Saturday, August 25, 2012

Austerity watch - europe ... Greece told to keep hammering the middle class and poor ... Spain farmers protests set to continue....

http://www.zerohedge.com/news/vacation-over-europe-back-square-minus-one-merkel-backs-weidmann-demands-federalist-state


With Vacation Over, Europe Is Back To Square Minus One: Merkel Backs Weidmann, Demands Federalist State

Tyler Durden's picture




Earlier today we showed for the nth time that with insanity and insolvency ravaging the old continent, at least one person has the temerity to avoid sticking his head in the sand of collectivist stupidity and denial. That person is Bundesbank head Jens Weidmann, who until now may or may not have had the backing of Germany's elected leader, Angela Merkel. Moments ago it became clear whose side Merkel, who recently came back from vacation and is set to spoil the party that the (insolvent) mice put together in her absence, is on. From Reuters, who quotes Merkel in her just released interview with German ARD: "I think it is good that Jens Weidmann warns the politicians again and again," Merkel said. "I support Jens Weidmann, and believe it is a good thing that he, as the head of the German Bundesbank, has much influence in the ECB."
Merkel also has some additional words about the Grexit.
Merkel allies, particularly the Bavarian Christian Social Union (CSU), have stepped up criticism of Greece in recent weeks, with senior CSU lawmaker Alexander Dobrindt saying at the weekend that he expected Athens to be out of the euro zone next year.
Last week, Greek Prime Minister Antonis Samaras visited Merkel in Berlin and issued an impassioned plea for German politicians to tone down their rhetoric, saying it was making it impossible for Greece to win back confidence and launch its privatizations drive.

Merkel said she believed Samaras was making a serious attempt to turn Greece around and issued a similar warning to her fellow politicians in Germany, saying Europe was in a "very decisive phase" in its three-year old crisis.

"My plea is that everyone weigh their words very carefully," she said.
Which she certainly did when Samaras came to Germany begging for more money. She very definitely said absolutely nothing. What she did say, is that after all the posturing, masquerade, and outright lies, Germany now demands precisely what it demand months ago, a year ago, and when this whole European implosion started. A European Federalist state. Again from Reuters:
German Chancellor Angela Merkel wants an EU 'convention' to draw up a new treaty for closer European political unification to help overcome the bloc's sovereign debt crisis, weekly Der Spiegel said on Sunday.

Germany, the European Union's biggest economy, has long argued for more national competences, including over budgets, to be transferred to European institutions but faces strong resistance from other member states.
Merkel hopes a summit of EU leaders in December can agree a concrete date for the start of the convention on a new treaty, Spiegel said.

The idea, which Spiegel said Merkel's European affairs adviser floated at meetings in Brussels, recalls the 100-plus strong convention of EU lawmakers set up in 2001 - inspired by the Philadelphia Convention that led to the adoption of the U.S. federal constitution - charged with the task of preparing a European constitution.

The charter that finally emerged was rejected by French and Dutch voters in 2005 and it became instead the basis of the EU's Lisbon Treaty which is still in force today.

Many member states, recalling the lengthy disputes and setbacks that preceded the Lisbon treaty's entry into force, are reluctant to embark on another prolonged process of institutional reform.
Which is funny because as we were reminded earlier today by theIndependent, it was none other than Europe, i.e. the Troika that forced Ireland into a bailout courtesy of a secret letter that is about to be unsealed (one can hope). Why: so European bankers aren't forced to mark to market the value of their insolvent loans either in Ireland or anywhere else.
Finance Minister Michael Noonan has said a secret "threatening" letter from the European Central Bank to his predecessor Brian Lenihan, which forced Ireland into the troika bailout in 2010, should now be released.
The letter has to date remained top secret and both the Department of Finance and the ECB have repeatedly refused to make it public.

Now Mr Noonan has said he favours it being made available, putting him on a potential collision course with the ECB, which is adamant that it remain "strictly confidential".

The controversial letter from the then ECB president Jean Claude Trichet to Mr Lenihan dated November 19, 2010, is said to have threatened the withdrawal of emergency liquidity assistance (ELA) to Ireland if the then government refused to accept the bailout, that included a ban on burning bondholders.
It is these same people that are now expected to not only continue footing the bill for the banker bailout, but to hand over their sovereignty, together with rest of insolvent Europe, over to Berlin, because the alternative is once again simply "unspeakable" (thank you Hank Paulson and 3 letter term sheets). Maybe not:
Some countries such as Ireland would have to hold a referendum on any new treaty and the process would increase pressure in Britain - where opposition to closer EU political union runs high - for a complete withdrawal from the EU.

However, Germany believes a much closer fiscal and political union - with EU oversight of national budgets - is needed to ensure that member states get their public finances fully in order and to restore stability to the euro currency.
All of the above summarized in one word: "volatility" which is what is about to come back to Europe with a vengeance as the fundamental problem at Europe's core is made all too clear once more: 17 countries in the "Union", 17 different languages, 17 election cycles, and 17 different rates of going broke, all of which, however, are converging toward unity with each passing day.

and...






http://www.boston.com/news/world/europe/2012/08/26/report-germany-seeks-european-integration-pact/FcUOK0FR3XWHCUpMq4oBML/story.html


BERLIN (AP) — Germany’s economy minister has rejected calls for Greece to get more time to implement economic reforms, saying in an interview Sunday that Athens needs to respect the bailout deal reached with its international creditors.
Philipp Roesler’s comments to ZDF public television come after a visit by Greece’s prime minister to Berlin on Friday, during which Antonis Samaras told German Chancellor Angela Merkel that his country needs ‘‘time to breathe’’ before it can make all the budget cuts and reforms demanded as part of its €240 billion ($300 billion) bailout packages.
‘‘What the Greeks have asked for, half a year or two years, that’s not doable,’’ said Roesler, who is also the vice chancellor in Angela Merkel’s coalition government. He added that ‘‘time is always money’’ and all parties had agreed that additional funds for Greece weren’t up for debate.
Roesler, the leader of Germany’s pro-business Free Democratic Party, has long taken a hard line on Greece. Last month, he caused an outcry in Greece by suggesting the idea of the country leaving the 17-nation eurozone had ‘‘lost its horror.’’
Those comments appeared to put him at odds with Merkel, who has always insisted that Greece should remain in the euro.
But his latest views on the need for Greece to stick to the agreed time plan for reforms were echoed by German Finance Minister Wolfgang Schaeuble, who told a newspaper in comments published Sunday that ‘‘more time generally means more money and that quickly means a new (bailout) program.’’


Merkel has so far shied away from making new promises to Greece. On Sunday, she dodged questions on the subject during an interview with German public TV station ARD. Instead, she insisted that ‘‘we are at a crucial moment in the fight against the debt crisis and that’s why I think we should all weigh our words carefully.’’
The question of how to avert a Greek debt default, which could spark a chain reaction among other ailing European economies, has preoccupied EU leaders as they return from their traditional summer break.
French President Francois Hollande urged Greece on Saturday to do more to show its commitment to reforms, and offered the country no immediate hope for relief from its current regime of painful austerity measures. Like Merkel, Hollande said further decisions on Greece need to wait for a report next month by the country’s debt inspectors.
Meanwhile, the respected German weekly Der Spiegel reported in its latest edition that Merkel wants EU leaders to forge ahead with deeper political integration within the unwieldy 27-nation bloc.
Merkel has long advocated closer political integration as a means of preventing the European project from unraveling under the strain caused by the eurozone crisis.
Asked about her plans, the chancellor told ARD television Sunday: ‘‘Our task now is to remove the founding mistakes of the currency union, namely the lack of political cooperation, and that’s what we are going to discuss in the coming months.’’
She suggested that EU member state could be subject to closer budget scrutiny, and that measures such as tax harmonization could be up for discussion.end of story marker
and....







http://eu.greekreporter.com/2012/08/24/mr-samaras-please-sign-this-guarantee-letter-asks-bild/


“Mr. Samaras, Please Sign This Guarantee Letter,” Asks Bild

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One of Germany’s most popular tabloid newspapers, Bild, interviewed Greek Prime Minister Antonis Samaras and asked him to sign a letter of guarantee that Greece will pay back its international loans, most of which come from Germany. That came ahead of his talks with Chancellor Angela Merkel.
Bild has published articles mocking Greek politicians, football players, singers, and others. This time the paper’s officials produced a letter of guarantee written in ancient Greek font style and included some provisions that he “vows personally” to ensure repayment.
The letter also asked that financial aid provided to Greece will not cause trouble to German taxpayers;  Greece will take any necessary measures to exit from the crisis; including sales of uninhabited islands if needed, and agrees  to pay off the total amount of debts it has been offered including interests.






and...




http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_18498_25/08/2012_458267


Cautious support from Paris

 PM back in fray after backing but no concessions from Hollande, Merkel

Prime Minister Antonis Samaras is to plunge back into the fray of domestic politics this week following a charm offensive involving visits to Berlin and Paris where German Chancellor Angela Merkel and French President Francois Hollande reiterated their support for Greece’s membership of the eurozone as long as the country meets its commitments to international creditors.
Hollande stressed that Greece belongs within the 27-nation single currency bloc but urged Athens to do more to show its commitment to the terms of a multi-billion-euro bailout.
“For me, Greece’s position in the eurozone is not up for question,” Hollande told a joint press conference with Samaras. “But it still has to demonstrate the credibility of its program and the willingness of its leaders to go the whole way,” the French leader said. He also acknowledged the sacrifices made by Greek citizens. “In the face of ordeals, we must show more solidarity,” he said, adding that reforms should be implemented in a way “that is bearable for the population.”
Hollande emphasized that a crucial decision on further rescue aid to Greece would depend on a report to be compiled by officials of the European Commission, European Central Bank and International Monetary Fund, or the troika, in late September or early October.
Samaras, for his part, insisted that Greece would succeed in overhauling its economy, defying global markets. “Some are betting that Greece will not make it. I am here to assure the French President that Greece is determined to make it and will,” Samaras said, adding that the country would do “whatever is needed.”
In Athens this week Samaras is to brief his coalition partners -- socialist PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis. Talks will also focus on some 11.5 billion euros in measures for 2013 and 2014 that have been demanded by the troika and an extra 2 billion euros in cuts to cover a shortfall expected to result from reduced tax revenues and social security contributions.
Samaras and Finance Minister Yannis Stournaras reportedly want the new measures -- spending cuts and fresh reductions to pensions and benefits -- to be voted through Parliament by late September or early October. But Venizelos and Kouvelis, who object to some proposed measures, are said to prefer them being approved in chunks to lessen their social impact.


and.....


Bad loans block Bank of Cyprus deal


Bank of Cyprus Group is reportedly freezing plans to exchange assets with one of the Greek banks operating in Cyprus.
According to sources, the issue is being put on the back burner as developments on the Cypriot side are being determined by the troika, as well as the island republic’s central bank, which has decided to probe the actions that led to the crisis in the financial system. Cypriot banks operating in Greece took heavy capital writedowns from the haircut to Greek bonds earlier this year, estimated at 4 billion euros.
The group early last week confirmed that discussions were under way with Greek banks for an exchange of assets, in the framework of efforts for bolstering its capital base. However, the discussions, which were widely believed to be taking place with Alpha Bank, seem to have come to an abrupt end a few days later. The main reason for the termination of discussions is reported to be the absence of reliable estimates regarding non-performing loans both in Greece and Cyprus, at a time when a further deterioration of economic conditions is expected in both countries.
The Cyprus central bank is considered likely to call for a reliable evaluation of provisions, in collaboration with the country’s Financial Stability Fund, if a recapitalization of banks is decided. However, the overall decisions are linked to a possible agreement between the troika and the government for a bailout loan.


and.....


Urgent need to tap EU funds

 Investment subsidies virtually the only way to prop up the economy as recession bites deep

 Widely divergent two years ago, the views of the current leaders of Germany and Greece on how to handle the latter’s fiscal crisis, seemed much closer during their meeting in Berlin on Friday.
By Dimitris Kontogiannis
Greece is not likely to escape the debt trap if it does not manage to stabilize its economy and get it growing again.

Extending the fiscal adjustment by two years without being asked to take additional restrictive measures should help in that direction. However, the government seems to be less aggressive in using the only other weapon left at its disposal to shore up the economy: the allocated large EU transfers and investment subsidies.

Prime Minister Antonis Samaras’s meetings with German Chancellor Angela Merkel and French President Francois Hollande over the weekend centered on Greece’s will and ability to honor its commitments under the second Memorandum of Understanding (MoU) on specific economic policy conditionality as the only way to stay in the eurozone.

In public statements and interviews in the German and French media, Samaras outlined the Greek case for being given a breather via a two-year extension of the fiscal consolidation.

Some had already criticized the rush to put the issue on the table before the new government was able to deliver on some of its promises and gain some credibility. Although this criticism sounded reasonable, it did not pay sufficient attention to two aspects according to our understanding: time and political considerations.

As far as time is concerned, the government will have to unveil its 2013 budget in October. This is also the month of the crucial European Union summit in which Greece is going to be evaluated.

If the view in the government is that the economy will not be able to sustain new austerity measures amounting to about 8 billion euros or 4 percentage points of GDP next year after more than 40 billion in 2010-2011, the extension issue should have been raised promptly in hope they could avoid including all these measures in the 2013 budget.Second, it is known that the two other smaller parties in the coalition government, namely Socialist PASOK and moderate Democratic Left (DEMAR), were pushing for the renegotiation of the second MoU, which was the main plank in the coalition’s platform. So, the premier had to raise it sooner or later.

Of course, nobody knows what will come out of it at the end of the day although the consensus-building nature of EU decision-making points to a compromise solution of some sort, assuming Greece has delivered on the package of spending cuts equal to 13.5-14 billion euro and some other reforms by then.

Still, by raising the extension of the fiscal adjustment program as a means of stabilizing the economy the coalition government looks like it suffers from the so-called “Papaconstantinou syndrome.” This refers to the policy of Giorgos Papaconstantinou, the finance minister in the PASOK government who signed the first MoU in May 2010 with the international creditors, to pay less attention to growth enhancement policies and focus primarily on fiscal consolidation while kicking the can down the road.

Although attaining the budget deficit targets is of the utmost importance from the viewpoint of the country’s creditors and Greece itself, it may pay more for the government to shift its focus on initiatives to boost growth. This is more so since the 7-month budget figures confirm that the country will most likely attain this year’s deficit target and even do better.

Privatizations slack

However, clouds hanging over Greece’s future in the eurozone till mid-October at best leave little hope the country will be able to put its privatization program on track this year and attract some serious private investment.

The same is true for purely domestic private investments since the recapitalization of the banks is lagging well behind schedule, depriving healthy companies of funds to invest. Moreover, the chronic slump of the Athens bourse does not allow listed companies to proceed with rights issues or other capital raising schemes.

Therefore, it is right to conclude that the only realistic way for Greece to boost investments and economic output when consumption spending is due to decline further and exports are an unknown factor is to speed up the absorption of EU funds. This is also the only way for the government to avoid the “Papaconstantinou syndrome.”

It is known that over 20 billion euros in structural and cohesion funding has been allocated to Greece for the 2007-2013 period and some 21 billion through the Common Agricultural Policy (CAP). While more than 15 billion euros has been paid via CAP so far, the unused capacity as far as structural and cohesion funds are concerned is still quite large. So, one would expect government resources and efforts to focus on speeding the absorption of these funds to boost investments and the economy, and especially since the funds are used to finance public investment projects at a rate of 95 percent, with Greece having to put the remaining 5 percent. This way they also help minimize general government spending.All-in-all, the coalition government should mobilize all available resources to help speed up the transfer of EU funds allocated to Greece since this is realistically the only way to prop up investments while the country’s future in the eurozone hangs in the balance. This would also avert the “Papaconstantinou syndrome” and put the extension of the fiscal adjustment program on the back burner for a while.


and...



From The Telegraph..


After talks with prime minister Antonis Samaras in Berlin, the German Chancellor said she was “deeply convinced” that the new Greek government was “doing everything to solve the problems.” Mr Samaras insisted that Greece “wants time not money.” But Ms Merkel refused to even address Greece’s plea, signalling a continuation of the deadlock at the heart of the debt crisis.
The sense of vacuum rather than solution was compounded by revelations that the European Central Bank (ECB) is planning to delay the progress of its bond buying programme. Sources at the central bank told reporters that there would be no decisions on the high-anticipated strategy, which has helped fuel the recent stockmarket rally, until Germany had approved the plan to boost the European Stability Mechanism (ESM).
Investors and economists had hoped ECB president Mario Draghi would use a press conference on September 6 to announce a radical intervention plan. But the German court ruling on the legitimacy of the ESM is not due until September 12. Mr Draghi first hinted at a bond purchasing scheme on August 2, yet the timetable is now sliding towards the next deadline for a Greek default.
Robert Halver, at Baader Bank in Frankfurt, told reporters: “We need clear decisions. There is a possibility that Greece will leave the euro zone in
October. Preparations for a Greece exit, and a subsequent domino effect are running. Markets need to know what the face of the new euro zone and policy will be.”

Earlier the Chinese stockmarket slumped to a three-year low amid diminishing expectations of central bank action, despite the deteriorating economy. Stockmarkets in Europe recovered from earlier losses to finish largely flat on the day. The jitters were more obvious on the bondmarkets where Spanish and Italian borrowing costs rose while the yield on German 10-year bonds dropped to a three-week low. The yield on US Treasury bonds, the other key safe haven, fell for a sixth day - the biggest drop since May 2011. The euro declined against the dollar.
Ms Merkel said Germans were impatient with Greece’s persistent failure to meets its targets. Mr Samaras, who will put his case to France's Francois Hollande on Saturday, said Greece would work on reducing its credibility deficit as well as its budget deficit.
Volker Kauder, parliamentary group leader of Merkel’s conservative bloc, said: “The phrase ‘time is money’ has never been so relevant as in this case and we cannot provide more money... Greece must live up to its responsibilities. It makes no sense to continue to ask for a delay.”
Klaus Regling, the head of the bail-out fund, the European Stability Facility (EFSF), said that “nobody wants to see Greece leave the euro area”. But he added: “They have to deliver, otherwise financial assistance could stop, not because we want it to stop but two sides of the bargain have to be in place.”

and.....

Expect more farm protests in Spain

As Rajoy's austerity measures start to take effect there will be more struggles for land – they have a long history in Spain
Spain - Workers March Against Austerity
Juan Manuel Sánchez Gordillo at a march organised by the Andalusian Union of Workers to protest against austerity measures. Photograph: Guillem Valle/Corbis
The struggle of unemployed Spanish farm labourers continues to grab global headlines. First with the enterprising supermarket sweeps led by the maverick "Robin Hood mayor", Juan Manuel Sánchez Gordillo, and this week with the mass occupation of the Palacio de Moratalla, owned by the Duke of Segorbe. "We're here to denounce a social class that leaves such places to waste," proclaimed Diego Cañamero, leader of the Andalusian Union of Workers – the duke was not there to hear him say it, being in one of his other homes, 60 miles away.

The duke, like many of the region's titled landowners, receives farm subsidies from the EU for his vast expanses of land, irrespective of whether anything is grown on it – meanwhile, rural poverty and unemployment soar ever higher. While the eurozone crisis, Rajoy's austerity measures, and the collapse of the construction industry on the Andalusian coast have brought it into sharp focus, the struggle for land goes back centuries in Spain. Some of the most notorious examples include the ill-fated Asturias Rising in 1934, in which 1,335 people were killed, and the election of a Spanish Federal Republic in 1873, a regime of radical decentralisation, which saw villages proclaim independence from the state and begin to carve up the large estates of the nobles for farming.


In Sánchez Gordillo's utopian town of Marinaleda, the farmland they spent 12 years attempting to requisition from the Duke of Infantal had always lain idle – but since their historic victory in 1991 those 1,200 hectares (2,964 acres) have employed the majority of the town's population of 2,600. It helps that the Marinaleños specifically chose labour-intensive crops, and ones that would need canning and packaging afterwards, to create more work. When I interviewed Sánchez Gordillo for my bookearlier this year he explained the rationale: "Our aim was not to create profit, but jobs, so we created a complementary industry to transform our agrarian products: peppers, artichokes, favas, broccoli, olive oil and olives." The idea, he went on, is that "la tierra es de quien la trabaja" – the land is for those who work it.
The current struggle for land terrifies the Spanish right, and the paucity of their response has been telling. "They're just uneducated farmers" someone told me haughtily on Twitter (bigoted and irrelevant at the same time), while another chipped in "Sánchez Gordillo is a monster" (difficult to prove without a DNA test). There has been no critique of their argument – simply, that the crisis of capitalism is being visited squarely on the poorest in Spanish society – because there can be no critique. Marinaleda terrifies them even more; first because it proves that protest works, and second because it works. The town has only 5% unemployment – and most of these people are recent arrivals, economic migrants from outside – compared with 34% in Andalusia as a whole.
As Rajoy's £65bn austerity measures start to take effect, and the crisis deepens, expect arrests, slander and agents provocateurs – this has as long a history in Spain as the struggle for land. During the late 19th century, the rightwing Carlists published provocateur newspapers that they would then use as evidence of the dangerous anticlericalism of the country's burgeoning anarchist movement. One of these newspapers contains better rhetoric than I've seen in most sincere insurrectionary tracts: "Let us tear down the vault of heaven as though it were a paper roof!" ran the lead story in a provocateur newspaper called Los Descamisados. "We, the disinherited, the pariahs, the helots, the plebs, the dregs, the scum, the filth of society declare that we have reached the depths of our misery and the hour of triumph is at hand!"


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