The European Central Bank has announced its latest growth projections for the
eurozone. It expects growth of -0.5% and +0.3% this year, which I think is in
line with the previous "central forecast" of -0.1%. For 2013, it predicts
growth between zero and 2.0% (that's a downgrade on last time's forecast of 0.0%
To 2.2%). The increased downside risks to the European economy, the ECB
president says, come from the debt crisis in Europe and its growing potential to
spill over to the wider economy. He cites unemployment as another threat to
underlying growth in the Eurozone. The first key headline from the European
Central Bank's press conference is that the ECB now sees "increased downside
risks to economic outlook" (yet it didn't cut rates at today's
meeting). .... Inflation, though, is likely to remain above 2% in 2012 --
i.e, above the ECB's target....
In The U.K - Most analysts expect the MPC to maintain its current policy at the June
meeting, with interest rates staying at 0.5pc and the quantitative easing
programme at £325bn. However, demands for more QE have started to rise due to
the worsening crisis in the eurozone and signs that the US and Asian economies
are slowing. More QE will have only marginal effects in boosting growth. But if
the pressure facing Spanish banks puts the UK financial system at risk, an
increase in QE may be necessary. In the meantime though, the MPC should focus on
boosting the flow of credit to businesses. The
European Central Bank held its key interest rates steady at an
historic low of 1pc. All eyes are now on what Mario Draghi will say at his press
conference. The bets are that he will indicate a cut in interest rates and keep
pressure on eurozone leaders to act to stem the debt crisis. The ECB has passed the buck to eurozone governments, warning that the single
currency is under increasing threat. Mario Draghi talked
down the chance of more cheap LTRO funding once the current
batch runs out, saying it was wrong for monetary policy to fill a policy vacuum
created by others: The issue now is whether these LTROs would actually be
effective. Some of these problems in the euro area have nothing to do with
monetary policy... and I don't think it would be right for monetary policy to
fill other institutions' lack of action. The economic outlook for the
euro area is subject to increased downside risks relating in particular to a
further increase in the tensions in several euro area financial markets and
their potential spillover to the euro area real economy.
22 comments:
The current Government has inflicted on the public a 2.5% VAT, 1-2% NI increase, the harshest public sector cuts in 60 years, trebling of tuition fees, public sector pay freezes and pension raids, an increase in pension age and so on.
Banksters who caused the crash get from Osborne an abolition of the bonus tax, a reduction in business rates, a new law that allows them to avoid taxes on any foreign subsidiaries profits (Barcalys and RBS have seven hundred of these tax avoiding vehicles and Barclays for example paid only 1% tax last year).
The banksters carry on with business as usual and get an average pay increase of 20% last year and a£14 billion bonus pot. The public get a recession and the biggest drop in living standards in a century.
Because banks provide over 50% of Tory party funding Cameron and Osborne will put their needs above those of the other 60 million people who live here.
Business as usual will not be acceptable in this case. There were riots last summer. There is a threat of a general strike in the over public sector pension raids. Refusing to reform the banks and cutting the 50% tax rates are the most divisive policies that can be imagined- "were all in it together" couldn't be further from the truth.
Expect, as warned before, very serious trouble for a decision so out of touch with the needs and views of the vast majority of the electorate.
Haldanes putting the subsidy COST at £60 billion a year-
http://www.bankofengland.co.uk/publications/speeches/2010/speech433.pdf
“The narrowest fiscal interpretation of the cost of crisis would be given by the wealth transfer from the government to the banks as a result of the bailout. Plainly, there is a large degree of uncertainty about the eventual loss governments may face. But in the US, this is currently estimated to be around $100 billion, or less than 1% of US GDP. For US taxpayers, these losses are (almost exactly) a $100 billion question. In the UK, the direct cost may be less than £20 billion, or little more than 1% of GDP.”
“But these direct fiscal costs are almost certainly an underestimate of the damage to the wider economy which has resulted from the crisis – the true social costs of crisis. World output in 2009 is expected to have been around 6.5% lower than its counterfactual path in the absence of crisis. In the UK, the equivalent output loss is around 10%. In money terms, that translates into output losses of $4 trillion and £140 billion respectively.” (That is just for the UK and the USA, not the rest of the world.)
“As” (evidence given in the paper) “shows, these losses are multiples of the static costs, lying anywhere between one and five times annual GDP.”
“Put in money terms, that is an output loss equivalent to between $60 trillion and $200 trillion for the world economy and between £1.8 trillion and £7.4 trillion for the UK. As Nobel-prize winning physicist Richard Feynman observed, to call these numbers ‘astronomical’ would be to do astronomy a disservice: there are only hundreds of billions of stars in the galaxy.
“For UK banks, the average annual subsidy for the top five banks (between 2007 and 2009) was over £50 billion - roughly equal to UK banks’ annual profits prior to the crisis. At the height of the crisis, the subsidy was larger still. For the sample of global banks, the average annual subsidy for the top five banks was just less than $60 billion per year. These are not small sums.”
the government in Madrid angrily rejected the demands, insisting that it did not need rescuing. With fears of a euro meltdown having rapidly shifted from Greece to Spain, Rajoy is pleading for a direct eurozone rescue of his country's banks,
Don't need rescuing but can someone else rescue us. Weird.
his whole neo-liberal scam is getting beyond a joke at this stage. Its clear to anyone who looks a little below the surface that the whole plan is to further the transference of wealth from the public to greedy private hands. They did it in Ireland, Greece and Portugal already with their so called austerity policies and now Spain is next. Whats so wrong with letting the bloody banks fail? Isn't it capitalism 101 that if you take a gamble and you dont win then you lose your money? Evidently not for the bankers who demand socialisation of private and now Angela and co. are suggesting further privatisation of public services. Honestly people, wake the fuck up!
its scary. the euro either fails or the nations of the eurozone effectively have to abolish themselves with no democratic input whatsoever. what a mess
https://sites.google.com/site/asociatiaproxemis/
People have to start to comprehend that the debt-based system of finance is a form of insanity, as is this ridiculous distraction about whether one currency survives or not. The whole system is on the point of imminent collapse and the people (and the politicians we voted in to protect our interests) have to give it a final push over the edge. It may seem a drastic step, but the alternative, of allowing business as usual, will be nothing short of catastrophic for us all.
Stop talking bloody sense will you?
In one sense it's just imaginary money. But we owe that debt, collectively, to the small percentage at the top, the oligarchy, as described in the documentary and they are accumulating very real wealth and doing so at the expense of very real habitat destruction.
Though they control government, media, and just about every other institution, once the system itself disintegrates, or is toppled (though there is no guarantee of this) we may well be able to restore some sanity and use our collective intellect to fix problems around the world based on necessity rather to service debt and for the obscene profit of a few.
There have been a fair few people out on the streets – unjustly dubbed a rag tag bunch of hippies by some – who have been going on about the 1% for some time. Its time they are separated from the power to influence the world's affairs and we move into a new era. Anything short of that and it's goodbye homo sapiens!
Firstly, the confirmation that there was a debate about lowering interest rates in the Council, showing a process of transition within the Governing Council towards a more dovish stance, especially compared to the May discussion when Draghi said that no changes in interest rates were discussed. The decision to keep rates unchanged in June was supported by a broad consensus but a “few” members argued in favour of lower interest rates. Looking forward, we do not expect there to be any meaningful good news about the euro area economy which will reverse the Governing Council transition and therefore we expect a majority of members to recognise the materialisation of downside risks to the economy.
Secondly, President Draghi was very explicit in mentioning some of the assembedded in the new Eurosystem staff projections. The projections have already been challenged to the downside by some of the most recently available survey data for May, especiallthose pinning down conditions of foreign demand, which the ECB still expects to be “buoyant”. In fact following the cut-off date for the Eurosystem projection assumptions (May 24th), survey data suggest the global business cycle might be weakening, especially as far as the manufacturing sector is concerned.
Firstly, the confirmation that there was a debate about lowering interest rates in the Council, showing a process of transition within the Governing Council towards a more dovish stance, especially compared to the May discussion when Draghi said that no changes in interest rates were discussed. The decision to keep rates unchanged in June was supported by a broad consensus but a “few” members argued in favour of lower interest rates. Looking forward, we do not expect there to be any meaningful good news about the euro area economy which will reverse the Governing Council transition and therefore we expect a majority of members to recognise the materialisation of downside risks to the economy.
Secondly, President Draghi was very explicit in mentioning some of the assembedded in the new Eurosystem staff projections. The projections have already been challenged to the downside by some of the most recently available survey data for May, especiallthose pinning down conditions of foreign demand, which the ECB still expects to be “buoyant”. In fact following the cut-off date for the Eurosystem projection assumptions (May 24th), survey data suggest the global business cycle might be weakening, especially as far as the manufacturing sector is concerned.
If EU summit in Brussels fails to show markets Euro will be defended at all costs, Spain says currency could be doomed
Who is going to defend Euro at all costs, Germany ?
It seems the domino effect is just about to begin.
Add Spain to Greece, which country is next.
Soon there will be more countries in trouble than trouble free.
And then what.
On the left, Francois Hollande's Socialist Party has concluded electoral pacts with the smaller Europe Ecology, The Greens and the Radical Left Party. Another potential coalition partner is the more radical Left Front, which brings together the Communist Party and the Left Party and has fielded candidates in nearly all constituencies.
On the right, the Union for a Popular Movement (the UMP - the party of former President Nicolas Sarkozy) is defending an absolute majority in the current National Assembly. The party has concluded an electoral agreement with its centrist Radical Party and New Centre allies.
The far-right National Front has ruled out any pact with the UMP.
Other parties to field candidates include the far-left Workers' Struggle and New Anti-Capitalist Party as well as the Centre for France.
How is the election portrayed in the media?
The polls are viewed as a test of the endurance of the Socialists' political vision among the electorate after a presidential contest which was dominated by personalities. Much was made of Mr Hollande's anti-austerity stance during the presidential election - but the extent to which the result was shaped by personal animosity towards Mr Sarkozy is unclear.
The fortunes of the UMP are also the subject of much debate. Wounded by Mr Sarkozy's defeat, the party has failed to portray a united front as it struggles to appoint a successor. A report by the France 24 news channel has suggested that continued disharmony could result in an "election shipwreck".
There is also discussion of the rise in popularity of the National Front, and the possibility that the party may take votes from the UMP and secure its first seats in decades.
BBC Monitoring selects and translates news from radio, television, press, news agencies and the internet from 150 countries in more than 70 languages. It is based in Caversham, UK, and has several bureaux abroad. For more reports from BBC Monitoring,
AFP - France's new Socialist government rolled back an emblematic reform of Nicolas Sarkozy's administration on Wednesday with a decree lowering the retirement age from 62 to 60 for some workers, a minister said.
The decree, reducing the age limit for people who begin their careers at the age of 18, was agreed on at a cabinet meeting, Social Affairs Minister Marisol Touraine told reporters as she left the meeting.
It will be finalised before the end of the month before being published in France's official gazette.
Next year around 110,000 people are expected to benefit from the measure at an estimated cost of 1.1 billion euros ($1.4 billion), an amount expected to rise to 3.0 billion euros a year by 2017, she said.
Up to six months of unemployment and six months of maternity leave can be included in the calculation of the amount of time a worker has to pay into pension funds to benefit from retirement at 60, Touraine said.
This system means that "women who worked and who had children will not be penalised in the calculation of their pension", she said, adding that the project will be financed by a 0.1 percentage point rise in worker and employer contributions.
Touraine said that the new decree, which goes against the current of pension reform in Europe, was "a measure of justice which concerns those who were penalised most by the reform of 2010".
Right-wing president Sarkozy raised France's retirement age that year from 60 to 62 despite months of protests that brought millions onto the streets.
Under the new system, workers who begin their careers at 18 will be able to retire if they have paid into state pension plans for 41 years or 41.5 years, depending on their year of birth.
The reform comes ahead of a "social conference" to be held by Prime Minister Jean-March Ayrault on July 9-10 which will include representatives from France's five main unions and employers' organisations
Mircea Halaciuga, Esq.
004.0724.58.1078
PROXEMIS - Managementul Riscurilor
REUTERS - Germany and European Union officials are urgently exploring ways to rescue Spain’s debt-stricken banks although Madrid has not yet requested assistance and is resisting being placed under international supervision, European sources said on Wednesday.
Spain, the euro zone’s fourth biggest economy, said on Tuesday it was effectively losing access to credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks.
The European Central Bank dashed investors’ hopes of an easing of monetary policy or another flood of cheap liquidity for banks despite saying that the euro zone money market has again become “dysfunctional”. The ECB left interest rates on hold at 1 percent at its monthly meeting.
The move raised pressure on EU political leaders to outline a solution to the bloc’s festering debt crisis at a summit later this month.
Spanish Economy Minister Luis de Guindos said after talks at the European Commission on Wednesday there were no immediate plans to apply for a bailout. Spain would await the results of an IMF report and an independent audit of the banking sector, both due this month, before taking decisions on how to recapitalise the banks, he said.
ECB President Mario Draghi said financial markets were not wrong to be worried about the future of the euro zone but they underestimated the political commitment backing the single currency. He welcomed EU leaders’ agreement to step up work on a long-term vision for a full economic and monetary union.
“Some of the problems in the euro area have nothing to do with monetary policy,” he told a news conference. “I don’t think it is right for monetary policy to fill other institutions’ lack of action.”
Acknowledging that the rate-setting governing council’s decision was not unanimous, he said “a few members, I would say not many” had wanted a rate cut on Wednesday.
Asked whether the central bank would take supportive action if the EU summit agreed to move towards a fiscal and banking union, he said there was no such “horse-trading” but the ECB would monitor developments and stood ready to act.
The U.S. Treasury, which chaired the G7 phone hook-up, said in a statement that the group’s finance chiefs had discussed “progress towards a financial and fiscal union in Europe” and agreed to monitor developments closely. But the group made no joint statement and took no immediate steps.
The United States, which is pressuring European governments to take a bold step toward financial and fiscal union, would like to see the makings of a plan by a G20 summit in Los Cabos, Mexico, on June 18-19.
U.S. President Barack Obama, whose re-election chances this year could be jeopardised by another global financial crisis, has been anxious not to be seen dictating to Europe.
But Canadian Prime Minister Stephen Harper was more forthright on Tuesday: “I don’t want to sound too alarmist, but we are kind of running out of runway here,” he said.
EU leaders meet on June 28-29 to discuss a strategy for overcoming the crisis, which began in late 2009 when Greece revealed it had covered up a huge budget deficit.
Spain will test the market on Thursday by issuing up to 2 billion euros ($2.5 billion) in government bonds at auction.
Sources in Berlin said the German Finance Ministry believes the euro zone’s permanent rescue fund, the 500-billion-euro ($625 billion) European Stability Mechanism, due to enter into force next month, could lend directly to Spain’s FROB bank rescue fund. EU lawyers are not convinced this would be legal.
One advantage would be that smaller euro zone countries such as the Netherlands or Finland could not hold up a loan since approval by the ESM board does not require unanimity.
Deutsche mark
Drachma
Peseta
Lira
Fiorint
Franc
Escudo
No punt, because the Irish still believe that they will get out of jail if they do as they are told.
Incidentally, the Drachma is being printed as I write.
Get ready.
CHARTRES, France—For decades, when this medieval town wanted to borrow for a building project, officials just needed to walk into one of the many banks between city hall and the nearby 13th-century cathedral.
This year, they have had to look farther afield. Unable to raise the money to keep city construction projects on track, Mayor Jean-Pierre Gorges has dispatched aides to Beijing in hopes of negotiating a loan from China Development Bank.
As France's new president, François Hollande, tackles the many challenges posed by the deepening euro-zone crisis, from Spain's troubled banking system to Greece's potential exit from the currency union, here's the latest: Many municipalities can't fund their investment projects.
France's economy currently is barely growing, and its unemployment is running around 10%.
Construction of a hospital in the western France town of Saint-Maixent-l'Ecole has been stalled since the town proved unable last year to raise the money to finish the project. In Sceaux, renovation of a retirement home is indefinitely delayed. "Nobody is lending," said its mayor, Mr. Laurent.
French local governments can borrow only to finance investments, not to pay routine bills. The French national government has vowed to help bridge the financing gap and extended €5 billion of credits directed to local authorities last year, an amount that was quickly snapped up.
France, for example, has 30,000 roundabouts—four times as many as Germany—many built on secondary roads in the countryside that hardly face dense traffic.
Mr. Hollande has rejected former President Nicolas Sarkozy's idea that municipalities should emulate the central government in not replacing one out of two retiring civil servants, but Mr. Hollande hasn't spelled out how he might help municipalities raise funds. A French finance ministry spokeswoman declined to comment on the issue
Certain projects have attracted the Chinese more than others, he said, including the rail-station renovation and the new exhibition center, designed by noted Iraqi-British architect Zaha Hadid, which Mr. Masselus said "could turn profitable fairly quickly" and make loans easier to repay.
But more negotiations will be needed before there is any loan agreement, Mr. Gorges said. China Development Bank and BPCE declined to comment.
While Chinese public opinion, as expressed in the media and on microblogging sites, opposes using state funds to bail out Europe by buying euro-zone sovereign debt, Chinese officials view infrastructure in Europe as a safer bet than government bonds, say European bankers who have dealt with them.
Europe's struggles have created opportunities for Chinese investors to acquire assets at tempting prices. China Three Gorges Corp. won the bidding for a 21% stake in power company EDP-Energias de Portugal SA in December. This year, the sovereign-wealth fund China Investment Corp. bought more than 8% of British utility Thames Water.
A loan to Chartres from China Development Bank's funds, if obtained, could come with strings attached. The bank's loans in Africa and Latin America are extended on condition the borrower plows much of the money back into Chinese companies, such as by using Chinese contractors rather than a local company. Asked about such a prospect, Mr. Gorges said, "I would never accept such conditions."
Post a Comment