Around the horn in Europe - Items from Greece newspapers , The Telegraph liveblog and Zero Hedge - plus much , much more....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_4930_05/07/2012_450769

Immigration, sell-offs prove obstacles to coalition consensus A couple of key obstacles remained on Thursday night to agreement between the three coalition parties ahead of Prime Minister Antonis Samaras appearing in Parliament on Friday to present the government’s policy program. According to sources, the two major differences were the privatization program and changes to the law granting citizenship to second-generation immigrants. In both cases, the coalition’s junior partner, Democratic Left, is offering the most resistance. Sources said that the leftist party is opposed to the sale of key state infrastructure, such as the Public Power Corporation, public water companies and the Hellenic Railways Organization (OSE). Democratic Left proposes that the state seeks strategic partners to invest in the firms but that the government retain controlling stakes. On the immigration law, the leftists are opposed to New Democracy’s plans for the legislation to only apply to children over the age of 18 and for those applying for Greek citizenship to reject the citizenship of another country. Samaras is expected to speak to Democratic Left leader Fotis Kouvelis and PASOK chief Evangelos Venizelos today before he goes to Parliament to announce the coalition’s plans. Samaras’s speech is expected to contain references to the closing down and merging of public organizations, privatizations, a scheme to make better use of public real estate and plans to meet civil service personnel targets through strict limits on new hires. Venizelos, meanwhile, has drawn up a proposal to reduce Greece’s debt by 91 billion euros. The PASOK leader, who is expected to promote his scheme in the days to come, will call for Greek banks to be recapitalized via the European Stability Mechanism (ESM), thereby reducing public debt by 50 billion euros. He will also call for the restructuring of Greek bonds held by the European Central Bank, shaving another 27 billion off Greece’s debt pile and for social security funds to exchange their bonds for new Greek notes issued under UK law, which would slash debt by another 14 billion euros.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_3835_05/07/2012_450752

Greece cedes ground to troika  PM, FinMin seek to convince creditors of will to push reforms as bid for concessions takes backseat  The IMF's Poul Thomsen (right) and ECB's Klaus Masuch (center) check their watches as they leave Maximos Mansion along with European Commission director Matthias Morse (left) on Thursday. Prime Minister Antonis Samaras had his first meeting with top-ranking envoys representing the country’s foreign creditors on Thursday and sought to convince them of his government’s commitment to getting the economy back on track while also sounding them out on some possible concessions that could curb rising unemployment and a deepening recession. In a statement issued by his office after his talks with officials of the European Commission, European Central Bank and International Monetary Fund, known as the troika, the premier’s office said Samaras “repeated the basic positions regarding the future of the Greek economy as set out in his letter to leaders of the eurozone attending the recent EU summit.” In that letter, Samaras had vowed to honor the targets of the Greece’s loan deal with creditors while asking for some “necessary modifications.” The statement yesterday added that the government is “determined to proceed more effectively with fiscal adjustment and to speed up structural reform in order to ensure economic recovery, create jobs and secure social cohesion.” The premier reportedly heralded an ambitious privatization program while asking for softer terms regarding wages, pensions and planned layoffs in the state sector. The troika officials were said to have maintained a tough stance. Their chief goal, however, is to assess the government’s intentions. Any negotiations would take place later this month after the troika’s technical teams compile a report. The strongest indication that Greece would not seek to violate the terms of its bailout came in a statement by Finance Minister Yannis Stournaras, who met with troika officials after being sworn into his new role in the morning. “The program is off track and we can’t ask for anything from our creditors before we get it back on course,” he told the Financial Times after meeting with troika officials. One of the mission chiefs told him he would have “a tough time at the Eurogroup meeting on Monday,” he said. Stournaras is to meet again with the troika on Sunday following the presentation in Parliament today of the government’s policy program. “We are entering very deep waters, the years ahead will be difficult,” he said adding that “there is light at the end of the tunnel, but the tunnel is long.” According to sources, Greece’s state and social budget is 1.5 to 2 billion euros off target due to a shortfall in tax collection and excessive spending by social security funds and the Manpower Organization (OAED). and..... Ministry unable to collect tax fines  Over 12.5 billion euros in penalties could have entered state coffers had the mechanism worked By Prokopis Hatzinikolaou The Finance Ministry has been unable to collect court-ordered tax fines totaling 12.6 billion euros, or 6.2 percent of the country’s gross domestic product, according to data posted on Thursday on the website of the ministry’s General Secretariat of Information Systems. The court orders came about after the taxpayers concerned disputed the fines imposed by the tax monitoring mechanism. However, partly due to being understaffed as a result of the voluntary exit program and retirements, as well as to the absence of electronic applications, the tax collection mechanism has only managed to collect 630 million euros, that is just 4.77 percent of the total sum of 13.2 billion. The above amount includes the fine of 4.8 billion euros imposed on the Acropolis stockbrokerage for its role in the structured bonds scandal three years ago. The state has not received a single euro of that yet. There are in excess of 180,000 outstanding tax cases in the Greek courts and there is no sign that this number will shrink significantly any time soon. While Athens had intended to have 50 percent of the pending cases heard by last month and 80 percent by the end of December, ministry data indicate that only 2.1 percent of cases made it to court in the first half of the year. As a result it is hardly surprising that sources from the ministry are suggesting that the budget’s net revenues are showing a 1.5 percent decline from the same period in 2011, which means there is still a 1-billion-euro black hole in the budget. Ahead of the official first-half figures to be released by the ministry later this month, sources point to a 1 percent increase in revenues in June compared to the same month last year. However, this was due to the withholding of tax returns, which were 10 percent lower than last year: The revenue figures exempting tax returns are said to show a 0.5 percent drop from June 2011. Receipts from the 2009 Single Property Tax managed to boost revenues somewhat. Also in June, income tax receipts fell by 30 percent while value-added tax receipts declined by 7 percent. and contrast Syriza responses...... athens news Syriza fire off against Asmussen comments 5 Jul 2012 Panagiotis Kouroublis accused the ECB execs of lacking seriousness and professionalism. (photo:Eurokinissi) The figure of 3,000 euro per month quoted as the 'average' Greek public-sector salary by European Central Bank executive board member Joerg Asmussen was simply wrong, the main opposition Radical Left Coalition (Syriza) party parliamentary spokesman Panagiotis Kouroublis stressed on Thursday. Commenting on Asmussen's remark at the Economist Conference held in Athens on July 2, Kouroublis was equally scathing about the ECB board member's inaccuracies but also the Greek government's failure to react "to the misinformed insult". "It is clear that the ECB's high-ranking executives lack seriousness and professionalism if they make mistakes of such magnitude, and extortionately impose their catastrophic policies without first ensuring that they have been informed about the real situation that exists in Greece," Kouroublis said. He clarified that Syiza had waited three days for the government to state its position concerning Asmussen's comments, adding that no one, regardless of their position, had a right to spread false information that created a negative climate in European public opinion against Greece and the Greeks - especially not those who were supposed to monitor, suggest and impose political choices on the country. Syriza's parliamentary spokesman also noted that the comment, which was picked up and reproduced by sections of the foreign media, was mysteriously omitted from the official Greek translation of the ECB official's speech on the Economist website. (AMNA)

and also......

Coalition has given up on renegotiation, Syriza says

5 Jul 2012

The coalition government has already bowed to the "will" of the memorandum, according to Syriza. (photo:Eurokinissi) The main opposition party Radical Left Coalition (Syriza) on Thursday repeated accusations that Prime Minister Antonis Samaras and his coalition government have backtracked on pre-election promises to renegotiate the terms of bailout loans to Greece, highlighting his decision to put off the government policy statement until after his meeting with the EU-IMF troika. "Mr. Samaras' choice to meet the troika first and then present his government's policy statement to Parliament and the Greek people clearly illustrates [the government's] intentions and priorities," a Syriza press office announcement stressed. The pre-election promises of all three parties in the coalition government to renegotiate the terms of the Memorandum had now given their place to a faithful implementation of Memorandum commitments that fully ignored the message of the elections, the party added. These included privatisations and the selling off of public wealth that would deprive the economy of valuable tools for national growth, continued reductions in public spending by wage and pension cuts, the dismantling of the welfare state and cuts in public investments programme in ways that would increase unemployment and deepen the recession, the announcement added. The only prospect for the Greek economy's recovery was the overthrow of destructive memorandum policies and a new strategic plan to support growth, employment and a productive restructuring of the economy, Syriza stressed. The party's Parliamentary representative Panagiotis Kouroublis, in separate statements on Thursday, also reacted to suggestions made by British Prime Minister David Cameron that the UK was considering plans to close its borders to Greek nationals if the country exited the eurozone. Kouroublis said the statements were politically and diplomatically "unacceptable" and stressed that "such slips do not help establish a climate of confidence that is needed for the EU to deal with the economic crisis that now affects it as a whole". "Given that the United Kingdom hosts within its territory the base of the speculative banking system that is at the centre of the creation of problems that European countries and especially Greece, are catastrophically experiencing, he has an obligation to carry out corrective actions in the interior of his own country before he proceeds with the utterance, with admittedly unrivalled ease, of statements that undermine European bonds," he added. Kouroublis also underlined that the government must take all necessary diplomatic steps to ensure that Cameron revised or retracted the statements that were a blow to Greece's dignity and the principle of solidarity between EU member states. Reacting to the remarks made by Syriza, government spokesman Simos Kedikoglou, said "this government with a mandate by the people has chosen our stay in Europe and the euro. Syriza (the Radical Left Coalition) and the interests of the drachma can wait until the next elections." (AMNA)

http://yanisvaroufakis.eu/2012/07/04/the-june-summit-a-week-later-the-latin-troikas-coup/

The Latin Troika’s Coup: what is left of the joy it generated a week later

4JUL

The half life of joy and celebration, following Europe’s Summits, is continuing to slide. The 19th such Summit since the Crisis erupted was, as I wrote here, the most successful (in that it produced, for the very first time in two and a half years) a decision that is not wholly fraudulent, irrational and irrelevant. It was, in effect, a first, important step toward decoupling the insolvent banks from the insolvent states. However, already, the politicians of the surplus nations are clawing back the encouraging elements of this decision, after having buckled in front of the Latin troika (the spontaneous alliance of Italy, Spain and France). It is, thus, no surprise, that the post-Summit’s enthusiasm’s half life proved no longer than three days.

To get this agreement the Latin troika traded progress on growth and the financing of member-states that find it impossible to refinance themselves. For what exactly?  The Netherlands are asking for a Treaty change, in order to permit the ESM to inject capital directly into banks. Finland continues to demand collateral – an act of determined refusal to behave like a prospective member of a closer union. Germany’s CSU is threatening to bring Mrs Merkel down over the same issue. The German constitutional court is waiting in the wings. Greece, Ireland and Portugal are frozen out of this agreement by some remarkable argument in favour of double and treble standards. The vagueness over the timing of, and conditions for, the direct capital injections are threatening to turn this singularly good idea into a dead letter. In a sense, the Latin troika secured an agreement that may be confirmed in the total breach rather than the implementation. 

The most telling aspect of it all is the attitude of those critical of Mrs Merkel’s concessions to the Latin troika: Their take on it makes it spectacularly clear that they do not wish for the bank run in the Periphery to end or for the Periphery’s states to see spreads fall to manageable levels. Ergo, they are more than happy to see the eurozone perish. It is little wonder, then, that the markets have gone back to their pre-Summit gloom. 

and....

http://www.zerohedge.com/news/futures-turn-negative-eur-back-pre-summit-levels-following-global-easefest

Futures Turn Negative, EUR Back To Pre-Summit Levels Following Global Easefest

Submitted by Tyler Durden on 07/05/2012 08:07 -0400

• Central Banks
 
• Germany

In continuing the quantum physics scramble of the past 48 hours in the aftermath of the potential Higgs Boson discovery which confirms mass exists (and will soon be blamed for America's obesity epidemic) we ask if three of the world's largest central banks eased and futures turned red, did three of the world's largest central banks actually ease? Because if today is any indication, either all the EURUSD-ES algos are being furiously shut down right now to prevent risk from being dragged far lower, or we have reached peak central planner intervention. In other news, the entire EURUSD ramp since last week's summit is now gone, which incidentally is just what Germany always wanted.

EURUSD tumbles:

to retrace 100% of the EU Summit gains...

and S&P 500 futures are up a measly 1pt...

http://www.zerohedge.com/news/spain-sells-10-year-paper-yields-jump-ireland-not-uganda

Spain Sells 10 Year Paper, Yields Jump; Ireland Is Not Uganda

Submitted by Tyler Durden on 07/05/2012 06:46 -0400

• Bond
 
• Capital Markets
 
• default
 
• Greece
• International Monetary Fund
 
• Ireland
 
• Portugal
• Reuters

So much for the latest European bail out. Not even a full week after the last European dead of night summit, which supposedly "was different this time", and Spanish bond yields have already retraced virtually the entire move lower, and after sliding to as low as 6.1%, are now back to 6.62% as of this morning, 22 bps wider on the day, as a result of the now generic realization that nothing actually changed, and also following the latest abysmal and unsustainable (there's that key word again) auction out of Spain, which sold bonds due 2015, 2016 and 2022, even as its default risk is now wider than that of Ireland.

From Reuters:

Spain sold 3 billion euros ($3.75 billion) of medium- and long-term debt on Thursday, at the top end of its target, though doubt over the details of an European accord forced the Treasury to pay the highest rate for its 10-year bond since November.

The 2022 paper, which sold 747 million euros at an average yield of 6.43 percent, was auctioned for only the fourth time this year on Thursday as the government concentrated on lower, less expensive maturities.

The benchmark bond, which has a coupon of 5.85 percent, was last sold June 7 at an average yield of 6.044 percent at a bid-to-cover ratio of 3.3 compared to a ratio of 3.2 on Thursday.

The Treasury also sold 1.2 billion euros of a bond maturing July 30, 2015 at a yield of 5.086 percent compared to a yield of 5.457 percent June 21. The bond was 2.3 times subscribed compared to 3.2 times last month.

A bond maturing Oct. 31, 2016 sold 1 billion euros at a yield of 5.536 percent, after 5.353 percent on June 7, with a bid-to-cover ratio of 2.6, the same as at the previous auction.

Those who bought the 10 year paper are already losing big in under 3 hours, as the last benchmark quote was about 20 bps wider.

In other news, Ireland is not Uganda:

Ireland returned to short-term debt markets on Thursday for the first time since before its EU/IMF bailout in November 2010, paying less for three-month paper than Spain which has avoided going to international lenders for a full sovereign rescue.

In a tentative first step following a near two-year hiatus, Ireland sold 500 million euros of treasury bills at an average yield of 1.8 percent.

Dublin, effectively shut out of capital markets before the 85 billion euro ($107 billion) bailout, is likely to run a number of t-bill auctions before attempting a long-term issue towards the end of this year or early next.

Ireland is the only country that has not sold treasury bills during its bailout and given that Greece has consistently auctioned three-month debt and Portugal has even tested appetite with 18-month bills, analysts saw Dublin having few difficulties.

And now that Europe is unfixed again, everyone's attention turns to Frankfurt, where woe is Spain if Draghi disappoints and only drops rates by 25 bps (or not even that), a move which is now priced in completely.

and.....

http://www.zerohedge.com/news/bank-england-hikes-qe-%C2%A350-billion-expected-china-cuts-benchmark-rate-surprising-move

Bank Of England Hikes QE By £50 Billion As Expected, As China Cuts Benchmark Rate In Surprising Move

Submitted by Tyler Durden on 07/05/2012 07:06 -0400

• Bank of England
 
• BOE
 
• China
 
• CPI
 
• Credit Conditions
 
• Monetary Policy
 
• People's Bank Of China
• United Kingdom

While everyone was expecting the BOE to return back to QEasing with a £50 Billion increase in its asset purchase program(me), to a total of £375 billion, which is what just happened, the bigger news came 1 second before the BOE announcement, with China declaring it has cut benchmark interest rates as once again the fate of the whole world is in the hands of small groups of academics, promising each other bottles of Bollinger if they can only get the S&P500 over 1,400.

From the BOE:

The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%.  The Committee also voted to increase the size of its asset purchase programme, financed by the issuance of central bank reserves, by £50 billion to a total of £375 billion.

UK output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters.  The pace of expansion in most of the United Kingdom’s main export markets also appears to have slowed.  Business indicators point to a continuation of that weakness in the near term, both at home and abroad.  In spite of the progress made at the latest European Council, concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here.  The correspondingly weaker outlook for UK output growth means that the margin of economic slack is likely to be greater and more persistent.

CPI inflation fell to 2.8% in May and is likely to edge down further in the near term.  Commodity prices have fallen, which should help to moderate external price pressures.  And pay growth remains subdued. Given the continuing drag from economic slack, that should ensure inflation continues to ease into the medium term. 

At its meeting today, the Committee agreed that the Funding for Lending Scheme, which would be launched shortly, was a welcome initiative.  It also noted recent and prospective actions to ease liquidity constraints within the banking system.  Taken together with reduced pressure on household real incomes, on the back of lower commodity prices, and the continued stimulus from past monetary policy actions, that should sustain a gradual strengthening of output growth.

But against the background of continuing tight credit conditions and fiscal consolidation, the increased drag from the heightened tensions within the euro area meant that, without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term.  The Committee therefore voted to increase the size of its programme of asset purchases, financed by the issuance of central bank reserves, by £50 billion to a total of £375 billion.  The Committee also voted to maintain Bank Rate at 0.5%. The Committee expects the announced programme of asset purchases to take four months to complete.  The scale of the programme will be kept under review.

The minutes of the meeting will be published at 9.30am on Wednesday 18 July.

And from the PBOC:

The People's Bank of China decided to cut financial institutions RMB benchmark deposit and lending interest rates since July 6, 2012. One-year benchmark deposit rate cut of 0.25 percentage points, year benchmark lending interest rate cut by 0.31 percentage points; other deposit and lending interest rates and individual housing provident fund deposit and lending rates be adjusted accordingly.

Since the same day, the lower limit of the floating range of lending rates of financial institutions was adjusted to 0.7 times the benchmark interest rate. Individual housing loans interest rate floating range should not be adjusted, financial institutions should continue to strictly enforce the differentiation of the housing credit policy, to continue to curb speculative investment buyers. (End)

and....

http://www.bloomberg.com/news/2012-07-04/finland-contests-seniority-clause-in-spain-s-bank-bailout.html

Finland Contests Seniority Clause In Spain’s Bank Bailout

By Kati Pohjanpalo - Jul 5, 2012 4:48 AM ET

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Finland is contesting the wording of an agreement struck last week in Brussels, arguing it doesn’t adequately address the possibility that loans to Spain from Europe’s permanent rescue fund can give taxpayers seniority.

A June 29 statement from the 17 euro-area leaders stripping the European Stability Mechanism of its preferred creditor status in Spain was incomplete, said Martti Salmi, a Finnish Finance Ministry official. The 100 billion-euro ($126 billion) bank bailout could provide seniority to contributor nations if fresh funds are transferred by the ESM, he said.

Enlarge image

Jutta Urpilainen, Finland's finance minister. Photographer: Henrik Kettunen/Bloomberg

Last week’s release out of Brussels “gives the impression that the entire bailout is without seniority,” Salmi, a director at the Finance Ministry under Jutta Urpilainen, said in a phone interview yesterday. “This is not the case exactly.”

Since euro-area leaders emerged from last week’s summit with a list of measures to stem the debt crisis, Finland and the Netherlands have cast doubt over the success of the talks by signaling disagreement with a number of key points. The government of Prime Minister Jyrki Katainenthis week underscored its opposition to using the ESM to purchase bonds on the secondary market, while Finland has also said it expects collateral in exchange for any aid commitments that don’t give it preferred creditor status.

Not Air-Tight

“We reaffirm that the financial assistance will be provided by the EFSF until the ESM becomes available, and that it will then be transferred to the ESM, without gaining seniority status,” euro leaders said of Spain’s bailout in their June 29 statement. The release was incomplete, Salmi said.

European Union President Herman Van Rompuy also addressed the point in his post-summit press briefing. “Financial assistance to Spain will be provided without seniority status for the financing provided by the EFSF/ESM,” he said.

That’s not air-tight, according to Salmi.

It’s “technically possible” that some part of Spain’s rescue would be paid directly from the permanent bailout fund, Salmi said. Taxpayers would have seniority in that event, he said.

Complex Reality

“After the June summit, the market took at face value the drop of the seniority rule, as well as the ESM’s bond buying and direct bank recapitalization roles,” Thomas Costerg, an economist at Standard Chartered Bank, said in an e-mailed response to Salmi’s comments. “The reality might be more complex” and people are starting “to realize that many details still need to be sorted out.”

That means that the July 9 euro group meeting, at which the bloc’s finance ministers will meet to fine tune the summit’s conclusions, “could be more tumultuous than expected,” Costerg said.

Euro-area leaders sought to ease the terms of Spain’s bank bailout by assuring bondholders their claims won’t be junior to those of taxpayers. Last week’s summit also brought Europe closer to a fiscal and financial union. The measures sent Spanish bonds higher amid confidence the crisis won’t spin out of control.

Euro-area finance ministers may decide on July 9 whether the entire Spanish bailout will come from the EFSF, according to Salmi. Use of the temporary fund means Finland will demand collateral, a privilege the country has already paid for after agreeing to forgo any profits the EFSF may generate, he said. Finland also agreed to make its contribution to the ESM up front as a condition for receiving collateral. The country has yet to make that transfer, according to the Finnish Treasury.

Spanish Collateral

What the collateral from Spain will be “remains to be seen,” Salmi said. “Greece is of course a kind of precedent.” Some preliminary talks with Spain’s government on collateral have already started, he said.

Finland, one of only four AAA rated nations left in the euro area, threatened to hamper efforts to agree on a second bailout for Greece by insisting on extra security last year. The Nordic country was the only nation to negotiate collateral in exchange for loans from the temporary fund because the vehicle doesn’t give its creditors preferred status.

Voters in Finland, which kept its deficit within the EU’s 3 percent threshold even as its economy contracted 8.4 percent in 2009, rewarded groups critical of Europe’s rescue mechanisms in April 2011 elections, when the anti-euro “The Finns” party become the nation’s third-largest.

Testing Limits

“Finland’s requests might start to resonate with electorates in other northern countries, who could feel that assistance to southern countries has already reached its limits, especially if economic conditions deteriorate at home,” Costerg said. Finland’s request for collateral could also raise the cost of the bailout, he said.

Inside the euro area, Finland shares its top credit rating with Germany, Luxembourg and the Netherlands at the three main rating companies. The other countries in the monetary union are Austria, Belgium, Cyprus, Estonia, France, Greece, Ireland, Italy, Malta,Portugal, Slovakia, Slovenia and Spain.

Finland’s government on July 2 reiterated its opposition to secondary market bond purchases using the ESM, citing the rescue fund’s limited resources and what it called the proven “ineffectiveness” of such measures. Such interventions could cost as much as “hundreds of billions of euros,” and be a deal-breaker for Finland, Salmi said.

The Netherlands also underlined its skepticism toward bond purchases as the government of Prime Minister Mark Rutte said “any request for the use of this instrument will be done on a case-by-case basis,” in a letter to parliament today.

“We think it’s quite unlikely that some member countries would think it sensible to ignore the views of others, because that could have consequences,” he said. “All parties here are playing hard ball.”

and....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_11138_04/07/2012_450533

Samaras poised for first meeting with troika officials Prime Minister Antonis Samaras is set to meet top-ranking envoys representing Greece’s international creditors at 1 p.m. on Thursday before briefing officials of his coalition government who are seeking to finalize the administration’s policy program ahead of its scheduled presentation in Parliament tomorrow afternoon. Finance Minister Yannis Stournaras will also meet with the troika chiefs following a swearing-in ceremony scheduled for 10 a.m. It is expected that Samaras will synopsize Greece’s basic arguments in his talks with envoys from the European Commission, European Central Bank and International Monetary Fund, known as the troika. According to sources, the four key “axes” of the Greek proposal to the troika will be: the restriction of hirings in the civil service to 1 for every 10 departures, the transfer of civil servants to other parts of the public sector instead of their inclusion in a labor reserve scheme, the implementation of an ambitious program for privatizing state assets and the adoption of certain measures to relieve austerity-weary citizens such as allowing them to pay taxes in instalments. Samaras is expected to pass on the troika’s response to this proposal to officials from the three parties in the coalition -- conservative New Democracy, socialist Pasok and Democratic Left -- who will then finalize the policy program. Sources said there had been some dispute between the different parties on certain areas of policy such as ND’s proposal for the revocation of a citizenship law granting migrants greater rights and as regards a minimum corporate tax rate. Stournaras is also expected to suggest that taxpayers are allowed to pay their dues in tranches though this would mean that 2.5 billion would not be collected until next year. The bloated civil service is another targeted area. The government plans to reduce the number of civil servants it employs by about 15,000 this year by adhering to a 10-out-1-in hiring policy as part of an effort to meet targets for a smaller public sector by 2015. The target it has agreed with the troika is 150,000 fewer full-time civil servants by 2015. Sources told Kathimerini that there would be a strict limit on the amount of temporary workers as well. Administrative Reform Minister Antonis Manitakis said that only staff to cover pressing seasonal needs would be hired, saving some 300 million euros. and..... http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_8631_04/07/2012_450547 Extra Eurogroup to discuss Greece  Eurozone finance ministers will likely convene on July 20 to give the troika new mandate By Nikos Chrysoloras BRUSSELS - The council of eurozone finance ministers, known as the Eurogroup, may hold an extraordinary meeting on July 20 to discuss the situation in Greece and in Spain, according to reports, despite being set to hold a scheduled meeting on Monday. As far as Greece is concerned, the first discussions on the ongoing inspection by the mission of the European Commission, the European Central Bank and the International Monetary Fund -- known as the troika -- will take place at Monday’s scheduled Eurogroup meeting. The Europeans are expected to decide what stance they will take with respect to the inspection and the negotiation for the signing of the updated bailout agreement with the troika. Diplomatic sources told Kathimerini that European governments are being cautious, and will remain so at least until the end of the bailout program’s evaluation. The evaluation is not seen happening before Monday’s meeting, which will be taken up by the Spanish and Cypriot requests for entry into the European Support Mechanism (ESM) and the implementation of the May 28-29 European Council decisions. As a result, an extra meeting of the Eurogroup will be necessary on July 20. That is when the troika will receive its political orders regarding its negotiating mandate, signaling what kind of concessions European governments are prepared to make. The new round of talks with the Greek side will begin on July 24. Sources from Luxembourg confirm that until the revised bailout agreement is signed, there will be no further disbursements from the ESM to Greece beyond the 1 billion euros that had been withheld from the May tranche. On the issue of what would happen if Greek cash reserves run out while the talks are ongoing,Kathimerini has learned that the situation is being monitored and decisions will be made according to developments. Kathimerini also understands that among the issues to be discussed at Monday’s Eurogroup is the bond maturing on August 20, which Greece will not be able to repay unless funds from the ESM are disbursed. A month’s extension could be granted, although several European governments will likely voice disagreement. and.... France to hand over interest collected on Greek bonds The Bank of France will hand over 754 million euros of interest collected on Greek government bonds it holds as part of agreements to offer the country financial support. The figure was given on Wednesday by the French treasury in its revised 2012 budget. [Bloomberg]

and....


http://www.zerohedge.com/news/hollande-love

To Hollande, With Love

Submitted by Tyler Durden on 07/04/2012 22:31 -0400

• France
 
• Germany
 
• Purchasing Power

Monsieur le Président de la République
Palais de l’Elysée
55, rue du faubourg Saint-Honoré
75008 Paris

Paris, 4th of July 2012

Monsieur le Président,

You have just been elected after a particularly adroit and fortunate electoral campaign which has awarded you full powers. This gives you the historic opportunity to carry out the in-depth reforms this country needs to help it face its major challenges, with a widened social support.

Unfortunately, the first projects unveiled by your government do not engage on this path. On the contrary, they portend a number of ominous consequences. The implementation of a confiscatory fiscal policy would cripple our major companies by accelerating the exodus of their management heads, while freezing investment into small and medium-size businesses. The fleecing of the middle classes as well would accentuate the weakening of the work ethic, already damaged by the 35-hour week. Finally, modest and low incomes would also suffer. Increase taxation of overtime would erode their purchasing power, while the project to raise the ceiling on the Livret A savings account may well support the financing of public debt, but would encourage an increased amount of the working-class savings to be sunk into an investment with lacklustre returns.

The plan to fleece the entire country in order to sustain the survival of an obsolete social welfare system is doomed, yet it may be implemented for a few months. But endeavouring to also fleece our German friends is a dangerous and reckless ambition. Why should they accept to contribute to the financing of a 60 year retirement age in France when they have just raised it domestically to 67? Certainly, Germany would have a lot to lose with the implosion of the euro. But it is politically untenable to demand support for social benefits that the Germans have denied for themselves and unrealistic to imagine they can single-handedly carry the burden of a spendthrift Europe.

You are faced with a formidable dilemma. Either to consolidate the viability of our core social progress by embarking on a courageous reform program or threaten it by impoverishing the country, while endangering the European construction project. By all means, consider the odds before taking your decisions.

With this hope in mind, Monsieur le Président, I remain yours faithfully,

Edouard Carmignac

Source Carmignac Geston, h/t Sean Corrigan

and...

http://www.telegraph.co.uk/finance/debt-crisis-live/9377485/Debt-crisis-live.html

13.10 The euro has tumbled against the US dollar after the ECB announcement, it's now at just $1.2442.

12.47 News from the ECB now, it's cut the deposit rate to 0pc from 0.25pc. So banks are getting no return for parking cash at the European Central Bank. Its key interest rate has also seen a 0.25pc drop, to 0.75pc.

12.19 We have the full Bank of England statement on the extension of QE online for you now:

UK output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters. The pace of expansion in most of the UK’s main export markets also appears to have slowed.

Business indicators point to a continuation of that weakness in the near term, both at home and abroad. In spite of the progress made at the latest European Council, concerns remain about the indebtedness and competitiveness of several euro-area economies, and that is weighing on confidence here.

The correspondingly weaker outlook for UK output growth means that the margin of economic slack is likely to be greater and more persistent.

12.01 The Bank of England has announced that it will boost its quantitative easing scheme. A further £50bn will be created from thin air, taking the total to £375bn. There's no movement on interest rates. China simultaneously cut lending rates as it economy slowed.

11.35 Ireland is back in the bond market after almost two years: it raised €500m in a short-term debt auction. The Treasury said in a statement:

It received bids 2.8 times the €500m amount of bonds on offer, and offloaded the three month debt at a yield of 1.8pc.

National Treasury Management Agency Chief Executive John Corrigansaid in a statement:

We are encouraged by the strong demand, the competitive interest rate and the presence of significant international interest in today's auction.

However, we are conscious that this is only the first step towards our ultimate goal of full access to the capital markets.

11.10 And details of that negotiation in Athens are emerging. Evangelos Venizelos, the head of Pasok, which is part of the coalition government, wants an extra three years of the aid program.

11.03 Also meeting the troika in Athens will be new finance minister Yannis Stournaras, who was only sworn-in this morning. The pressure is on: Greece will run out of cash within weeks if it fails to secure the next €31.5bn installment.

10.57 The new Greek PM Antonis Samaras will meet troika auditors today, hoping to renegotiate the terms of the country's bailout.

Daily paper Eleftheros Typos spoke of Samaras' first "arm-wrestling match" with the troika in what promised to be a "renegotiation marathon".

10.11 Spain sold £3bn worth of bonds this morning, with mostly higher yields. The Spanish Treasury paid 6.43pc on 10-year debt, up from 6.04pc at the last comparable sale. Nicholas Spiro, managing director of Spiro Sovereign Strategy, says:

While there is a renewed deterioration in sentiment towards Spain and Italy, yields still remain significantly lower after last week's EU summit deal. Concession-building notwithstanding, the Treasury was hoping to benefit from the slightly more positive tone in risk markets, and it did to a degree. While the Treasury managed to get all its debt out the door, yield levels were a mixed bag, with the yield on the 10-year note rising significantly and pretty much on a par with secondary market levels.

Last week's summit deal to use the eurozone's rescue funds to recapitalise banks directly was designed to allay fears regarding Spain's bail-out. Yet these concerns persist, partly because the decision is conditional on the creation of a eurozone-wide banking regulator which is likely to face significant delays. For the time being, the Spanish sovereign will have to shoulder the burden of the bail-out loans, putting more pressure on Spain's creditworthiness.

09.45 Cyprus - which this week takes over the EU presidency from Denmark - sees "nothing wrong" in taking two bailouts: one from Russia and one from the EU/IMF. Cypriot President Demetris Christofias says:

Yes, we've asked Russia and the EU at the same time. We expect a positive reply [from Russia]. Perhaps the EU terms will be harsher than the Russian republic.

08.35 The Bank of England will announce whether or not more quantitative easing is on the way at noon. It's been widely predicted that we'll get another £50bn, taking the total to £375bn. Of course, that'll be bad news for pensioners and savers.

08.27 Europe's main stock markets have opened flat as traders look ahead to key monetary policy decisions from the European Central Bank and Bank of England due later in the day.

The FTSE 100 lost 0.02pc, Frankfurt's DAX dipped 0.01pc and in Paris the CAC lost 0.2pc.

07.43 One good thing about being a consumer is that if you go to the bank for a loan and don't like the rate you're being offered, you can shop around. This is exactly what Cyprus has decided to do.

President Demetris Christofias told the European Parliament yesterday that it was being offered cheaper bailout loans by Russia than it could get via the EU and IMF. Plus, there were fewer strings attached. He said:

The conditions offered by Russia are more favourable [because it does not] impose any conditions [...] and offers a lower interest rate.

The government has not said how much aid Cyprus is seeking but reports suggest it may need around €10bn ($12.5bn).

07.30 A tale of two deficits emerged in the eurozone yesterday, as Italian PM Mario Monti and German Chancellor Angela Merkel met for a jaw-jaw in Rome. Louise Armitstead reports:

Mario Monti, the Italian prime minister, told a joint press conference with Angela Merkel, the German chancellor, that Italy's deficit would rise to 2pc of GDP rather than the 1.3pc predicted, while the German finance ministry revised its forecast from 1pc to 0.5pc "thanks to the favourable overall economic development".

Referring to their clash at the Brussels summit, Mrs Merkel said she and Mr Monti were "willing to overcome our difficulties" and work together to end the three-year-old debt crisis. She said that "every day counts" in finding a resolution.

Francois Hollande, the French president, announced €7.2bn (£5.8bn) of tax rises in a bid to relieve France's "crushing" national debt. The government expects the French economy to grow by just 0.3pc this year, compared with previous estimates of 0.7pc. Despite the gloom, markets have risen in recent days in anticipation of an ECB rate cut.