greece update - May 31 , 2012 - evening edition.... German scare tactics , Samaras posturing and impact of austerity on the real economy items...

http://hat4uk.wordpress.com/2012/05/31/greek-scare-tactics-continue-as-berlin-remorselessly-plans-a-future-fiscal-union-dominated-by-wolfgang-schauble/

MAY 31, 2012 · 1:13 PM

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Greek scare-tactics continue as Berlin remorselessly plans a future Fiscal Union dominated by Wolfgang Schäuble

Schäuble’s outline plan for FU is a totalitarian accident waiting to happen

One man’s poison….

There was more Domesday scariness from the National Bank of Greece on Tuesday. If Greece exits the euro, its latest report suggested, the events would lead to a devaluation of the new currency by 65%,  a GDP nosediving by 22%, 34% unemployment, and income per capita nearly halving to 55%.

But you ain’t heard the half of it: Sovereign finance will be impossible to find, initial inflation will therefore (?) be at 30% – and keep rising until any and all advantages of the drachma’s reinstatement have been wiped out.

But on the other hand, here’s some news about what’s likely to happen while there is even a risk of Greece leaving the eurozone: this morning, two of the world’s biggest trade credit insurers stopped providing cover for exporters to Greece “on concern that the country might leave the eurozone.” Brokers said the decisions by Euler Hermes and Coface were the only instances they could recall of trade credit insurers pulling out altogether from a European country. As none of them are 168 years old, I’d imagine that’s true.

But one is left wondering how, if that’s the case, things could be any worsewithout the euro….which isn’t going to exist in a year’s time anyway.

Greece doesn’t want to leave the euro, and Berlin-am-Brussels doesn’t want the country to go. I keep on saying this, and it seems to make remarkably little impression. This does not, of course, mean that a departure won’t take place, as the entire eurozone and its EU parent are based on the madness of bad science anyway.

But think on this as well: ClubMeds staying in the euro and dragging down its value can be good for business…especially German business.

…is another man’s meat.

Currency devaluation can be fun.  After EURUSD and German CDS had been tightly coupled for months, said Zero Hedge yesterday in another eurocalypse episode, the CDS market changed exchange-rates markedly between the euro and the Buck – as in, a 6% devaluation of the former. 

In Berlin – some in Frankfurt think – a cold calculation is going on in Schäuble’s Finance Ministry about the cost of megabailout versus the long-term business gains to be had from a weak exporting currency. The Frankfurters however – and they are dead right – see the calculation as not so much cold, more braindead: it would simply lead to aggressive devaluations elsewhere, and start a full-scale currency war. But a few of the more radical FinMin Berliners say that inflation is what the financial MoUs want anyway – as part and parcel of the monetisation of paper madness – so when rape is inevitable, try to enjoy it.

It strikes me on the whole as unlikely, but now he is slated for the TopFinMin job in the EU, Wolfgang Schäuble’s delusions of grandeur may be overriding his incipient paranoia about inflation. Certainly, he is very much on the case of his new job task – discipline, discipline, and more discipline. The following draft is a leak (and an intentional one) from the Berlin Finance Ministry scoping out how life in the Fiskal Union will work. And as we all know, work makes free:

The portion of a  FU nation’s debt exceeding 60% of GDP will be transferred into a new European Redemption Fund. (Very Merkelian, that one: sinners will be redeemed)

The 17 countries will be liable for their own portion of the debt transferred to the ERF. But they will face a maximum term of 20-25 years to pay it off. But here comes the double-think:

In a legal ‘redeemable pref shares’ sense (as per standard takeover contracts in business) all 17 nations will be jointly liable for the debt placed in the fund. This locks everyone in forever: you can run, but you can’t hide. As the more observant among you will have spotted, the original eurozone lock-in caused most of the problems the ezone faces today. Good to see that Berlin learns from its mistakes, nicht?

But it also means that nobody (for example – pulling a name out at random – Germany) can ever get lumbered with the entire debt mountain: because the word ‘severally’ is missing from the definition used (‘jointly’),  creditors can’t come after one debt guarantor like they could in business.

Deutschland über alles – naturlich. And – to be fair here – Brussels off the hook yet again…it not being a sovereign nation an’ all. “Don’t let’s be beastly to the Germans, or in any way horrid to the Hun” as Noel Coward sang in 1939.

One final thing of course – because Berlin never misses anything in the detail: if countries fall behind in their repayment of debt in the European Redemption Fund, some of their national tax revenue would be earmarked for repayments. They would also have to commit to fixing national finances to free up money for debt service.

Und all ziss vill be offaseen by little Volfy in dem Veelchair. You haff been varned.

Before any new readers write me off as an anti-German headcase, let me just reiterate what I’ve written a hundred times before: these problems are chiefly CDU-Merkelian, not German. The SPD would be opposed to these tactics, if not the overall goal, of eurostability. And, like UKIP’s Nigel Average, being married into a German family, I’m hardly likely to be a Germaphobic Mossad agent, now am I?

What I am doing here is dramatising and sharpening the focus on some facts to wake people up. Wolfgang Schäuble is a ruthless and slippery man found suspicious by most German politicians. Angela Merkel is a former Osti Stalinist who insists on taking a hard line in support of whatever she is promoting….usually herself. The Brussels eurocrats are all unelected functionaries who have shown themselves to be autocratic and pathetically unimaginative. Schäuble is already approved as the man who will be running the finances of the Fiscal Union. His idea of Germany is clearly going to dominate it. This is only ever going to end in tears.ä

and will voters buy into the newest set of lies from Samaras ......

ekathimerini.com , Thursday May 31, 2012 (21:49)

Samaras pledges no new taxes, gradual cuts Conservative New Democracy leader Antonis Samaras declared on Thursday that if his party wins general elections on June 17, ND will seek to scale back taxes and boost jobs as part of an overall renegotiation of the country’s debt deal with its international creditors. “We pledge no new taxes and no more horizontal cuts,” Samaras told members of the Athens Chamber of Commerce and Industry during a speech that set out his party’s 18-point economic policy program. “The era of taxing incomes that do not exist is over,” he said. The ND leader said he would seek to scale back some taxes and replace others, such as a property tax introduced last fall, with “fairer” levies. He also repeated a pledge to revoke cuts to low-level pensions and to the salaries of police and air force employees as well as to boost the languishing job market. Another priority was to help indebted households to repay their dues to banks, he said. On the thorny issue of 11.7 billion euros in public spending cuts that Greece’s creditors have demanded by the end of 2013, Samaras said that these should be made gradually over the next four years. New Democracy, which agreed to Greece’s debt deal along with socialist PASOK in February, would save the country from “suffocation” and secure its future in the eurozone, Samaras said. In contrast, leftist SYRIZA, with which ND is approximately level in opinion polls, “will bring about isolation from Europe.” “The unilateral rejection of our agreements will push us out of the euro,” he said, indicating that his leftist rivals were dangerous and would set Greece decades back. “They are like children playing with matches in an arsenal,” he said, adding, “They want a return to the days of the big state.” SYRIZA leader Alexis Tsipras is to unveil his party’s policies on Friday. The 37-year-old leader has insisted that rejecting Greece’s debt deal will not necessarily push the country out of the eurozone. Guess EFSF bonds won't be accepted by public hospitals..... http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_25063_31/05/2012_444866 EOPYY scrambles to pay outstanding debts  A group of physiotherapists staged a protest at Thessaloniki's Aristotelous Square on Thursday, demanding that EOPYY settle its debts to them. The National Organization for Healthcare Provision (EOPYY), is hoping to pay public hospitals in the next few days for some of the services they have provided to patients insured with the organization, which is facing serious financial difficulties. Pharmacists are refusing to supply medicines to people insured with EOPYY because of outstanding bills. However, EOPYY is also in arrears with regard to payments to public hospitals. EOPYY president Gerasimos Voudouris told Kathimerini on Thursday that he hopes to release up to 80 million euros, to cover the care provided in January, within the next few days. EOPYY, formed after several social insurance funds were merged last year, had its state funding cut by 500 million euros this year but is also being hurt by a drop in social security contributions, which were due to cover 4.5 billion euros of the 5.5 billion of its total funding. So far, EOPYY has only received 1.5 billion euros. and real economy still getting smashed..... http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_31/05/2012_444873 Hotels hit hard in May, first half of June Holiday bookings since the May election have declined dramatically and if the trend continues it could lead to the loss of 2 million arrivals this year, the Panhellenic Hoteliers Association warned on Thursday. Association president Yiannis Retsos said that Greece’s image as a country with no government is leading to new hotel cancellations on a daily basis. He suggested that the month of May and the first couple of weeks of June had proved very tough for hotels at holiday resorts. However, it is believed these establishments intend to take things into their own hands to improve their situation in the coming months. Meanwhile, caretaker Culture and Tourism Minister Tatiana Karapanayioti yesterday announced the implementation of various initiatives with the participation of all parties concerned in a bid to reverse Greece’s negative image in the international mass media through the promotion of favorable news from this country. and bank runs start as we head into June - get your money while the banks still have it and before capital controls are imposed...... ECB lets local lenders tap cash  Alpha and Eurobank report significant losses in Q1 after debt restructuring Local banks have officially returned to the European Central Bank cash pool after their capital boost on Monday with 18 billion euros’ worth of bonds from the Hellenic Financial Stability Facility, ECB head Mario Draghi confirmed on Thursday. The Italian banker also announced that the country’s four main lenders, National, Alpha, Eurobank EFG and Piraeus, would gradually be disengaged from the emergency liquidity assistance (ELA) of the Bank of Greece in association with the Eurosystem. Last February, due to the private sector involvement (PSI) in the Greek debt restructuring, the ECB had stopped accepting Greek collateral for the supply of liquidity to the country’s banks. Still, the PSI dealt a major blow to Alpha and Eurobank that they are yet to recover from, as their first-quarter results, issued yesterday, have shown. Alpha, the country’s second-biggest lender, recorded net losses of 107.8 million euros in the January-March period, and Eurobank, Greece’s third-biggest, reported losses of 236 million. In the same quarter last year, Alpha had posted net profits of 10.5 million euros, while Eurobank had registered losses of 5 million. Both banks attributed the severe deterioration of their finances to the “deep economic recession,” as Eurobank said in a statement, after reporting a 9 percent increase in provisions on a yearly basis, to 356 million euros. “Impairment losses on loans amounted to 320.7 million euros,” announced Alpha, which is a rise of 23.2 percent from the first quarter of 2011. Regarding the PSI process, the man who negotiated it on the part of Greece’s private creditors, Charles Dallara, reiterated on Thursday that the Greek restructuring cannot be repeated for Spain. “Greece was unique. The size of the Spanish economy is too large for a private sector involvement,” the head of the Institute of International Finance told Dutch newspaper Het Financieele Dagblad.