http://hosted.ap.org/dynamic/stories/E/EU_GERMANY_US_FINANCIAL_CRISIS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-06-25-07-41-21

BERLIN (AP) -- Germany's finance minister is rejecting U.S. President Barack Obama's calls on Europe to move faster in fighting its debt crisis, telling him to get the American deficit under control instead.

Wolfgang Schaeuble told public broadcaster ZDF in an interview late Sunday that "people are always very quick at giving others advice."

He says: "Mr. Obama should first of all take care of reducing the American deficit, which is higher than in the eurozone."

Obama and other leaders fear an escalating crisis in Europe could drag down the world economy.

The 17-nation eurozone is struggling to overhaul its institutions and streamline its decision making to restore investors' confidence. The bloc's debt relative to its economic output stands at about 80 percent, while it is about 100 percent in the U.S.

http://www.zerohedge.com/news/sch%C3%A4uble-german-endgame-plans-cant-lets-european-crisis-go-waste

Schäuble On German Endgame Plans: Can't Lets A European Crisis Go To Waste

Submitted by Tyler Durden on 06/25/2012 08:30 -0400

European Union

Finland

Germany

Greece

That the most important man in Europe is actually a woman is by now understood by everyone. Yet behind even Merkel, sits another man: German finance minister Wolfgang Schäuble, who is truly the devious mastermind behind the European endspiel, in charge of playing it in a way that benefits Germany uber alles. Which is why what Schäuble says, unlike anything uttered by Europe's "beggar" states, is actually important. Today, he speaks with Spiegel magazine and discusses, among many other things, the topic that is the most sensitive for the rest of Europe, and which must be overcome if a united Europe is to work: the abdication of national sovereignty, and implicitly the accession of Germany to the head of the European pyramid. That this will never happen is precisely why the European experiment is ultimately doomed, but of course they can keep trying, and in the process transfer as much wealth as possible to the only beneficiary from an imploding EUR. Wild guess who that is... Because at the end of the day, it appears that Schäubleis just as wily as America's own Rahm Emanuel: "SPIEGEL: With all due respect to your vision, is there truly more willingness today among EU member states to give up sovereignty than there was in the 1990s?Schäuble: The recognition that this is necessary, and the willingness to do so, has certainly grown due to the crisis, and not just in Germany. I would much prefer that we not have so many crises, and particularly not such severe ones. But every crisis also includes the opportunity to recognize what is necessary [regarding European sovereignty]. That's what led to the fiscal pact, in which 25 EU countries pledged to improve their fiscal discipline. And that's also how the new Europe will come about." Is it finally becoming clear what the German endgame is?

From Spiegel

SPIEGEL: Minister Schäuble, the European Union is mired the worst crisis in its history with the eurothreatening to break apart. What is at stake?

Schäuble: Our prosperity. The world, with its globalized economy, is changing at a rapid pace. Those who want to keep up cannot go it alone. It only works in collaboration with other European countries and with a European currency. Otherwise we would fall far behind, and that would lead to a substantial loss of prosperity and societal security.

SPIEGEL: Would the EU survive the collapse of the monetary union?

Schäuble: There is certainly the risk that, in the event of a collapse of the euro -- which, by the way, I don't believe is going to happen -- much of what we have achieved and become fond of would be called into question, from the common domestic market to freedom of travel in Europe. But a collapse of the EU would be absurd. The world is moving closer together, and we're talking about the possibility of each country in Europe going its own way? This cannot, must not and will not happen!

SPIEGEL: Was it a mistake to introduce the euro?

Schäuble: No. The monetary union was the logical consequence of the advancing economic integration of Europe.

SPIEGEL: Nevertheless, the euro is a miscarriage. The necessary political union was absent.

Schäuble: To call it a miscarriage is nonsense. But it's clear that we wanted a political union at the time, but it wasn't possible. Germany would have been prepared to relinquish powers to Brussels, because it was only through Europe that we received a new chance after World War II. But other countries had trouble with the concept, because of special traditions, for example, or because they had only recently regained their national autonomy after the fall of the Iron Curtain. As such, we faced a fundamental question: Do we introduce the euro without having the necessary political union, and do we assume that the euro will bring us closer together, or do we abandon the idea?

SPIEGEL: And in that situation you preferred to take the risk.

Schäuble: If we had always said would only take steps toward integration if they would immediately work 100 percent, we would never have advanced by so much as a meter. That's why we wanted to introduce the euro first and then quickly make the decisions needed for a political union. Luxembourg Prime Minister Jean-Claude Juncker was right when he said, at the time, that the euro would prove to be the father of future European developments.

SPIEGEL: In the meantime, however, the common currency has begun unleashing destructive forces more than anything else.

Schäuble: Now you're exaggerating. Europe has always worked on the basis of two principles: What isn't possible at first will happen over time, and what doesn't work will be corrected over time. That's why perfect solutions take so long in Europe. And that's why we are now improving the architecture of the monetary union.

SPIEGEL: It almost sounds as if you had longed for the crisis so that you could finally correct the birth defects of the euro.

Schäuble: Well, it isn't quite that bad, especially since I don't have a propensity for despair or even resignation. But the more people see what's at stake, the more they are willing to draw the right consequences.

SPIEGEL: What are the consequences that Europe now has to draw?

Schäuble: We need more and not less Europe.

SPIEGEL: You are clearly an advocate of the bicycle theory: Those who don't move fall over.

Schäuble: Yes, of course.

SPIEGEL: But you also seem to suggest that the design is unstable.

Schäuble: Excuse me, but the desire for improvement is a basic condition of human existence. In "Faust," Goethe writes: "If the swift moment I entreat: Tarry a while! You are so fair! Then forge the shackles to my feet, Then I will gladly perish there!" That's how it is.

SPIEGEL: The call for more Europe has become almost as much a classic as "Faust."

Schäuble: Perhaps, but that doesn't mean it's wrong. Unfortunately, Europe is complicated, and its structures are such that they inspire only limited confidence in citizens and the financial markets.

SPIEGEL: How do you intend to correct this deficit?

Schäuble: So far, member states have almost always had the final say in Europe. This cannot continue. In key political areas, we have to transfer more powers to Brussels, so that each nation state cannot block decisions.

SPIEGEL: You want nothing less that a United States of Europe.

Schäuble: Even though the term is used repeatedly, it doesn't make it any better. No, the Europe of the future will not be a federal state based on the model of the United States of America or the Federal Republic of Germany. It will have its own structure. It's an extremely exciting venture.

SPIEGEL: It sounds more like a new experiment, not unlike the introduction of the euro. And yet you want to transfer as much power as possible to Europe?

Schäuble: No, we must not and cannot ever make decisions in Europe that apply uniformly to all. Europe's strength is precisely its diversity. But there are things in a monetary union that are done more effectively at the European level.

SPIEGEL: What, for example?

Schäuble: The most important thing is that we create a fiscal union, one in which the nation states give up their jurisdiction in terms of fiscal policy. In addition, the problems of the Spanish financial institutions reveal, once again, that Europe would be better off with a bank union. We need a European supervisory authority, at least over the major lenders, which can then influence the banks directly. Then we can also save them with joint funds.

SPIEGEL: For months, Germany has been under pressure to agree to joint government bonds, the so-called euro bonds. It would certainly be seen as a confidence-building measure if you complied with the wishes of the other European countries.

Schäuble: As long as we don't have a fiscal union, we cannot assume joint liability for debts.

SPIEGEL: Why are you so uncompromising on this issue?

Schäuble: Because you can't separate the responsibility for decisions and the liability. This applies to almost all areas, but especially to money. Someone who has the ability to spend money at someone else's expense will do so. You do it, and so do I. The markets know that. And that's why they too would not find euro bonds convincing in the end.

SPIEGEL: What would a fiscal union have to look like so that Germany could accept euro bonds?

Schäuble: In an optimal scenario, there would be a European finance minister, who would have a veto against national budgets and would have to approve levels of new borrowing. It would be up the individual countries to decide how to spend the approved funds, that is, how to answer the question: "Should we spend more money on families or on road construction?"

SPIEGEL: And you seriously believe that this could work?

Schäuble: It's been working for a long time in competition policy. When the current Italian prime minister, Mario Monti, was the EU competition commissioner, he successfully tangled with major international corporations like Microsoft. A European finance minister would, should it become necessary, be forced to take on Italy, for example.

SPIEGEL: Or with Germany. Let's assume the finance minister in Brussels rejected your budget. People here would be incredibly outraged.

Schäuble: There is certainly the risk that there would be national reactions, and that's why all of this requires intensive discussion. But one thing is also clear: Those who want a strong Europe also have to be willing to surrender decisions to Brussels. But even then parliamentary responsibilities are needed.

SPIEGEL: Aside from fiscal policy, are there other areas that ought to be transferred to the European level?

Schäuble: In times of globalization, it's imperative that economic policy be part of it. Besides, there are still too many national competencies in foreign and security policy. Europe should speak more effectively and clearly with one voice in the world.

SPIEGEL: You propose the transfer of many national competencies. What happens to democratic legitimation?

Schäuble: Some things would have to change in that respect, too, because nowadays everyone has a say: the European Commission, the Council of Ministers, which consists of the national representatives, and the European Parliament. This is hard to figure out, even for political buffs. First the Commission has to develop into a real government. To that end, it ought to be elected directly, either by the parliament or through the direct election of a Commission president. I favor the second option.

SPIEGEL: What gives you the hope that a directly elected president would unite and not divide Europe?

Schäuble: The direct election would be preceded by a large-scale mobilization, and it would electrify all citizens from Portugal to Finland.

SPIEGEL: A directly elected president would be strong, but would only be monitored by a weak parliament.

Schäuble: No, the European Parliament has to be strengthened, of course. That's why it must finally be given to the power to enact bills. It's an anachronism that only the Commission has played this role until now.

SPIEGEL: In other words, there would be a directly elected president with his government and a parliament. What would happen to the member states, which currently make up the Council of Ministers and the European Council?

Schäuble: It would be best to have a body representing the countries that's based on the model of the German Bundesrat or the US Senate, with each country dispatching a certain number of representatives to this body. Of course, all laws would require a majority in the body, as well as in the parliament.

SPIEGEL: There is a two-speed Europe. On one side we have the EU, with its 27 members, and on the other the group of the 17 euro countries. Do all structures have to be duplicated?

Schäuble: We should try to achieve all of this for the entire EU. Germany has always stood for an EU of the 27 countries. But in light of Britain's continued resistance to further integration steps, as we saw with the fiscal pact, there are limits to my optimism in this regard. It's quite possible that we will have to create the new institutions for the euro zone first. But it's also clear that this would be an open club. Every member state of the EU would be more than welcome to participate. We certainly don't want to divide Europe.

SPIEGEL: With all due respect to your vision, is there truly more willingness today among EU member states to give up sovereignty than there was in the 1990s?

Schäuble: The recognition that this is necessary, and the willingness to do so, has certainly grown due to the crisis, and not just in Germany. I would much prefer that we not have so many crises, and particularly not such severe ones. But every crisis also includes the opportunity to recognize what is necessary. That's what led to the fiscal pact, in which 25 EU countries pledged to improve their fiscal discipline. And that's also how the new Europe will come about.

SPIEGEL: In your euphoria, you overlook the fact that most people in Southern Europe tend to see Brussels as a threat.

Schäuble: I'd be careful with statements like that. In the most recent election in Greece, more citizens voted for parties that support the course that was agreed to with Europe than in the first election.

SPIEGEL: Although voter turnout was lower.

Schäuble: That may be. Of course, a lot of people in Europe are worried about the future. But as far as I can see, the vast majority of Germans and people in other countries are pro-European. Aside from relatively small movements, there are no nationalist tendencies.

SPIEGEL: In Germany, the Federal Constitutional Court has imposed tight restrictions on the further relinquishment of sovereignty. Given the German constitution, how much more European integration is possible?

Schäuble: If the things that I've just outlined were in fact implemented and we reached the conclusion that the limits of the constitution had been reached, the Constitutional Court would be correct in saying: There's no problem with transferring more rights to Brussels, but the German people will have to make that decision.

SPIEGEL: Are you saying that we will soon have a referendum in Germany?

Schäuble: I don't know when that will happen, and I doubt anyone does. But I assume that it'll happen sooner than I would have thought a few months ago. At the EU summit at the end of this week, the heads of four European institutions plan to present concrete proposals for greater integration. We'll see what happens after that.

SPIEGEL: You believe that the Germans will vote on a new constitution within the next five years?

Schäuble: A few months ago, I would have said: In five years? Never! But now I'm not so sure. Do you want to know why?

SPIEGEL: Yes, please.

Schäuble: Many in Germany said that (former US President) Ronald Reagan was crazy when he stood at the Brandenburg Gate in 1987 and said: "Mr. Gorbachev, tear down this wall!" And then it happened two years later. At the time, I too didn't believe that German partition would soon come to an end. In the spring of 1989, I had just become the new interior minister in Bonn. The new US ambassador introduced himself to me and predicted that the Wall could come down in the next three years. I replied: "I would have doubted that a few months ago, but now I would say that with a little luck, it'll happen in the next 10 years." And how long did it really take? Less than half a year.

SPIEGEL: Minister Schäuble, thank you for this interview.

http://www.grreporter.info/en/greece_will_run_out_money_15_july_minister_finance_warned/7108

Greece will run out of money by 15 July, Minister of Finance warned

13 June 2012 / 17:06:18 GRReporter

235 reads

Photo: Vima

Greece has money to cover the costs of salaries, pensions and health services until 15 July this year, warned Minister of Finance Yiannis Zaniyas. The negative trend in revenue collection from taxes should change, said the Minister. According to the information published in Greek media, the ready money available to the government is now two billion euro and the current cash deficit for the first five months of the year is slightly over five million. Two billion euro is expected to be spent for the pensions and salaries of civil servants. The Ministry of Finance stated that during the first week of June, tax services have fulfilled the objectives of collecting taxes, but there were serious deviations in May and April. Last month, 666 million euro less than budgeted were collected and in April, the difference was 334 million.

and...

http://www.npr.org/templates/story/story.php?storyId=155265639

* * *

Continued bailout money hinges on keeping to the terms of an agreement to cut spending and make Greece's bureaucracy-choked economy more business friendly so it can grow out of its troubles in the long term.

Yet Greece's plummeting economy is making it harder for it to reduce its budget deficit by the required about. Failure to keep to the bailout deal could result in an aid cutoff, leaving the government unable to pay its obligations.

The previous government said Greece would run out of money July 20 if more funds are not received.

http://globaleconomicanalysis.blogspot.com/2012/06/capital-controls-hit-spain-government.html

http://www.zerohedge.com/news/wolfgang-sch%C3%A4uble-ask-not-what-germany-can-do-you-ask-how-many-government-workers-you-can-fire

Wolfgang Schäuble: "Ask Not What Germany Can Do For You, Ask How Many Government Workers You Can Fire"

Submitted by Tyler Durden on 06/24/2012 17:42 -0400

Councils

Creditors

European Central Bank

International Monetary Fund

Reuters

Sovereign Debt

And it seemed like the most innocent case of detached retina ever. On Friday, newly elected Greek PM Samaras had to be rushed to the hospital due to the rather peculiar ocular complication, only to be followed promptly by the new Finance Minister Vassilis Rapanos fainting and also being given urgent medical care. Both are procedures that require a few hours of inpatient treatment. Yet judging by the implications these two freak occurrences have had, one would image that both patients are comatose and on the same ventilator that kept former Egyptian president Hosni Mubarak half alive, half dead a week ago. The punchline, however, is that this may be the only case of detached retina in modern history that costs a country €5 billion.

From Kathimerini:

"The health problems of Prime Minister Antonis Samaras and new Finance Minister Vassilis Rapanos this weekend are changing the government’s timetable and postponing the visit of the representatives of Greece’s creditors by a week, according to state-run TV. The hospitalization of the two very people the inspectors of the European Commission, the European Central Bank and the International Monetary Fund – collectively known as the troika – wished to meet, means that the latter had to put off their visit that was originally planned for Monday."

In other words, the Troika which was supposed to come to Greece tomorrow to evaluate what little progress may have happened in order to release more cash to the insolvent country, will not have to wait until after the latest and greatest European summit, where while everyone was expecting for absolutely nothing to be decided (and certainly not the European Federalist state which is the only development that can keep the Eurozone together), suddenly the very fate of Greece in the Eurozone is once again at stake and may be decided as soon as next Friday.

State television channel NET reported on Saturday that the troika will now arrive early next month, which is after the European Union summit scheduled for June 28-29 in Brussels.

This will of course postpone further the disbursement of the next loan tranche for Athens, that was due for June and amounts to 5 billion euros.

Given that Samaras and Rapanos will stay in hospital until Monday - the former in order to recover after an eye surgery and the latter for tests to establish the reasons of his fainting on Friday – it remains unclear whether Samaras will be able to travel to Brussels for the summit and when Rapanos will swear in as Finance Minister.

Well, the detached retina may have been a fluke, and surely anyone would faint when seeing the Greek cash ledger, but adding insult to injury, and making some wonder about the odd timing of these events, is that it is suddenly becoming public knowledge what was previously only whispered in dark corridors: namely that Greece was pretending to be reforming in exchange for money that Europe was pretending to be paying Greek society.

An AFP report observes that "Greece breached the rules of its EU-IMF loan agreement by taking on some 70,000 public sector staff in two years, undermining efforts to reduce the state payroll, a report said on Sunday."

To Vima weekly said the hirings in 2010 and 2011 were highest in local administration, health, the police and culture, where the number of employees actually increased.

It cited a report from a permanent mission to Athens of the so-called 'troika' of international creditors, the EU, IMF and the European Central Bank, and data given by outgoing finance minister George Zannias.

An unidentified troika official told the daily: "While they legislated rules to reduce the number of civil servants, they were bringing people in through the window."

It appears that all those myths of austerity were just that (as we have explained time and time again): myths.

The official added that over 12,000 people were hired by local councils even as a cost-cutting initiative merging municipalities was underway.

Zannias' report to the new government coalition after June 17 elections allegedly reveals that although over 53,000 civil servants retired in 2010, the overall number of state staff was almost steady at 692,000 people, To Vima said.

In this case, most of the vacancies were filled immediately, the daily said.

Similarly, although another 40,000 staff left in 2011, the net reduction on the payroll was only 24,000.

By this time, Greece had promised to only hire one civil servant for every five that left.

But over 16,000 people were hired instead of the allowed 8,000, To Vima said.

The report came ahead of an expected EU-IMF audit starting on Monday.

And while it is true that the bulk of the Greek "bailout" money went primarily to pay Greek creditors and the ECB, a good 20% of the cash did make its way into the Greek economy... Somewhere. Perhaps soon someone will ask just where. Did the politicians in charge of the country in the past two years steal all of that cash as well?

What happens when the Greek society, now with absolutely no hope left, and more despondent than ever, finds out that its leaders once again betrayed it? Just how many Golden Dawn members will there be in the next government election, once this government too tumbles.

Tying it all together, however, and making sure that Samaras' cabinet is doomed before the ink of its formation documents is even dry, is everyone's favorite Schrodinger finance minister: Germany's Wolfgang Schauble who just told Greece for the final time: no mas.

From Reuters:

Greece's new government should stop asking for more help and instead move quickly to enact reform measures agreed to in return for previous bailouts from its European partners, German Finance Minister Wolfgang Schaeuble said on Sunday.

Schaeuble told Bild am Sonntag in unusually blunt language that Greece has forfeited much of Europe's trust during the sovereign debt crisis, as reflected in an opinion poll covering the euro zone's four biggest nations and published in the paper.

"The most important task facing new prime minister (Antonis) Samaras is to enact the programme agreed upon quickly and without further delay instead of asking how much more others can do for Greece," said Schaeuble, a close ally of Chancellor Angela Merkel and Europe's most powerful finance minister.

Greece's new three-party coalition government said on Thursday it would renegotiate the terms of the 130-billion-euro bailout deal that is helping the country avoid bankruptcy.

The coalition's platform particularly challenges euro zone paymaster Germany, which has offered to adjust the lifeline's terms to make up for time lost as a result of two Greek elections since May, but refuses to revise it radically.

In a separate interview on Sunday published in Der Spiegel news magazine, Schaeuble again ruled out any form of collectivised debt such as euro bonds and defended the German government's hard line on that.

"It's because you cannot separate the responsibility for decision-making from the liability," he said when asked why Germany was so adamantly opposed. "That's true for almost everything but especially when it comes to money.

"Anyone who has the chance to spend someone else's money will do that," he added, before telling the reporter: "You'd do that and so would I. The markets know that. And so from that point of view they wouldn't be convinced by euro bonds."

So while wild speculations about this and that and the other future of the Eurozone continue, here is the bottom line:

Germany will continue pushing every peripheral country closer to the brink until such time as PIIGS (and then all the other formerly core - here's looking at you "fairness doctrine" entrants) countries come begging for any scrap that whoever is in charge of Germany will be willing to hand them. If that means presenting their gold to the German Cash4Gold pawn shop, so be it. Unless of course, everyone keeps demanding that Germany bail them out. In which case Merkel will just unpack that brand spanking new shipment of DEMs and be done with it.

The only winner out of this: Syriza's Tsipras who is sitting and cackling like a madman as everything is happening precisely as had been anticipated. Until the moment, that is, when he is elected to lead the country. At that point we are not sure whose life will be more of a living nightmare: his... or whoever is elected president in the US 2016 elections.

and.....

Sunday, June 24, 2012 12:33 PM

Capital Controls Hit Spain: Government Laws Prohibit Cash Transactions Over €2,500; Minimum Fine of €10,000 for Failure to Report Foreign Accounts

If Spain is seeking further instability, a new law on financial transactions is sure to do just that. Via Google Translate, Spain passes a law limiting cash payments to 2,500 euros.

Key Provisions

Minimum fine of €10,000 for taxpayers who do not report their foreign accounts.
Fine of €5,000 for each additional account
Cash transactions greater than €2,500 prohibited
- Cash transaction restrictions apply to individuals and businesses
The US requires reporting of foreign accounts as well, supposedly for the same reason, preventing tax fraud.

In Spain however, consumers and businesses are already very nervous (and rightfully so), of a Spain exit from the euro with a return to the Spanish peseta accompanied by an immediate devaluation.

In that context, these controls are only going to make consumers and businesses even more nervous, if not outright suspicious about what is going on.

Mike "Mish" Shedlock

and......

http://www.guardian.co.uk/world/2012/jun/24/berlusconi-plans-comeback

Silvio Berlusconi hints at comeback bid

Disgraced former PM's remarks fuel speculation that he is aiming to regain power on ticket of withdrawal from euro

John Hooper in Rome
guardian.co.uk, Sunday 24 June 2012 15.14 EDT

Silvio Berlusconi has hinted at a new bid for power despite facing allegations of underage sex. Photograph: Alessandra Benedetti/Corbis

He may have been jeered from office last year. He may be on trial accused of paying for sex with a 17-year-old girl. And last week a prosecutor in Milan asked for him to be locked up in jail for three years and eight months for allegedly shady business practices.

But this weekend, Italy was abuzz with speculation that Silvio Berlusconiis planning a comeback – and could return to lead the right into an early general election, perhaps as standard-bearer of a party bent on withdrawing Italy from the euro.

The media tycoon gave his clearest indication yet that he is planning a return at the end of last week, when he told an audience of young rightwingers: "I'm working on solutions. I'm still here." And then, as if speaking from a campaign platform, he added: "Give me 51% [of the votes]."

His cry brought his audience to their feet, chanting: "Silvio, Silvio." Speaking as if he had already taken back the leadership of the Freedom People, the movement he founded in 2007, Berlusconi said he intended to change its name and ensure that half its candidates at the next election were women.

It was the latest in a succession of interventions that have Italy's political class wondering about a Berlusconi comeback in a more eurosceptic guise. The former prime minister recently warned that Germany "should get out of the euro, or others will do so". Last week, he said that regaining its own currency would have advantages for an export-led economy such as Italy's.

It's all a far cry from Berlusconi's ignominious exit last November, when, having governed Italy for eight of the previous 10 years, he handed in his resignation to the strains of "hallelujah" from a crowd outside the presidential palace.

By then, a flood of leaked claims about his "bunga bunga" parties, including allegations of half-naked showgirls dressed up as nuns and policewomen, had turned the billionaire politician into a figure of international ridicule. In the final weeks of his leadership, fellow EU leaders made strenuous efforts to avoid being photographed with him, and almost his only high-level friendship was an intensely controversial one with Russia's leader, Vladimir Putin.

Berlusconi's party still has the votes in parliament to bring down the unelected technocratic government led by Mario Monti. A snap vote in the autumn would have effects far beyond Italy, because it would bring down the curtain on Monti and his team, put into office last November to pass unpopular measures demanded by Italy's eurozone partners that Berlusconi's government had been reluctant to introduce. Their fall would almost certainly plunge the euro into renewed crisis.

The yield on Italian government bonds – a benchmark indicator that moves in the opposite direction to confidence in an economy – has been creeping higher since mid-March, though the rate dipped last week to close on Friday night at 5.77%. Berlusconi said the rise in Italy's borrowing costs showed that, since he left office, "the situation has not changed".

Some observers doubted whether the TV magnate could reverse his decision to hand the leadership of the party to his former justice minister, Angelino Alfano. But his chief opponent when he was in government did not rule it out.

Pierluigi Bersani of Italy's main leftwing group, the Democratic party, quoted an old Italian proverb: "There's no limit to the worst." Ironically, the PD leader was himself presented at the weekend with a new and powerful leadership challenge.

Italy's colourful but long-stagnant political scene has been thrown into confusion in recent weeks by the seemingly unstoppable ascent of the Five Star movement, founded by the comedian and blogger Beppe Grillo. Its growing success has gone hand in hand with mounting dissatisfaction with Italy's mainstream politicians and increasing anger over an economy that has been stalled for more than 10 years.

The Five Star movement's programme makes no reference to the euro. But Grillo has described the single currency as an "ever-tightening noose" and said Italy's exit ought not to be taboo.

A poll released by the La7 television channel last week indicated that the Five Star movement could emerge from the next election as Italy's second-biggest party, ahead of the Freedom People.

Introducing a further element of uncertainty to the political scene, the mayor of Florence, Matteo Renzi, who has been widely canvassed as the leader of a rejuvenated centre left, on Saturday threw down the gauntlet to the PD's existing leaders. Naming one by one the party's barons, the 37-year-old Renzi told a conference he had organised: "You've done much for the country, much for the party. But now Basta!"

In a speech packed with metaphors of successful renewal, Renzi pulled out two cameras, each made by Polaroid. One, he said, took 10 minutes to produce a black-and-white photograph. The other could turn out a colour picture almost instantly.

The executives at Polaroid, "knew how to renew the brand"‚ said Renzi. "Let's try it ourselves." The PD is to hold a poll before the end of the year to select its candidate for prime minister.

The PdL is to do the same. But several political commentators and pollsters said there were marked differences between the two leadership struggles that appeared to be taking shape.Maurizio Pessato of the polling firm SWG said the face-off within the PD was taking place within a structured framework and would eventually lead to the choice of a leader accepted by all, or most, of the party. But, he said, "On the centre right the situation is a lot more difficult." Berlusconi had stepped aside, but he was having second thoughts, a situation that was "putting the brakes on everything," said Pessato.

and......

http://www.telegraph.co.uk/finance/financialcrisis/9352540/Germany-tells-Greece-to-stop-asking-for-help-and-start-cutting-budgets.html

By Alistair Osborne, Business editor

4:20PM BST 24 Jun 2012

221 Comments

In unusually blunt remarks, German finance minister Wolfgang Schaeuble said: “The most important task facing new prime minister [Antonis] Samaras is to enact the programme agreed upon quickly and without further delay instead of asking how much more others can do for Greece.”

His comments highlight Germany’s growing impatience with the eurozone’s problem nations in what is shaping up to be another significant week for the single currency bloc.

A formal request from Spain for up to €100bn (£80bn) of emergency funding for its banks is expected on Monday, while the week ends with a two-day summit in Brussels where German chancellor Angela Merkel is again expected to dig in her heels over the eurobonds championed by France’s new president, Francois Hollande. Such bonds would mutualise the debts of the 17 eurozone nations, effectively leaving Germany on the hook for more spendthrift members.

Greece’s new three-party coalition government took charge on Thursday, vowing to renegotiate the terms of its latest €130bn bail-out. It wants a two-year extension to the 2014 deadline for it to cut its budget deficit to 2.1pc of GDP from 9.3pc in 2011. Such delay would, however, require up to €20bn more foreign funding.

Mr Schaeuble added: “Greece hasn’t tried enough so far, that has to be said quite clearly… no one on Earth who has followed this issue would think that Greece has fulfilled what it has promised.”

Catharsis Ours

Sunday, June 24, 2012