European finance ministers on Friday heaped pressure on the Greek government to accelerate its privatisation programme and implement deeper spending cuts, after they told Athens a crucial €8bn (£6.9bn) bailout payment would be delayed until next month. Luxembourg prime minister Jean-Claude Juncker, who chaired a meeting of the eurogroup of single currency finance ministers in Poland on Friday, said officials recognised the renewed efforts by Greece to meet its fiscal targets, but a decision on releasing the next tranche of cash would not be taken until October. The move was met with incredulity by Greek officials. They have already warned they will be out of money by mid-October and are reported to be making contingency plans to lay off public sector workers. Inspectors from the ECB, EU and International Monetary Fund (IMF) are currently in Athens and should report back on progress in early October, European commissioner for monetary affairs, Olli Rehn said – meaning that the next disbursement of aid to Greece from its first bailout could be paid by mid-October. Concerns that statistics from Athens failed to present an accurate picture of its finances were given weight after two members of the government's statistics board resigned and another was quoted as alleging that 2009 deficit data had been artificially inflated in order to ensure bailout funds would be forthcoming.
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Sunday, September 18, 2011
European finance ministers on Friday heaped pressure on the Greek government to accelerate its privatisation programme and implement deeper spending cuts, after they told Athens a crucial €8bn (£6.9bn) bailout payment would be delayed until next month. Luxembourg prime minister Jean-Claude Juncker, who chaired a meeting of the eurogroup of single currency finance ministers in Poland on Friday, said officials recognised the renewed efforts by Greece to meet its fiscal targets, but a decision on releasing the next tranche of cash would not be taken until October. The move was met with incredulity by Greek officials. They have already warned they will be out of money by mid-October and are reported to be making contingency plans to lay off public sector workers. Inspectors from the ECB, EU and International Monetary Fund (IMF) are currently in Athens and should report back on progress in early October, European commissioner for monetary affairs, Olli Rehn said – meaning that the next disbursement of aid to Greece from its first bailout could be paid by mid-October. Concerns that statistics from Athens failed to present an accurate picture of its finances were given weight after two members of the government's statistics board resigned and another was quoted as alleging that 2009 deficit data had been artificially inflated in order to ensure bailout funds would be forthcoming.
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I have to say that even in my most apocalyptic Eurosceptic moments – when I had moved on from thinking the federalist project simply preposterous to believing that it was criminal folly – I never anticipated this. What I expected was growing disillusionment followed by an almost imperceptible unwinding which would be finessed with political double-talk and diplomatic duplicity. The implosion would come, but it would be with a whimper, not a bang. Faces would be saved and enormous numbers of lies would be told, and somehow the thing would be brought to an end – or made so vestigial that it would no longer matter.
Well, so much for that idea. This is going to be huge: so cataclysmic that it may summon up forms of ugliness that we have not seen walking abroad in Western Europe for half a century. This is where the story goes beyond irony. The European federal dream was devised by its architects to be a definitive repudiation of the ideological conflicts of the 20th century. Pragmatism, consensus and regard for the greater supra-national good would reign where once wicked nationalism and zealotry had prevailed. But what strikes me when I hear the surreal statements emanating from those emergency summits and absurd Franco-German-Greek conference calls is that this is precisely a continuation of the old ideological delusions of the European past. The EU leadership and the Greek prime minister announce implacably that Greece will not leave the euro (ever), as if their uttering of the words made them indisputable. In fact, this is simply a statement of political will that dares the world to defy it.
It seems that the European political class still thinks that an assertion of its mystical belief can alter reality: that what it insists is so, will be so. If its idea of itself and its design for the future are in conflict with the facts of economics or life as it is actually lived, then it is those facts that will give way. (A German Christian Democrat politician once said to me, “The single currency will work because we will make it work.”) Those facts now include not only Greek debt but the democratic wishes of electorates who have a sentimental belief in their right to hold their own governments to account. This is where we are: up against the unavoidable contradiction of the European federal project. The complaint that the EU is lacking in strong political leadership is misconceived: it has had altogether too much “leadership” – which is to say, domination from political and bureaucratic authorities determined to lead with as little interference from real people as possible.
“Consensus” has become coercion. The imperatives of federalism and ever closer union have come bang up against the basic principle of democracy: that elected governments should be answerable to their own electorates, particularly on matters that affect the lives of ordinary citizens, such as taxation and public spending. Federalism cannot allow democracy to disrupt its objectives, and democracy will not permit federalism to ignore its anger and frustration. Angela Merkel cannot do what her critics are insisting that she must do – as George Osborne put it, show that she recognises “the gravity of the situation” and is “dealing with it” – because her electorate will not wear it. She cannot commit herself to endless bail-outs and the under-writing of infinite Mediterranean debt, just as the Greek government cannot deliver the EU’s austerity measures – because the people of both these countries do not wish it. The irresistible force has met the immovable object.
So the choice is between abandoning the democratic principle which holds that the legitimacy of government derives from the consent of the governed, or backing down on the commitment to the euro and all the strictures that go with it. We know which side of this argument our Government has chosen. Mr Osborne reiterated last Friday his insistence that the EU needs “fast-track” fiscal integration – and never mind the democratic scruples.
Corporations have a higher share of cash on their balance sheets than at any time in nearly half a century, as businesses build up buffers rather than invest in new plants or hiring.
Nonfinancial companies held more than $2 trillion in cash and other liquid assets at the end of June, the Federal Reserve reported Friday, up more than $88 billion from the end of March. Cash accounted for 7.1% of all company assets, everything from buildings to bonds, the highest level since 1963.
Despite last week’s positive economic figures, the winner of the election is likely to receive bad economic news during the first months of their term
Although second quarter economic statistics showed the country posting surprisingly strong GDP growth, a repeat in the third quarter is unlikely.
A closer look at the figures shows that the 1.0 percent GDP growth figure was due mainly to governmental spending and inventory build-up in the private sector. The domestic consumer spending that is necessary to drive continued growth, on the other hand, has remained stagnant. Exports meanwhile are likely to decline.
PIMCO who specializes in Bonds, having the largest bond fund in the world could not have been more wrong about an asset class, which is surprising considering their experience in this sector. Bill Gross`s official declaration that his firm was shorting the US Treasury Market on April 11th of this year to the day marked the literal double bottom in price/high in yield for the year, and it has been one heck of a one-way trade in the opposite direction ever since.
Countrywide Financial's lawsuit losses could compel parent Bank of America Corp (BofA) (BAC.N) to put up the unit on the bankruptcy block, Bloomberg reported citing four people with knowledge of the firm's strategy.
The bankruptcy option exists because the bank maintained a separate legal identity for the subprime lender after buying it in 2008, said the people, who declined to be identified because the plans are private.
However, a filing is not imminent and the executives are aware that the move could backfire and cast doubt on the largest U.S. bank's financial strength, Bloomberg cited the people as saying.
Charlotte, North Carolina-based Bank of America has lost more than $22 billion from its consumer mortgage division in the last four quarters, in large part because of loan losses and legal settlements linked to Countrywide.
In August, American International Group Inc (AIG.N) sued BofA for over $10 billion, saying the bank was liable for Countrywide's mortgage bonds as its legal successor.
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