![[image]](http://si.wsj.net/public/resources/images/EI-BY602_specon_NS_20130123071506.jpg)
MADRID—Spain's central bank said a recession in the euro zone's
fourth-largest economy deepened slightly in the final quarter of last year, but
it said austerity cuts are bringing the country's runaway budget deficit under
control. In the first estimate of fourth-quarter economic performance, the Bank
of Spain said the economy contracted 1.7% compared with the same period a year
earlier and likely contracted 0.6% from the previous quarter. In the third
quarter, the economy had shrunk 0.3% from the previous quarter, and 1.6% on an
annual basis. The Bank of Spain said gross domestic product fell just 1.3% in
the whole of 2012, which was less than the 1.5% contraction anticipated by the
government and a sign that strict budget cuts across the board are having a less
detrimental effect than some feared. It cautioned that continuing cuts could
still weigh on an economy already hurt by efforts to trim debt. "This budget
consolidation effort has had a net contracting effect on activity throughout the
year, especially in the last few months," the central bank said. This year,
meeting even stricter austerity targets "will require an additional, very
ambitious fiscal effort by the central and regional governments." Those
comments are in line with heightened concerns by local and foreign observers
that accelerated austerity measures promoted by the European Union are
self-defeating, as a collapse in economic activity makes it harder to boost tax
revenue, putting pressure on budget deficits. Earlier this month, the
International Monetary Fund said it revising its metrics for how quickly
governments should cut their budgets and the IMF's top economist Olivier
Blanchard made the case that Europe's fiscal tightening has been too severe. "We
do need to reduce the deficit, but the EU should be more flexible about the
deadlines," said Josep Comajuncosa, an economics professor at Spain's ESADE
business school. "Requiring a fast and drastic reduction of the public deficit
could backfire. The deficit target should be pushed back one or two years." The
central bank said tax revenue increases in recent months will make it easier for
the government to get closer to its target of lowering the 2012 budget deficit
to 6.3% of GDP from 9% in 2011. The target for this year is 4.5% of GDP. The
latest data available, the central bank said, indicates tax revenue picked up in
recent months due to higher value-added and corporate tax receipts, while
expenses fell after the government suspended an extra monthly payment for civil
servants and decided not to adjust pensions for inflation—two measures which
eroded popular support for Prime Minister Mariano Rajoy. Spain's statistics
institute is due to release an official preliminary estimate of fourth-quarter
GDP Jan. 30. Full data on Spain's 2012 budget deficit, including for regional
governments, will likely be released late February.(sursa : WSJ) 
Access Investments-Building Awareness - European Union-ROMANIA
Sunday, January 27, 2013
MADRID—Spain's central bank said a recession in the euro zone's
fourth-largest economy deepened slightly in the final quarter of last year, but
it said austerity cuts are bringing the country's runaway budget deficit under
control. In the first estimate of fourth-quarter economic performance, the Bank
of Spain said the economy contracted 1.7% compared with the same period a year
earlier and likely contracted 0.6% from the previous quarter. In the third
quarter, the economy had shrunk 0.3% from the previous quarter, and 1.6% on an
annual basis. The Bank of Spain said gross domestic product fell just 1.3% in
the whole of 2012, which was less than the 1.5% contraction anticipated by the
government and a sign that strict budget cuts across the board are having a less
detrimental effect than some feared. It cautioned that continuing cuts could
still weigh on an economy already hurt by efforts to trim debt. "This budget
consolidation effort has had a net contracting effect on activity throughout the
year, especially in the last few months," the central bank said. This year,
meeting even stricter austerity targets "will require an additional, very
ambitious fiscal effort by the central and regional governments." Those
comments are in line with heightened concerns by local and foreign observers
that accelerated austerity measures promoted by the European Union are
self-defeating, as a collapse in economic activity makes it harder to boost tax
revenue, putting pressure on budget deficits. Earlier this month, the
International Monetary Fund said it revising its metrics for how quickly
governments should cut their budgets and the IMF's top economist Olivier
Blanchard made the case that Europe's fiscal tightening has been too severe. "We
do need to reduce the deficit, but the EU should be more flexible about the
deadlines," said Josep Comajuncosa, an economics professor at Spain's ESADE
business school. "Requiring a fast and drastic reduction of the public deficit
could backfire. The deficit target should be pushed back one or two years." The
central bank said tax revenue increases in recent months will make it easier for
the government to get closer to its target of lowering the 2012 budget deficit
to 6.3% of GDP from 9% in 2011. The target for this year is 4.5% of GDP. The
latest data available, the central bank said, indicates tax revenue picked up in
recent months due to higher value-added and corporate tax receipts, while
expenses fell after the government suspended an extra monthly payment for civil
servants and decided not to adjust pensions for inflation—two measures which
eroded popular support for Prime Minister Mariano Rajoy. Spain's statistics
institute is due to release an official preliminary estimate of fourth-quarter
GDP Jan. 30. Full data on Spain's 2012 budget deficit, including for regional
governments, will likely be released late February.(sursa : WSJ) 
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Mark Carney was making some of his most detailed comments since he was announced as the surprise choice for the post in November.
He said that, although price stability was central, there were “tolerances” concerning the speed with which inflation would be brought down if the economy was struggling.
At the moment inflation is running at 2.7pc, which is above the 2pc target set by the Government.
Some economists believe that the Bank of England’s loose monetary policy is contributing to inflationary pressures and have called for an increase in interest rates.
Others argue that, while the economy is flat-lining and state spending is being curtailed, a fiscal consolidation, interest rates should remain low.
What Carney is saying is that he will take money from us by making us pay more for everything that we buy, the consequence of pushing printed money into the economy. Because the Government cannot and the public cannot borrow any more money and the Corporate sector will not spend, the BoE will cause price inflation which of course will make all of us relatively poorer except of course the over borrowed whose debts will fall in real terms. Yes, thats right, rewarding the people who caused the problem in the first place.
And before anybody says it was the Banks, not everybody wanted to borrow and no one forced the borrowers to be greedy except of course weakness and peer group pressure.
Britain has Wiemar Republic levels of debt and contingent liabilties. You know what comes next.
Am I losing my mind?
GDP is the amount we spend on stuff, GDP growth is the increase in the amount spent.
Inflation is the increasing cost to doing stuff.
If GDP growth < Inflation = the stuff we do is reducing.
Reducing stuff is bad for you and I.
GDP Growth is a good headline figure for the Government.
This will be a disaster!
Mr Soros also criticised UK fiscal policy, saying that the current austerity programme, led by Chancellor George Osborne, was misplaced. “The fact that austerity has resulted in a decline is not surprising. What is surprising is that anyone would be surprised by it”.
Mr Soros said that many aspects of the crisis remained unresolved and he described the world as still “far from the equilibrium tendency”.
The big issue was how to withdraw the excess liquidity created by quantitive easing and the fear that it could result in runaway inflation. This was a fear that predominated particularly in Germany, Mr Soros said, echoing past criticisms of the way Berlin has handled the eurozone debt crisis.
“Even though the euro crisis has been brought under control, this disgreement on how to handle the recession has become very acute”.
For each loser there is a winner and, as Banco Santander continued its drive into the Anglo-Saxon market by picking up US-based Sovereign this week, it is clear which side the Spanish bank thinks it is on.
Santander, which holds 10% of deposits in Britain's high-street banks, snapped up the remaining 75% of Sovereign that it did not own for only $1.9bn (£1.1bn).
"The winner takes all," Santander's chief financial officer, José Antonio Alvarez, told a conference last week, as he explained his bank's policy of buying while the market was in crisis.
Santander, he said, was planning to "add value by rescuing falling banks at attractive prices". It would become part of a group of strong banks, he predicted, that would grow at the expense of the weak.
The US bank requested a takeover last week as the global financial crisis hit what may prove to have been its lowest point. Santander is now buying Sovereign shares - which will be paid for with its own - at almost a fifth of the price at which it bought a quarter of the bank in 2006.
With its purchase of Alliance & Leicester, picking up Bradford & Bingley's 200 branches and Monday's $1.7bn cash injection into its Abbey subsidiary, Santander has used the crisis to become a major player in Britain. Only Lloyds TSB and RBS hold more deposits in the UK.
A long-cherished desire to enlarge its profile in the US is now being realised. Little surprise, then, that the Spanish bank is feeling and sounding smug. It is rooted in a strictly regulated Spanish banking system that has avoided the worst of the sub-prime fallout. It is the eurozone's largest bank in terms of market value and the world's largest by branches, thanks to a vast Latin American presence.
For each loser there is a winner and, as Banco Santander continued its drive into the Anglo-Saxon market by picking up US-based Sovereign this week, it is clear which side the Spanish bank thinks it is on.
Santander, which holds 10% of deposits in Britain's high-street banks, snapped up the remaining 75% of Sovereign that it did not own for only $1.9bn (£1.1bn).
"The winner takes all," Santander's chief financial officer, José Antonio Alvarez, told a conference last week, as he explained his bank's policy of buying while the market was in crisis.
Santander, he said, was planning to "add value by rescuing falling banks at attractive prices". It would become part of a group of strong banks, he predicted, that would grow at the expense of the weak.
The US bank requested a takeover last week as the global financial crisis hit what may prove to have been its lowest point. Santander is now buying Sovereign shares - which will be paid for with its own - at almost a fifth of the price at which it bought a quarter of the bank in 2006.
With its purchase of Alliance & Leicester, picking up Bradford & Bingley's 200 branches and Monday's $1.7bn cash injection into its Abbey subsidiary, Santander has used the crisis to become a major player in Britain. Only Lloyds TSB and RBS hold more deposits in the UK.
A long-cherished desire to enlarge its profile in the US is now being realised. Little surprise, then, that the Spanish bank is feeling and sounding smug. It is rooted in a strictly regulated Spanish banking system that has avoided the worst of the sub-prime fallout. It is the eurozone's largest bank in terms of market value and the world's largest by branches, thanks to a vast Latin American presence.
Spain's unemployment rate has shot up to 26.02% with nearly six million people now out of work.
The country's National Statistics Institute said the rate rose by 1% between the third and fourth quarters of last year.
It said 691,700 more people lost their jobs last year.
Spain is in the throes of its second recession in just over three years following the collapse of its once-booming property sector in 2008.
The year-old conservative government, battling to reduce a swollen deficit and avoid a bailout, has brought in major financial and labour reforms and applied severe cutbacks in wages and spending but so far the economy has shown few signs of recovery.
The Czech Republic's leftist former prime minister Milos Zeman (left) looked to have won the country's first direct presidential election, results showed on Saturday, beating his conservative opponent Foreign Minister Karel Schwarzenberg (right).
By News Wires (text)
Leftist former prime minister Milos Zeman won the Czech Republic’s first direct presidential election, beating a conservative opponent, results showed on Saturday.
Zeman, 68, was leading by 55.1 to 44.9 percent over Foreign Minister Karel Schwarzenberg, who is from a centuries-old aristocratic family, results from 98.3 percent of voting districts showed.
Economic forecaster Zeman, a member of the Communist Party before the Soviet invasion of Czechoslovakia in 1968, will take the Czechs closer to the European mainstream. Outgoing President Vaclav Klaus is strongly Eurosceptic
Hundreds of European banks are rushing to repay cheap loans they borrowed from the European Central Bank a year ago, in a show of confidence that financial markets are returning to health three years into the region's debt crisis.
The ECB will get back €137 billion ($182.2 billion) from 278 banks on Jan. 30, the first day that the three-year loans can be repaid—and nearly two years before they are due—the European Central Bank said Friday.
That represents more than one-quarter of the €489 billion that banks tapped from the ECB in December 2011. Banks borrowed an additional €530 billion in a second installment of three-year loans last February, bringing the total to more than €1 trillion.
The ECB didn't provide a breakdown in loan repayment by bank or country. Roughly one third of the money that was repaid came from Spanish banks, according to a person familiar with the matter.
The data provide one of the clearest illustrations to date of the surprisingly swift healing of large swaths of the European banking system. It removes a major impediment to a gradual recovery of the broader European economy, which hinges on the health of its banks.
The ECB report comes amid signs that the euro zone's economy is starting to find its footing after more than a year of stagnation and recession that has been particularly pronounced in Southern Europe.
Though the euro zone's economy continued to shrink in January, it did so at a slower pace than in recent months, the Eurocoin indicator of activity indicated. German business sentiment rose to a seven-month high in January, the Ifo institute said on Friday.
The euro-zone purchasing managers' index rose to a 10-month high in January, though it still points to a slight contraction in business activity.
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