Tuesday, September 4, 2012

Around the horn in Europe - September 4 , 2012.....

http://www.telegraph.co.uk/finance/financialcrisis/9521465/Brinkmanship-as-Spain-warns-over-bail-out-terms.html

( Recall that even if Draghi gets Germany to go along with buying debt from Spain and Italy ( three years and shorter in maturity ) , Spain and Italy still has to request a formal bailout. )


9:14PM BST 04 Sep 2012
Comments77 Comments
In an escalating game of brinkmanship, Spanish finance minister Luis de Guindos said his country is not yet willing to sign a Memorandum giving up fiscal sovereignty to EU inspectors. “First of all, one must clarify the conditions,” he told German newspaper Handelsblatt.
Mr de Guindos said the crisis engulfing the region is larger than any one country and warned north Europe not to scapegoat Spain.
“My colleagues are aware that the battle for the euro will be fought in Spain. Spain is right now the breakwater for the eurozone,” he said, adding that “solidarity” would be well-advised.
The warning comes as German Chancellor Angela Merkel leaves for Madrid for talks with premier Mariano Rajoy to thrash out the conditions of a full sovereign rescue of up €300bn (£238bn), beyond the €100bn bank rescue already agreed.
The ECB’s executive board met today to prepare crisis proposals for the governing council’s meeting on Thursday, including a “yield band” to lower borrowing costs for Spain and Italy.






http://www.zerohedge.com/news/mario-draghi-reprises-hank-paulson-demands-full-monetization-authority-or-else-threatens-end-eu


Mario Draghi Reprises Hank Paulson: Demands Full Monetization Authority Or Else Threatens With End Of Euro

Tyler Durden's picture
Submitted by Tyler Durden on 09/04/2012 11:21 -0400




Yesterday's "leak" of Draghi's comments that it is not monetization ifjust the tip only bonds with a maturity of 3 years or less are monetized, aka, legitimate monetization does not cause inflationwas so horribly handled that the ECB huffed and puffed in adesperate attempt to appear angry, even though it was absolutely delighted that it had even more ammo in its war against Germany. Today, the leakage continues only this time nobody cares that Draghi's desperation is hitting the headlines left and right. As a result, Draghi literally pulled a carbon copy of Hank Paulson, and while he did not have a three page term sheet in hand, threatened that the Euro would end unless he was allowed to monetize short-term bonds. Here's looking at your Germany. From Bloomberg: "European Central Bank President Mario Draghi said the bank’s primary mandate compels it to intervene in bond markets to wrest back control of interest rates and ensure the euro’s survival.Mounting his strongest case yet for ECB bond purchases, Draghi told lawmakers in a closed-door session at the European Parliament in Brussels yesterday that the bank has lost control of borrowing costs in the 17-nation monetary union."

Bloomberg continues: "We cannot pursue price stability now with a fragmented euro area because changes in interest rates affect only one country, or two countries at most,” Draghi said. “They have no importance whatsoever in the rest of the euro area.” ECB bond purchases are therefore “a way to comply with our primary mandate,” he said, adding: “Frankly, all this also has to do very much with the continuing existence of the euro.” The reason he added the last part is because as Asmussen has hinted, the ECB believes it is in its mandate to do everything, including monetize whatever it needs, to prevent the market from dumping bonds and selling the EUR (ironically a weak currency is precisely what an economically impliding Europe needs). Of course, the reality is that Draghi has cause and effect completely reversed, and the only reason the EUR is plunging, as are peripheral bonds is because the local governments are doing nothing to fix their miserable fiscal reality, and will continue to do so as long as the ECB continues to intervene and give the impression that things are better than they really are.
But the worst news, is that the European Central Jawboner no longer seems to have any impact, and while the EURUSD did spike yesterday on these news, only  to retrace all gains, today's rehash of the same comments resulted in a brief 30 pips spike in the EURUSD, only for the entire move to be undone in under 10 minutes.

Which means only one thing: the market, as well as everyone else, is getting sick and tired of mere talking, promises and jawboninb, and now demands action. Which, however, is the worst possible thing for the central planners, as once again, their faulty theory will be exposed for everyone in pracitse: one can promise the moon, but when it comes time to deliver, not even the world's greatest central planners can do much if anything.
More from Bloomberg:
Draghi’s plan involves the ECB buying bonds on the secondary market of countries that ask Europe’s bailout fund to purchase their debt on the primary market, which would require them to sign up to conditions. Neither Spain nor Italy has made such a request yet.

The ECB sent proposals for the plan to national central banks today ahead of the Sept. 6 policy meeting. Germany’s Bundesbank opposes the ECB purchasing government bonds, saying it is too close to state financing for its comfort.

Draghi said the ECB’s interventions will not amount to monetary state financing as long as it purchases short-dated bonds.

“If we are to buy long-term bonds we are in a very delicate situation,” he told the lawmakers. “But if we go on the short-term part of the market where bonds have a length of time, a maturity of up to one year, two years or even three years, these bonds will easily expire, so there is very little monetary financing if anything at all that we are doing.”

Conditionality
While many countries have made “substantial progress” recently, “we can’t exclude that at some point in time this progress can easily stop because of adjustment fatigue,” Draghi said. “So that’s why we are asking for conditionality combined with these interventions by the ECB. I think this could stand against the charges that we are doing monetary financing, because we are not doing it.”

Draghi started his testimony yesterday with an overview of the economic outlook.

He said financial-market sentiment “has somewhat calmed down over the past few weeks.” Still, the situation “remains fragile and it’s surrounded by heightened uncertainty,” he said. “Looking ahead we continue to expect only a gradual recovery with subdued momentum and risks on the downside.”

Draghi said risks to the inflation outlook “are still broadly balanced, but certainly further intensification of financial-market tensions has the potential to affect the balance of risks for both growth and inflation towards the downside.”

Lending to households and private sector companies is “still very, very sluggish,” he said.

Asset Classes

Draghi said the debt crisis has distorted yields across a range of asset classes.

“Markets have perceptions of a certain country in a crisis,” he said. “Therefore they ask for higher interest rates in order to buy the bonds issued by the country. And when I say bonds I don’t only mean government bonds. Bank bonds, corporate bonds. Markets are asking for higher and higher interest rates, which in return reinforce the situation of the perception of the crisis. That’s where the main justification to step in is for the ECB and start buying bonds.”

The fact that the ECB’s monetary policy is only being transmitted in one or two euro nations compels the ECB to intervene, Draghi said.

“We have to rebuild the euro area,” he said. “We have to overcome this fragmentation exactly for pursuing price stability through changes in interest rates.”

and the Troika creates the Greekend ( serfs get one day off from work per week ) .....

http://www.zerohedge.com/news/leaked-troika-letter-demands-greek-workweek-be-expanded-six-days


Leaked Troika Letter Demands Greek Workweek Be Expanded To Six Days

Tyler Durden's picture
Submitted by Tyler Durden on 09/04/2012 10:35 -0400




If true, and we don't see a reason to doubt it veracity, the just leaked Troika letter sent to the Greek Labor Ministry, courtesy of The Telegraph's Bruno Waterfield, which sees the Troika demanding a 6 day work week, to wit: "Measure: Increase flexibility of work schedules: Increase the number of maximum workdays to 6 days per week for all sectors." This means that Greece is effectively out of the Eurozone, as there is no way the Greeks, no matter how much they want to be a vassal state of Brussels, will agree to this kind of treatment. Although one may expect the Syntagma square riot cam will be up and running well before the Grexit is a done deal.
Leaked letter from Troika to Greek Labour Ministry
Greece. Labor market reforms
1.      There should be no backtracking on recently passed labor market reforms. The mission welcomes the social dialogue as a means to consult with social partners, and to address the remaining challenges in the labour market. The labour reforms introduced in March, including the needed re-alignment of wage floors, need to be preserved well beyond the present round of social dialogue, and the government should act accordingly to ensure this.

2.      The government should take the next steps towards better functioning labour markets and employment creation (Table 1):
•     The framework for setting the minimum wage needs to be overhauled to help ensure that wage dynamics support full employment. After the measures taken in February to re-align wage floors, the objective—as agreed in the programme—should be to adopt a timetable for establishing a single-rate statutory minimum wage on a permanent basis legislated by the government after consultation with social partners. This system should provide a basic floor for labour income.
•     Non-wage labor costs and barriers to employment must be addressed to support competitiveness and alleviate the pressure on wages:
        ?     The labor tax wedge should be reduced. Concrete measures should be proposed to reduce social            contribution rates by 5 percentage points in a fiscally-neutral manner (as envisioned in the second programme).
        ?     Other non-wage labour costs which ultimately affect entry and exit costs should be reviewed and reduced, taking into account the effects of recent labor market reforms.
        ?     Excessive regulatory burdens should be reduced, while regulatory effectiveness should be increased. These include cumbersome data reporting to and approval requirements from the labour inspectorate. A comprehensive strategy is needed to reform the labour inspectorate. A roadmap should be adopted and an independent assessment of Labour Inspectorate by international experts contracted, covering mandate, activities, structure and the enforcement and penalty structure for infringements of labour law (including undeclared work) consistent with the principle of proportionality. The government should be ready to promptly take the needed corrective actions soon after that.

        ?     Work schedules can be made more flexible. Required actions include increasing the maximum number of weekly workdays, new modalities of working time and daily working hours arrangements and take up of annual leave. Revising labour legislation for specific sectors or professions within the context of product and service market reforms is necessary to help the latter reforms to succeed.
        ?     Unemployment is too high, and policies are needed to prevent it from becoming structural. The ESF can provide resources which can be used to help integrate the unemployed into those economic sectors with higher growth potential. The procedures related to ESF schemes (i.e. those combining work and training together with the social work programmes) should be completed as soon as possible, with a view to begin implementing the schemes by end-September.
Table 1. Greece: Labor Market Reforms
Area: Wage setting
Measure:  Overhaul framework for setting the minimum wage:
•     Adopt a timetable for establishing a single-rate statutory minimum wage legislated by the government after consultation with social partners.
•     New system should provide a basic floor for labour income which ensures that wage dynamics support full employment.
•     Consultation with social partners should be on designing the mechanism, and must not lead to an increase in the minimum wage adopted under the EFF until unemployment rates are low.

Area: Non-wage labour costs
Measure: Propose measures to lower social security contribution rate for employers by 5 percentage points in a deficit neutral manner:
•     Adjust pensions (with protection for low-income pensioners).
•     Broaden the base for contribution collection.
Reduce administrative burden to employers and employees related to cumbersome reporting and preapproval requirements:
•     Remove existing requirements for submission of working schedules, notification and/or pre-approval by labour inspectorates of overtime work, compensatory work time arrangements, and rotational work.
•     Adopt a roadmap for the gradual increase of electronic record keeping and for reporting by employers to the Labour Inspectorate, with full digitization of relevant data on labour arrangements by end-2014.
•     Accept electronic signatures in electronic submissions to the Labour Inspectorate.
Review and reduce high entry and exit costs to bring them in line with the practice in other EU countries, taking into account the effects of recent labour market reforms.
Area: Flexibility of labour arrangements
Measure: Increase flexibility of work schedules:
•     Increase the number of maximum workdays to 6 days per week for all sectors.
•     Set the minimum daily rest to 11 hours.
•     Delink the working hours of employees from the opening hours of the establishment.

•     Eliminate restrictions on minimum/maximum time between morning and afternoon shifts.
•     Allow the consecutive two week leave to be taken anytime during the year in seasonal sectors.
Area: Effectiveness of Labour Inspectorate
Measure: Adopts roadmap and contracts an independent assessment of Labour Inspectorate covering:
•     Mandate, activities and structure.
•     Enforcement and penalty structure for infringements of labour arrangements (including undeclared work)




and.....




http://www.zerohedge.com/news/battle-begins

( Interestingly , this is occurring before the German Constitution Court decision on the ESM next Wednesday..... )


The Battle Begins

Tyler Durden's picture
Submitted by Tyler Durden on 09/04/2012 08:30 -0400



Submitted by Mark J. Grant, author of Out of the Box,
If the leaks from the European Parliament are to be believed then the lines are being drawn in the sand for quite a fight. The rumor is that Mr. Draghi is going to propose a plan to buy short sovereign debt (0-3 years) without limit if a nation fills out the requisite form and officially asks for aid with conditionality. The rumor further states that this short term-buying, which involves lending money directly to various governments and not just buying bonds in the secondary market, does not violate the mandate of the ECB which specifically forbids the ECB from doing exactly what he may be proposing. I find his argument spurious as defined by maturity and it will be quite interesting to see what reaction Germany and her allies may have to this scheme. The dog fight will begin later today as he releases his actual plan to the various central banks in Europe. The constant speculation will end and the reactions of the various governments will be front and center upon the world’s stage.

“He thinks it’s not a violation of the treaty and you can do it under the current legal framework,” said Gauzes, a French Christian Democrat. “He said for example three years is ok, 15 years no.”I find this once again proof that the rules and regulations in Europe, the very stipulations that we rely upon, can be changed, modified or distorted with the blink of an eye and the wave of a hand. It seems that nothing is set in concrete, nothing is firm and that everything is moveable upon a moment’s notice. I find Mr. Draghi’s argument ridiculous, if the report is to be believed, and one fraught with fiscal danger as it would probably mean that all new sovereign financing would be within the timeframe that he sets and so the amount of upfront debt, which would constantly have to be rolled, would present a series of dangers including the inability to finance it as it comes due along with a balance sheet at the ECB that could swell well past the $4 trillion mark where it is now or 45% larger than the current balance sheet at the Fed. The world does not receive funding from alien worlds and there are consequences that append from having a ledger that expands without boundaries and where the slightest imperfection pricks the balloon and the whole bloated piece of plastic twizzles off into the air with frightening results and a dreadful sound.

If this rumor is at all accurate and Mr. Draghi is going to redefine the European treaty under his own terms then we may expect quite a reaction from various countries including Germany, Austria, the Netherlands and Finland. One supposes that they think the ECB should follow the rules and not make them and the Parliaments of various countries may not be too happy with the ECB overruling their political decisions for the good of Greece, Spain, Italy, Portugal and whomever might show up next. Personally I think it is going to get quite tense, as in backs up, teeth bared and the possibility of someone or another refusing to fund if this is going to be the scheme. The flashpoint may also be conditionality as the EU may have to agree first and then refuse to agree when it comes down to it which would be the can kicking play if this particular case. It is both Greece and likely Spain that will demand money and more money and there is only so much capital available regardless of what is sometimes touted in the Press where it seems that cash flows in daily from the next solar system and that no one is accountable for it.When Mr. Draghi releases his grand plan to the other European central banks, likely after the close of the markets on the Continent today; the head banging will begin. I have called it the Battle of Frankfurt because it will be just that with the majority of nations, the countries that are troubled and need assistance, squared off with the minority of nations, those with the capital, in what I believe will be a demonstration of Mortal Combat. I think it will be that serious, that bone shattering and that the stakes are as high as they have even been in one of these contests because the divergence in needs and desires is strained to the limit. We could well see all kinds of erratic blows and then counter-blows and serious consequences as the positions harden and as the demands for capital increase.


 The fourth and last Armada left Spain in 1598 sailing to rendezvous with the French. Greece, Italy and Portugal have joined the fight. Light the beacons along the shore. The fleet is approaching.



and.....

http://www.zerohedge.com/news/nomura-spain-will-need-full-blown-bailout


Nomura: "Spain Will Need Full-Blown Bailout"

Tyler Durden's picture
Submitted by Tyler Durden on 09/04/2012 08:48 -0400



While hardly saying anything new, more and more pundits are waking up to the reality that faced with an environment of epic capital outflows predicated by a complete loss in the system (see Greece), Spain simply can not survive. We wrote about the record outflow in Spanish deposits last week (here and here) and the fact that with banks urgently seeking to plug liquidity holes, coupled with soaring NPL levels, in the absence of actual profits they areforced to sell all those SPG bonds they had been purchasing during the open ponzi phase, where ECB funding would be recycled by local banks to meet primary market demand. Overnight even the New York Times has finally understood this simple identity: record outflows = the end. And now, the banks begin to chime in, pointing out what is patently obvious: from Nomura - "Spain will need full-blown bailout which will include more active role of ECB in Spanish bond markets."
More from Bloomberg:
  • Capital flight from Spain is in a "category of its own," with extreme, broad-based outflows raising “serious concerns about the implications for banking sector stability and economic growth,” Nomura strategists Jens Nordvig and Charles St.-Arnaud write in client note.
    • Capital outflows on 3-month rolling basis at 50% of GDP vs Italy 15%; for comparison, Indonesia outflow during Asian crisis peaked at 23%
    • Foreign selling of Spanish securities in 2Q equal to 19.4% of GDP; also liquidate Spanish bank claims at 15.3% of GDP in 2Q
    • Spanish residents shift funds to foreign banks at rate of 16.7% of GDP in 2Q
    • Spain fills capital gap through Target 2 borrowing, currently at €408 bln or 39% of GDP;
    • Overall capital flight from euro zone vs rest of world "normalized to some degree" after earlier outflows: SNB intervention in July at €35 bln, about half of May and June; TIC data for June show US investors net buyers of euro zone bonds, euro zone residents modest sellers of US Treasuries
    And picking up on what we wrote last night, namely that Spain is running out cash, here comes Daiwa doubling down on Nomura's conclusion:
    • Spain using treasury debt to recapitalize Bankia pushes Spain toward requesting full sovereign bailout, Daiwa Capital Markets credit analyst Michael Symonds says in an interview.
    • The use of treasury debt is “designed with Spain’s tight liquidity position in mind,” allowing Spain to avoid drawing on its “dwindling” cash reserves
    • Govt needs cash to maintain deficit spending and to pay out ~€20b bond redemption in October
    In other words, just what you read here first last night.
    Finally, this is how the Spanish endgame looks visually.


and....




http://www.telegraph.co.uk/finance/debt-crisis-live/9518460/Debt-crisis-live.html


12.39 Greek finance minister, Yannis Stournaras, and his German counterpart have met today. Wolfgang Schaeuble told Mr Stournaras that Greece must fully implement promised reforms in order to receive further aid from its international lenders.
The German finance ministry said in a statement after the two met in Berlin:
QuoteMost important is that Greece fully implement its obligations. Finance minister Schaeuble pointed this out to his colleague once again.



11.31 There are meetings aplenty today, including one between Mario Monti and Francois Hollande at lunchtime. French government sources have told AFP that the pair will "restate their will to be actively involved in the implementation of the measures adopted" at the European summit in June to preserve "the integrity of the eurozone".
Their talks are likely to focus on how to handle the latest developments in the crisis, but it is not thought that they will make any comments on ECB intervention when they give a press conference at 1.30pm.
Meanwhile, Angela Merkel is set to meet European Council president, Herman Van Rompuy, in Berlin and Greek finance minister Yannis Stournaras was expected to present Greece's budget cuts plans to German counterpart Wolfgang Schaeuble.
11.19 Pensioners in Greece are making their voices heard over healthcare cuts. Protesting pensioners pushed their way into the country's health ministry today during a rally against cutbacks. About 200 pensioners reportedly took part in the rally, and pushed past police lines to enter the building and occupy the lobby for about 20 minutes.
AP reports that private doctors and pharmacists this week refused to accept credit from Greece's largest state-run healthcare provider, EOPYY, arguing that the government has allowed debts to accumulate, leaving them unpaid for months.
10.27 And a not-so-fun fact. Britain's construction sector has recorded its fastest drop in new orders since April 2009. The Markit/CIPS construction PMI fell to 49 in August from 50.9 in July, with a number below 50 signifying a contraction. It was the second-lowest reading since February 2010.
10.00 Industrial unrest is hitting Germany too, with cabin crew at the country's largest airline striking in a row over pay and conditions.Lufthansa said that it was cancelling 190 flights at its main Frankfurt airport today due to the strikes.
09.46 Job cuts are on the way in Germany, where pharmaceutical giant,Merck, has announced it will axe 1,100 jobs from a total domestic workforce of 10,900 by the end of 2015.
"The positions will be reduced in a socially acceptable manner, mainly through voluntary resignation and early retirement programmes across all divisions and functions," the company said.
09.38 There are reports this morning that Spain's Banco Popular Espanol is studying the potential takeover of smaller peer Banco Mare Nostrum, but the pair are yet to reach an agreement on a merger.
In other Spanish banking news, the country's rescue fund last night rubber-stamped a €4.5bn capital injection into Bankia. The move was first announced on Friday after the lender posted a €4.45bn first-half loss.
09.09 Yet more grim news from Spain, where the number of people registering for jobless benefits rose 38,179 from July to 4.63m in August. It marks the first rise in five months, amid a worsening recession.
08.55 Members of the EU assembly have been chastised for revealing details of a confidential briefing with ECB president, Mario Draghi. Mr Draghi was taking part in a hearing organised by the EU assembly's economic and monetary affairs committee on the future of the euro and plans to build a so-called banking union.
Jean-Paul Gauzes, a French member of the panel, commented that Mr Draghi had told the commitee that he was comfortable with the central bank buying bonds with maturities up to about three years.
Members had their knuckles rapped over leaking their briefing, with the committee chairman Sharon Bowles saying the leaks were “a complete breach of confidence". "I think it has brought this house into disrepute,” she added.
Bloomberg reported:
QuoteWhile it had originally been intended that Draghi’s hearing with lawmakers would be public, that plan was changed because of the convention that senior ECB officials don’t comment publicly on policy in the week before an ECB Governing Council meeting, according to a parliament spokesman.
08.33 Turkey has found one way of making up for a slide in exports to Europe - by clocking up record gold sales to Iran.
Bloomberg reports that sales of precious metals to Iran jumped to $6.2bn this year through July from $21.9m in the same period last year, accounting for 70pc of Turkey’s increase in exports this year.
The transactions helped narrow the current-account gap to 8.3pc of gross domestic product from 10pc in 2011, even as sales to the European Union dropped by $3.4bn.
08.26 Another slice of not particularly positive news for eurozone leaders to ponder as they meet today. The Swiss economy unexpectedly contracted in the second quarter for the first time in almost as a year, as exports declined and companies cut spending.
Swiss output fell 0.1pc in the second quarter compared to the previous three months. The strong Swiss franc was partly to blame, as it hurt exports. Chemical, machinery, equipment and electronic exports were all down; only watch, precision instrument and vehicle exports held up.
08.10 Not a particularly positive start to the day. Moody's has cut its outlook on the triple-A rating of the European Union to negative, saying the move reflected credit risks of the bloc's key budget contributors.
Moody's said:
QuoteThe outlook change to negative reflects the negative outlooks now assigned to the Aaa sovereign ratings of key contributors to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45pc of the EU's budget revenue. Moody's believes that it is reasonable to assume that the EU's creditworthiness should move in line with the creditworthiness of its strongest key member states.
However, Moody's did maintain the EU's triple-A rating for now, saying its "two key rationales" for assigning the bloc its highest rating remained unchanged: its "conservative budget management" and "the creditworthiness and support provided by its 27 member states".


and.......

http://www.zerohedge.com/news/overnight-sentiment-hoping-there-hope


Overnight Sentiment: Hoping There Is Hope



Tyler Durden's picture
Submitted by Tyler Durden on 09/04/2012 06:48 -0400


Yesterday we dedicated significant space to the most recent piece of perfectly ludicrous propaganda out of the ECB, namely thatmonetizing debt with a maturity up to three years is not really monetization but is instead within the arena of "money market management" (images of Todd Akin defining when something is 'legitimate' and when it isn't swimming our heads). The implication of course is that debt under 3 years is not really debt, but some mystical piece of paper that nobody should be held accountable for. Hopefully all those consumers who have short-maturity credit card debt which nonetheless yields 29.95% APR are made aware of this distinction and decide to follow through with Mario Draghi's logic, which is about to take the war of words between Germany and the ECB to the next level. Sure enough, this is precisely the news item that is dominating bond risk markets this morning, if not so much futures, and sending Spanish and Italian 2s10s spreads to record wides on hopes Draghi will definitely announce some sub 3 year monetization program for the PIIGS. Bloomberg summarized this best last night when it commented on the move in the EURUSD, since retraced, that we now have speculation Draghi's move will bolster confidence.  In other words: the market is now hoping there is hope. Sure enough, even if Draghi follows through, for the ECB to monetize Spanish bonds, Spain still has to demand a bailout, which however is now absolutely out of the question as mere jawboning has moved the entire highly illiquid curve so steep Rajoy (and Monti) have absolutely no reason to hand over their resignations (i.e., request a bailout). And so we go back to square one. But logic no longer matters in these markets.
***

and from Greece.....


Gov’t eyes bank recap by October

 Law to be passed this month while the sector will get another extension to publish its H1 results

By Yiannis Papadoyiannis
Banks will get an extension until the end of October for the publication of their first-half financial reports so that the second installment of 25 billion euros for the recapitalization of banks will have been disbursed by then to the Hellenic Financial Stability Fund (HFSF) and legislation on the recapitalization of the banking system will have been passed.
Normally banks should have published their results for the first half by the end of August, but this year, they had until late September due to a previous extension. In the coming weeks the government will proceed to a new regulation extending the deadline to end-October.
By that time the government is hoping to have dealt with the major issue of banks or have completed the necessary process for the distribution of the recapitalization. It aims to pass the relevant legislation within the month.
Sources suggest that neither the government nor the representatives of Greece’s creditors (known as the troika) want a solution that would lead to the full nationalization of banks. Instead, they are seeking incentives that would safeguard the private character of the credit system while also examining the use of European mechanisms to access funding.
The greater the participation of the private sector in the process, or the more the European Financial Stability Facility (EFSF) participates, the less money the government will need to contribute.
On Monday Yiannis Papadakis, the deputy governor of the Bank of Greece, told Parliament’s financial committee that apart from the four major banks -- National, Piraeus, Alpha and Eurobank -- no other Greek lenders are believed to be capable of surviving following their recapitalization. He underscored that Hellenic Postbank was not deemed sustainable as checks showed it to be trailing its competitors considerably. The “weak” banks must find a “way of cooperation,” he added.

and.....


German plan for Swiss accounts


Athens will follow the German plan for taxing bank deposits in Switzerland, according to meetings that Deputy Finance Minister Giorgos Mavraganis had with Swiss government and credit sector officials on Sunday and Monday.
A top ministry official told Kathimerini that the meetings were conducted in a positive atmosphere. A Swiss government official in Bern confirmed Mavraganis’s meeting with Switzerland’s state secretary for international financial and tax matters, Michael Ambuehl, but refused to provide any details on the negotiations.
According to the German plan, also followed by Austria and the United Kingdom, Greek clients will be able to maintain their anonymity and pay a large amount of tax or to present data to the Greek tax authorities explaining how they have obtained their wealth and agree to an audit.
The Swiss-German deal provides for tax rates ranging from 21 to 41 percent. Although the amount of Greek deposits in Swiss banks is not known, estimates put it below 20 billion euros.

ekathimerini.com , Monday September 3, 2012 (22:48)

and....


PASOK holds gala as SYRIZA fires barbs


 Evangelos Venizelos speaking at the PASOK function on Monday.
PASOK leader Evangelos Venizelos on Monday insisted that a new austerity package now being drafted would be the last imposed on Greeks during a speech marking the 38th anniversary of the foundation of socialist PASOK.
Meanwhile at a separate event, apparently timed to coincide with the Socialists’ gala, the leader of main leftist opposition SYRIZA, Alexis Tsipras, accused PASOK’s leadership of surrendering the party’s founding ideals to Greece’s so-called troika of foreign lenders.
“This will definitely be the last tough and painful package of measures,” Venizelos said in a speech to party cadres that was broadcast live on television. He said that every effort would be made to make the package as fair as possible and insisted that Greece could hold onto its national sovereignty. The Socialist chief also called for an “open dialogue” with Democratic Left, the third party in the government coalition, in an apparent bid to boost PASOK’s flagging fortune.
The PASOK function had been intended to rally cadres of the once-mighty party but was lackluster, not least due to the absence of several party heavyweights. Among those who snubbed the event at the capital’s Benaki Museum were several former ministers including Michalis Chrysochoidis, Andreas Loverdos and Anna Diamantopoulou. Among the big names in attendance were former prime ministers Costas Simitis and George Papandreou and veteran socialist Costas Laliotis.
Addressing his audience, Tsipras declared that “today’s PASOK” was not inspired by the party’s founding ideals but by the policies that have been put in place since Greece sought its first bailout in April 2010. The leftist leader accused the party of “demolishing, one by one, the social conquests made by the Greek people in the 1980s.”

ekathimerini.com , Monday September 3, 2012 (22:43)  

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