http://www.zerohedge.com/contributed/2012-06-03/everything-getting-gummed-greece
( Greece gummed up - the problem is this is the so called template for Portugal , Spain and Italy . )
Submitted by testosteronepit on 06/03/2012 19:46 -0400
and......
http://globaleconomicanalysis.blogspot.com/2012/06/greek-poling-ban-in-effect-until.html
In Harsh Language from Lagarde: "IMF Has No Intention of Softening Terms"; From Head of Deutsche Bank: "Greece is a Failed Corrupt State" I expressed the viewpoint that remarks by Lagarde and Deutsche Bank were "purposefully Inflammatory".
I see no reason to change my mind about the statements made by Deutsche Bank. Is the apology by Lagarde an admission of a huge gaffe? Possibly but take a look at the statement once again.
In an uncompromising interview with the Guardian, Lagarde made it clear that the IMF has no intention of softening the terms of the country's austerity package.
Numbers Add Up for Syriza?
Kathimerini has additional details on the latest polls in Are the numbers starting to add up for SYRIZA?
For all the fluctuations polls showed in the support for SYRIZA and ND, PASOK has remained anchored to its feeble showing on May 6. The Socialists have hardly moved from around 13 percent and seem unable to convince their former supporters to return to the fold. In contrast, Democratic Left shows a modest rise, but this has not come at the expense of SYRIZA. There has been a drastic fall in the number of people intending to vote for parties that won’t get into Parliament. If SYRIZA and Democratic Left are drawing support from this pool and not from each other, then Tsipras’s party doesn’t face a strong threat from the left side of the political spectrum.
The Public Issue poll indicates that SYRIZA is fishing support from an even larger tank. Over the last few months, a growing proportion of Greeks has positioned itself on the left wing of Greek politics. According to the latest survey, half of those questioned said they identified with the left. This was up from 39 percent just over a month earlier. Those identifying with the right, however, are at 28 percent, which has remained virtually unchanged for the last six weeks.
This presents a serious problem for New Democracy. These numbers suggest its potential appeal has a much lower ceiling than SYRIZA and that it has almost reached it. The conservatives have tried to pull out all the stops to build on the slim lead of 2 percent they had over the leftists on May 6. This included welcoming back Dora Bakoyannis, who suspended the operation of her Democratic Alliance party, and several members of the Popular Orthodox Rally (LAOS) and Independent Greeks, all of which had been a drain on ND’s support. However, now that’s been done, ND leader Antonis Samaras has nowhere else to turn to generate support. He’s brought in the reinforcements but still seems outnumbered by Tsipras’s amassing troops.
The New York Times reports matters much differently in UPDATE: Greek Conservatives Lead In Three Final Polls Before Vote
European voters have an overwhelming tendency to throw the bums out.
Take the tendency to blame the party in power along with the fact that New Democracy and Pasok have been ruling Greece for years, then add in the exceptionally inflammatory remarks by Lagarde, and one should expect Syriza to be in the lead.
I rate Syriza a 2-1 favorite to win the election with a similar chance of actually forming a coalition government if they do.
If so, Greece will default on payments to the Troika, and funds to Greece will be shut off.
and........
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_17457_03/06/2012_445175
German Chancellor Angela Merkel hardened her opposition to joint debt sharing in the euro region as President Barack Obama singled out Europe’s leaders for not doing enough to arrest the financial crisis.
With Europe’s debt crisis cited last week for canceled IPOs, weaker-than-expected Chinese manufacturing figures and a rise in the US jobless rate, Merkel rejected joint debt issuance in the 17-nation euro area as a solution, saying “under no circumstances” would she agree to Germany-backed euro bonds.
Now, some “come along and ask for euro bonds, saying all we need are equal interest rates and everything will turn out all right,” Merkel said in a speech to members of her Christian Democratic Union in Berlin Saturday. Instead, what’s needed is an economic overhaul to tackle the lack of competitiveness in Europe, she said.
Merkel, the head of Europe’s biggest economy and the largest contributor to bailouts for Greece, Portugal and Ireland, is the pivotal player in efforts to resolve the crisis now in its third year. As Spain struggles to avoid becoming the next country to call for a rescue and the euro slides near a two-year low against the dollar, Obama added to pressure on Merkel from the European Central Bank, France and Italy to do more to halt the spread of contagion.
Obama, speaking at a Chicago fundraiser on June 1 as he bids for re-election in November, said that a report showing the slowest month of US employment growth in a year was in large part “attributable to Europe and the cloud that’s coming over from the Atlantic.” The “whole world economy has been weakened by it,” he said.
“Europe is having a significant crisis in part because they haven’t taken as many of the decisive steps as were needed to deal with the challenge,” he said at a separate event in Minneapolis.
The president’s point person for the European crisis, Lael Brainard, Treasury undersecretary for international affairs, ended a three-day tour of Europe’s crisis capitals the same day as work continued on erecting a financial firewall to stem contagion. The European Union is targeting July 9 as the start date for its permanent rescue fund, the 500 billion-euro ($620 billion) European Stability Mechanism, an EU official said.
( Greece gummed up - the problem is this is the so called template for Portugal , Spain and Italy . )
Everything is Getting Gummed up in Greece
- Central Banks
- European Central Bank
- Eurozone
- Fresh Start
- Germany
- Greece
- Italy
- Natural Gas
- Unemployment
- Unemployment Benefits
Wolf Richter www.testosteronepit.com
Tourism, Greece’s second largest industry after the shipping industry, and already in a downdraft, is taking another hit as tour-bus drivers will go on strike next week; wage negotiations have deadlocked. Owners demand that drivers take an additional 50% cut in pay and benefits on top of the 20% cut they’ve already suffered.
The National Organization for Healthcare Provision (EOPYY), Greece’s state-owned health insurer, hasn’t paid pharmacists for months and owes them €540 million. In turn, pharmacists are refusing to sell medications to insured patients, including cancer patients, unless they’re paid in cash—and even hospitals are reporting shortages.
Greece’s ship repair and shipbuilding industry, a highly competitive activity in a global market, has collapsed. Over 90% of its union workers are jobless—though Greek shipping companies own 16% of the global merchant fleet, more than any other nation. They’re just not having their ships built and repaired in Greece anymore—whatever the reason, high cost of labor, lack of investment, changing shipping routes, strikes. A sign that there are fundamental problems related to competitiveness that a bailout, no matter how generous, won’t be able to solve.
And yet, President Barak Obama—whose reelection hinges on the US economy, which is wobbling, and on the jobs picture, which remains dismal—blamed European leaders, specifically German leaders, for refusing to bail out Greece and the rest of the tottering Eurozone at taxpayers’ expense, just so he could sail to four more years. Everything in the book, from the loss in US manufacturing jobs to cancelled IPOs, was “attributable to Europe and the cloud that’s coming over from the Atlantic,” he said at a fundraiser in Chicago.
German Chancellor Angela Merkel shrugged off the bullying and just said no to Eurobonds, again. Despised in Germany, they’re seen as an insidious transfer from bleeding German taxpayers to other countries. Instead, her government wants struggling Eurozone countries to overhaul their economies with utmost speed—and Germans are willing to dole out hundreds of billions of euros to make that possible—but it’s proving to be impossible, at least in Greece, and very painful everywhere, to unwind years of an economic gravy train fueled by cheap euro debt. Read.... Germany Walks Away From Greece.
And unpaid bills are now threateningGreece’s electricity supply. State-owned Electricity Market Operator (LAGIE), a clearing house for power transactions, hasn’t paid independent power producers for electricity it bought from them. They, in turn, haven’t paid their natural gas supplier, Public Gas Corporation (Depa), which now doesn’t have the money to pay its supplier. Payment is due on June 22. Alas, its supplier is Gazprom in Russia, and they insist on getting paid. If not, they will shut the valve, and Depa won’t get the gas to supply the independent producers, which will have to take their power plants off line, removing about a third of the country’s electricity production.
But Germany isn’t even worried about Greece’s return to the drachma anymore—afait accompli. It’s worried about Spain and Italy. Greece simply is the model. The costsappear to be steep, but most of the actualcosts have already been incurred. They’re hidden in Greece’s debt, now held largely by European institutions, such as the ECB, and in the infamous Target2 balances within the European System of Central Banks. Hundreds of billions of euros. They were spent on everything: social benefits, German frigates, inflated wages, now weedy and abandoned Olympic facilities, profits, bribes, votes. What remains aren’t productive assets to service this debt, but simmering unrest and the debt itself.
International companies have long been preparing for Greece’s return to the drachma, quietly and in secret, but occasionally word seeped out. According to the latest revelation, Heineken NV has moved excess cash out of Greece, doing what the Greeks themselves have been doing. And currency traders were surprisedon Friday to see the new identifier for the drachma (XGD) on their Bloomberg terminals; a test, the company said, so that it would be ready for trading drachmas.
When Alexis Tsipras, leader of the Radical Left Coalition (Syriza)—in first place with 31.5% in the latest poll—laid out hisprogram, he left no doubt: his first action if he won the June 17 elections would be to annul the bailout memorandum signed by the previous government. The memorandum spelled out the structural reforms Greece would have to implement in order to receive further bailout payments. He’d stop the privatization of state-owned companies, undo wage and pension cuts, lower the Value Added Tax, offer debt relief to households, raise the minimum wage back to the original €751, raise unemployment benefits.... His program had vote-buying promises for practically everyone. And yet, he wanted to keep the euro and expected taxpayers of other countries to fund his promises. Program of “dignity and hope” he called it.
Antonis Samaras, leader of the conservative New Democracy—in second place with 25.5%—also laid out his program. He’d renegotiate the bailout memorandum, though he stressed that Greece should stay in the euro—whose flood of cheap debt had made the Greek elite rich, and certainly he wouldn’t want to stop the gravy train. He promised to raise pensions, private-sector wages, child benefits ... undoing much of the economic restructuring already agreed to. And he threw in some new goodies: unemployment benefits for the self-employed and compensation to Greek institutions for the haircut they’d suffered on their Greek government bonds. Every item on the long list was at the expense of restive taxpayers in other countries.
Greek politicians, even the new generation, are sticking to their time-worn strategy: vote-buying with ruinous promises that can only be fulfilled with an endless flow of borrowed money. Thus, they define themselves as leaders who need a central bank that can print however much is needed to fund these promises, with periodic devaluations or defaults to get a fresh start.
and......
http://globaleconomicanalysis.blogspot.com/2012/06/greek-poling-ban-in-effect-until.html
Sunday, June 03, 2012 7:05 PM
Greek Polling Ban In Effect Until Election; Latest Results Show SYRIZA Support at 31.5 percent, Well in the Lead Over New Democracy; Why I expect Syriza to Win
The preponderance of recent Greek polls show a tight election. However, the latest Public Issue Survey stands out, and I happen to think that is the most accurate one.
Please consider Going into final stretch, SYRIZA builds poll lead
Please consider Going into final stretch, SYRIZA builds poll lead
In the last opinion poll to be published by Kathimerini before the June 17 elections, leftist SYRIZA maintains a clear lead over New Democracy, although short of enough support for a clear parliamentary majority.
According to the Public Issue survey, SYRIZA garners 31.5 percent of the vote, 1.5 more than just a week ago. Support for New Democracy is largely unchanged at 25.5. PASOK has lost 2 percent and falls to 13.5. It is followed by Democratic Left (DIMAR) on 7.5 percent and the weakening Independent Greeks on 5.5. The Communist Party (KKE) also has 5.5 percent, while the neo-Nazi Chrysi Avgi (Golden Dawn) has fallen to 4.5 percent. The liberal alliance of Dimiourgia Xana (Recreate Greece) and Drasi attracts 2.5 percent.
In terms of parliamentary seats, this translates into 134 for SYRIZA, 68 for New Democracy, 36 for PASOK, 20 for DIMAR, 15 for KKE, 15 for Independent Greeks and 12 for Chrysi Avgi. Most would fall slightly if the liberals reach the 3 percent parliamentary threshold.What's Lagarde's Game?
Most Greeks, however, are not convinced that SYRIZA will win. The poll indicates that 58 percent believes ND will come first and only 34 percent see the leftists triumphing.
Speaking to reporters on Thursday, IMF spokesman Gerry Rice said that the Washington-based fund is willing to listen to “any new ideas” that the next Greek government has with respect to how the fiscal targets agreed as part of the bailout can be achieved more effectively.
Rice also said IMF managing director, Christine Lagarde, regretted recent remarks concerning tax evasion by Greeks and comparing their suffering to children in Niger. “She regrets her remarks were misunderstood and caused offense, that was not her intention.”
In Harsh Language from Lagarde: "IMF Has No Intention of Softening Terms"; From Head of Deutsche Bank: "Greece is a Failed Corrupt State" I expressed the viewpoint that remarks by Lagarde and Deutsche Bank were "purposefully Inflammatory".
I see no reason to change my mind about the statements made by Deutsche Bank. Is the apology by Lagarde an admission of a huge gaffe? Possibly but take a look at the statement once again.
In an uncompromising interview with the Guardian, Lagarde made it clear that the IMF has no intention of softening the terms of the country's austerity package.
Asked whether she is able to block out of her mind the mothers unable to get access to midwives or patients unable to obtain life-saving drugs, Lagarde replies: "I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind all the time. Because I think they need even more help than the people in Athens."Those statements are clearly quite inflammatory. Regardless of her intention, I strongly believe those statements will swing voted to Syriza.
"I think they should also help themselves collectively." Asked how, she replies: "By all paying their tax."
Numbers Add Up for Syriza?
Kathimerini has additional details on the latest polls in Are the numbers starting to add up for SYRIZA?
For all the fluctuations polls showed in the support for SYRIZA and ND, PASOK has remained anchored to its feeble showing on May 6. The Socialists have hardly moved from around 13 percent and seem unable to convince their former supporters to return to the fold. In contrast, Democratic Left shows a modest rise, but this has not come at the expense of SYRIZA. There has been a drastic fall in the number of people intending to vote for parties that won’t get into Parliament. If SYRIZA and Democratic Left are drawing support from this pool and not from each other, then Tsipras’s party doesn’t face a strong threat from the left side of the political spectrum.
The Public Issue poll indicates that SYRIZA is fishing support from an even larger tank. Over the last few months, a growing proportion of Greeks has positioned itself on the left wing of Greek politics. According to the latest survey, half of those questioned said they identified with the left. This was up from 39 percent just over a month earlier. Those identifying with the right, however, are at 28 percent, which has remained virtually unchanged for the last six weeks.
This presents a serious problem for New Democracy. These numbers suggest its potential appeal has a much lower ceiling than SYRIZA and that it has almost reached it. The conservatives have tried to pull out all the stops to build on the slim lead of 2 percent they had over the leftists on May 6. This included welcoming back Dora Bakoyannis, who suspended the operation of her Democratic Alliance party, and several members of the Popular Orthodox Rally (LAOS) and Independent Greeks, all of which had been a drain on ND’s support. However, now that’s been done, ND leader Antonis Samaras has nowhere else to turn to generate support. He’s brought in the reinforcements but still seems outnumbered by Tsipras’s amassing troops.
The last vestige of hope for Samaras has been to polarize the campaign, to turn it into an all-out battle between the responsible conservatives who would keep Greece on an even keel and in the euro and the reckless leftists who dream impossible schemes that would ensure the return of the drachma and deep misery. So far, the euro-vs-drachma dilemma has had only limited appeal and time is running out for Samaras to state his case convincingly.New York Times Has Different Results
The presentation of his party’s economic program on Thursday lacked the pomp and circumstance of previous addresses at Zappeio Hall but, more crucially, seemed to carry little weight. Media interest was scant and the ideas presented were tired. It had the air of an inconsequential conference, where everyone was staring at the clock for the last speaker of the day to finish. Compare this with the heightened expectation for Tsipras’s address on Friday, and the SYRIZA leader seemed like the guy with all the momentum. Brighter and fresher, he even got his audience of their seats a couple of times. Maybe the body language and aura meant very little but one imagines the conservatives would have gladly swapped places with the leftists at this stage of the campaign.
One encouraging sign for the conservatives could be that almost twice as many Greeks think that ND will win the elections as those who believe SYRIZA will come first. The leftists want to break with the past but they have to conquer it first by making people believe a SYRIZA-led government is possible and viable. It may be the only thing left standing between them and what until recently was an election result nobody could have predicted.
The New York Times reports matters much differently in UPDATE: Greek Conservatives Lead In Three Final Polls Before Vote
Greece's conservative New Democracy Party led the radical left Syriza Party in three polls released Friday, the last to be published before crucial June 17 elections that are widely seen as a de facto referendum on the country's future inside the euro zone.
According to a survey of voter intentions for the privately owned ANT1 channel released late Friday, New Democracy had a razor-thin 0.7 percentage point lead over Syriza, with 22.7% favoring the conservatives and 22% favoring the radical leftists.
A survey released earlier Friday in the newspaper Ta Nea showed 26.1% of respondents intend to vote for New Democracy, up from 25.8% in the previous poll just over a week ago, versus 23.6% who said they would vote for Syriza. The poll, conducted by Kapa Research between May 29-31, showed an increase in undecided voters, with those yet to make a final decision rising to 14% from 10.8%.
The Socialist party, Pasok come in third place, with 9.9%. The survey showed the Communists, Independent Greeks, Democratic Left and the ultra-nationalist Golden Dawn all set to gain more than the 3% support required to return lawmakers to parliament.
Another poll published in the newspaper Eleftheros Typos also showed New Democracy ahead, backed by 26.5% of respondents versus 24.2% who supported Syriza.Throw the Bums Out
The three polls confirm a broad trend shown by more than half-a-dozen similar surveys in the last week that give the conservatives a slight advantage. But in each poll the difference separating the two parties is less than three percentage points and within the statistical margin of error. That suggests the race remains too close to call.
In last month's elections, Syriza was catapulted from a small fringe party with about 5% of the vote into a surprise second-place finisher.
A fourth survey published Friday in the newspaper Kathimerini adjusts the results for undecided voters. It shows Syriza ahead, gathering 31.5% of the vote versus 25.5% for New Democracy.
European voters have an overwhelming tendency to throw the bums out.
- Nicolas Sarkozy a centrist went down in flames to Socialist Hollande in the French presidetial election.
- Socialists were thrown out en masse in the last elections in Spain.
- In spite of German chancellor Angela Merkel's popularity, her party, the Christian Democratic Union, has been trounced in recent election in Germany.
Take the tendency to blame the party in power along with the fact that New Democracy and Pasok have been ruling Greece for years, then add in the exceptionally inflammatory remarks by Lagarde, and one should expect Syriza to be in the lead.
I rate Syriza a 2-1 favorite to win the election with a similar chance of actually forming a coalition government if they do.
If so, Greece will default on payments to the Troika, and funds to Greece will be shut off.
and........
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_17457_03/06/2012_445175
Merkel rejects debt sharing as Obama urges Europe action
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With Europe’s debt crisis cited last week for canceled IPOs, weaker-than-expected Chinese manufacturing figures and a rise in the US jobless rate, Merkel rejected joint debt issuance in the 17-nation euro area as a solution, saying “under no circumstances” would she agree to Germany-backed euro bonds.
Now, some “come along and ask for euro bonds, saying all we need are equal interest rates and everything will turn out all right,” Merkel said in a speech to members of her Christian Democratic Union in Berlin Saturday. Instead, what’s needed is an economic overhaul to tackle the lack of competitiveness in Europe, she said.
Merkel, the head of Europe’s biggest economy and the largest contributor to bailouts for Greece, Portugal and Ireland, is the pivotal player in efforts to resolve the crisis now in its third year. As Spain struggles to avoid becoming the next country to call for a rescue and the euro slides near a two-year low against the dollar, Obama added to pressure on Merkel from the European Central Bank, France and Italy to do more to halt the spread of contagion.
Obama, speaking at a Chicago fundraiser on June 1 as he bids for re-election in November, said that a report showing the slowest month of US employment growth in a year was in large part “attributable to Europe and the cloud that’s coming over from the Atlantic.” The “whole world economy has been weakened by it,” he said.
“Europe is having a significant crisis in part because they haven’t taken as many of the decisive steps as were needed to deal with the challenge,” he said at a separate event in Minneapolis.
The president’s point person for the European crisis, Lael Brainard, Treasury undersecretary for international affairs, ended a three-day tour of Europe’s crisis capitals the same day as work continued on erecting a financial firewall to stem contagion. The European Union is targeting July 9 as the start date for its permanent rescue fund, the 500 billion-euro ($620 billion) European Stability Mechanism, an EU official said.
Brainard held closed-door meetings with government officials in Athens, Madrid, Paris, Frankfurt and Berlin in a week when investors flocked to the perceived safety of German and US bonds. The euro fell against the dollar and dropped to an 11-year low against the yen as uncertainty over the outcome of Greek elections on June 17 shifted to take in Spain, where Prime Minister Mariano Rajoy’s government is struggling to shore up banks amid a recession.
Merkel and Finance Minister Wolfgang Schaeuble are urging Rajoy to take an international bailout since Spain cannot solve its banking woes alone, German news magazine Der Spiegel reported Saturday in an advance copy of an article in this week’s edition, without citing a source for the information. Steffen Seibert, Merkel’s chief spokesman, declined to comment on the report when contacted by telephone.
A Spanish government spokeswoman declined to comment on the report, referring instead to a speech Rajoy made Saturday in which he said the euro region should have a centralized mechanism that can directly recapitalize lenders as part of a banking union, echoing a proposal by European Commission President Jose Barroso. Such a structure, which might include conditions for banks receiving aid, would help meet Spain’s need for external capital without the stigma of a formal rescue.
Spain “will emerge from the storm under its own efforts and with the support of our European partners,” Rajoy said in the speech in Sitges, near Barcelona, calling on analysts and investors to moderate “irrational” views of Spain’s financial situation. “We are not on the edge of a precipice.”
Spanish 10-year yields ended the week at 6.51 percent, approaching the 7 percent level that triggered previous euro- area bailouts, though below a euro-era record of 6.78 percent on Nov. 17. Germany’s equivalent 10-year bund rate was at 1.17 percent after reaching 1.127 percent, the lowest since Bloomberg began collecting the data in 1989. German two-year yields slid below zero for the first time.
Irish backing for Europe’s fiscal pact failed to halt a decline in European stocks for the fourth week in five, with the Stoxx Europe 600 Index dropping 3.1 percent to 235.09. The benchmark measure has plunged 14 percent from this year’s high on March 16. The euro closed at $1.2434 in Brussels on June 1.
Merkel lauded Rajoy’s efforts “for the first time to undertake sweeping labor market reforms,” tackle the real- estate crisis and address Spanish banks, where she said the situation is “fragile.”
“That’s why it’s important to create transparency quickly over what that means for the banks, what the situation is for recapitalization,” she said. Germany and Spain are in close contact over those efforts “as we must tackle the problems of the past and start the future with a clean slate.”
The German chancellor, who was besieged over her crisis- fighting policy last week by Italian Prime Minister Mario Monti and ECB President Mario Draghi, took aim at Italy as she cited a “missed opportunity” offered by the euro’s introduction for Europe to overhaul uncompetitive economies. The cheaper borrowing that came with the euro meant “countries like Italy became virtually on a par with Germany in terms of interest rates,” she said.
Now “what we have is a situation that we didn’t want,” Merkel said. “The freedom created by this situation wasn’t exploited to improve long-term competitiveness. Instead, the time was used to spend too much money in consumption and too little time in tackling reforms.”
In Greece, where the crisis first emerged in late 2009, Alexis Tsipras, head of the biggest anti-bailout party, Syriza, appealed to voters two days ago to give him the power to cancel the terms of the country’s international bailout, including economic reforms. Moody’s Investors Service lowered Greece’s highest possible credit rating the same day, saying there was an increasing risk Greece may exit the euro region.
Merkel and Finance Minister Wolfgang Schaeuble are urging Rajoy to take an international bailout since Spain cannot solve its banking woes alone, German news magazine Der Spiegel reported Saturday in an advance copy of an article in this week’s edition, without citing a source for the information. Steffen Seibert, Merkel’s chief spokesman, declined to comment on the report when contacted by telephone.
A Spanish government spokeswoman declined to comment on the report, referring instead to a speech Rajoy made Saturday in which he said the euro region should have a centralized mechanism that can directly recapitalize lenders as part of a banking union, echoing a proposal by European Commission President Jose Barroso. Such a structure, which might include conditions for banks receiving aid, would help meet Spain’s need for external capital without the stigma of a formal rescue.
Spain “will emerge from the storm under its own efforts and with the support of our European partners,” Rajoy said in the speech in Sitges, near Barcelona, calling on analysts and investors to moderate “irrational” views of Spain’s financial situation. “We are not on the edge of a precipice.”
Spanish 10-year yields ended the week at 6.51 percent, approaching the 7 percent level that triggered previous euro- area bailouts, though below a euro-era record of 6.78 percent on Nov. 17. Germany’s equivalent 10-year bund rate was at 1.17 percent after reaching 1.127 percent, the lowest since Bloomberg began collecting the data in 1989. German two-year yields slid below zero for the first time.
Irish backing for Europe’s fiscal pact failed to halt a decline in European stocks for the fourth week in five, with the Stoxx Europe 600 Index dropping 3.1 percent to 235.09. The benchmark measure has plunged 14 percent from this year’s high on March 16. The euro closed at $1.2434 in Brussels on June 1.
Merkel lauded Rajoy’s efforts “for the first time to undertake sweeping labor market reforms,” tackle the real- estate crisis and address Spanish banks, where she said the situation is “fragile.”
“That’s why it’s important to create transparency quickly over what that means for the banks, what the situation is for recapitalization,” she said. Germany and Spain are in close contact over those efforts “as we must tackle the problems of the past and start the future with a clean slate.”
The German chancellor, who was besieged over her crisis- fighting policy last week by Italian Prime Minister Mario Monti and ECB President Mario Draghi, took aim at Italy as she cited a “missed opportunity” offered by the euro’s introduction for Europe to overhaul uncompetitive economies. The cheaper borrowing that came with the euro meant “countries like Italy became virtually on a par with Germany in terms of interest rates,” she said.
Now “what we have is a situation that we didn’t want,” Merkel said. “The freedom created by this situation wasn’t exploited to improve long-term competitiveness. Instead, the time was used to spend too much money in consumption and too little time in tackling reforms.”
In Greece, where the crisis first emerged in late 2009, Alexis Tsipras, head of the biggest anti-bailout party, Syriza, appealed to voters two days ago to give him the power to cancel the terms of the country’s international bailout, including economic reforms. Moody’s Investors Service lowered Greece’s highest possible credit rating the same day, saying there was an increasing risk Greece may exit the euro region.
Greece is reaching an endgame regardless of the election outcome, Germany’s best-selling Bild newspaper said, underscoring the domestic pressure facing Merkel over her crisis response.
Greece “is unravelling,” and ever-more aid cannot deliver the new beginning that Greece needs, Nikolaus Blome, Bild’s chief political columnist, said in an editorial in Saturday’s edition.
The Greek state “must be rebuilt, like in a developing nation,” Blome said. “Someone among the euro-zone leaders must finally tell the Greeks the truth: this fresh start can only be achieved with a radical first step. And that means leaving the euro.”
Billionaire investor George Soros said in speech in Trento, Italy, Saturday that European leaders, chief among them Merkel, have a three-month window in which to “correct their mistakes and reverse the current trends.”
“We need to do whatever we can to convince Germany to show leadership and preserve the European Union as the fantastic object that it used to be,” Soros said. “The future of Europe depends on it.” [Bloomberg]
and.....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_03/06/2012_445171
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