Berlin had an "unfulfilled moral, as well as material historic debt".  He acknowledged that Germany paid 115 million deutschmarks (€59 million) to Greece in 1960, but said this went only to individual victims of Nazis and did not compensate for the "destruction" of the country.   "This agreement, however, provided compensation only for the victims of the Nazis in Greece and not for the damages inflicted on the country itself," he said.  "And of course it did not relate either to the obligatory occupational loan or the claims for damages due to war crimes as a consequence of the nearly total destruction of the country’s infrastructure and the economy’s disintegration during the war and the occupation".  He accused Berlin, which has long said it has honored its war obligations, of using "legal technicalities" to get around paying.  "They see the mote in their brother's eye but not the beam in their own," he added, quoting a passage from the Bible, and speaking of a "moralistic tone" in Europe in an apparent allusion to Berlin's statements on Greece.  He also said that a parliament committee on "claiming the German debts owed to Greece" is to be reconstituted and upgraded and that his government will offer "political and legal assistance" so that its efforts "bear fruit". The motion to re-establish the committee was then backed unanimously by parliament late on Tuesday.  For his part, Nikos Paraskevopoulos, the Greek justice minister took the rhetoric a stage further on Wednesday by saying that German property in Greece could be seized as compensation.  He said he is "ready to approve" a Greek Supreme Court ruling in 2000, which ordered Germany to pay around €28 million to the relatives of 218 civilians in the village of Distomo, massacred by Nazi forces in 1944. The ruling said that assets such as property could be seized as compensation.  "The law states that the minister must give the order for the Supreme Court ruling to be carried out ... I am ready to give that order," he told Antenna TV, reports AFP.  The Greek statements come after weeks of uneasy relations between Berlin and Athens since the Greek far-left/nationalist coalition government came to power in late January.  Tsipras' first move as PM was to vist a memorial honoring  Greek resistance fighters killed by the Nazis in 1944 - a symbolic gesture that did not go unnoticed in Berlin.  Since then, the Greek government has sought to make good on its election promises to restructure its debt and to end EU-imposed austerity.  But tough negotiations with its creditors have seen it win only small concessions, such as renaming the hated Troika (representing its three international creditors) as "the institutions".   Contrary to what it wanted, the government was forced to extend an existing bailout - by four months - and is currently trying to reach a deal on which reforms it needs to carry out to get the next tranche of cash.  Germany is at the forefront of those saying Athens must stick to its prior commitments on reforms. Rhetoric between the two countries has turned nasty on several occasions since Athens' first bailout in 2010, with Greece - wracked by high unemployment and low growth - viewing Germany as too single-minded on austerity and with Germany seeing Greece as slow to undertake major changes.  The current talk from Athens is much harder than anything before, however.  It comes amid criticism of Tsipras by his own, hardline backbenchers, who expect him to deliver more of his campaign pledges.   Tsipras' defense minister Panos Kammenos, from the nationalist party in the coalition, also recently threatened to "flood" Europe with migrants if Greece does not get a debt deal.  "If they [the Eurogroup, a body which oversees eurozone governance] strike us, we will strike them. We will give to migrants from everywhere the documents they need to travel in the Schengen area [the EU's passport free zone], so that the human wave could go straight to Berlin."

Sunday, December 15, 2013

The head of the venerable Deutsche Bank reprimanded like a schoolboy... UUUU

German Finance Minister Wolfgang Schäuble recently gave a German banker the most brutal lesson to date -- delivered in a series of apparently incidental comments. At a press conference last Thursday afternoon, Schäuble launched into one of his notorious lectures on sound fiscal policy in times of crisis.  But then, finally, he had an opportunity to air his frustration over the incorrigible banker caste. A journalist asked Schäuble about his response to recent comments by Deutsche Bank co-CEO Jürgen Fitschen. The previous day, Fitschen had accused Schäuble of irresponsibility and populism, because the finance minister had insinuated that the banks were still bypassing financial industry regulations.

 "I don't know if Herr Fitschen has understood what I mean," Schäuble complacently replied. He also noted that he had only recently reminded the bank executive that the financial crisis had not been caused by politicians. Then, as if he hadn't already sufficiently lambasted one of the country's leading bankers, Schäuble added: "If Herr Fitschen carefully reviews his statement, he will undoubtedly come to the conclusion that he is incorrect in this matter." And Fitschen has undeniably adopted the wrong tone, he said.   The head of the venerable Deutsche Bank reprimanded like a schoolboy? Ouch.  

Schäuble's slap in the face is a warning to Deutsche Bank. The minister's portfolio includes Germany's Federal Financial Supervisory Authority (BaFin). These days, the Bonn-based financial watchdog is conducting far more than the usual number of investigations into Germany's largest bank, and the consequences of these probes -- for the bank and its co-CEOs Fitschen and Anshu Jain -- are ultimately a political issue.

Friday, October 18, 2013

Chancellor Angela Merkel's conservatives are meeting the center-left Social Democrats (SPD) for a second round of preliminary talks on Monday afternoon and plan to decide by the end of the week whether to start formal coalition talks with them or the Greens.  A grand coalition between the conservatives and the SPD -- Merkel's preferred option because it would give her comfortable majorities in both houses of parliament -- is looking increasingly likely.  So far at least, progress has been easier than anticipated. The two parties are finding scope for compromises on a range of domestic policy issues including the introduction of a minimum wage, tax policy and the energy revolution.  The allocation of cabinet posts could, however, prove contentious. The SPD wants the post of finance minister, a key position in tackling the euro crisis which is currently occupied by veteran Wolfgang Schäuble of Merkel's Christian Democratic Union (CDU), but Merkel doesn't want to hand it over. The SPD also wants the labor portfolio, which would require Labor Minister Ursula von der Leyen to find another post. Rumor has it that she would like to be foreign minister, but sources have told SPIEGEL that Merkel may offer her the Health Ministry instead, a less attractive position.  There is speculation that Schäuble could become Foreign Minister and that SPD member Jörg Asmussen, currently on the European Central Bank's executive board, could replace him as finance minister.   Another difficult issue is likely to be dual citizenship. Merkel's CDU and its Bavarian sister party, the Christian Social Union (CSU), oppose it and the current law requires people born in Germany to foreign parents to choose by the age of 23 whether they want to be German or foreign citizens. The SPD wants to amend the law and allow permanent dual citizenship.  Merkel said last week she wants to know which party she will be entering formal coalition talks with by Oct. 22, when the newly elected Bundestag, Germany's lower house of parliament, assembles for its first session.  That doesn't mean a new government will be in place by that date, though. It means she wants to be sure who her likely coalition partner is going to be. 'New Government by Mid-November'  Schäuble told reporters that a new government could be formed quite quickly. "I think we'll have a new government by around the middle of November," he said Saturday on the sidelines of international financial talks in Washington. Merkel, who led her conservatives to their best general election result since the heady days of reunification in 1990, is just five seats short of an absolute majority.  Some observers said in the immediate aftermath of the election that the coalition talks could drag on to the end of the year or even into January. Germany may have a government a lot sooner than that.

Saturday, September 21, 2013

Merkel does put German interest above European interest. But that's not the whole story. She also puts German corporate interest above German public interest. And most of all, her own interest above anything else.
I understand people in Germany being upset about everyone in Europe wanting their tax money. But that's only half the truth. The other half is, Germany profits from investors taking back their money from other European countries, and now investing it in the much safer and quite profitable Germany. Our interest rates in Germany have reached an all-time low in the crisis, so German economy profits from this crisis. And we still live from exports, and so from the EU. German economic interest is: try to keep up the status quo as long as possible, and that is what Merkel does.
Problem is, in my opinion, that will be disastrous for Europe. Polemics aside, the south europeans have a point. There's need for reforms, there's need for savings, but there also needs to be a perspective. You can't just close schools, hospitals, stop investments in infrastructure and deny people their healthcare for nothing in return but a lack of perspective. Just fire everyone from public service and don't offer any alternative for them. You can't just sacrifice the future of countries and societies for nothing but the need to save money.
It almost seems like Britain was right in its Euro-scepticicm. And everyone who was afraid of a too strong Germany after its reunion. That doesn't mean we should split up. In present and future, we simply have no choice but to work together in Europe. We're all in the same boat. If Britain wasn't in the European boat, few would care about it anymore. UKIP is wrong, British interest has to be in a strong Europe, not in a lone Britain.

Our unpopular former chancellor Gerhard Schröder made the reforms that led to present German economic strength. He risked his chancellorship, against his own party, to put through inevitable reforms. He turned the inert giant into an economic powerhouse. Merkel hardly does anything, the economic success she rests on was caused by her predecessor who took great risks. Risks that Merkel would never take. She's not the risky type. Schröder made reforms that were in parts flawed, but his own party, the SPD, is willing to work with and against the flaws today. Merkel is nothing like that. Her own influence is everything, and everything else plays second role, be it Germany, be it Europe.
Chancellor Schröder would have forced similar reforms on those countries, but he would have tried to convince them. Something like "it's going to be hard, but we're in the same boat, and we need to work together to get out of the crisis with greater strength". Even if it would damage his reputation in Germany. Merkel doesn't care about that. She simply says: "it's inevitable, deal with it. German savings are secure, I don't care a lot about the rest of Europe". She only cares about her position. And her position doesn't depend on Greece, Italy, Spain, or Britain. It only depends on Germans wanting to keep their money, and German economy, which is, again, profiting from the Euro crisis.
I am convinced that will destroy Europe, and I will vote for her adversary this month, but I have very little hope in a regime change. My hope is for a large coalition in which the SPD will have a little bit of influence on her Europe policy. A Europe policy, that is, contrary to her claims, careless and heartless.I find the idea that a German chancellor is responsible for solving the European economic crisis quite ridiculous. It is not in her powers to do so as she is no monarch but the democratically elected head of the German government. To all those moaning about her putting Germany's interest first - well that's actually her job description. That means, that she will, quite free of any ideological leaning decide hand in hand with the German industry what should be pursued for Eurozone. Be the next chancellor Steinbrueck or Merkel, nothing will change that.

Wednesday, September 11, 2013

GREECE - During the first seven months of 2013, the surplus reached €1.1bn (£921m), he said, adding this would enable the country to negotiate with its creditors, the European Union (EU) and the International Monetary Fund (IMF).
Greece has received massive rescue funding, tied to tough conditions, from the EU and the IMF to help it overcome a debt crisis which threatened the eurozone.
However, the a resulting structural reforms, including an overhaul of its public sector and its tax system, have proved unpopular.
On Saturday Samaras promised no further austerity measures would be introduced, saying the economy "cannot take" them any more.
"Debt levels will be manageable, Greece has respected its commitments... now, the creditors must also respect what was agreed," he added.
Protests in Thessaloniki, the country's second largest city, were organised by the private and public sector trade unions, GSEE and Adedy, who called for "fighting austerity and poverty".
Police said about 4,500 extra officers had been sent to the city to avert rioting during the four-hour demonstration.
The EU and the IMF recently praised the Greek government's progress in turning the economy around, but bemoaned delays to a programme of privatisation and reform, and the fact that the country will likely need further aid in 2014 and 2015 amounting to around €10bn.

Wednesday, August 28, 2013

When a politician is planning a campaign lie, he has to be able to rely on one thing: No one in his own party must come out with the truth prematurely. The Social Democrats adhered to this rule in the 1976 election, when then Chancellor Helmut Schmidt promised higher pensions and then announced sharp cuts after the election. And the center-right Christian Democratic Union (CDU) also closed ranks in 1990, the year of German reunification, when then Chancellor Helmut Kohl appeared on market squares throughout the country to announce that taxes would not be raised. It was a promise that, as we now know, was followed by the strongest postwar increase in taxes and other charges. Current Chancellor Angela Merkel was still an up-and-coming member of the eastern German CDU and Kohl's eager pupil, so it came as no surprise that she urged her party's executive committee to stay the course on Greece at all costs last week. "There is too much talk in Europe about debt haircuts," the chancellor told her party's executive committee at a meeting last Monday.  But after SPIEGEL had reported two weeks ago that the Bundesbank, Germany's central bank, had new doubts about Greece's bailout program, the debate over additional aid packages or debt forgiveness was reignited. This would be extremely dangerous, the chancellor told CDU MPs, as it would create "uncertainty in the markets." In other words, she was saying, it was critical to maintain discipline in the debate.
Less than 24 hours later, Finance Minister Wolfgang Schäuble appeared on a campaign stage in Ahrensburg, a town in the northern state of Schleswig-Holstein, and said: "There will have to be another (bailout) program in Greece."...So there it was.

Friday, August 9, 2013

The five countries that implemented Merkel's anti-crisis recipes and cut spending massively in areas such as health and education, have been in or close to recession since 2008. Unemployment tops 27pc n Spain and Greece.   Their leaders, however, disagree with the public view. Confident that Merkel will tone down her budget cutting mantra and accept more burden-sharing within the euro zone, they are positioning themselves as close allies of Europe's main paymaster.  "I think we will see a different Mrs. Merkel after the elections," said Cypriot President Nicos Anastasiades, echoing a view shared by most of his fellow southern European leaders.  In Greece, where crunch time for plugging a budget gap with a third bailout of the country starts at the end of September, hopes are high that debt issues can finally be sorted out after the German election, maybe through a new debt write-off.  In Italy and Portugal, policymakers believe Merkel will accept a shift from the emphasis on unpopular austerity to a more balanced model for managing the economic crisis if she wins.  In Spain, where banks were rescued with 42 billion euros of European money, expectations are that the chancellor will lean towards common euro zone debt issuance and accept a full-fledged banking union, unlocking credit in the recession-hit nation.  While market turmoil has eased in the euro zone and last year's massive capital outflows from southern Europe to safe-haven Germany have started to reverse, the underlying problems are far from resolved.  The correction pace of imbalances in the European Central Bank's Target 2 cross-border payments system, a key indicator of financial stress within the single currency zone used by ECB President Mario Draghi to monitor monetary policy, remains slow. Continued German support will be key to keep the fever down. Senior government sources in southern European countries insist Merkel has signaled flexibility on these issues in recent private talks. But she has given no public indication of such a U-turn and many in Berlin caution it is highly unlikely to happen, warning against wishful thinking.

Saturday, August 3, 2013

Silvio Berlusconi hausse le ton. L'ancien président du Conseil, qui ne se résout pas à son nouveau statut de repris de justice, exige la grâce présidentielle et menace de faire tomber le gouvernement si cette dernière lui était refusée. Ses émissaires ont proposé au président Giorgio Napolitano un plan pour sortir de l'impasse. Le Cavaliere se démet immédiatement de ses fonctions au Sénat, évitant ainsi au pays l'écueil d'un vote de la chambre haute sur la déchéance de son mandat. En effet, ce vote, prévu au mois de septembre, mettrait sérieusement en danger la cohésion de la majorité Parti démocrate (PD) et Peuple de la liberté (PDL) qui soutient le gouvernement d'Enrico Letta.    En échange du sacrifice de Silvio Berlusconi sur l'autel de la stabilité gouvernementale, Giorgio Napolitano s'engage à lui accorder au cours de l'automne la grâce, qui entre dans les prérogatives du président de la République. Berlusconi ne serait plus éligible, mais libre. Il ne pourrait pas être candidat de la droite à la présidence du Conseil, mais continuerait à dicter la ligne politique à son parti.
Un scénario improbable pour plusieurs raisons. La Constitution précise que la grâce ne peut être accordée qu'à des sujets "repentis" des délits qu'ils ont commis. Depuis sa condamnation, Berlusconi ne cesse de clamer qu'il est victime d'une magistrature politisée et n'a manifesté aucun repentir. En outre, la grâce est exclue pour les sujets impliqués dans d'autres procès que celui pour lequel ils ont été condamnés de façon définitive.   Or, le Cavaliere a encore une longue ardoise à solder avec la justice de son pays : prostitution de mineur (condamnation à sept ans en première instance), non-respect du secret de l'instruction (condamnation à un an en première instance) et une instruction en cours pour la corruption d'un parlementaire destinée à faire tomber le gouvernement Prodi. Enfin, si Giorgio Napolitano accordait rapidement la grâce au mépris de la Constitution, il délégitimerait la sentence de la Cour de cassation, instance suprême de la justice italienne, et se poserait comme une sorte de quatrième niveau de justice.  Qu'importe, Silvio Berlusconi veut passer en force. Les présidents des groupes parlementaires du Peuple de la liberté au Sénat et à la Chambre ont demandé audience dimanche au président de la République pour présenter officiellement la requête. Le PDL a appelé ses militants à manifester également dimanche - en plein mois d'août ! - à Rome. Les télévisions de l'empire audiovisuel du Cavaliere décrivent un pays plongeant dans l'abîme. Et Sandro Bondi, ancien coordinateur de Forza Italia, avertit : "Si le leader du plus grand parti italien ne retrouve pas l'intégralité de tous ses droits politiques, le pays risque la guerre civile." La grâce... ou le chaos.

Monday, July 8, 2013

...the German model is really a "beggar thy neighbor"

Schröder's economic "reforms" entailed gutting social security and unemployment benefits and eliminating the minimum wage in order to force young/unemployed Germans to go to work for one euro an hour (literally). Has this worked? Only sort of. True, the dramatic reduction of labor costs has been one of the keys to Germany's phenomenal export-oriented growth over the last decade. Combined with the artificial deprecation brought about by the adoption of the Euro, it's helped Germany maintain an extremely favorable balance of trade vis à vis other members of the Eurozone. What this means is that Germany's "success" has been built by selling more to their neighbors than their neighbors sell to them. (Internal demand on the other hand has flat lined; the German "model" is entirely predicated on exports.) Here's the thing though: it's impossible for all Eurozone members to maintain a trade surplus towards each-other; for one country to maintain such a surplus, another must have a deficit. Calls for the Mediterranean states to emulate the German model are thus deeply paradoxical; were the PIGS to run such a surplus, who would eat the deficit?
In other words, the German model is really a "beggar thy neighbor" policy, one which literally requires the impoverishment of the Mediterranean states. For ten years this kind of worked: Germany sold more to Spain et al than it purchased, then recycled those profits back to the periphery in the form of lines of credit, allowing those countries to purchase even more goods yielding greater profits, etc, etc. (Rinse and repeat.) Eventually the imbalance grew too deep for anyone to ignore and hey presto we had the start of the Eurozone crisis.
So, with shades of Plato's pharmakon, what the author is here calling for is to treat Europe with more of the poison that caused it's illness in the first place. What he identifies as Germany's "successful example" is actually the source of the crisis, not its resolution. A real solution would require the Germans to adopt a new policy based on internal demand, increasing domestic purchasing power by (for example) establishing a minimum wage and strengthening the working classes... Yes, the German mercantilist strategy cannot be maintained indefinitely and they do need to switch from an export driven economic strategy to one more balanced by domestic demand. And yes, the internal disparities and inconsistencies within the Eurozone make escape much more difficult (if not impossible) for the Southern periphery, including possibly France also.
But there are two further problems which are really at the genesis of the Eurozone's economic difficulties - one of which is shared with the UK. First, most of Europe (including the UK) has been running consistent deficits (trade and budget), and while one can argue about when and how and how fast these deficits are reversed, ultimately they will need to be for sustainability. It was not the economic disparities of the Eurozone per se which created their current difficulties, but the lack of flexibility to respond to the credit crisis. The other major problem is the sclerotic nature of a lot of Eurozone economies (eg France, Spain), with myriad obstacles and costs put in the way of enterprise and real job creation, and the disincentives to employment and inward investment.

Tuesday, July 2, 2013

Experts "travaille" sur les "eurobonds" à Strasbourg - we are screwed !

Les "eurobonds" reviennent. La Commission européenne a annoncé mardi 2 juillet à Strasbourg la formation d'un groupe d'experts pour évaluer les avantages et les risques d'une mutualisation partielle de la dette au sein de la zone euro, vue comme une première étape vers la mise en place d'obligations communes (euro-obligations).
La Commission avait décidé de mettre en place ce groupe d'experts en contrepartie d'un renforcement de la discipline budgétaire décidée au printemps, et sous la pression du Parlement européen. Onze experts font partie de ce groupe, dont l'économiste française Agnès Benassy. Ce groupe devait initialement présenter ses conclusions d'ici mars 2014, mais aucune indication calendaire n'a été fournie mardi.
Le rôle de ce groupe est d'analyser les avantages et obstacles à la mise en place d'un fonds d'amortissement, qui permettrait de mutualiser une partie de la dette de la zone euro, ou la mise en place d'"eurobills", des titres de dette communs à court terme.
PRESSION DE BERLIN - Le sujet est particulièrement délicat car l'Allemagne, qui emprunte à très bas coût sur le marché de la dette, refuse toute forme de mutualisation de la celle-ci au sein de la zone euro. Le sujet a été maintes fois évoqué, et toujours repoussé à plus tard, sous la pression de Berlin.
Pendant la partie la plus aiguë de la crise, de nombreux responsables politiques et économistes plaidaient pour la mise en place d'euro-obligations, afin de faire baisser la pression sur les pays les plus fragiles de la zone euro, dont les taux d'emprunt atteignaient des niveaux insupportables.
"Les membres de ce groupe d'experts, dirigé par Mme Gertrude Tumpel-Gugerell, ancienne membre du directoire de la Banque centrale européenne, possèdent une expertise impressionnante et ont des parcours variés. Je leur fais confiance pour donner des conseils précieux sur ces questions très complexes d'un point de vue politique, économique et juridique", a affirmé le président de la Commission, José Manuel Barroso, qui s'exprimait devant le Parlement européen.

Monday, June 24, 2013

The Shibor overnight lending rate in Shanghai spiked violently to 29pc, with wild moves in seven-day and one-month money. The central bank refused to intervene to calm markets, apparently determined to purge excess from the credit system.
China Securities Journal, a voice of the regulators, said: “We cannot use a fast money supply growth as in the past, or even faster, to promote economic growth.”
“I am extremely concerned about China,” said Lars Christensen from Danske Bank. “They are overdoing it and are on the verge of making the same mistake as the Fed and the European Central Bank before the Lehman crisis in 2008, when they failed to see how much the economy was slowing.” Mr Christensen said the world now risks a “perfect storm” as the Fed prepares to taper its bond purchases (QE) at the same time as tightening the spigot of worldwide dollar liquidity.
The twin effects are cascading through emerging markets, pummelling commodity exporters such as Brazil, South Africa and Russia that sell to China, but also tripping up Turkey, Ukraine, Hungary and others that rely on external funding. “Everything is being hit indiscriminately,” said Neil Shearing from Capital Economics.  The Turkish lira and the Indian rupee both fell to record lows as investors pencilled in Fed tapering for September. “The party is over,” said Ceros Securities in Istanbul.
Fed chairman Ben Bernanke has brought forward his QE exit by lifting the unemployment target from 6.5pc to 7pc. He dismissed the looming threat of deflation as a “transitory” effect.
Brazil’s real weakened to a four-year low of 2.26 against the dollar, down 15pc since April, while the cost of credit default swaps gauging risk in Indonesia and Vietnam jumped more than 40 points. The Kremlin said Russian companies may have to delay bond issues, but denied immediate credit stress.
The latest country moving onto the radar screen is Poland, where construction crashed 28pc in May, “Poland is suddenly stalling, something we haven’t seen in almost two decades. The central bank has been way too hawkish,” said Bartosz Pawlowski from BNP Paribas.
Benoit Anne from Societe Generale said the “second leg” of the emerging market sell-off is just starting, warning that there is a “long way” to go before investors wake up to the full impact of Fed tightening. Latin America’s debt crisis of the early Eighties and East Asia’s crisis in the Nineties were both triggered by turns in the US credit cycle, though emerging markets have ample foreign reserves to defend themselves this time.
Mr Shearing said the BRICS quintet will be much weaker than assumed over the next two years for their own structural reasons, but there is now the risk of a “mutually reinforcing” effect as dollar stimulus drains away. The latest ructions in China came after premier Li Keqiang omitted mention of the liquidity strains in a speech this week, instead dwelling on rampant excess in the shadow banking system and overcapacity in obsolete areas of the economy. Though Deutsche Bank said the unwinding of hot money inflows disguised by over-invoicing may also be to blame.
Mr Li’s comments were a signal that the new leadership intends to prick the credit bubble, even though the hard line has already led to industrial recession. China’s HSBC manufacturing index fell sharply in June, dropping further below the “boom-bust line” to 48.3. Zhiwei Zhang from Nomura said Beijing aims to crack down on a plethora of trusts, wealth products and offshore vehicles intended to evade loan curbs. These have accounted for half China’s credit growth over the past year. It is willing to “tolerate short-term pain” to wean China off over-investment, and is less worried about social instability now that its workforce has begun to contract and the rate of migrants from rural areas is slowing.
The strategy is to tighten before the Fed winds down QE in order to “avoid two negative shocks occurring simultaneously”, but this may be hard to manage given the scale of the boom. “We expect a painful deleveraging process in the next few months. Some defaults will likely occur in manufacturing industry and in non-bank financial institutions,” he said. Fitch Ratings said total credit has jumped from $9 trillion to $23 trillion over the past five years, surging from 125pc to 200pc of GDP. This is a bigger rise than in any of the major bubbles worldwide over the past half century.
China has the firepower to cope with any crisis and will not let the state banking system collapse. Keeping growth on track now that credit has reached saturation point is a tougher challenge. Source

Monday, June 17, 2013

Initially the €Z and EU were the major players when Greek problems started in 2010.  DSK offered quite meaningful assistance in terms of liquidity from what he now called BRICS whom he had previously helped progress in the global economy. DSK had also indicated that a larger BRIC role in IMF should be put in place such that European directorship should not be automatic within 10 years. DSK even promised to renegotiate the World Bank = USA; IMF = Europe convention as best he could and to ensure that there would be at least 1 BRIC deputy director ASAP and the First Deputy director would be a BRICie within 5 years along with non-Europeanization of senior posts like Chief Economist and Head of Research and Statistics as quickly as possible. DSK made quick progress as China’s ZhiMin was appointed one of the 3 deputy directors and the stage set for the appointment of a second from Japan, I think, but forget – something like Saratonago. Needless to say BRIC investment was really useful as although all the money is promissory notes to the IMF, BRIC money is the result of growing economies not governmental borrowing at more and more punitive rates. DSK was a private and I believe seriously mentally ill, disaster but probably the best IMF director in 2 decades.  So DSK had ensured IMF power through new BRIC money and in return increased BRIC power and influence.  Then lots of things happened together. Sokrazy realized his UMP candidacy for 2012 presidency was endangered by his FinMin – Laggard. The size of the French exposure to Greece, around 80bn was seen. Clever semantics on the reporting request and use of French banks outside France allowed a much less €40-50bn to be reported, but it was clear that Greek default could not be allowed or France would fail. DSK had to go. May 2011. An opportunity to get rid of an election threat and relieve pressure on EU institutions and on the basis of exhibited Greek ‘attitude’ shown already, ‘une carte blanche’ to drive a country to an economic wasteland and political slavery exactly what the € was devised for, whilst defending France and perhaps persuading Germany to pay for the economically protectionist, anti-democratic, utterly globally non-competitive paradigm again.  Sarkozy sowed the seed and got what he wanted even to the point of getting agreement that an €Z director was the logical European choice. Next: Laggard insults and threatens RSA’s brilliant Trevor Manuel out of directorship contest, then gets Mexico’s Carsten disbarred through NAFTA links and David Lipton the first deputy because he’s American. Laggard installed June 2011. Olivier Blanchard becomes chief economist as well as his existing job of Head of Research and Statistics which gives him both dataflow and data interpretation control throughout the IMF – no need for anybody else. Laggard now able to impose her troika dominance over a blackened EU duo. She picks AH Thomsen, already versed in Ireland, to lead in Greece. She promises to furnish lots of BRIC money – much more than the ECB and EU and thus gets voting control of the Greek troika. She fails to get most of the BRIC money for Greece and has managed to divide a global rescue actor called the IMF into BRICS and mates like OZ versus the rest with a USA in the inert middle. She must go.  In summary all three troikista have failed the Greeks and others. The ECB and EU started it: the Laggard IMF has finished it in truly feudal robber baron fashion.

Friday, June 14, 2013

Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is "leading to disaster".  "The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt," he said.  "The Germans have not yet realized that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later," he said, blaming much of the crisis on Germany's wage squeeze to gain export share.  Mr. Lafontaine said on the parliamentary website of Germany's Left Party that Chancellor Angela Merkel will "awake from her self-righteous slumber" once the countries in trouble unite to force a change in crisis policy at Germany's expense. His prediction appeared confirmed as French finance minister Pierre Moscovici yesterday proclaimed the end of austerity and a triumph of French policy, risking further damage to the tattered relations between Paris and Berlin.  "Austerity is finished. This is a decisive turn in the history of the EU project since the euro," he told French TV. "We're seeing the end of austerity dogma. It's a victory of the French point of view." ... Lafontaine is widely regarded as a joke and a failed politician in Germany, so its only fitting when AEP is basing his arguments on him .... The immediate problem with the Euro is essentially in not having a single borrowing authority issuing Euro bonds - as I argued. This does not require a single European government,  just better financial coordination.  The big problem with "Europe" is the need for a unanimous vote on big issues - and that's hard to overcome in the fractious atmosphere caused by the counter-productive austerity a outrange mind- set currently in fashion. But there are signs that this suicidal approach to finance and economics is coming to an end in Europe at least.  But where is the European leader (or couple of leaders) we need to push (for reducing waste of course) for investing in the future and making sure any "easing" goes to lending to those, government and private, entities that are investing and providing knowledge and jobs for the future? Investing in education, job training, research and development will bring in private investment.  But when people spoke of a president for Europe Tony Blair's name was bandied about! We in Europe need politicians who aren't smeared with the past or chained by ideology, but look out with clear eyes on what went wrong and how to put it right. The next generation must be given a chance towards meeting the immense challenges faced not just by Europe but by all humanity. 

Tuesday, June 11, 2013

Earlier this year, the Pentagon publicly accused China for the first time of being behind attacks on the US. The Washington Post reported last month that Chinese hackers had gained access to the Pentagon's most advanced military programs. The director of national intelligence, James Clapper, identified cyber threats in general as the top national security threat. Obama officials have repeatedly cited the threat of cyber-attacks to advocate new legislation that would vest the US government with greater powers to monitor and control the internet as a means of guarding against such threats. One such bill currently pending in Congress, the Cyber Intelligence Sharing and Protection Act (Cispa), has prompted serious concerns from privacy groups, who say that it would further erode online privacy while doing little to enhance cyber security. In a statement, Caitlin Hayden, national security council spokeswoman, said: "We have not seen the document the Guardian has obtained, as they did not share it with us. However, as we have already publicly acknowledged, last year the president signed a classified presidential directive relating to cyber operations, updating a similar directive dating back to 2004. This step is part of the administration's focus on cybersecurity as a top priority. The cyber threat has evolved, and we have new experiences to take into account. "This directive establishes principles and processes for the use of cyber operations so that cyber tools are integrated with the full array of national security tools we have at our disposal. It provides a whole-of-government approach consistent with the values that we promote domestically and internationally as we have previously articulated in the International Strategy for Cyberspace. "This directive will establish principles and processes that can enable more effective planning, development, and use of our capabilities. It enables us to be flexible, while also exercising restraint in dealing with the threats we face. It continues to be our policy that we shall undertake the least action necessary to mitigate threats and that we will prioritize network defense and law enforcement as the preferred courses of action. The procedures outlined in this directive are consistent with the US Constitution, including the president's role as commander in chief, and other applicable law and policies."

Sunday, June 9, 2013

Gas-land and the EU goons

Guvernul României a concesionat suprafețe mari din unele dintre cele mai frumoase zone ale țării, pentru începerea fracturării hidraulice în vara lui 2013. Locuitorii acestor zone au protestat vehement, dar toate aceste proteste au fost până acum ignorate de presă și de autorități.
  • Fracturarea hidraulică e o metodă extrem de periculoasă de extragere a gazelor naturale, care ne poate otrăvi apa, aerul și solul.
  • Chimicalele (peste 500 de substante chimice ce pot provoca diverse tipuri de moarte) folosite pentru forare sunt toxice și pot contamina apa în urma unor scurgeri sau accidente; pentru foraj sunt necesare milioane de litri de apă, ceea ce poate epuiza rezervele locale.
  • Apa reziduală rezultată în urma fracturării conține substanțe radioactive și chimicale toxice și este extrem de periculoasă, ceea ce face depozitarea ei extrem de dificilă și riscantă.
  • În urma fracturării hidraulice, gazul natural poate “migra” în rezervele de apă potabilă, punând locuințele și fântânile din vecinătate în pericol de explozie. În SUA au fost documentate peste 1.000 de cazuri de contaminare a apei în apropierea zonelor de extracție.
Mai multe state – printre care Franța, Bulgaria și câteva landuri germane și cantoane elvețiene – au interzis fracturarea hidraulică sau au instituit moratorii împotriva acestei metode.

Saturday, March 30, 2013

Waiting for poverty to strike is no game. It makes ordinary men and women helpless, desperate and scared. "If you look at it mathematically, there is no way out: we will just never be able to repay our bills to the EU and IMF," said Haris Christou, one young Cypriot speaking for his compatriots. "Am I afraid? Of course I am afraid. Everybody knows everything in Cyprus is going to get bad, really bad. And nobody knows where exactly we are headed."
On Wednesday night men and women, some young, some old, gave voice to that fear. They gathered outside the offices of the European commission, and then lined the road that leads up to Cyprus's colonial-era presidential palace, to protest against a rescue programme that, wittingly or not, will destroy their country's banking sector and bring its economy to its knees.
"Out with the troika", "Fuck the troika", "Go home Troika", said the placards. "No to the policies of austerity." "No to privatisations." "No to the memorandum of catastrophe."
But more than words, or any amount of hoarse chanting, it is uncertainty that now speaks loudest in Cyprus. The uncertainty that has come with the knowledge that the island's economic output will shrink dramatically as a result of the austerity now being demanded in return for €10bn in aid. The uncertainty unleashed by policies that will see many Cypriots wake up with much less than they once had in the bank. And the insecurity of suddenly being the subject of capital controls that possibly could change Cypriots' lives for years....I, too, would be inclined to withdraw all my funds from any Cyprus bank and I suspect there will be a run on them. There are 'policies in place' to restrict such a run but I don't see how they can prevent people taking out what is their own money. That is the worry. The Russians called it theft and so would any Cypriot who cannot access savings. The safest place to deposit money is still the UK and I'm surprised that London has not offered to make itself a safe haven for Italians, Portuguese and the Spanish to place their life savings. That's what I'd do if I were a Mediterranean saver. The GBP and USD have their moments but nobody will lose a penny by keeping their money in those currencies which are trusted around the world. I don't know how any Cypriot would be able to do a SWIFT transaction to get cash out of harm's way but surely it can be done.