By: Credit Suisse

Will 2015 be the year Europe’s sluggish economy finally sputters to life? Time will tell, but the European Central Bank’s quantitative easing policy, low oil prices, and a weak euro should all help bolster economic growth in the coming months. Watch our video to see what experts such as José Manuel Barroso, former President, European Commission, and Richard Fisher, former President and CEO, Federal Reserve Bank of Dallas, had to say at the Credit Suisse 18th Annual Asian Investment Conference. - See more at: http://www.thefinancialist.com/is-the-eurozone-ready-for-healthy-growth/#sthash.1iRVoHdS.dpuf

European Councilp president Donald Tusk has said Greece's creditors should consider debt sustainability if Athens tables realistic reform proposals, something it is meant to do by midnight today.  "The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation”, Tusk said on Thursday (9 July), after speaking with Greek leader Alexis Tsipras by phone earlier in the day.

The comment comes on top of a widely publicised report by the International Monetary Fund (IMF), one of Greece's creditors, which also said the country's debt mountain is hindering growth.  IMF chief Christine Lagarde repeated the stance on Wednesday, saying that while Greece needs structural reforms and fiscal consolidation, "the other leg is debt restructuring, which we believe is needed in the case of Greece for it to have debt sustainability”.  Debt sustainability - along with the various formats for getting there - has been a central sticking point for the Greek government, which says it cannot support its debt. Germany, Athens' biggest eurozone creditor, has already rejected an outright debt write-off as illegal under the EU treaties, amid a general hardening of euro countries' attitudes to the Tsipras government.  The hardening came after Tsipras called a snap referendum on creditors' terms, resulting in a rejection of them by Greek citizens. Since then, creditors have insisted Greece will have to commit to more reforms as the economic situation has deteriorated further, amid closed banks and capital controls, now in place for over a week.

Greece, for its part, asked for a three-year bailout on Wednesday, with the European Commission and the European Central Bank currently looking at whether it is eligible for a further (third) loan.

 

Since coming into office, the Athens government has relentlessly argued that Greek expulsion would inevitably trigger an unravelling of the monetary union, and ultimately deal a fatal blow to the European project itself.  Until recently this narrative had gained little traction, but as Grexit becomes the default scenario and media coverage more frantic, more commentators warn of a potential “Lehman moment” for the EU. They fear that Grexit would undermine public trust in the core values of the EU and turn the eurozone into a currency-peg arrangement, which will be unpicked by financial markets or populist political leaders seeking an easy way out. Even the German weekly Der Spiegel showed Merkel sitting on ancient Greek ruins, under the headline: “If the euro fails, so does Merkel’s chancellorship”.  It may be true that Grexit would be an unprecedented event in the history of European integration and raise a host of difficult legal questions. But the fears for the political sustainability of the euro are vastly overblown. In the short term Grexit would pose no existential threat to the eurozone, especially if it is done in a coordinated fashion.  Five years ago the risk of contagion from a Greek default and exit were real. Monetary union remained fragile, with a growing and high divergence in the borrowing costs between the core and periphery countries as investors fled for safety. But this time the markets’ reaction to last weekend’s referendum result has been muted, with the borrowing costs of Italy and Spain rising relatively little from low levels. The economies of Ireland, Spain and Portugal are in a much better shape as a result of structural reforms and fiscal consolidation.Moreover, the European Central Bank has become de facto lender of last resort with its OMT – outright monetary transactions – programme, flanked by new institutions and mechanisms such as the European stability mechanism and the banking union. The majority of Greek debts are held by public institutions, and the size and location of the potential losses are much clearer.

Any currency's value only reflects how it is perceived.  That credibility to state:   ''The Bank promises to pay the bearer on demand the sum of''.  Immaterial whether you call your currency a Euro, Drachma or a Turnip-Pie.  'Tis the degree of credibility that sustains its value not the name.  Greeks to be taken seriously must deliver that credibility to the markets and as such, not be viewed as mish-mash of political influences devoid of ''FOCUS''.  Can it do that .... Not easy .... But 'Yes' it can.  But it must be seen as adopting credibility as opposed to hoping something of the  Mr Micawber politics: albeit ''something will turn-up'' .... Because, one way or the other it certainly will?  Thus delivered: then it may well be the EU and the Euro that come under that FOCUS, if not already?  Greece might engage in this very activity - continuing to print Euros, while ceasing to take orders from the European Central Bank.  Nice idea excepting member state's central banks are not allowed willy nilly to churn out Euro paper currency.  Which is, of course, one of the two core flaws of the Euro mechanism. Any nation state operating a fiat monetary system has two essential levers to try and adjust their monetary economy: base rates and money supply. Excepting, of course with the Euro this is "Managed" centrally by the ECB; leaving only local taxation and sovereign borrowing for member governments, which is clearly not sufficient.  Trying to meld hugely disparate states into a One Size Fits All, monetary system simply doesn't and could not ever work: unless, of course, the successful Euro members are happy for their taxpayers to fund the cost of shipping buckets of capital to the impoverished - in relative terms - member states.  Seems now, as I forecast years back, the German taxpayers are simply no longer prepared to accept higher taxes and a reduced standard of living simply to prop up the basket cases.

Journalists are now starting to ask that awkward question, Is the EU really benign ? To draw a parallel, here is my response.  We've seen the EU control freaks demanding repeat referendums until they get their way on a national vote and we've seen them impose a president on Italy, what part of un-democratic process does it take before people wake up and realize the EU is not benign but a malignancy that is corrupting democracy.  The Common Market or EU long ago morphed into a life threatening polyp just like the one doctors found in my colon last year and luckily for me, unlike the EU, mine was still benign. However, I must have had it for several years as it had grown to the size of a large grape and had I left it any longer it could have  turned malignant just like the EU is today.  I had my polyp cut out just in time before it could have turned cancerous and made a full recovery and its time the countries in Europe cut out the cancerous parts of the EU before its too late. Remove that growing malignancy in  Brussels, make the EU the free trade area that was originally sold to us  and with luck the 'patient' might survive.  That of course is if we want EU to survive as some cancers have a nasty habit of returning !!!.. Everything you were warned about is coming true.  You were told you cannot tie together your disparate nations into one currency like some huge refugee raft and think it was going to work.  Greece is the proud  nation, and now that their skiff is going down, they're going to take you with it.  They've always been a problem from day one.  Cut 'em loose, and next time, you should listen when people tell you that you can't tie your sovereign nations together with other nations that you don't control electorally nor fiscally. . . .

Greeks are historically hard-working people, betrayed by banksters and their elected tools. The debt isn't THEIRS!! They live under a giant currency-swap turned loan-sharking scam, pushed onto these people without their consent. The people actually got 3% of the loaned money, the rest going to to JP Morgan and the rest.  In other words - only  an idiot can fall easily to whatever crap media feeds Europe ...

ECB - Christian Noyer said that Greece's debt cannot be restructured

Chancellor Angela Merkel's spokesman says Germany sees no basis at present for entering negotiations on a new bailout program for Greece. Steffen Seibert said Monday that Germany respects the "clear 'no' vote" by Greeks against austerity measures demanded by creditors and that "the door for talks always remains open." However, he said the conditions are "not there at present to enter negotiations on a new program." He said the "no" vote is a vote against the principle - still supported by Germany - that solidarity requires countries to take responsibility. Seibert says Europe will explore what possibilities there are to help Greek citizens and "a lot will depend on what proposals the Greek government now puts on the table." Regarding requests by Athens to restructure its debt, finance ministry spokesman Martin Jaeger said: "I can see no reason to enter into discussions."  Meanwhile, ECB governing council member Christian Noyer said that Greece's debt cannot be restructured. "Greek debt held by the Eurosystem is debt that cannot by its very nature be restructured because that would be monetary financing of a state," he said...The French advisor went on to say that Merkel had gone out on a limb to reach a compromise with Greece over a credit deal. 

"Merkel was very open to negotiations with Greece, showing patience and even a sort of maternal protection regarding Alexis Tspras," he said. France's Socialist government still hopes to avoid Greece leaving the euro, but France's opposition conservatives are now calling for Greece's orderly exit from the eurozone.  Alain Juppé from Nicolas Sarkozy's centre-right Republicans party, said: "Greece is no longer capable of sticking to the disciplines of the eurozone."

"We must help it to organise its exit without any drama."...Angela Merkel displayed "maternal protection" towards Greece's Leftist prime minsiter Alexis Tsipras who betrayed the trust of the German Chancellor and François Hollande - despite France's more conciliatory line with Athens, according to a French presidential aide. The comment comes as the French and German leaders are to meet in Paris at 6pm local time (5pm BST) to discuss the Greek crisis, followed by a working dinner at 7.30pm at the Elysée Palace.  The Hollande advisor's comment to AFP suggests France is hardening its line as facilitator vis a vis Greece and aligning itself more with Germany in a bid to show a united Franco-German front.  The aide admitted Hollande got his fingers burned after seeking a compromise with Greek PM Tsipras, saying: "It will be difficult with Tsipras. There's a real problem of trust between him and us and us and him."    Brussels to Greece: we're going to make your life much harder That was quite the press briefing from Commission vice-president Dombrovskis. In short, Brussels will not be giving the Greek government anywhere near an easier ride after last night.

Some points:

• "The place of Greece is and remains in Europe", but when pressed, Mr Dombrovskis did not repeat that Greece's place remained in the single currency

• Brussels questions the legality of the referendum and the nature of the question: it is "neither legally nor factually correct"

• The Commission will not carry out any talks with Athens before they get a mandate from the eurozone's finance ministers who are meeting tomorrow

• Greece's vague promise of debt relief as agreed back in 2012 is now no longer on the table after the second bail-out expired last week

• The No vote has made life much more "difficult" for the Greek government, but the ball is in their court to now come up with some credible reforms

No way Reichs Chancellor Merkel was going to allow one of the sub-members of her club to derail her project. Greece is owned lock stock and barrel by the EU. Suckers

Germany is at last bowing to pressure as a chorus of countries and key institutions demand debt relief for Greece, a shift that could break the five-month stalemate and avert a potentially disastrous rupture of monetary union at this Sunday’s last-ditch summit.  In a highly significant move, the European Council has called on both sides to make major concessions, insisting that the creditor powers must do their part as the radical Syriza government puts forward a new raft of proposals on economic reforms before a deadline expires tonight. If Greece stays within €uro this will help to bring down this damned currency within the next 5 years, as it will accelerate drain of liquidity, speed up moral hazard and force the counter measures of Mario "Printy" Draghi. Inflation and big bang sometimes.  If Greece leaves the €uro this will help to bring down this damned currency within 10 years as the other Austerity victims as well as moral hasard victims will learn, that there is a life beyond EU-summits, Brussels, ECB, ESM ESFM, EFSF, TargetII, LTRO and Juncker - a life in proudness and dignity (and a living within ones means, regrettably). At the end, when all nations left €uro, we will be back again in national currencies.