Commentary on the economic , geopolitical and simply fascinating things going on. Served occasionally with a side of snark.
Thursday, August 9, 2012
Hope Merkel and Schauble have enjoyed their holidays- Greece is awaiting her return , Spain is still insolvent but playing beggar thy german , Italy's Monti still acts as if Italy won Euro 2012 and he's calling shots and Greece is still a quagmire and broke.......
BANKFURT MOLE: Merkel ‘in a prison of her own making’
Merkel: “she can’t control Draghi now”
“Germany must desert the eurozone, and the Chancellor must engineer that”
The German Chancellor returns from holiday next week. The Slog’s veteran Frankfurt banking mole says she has made the task of educating the Germans about Euroblown extremely difficult…and has only a limited window in which to do it.
“The ordinary German has no idea what we are taking on,” The Slog’s long-serving Frankfurt Mole ‘Maulwurf’ told me this lunchtime, “They see a grand project and Germany at the centre of a strong Europe eventually. Of all the European nations, they are perhaps the worst informed about the realities of the euro disaster”.
In many ways, the Bankfurt Maulwurf is right. German public opinion is strongly opposed to Greece staying in the eurozone and getting “yet more” help as they see it, but comprehension of why Greece is in the mess it is (and, for example, the role of Franco-German arms sales in the collapse) doesn’t figure highly – if at all.
Yet Brits and Americans shouldn’t extrapolate from this that the German voter has a problem with the euro. The irony is that, the naturally secretive nature of Wolfgang Schäuble and Angela Merkel being what it is, the Berlin government would now have a problem should it ever wish to point out to the electorate just how big a mess the eurozone is in. The average voter didn’t notice today, for instance, that German Bund yields rose on the uncertainty surrounding the ECB/ESM future moves, and some poor export data showing even Germany now having a hard time of it.
“The government should finally be honest about it to the people,” said Frank-Walter Steinmeier yesterday, SPD floor leader in the Bundestag and one-time foreign minister in Merkel’s first government, “If we want to prevent the breakup of the euro zone, it won’t be without risks for Germany…she [Merkel] fails to say that Germany is already exposed to losses from the debt crisis through the European Central Bank’s bond purchases.”
“Steinmeier is right about the dishonesty,” the Maulwurf insists, “but like all social democrats he thinks the impossible can be made possible. It can’t: Germany must desert the eurozone, and the Chancellor Angela Merkel must engineer that.”
Angela Merkel returns from holiday next Monday, but the pressure she faces then will be from the very pro-EU SPD Opposition to ‘get off the pot’. Her Government grudgingly backs Mario Draghi’s proposal to help lower borrowing costs in Spain and Italy with more direct bond-buying, but the SPD wants her to be more pro-active, and assume greater risks, to avert a breakup of the single currency.
To the likes of the Bundesbank’s Jens Weidmann and The Slog’s Bankfurt Maulwurf, this represents idiocy of the highest order.
While a potentially smart political move by the SPD, the Party may be yelling at a brick wall. An Infratest dimap poll for ARD television last week showed that 76% of Germans think a breakup of the euro would be bad for Germany, but 64% were confident the euro would survive. And 56% said the government should “do everything” to save the euro. Replace ‘everything’ with ‘nothing’, and you’d have the UK sentiment spot on.
“Their confidence is based on ignorance,” says the Maulwurf, “that, and Merkel’s easy facility with the smoke and mirrors”. But whether she is sparing with the truth or not, Merkel is not in that much trouble with the electors right now: the Infratest poll showed 68% of Germans approving of her overall approach – her best score since December 2009. Roughly the same number feel that saving the euro is “in good hands” with Merkel.
This is all good news for the CDU Chancellor…until a major can of worms opens. Or even worse, she has to tell the Germans that they are quitting the eurozone.
The Karlsruhe Constitutional Court might wake some people up….especially if President Gauck were to weigh in around the time the Court rules on ESM legality on September 12th. Most observers think this unlikely, but I’m not so sure: an Osti himself, Joachim Gauck has never trusted Merkel. Let’s face it, there’s a lot about her not to trust.
More likely can openers lie along the Spain/Italy nexus. Cleverly positioned thus far as Draghi’s programme of bond-buying (‘don’t mention the bailout’) most Germans once again see the problem as soluble. But The Slog’s Maulwurf speaks for many in Frankfurt when he observes, “The problem is not soluble, not as the eurozone is now constructed. And [Merkel's] dash for Fiscal Union would put Germany effectively in the position of being a sovereign. There are many in Frankfurt you know who say ‘thank God for Hollande’”.
I think our Bankfurt chum is being over the top when he says Germany would be the sovereign power – this is my gag about Berlin-am-Brussels being taken to an extreme – but I sense he’s right that Germany may well be the last sovereign standing when the dust settles. And it’s not hard to understand why he sees Hollande as a welcome saboteur: the Maulwurf is very much of the Jens Weidmann ‘stop chucking good money after bad’ school.
“The balance of power has changed markedly – everyone can now see this,” the Bankfurt Maulwurf continues, “but not the German people. Everything Merkel has done has been to the detriment of Germany, but now she is in a prison of her own making. She will have to shout through the bars of her cell, ‘Wake up! Get out! It is out of our hands!’ I hope she does this in time, but I have my doubts.”
We shouldn’t see the Maulwurf’s view of life as in any way typical of German opinion: in many ways, that’s his point. But he is well-informed, cosmopolitan, and on the whole a good judge of trucks coming down the road. The reality he grasps is that Greece will default after further haircuts, Spain will need a full-scale bailout, Italy’s bonds will suffer once that becomes clear, and Mario has already accepted that more money must be printed – be it in Athens or Berlin.
These kinds of events have a habit of happening more quickly than politicians think: and far more quickly than most politicians can think. My source has always maintained that other forces in Germany will steer Merkel away from the rocks. He may well be proved right again. And the only way for her to go would be out of the euro….or a drastic reformulation of its membership.
We should all watch out for the signals from Angela Merkel next week.
EUROBLOWN: American influence on the Greek Government waning – sources
Intrigue, austerity denial, side-deals, and economic collapse: but the bottom line is ‘debt monetisation’
Coalition dilemma…which way is up?
Senior sources close to Greek Opposition MPs are claiming this morning that those calling the shots in the ruling Coalition of Antonis Samaras do not view a return to the drachma with American support as “a viable alternative to staying within the EU”. The Troika’s abrupt change of attitude to Greece is also suggesting to some observers that “some kind of secret deal” has been done between the ECB and Athens to both reassure the Troikanauts, and keep the Greeks onside. But it’s clear the Germans aren’t on board with this.
Something very odd indeed is going on between Brussels, Berlin, Frankfurt, Washington and Athens. On all sides, things said in public are either slightly mad, or completely different to what is thought in private – and then executed while nobody is looking. Facial expressions and media soundbites have turned 180 degrees to give the impression of Jolly Good Pals. But there is a great deal of intrigue going on behind all this.
Most people outside Greece find it less and less intriguing. “It’s holiday time, the Greeks owe a lot of money, the Troika seems to be happy again, it’s tough for the people – whatever. I’m all Greeked out.” It would be a mistake for any of us to think like this, for two reasons.
First, at the sovereign level, the overlapping (and often contradictory) aims of the ECB, the Brussels Commission, the Americans, the Germans, and the Greek elite may be very close now to snatching meltdown from the jaws of chaos. Taken together, these swirling objectives could easily turn Europe and the Middle East into an unstable nightmare.
Second, at the globalist investment bank level, sooner or later – whether one lives in Finchley, Philadelphia or Famagusta – it will be our turn to be pauperised further. Bluntly, only an insane person would imagine that Greece can survive the latest round of cuts: so either the Troikanauts are all crazy, or there’s another game in play. The game is called monetising debt. One way or another, the financial Establishment is hell-bent on squeezing real money out of the populace in order to meet the currently ‘virtual’ cost of a decade of unscored, frontal-lobe lending policies, and derivative salamis chopped up on the back of it. In my view, it can’t be done because the numbers are far too high. But mark my words, unless somebody courageous stops them, they’re going to have a crack at it.
A quick survey of the Troika’s feigned insanity – and the terror now felt by the Samaras Coalition – will suffice to make the point.
Following Draghi’s (in my view much underreported) new deal for the Bank of Greece concerning collateral relaxation, the negotiating mood changed immediately: the Troika left Athens all smiles and happy handshakes last week. But the first time the BoG tried to use the facility, they were turned down. And it now emerges that, behind closed doors, Christine Lagarde and her IMF officials maintain Greece’s debt must be reduced to “sustainable” levels before the fund releases billions more euros…..to keep Athens from running out of cash. That’s what I thought the Draghi deal was about, silly me. But now Chrissie the Countdown genius says – for once correctly – that the most effective way to do this is at least some degree of debt forgiveness.
Chrissie is not mad, just stupid and cunning. She knows perfectly well that Greece’s deep recession has blown the country’s bailout programme several light years off course. The statistics are horrendous, and are I think reported in the West for the first time here. 68,000 small businesses closed in the first 6 Months of 2012. 190,000 businesses stated they were at risk of closing down in the next 12 months. One in Four companies are unable to meet their business loan repayments. One in Two faces difficulties in paying employees’ salaries. 30% have fallen behind on the rent. Three in Ten have debts to utility companies. The average fall in SME turnover was 34.5% during the first half of 2012. This isn’t a slump, it’s scorched-earth economics worthy of the less sensitive form of Gauleiter.
I simply do not accept that even the barmiest neocon thinks this “retribution” (as the holy suits love to call it) is getting the european economy anywhere, or is indeed likely to achieve anything more than the destruction of the Greek economy….and violence against the new Athens government. That the Samaras Coalition realises this only too well is obvious: for these new cuts are the scimitar which dare not leave its scabbard.
“There will be spending cuts but no new austerity,” said a struggling Government minister on TV last week. But the reality (admitted by the Greek government) is that they have signed up to €11.5bn in new cuts…and although the estimates vary, there are around €4.5bn in savings that, I understand, nobody in the Cabinet seriously thinks can be carried out. Plans are being drawn up for pension cuts on a grand scale, but the hospitals (which haven’t paid any bills for some five months) are already flooded with old people either half-starved or unable to afford to run air-conditioning during the August heat. This is, if you like, literally scorched earth.
In fact, not far below the surface is the widespread belief that, while Samaras seems robotic enough to do the Troika’s bidding, his Coalition partners aren’t. Finance Minister Yannis Stournaras, says in public the savings can be found, but in private he flatly rules out the possibility of firing public sector employees as “impractical”. PASOK leader Evangelos Venizelos has told colleagues he thinks they will “all be strung up” if the full cuts are enacted. (If they are carried out without firing bureaucrats, then I suspect he’ll be proved right).
So the Government plan for the moment is Don’t Mention the Austerity Measures. It wasn’t helped by Greek President Stournaras telling the media that “there will be no layoffs in the public sector”, although more optimistic Hellenics have interpreted this to mean that things are not so bad after all.
But things could not be worse. Without massive debt forgiveness, Greece will default – and very soon. What’s more, if Mario in Frankfurt keeps on playing silly buggers with the Bank of Greece, it will be very soon indeed.
This is what the Americans would not so much like to happen, as like to be around to control: defensively, to protect Wall Street: and aggressively, to maintain its position in the South-east Europe-to-North African axis of energy. But their main contact at senior Governmental level, Finance Tsar Yannis Stournaras, hasn’t been able to get enough credibility behind the American ‘offer’.
“There is no offer,” asserts one source close to Opposition Party Syriza, “just a lot of bullsh*t which adds up to ‘you dive off the cliff and we’ll be there with a net at the bottom’. Samaras thinks the EU needs us more than the Americans. Maybe he’s right.”
But not every EU member State ‘needs’ any more Greek dramas. And so it is that we find ourselves back in Berlin, where the view expressed in the media (and by almost every source one talks to) is that forgiving Greek debt would be completely unacceptable to the German people. You can sort of see their point: having already lent €127 billion, not just Merkel but pretty much the whole country has drawn a line in the sand. Understandable, but mad. Not just mad, in fact, but a failure to draw the blindingly obvious conclusion: had they forgiven much of it three years ago, the cost to EU governments would’ve been a fraction of what it is now shaping up to be.
But that’s the point: governments and taxpayers have coughed up: so far, the bondholders and general lending community have got away with nothing worse that a profit-negating haircut in Greece. Bizarrely, they see even this as a disaster, a precedent…and above all, the clinching piece of evidence that dictates, “We have to get our money out somehow”. And so that’s what is happening in Greece.
As I wrote earlier, the strategy is doomed. Next up are Spain and Italy. Draghi’s response to that unaffordable cost is, decoded, “print money”. This is what the bankers have been wanting to hear for eighteen months, for not only will it start wiping out the real value of their obligations through inflation, it once more reaffirms the central daft assumption within their survival strategy: they can’t pay, so the customers must….via the Mints, whose banknote machines will now start to work overtime.
The Americans are up for this, but the Germans will make their move soon to get away from so much as a whiff of hyperinflation. The Chinese too will not accept it: they’re already letting the Yuan fall again. And as for the economies….ah yes, the economies. They’re at a standstill. Ben Bernanke will start up QE3 soon enough to keep the markets solid. But that will also feed the inevitable inflation.
Interesting times. But not if you’re an ordinary Greek citizen. And – the fundamental point of this piece – not if you are one of the 97% sinking under the weight of the super-rich. So don’t let Greece slide off your radar: keep looking underneath.
and with Greece's unemployments numbers crossing 23 percent , how can the Coalition ram through the Labor Reserve scheme ........... if they do it , more folks become de facto unemployed - if they don't do it , those currently unemployed will go ballistic that civil servants are protected while their thrown to the wolves..... lose / lose scenario
Greek police detain a group of migrants in central Athens. Police claim that 'national survival' is at stake for debt-choked Greece. Photograph: Thanassis Stavrakis/AP
New spending cuts being asked of Greece by international creditors are pushing Athens' fragile coalition towards a showdown with unions and anti-bailout forces amid signs that it will be civil servants who will bear the brunt of the belt-tightening.
Word is spreading of an incendiary autumn with labour groups, backed by the radical left main opposition Syriza party, warning of protests in September. The prospect of mass lay-offs in the state sector and a spate of planned privatisations are setting the scene for the "hottest fall yet," unionists said.
"Mass demonstrations are being prepared by both public and private sector unions," said Ilias Iliopoulos general secretary of ADEDY, the union of civil servants. "As long as the [governing] parties don't respect their pre-election pledges of no more cuts and no more firings they will face the wrath of the people," he said.
With the country enduring a record fifth straight year of recession and unemployment hitting an unprecedented 23.1%, Greeks, he said, could "take no more'".
Passions were reignited this week when barely a month into the job the new finance minister, Yiannis Stournaras, conceded that the "numbers don't add up". He admitted the government was still €4bn short of its budget target.
The debt-stricken country has to come up with "alternative solutions" to appease lenders at the EU, ECB and IMF, the so-called Troika that set as a condition of further assistance €11.5 bn in additional cuts – the equivalent of 5.5% of GDP. Among options being discussed, he said, was a controversial plan placing thousands of civil servants in a special labour pool on reduced pay. The scheme, seen as the first step towards dismissal, was dropped last year in the face of widespread hostility.
On Thursday senior government officials insisted that the politically risky move would go ahead with as many as 40,000 civil servants being gradually laid off. "The labour reserve plan will go ahead this time," an official told Reuters. Another insider said: "This is a measure that may not produce dramatic and immediate savings but it will give credibility to our efforts to reform."
With the country's coffers close to empty and the paralysis caused by two successive elections having delayed the next €31.5bn tranche of aid, the government is under pressure to show willing.
Failure to implement reforms, exacerbated by months of foot-dragging, has given way to suspicion among Greece's troika of creditors with Athens being repeatedly warned it will face default, and euro exit, if it does not conform.
Despite a reported change in atmosphere during a recent visit by troika inspectors, Greek officials are acutely aware that they can afford no let up in the reform process if EU-IMF monitors are to produce a positive review on which further loans depend. Piling on the pressure, EU officials said plans were afoot to postpone Athens' next injection of cash until October – prompting officials to issue a denial amid fears that payment of public sector pensions and salaries will be delayed.
With Greece's economic indicators worsening since the outbreak of the crisis in late 2009, it is debatable whether the government would survive enforcing measures that are so unpopular. In a sign of the mounting storm, Fotis Kouvellis, the leftist leader supporting the coalition, described the labour pool scheme as a "fiasco" and said he would not countenance further policies that exacerbated the plight of ordinary Greeks.
Civil service jobs an obstacle
Coalition parties jostling over labor reserve as 6.5 bln worth of cuts head for troika approval
Greece is to send to the troika on Friday a list of savings worth 6.5 billion euros over the next two years as it looks to find the remaining 5 billion euros in cuts, with the coalition parties still divided over whether sackings in the civil service should form part of the package.
New Democracy, PASOK and Democratic Left have agreed on how just over half of the savings will be made, but have yet to settle on the remainder, despite daily contacts between party representatives and leaders.
The option of reintroducing a labor reserve scheme, whereby as many as 40,000 civil servants would be removed from their posts is being considered. They would continue to receive up to 70 percent of their salary for at least a year, Finance Ministry sources said.
The measure, which was abandoned last year after some 7,000 departures, is opposed by PASOK and Democratic Left. Justice Minister Antonis Roupakiotis, chosen by Democratic Left, suggested on Thursday that the labor reserve could fall down if challenged in court.
“As justice minister and thinking legally, it is a set of measures that does not led anywhere,” he said. “Courts have already ruled that the labor reserve clashes with the constitution.”
The leftist party’s other cabinet choice, Administrative Reform Minister Antonis Manitakis, is also thought to be skeptical about the measure. Manitakis met on Thursday with PASOK MP Giorgos Dolios, who is the party’s spokesman on civil service issues. After the meeting, Dolios was clear about PASOK’s objections.
“For this measure to be adopted, the coalition’s policy agreement has to be changed,” he said. “The pre-election pledge that there would be no sackings in the civil service remains.”
Dolios explained that PASOK is basing its reluctance on two main points. “We must not heighten the sense of insecurity in the civil service at a time when we are asking them to play a part in the reform of the public sector,” he said. “Also, the previous experience with the measure did not produce the expected result.”
Sources said that some of the remaining savings could come from further reductions in ministry budgets. Prime Minister Antonis Samaras called ministers on Thursday to ask if they could reduce their departments costs. The government believes a 25 percent reduction in non-wage costs could save some 4 billion euros.
Meanwhile, Samaras’s office confirmed that he will not be delivering the traditional economic policy speech at the Thessaloniki International Fair next month.
and.....
Joblessness climbs to a new high
Greece’s unemployment rate rose to 23.1 pct in May, with most in the 15-24 age group out of work
Greece’s unemployment rate climbed to a new peak in May, highlighting the intensity of the recession for a fifth straight year.
According to the Hellenic Statistical Authority (ELSTAT), the jobless rate rose to 23.1 percent, from 22.6 percent in April. It stood at 16.8 percent in May 2011.
The number of jobless totalled 1,147,372, compared to 836,331 a year earlier, while the number of those in registered employment dropped 3,816,912 from 4,137,452 over the same period. The ELSTAT data show that the jobless rate has nearly tripled in the last five years, from 8.3 percent in May 2007.
The young and women remained the most vulnerable groups. The rate of jobless in the 15-24 age group shot up to 54.9 percent -- the highest in the 27-member European Union -- compared to 41.7 percent in May 2011 and 31.9 percent in May 2010. Among women, unemployment rose to 26.8 percent from 20.4 percent in May last year, while among men it was 20.3 percent compared to 14.2 percent 12 months earlier. In the 25-34 age group, those out of work represented 31.6 percent of the total, from 23.3 percent in May 2011.
The European Commission regards Greek unemployment as “a matter of deep concern,” spokesman Olivier Bailly told reporters in Brussels on Thursday.
“The unprecedented level of unemployment in Greece, in particular youth unemployment, is something both the troika and the Greek authorities need to address,” he said.
Other data on Thursday showed Greece’s construction sector, once a key growth driver, slumped again in May, as austerity sapped demand for new homes. ELSTAT said 31 percent fewer building permits were issued than in May 2011.
Greek industrial production rose 0.3 percent in June from the same month a year ago, compared with a 2.9 percent drop in May. The increase was the first year-on-year rise since April 2008.
Think-tank Foundation of Economic and Industrial Research (IOBE) expects Greek gross domestic product (GDP) to shrink 6.9 percent this year.
“The unemployment rate could go higher and register 24 percent from September. Our forecast is that for the year as a whole it will likely average 23.6 percent,” said Angelos Tsakanikas, an economist at IOBE.
and Greek for here is ...... Barakos ?
State company head sacked for not reducing workers' pay
9 Aug 2012
The president and CEO of LARCO, Anastasios Barakos, was asked to resign for flouting the law, the finance ministry has said
The government sacked the head of its state nickel producer LARCO on Thursday for refusing to reduce workers' pay, the first state company chief to lose his job in the fight to cut costs and stay hooked up to an international bailout.
The Finance Ministry said in a statement that the president and CEO of LARCO, Anastasios Barakos, was asked to resign for flouting the law.
"He did not apply legislation requiring a reduction of salaries across the wider public sector," the ministry said.
Barakos was not immediately available for comment. LARCO is one of the world's top producers of nickel.
Ministry officials said all state corporations were told in 2011 to reduce pay by 35 per cent over two years, with 25 per cent in the first year, in line with reductions in the core civil service.
They said Barakos had written back that his company should not be included in the law and refused to apply the cuts.
State companies normally pay much higher wages than the main state sector. One of the coalition government's main targets to meet pledges to international lenders is to shut down, merge or privatise these costly companies. (Athens News/dv, Reuters)
and docs threaten action against the state ripping them off....
Doctors threaten action unless paid
Doctors working for the National Organization for Healthcare Provision (EOPYY), the country’s main fund providing medical coverage, said that as of August 20, they would begin holding back money paid by patients for treatment in order to cover for money they believe they are owed by the state.
In a letter to the Health Ministry and EOPPY, the doctors said that the government is illegally holding back money there are owed from 2010 until today.
The doctors said that they will take the payment they are legally entitled to directly from patients until September 2.
They said they are giving the government until August 15 for the money to paid so the action can be called off.
and last thing they need is fear of piranhas in Greek waters , rivers , lakes - if someone is setting them free , wait until someone gets bitten .....
Ferocious piranha found in Evros River
The Fisheries Research Institute (INALE) confirmed on Thursday that a fish caught in the Evros River recently was a piranha.
The organization was sent the specimen by 58-year-old Costas Tsolakidis, who caught it.
INALE identified the fish as pygocentrus nattereri, or red-bellied piranha.
It lives mainly in the Amazon River Basin and has a reputation for being one of the most ferocious freshwater fish in the world despite measuring no more than 33 centimeters in length.
Researches said that it is likely someone had the fish in the aquarium and emptied it into the river.
“It would be better if they returned them to the shops where they bought them,” said INALE researcher Manos Koutrakis, who added that piranhas would not be able to survive in the Evros as they live in waters that have a temperature of 20-27 Celsius.
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