The European Central Bank (ECB) pursues its mandate and defends its independence, according to statements of the president of the institution, Mario Draghi, who responded yesterday, to some criticisms coming from several German officials concerning the lax monetary policy of the ECB.

Draghi yesterday said, in a press conference: "We have the mandate of ensuring price stability for the entire Eurozone, not just for Germany. We obey the law, not politicians, because we are independent, as stipulated by the law". Over the last few weeks, several German politicians have criticized the ultralax monetary policy adopted by the ECB, which cut the policy rate to zero in March. The officials in Berlin are saying that this measure affects those Germans who save money. (A.V.)  Mario Draghi said that the ECB is ready "to use all the available instruments" to stimulate the rise of prices in the Eurozone, but expressed his confidence in the effects of the measures passed by the bank so far.   "Our policies work, they are efficient", said Draghi, and he added: "It just takes time for those measures to produce their effects in full". The president of the ECB also stressed that aggressive measures, the kind of "money thrown from helicopters", has not even been brought up in this week's meeting of the council of governors.   Yesterday, the ECB decided not to change the interest rate, after it cut it to a historic low in its March meeting, in an attempt to boost inflation.  The ECB kept the policy rate at zero, while the interest on the marginal lending facility was kept at 0.25%, and the interest rate on deposits was kept at - -0.40%.

Greece's lenders, especially the IMF, want the Greek parliament to adopt a €3.6 billion package of austerity measures that would be implemented only if Greece missed its primary surplus target for 2018, set at 3.5 percent of GDP by the bailout memorandum signed last year.

The primary surplus is the budget surplus before the state has to repay interests on its debt.

The Greek government, which said legislating in advance was unconstitutional, has proposed to commit to take measures in the future if fiscal data approved by Eurostat show that the target will be missed. A more political argument is that the quartet's request for a contingency package goes beyond what was agreed by eurozone leaders last July and then written down in the bailout memorandum of understanding signed in August.  That is why Tsipras, who always said he would do "nothing more and nothing less" than what was agreed last summer, is trying to push the discussion back to the highest political level.  A eurozone summit is however unlikely, as EU leaders have been willing to let their finance ministers deal with the Greek crisis. The leaders took over the talks last year only when a Greek exit from the eurozone became a real danger.

Morgan Stanley, Nomura, and Societe Generale have all issued cautionary notes just as amateur investors belatedly turn bullish again on China and start to pile into both commodities and emerging market equities.  "While the mini-recovery is likely to last another 3-4 months, our economists expect a renewed slowdown in the second half of the year, as stimulus efforts fade," said Morgan Stanley. The US bank said record credit growth over the last quarter will keep growth humming for a little longer but the fiscal blitz is already ebbing and the government is imposing property curbs in the Eastern cities to prevent a speculative bubble.  China's reflation drive has been explosive. New home sales jumped 64pc in March from a year earlier. House prices have risen 28pc in Beijing, 30pc in Shanghai, and 63pc in the commercial hub of Shenzhen. The rush to buy has spread to the Tier 2 cities such as Hefei - up 9pc in a single month.  "The housing market is on fire," said Wei Yao, from Societe Generale. "In the first quarter, increases in total credit exploded to 7.5 trilion yuan, up 58pc year-on-year. There is no bigger policy lever than this kind of credit injection."  "This looks like an old-styled credit-backed investment-driven recovery, which bears an uncanny resemblance to the beginning of the“four trillion stimulus” package in 2009. The consequence of that stimulus was inflation, asset bubbles and excess capacity. We still think that this recovery will not last very long," she said.

The biggest Italian banks, insurers and asset managers in the country, have accepted, on Monday night, to create a five billion Euros fund meant to help troubed banks, to allay investor fears over the stability of the local banking sector. The fund, called "Atlas", will benefit from major capital injections from "UniCredit" and "Intesa Sanpaolo", the top two largest banks. According to sources quoted by Reuters, "UniCredit" and "Intesa Sanpaolo" will each contribute one billion Euros to that fund. The sources are also saying that state owned bank CDP will contribute 500 million Euros, smaller banks will allocate between 500 and 700 million Euros, banking foundations will contribute approximately 520 million Euros, and insurers - another 500 - 700 million Euros.  In exchange for the financing offered by private banks, the Italian government has accepted to revise its bankruptcy legislation, in order to facilitate the sale of non-performing loans. Italian PM Matteo Renzi said: "In the coming days we will make the bankruptcy procedure simpler and quicker, so that all the parties involved recoup their money within a reasonable delay".  Currently, in Italy it takes about eight years on average to recoup non-performing loans, compared to approximately two years in the EU. The Italian banking system is facing non-performing loans of approximately 360 billion Euros, one third of the total volume in the Eurozone. The "Atlas" fund will allow supporting "Banca Popolare di Vicenza" and "Veneto Banca", financial institutions that have to raise almost 3 billion Euros in the coming weeks, to consolidate their capital. The fund may invest two billion Euros in the future stock issues of "Banca Popolare di Vicenza" and "Veneto Banca", and may even acquire one of these banks.  The European Commission has informed that it is keeping in touch with the government in Rome on the creation of the fund intended to support banks.

In October 2013, the provisions of articles 12 and 13 of the Law no. 193/2000 concerning abusive clauses in contracts concluded between professionals and consumers, with the modifications that were made to them by the Law no. 76/2012 for the implementation of the Law no. 134/2010 concerning the Civil Procedure Code. Article 12 stipulates: "If the use of adhesion contracts which include abusive clauses are found, the control entities stipulated in Art. 8 (ed. note: the authorized agents of the National Consumer Protection Agency and authorized specialists of other entities of the public administration, depending on their competences) will notify the court from the domicile, or the headquarters of the professional, and demanding that the professional be required to amend the ongoing contracts, by removing the abusive clauses they may contain. (...) The consumer protection associations (...) can sue professionals that use adhesion contracts that contain abusive clauses, with the courts stipulated in paragraph (1), and ask the latter to decide the cessation of their use, by eliminating the abusive clauses".  Article 13 states: "The court, if it finds the existence of abusive terms in the contract, requires the professionals to change all ongoing adhesion contracts, as well as to eliminate all abusive clauses from boilerplate contracts, meant to be used as part of the professional activity". There are several ongoing "class action" lawsuits filed by the ANPC, especially against banks. The Parakletos Association has intervened in seven of the ANPC cases against the banks, as a third party. The leaders of Parakletos state that, through the ruling in the ANPC/OTP Bank case, lays the groundwork for the straightening of all the contracts between professionals and consumers, when they contain abusive clauses, without the consumers in question having to resort to individual lawsuits.

 

  Unemployment rate in Greece increased slightly in January this year, to 24.4%, from 24.3% in the previous month, and down from 25.7% in January 2015, according to the Athens Statistics Bureau - ELSTAT. Thus, unemployment in Greece remains almost double than in the Eurozone and almost three times higher than in the European Union. According to seasonally adjusted data, the January level is the lowest since May 2012, when the unemployment rate was at 24.1%. The highest level, of 27.9%, was seen in September 2013.  According to ELSTAT, 1,169,119 people did not have a job in January, down 62,999 over the previous month. Also, the number of employees in Greece was 3,613,483, up 59,789 over the previous month, ELSTAT announced.  The highest unemployment rate, of 51.9%, was seen among young people aged 15 to 24. In January 2015, the unemployment rate on this segment was 50.5%.  Greece's economy fell 0.3% last year, according to revised data recently published by ELSTAT. In 2014, the Greek economy exited a recession which lasted almost six years, posting an advance of 0.7%.

The International Monetary Fund has tried to attenuate the pessimism reflected in its World Economic Outlook through the Global Financial Stability Report, titled "Potent policies for a successful normalization". Without going too much into the psychological subtext of the title, a cursory read shows that the optimism of the Fund has no real basis, especially if we focus on the description of the financial situation of the financial system in Europe.  "The systemic risk is limited, but can grow all over Europe", the IMF document states, because there is "a confluence between the issue of non-performing loans and that of borrowing conditions", when the possibility of bail-in has been fully internalized by the holders of banking liabilities". The euphemisms of the Fund are touching, especially if we look at the report on the global economic outlook.  Bloomberg writes that "the report is very pessimistic", amid "far too low growth that has lasted too long", according to the chief-economist of the institution, professor Maurice Obstfeld.  One of the risks mentioned in the introductory chapter of the report, is the return of the financial crisis, with negative effects on demand and confidence, about which it is stated that "they could enter a self-perpetuating negative feedback loop".  The choice of the term "self-perpetuating negative feedback loop" is extremely unfortunate for the specialists of an institution who should know something about dynamic economic systems. A negative feedback loop is by definition, stabilizing, whereas a positive feedback loop can lead to explosive growth or catastrophic growth.