http://www.zerohedge.com/news/2012-09-25/spanish-protest-turns-violent
Submitted by Tyler Durden on 09/25/2012 15:07 -0400
and......
http://www.zerohedge.com/news/2012-09-25/imf-invokes-grexits-ghost
Submitted by Tyler Durden on 09/25/2012 11:31 -0400
and.....
Two weeks ago we showed the human aspect of the absolute economic collapse in Greece (because depression is too light a word to describe what is happening in this globalist vassal collony) when charting Greek unemployment surging by 1% in one month to 24.4%, and which as of September is likely nearly 30%. What this means in practical tax revenue terms (if the tax collectors were actually doing their job collecting taxes, instead of striking) is that there is nobody generating any economic products and services, and thus no state revenues. Today, Kathimerini confirms this, in a report that almost a third of all business in Athens have now shuttered: "The number of shuttered shops on the capital's busiest commercial streets, Panepistimiou and Stadiou, also hit a record high in August, reaching 34.7 percent on Panepistimiou and 42 percent on Akadimias, up 14 percent in the last six months." And so the close loop continues as fewer businesses are around to hire less people, generating less state revenue, encouraging less businesses to open and so on, until the entire country collapses in a heap of worthless debt.
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100020306/patience-snaps-in-portugal/
http://www.zerohedge.com/news/2012-09-24/draghis-bond-buying-dream-circling-drain-bundesbank-lawyers
Submitted by Tyler Durden on 09/24/2012 20:30 -0400
and....
http://beforeitsnews.com/eu/2012/09/spain-is-on-the-verge-of-a-massive-implosion-the-global-financial-system-is-about-to-crumble-2451754.html
What happens when debt-fueled false prosperity disappears? Just look at Spain. The 4th largest economy in Europe was riding high during the boom years, but now the Spanish economy is collapsing with no end in sight. When a debt bubble gets interrupted, the consequences can be rather chaotic. Just like we saw in Greece, austerity is causing the economy to slow down in Spain. But when the economy slows down, tax revenues fall and that makes it even more difficult to meet budget targets. So even more austerity measures are needed to keep debt under control and the cycle just keeps going. Unfortunately, even with all of the recently implemented austerity measures the Spanish government is still not even close to a balanced budget. Meanwhile, the housing market in Spain is crashing and unemployment is already above 24 percent. The Spanish banking system is a giant, unregulated mess that is on the verge of a massive implosion, and the Spanish stock market has been declining rapidly. The Spanish government is going to need a massive bailout and so will the entire Spanish banking system. But that is going to be a huge problem, because the Spanish economy is almost 5 times as large as the Greek economy. When the Spanish financial system collapses, the entire globe is going to feel the pain and there will be no easy solution.
So just how bad are things in Spain at this point?
The following are 22 signs that the collapsing Spanish economy is heading into a great depression….
#1 The unemployment rate in Spain has reached 24.4 percent - a new all-time record high. Back in April 2007, the unemployment rate in Spain was only 7.9 percent.
#2 The unemployment rate in Spain is now higher than the U.S. unemployment rate was during any point during the Great Depression of the 1930s.
#3 According to CNBC, some analysts are projecting that the unemployment rate in Spain is going to go above 30 percent.
#4 The unemployment rate for those under the age of 25 in Spain is now a whopping 52 percent.
#5 There are more than 47 million people living in Spain today. Only about 17 million of them have jobs.
and.....
http://www.zerohedge.com/news/2012-09-24/spanish-miltary-threatens-treason-catalonia-seeks-secession-referendum
Submitted by Tyler Durden on 09/24/2012 13:51 -0400
and.....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_4239_24/09/2012_462725
Battered economy to suffer more as a result of a likely delay in the disbursement of next installment
By Dimitris Kontogiannis
The private sector will once again pay the biggest price for the likely delay in the disbursement of the next loan tranche to Greece as negotiations between the government and the troika on the new austerity package drag on, global considerations, such as the elections in the United States, seem to have come into play and failure to implement various reforms weigh in.
Despite reported “good progress” in discussions between the troika and the Greek side on the new austerity package worth some 13.5 billion euros -- split approximately between 11.5 billion in spending cuts and 2 billion in tax revenues -- and the clear intention of Finance Minister Yannis Stournaras to conclude the negotiations by last night, there was no happy ending.
The delay has upset the sketchy timetable some local politicians and government officials had in mind. The latter hoped to have the measures passed through Parliament in the last week of September at the latest, giving the troika time to present its report to the Eurogroup meeting on October 8.
The Greek side obviously counted on an overall positive troika review of the economic program, following the adoption of the austerity measures, so it could convince EU finance ministers to give the green light for the disbursement of the 31.5-billion-euro tranche to the cash-strapped country. Moreover, it could also have presented its case for a two-year fiscal extension to the EU Summit in mid-October.
Whether the delay fits presumed EU plans to give the coalition government more time to implement reforms so that the governments of northern countries -- especially Germany -- can justify the extension of the Greek fiscal adjustment to their constituencies, or/and is mainly due to a desire by the US side for no unpleasant surprises prior to the November 6 elections remains to be seen.
http://www.zerohedge.com/news/2012-09-24/spains-latest-bailout-plan-lottery-bonds
( Bailout bingo coming next one could presume...)
Submitted by Tyler Durden on 09/24/2012 07:47 -0400
and.....
http://www.telegraph.co.uk/finance/debt-crisis-live/9561764/Debt-crisis-EC-President-warns-more-must-be-done-live.html
As long as Portugal maintains its level of fulfilment, we know that we will have the support of our external partners. If we do not, we put at risk our fulfilment, and these guarantee mechanisms will cease to exist.
He must spell out what the situation is. Rajoy evidently has a communications problem. If he needs help he must say so. Conditionality will and must apply. The German parliament would not accept anything less. If conditionality doesn’t apply it would be only a short step for Ireland to ask for renegotiated terms and Italy might request partial help under those conditional terms.
No to the temptation to go back and dismantle the reforms that have been accomplished! This is not just about the future of Italy but also the future of the European construction.
The companies surveyed are again less satisfied with their current business situation. They also expressed greater pessimism about the future. The headwinds on the German economy continue to prevail.
Spanish Protest Turns Violent
Sadly the social unrest that we had predicted, when over 50% of the youth are unemployed and the politicians are navel-watching, has erupted, as angry protesters charge the local police, who in turn are arresting rioters and using volleys of rubbers bullets to keep the crowd at bay.
and......
http://www.zerohedge.com/news/2012-09-25/imf-invokes-grexits-ghost
IMF Invokes Grexit's Ghost
Perhaps the IMF forgot, but nobody in Europe is allowed to rock the boat until the Obama reelection. Either way, this just hit:
- International Monetary Fund won’t agree to further aid payment to Greece before decisions taken on new debt restructuring, Athens-based Skai.gr reports on website, without citing anyone.
- IMF insists debt ratio come down to 120% of GDP in 2020
- IMF may stop funding Greece under bailout agreement
Since the credibility of those "without citing anyone" reports is more or less negative, expect an official IMF response in minutes. On the other hand, if there is no IMF response, look for the #Grexit hashtags to promptly reappear.
and.....
Spain In A Nutshell
Submitted by Tyler Durden on 09/25/2012 - 10:47Budget Deficit Greece Gross Domestic Product Tax Revenue
Confused why contrary to all public lies otherwise, Spain is Greece? Here's why
- TAX RECEIPTS THROUGH AUGUST FELL 4.6% ON YR, SPAIN DATA SHOW: perhaps their tax collectors were also on strike?
- SPAIN GOVT SPENDING THROUGH AUGUST ROSE 8.9%, BUDGET DATA SHOWS: missed the austerity by just thiiiiiiis much
- SPAIN JAN-AUG CENTRAL BUDGET DEFICIT 4.77% GDP VS 3.81% YR AGO
Luckily, there is always hope that the magic money tree will bloom eventually
- SPAIN EXPECTS HIGHER TAX REVENUE IN COMING MONTHS
So, to summarize: revenues down, spending up, budget deficit naturally higher than last year. Oh, stop calculating... and just buy their bonds. The Central Planners will make sure the math is irrelevant always and forever.
and.....
One Third Of Athens Businesses Shuttered
Submitted by Tyler Durden on 09/25/2012 - 08:09France Greece Recession Reuters Tax Revenue Unemployment
Two weeks ago we showed the human aspect of the absolute economic collapse in Greece (because depression is too light a word to describe what is happening in this globalist vassal collony) when charting Greek unemployment surging by 1% in one month to 24.4%, and which as of September is likely nearly 30%. What this means in practical tax revenue terms (if the tax collectors were actually doing their job collecting taxes, instead of striking) is that there is nobody generating any economic products and services, and thus no state revenues. Today, Kathimerini confirms this, in a report that almost a third of all business in Athens have now shuttered: "The number of shuttered shops on the capital's busiest commercial streets, Panepistimiou and Stadiou, also hit a record high in August, reaching 34.7 percent on Panepistimiou and 42 percent on Akadimias, up 14 percent in the last six months." And so the close loop continues as fewer businesses are around to hire less people, generating less state revenue, encouraging less businesses to open and so on, until the entire country collapses in a heap of worthless debt.http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100020306/patience-snaps-in-portugal/
Patience snaps in Portugal
http://www.zerohedge.com/news/2012-09-24/draghis-bond-buying-dream-circling-drain-bundesbank-lawyers
Is Draghi's Bond-Buying Dream Circling The Drain As Bundesbank Lawyers Up?
Following closely on the heels of our recent (now must read) discussion of the potential illegality of Draghi's OMT, Reuters is reporting the somewhat stunning news that the ECB and Bundesbank are getting lawyers to check the legality of the new bond-buying program. Germany's Bild newspaper - via the now ubiquitous unnamed sources - said in-house lawyers were checking both what proportions the program would have to take on and how long it would have to last for it to breach EU treaties (that specifically ban direct financing of state deficits).
While Draghi - full of bravado - likely said whatever he felt was necessary at the time to stop the inversion in the Spanish yield curve,it is becoming clearer that, as usual, the premature euphoria (in the complacent belief that central banks can solve every problem with a wave of the magic CTRL-C wand) was misplaced.
Bild goes on to note that this matter could be referred to the European Court of Justice - and the ECB/Buba were preparing for such an event. Of course, since every other rumor in recent months, most of which have originated in credible media, has proven to be a lie, it is likely this is also merely leaked disinformation to push the German case, i.e. anti-Europe.
Via Reuters:
BERLIN, Sept 25 (Reuters) - The European Central Bank and Germany's Bundesbank central bank are getting lawyers to check the legality of the ECB's new bond-buying programme, a German newspaper said on Tuesday.German tabloid Bild, which did not name its sources, said ECB and Bundesbank in-house lawyers were checking both what proportions the programme would have to take on and how long it would have to last for it to breach EU treaties.The newspaper said this meant there was a possibility that the issue could soon be referred to the European Court of Justice and added that the ECB and Bundesbank wanted to legally "arm" themselves for this scenario.Bild said the background to this was controversy over the issue of whether the ECB bond-buying programme violates the ban in EU treaties of direct financing of state deficits. The ECB and the Bundesbank were not immediately available for comment.
ECB President Mario Draghi announced earlier this month that the central bank stood ready to buy unlimited amounts of bonds issued by euro zone member states, provided they put in a formal request for aid and fulfilled strict domestic policy conditions.Jens Weidmann, head of the Bundesbank, was the sole dissenting voice in the ECB's decision.The plan is designed to lower the borrowing costs of euro zone states such as Spain and Italy by buying their bonds, but it has stirred anxiety in Germany where some people fear the ECB is venturing beyond its mandate and potentially exposing taxpayers to billions of euros in risky debt. Draghi has said the plan is strictly within the ECB's mandate.
and....
http://beforeitsnews.com/eu/2012/09/spain-is-on-the-verge-of-a-massive-implosion-the-global-financial-system-is-about-to-crumble-2451754.html
What happens when debt-fueled false prosperity disappears? Just look at Spain. The 4th largest economy in Europe was riding high during the boom years, but now the Spanish economy is collapsing with no end in sight. When a debt bubble gets interrupted, the consequences can be rather chaotic. Just like we saw in Greece, austerity is causing the economy to slow down in Spain. But when the economy slows down, tax revenues fall and that makes it even more difficult to meet budget targets. So even more austerity measures are needed to keep debt under control and the cycle just keeps going. Unfortunately, even with all of the recently implemented austerity measures the Spanish government is still not even close to a balanced budget. Meanwhile, the housing market in Spain is crashing and unemployment is already above 24 percent. The Spanish banking system is a giant, unregulated mess that is on the verge of a massive implosion, and the Spanish stock market has been declining rapidly. The Spanish government is going to need a massive bailout and so will the entire Spanish banking system. But that is going to be a huge problem, because the Spanish economy is almost 5 times as large as the Greek economy. When the Spanish financial system collapses, the entire globe is going to feel the pain and there will be no easy solution.
So just how bad are things in Spain at this point?
The following are 22 signs that the collapsing Spanish economy is heading into a great depression….
#1 The unemployment rate in Spain has reached 24.4 percent - a new all-time record high. Back in April 2007, the unemployment rate in Spain was only 7.9 percent.
#2 The unemployment rate in Spain is now higher than the U.S. unemployment rate was during any point during the Great Depression of the 1930s.
#3 According to CNBC, some analysts are projecting that the unemployment rate in Spain is going to go above 30 percent.
#4 The unemployment rate for those under the age of 25 in Spain is now a whopping 52 percent.
#5 There are more than 47 million people living in Spain today. Only about 17 million of them have jobs.
#6 Retail sales in Spain have declined for 21 months in a row.
#7 The Bank of Spain has officially confirmed that Spain has already entered another recession.
#8 Last week, Standard & Poor’s Ratings Services slashed Spain’s credit ratingfrom A to BBB+.
#9 The yield on 10-year Spanish bonds is up around 6 percent again. That is considered to be very dangerous territory.
#10 Two of Spain’s biggest banks have announced that they are going to stop increasing their holdings of Spanish government debt.
#11 Of all the loans held by Spanish banks, 8.15 percent are considered to be “bad loans”.
#12 The total value of all bad loans in Spain is equivalent to approximately 13 percent of Spanish GDP.
#13 Of all real estate assets held by Spanish banks, more than 50 percent of them are considered to be “troubled” by the Spanish government.
#14 That total amount of money loaned out by Spanish banks is equivalent toapproximately 170 percent of Spanish GDP.
#15 Home prices in Spain fell by 11.2 percent last year, and the number of property repossessions in Spain rose by a staggering 32 percent during 2011.
#16 Spanish housing prices are now down 25 percent from the peak of the housing market and Citibank’s Willem Buiter expects the eventual decline to be somewhere around 60 percent.
#17 It is being projected the the economy of Spain will shrink by 1.7 percentthis year, although there are some analysts that feel that projection is way too optimistic.
#18 The Spanish government has announced a ban on all cash transactionslarger than 2,500 euros.
#19 One key Spanish stock index has already fallen by more than 19 percentso far this year.
#20 The Spanish government recently admitted that its 2011 budget deficit wasmuch larger than originally projected and that it probably will not meet its budget targets for 2012 either.
#21 Spain’s debt to GDP ratio is projected to rise by more than 11 percentduring 2012.
#7 The Bank of Spain has officially confirmed that Spain has already entered another recession.
#8 Last week, Standard & Poor’s Ratings Services slashed Spain’s credit ratingfrom A to BBB+.
#9 The yield on 10-year Spanish bonds is up around 6 percent again. That is considered to be very dangerous territory.
#10 Two of Spain’s biggest banks have announced that they are going to stop increasing their holdings of Spanish government debt.
#11 Of all the loans held by Spanish banks, 8.15 percent are considered to be “bad loans”.
#12 The total value of all bad loans in Spain is equivalent to approximately 13 percent of Spanish GDP.
#13 Of all real estate assets held by Spanish banks, more than 50 percent of them are considered to be “troubled” by the Spanish government.
#14 That total amount of money loaned out by Spanish banks is equivalent toapproximately 170 percent of Spanish GDP.
#15 Home prices in Spain fell by 11.2 percent last year, and the number of property repossessions in Spain rose by a staggering 32 percent during 2011.
#16 Spanish housing prices are now down 25 percent from the peak of the housing market and Citibank’s Willem Buiter expects the eventual decline to be somewhere around 60 percent.
#17 It is being projected the the economy of Spain will shrink by 1.7 percentthis year, although there are some analysts that feel that projection is way too optimistic.
#18 The Spanish government has announced a ban on all cash transactionslarger than 2,500 euros.
#19 One key Spanish stock index has already fallen by more than 19 percentso far this year.
#20 The Spanish government recently admitted that its 2011 budget deficit wasmuch larger than originally projected and that it probably will not meet its budget targets for 2012 either.
#21 Spain’s debt to GDP ratio is projected to rise by more than 11 percentduring 2012.
#22 Worldwide exposure to Spanish debt is estimated to be well over a trillion euros.
Spain is going down the exact same road that Greece went down.
Greece is already suffering through a great depression and now Spain is joining them. The following is from a recent BBC article….
The nightmares that we are seeing unfold in Spain and Greece right now are just a preview of what is coming to most of the rest of the world.
Spain is going down the exact same road that Greece went down.
Greece is already suffering through a great depression and now Spain is joining them. The following is from a recent BBC article….
“In Spain today, a cycle similar to Greece is starting to develop,” said HSBC chief economist Stephen King.In Spain right now there is a lot of fear and panic about the economy. In many areas, it seems like absolutely nobody is hiring right now. The following is from a recent USA Today article….
“The recession is so deep that when you take one step forward on austerity, it takes you two steps back.”
“The situation is very bad. There’s no work,” said Enrique Sebastian, a 48-year-old unemployed surgery room assistant as he left one of Madrid’s unemployment offices. “The only future I see is one with wages of €400 ($530) a month for eight-hour days. And that’s if you can find it.”But Spain is just at the beginning of a downward spiral. Just wait until they have been through a few years of economic depression. Once that happens, millions of people begin to lose all hope. A recent Reuters article discussed the epidemic of suicides that is happening in Greece right now….
On Monday, a 38-year-old geology lecturer hanged himself from a lamp post in Athens and on the same day a 35-year-old priest jumped to his death off his balcony in northern Greece. On Wednesday, a 23-year-old student shot himself in the head.And you know what?
In a country that has had one of the lowest suicide rates in the world, a surge in the number of suicides in the wake of an economic crisis has shocked and gripped the Mediterranean nation – and its media – before a May 6 election.
The nightmares that we are seeing unfold in Spain and Greece right now are just a preview of what is coming to most of the rest of the world.
The next wave of the economic crisis will soon envelop the United States, Japan and the rest of Europe.
When it strikes, the pain will be immense.
But it won’t be the end – it will only be just the beginning.
The global financial system is starting to crumble.
You better get ready.
When it strikes, the pain will be immense.
But it won’t be the end – it will only be just the beginning.
The global financial system is starting to crumble.
You better get ready.
and.....
http://www.zerohedge.com/news/2012-09-24/spanish-miltary-threatens-treason-catalonia-seeks-secession-referendum
Spanish Military Threatens Treason As Catalonia Seeks Secession Referendum
"Do not play with the feelings of the Catalans" is the totally unveiled threat after Catalonia's beggars-can-be-choosers demand for an unconditional bailout fell on deaf ears. The traditionally separatist-minded province has decided, according to ANSAmed, has decided to pull a Greece - and escalate with a move to secession. A resolution, on the right of the Catalan people to cut off ties with the Spanish state, will be voted on Thursday by the regional parliament.
This statement of "the will of Catalan people to vote on the bond with the State of Spain" opens the way for forthcoming elections on November 25 to become a referendum on the sovereignty of Catalonia.
The Spanish military are not taking this lying down with the counter-threat that these 'separatists' and their 'inappropriate and unacceptable' threat to break-up Spain shall be, according to El Economista, charged with high treason. We are sure Draghi has a 'grand plan' for this.
Via ANSAmed: Spain: Catalan Parliament will vote on right of independence
(ANSAmed) - Madrid, September 24 - The parties which played a central role in the National Day of Catalonia on September 11, 2012 are now working on a statement on the right of the Catalan people to cut off the tie with the Spanish state.The resolution will be voted on Thursday by the regional parliament, at the end of the general debate due to start tomorrow. To the writing of the resolution on sovereignty, which is not binding, are participating the following parties: Convergencia i Union (CiU), the ruling party in the Generalitat, with 62 deputies; Iniciativa (ICV-Euia), with 10 deputies; Esquerra Republicana (ERC), 10 deputies, the independents of Solidaritat, 3 deputies, and Joan Laporta.
The Popular Party (PP) (18 deputies) and Ciutadans (3) are against the initiative, while the Socialist Party (PSC, 28) proposes to move towards the construction of a federal state.
According to Spanish media, the statement won't be only a proposition, as others rated in the past by the Catalan room, but goes further, and expresses "the will of Catalan people to vote on the bond with the State of Spain".In addition to this, it opens the way for forthcoming elections which may already take place on November 25, and a referendum on the sovereignity of Catalonia, claimed by parties supporting a national indipendence. A decision which, as indicated by the Catalan President Artur Mas, must be taken by the majority of the Parliament.After the refusal of the government of Mariano Rajoy of a fiscal pact with Catalonia - a privileged system of financing, such as those in the Basque Country and in Navarre - Mas said that it was time to take a step forward, even with the a referendum for indipendence.For his part, the Secretary General of Convergence (CDC), Oriol Pujol, declared to be "skeptical about a dialogue" suggested on Saturday by Prime Minister Rajoy, to check the possibility of an agreement on the financing of Catalonia. He also urged the Prime Minister to take initiative and "Do not play with the feelings of the Catalans".
According to La Vanguardia, the model for the new Catalonia would be Scotland. (ANSAmed).
Via El Economista: (Google Translate'd) But military warn of the consequences of promoting "fracture of Spain"Spanish Military Association (SMA) has warned Monday that those who cooperate or allow "fracture" of Spain should "respond with all the utmost rigor" in the courts in the field of military courts by the "serious charge high treason. "In a statement, the association warns that "the highest office" and "governments" should take "appropriate action immediately to remove any hint of secessionwithout armed forces look serious and unpardonable in tessitura to comply scrupulously strictly with the mission and that the Constitution gives them to ensure the sovereignty, independence and territorial integrity of our country. ""If it had unfortunately-warn-act, there must be no doubt that those who have allowed, participated or assisted in reaching this last time but repeated threat of fracture of Spain, by commission, omission or out of your constitutional positions shall be accountable to the fullest extent of all so serious charge of treason before the courts in the field of military jurisdiction. "
For this association, the attitude of the president of the Generalitat of Catalonia, Artur Mas, and members "separatists" of Parliament is "inappropriate and unacceptable" and "not consistent with any of the ways with the duty and responsibility as representatives of the state, are required to observe and exercise ".According to AME, current events in Catalonia are the result of "a frightening economic crisis and other manifestly disastrous political management by the formations that incur a high treason to voluntarily maintain a system of electoral representation that encourages the emergence and establishment of separatist nationalism to give in to his blackmail votes to stay in power. "This association, which is not registered in the Register of Professional Associations of members of the Armed Forces, created in light of the Bill of Rights and Duties of the military-is chaired by retired Colonel Leopoldo Munoz and is mainly composed of former members of hosts and Navy.
and.....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_4239_24/09/2012_462725
Greece insists 13.5 bln will close budget gap, as IMF hardens stance
 |
Greece rebuffed a report in Der Spiegel magazine on Sunday that claimed the country’s budget shortfall is about 20 billion euros, rather than the 13.5 billion euros Athens is discussing with the troika.
The Finance Ministry said that the budget shortfall as it stands will be covered by the 11.5 billion euros in cuts and 2 billion euros in new tax measures that it is negotiating with the troika.
Meanwhile, Kathimerini understands that a hardening in the stance of the International Monetary Fund and its representative in the troika, Poul Thomsen, was behind the Greek government’s inability to reach an agreement last week with its lenders over the 13.5-billion-euro austerity package.
The troika, which includes the European Central Bank and the European Commission, ended talks with the coalition on Friday and its representatives are due back in Athens by next Tuesday at the latest.
Following negotiations with Finance Minister Yannis Stournaras on Friday, about a third of the 13.5 billion euros in measures remained to be agreed between the two sides.
Government sources said that Thomsen had raised objections to the coalition’s proposals throughout the week and had persisted with the need for further cuts to wages and pensions in order to complete the package.
Amid tense exchanges between Stournaras and Thomsen, the IMF official is said to have been unmoved by the finance minister’s concerns about the survival of the three-party government should the cuts be deeper than expected.
Sources said the government believes that by either endangering a deal or by getting Greece to agree to measures it will not be able to implement, the IMF hopes that it will be able to highlight in the troika report on the Greek adjustment program the need for a second debt restructuring.
| The government still hopes that it will be able to seal the package of measures in time for them to be voted through Parliament before the Eurogroup meeting on October 8 and in time for Prime Minister Antonis Samaras to be in a stronger position ahead of negotiations at the European Union leaders’ summit on October 18. By the time the troika returns to Athens, Greece must be in a position to quell the inspectors’ doubts about 2 billion euros worth of savings that are due to be produced through public administration reforms. The lenders are also expecting more detailed plans about the tax measures that will raise 2 billion euros over the next two years. The two sides will also have to agree on how the cuts will be spread over the next two years. The troika is demanding that 10 billion euros be saved next year and 1.5 billion in 2014. This would put into doubt Greece’s call for an extra two years to apply the measures.
and.....
|
Tranche delay hurts private sector
Battered economy to suffer more as a result of a likely delay in the disbursement of next installment
 |
The private sector will once again pay the biggest price for the likely delay in the disbursement of the next loan tranche to Greece as negotiations between the government and the troika on the new austerity package drag on, global considerations, such as the elections in the United States, seem to have come into play and failure to implement various reforms weigh in.
Despite reported “good progress” in discussions between the troika and the Greek side on the new austerity package worth some 13.5 billion euros -- split approximately between 11.5 billion in spending cuts and 2 billion in tax revenues -- and the clear intention of Finance Minister Yannis Stournaras to conclude the negotiations by last night, there was no happy ending.
The delay has upset the sketchy timetable some local politicians and government officials had in mind. The latter hoped to have the measures passed through Parliament in the last week of September at the latest, giving the troika time to present its report to the Eurogroup meeting on October 8.
The Greek side obviously counted on an overall positive troika review of the economic program, following the adoption of the austerity measures, so it could convince EU finance ministers to give the green light for the disbursement of the 31.5-billion-euro tranche to the cash-strapped country. Moreover, it could also have presented its case for a two-year fiscal extension to the EU Summit in mid-October.
Whether the delay fits presumed EU plans to give the coalition government more time to implement reforms so that the governments of northern countries -- especially Germany -- can justify the extension of the Greek fiscal adjustment to their constituencies, or/and is mainly due to a desire by the US side for no unpleasant surprises prior to the November 6 elections remains to be seen.
The pros
At first glance, both arguments have some merit and may not be mutually exclusive. Greece failed to implement a number of reforms in the first half of the year, such as lifting barriers to entry in some regulated professions, partly due to the extended election period. This explains the delay of the disbursement of the 31.5-billion-euro tranche, which was supposed to be paid by end-June, as policy implementation lags are met by delays in the disbursement of official loans.| Moreover, the EU and the IMF appear to have different views on the sustainability of the Greek public debt at this point and may need more time to reconcile them. Even if they do so, making it public that the debt ratio is projected to come to above 120 percent of GDP in 2020 could unsettle world markets and this is not what the US’s Barack Obama administration would like to see ahead of the elections. In addition, there is no reason for the troika to publicize the Debt Sustainability Analysis (DSA) of the Greek debt if Greece is to request an extension of its fiscal program and perhaps get it at the EU summit on October 18. After all, an extension is bound to create a funding gap and affect the trajectory of the public debt-to-GDP ratio. This in turn means that sources of funds have to be identified to fill the gap and steps have to be taken to bring down the debt ratio below 120 percent of GDP by 2020 since this is important for keeping the IMF aboard. Since it is almost certain that Prime Minister Antonis Samaras will ask for two more years to bring the budget deficit below 3 percent of GDP in 2016 at the EU summit, the troika should find technocratic ways to justify a delay in writing its report on Greece . Also, this would probably suit political leaders in the European Union, especially if the Greek side manages to implement more reforms and they can justify their agreement to the extension to their constituencies back home. There is a strong case for the troika to finalize its review report later than initially thought, perhaps after the US elections, though this would mean a delay in the disbursement of the funds to Greece, possibly to the second half of November.
The cons
However, this ongoing saga is a bane on the Greek economy and more specifically the private sector, its engine. Although the execution of the budget is going well and the country may not need more money from international lenders to pay pensions and wages in the public sector, the state will delay the settlement of arrears domestically and may even increase them by declining to pay suppliers and others in the private sector. It is reminded that about 4 billion euros from bailout loans were destined to settle domestic arrears and inject liquidity into the cash-starved real economy by the end of this year.The delay would also bring back any plans for the recapitalization of Greek banks, as some 23.5-23.8 billion euros of the 31.5 billion euros are destined for bank recapitalization and the facilitation of resolutions in the sector. A delay may be good for those who wish the status quo to be preserved but it is ominous for the economy. This is because local banks are subject to liquidity and capital constraints operating in a bad domestic macroeconomic environment with increasing bad loans and deposit outflows at least till last June. Although deleveraging is the norm in periods of scarce liquidity and protracted recession, recapitalization is widely regarded as key to restoring depositors’ confidence in banks and the gradual return to credit extension. This cannot happen without bailout funds at a time when few private investors will risk their money when uncertainty over Greece ’s future in the eurozone persists. |
http://www.zerohedge.com/news/2012-09-24/spains-latest-bailout-plan-lottery-bonds
( Bailout bingo coming next one could presume...)
Spain's Latest Bailout Plan - Lottery Bonds
Just when we thought Europe has already used the kitchen sink and then some in its arsenal of bailout ideas, here comes Spain proving there is always "something else." Bloomberg reports that the insolvent country which is not really insolvent as long as people keep buying its bonds on hopes it is insolvent, is launching "lottery bonds". To wit: Spain to sell bonds through state-run lottery operator to fund regional bailouts, two people familiar with the matter told Bloomberg’s Esteban Duarte and Ben Sills. The issue is part of €6 billion financing through Sociedad Estatal Loterias & Apuestas del Estado which is raising syndicated loan. Loterias official said financing details haven’t been completed. In other words, the national lottery, which as in Spain so everywhere else, is nothing but an added tax on a country's poor population but one which provides at least a tiny hope of a substantial repayment (which never happens for the vast, vast majority of players) so few actually complain about paying it, is about to shift the bailout cost to the nation's poorest. Who benefits? Why Spiderman towel makers of course. And insolvent banks.
In retrospect, it appears this is not exactly a new idea. FromBusinessweek two months ago:
Spain will use its national lottery, the operator with the biggest jackpot in the world, to provide aid to regional governments as the nation struggles to avoid a second bailout itself.
The state-owned lottery will contribute 6 billion euros ($7.3 billion), taking out a loan against future revenue, to a fund of as much as 18 billion euros to fund redemptions and deficits for regions that request it.Regions, many of which have been shut out of debt markets for more than a year, will pay a “small spread” above the central government’s yields to borrow from the fund, de Guindos said. The government will demand budget cuts in return from the regions that choose to use the fund, he said....Loterias & Apuestas del Estado, a debt-free company the government
tried to list on the stock market last year, has operated for almost 250
years in the world’s fourth-largest lottery market. The company’s
annual Christmas draw, known as El Gordo, or the Fat One, had a prize
pool last year of 2.3 billion euros. It had 2.6 billion euros of profit
in 2010, according to the annual report.
And from Dow Jones:
The Spanish government will take out a loan from its national lottery company to finance part of a newly- created fund to help Spanish regions pay debt maturities, Finance Minister Luis de Guindos said Friday, a move aimed at reducing the country's need to tap financial markets for expensive funding.
The regional fund will be run by the central government and will pay out a maximum of 18 billion euros ($22 billion) this year, Mr. De Guindos said at a press conference following the weekly Cabinet meeting. Spain will finance the fund by making Loterias y Apuestas del Estado SA, the most profitable of Spain's publicly-owned companies, take out a EUR6 billion loan, while the rest of the money will come from Spain's Treasury, he said.The Treasury won't have to alter its issuance calendar as a result of the added financing needs, Mr. De Guindos added.The fund is a response to repeated pleas for help from cash-strapped regional governments facing billions worth of maturities at a time when they are shut down from capital markets.
What can possibly go wrong: "step right up, play the lottery, win a Spiderman towel."
and.....
http://www.telegraph.co.uk/finance/debt-crisis-live/9561764/Debt-crisis-EC-President-warns-more-must-be-done-live.html
16.08 The French Development Agency has signed a deal with the Jordanian government to provide the kingdom with a soft loan of 150 million euros (£119 million) to support its battered budget. The agreement follows a £1.2 billion loan for Jordan to steady its economy issued by the IMF in August.
Two weeks ago the French Finance Ministry said its general budget deficit in the first seven months of the year had widened to 63.8 billion euros.
15.27 Bad news for Greece from Citi, via Fabrizio Goria:
14.25 Joaquin Almunia, the EU's competition commissioner, has said that continued uncertainty over whether or not Spain intends to seek a bail-out is "highly risky".
Almunia, who represents Spain in the 27-member European Union executive, recognised it was "difficult" for Spain to choose whether to ask for a full sovereign rescue rather than a bail-out of its banks but added: "What's highly risky is to maintain the uncertainty."
14.10 Portugal has announced that it will roll-back controversial plans for a social security tax hike that triggered protests across the country. Prime Minister Pedro Passos Coelho said that after meeting unions today he'd investigate alternative income tax and capital tax measures. The plan would have seen employees' contributions jump from 11pc to 18pc. Portugal is struggling to implement austerity measures demanded by the troika for its €78bn bail-out, warned the PM in a television statement:
As long as Portugal maintains its level of fulfilment, we know that we will have the support of our external partners. If we do not, we put at risk our fulfilment, and these guarantee mechanisms will cease to exist.
12.06 The finance spokesman for Angela Merkel’s Christian Democratic Union, Michael Meister, says that Mariano Rajoy speak now if Spain needs a bail-out:
He must spell out what the situation is. Rajoy evidently has a communications problem. If he needs help he must say so. Conditionality will and must apply. The German parliament would not accept anything less. If conditionality doesn’t apply it would be only a short step for Ireland to ask for renegotiated terms and Italy might request partial help under those conditional terms.
11.28 Italy must not backtrack on key reforms implemented by Prime Minister Mario Monti, the Organisation for Economic Cooperation and Development (OECD) has warned.
The “courageous, ambitious and vast” reforms, which focus on overhauling the labour market and restoring public finances, are crucial for the country and the future of Europe, according to Angel Gurria, head of the OECD. He said:
No to the temptation to go back and dismantle the reforms that have been accomplished! This is not just about the future of Italy but also the future of the European construction.
11.13 More German news: the country held a bond auction this morning, seeing-off €1.17bn in year-long debt at an interest rate of -0.0184pc. That means that investors were willing to pay Germany to look after their cash.
Meanwhile, a German finance ministry spokesman has told Reuters that leveraging the ESM bail-out fund to €2 trillion is "not realistic", but that there is a possibility of private sector investors being brought in.
11.02 Time for a quick update on the European markets, which slipped in early trading and have moved further into the red after poor German business confidence figures out this morning.
10.41 There was trouble in Portugal over the weekend, where the government is near to rolling-back on plans to increase social security contributions. Hundreds of thousands protested last week and on Saturday a presidential state council meeting was interrupted by further demonstrations. The government has now offered to renegotiate with unions. The photograph below shows protesters in front of presidential palace of Belem in Lisbon.
09.34 German business confidence has fallen for the fifth month in a row; fears over the financial crisis have pushed it to its lowest since February 2010. The Ifo economic institute's index dropped to 101.4 points in September from 102.3 points in August. President Hans-Werner Sinnsaid:
The companies surveyed are again less satisfied with their current business situation. They also expressed greater pessimism about the future. The headwinds on the German economy continue to prevail.
09.23 Staff at Greek newspapers and television stations are on strike today to protest the "dismantling" of employment regulations, reportsekathimerini. This means there will be no online, radio or television news today, or newspapers tomorrow. But rest assured, the Telegraph live blog will bring you all the latest on the eurozone crisis.
08.15 Meanwhile, France's PM has said that Greece should be given more time to meet its deficit targets, as long as it is "sincere in its commitment to reform".
Jean-Marc Ayrault told French news website Mediapart that "the answer must not be a Greek exit from the eurozone... we can already offer it more time... on the condition that Greece is sincere in its commitment to reform, especially fiscal reform."
08.10 European debt inspectors have reportedly discovered a €20bn black hole in Greece's budget. Officials from the European Central Bank, European Commission and International Monetary Funddiscovered the funding gap on their latest fact-finding mission, according to Der Spiegel.
The report adds to speculation that the country will need more time to implement its harsh austerity measures - or even another bail-out.
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