http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_25254_16/08/2012_457136
( so much for the showdown..... )
Samaras not intending to stake claim during talks with Merkel and Hollande
Prime Minister Antonis Samaras does not intend to formally raise the issue of extending Greece’s fiscal adjustment program by two years when he meets European leaders next week but wants to use the talks as an opportunity to sound out his counterparts ahead of some crucial decisions regarding Greece.
Sources told Kathimerini Thursday that Samaras will only officially ask for an extension at the European Union leaders’ summit scheduled for October 8 and 9, which will be after the troika delivers its report on Greece to eurozone finance ministers, who will have to decide whether to release further funding for Athens.
“The decisions will not be taken on German soil but on a European [level],” one of the prime minister’s aides told Kathimerini.
Sources said that the Greek government is fully aware of the negative mood in many eurozone countries, where politicians are expressing serious reservations about keeping Greece in the eurozone. Austria’s foreign minister proposed Thursday that the eurozone create a mechanism to force countries that “don’t meet their commitments” to leave the single currency.
“We need to create ways to be able to eject someone from the eurozone,” Michael Spindelegger, who is also deputy chancellor, told the Kurier daily.
Samaras is due to return from his vacation on Sunday, ahead of a meeting with Eurogroup chief and Luxembourg Prime Minister Jean-Claude Juncker in Athens on Saturday. German Chancellor Angela Merkel and French President Francois Hollande are due to meet in Berlin on Thursday. The following day, Samaras will travel to the German capital for talks with Merkel. On Saturday, he will meet Hollande in Paris.
http://www.zerohedge.com/news/short-term-ecb-dollar-fx-swaps-fed-soar-highest-december-2009
Submitted by Tyler Durden on 08/17/2012 08:03 -0400
and more on Spain.....
The absence of any ket EMU events combined with a relatively muted news flow on the debt crisis amid the summer vacations/doldrums and a major lack of bond supply from the periphery until the end of August has created a favorable environment for peripheral debt. Draghi's August 2nd comments drove risk-on and as UBS notes, this amplified the usual thin liquidity and light volumes. However, all these fun and games are about to stop as September has myriad events slated that are likely to have significant impacts on investors' demand for peripheral paper. Spain, in particular, after seeing its stock and bond markets surging euphorically, is about to suffer a double-whammy. Gross issuance for the rest of the year is estimated at EUR8bn per month (and could rise to EUR13bn per month) implying EUR4-6bn per auction twice a month - keeping bonds back under pressure as supply approaches. As if that was not enough, Delinquencies on Spanish bank loans just soared to new all-time highs, rising by the most in over three years and accelerating. So, after a calm summer vacation, Spain (optics aside) is bad and about to get much worse.
http://hat4uk.wordpress.com/2012/08/17/revealed-eurodebt-now-80-of-global-total-but-ecb-official-claims-that-central-bank-is-immune/
Submitted by Tyler Durden on 08/17/2012 07:16 -0400
and.....
http://www.zerohedge.com/news/finns-prepare-euros-end-deeply-suspicious-eus-gang-four
Submitted by Tyler Durden on 08/17/2012 02:04 -0400
Ana Botella, wife of former Prime Minister Jose Maria Aznar, is the first high-level Spanish official to say publicly that the country would need a financial rescue.
Merkel’s government is torn between showing some leniency toward Greece as it struggles to meet the terms of its rescues and insisting that Prime Minister Antonis Samaras deliver on his promises, Klaus-Peter Willsch and Frank Schaeffler, both of whom have voted against Merkel’s euro crisis policies in parliament, said in separate telephone interviews.
Long a model of relative prosperity in northern Africa, Morocco had to seek help from the International Monetary Fund this month, winning a $6.2 billion precautionary credit line. The IMF says it offered the loan to help Morocco cope with fluctuating energy prices and the effects of Europe's economic troubles.
That would include Germany's Sparkassen savings banks and Genossenschaftsbanken cooperative banks, which Germany had hoped would be exempt when it signalled it wanted supervision only over the biggest 25 banks, the paper reported.
Finnish and Austrian ministers are talking of a euro split again. Talk is cheap, but such statements jar with Mario Draghi's promise to fight convertibility risk. For the ECB's bond-buying to get maximum impact, politicians must learn to shut up.
The negative consequences of a eurozone breakup would by far exceed possible benefits it could have for individual countries. A sovereign bankruptcy of a euro member would have incalculable consequences for all of Europe, including Austria, and is hence not in our interest.
We have to face openly the possibility of a euro-break up. It is not something that anybody — even the True Finns [eurosceptic party] — are advocating in Finland, let alone the government. But we have to be prepared. Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality.
( so much for the showdown..... )
PM cautious on extension
Samaras not intending to stake claim during talks with Merkel and Hollande
 |
Sources told Kathimerini Thursday that Samaras will only officially ask for an extension at the European Union leaders’ summit scheduled for October 8 and 9, which will be after the troika delivers its report on Greece to eurozone finance ministers, who will have to decide whether to release further funding for Athens.
“The decisions will not be taken on German soil but on a European [level],” one of the prime minister’s aides told Kathimerini.
Sources said that the Greek government is fully aware of the negative mood in many eurozone countries, where politicians are expressing serious reservations about keeping Greece in the eurozone. Austria’s foreign minister proposed Thursday that the eurozone create a mechanism to force countries that “don’t meet their commitments” to leave the single currency.
“We need to create ways to be able to eject someone from the eurozone,” Michael Spindelegger, who is also deputy chancellor, told the Kurier daily.
Samaras is due to return from his vacation on Sunday, ahead of a meeting with Eurogroup chief and Luxembourg Prime Minister Jean-Claude Juncker in Athens on Saturday. German Chancellor Angela Merkel and French President Francois Hollande are due to meet in Berlin on Thursday. The following day, Samaras will travel to the German capital for talks with Merkel. On Saturday, he will meet Hollande in Paris.
| During a visit to Canada Thursday, Merkel called for the eurozone to speed up its efforts to form a closer political union in order to overcome the crisis. “I made clear once again that we need a long-term, sustainable solution,” she said. “It is a question of taking the steps that weren’t taken when the currency union was created, namely a political union,” she said. “Germany knows that in a common currency area political responsibilities need to be shared. We are on a good path on many of these issues, but time is of the essence. We are fully aware of this.”
and....
|
http://www.zerohedge.com/news/short-term-ecb-dollar-fx-swaps-fed-soar-highest-december-2009
Short-Term ECB Dollar FX Swaps With Fed Soar To Highest Since December 2009
While Europe is once again experiencing one of its brief, manic episodes of inexplicable euphoria sending all risk assets in the continent higher while everyone is still on vacation (and ahead of a surge in Spanish bond issuance in September, which only spikes even more in 2013 - more shortly), its banks have quietly run out of dollars again. Certainly, looking at the now irrelevant metric known as Libor which indicates precisely nothing of significance, and merely allows banks to feel good about themselves, and which has been declining, one could imagine that banks have zero problems finding unsecured follar funding. One would also be absolutely wrong because as the most recent ECB and Fed data confirm, 7-day dollar swaps between the ECB and New York Fed - the only real sign of dollar funding scarcity - has risen to $9.3 billion in the current week, the highest since December 9, 2009. And with 10 banks bidding at the last USD operation, one can be sure that at least 10 European banks are suddenly hoping that the bout of euphoria continues for at least 2 more weeks so that the executives of these 10 dollar impaired banks can continues their vacation in peace, until the eye of the European hurricane passes starting September 1.
and more on Spain.....
Spanish Bad Loans Soar By Most In 3 Years As Bond Issuance Set To Surge
Submitted by Tyler Durden on 08/17/2012 - 08:55Bond European Central Bank Germany International Monetary Fund Primary MarketThe absence of any ket EMU events combined with a relatively muted news flow on the debt crisis amid the summer vacations/doldrums and a major lack of bond supply from the periphery until the end of August has created a favorable environment for peripheral debt. Draghi's August 2nd comments drove risk-on and as UBS notes, this amplified the usual thin liquidity and light volumes. However, all these fun and games are about to stop as September has myriad events slated that are likely to have significant impacts on investors' demand for peripheral paper. Spain, in particular, after seeing its stock and bond markets surging euphorically, is about to suffer a double-whammy. Gross issuance for the rest of the year is estimated at EUR8bn per month (and could rise to EUR13bn per month) implying EUR4-6bn per auction twice a month - keeping bonds back under pressure as supply approaches. As if that was not enough, Delinquencies on Spanish bank loans just soared to new all-time highs, rising by the most in over three years and accelerating. So, after a calm summer vacation, Spain (optics aside) is bad and about to get much worse.http://hat4uk.wordpress.com/2012/08/17/revealed-eurodebt-now-80-of-global-total-but-ecb-official-claims-that-central-bank-is-immune/
REVEALED: Eurodebt now 80% of global total. But ECB official claims that central bank “is immune”.
French debt growth out of control: ‘no economic reason why the ECB could not operate with a hugely negative net worth’
So why is Greece on the rack?
Take a look at the ECB’s latest paper on Short Term European Paper (STEP) – bond debt to you and me.
In the one day from the 8th to the 9th of August, it grew three billion euros. In the day from 9th to the 10th of August, it grew four billion euros. The rate of acceleration is still growing. It is today nearly 480 billion euros…a YOY increase of 100 billion euros, aka 25%.
Now take a look at French private (but especially bank and government-related) borrowing in the STEP sector.
Whereas other borrowing across Europe still looks dodgy at two or three numerals of millions per programme, the French debt is more commonly at four to five numerals.
French social security, €10.3bn, Credit Agricole €12.4bn, BNP Paribas €60bn, SocGen €39bn: these are all massively in excess of Holland, Germany, and even Italy.
And it’s clear, looking across as well as down, how incestuously interrelated all the buying and selling of this debt is.
But here’s the bottom line: whereas the total debt denominated in euros is €374bn, expressing other currency debt in euros gives us a US figure of 50 billion, and a UK figure of 23 billion.
Euro STEP debt, as of three days ago, accounted for 80% of the global total.
Surely the ECB is, one day soon, going to wind up insolvent? Well, late last year I unwittingly wrote something that isn’t true in relation to ClubMed sovereign debt, to the effect that if the ECB could no longer finance its operating expenses out of earnings, it would require support from national government central banks.
Most observers assume (I think) that there is a huge difference between the US Fed buying its own Treasuries, and the ECB buying sovereign bonds of, say, Greece. When buying Treasuries, the Fed only does monetary easing; it does not acquire credit risk, because it IS the creditor. When buying the sovereign bonds of Greece, Italy, Spain and Portugal, the ECB however does monetary easing as well as acquiring credit risk.
Not so, said the ECB bureaucrat dinner guest of a prominent Greek commentator a few weeks ago. The ECB has no credit risk because it is constituted in a way that allows it to continue even if all its assets are negative in value.
As it happens, he appears to be correct: if you look at the ECB’s Constitution, as so often with things set up by the EU, so great was the hubris at the time, disaster clauses are absent….after all, there weren’t going to be any disasters. For instance, no provisions were made for the exit of a member State from the eurozone. So too is the insolvency of the ECB never addressed in its Constitution: the only references are to reserves: (my Italics)
33.2. In the event of a loss incurred by the ECB, the shortfall may be offset against the general reserve fund of the ECB and, if
necessary, following a decision by the Governing Council, against the monetary income of the relevant financial year in
proportion and up to the amounts allocated to the national central banks in accordance with Article 32.5.
necessary, following a decision by the Governing Council, against the monetary income of the relevant financial year in
proportion and up to the amounts allocated to the national central banks in accordance with Article 32.5.
And at 32.5, we find:
32.5. The sum of the national central banks’ monetary income shall be allocated to the national central banks in proportion to
their paid up shares in the capital of the ECB, subject to any decision taken by the Governing Council pursuant to Article 33.2.
their paid up shares in the capital of the ECB, subject to any decision taken by the Governing Council pursuant to Article 33.2.
Just to be on the safe side, however, this article appears right at the end:
The ECB shall enjoy in the territories of the Member States such privileges and immunities as are necessary for the performance
of its tasks, under the conditions laid down in the Protocol on the privileges and immunities of the European Communities.
of its tasks, under the conditions laid down in the Protocol on the privileges and immunities of the European Communities.
and....
Gold Continues To Be Money: CME Europe Now Accepts Gold As Clearing Collateral
Over two years ago, the US Clearing house of the CME, the world's largest derivatives marketplace, had no choice but to allow gold as collateral. Why: because as we showed some days ago, while in Europe bank deposits are expansive, in the US, financial system funding relies primarily on mythical assets as liabilities, i.e., those that exist primarily due to faith in the system, something which has been in short supply, as a result of which the $15 trillion (down from a peak of $23 trillion) shadow banking system long used to fund regular operations, has been imploding.
Couple that with a scarcity of other (re)pledgeable assets which in the US do not, unlike the UK, have an infinite rehypothecation chain, and one can see why back in October 2009 the CME had no choice but to accept gold as eligible collateral for clearing purposes.
As of minutes ago, the European arm of CME Clearing has folded too, and has released a press release stating that it to0 "has extended the range of eligible collateral types to include gold bullion." Of course, this is the same gold bullion that Germany will be seeking to "repo" in exchange for sovereign bail outs as Europe's periphery continues to run out of endogenous money and has to increasingly rely on the benevolence of the Bundesbank.
For now all we need to know is that another exchange just threw in the towel and admitted that contrary to Bernanke's stern position, gold is, indeed money.
Full press release:
CME Clearing Europe, the London-based clearing house wholly-owned by CME Group, the world's leading and most diverse derivatives marketplace, today announced it has extended the range of eligible collateral types to include gold bullion.The extension offers additional flexibility at a time when high quality collateral is at a premium and the clearing of over-the-counter (OTC) derivatives is increasing. CME Clearing Europe has followed the lead of CME Clearing, which has accepted gold to cover margin requirements since October 2009.
Launched in May 2011, CME Clearing Europe currently clears OTC commodity derivatives and plans, subject to regulatory approval, to introduce OTC Interest Rate Swap clearing later this year.CME Clearing EuropeCME Clearing Europe is an FSA regulated, multi-asset class clearing house based in London that offers more than 200 OTC products for clearing. Its clearing model ensures stability and increases transparency in the OTC markets that it clears. CME Clearing Europe has its own dedicated staff, and its governance arrangements, capital and default resources are separate from those of CME Clearing in the US. As part of CME Group it nonetheless has full access to the to the clearing and risk management expertise, systems and financial strength of CME Clearing. More information can be found at www.cmeclearingeurope.com
and.....
http://www.zerohedge.com/news/finns-prepare-euros-end-deeply-suspicious-eus-gang-four
Finns Prepare For Euro's End: "Deeply Suspicious" of EU's 'Gang of Four'
While not advocating the break-up of the Euro-zone, Finland's foreign minister Erkki Tuomioja told the Daily Telegraph this evening that "it is only a matter of time". In a somewhat stunning show of truthiness, perhaps the first cracks in Europe's Nash Equilibrium are starting to show through following Monti's 'threats', Draghi's 'promises', and Merkel's 'well, nothings'. The Finn continues, viaReuters, "Either the south or the north will break away because this currency strait-jacket is causing misery for millions and destroying Europe's future."
Finland, which has a veto that could be used to block any new bailout measures, has already stirred the pot unilaterally by demanding collateral from Greece and Spain, is quite clear in its view that Europe "is a total catastrophe" but adds that no-one wants to be first to get out of the Euro and take all the blame.
Insisting that the break-up of the Euro does not mean the end of the European Union, Tuomioja believes "it could make the EU function better," but comments that he is deeply suspicious of the 'gang of four' - which includes Draghi - with regard his promises (especially ESM seniority) adding that he "does not trust these people."
and...
http://www.telegraph.co.uk/finance/debt-crisis-live/9481569/Debt-crisis-live.html
16.07 Spanish public sector workers who are angry with government cutbacks have again taken to the streets in protest today. AFP reports that the protesters - many waving red flags representing Spain's two largest unions, the UGT and the CCOO, which organised the rally - gathered outside the finance ministry as they have every Friday this month.
15.03 Madrid's mayor has spoken out about Spain's economic predicament, saying that it "seems inevitable" the central government would apply for some kind of international aid package as the country goes through a deep recession and borrowing costs soar.
Reuters reports:
Ana Botella, wife of former Prime Minister Jose Maria Aznar, is the first high-level Spanish official to say publicly that the country would need a financial rescue.
"There's no doubt about it. It's very probable that we're going to have to ask for help from the European Union," Botella told Spanish news agency Europa Press in an interview.
"It seems inevitable," the agency quoted her as saying.
14.54 Angela Merkel is mulling easing Greece's bailout terms, according to Bloomberg. The newswire has interviewed a couple of German politicians, who say that the chancellor is considering easing the terms. Such a move could fan tensions with members of her coalition, who oppose giving the Greek government any more concessions.
Bloomberg writes:
Merkel’s government is torn between showing some leniency toward Greece as it struggles to meet the terms of its rescues and insisting that Prime Minister Antonis Samaras deliver on his promises, Klaus-Peter Willsch and Frank Schaeffler, both of whom have voted against Merkel’s euro crisis policies in parliament, said in separate telephone interviews.
“The sensitivities among many more than just the 27 coalition members who voted ‘no’ last time are well known” to Merkel, “so the official line is to stay tough” on Greece, said Willsch, a member of Merkel’s Christian Democratic Union party. “But at the same time, some are being sent forward to test the waters on how this tough line can be abandoned.”
Samaras, whose coalition favors extending its fiscal adjustment program by two years to the end of 2016, will visit Berlin on Aug. 24 for talks with Merkel, almost three years after the debt crisis emerged in Greece.
13.47 AP has a report on the latest victim of the debt crisis - Morocco. A slump in business with its main export partner and the costs of keeping the peace amid uprisings in the Middle East have forced the country to impose austerity measures in order to receive international financial assistance:
Long a model of relative prosperity in northern Africa, Morocco had to seek help from the International Monetary Fund this month, winning a $6.2 billion precautionary credit line. The IMF says it offered the loan to help Morocco cope with fluctuating energy prices and the effects of Europe's economic troubles.
In exchange, the government promised to reform the pension system and a costly program of state subsidies for energy and staples, according to a letter published on the IMF website this week.
Morocco's state spending is at record highs, the deficit is soaring and its No. 1 trading partner - Europe - is flailing. The latest economic figures show that Europe is edging closer to recession, dragged down by the crippling debt problems of the 17 countries that use the euro. Europe's stumbling economy is making it harder for other economies around the world to recover and policymakers are trying to reach agreement on more decisive action to deal with the debt crisis.
12.51 AFP is reporting that Spain's government will shortly request a first payment for its banks from a eurozone rescue line. A spokesman for the economy ministry told AFP that "the request will be sent shortly", but declined to specify the exact amount or timing for the request, which is to be made by the Bank of Spain.
11.55 Over in Greece, the finance ministry has reported an increase in the country's total central government debt, which stood at €303.5bn at the end of July. That's up from €280.2bn at the end of the first three months of the year.
11.11 German newspaper Handelsblatt reports today that the European Commission will next month propose giving the European Central Bank supervision over all of the eurozone's major banks.
Reuters has the details on Handelsblatt's report:
That would include Germany's Sparkassen savings banks and Genossenschaftsbanken cooperative banks, which Germany had hoped would be exempt when it signalled it wanted supervision only over the biggest 25 banks, the paper reported.
The Commission's proposal, due on Sept. 11, envisages national authorities supervising day-to-day business and the ECB only intervening where it sees "dangerous risks", Handelsblatt said.
Outside the euro zone, national banking supervisors would stay in charge of their banks, the paper reported.
10.58 With politicians at odds over a eurozone break-up, Neil Unmack ofReuters comments that it doesn't help Mario Draghi's cause:
Finnish and Austrian ministers are talking of a euro split again. Talk is cheap, but such statements jar with Mario Draghi's promise to fight convertibility risk. For the ECB's bond-buying to get maximum impact, politicians must learn to shut up.
10.54 But while Michael Fuchs talks about a Grexit and Finland's foreign minister says the country's preparing for a eurozone break-up,Austria's chancellor has spoken out against a break-up of the eurozone. Werner Faymann said the break-up of the euro area or the bankruptcy of a member would do more harm than good and he can't support expelling a country. He said:
The negative consequences of a eurozone breakup would by far exceed possible benefits it could have for individual countries. A sovereign bankruptcy of a euro member would have incalculable consequences for all of Europe, including Austria, and is hence not in our interest.
He added that it was necessary to take further steps to stabilise the euro area, including stricter bank supervision and further financial market regulation.
10.37 Michael Fuchs, deputy parliamentary leader of Angela Merkel's Christian Democratic Union party, has been speaking this morning. He's suggested that German banks could handle a Greek exit from the eurozone. "A theoretical exit for Greece would be manageable," he said, adding that "the exposure at this stage is about €17bn if I'm not mistaken", virtually all of it in the public sector.
10.12 Figures out from the EU statistics office this morning show thattrade volumes for the eurozone rose in the first half of the year.
Exports from the currency bloc were up 8pc from the same period in 2011, highlighting the area's dependence on external sources of growth as economic activity within the region stagnates. Imports were up just 2pc in both the first half and in June, reflecting relatively weak demand for external products.
09.31 The eurozone's current account surplus expanded in June. It grew to €12.7bn from €10.3bn in May, European Central Bank data showed.
AFP notes that the current account on the balance of payments, which includes imports and exports in both goods and services plus all other current transfers, is a closely tracked indicator of the ability of a country or area to pay its way in the world.
09.14 Yet more signs of stress in Spain. Banks' bad loans have risen to the highest on record, according to Bank of Spain data. In June, bad loans rose to 9.42pc of banks' portfolios, up from 8.95pc a year year.
Loans that fell into arrears increased by €8.4bn from May, reaching €164.4bn in June.
Since Spain's property boom ended four years ago, bad loans have ticked up, not helped by the country now being in its second recession since 2009 and one in four Spaniards out of work.
08.55 The festering debt crisis does not bode well for bankers and other financiers. Bloomberg reports that research by Oxford Economicssuggests that financial firms in London, beseiged by the eurozone crisis, will probably shrink their workforce this year.
Banks, insurers and other financial services firms may eliminate a total of about 3,000 jobs across greater London, according to the research.
08.19 Following Ambrose's story, Finland's Europe minister has said that the foreign minister's speculation on a break-up of the eurozone does not reflect the government's position. He adds that Finland remains '100pc committed' to the euro.
08.01 Finland's foreign minister, Erkki Tuomioja, has been speaking toThe Telegraph's Ambrose Evans-Pritchard. He warned that the country is preparing for a break-up of the eurozone. The Nordic state is battening down the hatches for a full-blown currency crisis as tensions in the eurozone mount and has said it will not tolerate further bail-out creep or fiscal union by stealth. Mr Tuomioja said:
We have to face openly the possibility of a euro-break up. It is not something that anybody — even the True Finns [eurosceptic party] — are advocating in Finland, let alone the government. But we have to be prepared. Our officials, like everybody else and like every general staff, have some sort of operational plan for any eventuality.
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