Around the horn in Europe - September 10 , 2012....

http://www.zerohedge.com/news/europes-most-parabolic-chart-resumes-climb-german-target2-liabilities-rise-just-shy-1-trillion

Europe's Most Parabolic Chart Resumes Climb As German TARGET2 Liabilities Rise To Just Shy Of $1 Trillion

Submitted by Tyler Durden on 09/10/2012 07:40 -0400

• Germany

Perhaps one of the best advance indicators of the market respite that took place in August was the slowdown in Bundesbank TARGET2 liabilities, which until then had been rising at an exponential pace, only to see its first monthly sequential decline since 2011, dropping €1.4 billion. Now that August is gone, and the vacation that brought Europe to a merciful halt is over, the time to resume sucking Germany dry in order to fund current account (and other) deficits is back, and sure enough the just reported Bundesbank August update of TARGET2 liabilities shows that the increase is back. At a record €751.4 billion (or just shy of $1 trillion at today's exchange rate), Germany funded the periphery mostly Spain, via the transfer of public risk to private sector benefit (sunk "public" Buba costs are a concurrent benefit to the German export sector) to the tune of over €1 billion each work day, with a total monthly increase of €24 billion in August. Look for this number to resume its astronomic rise as the periphery realizes its inventories needs restocking and that it needs to import German stuff using Bundesbank liabilities that will never be satisfied.

and....


http://www.telegraph.co.uk/finance/debt-crisis-live/9532796/Debt-crisis-Break-up-fears-as-France-contracts-live.html

12.30 Germany's Constitutional Court said it will examine whether to postpone its long-awaited verdict on the eurozone's €500bn ESM rescue fund and the EU fiscal pact given a new legal challenge by a leading eurosceptic politician.

A spokeswoman told AFP the court would hold an emergency session on the latest challenge by Peter Gauweiler - a eurosceptic lawmaker from the CSU Bavarian sister party to Chancellor Angela Merkel's conservatives - on Monday afternoon and make public its decision on Tuesday morning.

The court verdict is the last legal hurdle for the ESM before it can come into effect. Until now, the court had been scheduled to deliver its ruling on Wednesday.

But it could now be held up following Gauweiler's latest complaint on Sunday, in which he challenged last week's decision by the European Central Bank to launch a bond-buying programme.

He argues that the ECB move alters the situation and the court must now first decide whether the central bank's bond purchase programme is legal before it can rule on the constitutionality of the ESM rescue fund.

12.15 Portuguese banks' cut their dependency on European Central Bank funds last month. The borrowed €54.9bn in August, retreating further from June's all-time record of €60.5bn.

Top Portuguese banks met the ECB's new capital requirements in June but they have long been frozen out of the interbank funding market due to concerns over the country's debt crisis and economic prospects. Lisbon is working to repair its public finances after taking a €78bn EU/IMF bailout.

11.30 Further evidence of how eurozone crisis and sluggish US growth is hit the global economy. South Korea unveiled an incremental $5.2bn stimulus package today to help it export-driven economy weather hard times.

In June it announced a $7bn package. Together the stimulus equals about 1pc of GDP for Asia's fourth largest economy - which Reuters says is hardly enough to set pulses racing.

It is a move other Asian countries are expect to follow, particularly China data today showed imports shrank in August in a new sign its painful economic downturn might be worsening while export growth was weak due to anemic global demand.

11.21 Stock markets in Europe are still flat. London'sFTSE 100 index is down 0.04pc, Frankfurt's DAX 30has edged up 0.1pc, Paris' CAC 40 rose 0.07pc, Italy's MIB slipped 0.5pc and Spain's Ibex fell 0.35pc.

10-year bond yields in Spain dipped further to 5.5pc, but rose slightly in Italy to 5.14pc. While the euro gave up recent gains to trade at $1.2777.

11.05 Ahead of the Dutch elections on Wednesday, a new poll shows Prime Minister Mark Rutte, whose pro-austerity Liberals are running neck and neck with the opposition Labour Party, would best serve the country's interests in Europe.

"Rutte is the man we can best send to Brussels to get the most for the Netherlands from the bureaucrats: the Liberal Party leader scores best on qualities including 'competence' and 'real leadership'," said Dutch newspaper De Volkskrant, which Reuter reports commissioned the poll and is generally considered left-leaning.

Rutte was prime minister until April, when his coalition collapsed after his chief ally, the anti-immigration politician Geert Wilders, refused to support further austerity measures to meet European Union budget targets.

He scored highest on leadership and competence, with 52pc of those surveyed saying he was a "real leader", against 41pc for his chief rival, Labour leader Diederik Samsom.

Dutch voters are divided over the demands for massive bailouts for Europe's so-called budget sinners, particularly Greece, and for austerity measures at home that chip away at their cherished welfare benefits.

10.40 Greece's official statistics office reported a 5pc year-on-year decline in industrial output data in July, from an increase of 0.2pc in the previous month.

Not a great backdrop for Greek Prime Minister Antonis Samaras who is today trying to bridge differences with the country's lenders, after they rejected parts of the €12bn austerity reforms Athens hopes will unlock further aid payments.

Moderate leftist leader Fotis Kouvelis told reporters after meeting Mr Samaras.

Our European partners must realise that the Greek people can't take it any more.

Some in Germany it seems feels the same way about the Draghi plan.Volker Kauder, the conservatives' parliamentary leader and a close ally of Merkel, told the Bild daily.

Because An ECB intervention (in the bond markets) hinges on politically determined programmes, the bank's independence is brought a little bit into question.

The ECB has reached the border of what is permitted, also because it is moving into the area of state financing. These are quite simply extraordinary times.

10.30 Investec's Corporate Treasury has a view on why markets are sluggish and why we shouldn't expect any bond buying action soon:

After last week’s market positive news from the ECB, markets are mostly unchanged this morning, with the Euro a little softer. Some Euro negative news over the weekend came in the form of a an article in the El Economista newspaper claiming that Spain may wait until after regional elections on 21st October before making a formal application for EFSF aid.

If this is indeed the case it would likely mean there is little prospect of ECB bond purchases via Outright Monetary Transactions anytime soon, given the ECB’s insistence on conditionality. Either way it highlights the sensitive nature of the current predicament.

10.20 Moody's is not massively impressed by Draghi 'big bond buying bazooka', Ransquawk reports.

The credit rating agency thinks the plan:

- Leaves a number of uncertainties
- It will not resolve the debt crisis

09.20 Not great news from Italy, with weak domestic demand a heavy drag on activity in the second quarter. The economy fell 0.8pc in the second quarter from the first, more than under a preliminary estimate, and gross domestic product was down 2.6pc year-on-year.

ISTAT revised down its preliminary data pointing to -0.7pc fall quarter on quarter and first quarter GDP was also revised down to -0.8pc quarter on quarter. Average GDP for the euro zone was -0.2pc in the second quarter.

Italy has been in recession since the middle of last year and leading indicators suggest no recovery is likely until well into 2013.

09.00 France's economy is set to contract by 0.1pc in the third quarter, the central bank confirmed on Monday, in further evidence that the euro debt crisis it hitting core eurozone. France is the second-biggest economy in the single currency, and Germany is also starting to fell the pressure.

This is France's first contraction since it came out of recession in 2009 and follows zero growth for the past three quarters. I suspect French President Francois Hollande had a sneak preview when he promised to turn the country's stagnant economy round by 2014 and set himself a year-end deadline to ready labour market reform.

 08.25 Ambrose Evans-Pritchard warns in his column titled"Carthaginian terms for Italy and Spain threaten Draghi bond plan":

The cold douche begins. Markets will now learn that the European Central Bank's bond plan is a devout wish, not a done deal. Europe's political minefield lies ahead.

He says the ECB's willingness to act is plainly not enough in itself to save the euro, and argues: "Primat der Politik is back in tooth and claw. Democracies will make or break EMU."

08.00 Good morning, the eurozone is facing a difficult week, with potential surprises from a ruling the ESM rescue fund by Germany's top constitutional judges, Dutch elections, a Greek deadlock over austerity cuts, and an EU finance ministers' meeting to discuss banking regulation with Brussels and Germany taking different views.

So expect a quiet day as markets mark time ahead of these events

and.......

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_10/09/2012_460526

Troika raises doubts over 2.2 bln euros worth of measures [update]

 Greek PM meets with foreign inspectors ahead of Draghi talks on Tuesday

Prime Minister Antonis Samaras sought on Monday to bridge differences with the country's lenders over a near 12-billion-euro austerity package, after they expressed skepticism over parts of the plan that Greece hopes will unlock further aid payments.

"Talks with the troika will continue,» Finance Minister Yannis Stournaras, who took part in the meeting,» told journalists without elaborating further.

No details were made available immediately after the meeting which took place ahead of the Greek prime minister's meeting with European Central Bank chief Mario Draghi in Frankfurt on Tuesday.

Greece's foreign lenders have reportedly raised doubts about some 2.2-billion-euros worth of measures contained in a nearly 12-billion-euro austerity package prepared by the government.

The objections put forward by the so-called “troika” of inspectors from the European Commission, the European Central Bank and the International Monetary Fund concern three main areas, namely expenses in the public sector, defense spending, and health costs.

Among the demands being made by the troika is a further streamlining of the public sector, which would include 150,000 sackings by 2015 – something that all partners in the coalition government have painstakingly tried to avoid.

Troika officials returned to Athens on Friday to conclude a report on debt-hit Greece's progress in meeting the terms of its latest bailout. The inspectors, who held talks with Stournaras on Sunday after a month-long hiatus, must approve the plan to trim roughly 11.7 billion euros from the state budget over the next two years if Athens is to get a green light for the bailout money it needs to avoid bankruptcy.

Sources inside the finance ministry said that visiting officials expressed doubts about whether the government can live up to its prediction of slashing administrative costs in the public sector by 750 million euros.

Similarly, they were skeptical of forecasts to cut 911 million euros in health spending and social security expenditure. Additionally, the troika has doubts that a proposed 517-million-euro reduction in defense spending would be a permanent measure rather than simply a bid to put off the expenditure for now.

The austerity package, which Samaras has yet to convince his socialist allies in the coalition government to accept, contains a fresh round of unpopular wage and pension cuts for the next two years including 7.3 billion euro cuts in pensions, civil servant salaries, benefits and tax breaks. The package also includes 4.5 billion euro cuts in the state budget for health, education, defense, local administration, public utilities and administrative spending across Greece's ministries. More specifically, the proposed measures include the abolition of the extra Christmas and Easter payments in the 14-month pay packet, which have already been significantly reduced. They also include graded reductions between 2 and ten percent for all pensioners who receive more than 1000 euros in primary as well as auxiliary monthly pensions. Furthermore, the package calls for some 700 million euro cuts in the pensions of civil servants who used to be on so-called “special salaries” -- such as judicial and military staff. Pay cuts to special salaries are set to apply to this year as well, and will be retroactive. Beginning with paychecks in July, they are expected to save some 600 million euros per year. Reductions between 22 and 35 percent in the so-called “efapax,” the lump-sum payment all workers get upon retiring, and 940 million euro cuts in welfare benefits are also called for. Greece faces bankruptcy and a potential eurozone exit without the next tranche of aid, an issue that its peers in the European Union are expected to decide on next month.