http://soberlook.com/2012/07/trying-to-keep-deposits-in-spain.html?utm_source=BP_recent
( small banks really paying up to keep deposits. )

MONDAY, JULY 2, 2012

Trying to keep deposits in Spain

How does Banco de Sabadell, Spain's 5th largest bank try to keep depositors from moving cash to Germany or Switzerland? They offer up a juicy deposit rate. The bigger the portion of your deposit you are wiling to lock up for a year ("Fund"), the more they will pay.

This is expensive. And some of the smaller banks pay even more. In fact Spain's banks pay more for deposits than they make on mortgages. Why bother when you can replace depositors with the ECB.

Bloomberg: - While Spain’s two largest lenders, Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA), earn most of their income outside the country, smaller banks depend on domestic business. Most are paying higher rates for deposits than they earn on mortgages. Their most profitable trade -- borrowing at 1 percent from the European Central Bank and lending to the Spanish government at 6 percent -- risks bankrupting the country.

While the recapitalization program should help, ultimately the government is crowding out private credit. A banking system that borrows from the ECB and lends to the government can sustain itself for a while but will be of limited value for economic growth.

http://www.zerohedge.com/news/post-eu-summit-reality-reversion

The Post EU-Summit Reality Reversion

Submitted by Tyler Durden on 07/04/2012 09:38 -0400

Bond

Reality

We know its a holiday trading day but Europe is active (if not watching Bob) and deteriorating quite rapidly. EURUSD just traded below the ledge of the initial spike after the EU SUmmit (and has retraced around 60% of the rally now). Italian and Spanish sovereign bond spreads are 15-20bps wider from their open today and haveretraced over 40% of the spread compression post the EU-Summit now. Bunds are rather notably 5-6bps lower in yield (as we noted earlier the 'nein' to ESM standards relieves some risk transfer concerns for now). Equity indices across Europe are down between 0.5% and 1.5%. European bank equities are down around 1.5% on average (modest) but have quickly retraced around 25% of their post-summit gains. It appears the initial squeeze euphoria is wearing off quite quickly.

Spanish 10Y bond spreads have retraced 40% of their post summit gains...

and EURUSD over 60%...

and even the most-loved (and solved) European banks have retraced almost 25% of their gains now...

Credit spreads - both corporate and financial - have also retraced almost 25% of these post-summit gains.

While Swiss 2Y and EUR-USD basis-swaps are flat today, there recent weakness combined with a total lack of follow-through in European risk assets suggests that this 'fix' is the same as all the others and not a 'game-changer'. More importantly, with Germany's comments, it seems its a non-starter.

Charts: Bloomberg

and.....

http://www.zerohedge.com/news/germany-backtracks-last-weeks-summit

Germany Backtracks On Last Week's Summit

Submitted by Tyler Durden on 07/04/2012 08:52 -0400

Bond

European Central Bank

Eurozone

Finland

Germany

International Monetary Fund

Italy

Slovakia

Those curious why peripheral European bond yields have once again resumed their levitation creep higher, it is because not only did yesterday the key Merkel coalition partner, CSU, threaten to leave Germany's ruling party hanging "if further euro zone states secure bailouts, saying there were limits to how far his party was prepared to go", but today we have gotten even more furious backtracking on Mario Monti's history "success" less than a week earlier, after on one hand German opposition SPD has said it opposed Direct ESM aid to banks, but more importantly, the German Finance Ministry itself said that the entire bailout timeline is now in question, saying that it "remains unclear if Eurozone finance ministers will decide on Spain's request for banking sector aid at their next monthly meeting on July 9." The ministry also added that a decision could only come once the report on Spain by the troika - the European Commission, the ECB and the IMF - had been finalized. In other words, that much maligned Troika, which Monti had supposedly exorcised from intervening in the economies of Spain and Italy, will, after all be very much present, which also means that all the media spin about last week's "gamechanging" and unconditional bailout summit resolution, has been for nothing, in line with all the skeptical expectations.

From Market News:

Germany's largest opposition party, the center-left SPD, opposes the plan to allow Europe's permanent rescue fund, the European Stability Mechanism, to directly recapitalize banks, a senior lawmaker said in an interview published Wednesday.

The proposal allowing for direct capitalization of banks by the ESM was considered one of the key achievements of the EU leaders' summit in Brussels late last week. The leaders said, however, that direct capitalization would only be allowed once a new centralized European bank supervisor, headed by the European Central Bank, has been established.

"We strictly oppose enabling credit institutions to be financed directly from the rescue funds," Carsten Schneider, the SPD's parliamentary budget speaker, told German web media Spiegel Online.

If the planned aid for the Spanish financial sector were to flow directly from the bailout fund to the banks, then "it's hard for me to imagine that the SPD could approve this," Schneider said.

It is expected that the lower house of parliament, the Bundestag, will get to vote on the planned aid for Spain, which could be as much as E100 billion, at the end of this month. German Chancellor Angela Merkel's center-right CDU/CSU-FDP coalition government has a majority in the Bundestag.

Also from the same source, and moreimportantly:

Finance Ministry spokesman Martin Kotthaus said at a regular government press conference here that a decision could only come once the report on Spain by the troika - the European Commission, the ECB and the IMF - had been finalized.

"Up to now I've had no indication whether we will be able to decide already on July 9," Kotthaus said.

Government spokesman Georg Streiter said at the same press conference that Chancellor Angela Merkel and Horst Seehofer, the leader of her junior coalition partner CSU, were working well together. Reports that Seehofer had threatened to break up the coalition over future aid measures for ailing Eurozone states are wrong, he said.

Streiter also said the government expects a quick decision by the country's Constitutional Court on whether it will grant an injunction against the ratification of Europe's permanent bailout fund, the European Stability Mechanism.

Both houses of German parliament approved the ESM bill with a two-thirds majority on Friday. The court has announced it will conduct oral proceedings on the case July 10.

In other words, the European bailout meaahnism may or may not be activated at some point in the future. But one thing is certain: even combined, assuming they are fully funded, and with recent opposition by Finland, Holland and Slovakia they won't be, the ESM and EFSF, will certainly not have enough firepower to deal with both Spain and Italy, which means next on the regurgitated 2011 news agenda will be the same discussions that took place last year over levering up the EFSF, which like in 2011 will end up with the same sad conclusion. And during all this time, Europe will have finally run out of its last remaining assets, up to and including Spiderman towels.

and.....

http://globaleconomicanalysis.blogspot.com/2012/07/winning-summit-but-losing-war-merkel.html

Merkel Coalition About to Splinter Over Creation of "European Monster State"

Winning the Summit but Losing the War

German chancellor Angela Merkel was the EU Summit Winner. She gave next to nothing to Italy and France, and a pittance to Spain.

However, there was a price to that pittance, and it could cost Merkel dearly. Please consider German Party Leader Threatens To Axe Coalition

Chancellor Angela Merkel faces growing resistance to her European policy from within her own coalition. Horst Seehofer, the leader of the powerful CSU party, sharply criticized the outcome of last week's EU summit, and threatened to let the coalition government collapse if Berlin makes any more concessions to ailing euro members.

Bavarian governor Horst Seehofer, the leader of the conservative Christian Social Union party (CSU) which is part of Chancellor Angela Merkel's center-right federal government coalition, has criticized the outcome of last week's European Union summit and threatened to let the government collapse if Berlin makes any further financial concessions to ailing euro member states.

"The time will come when the Bavarian government and the CSU can no longer say yes. And I wouldn't then be able to support that personally either," Seehofer said in an interview with Stern magazine released on Tuesday. "And the coalition has no majority without the CSU's seats."

The CSU is the Bavarian sister party to Merkel's Christian Democratic Union.

Germany's billions of euros in aid and guarantees were already "borderline," said Seehofer, who is known in Germany for his combative, occasionally populist style. "My biggest fear is that the financial markets will ask: Can Germany cope with all that? That is the point I regard as the most dangerous of all."

'European Monster State'

Seehofer also criticized a suggestion by Finance Minister Wolfgang Schäuble that Germany should hold a referendum on a new constitution that could relinquish national powers to Brussels. "Hands off our constitution! We have this constitution to thank for the most stable state and the most stable democracy there has ever been in German history. We don't want a different constitution," said Seehofer.

He said he wouldn't accept the transfer of major powers to a "European monster state." He said he would turn the next general election and the Bavarian regional election, both scheduled for 2013, into a vote on Europe. "We will put this question to the people."

End of the Line

Merkel has given the minimum each step of the way. However there have been too many give-aways to count. Each cave-in, no matter how small, has had a cumulative effect. Each time she makes a concession, she adds risk of an adverse ruling in the constitutional court or risk of increased political fallout.

Her latest pre-planned escapade in Brussels puts her at risk of both.

The constitutional court already had the ESM under review. Additional challenges will be filed. I suspect the court will OK the treaty but with a stern warning. And speaking of stern warnings, CSU party leader Horst Seehofer just issued one in no uncertain terms.

This may be the end of the line of what Merkel can agree to without a referendum. When yields head North again in Spain and Italy (and they will because nothing has been solved), Merkel will be in serious trouble.

BoE's Tucker Preparing To Self-Immolate... And Take Others Down

Submitted by Tyler Durden on 07/04/2012 08:29 -0400

Paul Tucker, the Bank of England executive at the center of the Barclays/Diamond trigger-conversation, has issued a statement requesting a Treasury hearing to show his "keenness to clarify the position with regard to the events" of that hanging chad of a phone-call. What is most troublesome (for every major banker and politician) is his apparent willingness to take more down with him. As the M.A.D. escalates, MNI reports that minutes from 2007 show Tucker (who was/is in line as we noted yesterday for the top-job once King leaves next year) was fully aware from the early days of the financial crisis that market participants believed Libor was rigged. The Group’s November 2007 minutes, from a Tucker-chaired meeting, state “Several group members thought that Libor fixings had been lower than actual traded interbank rates through the period of stress.” The minutes show that not only was the issue raised back in November 2007 but that the BOE went to great lengths as the crisis deepened the following year to keep its finger on the money markets’ pulse. It seems that instead of mounting the 'plead-da-fif' defense Tucker is coming all-guns-blazing and is willing to drag more names into this miasma as a suicide-bomb of a hearing where the truth is realized could well bring every high ranking banking official to admit the continued unreality of Libor rates.

and....

Live Webcast Of Bob Diamond Testimony On Lieborgate

Submitted by Tyler Durden on 07/04/2012 09:01 -0400

UPDATE: *BARCLAYS SAYS HAS RECORDING OF DIAMOND, TUCKER CALL, SKY SAYS

We suspect the Treasury Select Committee hearing with Barclays ex-CEO Bob Diamond will have a few more fireworks than Jamie Dimon's congressional hearings. The Chairman of the committee noted "This is the most damaging scam I can recall" as the goal of the hearing is to ensure "the public know what went wrong and whether the perpetrators have been rooted out." While we will have our own fireworks on this side of the pond, we suspect the live stream below will contain more than a few as the independence of Libor remains in question.

Meeting details

Wednesday 4 July 2012, 2.00pm (9am ET), Wilson Room, Portcullis House

Witnesses

Bob Diamond

Commenting on the evidence session, the Chairman of the Treasury Select Committee, Andrew Tyrie MP, said:

"The Libor interest rate benchmark - crucial to transactions right across the economy and affecting millions of people - was systematically rigged over a period of years.

It appears that many banks were involved and Barclays were the first to own up.

This is the most damaging scam I can recall.

The reputation of Britain's financial services industry has been severely tarnished, albeit unfairly for the overwhelming majority unconnected with the scam.

The public's trust in banks has been even further eroded.

Restoring the reputational damage must begin immediately.

Parliament and the public need to know what went wrong and whether the perpetrators have been rooted out. We also need to be given confidence that this has been put right."

http://hat4uk.wordpress.com/2012/07/04/the-rbs-glitch-hesters-hijackers-go-from-the-ridiculous-to-the-incredible/

THE RBS GLITCH: Hester’s Hijackers go from the ridiculous to the incredible.

My jawslog@gmail.com inbox is packed to the brim with stories of RBS and Natwest ‘glitches’ ranging from brazen theft via postdated restoration cheques and crazy delays on payments, all the way through to standing orders not being honoured….and now the latest, things being debited twice.

Thus RBS admitted last night that loan payments on credit taken out by RBS customers had been removed twice ‘in a large number of cases’. Earlier, the Group had said the problem was ‘small’ and ‘duplicate mortgage payments have not been taken during Natwest’s IT meltdown’. But some Slog readers dispute this.

As Gullibles everywhere know and accept, this was all caused by one Indian engineer. How bizarre, though, that every last mistake is in RBS/Natwest’s favour. What, one wonders, are the chances of that happening by accident?

Small and medium sized businesses seem to have been particularly targeted. A regular Slogger exporting to the eurozone has described to me in detail how his last need to wire some money to suppliers abroad (£30,000 in total) was met with a blank look and the entirely new information that such transfers were now restricted to £300. The SME customer is five years from start-up and doing well, with only a small overdraft facility and a history of being in the black. Only forcibly argued small points such as “This is our money, so don’t tell us we can’t transfer it” made Natwest grudgingly go through with the transaction. So things are now moving on from ‘we don’t want to lend to you’ to ‘we will do what we like with your money now f**k off’.

Some of you may also have spotted that, at the outset of this “a little Indian did it and then ran away” bollocks, the problem was allegedly contained within NatWest. Initial Slog research over a week ago disproved that one, and now – assuming in the 24/7 news asylum that most people have forgotten – Hester’s Hijackers are brazenly showing with every new announcement that it applies right across the Group. This makes our Indian scapegoat a chap who clearly has a bike: he wiped a load of NatWest files by mistake, and now the wiping of those files means double helpings for the RBS side of the bank, and slow payments to Ulster customers.

Still, it’s good to see one British export sector booming: another Slogger noted last night that the Santander online banking and money access systems are all down. This was then confirmed by others flooding my inbox yet again – with the dreaded ‘technical glitch’ getting the blame. The nationality of Senor Glitch is unknown thus far, but Money-Saving Expert notes this morning that ‘the system is back up although very sluggish’. Funny how the problem is never, ever one of money going out too quickly.

http://www.telegraph.co.uk/finance/debt-crisis-live/9374489/Debt-crisis-live.html

17.21 Greek politicians have hit back at David Cameron's remarks that Britain could stem migration from the eurozone.

Earlier this week, the prime minister said: "The legal position is that if there are extraordinary stresses and strains it is possible to take action to restrict migratory flows, but obviously we hope that doesn't happen."

Responding to that, Greece's Pasok party said in a statement:

Is the UK, which is not a member of the euro zone, so interested in the unity and stability of the euro zone that it is threatening policing measures which violate all principles, basic freedoms and rules of the European Union?

...

It would be preferable if the British prime minister, rather than making remarks that are insulting or create a false sense of nervousness in the markets, elaborated on the information regarding the manipulation of the Libor interest rate and took better care of the fiscal figures of his country.

16.50 As the press conference finishes, some more breaking news onGermany and Italy, where it's a tale of two deficits.

Germany has halved its public deficit forecast this year, while Italy's has almost doubled. In a statement, the German finance ministry said:

Thanks to the favourable overall economic development, and the good situation on the labour market in particular, the estimate for this year's deficit has improved from 1pc to a good half-percent.

Meanwhile, Mr Monti told reporters that "Italy will have a deficit of around 2pc this year," far higher than the previous estimate of 1.3pc.

16.39 Mr Monti says that youth unemployment, at 36.2pc in Italy, is unacceptable.

16.35 The EU summit wasn't just about implementing growth measures and buying the bonds of distressed countries, however. Angela Merkelwhips out that age old mantra: only competitiveness guarantees employment growth.

In other words, countries must slash wages/unit labour costs if they want to grow...

16.25 Mr Monti says that Italy does not need help to finance its debt, and adds that the country should not be put in the same box as Portugal andGreece. He says:

We needed to avoid that high levels of government spreads may prevent some countries from pressing ahead with economic policies in a resolute way [...] This is why we asked for those measures and why we don’t ask for direct support.

16.20 Angela Merkel praises Mr Monti's efforts, and says he has taken important steps in Italy, she adds that strong EU economies are important for German stability.

16.09 Mr Monti says that Italy's spending review will try to avoid a tax on consumption - i.e. no VAT hikes.

15.45 Here's what Pierre Moscovici, France's finance minister, had to say about the €7.2bn package of tax rises (see 12.08) aimed at meeting France's deficit reduction goals:

We face an extremely difficult financial and economic situation. The wealthiest households, the big companies, will be asked to contribute. In 2012 and 2013, the effort will be particularly large

The largest new levy will be a one-time surcharge on wealthy individuals’ assets to raise €2.3bn. Another €898 will be reaped by ending a payroll-tax holiday. Other steps include surcharges for oil and financial companies, each raising an additional €550m, and a levy on dividends and stock options.

15.34 Perhaps unsurprisingly, the economic mood in Greece is not a happy one. Sentiment has fallen to a seven-month low, with manufacturing and construction worst hit. Reuters reports that the Foundation for Economic and Industrial Research found that three in five expect their economic situation to worsen in the next 12 months. The think tank said its index - based on consumer confidence gauges and indexes for business expectations in manufacturing, construction, retail and services - fell to 74.1 points in June from 76 points in May.

14.57 As if Greece's deputy finance minister didn't have enough to put up with. Police sources have told AFP that the office of poor Christos Staikouras was broken into several days ago, and the burglars made off his passport and other documents. The break-in happened at the general accounting office and comes as the country is preparing for a crucial audit by EU and IMF creditors.

14.09 Reuters has a tale that Spain is putting the finishing touches to a package of spending cuts and tax rises worth up to €30bn. The move would help the country meet its tough deficit targets for this year.

Running over several years, the programme could involve raising Spain's main consumer tax, a new energy levy, reforms to the pension system, pay cuts for civil servants, new motorway tolls and another drastic reduction in ministry and regional spending, the sources told Reuters.

Some measures may be announced next week, when the EU is likely to grant the government an extra year to cut its deficit below 3pc of output, and others could be presented over the summer and included in a multi-year budget plan due to be prepared in August.

13.28 There are suggestions today that eurozone finance ministers might meet on July 20 to finalise a rescue of Spain's banks. Sources told AFPthat there was a "strong possibility" that the ministers - known as the Eurogroup, will meet on July 20 as "the auditing of four banks isn't finished in Spain"..

Spanish officials said they were negotiating with the European Commission on the details of the rescue and hoped to present a figure for the amount needed when the Eurogroup meets on July 9.

However one source told AFP "there are many things on the table for Monday, Greece among them".

13.23 A poll in Germany has highlighted the country's unease about a closer fiscal and political union championed by Angela Merkel.

Just under three quarters of Germans surveyed in the Forsa poll were against the idea of a United States of Europe under which Berlin would cede more sovereignty to EU institutions, while 59pc opposed handing budgetary powers to Brussels.

More than two thirds of those canvassed in the Forsa poll opposed joint euro zone debt liability, or euro bonds.

12.48 With all eyes on the ECB interest rate decision due tomorrow, Jim Reid of Deutsche Bank had this to say:

Given the recent rally in credit and equity markets we are building up to the first important test with the ECB policy meeting tomorrow and non-farm payrolls on Friday. The ECB is widely expected to ease its key rate by 25bp tomorrow but we can't help thinking that additional market-friendly action is required from Mr Draghi to sustain this rally. The market is hoping that politicians have done enough to encourage the ECB to lend a hand. We suspect that they won't add additional support for now which may lead to some disappointment.

We then have Friday's payrolls which have a habit of being soft this time of year. If history repeats will is frighten markets or encourage the QE3 speculation? Maybe a slightly disappointing number is the worst case scenario as it may leave markets in limbo. So an interesting end of the week awaits.

12.33 Disappointing data from Ireland. Unemployment in the country - which received an €85bn bailout in 2010 - jumped to 14.9pc in June from 14.7pc in May.

12.24 Still with Cyprus, the newspaper Phileleftheros reported that the cost of bailing out Cyprus' banks could hit €10bn, referring to preliminary estimates by IMF officials visiting the island.

Fitch had last week said the recapitalisation costs of Cypriot banks could be in the region of €6bn, but acknowledged the estimates were subject to uncertainty and were conservative.

12.19 Cyprus has said that it expects negotiations to conclude with the IMF and the EU on its request for emergency financial aid by the end of July. But, the country, which is deeply exposed to Greece, has said it is too early to specify how much it might need.

Finance minister Vassos Shiarly said:

The aim of this process is, within the month, to have prepared a proposal which they would have discussed with us and concluded upon

12.08 Reuters reports that France's new Socialist government has announced a raft of tax rises worth €7.2bn, including heavy one-off levies on wealthy households and big corporations, to plug a revenue shortfall this year from feeble economic growth.

A one-off levy of €2.3bn on those with net wealth of more than €1.3m and €1.1bn in extraordinary taxes on large banks and on energy firms holding oil stocks were central parts of an amended 2012 budget presented to parliament ahead of a vote later in July.

11.52 The euro is under pressure this morning as grim economic data strengthened expectations that the European Central Bank is on the verge of cutting interest rates.

At one point, it slumped to a 11-and-a-half year low against the higher-yielding Swedish crown after Sweden's central bank kept interest rates unchanged and only slightly trimmed its forecasts for future borrowing costs.

Paul Robson, currency strategist at RBS, said:

The market looks primed for a 25 basis point cut by the ECB, but something more like a liquidity injection would be needed to lift the euro

Investors will also want to see if the ECB President (Mario Draghi) will highlight downside risks to growth and inflation, which will set the ground for more easing

11.29 BREAKING .... Spanish High Court has opened a case against former Bankia chairman Rodrigo Rato and 32 top executives, Reuters reports, citing a legal source. Shareholders, who lost most of their money after investing in an initial public offering last year, had started legal claims against the bank.

Bankia was nationalised in May and Rato stepped down as chairman as it became clear the lender could not deal with growing capital shortfall from a 2008 real estate crash.

11.21 Spanish and Italian bond yields have crept up around 10 basis points each to 6.27pc and 5.7pc respectively. Still way off the high before the EU Summit agreement but not encouraging.

10.20 One bright spot. European retail sales unexpectedly increased in May. Sales advanced 0.6pc from April, when they slipped 1.4pc, the European Union’s statistics office said, as gains from France to Ireland and Portugal helped offset decreasing demand in Germany.

10.01 We mentioned earlier (09.13) that Mario Monti has been on something of a charm offensive ahead of his meeting this afternoon with Mrs Merkel. Here are a few more details of the interview he gave toFrankfurter Allgemeine Zeitung. The Italian prime minister said:

We need a partial mutualisation of debt, but also more central control of national budgets. Without proper control it would be irresponsible to burden others with a share of your own debt. Germany and Italy take the same line on this and are prepared to surrender national sovereignty.

Mr Monti insisted that Italy "isn't calling for a rescue and isn't calling for eurobonds. Italy is doing everything that is being demanded of it to boost growth."

09.36 In the UK, the service sector has grown at a much weaker than expected pace. The Markit/CIPS purchasing managers' index (PMI) for the services sector sank to an eight-month low of 51.3 in June, below May's 53.3 and well shy of expectations for a more moderate easing to 52.8.

09.07 With the eurozone's private sector downturn easing only slightly in June - with Markit's composite PMI for the region revised up to 46.4 from a preliminary reading of 46 - expectations are rising for an interest rate cut by the European Central Bank.

Chris Williamson, chief economist at data provider Markit, said:

Even Germany looks to have fallen into a renewed decline, though only a very modest drop in output is signalled. The pace of downturns in other major euro member states is far more worrying

08.58 In a sign that Europe's economic powerhouse is suffering from the ramifications of the eurozone crisis, Germany's services sector unexpectedly stagnated in June.

Markit's services Purchasing Managers' Index (PMI) fell to 49.9 in June from 51.8 in May, just below the 50 level that separates growth from contraction.

The reading was the lowest since September last year, driven by lower levels of new work for the third month running and a sharp fall in business expectations.

08.55 And in France, the contraction in the services sector eased in June. The Markit/CDAF final purchasing manufacturers' index for the services sector jumped to 47.9 in June from 45.1 in May.

But in a sign of muted sentiment, the business expectations reading dropped to 52.5 from 59.5, its biggest monthly decline since the late-2008 global financial crisis and its lowest level in more than three years.

08.51 While in Italy, services activity contracted for the 13th month running. The Markit/ADACI Business Activity Index, covering service companies from hotels to banks, edged up to 43.1 in June from May's 42.8. The fall came as the pace of job losses accelerated.

08.48 Some of this morning's first economic data has dropped.

In Spain, the Purchasing Managers' Index for the services sector, which makes up around 70pc of the country's economy, was 43.4 in June, up from 41.8 in May.

That was better than the 41.5 level forecast by economists, but still a long way from the 50 mark that divides growth from contraction.

08.37 This might not fill Mrs Merkel with confidence as she prepares to meet Mario Monti. According to a report late last night, former German chancellor Helmut Schmidt (pictured below with Margaret Thatcher in 1979) has been talking of a "profound crisis". He apparently said:

After half a century since the beginning of European integration, we find ourselves in a profound crisis in almost all of the European institutions

He argued that Germany has a legal obligation to continue supporting and rescuing Europe under Article 23, paragraph 1 of the German Basic Law, which requires Germany to participate in the development of the European Union:

Either to fight the financial crisis as individual states with dwindling prospects of success, or we return to the concept of progressive European network

08.02 Meanwhile, Christine Lagarde, the managing director of the IMF, said yesterday that the ECB should beef up its purchases of peripheral debt rather than cut interest rates. She told CNBC:

We are not sure this is the best channel at the moment. Germany does not need a lowering of interest rates set by the ECB but Italy and Spain do, so you can't dissociate when you use that kind of monetary policy instrument. On the other hand, the (ECB) asset purchase program is much more selective and can be used in a more judicious way.

07.53 David Cameron also said yesterday that Britain could restrict immigration of Greeks and other migrants from eurozone countries affected by Europe's sovereign debt crisis in the event of "extraordinary stresses and strains". He said:

The legal position is that if there are extraordinary stresses and strains it is possible to take action to restrict migratory flows, but obviously we hope that doesn't happen.

I would be prepared to do whatever it takes to keep our country safe, to keep our banking system strong, to keep our economy robust.

and......

http://www.athensnews.gr/portal/1/56685

News bites @ 10

by Damian Mac Con Uladh 4 Jul 2012

A man crosses a bridge over a city train station in Athens, 26 June 2012 (Reuters)

1. CONVINCING THE TROIKA The government reiterated on Tuesday that it would seek to radically reduce the number of state agencies and organisational units within ministries in an effort to stave off troika demands for 150,000 layoffs from the public sector. Among the measures will be limiting the recruitment-retirement ratio from the present 1:5 to 1:10, Alternate Finance Minister Christos Staikouras said on Tuesday. "The climate is becoming more favourable to changes and adjustments provided we meet our commitments and work towards implementing targets," Staikouras told an Economist conference. "The government can make changes, as long as these are in line with the targets of the programme." The troika will begin talks with the government on Wednesday.

2. PAYING STATE DEBTS At the same conference, Staikouras said that the state should move to repay its debt of 6.5bn euros to the private sector in order to reinforce market fluidity. He underlined that 4bn euros will be repaid by the end of the year. The comments came after the head of the EU's taskforce in Greece, Horst Reichenbach, told the same conference that the government must prioritise paying out those arrears to get funds flowing again to cash-strapped businesses.

3. QUANGOS SCRAPPED All paid committees attached to ministries and special secretariats were abolished on Tuesday, according to a statement from the prime minister's office. Among those axed was a committee for the reinforcing of masonry buildings that was part of the Organisation for Earthquake Planning and Prevention. Members on that committee received 8,000 euros for their efforts. In 2009, there were 2000 such committees, about a quarter of which were created under the New Democracy government from 2004 to 2009. The rule will not affect special secretariats considered essential such as the Financial and Economic Crime Unit (SDOE).

4. SHADOW CABINET Main opposition party Syriza on Tuesday announced the line-up of its shadow cabinet. The key names are: finance spokesman is Euclid Tsakalotos, a professor of economics, while Yiorgos Stathakis will assume the development brief. Handling labour issues will be Dimitris Stratoulis, while labour law expert Alexis Mitropoulos will head the administrative reform brief. Internal affairs will be dealt with by Sofia Sakorafa, while Rena Dourou will deal with foreign affairs and Zoi Konstantopoulou with justice.

5. BLOCKING GREEKS Britain could restrict the immigration of Greeks and other citizens of eurozone countries affected by the debt crisis in the event of "extraordinary stresses and strains", Prime Minister David Cameron said on Tuesday. "The legal position is that if there are extraordinary stresses and strains it is possible to take action to restrict migratory flows, but obviously we hope that doesn't happen," he told a parliamentary committee. "I would be prepared to do whatever it takes to keep our country safe, to keep our banking system strong, to keep our economy robust," he added.

6. MAYOR MEETS CHINESE The municipality and Chinese community of Athens expressed their mutual desire to further strengthen relations, at a meeting held on Tuesday. Representatives of the Chinese community told Athens Mayor Yiorgos Kaminis and city councillors that they want to support the local economy by promoting the Greek tourism brand in China and by boosting olive oil and wine exports. Describing the meeting as "historic", Chinese Ambassador Du Qiwen stressed that it was the first time the Athens city hall opened its doors to the representatives of the ethnic Chinese community.

7. HUSBAND ARRESTED A 68-year-old man who tried to set his wife on fire is due to appear before a prosecutor in Larisa on Wednesday. According to reports, the man, who was drunk, doused his wife in petrol early on Tuesday and then threatened to light a match and set her alight. The woman managed to escape from her husband and ran screaming to a relatives who lived nearby. The incident happened in Farsala, in southern Thessaly. The man was later arrested by police.

8. ANTIRACIST PROTEST Antiracist groups have called a demonstration for Thursday at 6.30pm in Nikaia in solidarity with non-Greek shopkeepers who have been "ordered" by neo-Nazi Golden Dawn to shut down their businesses. On June 23, Golden Dawn members gave the business one week to shut down or "face the consequences". All the businesses in question are legal and licensed. Among those threatened is the Pakistani owner of a video rental shop.

9. GREECE IN BLOOM Unemployment, poverty, upheaval, bankruptcy – the country's image has hit rock bottom, or so it appears in the eyes of many Europeans. But what is life really like out there, in the olive groves, on the islands and in the tavernas? To answer that question, award-winning Austrian filmmaker Fabian Eder explored the mood among "the simple people" during a boat-trip from Crete to western Greece over a number of weeks. The results of his efforts is a new documentary, Greece in Bloom: A Spring Odyssey, which has its TV premiere in Germany, Austria and Switzerland on Wednesday. Here's the trailer:

Catharsis Ours

Wednesday, July 4, 2012