Back in June 2013 on a state visit to Japan, French President Francous Hollande declared the Eurozone crisis was "over".  How could the ECB claim that recovery has not been achieved, when according to Hollande, the Eurozone has been out of recession for nearly two years?  The central bank’s estimates have been considered optimistic by external observers, as private forecasters remain more sanguine about the euro area’s prospects. Members of the ECB Board  warned that growth projections for 2017 relied on several elements which might turn out to be less supportive than the forecasts assumed.   Peter Praet, the ECB’s chief economist, said that the governing council had to remain cautious “given the very early stages of the economic recovery and the high degree of uncertainty,” particular when dealing with forecasts running up to 2017.

Members of the council “generally shared” the view that the forecasts represented an accurate assessment of the situation. The central bank has pencilled in growth of 1.5pc for this year, 0.2 percentage points higher than the consensus. It expects growth of 1.9pc and 2.1pc in the following two years.   Christian Schulz, an economist at Berenberg, said that “there are plenty of the risks” that both growth and inflation might be lower than projected. “The word risk appears 16 times in the minutes,” he said.   The minutes stated that the upward revisions to growth should not be taken to mean that the €1.1 trillion (£810bn) package of asset purchases “was less necessary”. The QE scheme has already been effective in reducing borrowing costs and weakening the euro. ECB purchases began last month, as the euro area entered a fourth straight month in deflationary territory.   The higher growth and inflation forecasts “confirmed that full implementation of these measures was required to deliver on the governing council’s mandate”, the minutes said. Members believed that this provided grounds for “prudent optimism” regarding a gradual recovery and returning inflation to its close to 2pc target. The minutes showed that the committee intended to continue the purchases “without hesitation” until its objectives are met. Jonathan Loynes, chief European economist at Capital Economics, said: “

According to a poll published a week ago, more than half of Germans would like Greece to leave the eurozone, a rise of more than 10% on February. It is a sentiment that is likely to hang heavily in the air when the Greek prime minister, Alexis Tspiras, makes his first visit to Berlin on Monday.

“It feels a bit like the Emperor’s New Clothes,” says Anton Brandt, referring to the Hans-Christian Andersen fairytale. “It just needs that child to stand up and say: ‘ha! they’re taking the piss out of us all’, but no one dares do it, especially not a German because we’re scared we’ll be accused of being anti-European,” the 38-year old administrator adds. “There’s no worse insult you can make towards a German.”  “The public mood is tipping,” said Thomas Oppermann, chairman of the Social Democrats (SPD) parliamentary group, speaking on a political TV chatshow Hard But Fair, which posed the question: ‘Bankrupt, insulted and brazen – does Greece deserve this image?’

The programme highlighted how any sympathy once felt for the Greeks is quickly drying up as feelings of resentment set in. Not least because Germany is the largest single contributor to Greece’s multibillion-euro bailouts and few see an end in sight to payments as long as Greece fails to implement any of the reforms it has promised. “But we must ask how dangerous would the exit of the weakest member from the eurozone be?” Oppermann added.  For years the German government has repeatedly excluded the possibility of Greece being forced to leave. The chancellor, Angela Merkel, appeared to repeat that conviction at the end of last week during an address to the Bundestag, in which she said: “We have a long and difficult road ahead of us.” But the more feelings of resentment towards Greece fester, the harder it will be for Merkel to keep voters – and members of her own party – on board.  It was no surprise that she drew nervous laughter from some politicians when she said she was looking forward to the opportunity to talk “and perhaps also to argue” with Tsipras. No one is in much doubt that arguing will be more likely than talking when Merkel receives him – with a military guard and a red carpet – at her chancellery.  The atmosphere between Athens and Berlin has soured in recent weeks over calls from Tsipras for Germany to pay war reparations for the Nazi occupation during the second world war.   German chagrin was only stoked further when the Greek defence minister threatened to send 10,000 refugees to Germany, and said he couldn’t guarantee there would not be a few Islamic State (Isis) terrorists among them.

This all followed years of tensions, in which Greek newspapers have repeatedly portrayed Merkel and her finance minister, Wolfgang Schäuble, as Nazis, and the German media in turn has depicted the Greeks as lazy and corrupt.

While opinions have been divided over the compensation claims, with Merkel’s government insisting the case was legally closed, one German couple took it upon themselves to, as they saw it, right a historical wrong.

On the back of an envelope, Ludwig Zaccaro and Nina Lange calculated that if the compensation claim was divided equally amongst the Germans, their own share would be €875 (£630), and so they paid the amount to a charity supporting austerity-hit families in the town of Nafpolio in the Peloponnese.   “We said ‘this is a symbolic gesture, that if we do this, maybe other Germans will follow’,” Zaccaro said. “It’s time to stop demanding the Greeks pay.”

Georg Franke, a 57-year old market-stall holder in Potsdam, said while he believed the Greek government’s behaviour had been “childish”, he did not find its second world war compensation claims so outlandish.   “The trouble is, Germans know a lot about the atrocities carried out in their name by the Wehrmacht and the SS against the Jews from Germany, Poland and Hungary, as well as the Slavs, but we learnt very little in school about the horrors carried out against the Greeks. It was only recently, around the 70th anniversary of the liberation of Auschwitz, that I saw a documentary which touched on how they [Jewish Greeks] were almost all wiped out and it brought it home to me.”

The reason perhaps for the lack of discussion about the past is that for years, it suited both sides. Greeks began coming to Germany as Gastarbeiter (guestworkers) in their hundreds of thousands from the 1960s onwards. German tourists flocked to Greece’s holiday resorts. Both a mutual respect and a mutual dependency brought them closer together. Today, an estimated 300,000 Greeks live in Germany.  Germans still love to holiday on Greek islands. But Jorge Chatzimarkakis, born in the German city of Duisburg to a Greek Gastarbeiter, a member of the European parliament for the German liberal FPD as well as being a special envoy for the Greek government, in which role he has also demanded compensation and the setting up of a Marshall Plan-style reconstruction fund, said much of the erstwhile goodwill had evaporated since the financial crisis began.

“Relations are now a minefield,” he said. “I would not in my wildest dreams have imagined that there would have been such a hard confrontation course. It scares me.”

Despite the understanding of Franke, the market-stall holder, for the Greeks’ search for recognition for their wartime suffering, he believed, like many Germans, that it was wrong to mix the two issues.

“It makes you suspicious that the sum they’re demanding in compensation - around €300bn – is so amazingly close to the Greek debt total.” But he added that the German word for “debt” and “guilt” – Schuld – is the same. “The Greeks know that and they’re playing on that for all it’s worth,” Franke added.

Report UE - The central question in the report is that of forced loans the Nazi occupiers extorted from the Greek central bank beginning in 1941. Should requests for repayment of those loans be classified as reparation demands -- demands that may have been forfeited with the Two-Plus-Four Treaty of 1990? Or is it a genuine loan that must be paid back? The expert commission analyzed contracts and agreements from the time of the occupation as well as receipts, remittance slips and bank statements.  They found that the forced loans do not fit into the category of classical war reparations. The commission calculated the outstanding German "debt" to the Greek central bank and came to a total sum of $12.8 billion as of December 2014, which would amount to about €11 billion.  As such, at issue between Germany and Greece is no longer just the question as to whether the 115 million deutsche marks paid to the Greek government from 1961 onwards for its peoples' suffering during the occupation sufficed as legal compensation for the massacres like those in the villages of Distomo and Kalavrita. Now the key issue is whether the successor to the German Reich, the Federal Republic of Germany, is responsible for paying back loans extorted by the Nazi occupiers. There's some evidence to indicate that this may be the case.  In terms of the amount of the loan debt, the Greek auditors have come to almost the same findings as those of the Nazis' bookkeepers shortly before the end of the war. Hitler's auditors estimated 26 days before the war's end that the "outstanding debt" the Reich owed to Greece at 476 million Reichsmarks.  Auditors in Athens calculated an "open credit line" for the same period of time of around $213 million. They assumed a dollar exchange rate to the Reichsmark of 2:1 and applied an interest escalation clause accepted by the German occupiers that would result in a value of more than €11 billion today.

So there you have it - QE and ZIRP ( Zero interest-rate policy (ZIRP) is a macroeconomic concept describing conditions with a very low nominal interest rate, such as those in contemporary Japan)didn't solve anything, they merely delayed the inevitable and allowed an even bigger bubble to be blown, thus ensuring that the next crash is even bigger than the last one.  Let's hope that Gordon Brown is within ear-shot of the Bat-phone so he can save the world again when the time comes.  I'd love to know what sort of investor buys $131 billion worth of 'junk' bonds, though. Were they addicted to CDOs and other financial WMDs?  Well, bonds are really designed to be bought and held to maturity. The yield of any particular bond will contain a premium for the creditworthiness of the issuer, a term premium dependent on the maturity of the bond (lenders expect to be compensated for locking their money up for longer) and will also encapsulate the markets expectation for the future direction of short term interest rates.  Because the bond price already takes into account the market expectation of movements in short term interest rates, there shouldn't really be any desire to sell when interest rates move up as expected - but investors don't tend to think rationally or act rationally. As the article points out, when rates do start to rise, investors not acting rationally will want to sell bonds or redeem investments in bond funds. In order for them to sell, somebody needs to buy.  Unless you can find another investor happy to buy at the same time somebody wants to sell, the market will work more smoothly if there are liquidity providers happy to bridge that timing gap. Historically, banks tended to be those liquidity providers. They are used to taking on credit risk and can hedge if required. Managing the term premium is not too much of an issue - after all banks always lend long and borrow short, so can manage that risk. Plus they can also manage and hedge the expectations of the future direction of short term rates.  Of course, the liquidity providers expect to be paid for what they do, either by charging a bid/offer or indeed being paid directly by an exchange for committing to make markets. Having sufficient numbers of liquidity providers drives those costs down and also results in a very liquid, sharply priced market for end users.  Now that banks have been discouraged from that role (because it is viewed by some as a 'casino' operation), there is a fear that the market will be less liquid with investors being unable to buy and sell at very tight prices in sizes they need to transact in.

Germans must be mind-numbingly slow on the uptake not to realise what the likes of Schäuble and Merkel meant years ago when they said the "euro must be saved at all costs".

One of them even said (these bots are all the same) the "euro must be saved at all costs or it will be the End of Europe"...from exactly the same botspeak hymn book as mafiosi Borassol's "more Europe or war"...hahahaha...Not a Grexit, or new drachma, but a parallel currency called the Geuro perhaps. Very interesting possibility indeed, giving Greece a competitive tourist trade advantage that the others will want in on for sure. Let us face facts here, Club Med is not changing anytime soon. Cheaper to keep her is the verdict yet again. 2 billion to address the humanitarian crisis on the way, with more new money to be released to fill Greece's empty coffers next week. Draft your proposals quickly Greece. Their trusty EU rubber stamp of approval is at the ready.,,I wonder whether Athens will bother furnishing another list of 'reforms'.

You can just imagine the dialogue round the Syriza cabinet table. Bagsy me! I've got some lovely ideas. We can charge the tourists more for entry to nude beaches. We just need somebody to go round the sunbathers and collect all the cash that they've got in their...Hmmmm, yes, may be a problem that...OK, next: Tax absentee shipowners! We can send all our tax-collectors over to Belize and the Caymans and locate all the shipowners and...

OK, next...'Higher coffee prices for foreigners. The cafetzis just overcharges everyone who looks a bit foreign...Oh I see, they already do...Hm.

Next...'

In southern Spain the Socialist party won a closely-watched regional election in Andalucia, where it has governed since the restoration of Spanish democracy in the 1980s.  But Podemos from the radical left - the Spanish Syriza - won an impressive 15% of the vote; little more than a year after the party was formed.   The big loser in Andalucia was the centre right People's Party, which runs the government in Madrid, even though it came second overall.   The PP will be particularly concerned because the threat to the status quo doesn't come only from the left.  An upstart centrist party, Ciudadanos, also won 9% of the vote, attracting support from people disillusioned by business as usual.   So where does this leave the two main parties in Spain?   As recently as 2008, the Socialists and the PP between them won nearly 84% of the vote in a general election.   They won't come anywhere near that when the country goes to the polls later this year.   Podemos is still some way behind them. But it is indisputably on the rise.  But the FN still came second with more than 25% of the vote, pushing the governing Socialists into third place.   That suggests that support for the FN's anti-immigration, anti-EU message is more than a simple protest vote.  Even if the mainstream parties conspire to keep the FN out wherever they can in the second round of voting, the French elections are another sign that many disgruntled citizens are now ready and willing to look for alternatives.  Elsewhere on the continent there are similar stories.  The rise of the Five Star Movement in Italy or UKIP in the UK, or even the AfD (Alternative for Germany) in Germany, suggest that some political fault lines are moving.  The idea of a 'democratic deficit' has exercised many political minds, particularly among supporters of the European Union.   Parties like Syriza and Podemos want to redefine what the EU does.  But many protest parties want to destroy it.  Of course, the centre ground is not dead.   Well-funded party machines do not disappear overnight (even if supporters of the Greek Socialist party PASOK may beg to differ).   But traditional parties across Europe are under pressure as never before in recent memory.   And European politics has become fascinatingly unpredictable.

Prices have fallen across the eurozone for a fourth month, as economists warn that the currency union could fall into a deflationary spiral.   Official statistics showed that prices fell by 0.1pc in the year to March, a slower pace than the 0.3pc Eurostat reported for the previous month.

No economist polled by Bloomberg expected inflation any higher than zero in the year to March. The most pessimistic analysts predicted that prices would fall by 0.5pc in the period.   Jonathan Loynes, of Capital Economics, said: "The latest data ... do little to diminish the danger of a prolonged period of deflation in the currency union."

"The increase was driven entirely by higher food and energy inflation, no doubt partly reflecting the drop in the euro during the month," he said.  The euro area first entered deflation in December, forcing the European Central Bank (ECB) to deploy a €1.1 trillion (£800bn) bond-buying scheme in a bid to revive the economic area.  Purchases began in March at a monthly rate of €60bn as inflation has remained well below the ECB's target of close to 2pc.  Sandte, of Nordea, said: "For the next few months, we expect the headline [inflation] rate to hover around zero."   "Depending on the monthly changes in energy prices, the headline rate can easily fall back a bit deeper into negative territory," he added. The inflation data came as Eurostat announced that the euro area unemployment rate fell by 0.1 percentage points to 11.3pc in February.

Compared with a year ago the jobless rate fell in 22 of the European Union's member states, and increased in six.