As there will now be another meeting of the eurozone finance ministers next Monday (November 26), the Greek Prime Minister Antonis Samaras has postponed a visit to the wealthy Gulf state of Qatar, which was due to happen next week. "The prime minister will stay in Athens to coordinate things," spokesman Simos Kedikoglou told Reuters. Samaras was due to meet Qatar's emir and prime minister as well as top officials from Qatar's sovereign wealth fund to discuss investment in the country's recession-mired economy.  The German Finance Minister Wolfgang Schaeuble also spoke after the meeting. He told lawmakers at a closed-door session that Greece's lenders remained divided over how to fill a €14bn hole in the country's finances through 2014 and how to define debt sustainability for the eurozone's weakest link, participants told Reuters. Schaeuble met members of parliament on Wednesday morning to explain the failure of the negotiations. One participant said Schaeuble had told members of his conservative party that lenders had failed to resolve the issue of whether 2020 or 2022 would be used as a benchmark for Greek debt sustainability. The source said Schaeuble had explained that the ECB believed Greece could raise €9bn itself by issuing short-term debt. Another Christian Democrat lawmaker said the minister had told participants that a debt buyback could be part of the solution.

The groundswell feeling of injustice is heightened because governments have ratcheted up borrowing to fund aid and guarantees worth £3.7 trillion to failing European banks while making deep and painful cuts to social provisions. To add insult to injury, the austerity programmes for the eurozone have been drafted and imposed by the European Commission in Brussels and the EU’s Central Bank in Frankfurt. Debt programmes have been directly imposed by the EU and International Monetary Fund “troika” in Greece, Portugal and Ireland, which have effectively been stripped of their economic sovereignty. It is going to get worse. EU forecasts predict that joblessness rates will climb even further, hitting 11pc in the EU and 12pc in 2013. In Greece, unemployment is 23.6pc, and 54pc among young people. One thousand Greeks are losing their jobs every day. In Spain, once an EU pin-up for growth and a country that was not in debt before the banking crisis, youth unemployment has hit 55pc and the recession is still deepening. Tens of millions of Europeans blame austerity for suppressing demand and acting as a dampener on growth at a time of economic recession triggered by the financial crisis. The deadly combination of slowdown plus austerity, compounded by economic imbalances built into the EU’s single currency, has pushed countries, especially the southern European economies at the heart of the eurozone debt storm, into what looks like a deep and protracted slump.

Heil ....

Germany has asked a panel of top advisers to examine France's economic problems.

Finance minister Wolfgang Schaeuble (pictured, below) has asked its panel of economic advisers, known as the "wise men", to look into France's reform proposals, amid concerns that weaknesses could spread to Germany and the rest of Europe, according to Reuters. More from the newswire:  Schaeuble's request denotes growing concern in Berlin and among private economists over the health of the French economy, which is set to miss a European Union goal for reducing its public deficit next year.

"Concerns are growing given the lack of action of the French government in labour market reforms," Lars Feld, an economist who sits on the panel, told Reuters.

Although Schaeuble raised the prospect of a report on France with members of the council this week, Feld and the finance ministry made clear that the government had not submitted a formal request. The ministry declined comment on the minister's "unofficial discussions" in general.

The definition of incompetence and stupidity ....Herman van Rompuy

European Council President Herman van Rompuy has quashed reports yesterday which said that a deal on keeping Greece afloat and providing more bailout money for the near-bankrupt state is unlikely to be reached next week when eurozone finance ministers meet in Brussels.

Mr van Rompuy said a deal to keep Greece afloat by providing more bailout money will be agreed in "due time" once a report on the country is finalised by the troika of the IMF, reports Reuters.  "We need more time to reach agreements on privatisation law," Van Rompuy told reporters after a summit of Asian and European leaders in Laos. "In any case, the Europe group meeting on 12 November remains on the agenda."   Athens also needs to push through spending cuts and tax measures worth €13.5bn as well as a raft of economic reforms that will satisfy EU and IMF lenders but anger the Greek population, which has led to the anti-austerity strikes that we are seeing today in the country.  "The decision on this will be taken by the Europe group after analysis of the troika report, which is in the stage of finalisation in Athens," Van Rompuy added.   He urged the Greek government and leading political parties to decide on what is needed to reach an agreement with the troika, adding "I'm quite sure this will be done in due time"....Martin Koehring from the Economist Intelligence Unit has said these protests could convince to some MPs in the centre-left Pasok party to vote against the latest austerity package, but said he still expected the package to be approved.

The two-day general strike is yet another sign of the anti-austerity climate among the Greek population. However, the government has to pass further austerity measures to guarantee disbursement of a vital €31.5bn loan tranche from the EU and IMF.

The strike may convince more MPs from the centre-left Pasok party to vote against the latest austerity package; Pasok is part of the fragile three-party government coalition but has seen its support among voters eroded as a result of backing austerity.  The government has already suffered several setbacks in recent weeks, with the other left-wing junior coalition party, the Democratic Left, threatening to vote against the package. Wven the senior coalition party, the centre-right New Democracy party, has seen two MPs being forced out of the party for opposing further budget cuts. The government's majority is narrowing and the general strike further puts pressure on MPs to vote against the government's plans.  On balance, however, we expect the package to be approved by MPs because the alternative would be the government running out of cash by November 16 and facing default and potential euro exit.

The European Central Bank is in "panic" over the eurozone crisis and acting outside its mandate with its new bond-buying plans, the bank's former chief economist said in comments published Saturday. "The break came in 2010. Until then everything went well," Juergen Stark, the German who resigned from the ECB in late 2011 after criticising its earlier round of buying up of sovereign debt, told Austrian daily Die Presse in an interview. "Then the ECB began to take on a new role, to fall into panic. It gave in to outside pressure ... pressure from outside Europe." Mr Stark said the ECB's new plan to buy up unlimited amounts of eurozone states' bonds, announced on September 6, on the secondary market to bring down their borrowing rates was misguided. "Together with other central banks, the ECB is flooding the market, posing the question not only about how the ECB will get its money back, but also how the excess liquidity created can be absorbed globally," Mr Stark said. "It can't be solved by pressing a button. If the global economy stabilises, the potential for inflation has grown enormously." He added that "panic" about the eurozone breaking up was "nonsense" but that the only way to end the crisis was for member states to bring down their debts and implement structural reforms to boost economic growth. "Governments have recognised that returning to budgetary discipline is indispensable. Markets focus much more on whether states will be able to service their debts in five years' time," he said. Mr Stark quit in late 2011, following in the footsteps of former Bundesbank head Axel Weber, who stepped down earlier in the year from Germany's central bank because of unease about the ECB's policies. Mr Weber's successor Jens Weidmann was the only member of the ECB's policy-setting governing council to vote against the bank's new programme earlier this month. "Weidmann's arguments ... should not be made light of," Mr Stark told Die Presse. "The way in which his position has been publicly commented upon by the ECB leadership has crossed the line of fairness." Source: AFP

NICOSIA, Cyprus—Euro-zone finance ministers indicated Friday they are open to giving Athens more time to meet budget targets and that they aim to decide by the end of October on whether to give Greece its next installment of a bailout money….In their first gathering after a long summer hiatus, finance ministers from the 17-member currency bloc spent the morning discussing the economic and financial crises of Greece, Spain, Portugal and Cyprus. They were joined later by the 10 ministers from the rest of the European Union to debate proposals, released this week, for a system of common banking supervision.  European Central Bank President Mario Draghi, center, with IMF chief Christine Lagarde, left, Eurogroup President Jean-Claude Juncker and German Finance Minister Wolfgang Schäuble talk at the start of a two-day informal meeting in Cyprus….The meeting comes days after the European Central Bank announced a revamped plan for purchases of government bonds in the open market in coordination with the euro zone's rescue funds, and follows a German constitutional court ruling clearing the way for the launch of the European Stability Mechanism, the permanent bailout fund.  Friday's gathering turned attention back to the governments of bailed-out countries and what they will do to implement tough reforms to qualify for support from the currency bloc.   Ministers sought to keep pressure on the Athens government, which hopes to win approval soon for the next disbursement in its €173 billion ($224.7 billion) second bailout package…. The Greeks "need to show very strongly decisive action" on structural reforms and spending cuts, said Luxembourg's Jean-Claude Juncker, head of the Eurogroup of finance ministers. Athens must agree to a "set of credible measures to close the fiscal gap between 2013 and 2014," he said.

barbarians at the gates...of european cristian countries

WSJ - Ms. Merkel said on Wednesday that no one should expect any concrete decisions to come out of her meeting with Mr. Samaras on Friday.  The question of whether to grant Athens more time is likely to play a significant role in talks between Ms. Merkel and Mr. Hollande at a working dinner in the Berlin chancellery on Thursday evening. The German and French leaders will make a brief statement to the press at about 1 p.m. ET Thursday and then withdraw for dinner and try to resolve their differences over dealing with Greece. It is believed that Mr. Hollande favors granting Greece more time. Ms. Merkel hasn't showed her hand yet, but her coalition government is deeply divided over the issue and she risks splitting the government if she agrees to give Greece more money, say analysts.

The pro-business Free Democrats, junior partner in Ms. Merkel's ruling center-right coalition, have insisted that Greece should be given no more aid and suggested it would be better for Athens to leave the euro. "We want to help, but there won't be any substantial changes to the agreed reforms," Foreign Minister Guido Westerwelle, a senior FDP official, told the daily Maerkische Allgemeine newspaper in an interview published on Thursday.

German opposition parties oppose the government's apparent hard line on Greece.  "It's not very smart to abandon all conditions (for aid) over an extension of 12 months," said Frank-Walter Steinmeier in an interview with the left-leaning Frankfurter Rundschau newspaper.

THE RIBBENTROP - MOLOTOV PACT - IMPLEMENTED - the second pillar.

THE RIBBENTROP-MOLOTOV PACT - IMPLEMENTED - the second pillar. Germany takes over the administration of Europe. In Berlin, the new epicentre of political as well as economic Europe, the German chancellor, Angela Merkel, was putting the finishing touches to her government statement to the Bundestag on the broad shape of the new "bazooka" – the enhanced bailout fund, or EFSF, that would save Europe from any reprise of the sovereign debt crisis that has overtaxed the powers of EU leaders to assert the primacy of politics over the naked short-sellers of financial markets. The letter – which Berlusconi hopes will give him a respite from humiliating criticisms of his country's €1.9tn debt and stagnant economy – was in Rome, being touched up by his advisers, but it was one of three key elements to a day destined to determine Europe's future. Down the road in Brussels from the marble-clad Justus Lipsius building, the current home of the council of ministers, EU officials – marshalled fittingly enough by an Italian treasury official, Vittorio Grilli – began a new session of their tortuous, often aggressive talks with leading bankers over how to reduce Greece's debt burden and allow a second bailout package to go ahead. Later the negotiations over the "haircuts" for holders of Greek debt moved from the Lex building to Justus Lipsius so they could be closer to Europe's political leaders. The overnight news from Rome was that Berlusconi had cut a deal on pensions reform with the Northern League, but that did not pacify the Italian press corps, the biggest national contingent in Brussels and the best-paid. At the midday news conference in the Berlaymont, the European commission's headquarters, that letter was the sole topic. "Can't we interest you in anything else?" Olivier Bailly, the spokesman, asked plaintively. He could not.

As Donald Tusk, the Polish premier whose country holds the rotating presidency, set out the achievements so far, a leak of the draft eurozone summit communique began doing the rounds. It again contained no figures, preferring instead to talk of boosting the bailout fund's firepower "severalfold" and strengthening the role of the European commission as Greece's debt and budget inspector. No word of those "haircuts" for the banks. Merkel and her team had spent all day lowering expectations of breakthroughs, big bangs, full-range bazookas; as dinner for the eurozone 17 loomed it looked pretty clear they were right.

The EU commission says 22.8 million people were unemployed in the EU in August, down by 62,000 from July and by 300,000 from August last year. In less welcome news, eurozone inflation jumped from 2.5% to 3% in September, galloping away from the European Central Bank's 2% target.
News :

Greece will not meet deficit targets this year or in 2012
Greek civil servants block troika from entering finance ministry
Greek finance minister tries to quash talk of ‘disorderly default’

EU economy commissioner Olli Rehn said on Monday (3 October) that European finance chiefs are considering different options on how to leverage the eurozone’s multi-billion-euro rescue fund to give it further firepower. "We are reviewing options on optimising the use of the [European Financial Stability Fund] in order to get more out of it and make it more effective as a financial firewall to contain contagion. Leveraging is one of the options," he said speaking to reporters in Luxembourg. Finance ministers are meeting in Luxembourg to assess the heavily indebted Greek government’s latest announced efforts to deliver on its promises of austerity and structural adjustment made to international lenders. There are growing fears that were Spain and Italy to be cut off from market funding, the existing €440 billion rescue fund would be insufficient to bail out such large economies and even an expansion of the war-chest to €780 billion agreed by eurozone leaders in July may not be enough.

Recap of the day - sept. 23. 2011

Just a recap of the day

1. The G20 settled markets with a comminiques overnight on Thursday, pledging to "take all actions to preserve the stability of banking systems and financial markets as required".

2. In London the FTSE 100 opened up 1.2pc with banks rising strongly, but the bounce was shortlived. By 10.45am the index had tumbled through the psychologically important 5,000 level after reports that Greece saw orderly default as possible. The mood was darkened after an EU spokesman said there were not plan to further recapitalise eurozone bank - other than what has been done. This seems to contradict the thrust of the G20 statement.

3. By lunchtime the market was turning around after rumours of further ECB measures to support the eurozone economy. Sentiment was further boosted by comments from Osborne at the IMF annual meeting in Washington. He said Europe had until the G20 meeting in Cannes in November to solve the political crisis in the eurozone. This six-week deadline seemed to give investors hope that leaders understood the urgency of the eurozone's situation.

4. London's leading shares close up 0.5p on the day, but down 5.6pc on the week. Markets in Germany, France, Italy and Spain also rose, closign up 0.6pc, 1pc, 2.1pc and 1.36pc respectively. However, after European markets closed the Dow Jones and the S&P 500 seemed to be trading sideways as nerves returned.

"Partnerships" will not save The E.U. or the jobs of "Bruxelles FAT Biurocrats"

Needless proposal - Enhancing the Eastern Partnership: Time for Action. Gunnar Hökmark MEP - "European Neighbourhood policy has to be successful and, in the middle of the debt crisis, support progress in countries striving for democracy and rule of law. It takes decisiveness and a capability to prioritise both in political co-operation and between reforms enhancing all forces looking to Europe for guidance and support", said Gunnar Hökmark MEP, Vice-Chairman of the EPP Group, at the Group's Bureau meeting in Wrocław, Poland. The Eastern Partnership, a Swedish-Polish initiative that is a logical consequence of the 2004 enlargement, aims to give the countries in the eastern neighbourhood access to the internal market and further European co-operation but requires at the same time political and economical reforms. Both the EU and its neighbours will gain a lot from this. The Eastern Partnership includes six countries: Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Top priority is trade agreements that give them access to the world's largest market, the European internal market. We should also soon dispose of visa regulations to give citizens of our neighboring countries free movement in the Schengen area thus enhancing closeness and co-operation. This requires specific reforms and strict criteria to be fulfilled. But the neighbourhood policy is about more than economy, trade and free movement. It also includes educational support, such as grants to help young people from these countries to study at European universities, strengthening their countries and their own possibilities for the future. Co-operation on energy is likewise important. The EU should assist with infrastructure including gas pipes that benefits all concerned and strengthens further co-operation across borders", concluded Gunnar Hökmark.

Markit's monthly healthcheck of the eurozone found that the total activity across the region was flat month-on-month at 51.1, above the 50-point mark that separates expansion from contraction. But French manufacturing output dropped to 49.3, its first contraction since July 2009. The overall eurozone manufacturing sector came in at 49.7. Germany's manufacturing sector, the powerhouse of Europe, increased its output to 52, but this was marred by a drop in service activity to just 50.4. Williamson said that the eurozone economy had suffered from a drop in global demand, which dampened demand for exports. The ongoing euro debt crisis has also hit business confidence. Seperate data from Germany underlined how the financial crisis has hit sentiment. The ZEW index, which tracks invester confidence, fell sharply this month. Economists said the size of the drop was surprising, and matched the plunge seen after the collapse of Lehman Brothers. The ZEW economic expectations index dropped to -37.6 from a reading of -15.1 in July. "The skepticism with regard to future economic growth shown by a growing number of financial market experts during the previous months has increased dramatically," said Wolfgang Franz, president of the Mannheim-based Center for European Economic Research, or ZEW.

Would Germany subscribe to euro-zone bonds ? The market is hinting at the price of Germany's commitment to Europe. The cost of insuring its debt with credit-default swaps has risen sharply during the past month-and-a-half, to the point where five-year U.K. CDS are now cheaper than equivalent German ones. Although flight-to-safety trades have supported demand for German bonds, the CDS market suggests that might not last long if Germany were to commit to backstopping a common euro-zone bond. There's a further irony in Franco-German demands that all countries in the bloc boost their competitiveness. One of the major imbalances in the single currency is the lack of competitiveness of peripheral countries relative to the core. Unless the core is willing to lose ground here, the region is at an impasse. Saying every country in the euro zone should become more competitive is like saying every child in Lake Wobegon is above-average. A nice idea but it defies the math. Instead, what the Franco-German deal seems to have created is the circumstance under which peripheral countries will be forced out of the single currency. Then again, things were probably heading in that direction anyway.

Renewed worries about the Eurozone's finances and the state of its banks - particularly the French ones - have sent shares sharply lower again, all but wiping out Tuesday's Bernanke bounce on Wall Street. The US market, which invoked a rule to help prevent turbulence at the open, is down more than 242 points, having started down 75 points and fallen by more than 300 points at its worst so far. Last night the US market mounted a more than 400 rise after US Federal Reserve chairman Ben Bernanke vowed to keep interest rates low until 2013, but it seems investors are now nervous about what that means for the state of the US economy, and how bad it could get. But attention also moved back to Europe, with news that President Sarkozy was locked in emergency talks with his ministers seeking ways to cut the country's deficit. That prompted rumours that the country was likely to be next to lose its Triple A rating, and also talk that one of its banks could be in trouble in the current financial turmoil, leading to hefty double digit share price falls at the likes of Societe Generale and BNP Paribas. In a note on the rating this week Citigroup said: We expect that France, with its high public debt and deficit, and popular resistance to cutbacks in its even by euro area standards extremely large welfare state is now likely to be the G7 country at the highest risk of losing its AAA rating. The markets appear to share this sentiment with French 10-year spreads over German Bunds reaching 16-years highs on Friday.

Two of the leading Petrom top managers, who were in the company's management team ever since the privatisation of the oil and gas producer in 2004, have this year left to carry out the reorganisation of OMV's latest acquisition: Petrol Ofisi."I won't be talking about Petrom today because it is already going in the right direction, of integration. Let's talk about Turkey." This was one of the opening messages conveyed by Wolfgang Ruttenstorfer, CEO of OMV in London, at the latest media summit organised by the Austrian oil group, Petrom's majority shareholder.
In mid-October, OMV finalised the acquisition of Turkey's biggest petrol station chain, Petrol Ofisi, for which it paid one billion euros, securing a significant share of a market credited with the biggest chances of growth in the next period.Reinhard Pichler, 49, former CFO of Petrom, left his position last week, being replaced by Daniel Turnheim, a member of the OMV group since back in 2002. Pichler is not leaving the group, however, but will go to Turkey, where he will fill the same position he has occupied in Petrom since 2004.At the beginning of this year Tamas Mayer, who used to be in charge of Petrom's marketing operations, i.e. of the nearly 550 distribution stations, left the position to become Vice Chairman of the Board of Directors of Petrol Ofisi. According to some sources, Mayer will be running marketing operations within Petrol Ofisi, as well.Agerpres, Mediafax, Romanian Vancouver Sun,Global News, Financial Times,Tribune, ,Wall Street Journal,The Washington Times,Athens News,The New York Times,USA Today,Le Monde

China - the new frontier for EU Investors

China's rapid growth is easing to a manageable pace and Beijing can do more to reconfigure its economy to promote domestic consumption and reduce reliance on trade, the World Bank said Wednesday. Inflation that has risen steadily this year should level off and is unlikely to be a serious problem, the bank said in a quarterly China outlook. The Washington-based bank raised its 2010 growth forecast from 9.5 percent to 10 percent and said the expansion should slow to 8.7 percent next year. Growth eased to 9.6 percent in the three months ending in September, down from 10.3 percent the previous quarter, as the government imposed lending and investment curbs.
"We think that coming from this very strong growth, China should be able to ease into a more sustainable growth rate in the long term," said the report's main author, Louis Kuijs, at a news conference.
The outlook reflects China's status as the first major economy to rebound from the global crisis on the strength of a flood of stimulus spending and bank lending. While Washington and others are trying to shore up growth, Beijing faces the challenge of cooling inflation and restoring normal conditions.
Beijing needs to boost wages and consumer spending and promote growth of private and service businesses to reduce reliance on exports and energy-intensive heavy industry, the World Bank said.
"The need to rebalance to more domestic demand-led, service sector-oriented growth seems stronger now than five years ago," said Kuijs. "Internationally the environment is less favorable than it was."
Communist leaders made raising domestic consumption a priority in their latest five-year economic plan crafted at a meeting last month. But it also was a goal in their previous plan and private sector analysts say Beijing has yet to take major steps to shift emphasis away from manufacturing and construction. The World Bank recommended opening up more industries to private business, changing the way energy prices are set to encourage efficiency and nurturing private-sector research and development. The bank cautioned against abrupt steps such as mandating sharp wage hikes, saying Beijing instead should look at gradual changes such as allowing more rural workers to move to cities and changing energy prices that favor heavy industry."We are looking for a market-oriented, market-friendly way of getting this consumption growth, consistent with continued strong growth," Kuijs said. Inflation that hit 3.6 percent in September, well above the 3 percent government target, should level off but might stay as high as 3.3 percent next year, the bank said. Kuijs said that in developing economies such as China, inflation of 3 to 5 percent might be acceptable as industries grow rapidly and demand for resources shifts."We still do not think China's inflation is at a very serious risk of escalating but we also do not think China will go back to the very low rate of inflation it saw in 2005," he said.
The bank also cautioned that China's politically contentious trade surplus is likely to rebound in 2011 after narrowing temporarily this year.
The multibillion-dollar trade gap has strained relations with Washington and other trading partners and prompted some U.S. lawmakers to demand sanctions over Chinese currency controls blamed for widening the surplus.

IMF to relax deficit targets for the co-funding of more EU projects

The IMF should relax budgetary gap targets for Romania so that more EU projects could be co-funded, states Andreas Treichl, a CEO with Erste Group, which controls BCR. "Romania is in a situation of conflicting objectives: its strong advantage are the funds available from the EU, but governmental funding is also necessary for these funds to be used. If money from the budget is allotted, deficit targets agreed on with the IMF are overshot and a conflict of 'interests' emerges. The IMF could relax the targets for the European funds to be used. This will be a very interesting exercise in the following months," Treichl stated.Banks have a direct interest in the success of such a move, considering many entrepreneurs and public authorities need loans to be able to co-fund the European funds they try to get. It remains to be seen whether the banking lobby in this respect will be as strong as in the case of modifications requested for Ordinance 50 regarding retail loan contracts.

Fate of the Romanian Economy in 2011 depends on talks with IMF

Yesterday saw the start of two weeks of negotiations with the Fund, which are set to provide some answers to essential questions as far as next year is concerned.
Romania could find out in about two weeks' time if and how much economic growth it will see next year, what the main taxes will look like - flat rate, social contributions, VAT, what the new arrangement to be signed with the IMF in spring will look like and implicitly how big the RON/euro exchange rate volatility will be.
The first official talks between the IMF's review mission and the authorities began yesterday.Jeffrey Franks, the mission chief, says the Fund's forecasts regarding the Romanian economy could be adjusted, but not significantly.Forecast modifications have become a current practice over the course of the arrangement sealed in the spring of 2009, with the IMF so far only revising its calculations for the worse, after failing to anticipate the economic trends. Now the Fund expects a 1.5% GDP growth for 2011.The final forecasts will be an essential tool towards building next year's budget. The draft that recently featured in the press but has yet to be officially assumed is already suspected of overestimating the revenue potential. Things are made even more complicated by the chaos on the political scene, which was reflected yesterday in the Parliament in the decisions on introducing a 5% VAT rate on basic food items and on exempting from taxation pensions of less than 2,000 RON, after there had been talk of taxing all incomes of this type.If these decisions are politically assumed, by the head of state inclusively, attempts by the main ruling party PD-L to talk to the IMF about cutting the flat rate to 12%, cutting overall social contributions to 41% and increasing the minimum wage to 700 RON will fail.