It took the ECB a year of endless behind the scenes Machiavellian scheming to restart the SMP program (which was conceived by Jean-Claude Trichet in May 2010, concurrent with the first Greek bailout). The markets soared with euphoria that this time will be different, and that the program which is a masterclass in central planning paradox, as it is "unlimited" yet "sterilized", while based on "conditions" none of which have been disclosed, and will somehow be pari passufor new bond purchases while it retains seniority for previous purchases of Greek and other PIGS bonds, will work - it won't, and the third time will not be the charm as we showed before. Yet it has been just 48 hours since the "bailout" announcement and already Europe is being Europe: namely, it turns out that nobody wants the bailout.

On one hand there's Germany for obvious reasons - not only are they footing the cost, but it is for them that the threat of an inflationary spike as a result of "unlimited" bond buys is most acute. But on the other, just as we predicted all along, are Spain and France, the biggest beneficiaries of the bailout, and whose bonds soared on expectations the ECB may buy them, who overnight have had a change of heart and say they never actuallyneeded the bailout. Why? Because its politicians have suddenly had a change of heart and realize they will be sacked the second they hand over sovereignty over to the Troika or whatever supernational entity is in charge of the country following the submission of the bailout request.

More importantly, and as explained before, as long as the yield on the bonds of insolvent European countries is sub 8%, not one country will demand a bailout. And as long as these countries reap the benefits of cheap rates, the policies of pseudo austerity will continue (as a reminder, nobody in Europe has actually implemented austerity), where nothing changes, where budget deficits continue to pile on, where sovereign debt continues to soar, where politicians continue making the same flawed policy choices, and where the European slow-motion trainwreck continues, only with a brief delay in the final inevitable outcome.

By now everyone knows about the ECB party that sent US stocks to 4 year highs. Now comes the aftermath. From the NYT:

Greeted with initial fanfare by investors and economic officials, the unlimited bond-buying plan that the European Central Bank president, Mario Draghi, announced Thursday ran into immediate political problems in the crucial countries of Germany, Spain and Italy.

In Germany, despite Chancellor Angela Merkel’s support for Mr. Draghi and the independence of the Central Bank, political and news media reaction was scathing, with accusations that the bank, in seeking to stabilize the euro currency union, was subverting its mandate to fight inflation and forcing debt upon euro zone members.

“A Black Day for the Euro,” “Over the Red Line” and “Pandora’s Box Opened Forever” were some of the German headlines, with the normally sympathetic Süddeutsche Zeitung headlining an editorial: “The E.C.B. Rewards Mismanagement.” Even the German Bundesbank, officially part of the European Central Bank, put out a statement commenting acidly that the plan was “financing governments by printing bank notes.”

Here is where it gets funny:

At the same time, the two intended beneficiaries of the Draghi plan — Spain and Italy — expressed reluctance to ask the bank for help, even if both might eventually have little choice but to seek aid. The governments in Madrid and Rome apparently fear the political impact at home of bowing to whatever demands for harsh economic policy changes might come with the aid.

And just as we predicted before...

They seem afraid that the medicine might prove worse than the disease, because Mr. Draghi made it clear that there would be no bottomless well of money made available without a program of greater spending discipline.

“Those who did everything to have the E.C.B. help now say they don’t want it,” Ferruccio de Bortoli, editor in chief of the newspaper Corriere della Sera, said in a Twitter message. “Speculation will play on this contradiction.”

The disjunction between how officials seek to placate the lightning-fast markets and the reluctance on the part of the public and politicians to make further sacrifices and move at more than a glacial pace highlight why it has proved so difficult for Europe to overcome the challenges that still threaten to tear apart its 17-nation currency union.

All of this is just as we explained over a month ago: "In Order To Be Saved, Spain And Italy Must First Be Destroyed." We also explained why this will not happen, and that instead of being saved, Spain and Italy will ultimately be destroyed, by appearingto be saved first: as Mario Draghi kindly obliged us on Thursday. And all with the central-planners' and stats quo's blessing.

The simple reality is that already the grand plan is fizzling, which was to be expected. After all politicians are involved. Recall that Goldman, who basically force fed its alum Mario Draghi the play by play (after leaking the ECB playbook hours in advance) now "predicts" (and by predicts, we mean demands) that Spain demand a bailout as soon as next week. Well, Spain PM Mariano Rajoy, who promised Spanish banks will never need a bailout one week ahead of the Spanish bank bailout announcement, already is digging his feet in. As Spanish El Economista write, Rajoy is "tempted" to delay the Spanish bailout request until after the Galician elections, i.e., until October 21. At the earliest. In other words, while the market has already front-ran the Spanish bailout demands, suddenly Spain will conduct at least 6 auctions between now and October 21, during which time bond buyers will be praying that eventually Spain will demand a bailout. Ironically, it is these same "bond buyers" who swallowed hook line and sinker the plan that Draghiet al laid out for them, namely to assume a bailout, and buy bonds, when by doing so, a bailout becomes unnecessary. Did we say bailout? We meant trap.

So what happens in the meantime? Well, Spanish bonds can languish in the 6%, 5%, or even 4% range, which in turn will embolden the insolvent Spanish government to issue even more debt, thus making its fiscal situation even more untenable (recall the Spanish financial system is broke for one simple reason: too many (soaring) bad loans predicated by the endless collapse in the Spanish housing market). And issue bonds it will have to: recall that as we first explained, and as Nomura subsequently understood, Spain is on the verge of running out of cash!

But suddenly now that the market pretends all is well, following the most recent bout of central bank intervention, no Spanish politician feels the urge to sign their own career death warrant and request that the ECB funds these purchases which Spain simply will not have the money for. Instead, the theater that "all is well" will continue until Spain does run out of cash (the record outflow in Spanish bank deposits makes that a certainty) at which point the transition chaos will be unprecedented as instead of arranging for an orderly transition, the panic in the Spanish government will be epic. Even the NYT now understands this dynamic:

Spain must pay back 20 billion euros, about $25.6 billion, in bond redemptions in October. And some analysts suggest that Mr. Rajoy will need to seek help to satisfy half of Spain’s 180 billion euro financing needs (about $230 billion) over the next year. “The Spanish fear is that they become another Greece — that they will have to chop off their right arm for a blood transfusion,” said Mark Cliffe, chief economist at ING Bank in Amsterdam....Mr. Rajoy is already losing popularity rapidly, and no one wants further political instability in Spain to add to continuing anxieties over Greece.

And this is only Spain. Throw Italy into the mix, which the NYT admits has been even worse at implementing reforms, and one can see why even the once intelligent bond market has demonstrated surprising stupidity with its ramp in peripheral bond prices last week (which really has been just a massive short squeeze).

But the piece de resistance, which readers of Zero Hedge know too well about, is that while jawboning will continue to yield results as long as reality finally demands an intervention, and Spain running out of cash will be just such an jawboning-event horizon, is that once the ECB is forced to begin buying, as up to now nothing has actually been done by the ECB which has merely taken rhetoric, promises and threats to a next level, it is all downhill from there:

There is a further uncertainty about the survival of the euro zone, which the Central Bank is mandated to defend. Once the Central Bank loads up further on Spanish and Italian bonds — it has already bought more than 200 billion euros ($256 billion) of European bonds, including 50 billion euros ($64 billion) from Greece — it will find it very difficult to stop its bond buying even if countries do not keep to their promises of reform. To do so would be a form of suicide, because it could set off market panic and force countries to exit the euro, beginning a process with no clear end.

Yesterday we explained why the Fed will do everything in its power to avoid enacting more LSAP-based QE (it simply does not have the capacity for the kind of massive program that everyone expects, and even an "open-ended" monetization will force everyone to do the math). Today, we learn why it is the ECB that also will do everything it can to not hit the buy button. The biggest paradox is that up to now, the fear of central banks, which is there in part due to their (rapidly dwindling) credibility, is what forced investors to "not fight the Fed/ECB"... and the banks took advantage of this by not doing anything, but merely talking. The time for talk is over, and for one reason or another, the time for action has arrived. Such action will very quickly demonstrate that the central-planning emperor was, indeed, naked all along, and the ramp across all risk assets was for naught.

It also means that the next time when the central banks attempt a comparable jawboning of risk, they will be taken far less seriously, if at all. At that point one may expect the PBOC to finally admit just how much gold it has acquired in the past 4 years, and that anyone who wishes to give a totally new and still quite credible monetary authority the chance, is invited to do so.

* * *

P.S. The initial phrasing of this article's title was "Suddenly, Nobody Wants The ECB Bailout." We then added "In Europe" because there is at least one person in the US who is absolutely delighted by the ECB "bailout." The US president.

and Mish also covers this subject ...

http://globaleconomicanalysis.blogspot.com/2012/09/no-one-happy-except-stock-market.html

Saturday, September 08, 2012 8:33 PM

No One Happy Except Stock Market; Discord Emerges in Spain, Italy, Germany to ECB Announcement

Discord Emerges

It's not just Germany expressing reservations about the ECB's plan to "Save the Euro". Spain, Italy, and Germany all have concerns about the plan launched last week by ECB president Mario Draghi.

Germany does not like the plan because it does too much (please see 54% of Germans Want Constitutional Court to Kill the ESM; Merkel's Disingenuous Reservations) but Italy and Spain are annoyed they may have to bow to the Troika to get bailouts.

Please consider After High Note for Euro Plan, Discord Emerges.

Greeted with initial fanfare by investors and economic officials, the unlimited bond-buying plan that the European Central Bank president, Mario Draghi, announced Thursday ran into immediate political problems in the crucial countries of Germany, Spain and Italy.

In Germany, despite Chancellor Angela Merkel’s support for Mr. Draghi and the independence of the Central Bank, political and news media reaction was scathing, with accusations that the bank, in seeking to stabilize the euro currency union, was subverting its mandate to fight inflation and forcing debt upon euro zone members.

“A Black Day for the Euro,” “Over the Red Line” and “Pandora’s Box Opened Forever” were some of the German headlines, with the normally sympathetic Süddeutsche Zeitung headlining an editorial: “The E.C.B. Rewards Mismanagement.” Even the German Bundesbank, officially part of the European Central Bank, put out a statement commenting acidly that the plan was “financing governments by printing bank notes.”

At the same time, the two intended beneficiaries of the Draghi plan — Spain and Italy — expressed reluctance to ask the bank for help, even if both might eventually have little choice but to seek aid. The governments in Madrid and Rome apparently fear the political impact at home of bowing to whatever demands for harsh economic policy changes might come with the aid.

“Those who did everything to have the E.C.B. help now say they don’t want it,” Ferruccio de Bortoli, editor in chief of the newspaper Corriere della Sera, said in a Twitter message. “Speculation will play on this contradiction.”

ECB's Dirty Work

German newspapers blasted the announcement, even typically pro-EU newspapers as per Der Spiegel article 'The ECB Is Doing Governments' Dirty Work'

The markets reacted to the announcement with euphoria. On Friday, the German DAX stock market index climbed to over 7,200 points, its highest level in 2012. Yields on Spanish and Italian sovereign bonds dropped, as well.

But the criticism of the ECB's course continued in Germany. Bundesbank President Weidmann reiterated his opposition to the move, saying it was too close to "state financing via the money presses." Alexander Dobrindt, general secretary of Bavaria's conservative Christian Social Union, said that the ECB must be "a stability bank and not an inflation bank".

The center-left Süddeutsche Zeitung writes:

"Rescuing the euro at any price could be an economic disaster -- that is the red line that must not be crossed. The other limit is the law: In a community based on law, the ends can never justify the means. A euro community that is based on constantly breaching treaties is built on a shaky foundation."

"On Thursday, the ECB unfortunately crossed both red lines. It did so reluctantly and not irrevocably, and yet it did so with determination. The purchase of government bonds by the central bank means that the ECB will tolerate and even reward economic mismanagement. (…) The crisis countries are not out of the woods yet. And that means that if the ECB provides them with unlimited help, then it is financing unsound states. It can only do so by printing ever more money. Ultimately, there will be the threat of bubbles, crises and inflation. It will benefit speculators, and the vast majority of citizens will have to foot the bill."

The center-right Frankfurter Allgemeine Zeitung writes:

"Draghi has made it clear that, from now on, the ECB will only buy bonds when a crisis-hit country asks for help from the euro rescue fund or agrees to other conditions. But that promise isn't new. The would-be saviors of the euro have been insisting on structural reforms for years. The recipients of aid make promises but often do not keep them. But what will the ECB do if, say, Italy does not carry out the labor market reforms it has promised? Is it going to start selling Italian bonds? It can't if it takes its own argument seriously, that monetary policy in the euro zone no longer functions properly."

"The central bank is getting tangled up in its own arguments because it has allowed itself to become the prisoner of politics. Since it is willing to make up for the failures of European politicians, it can not quit the bond-purchasing program."

"The leaders of southern euro-zone countries should be happy: They can continue to borrow at low interest rates and do not need to worry about finding investors. But the northern leaders are satisfied, too, because they can hide behind the ECB and do not need to face uncomfortable questions in, say, the Bundestag (Germany's parliament) about all the additional risks that Germany is taking on. In the euro zone, there is no longer a distinction between monetary and fiscal policy."

The conservative Die Welt writes:
"Every time the politicians shout 'fire,' the ECB puts it out. ..
"With his reference to a possible breakup of the euro zone, Draghi tried to justify the fact that he is trampling all over the ECB's statutes. In doing so, he is doing the dirty work for governments, who can slow down the pace of reforms a bit now that they are being protected by the central bank. At the same time, the ECB will get clogged up with government bonds from the crisis countries."

"The dangers of this policy are enormous. At the moment, it's not inflation that is the big problem. Rather, it is the redistribution of wealth from the north to the south in a completely non-transparent way and without political legitimacy. (The money is flowing) from the savers to those who benefit from this irresponsible monetary policy. This is undemocratic and antisocial."

No One Happy Except Stock Market

There are some favorable comments in the Der Spiegel but many additional negative ones that I did not excerpt.

Curiously, no one seems happy with the deal but the central bankers who hatched the plan and the stock market.Of course the stock market always easy money, until things blow sky high like the 2000 dotcom bubble and the 2005 housing bubble.

and....

http://www.zerohedge.com/news/socialist-counter-revolution-begins-frances-richest-man-seeks-belgian-citizenship

The Socialist Counter-revolution Begins: France's Richest Man Seeks Belgian Citizenship

Submitted by Tyler Durden on 09/08/2012 10:41 -0400

A few months ago when the new French socialist president gave details of his particular version of the "fairness doctrine" and said he would tax millionaires at 75%, we said that "we are rotating our secular long thesis away from Belgian caterers and into tax offshoring advisors, now that nobody in the 1% will pay any taxes ever again." While there was an element of hyperbole in the above statement, the implication was clear: France's richest will actively seek tax havens which don't seek to extract three quarters of their earnings, in the process depriving France (and other countries who adopt comparable surtaxes on the rich) of critical tax revenues. It took three months for this to be confirmed, and with a bang at that. The WSJ reports that Bernard Arnault, the CEO of LVMH, and the richest man in France, has decided to forego hollow Buffetian rhetoric that paying extra tax is one's sworn duty, and has sought Belgian citizenship.

From the WSJ:

Bernard Arnault, France's richest man and chairman and chief executive of LVMH Moët Hennessy Louis Vuitton, is seeking Belgian citizenship, a move that comes as President François Hollande prepares to press ahead with a controversial tax on the country's wealthiest citizens.

Georges Dallemagne, president of Belgium's naturalization commission, said Mr. Arnault's case was filed at the end of August and will be "treated like others." Mr. Dallemagne said the process would take until "early next year, at best."

Though the LVMH titan denies his move is fiscally motivated, the timing of Mr. Arnault's request is sure to intensify the debate about whether Mr. Hollande's tax policies are sparking an exodus of the country's rich.

As a reminder, it took Monsieur Hollande four months to reneg on his promise to never bailout evil banks, when just last week he bailed out the second largest French home loan specialist, in the process pledging tens of billions in taxpayer funds. Precisely what he said he would not do. We expect Hollande will also reneg on his populist promises of exorbitant taxation of the wealthy once the Arnault backlash spreads among the remainder of the French "1%", who just happen to pay the bulk of French taxes.

On the other hand, perhaps it won't, and just like the US, France will become increasingly reliant on debt to fund its ever increasing budget deficits. As we showed before, this is the breakdown of how the US funds its $4 trillion (and growing) cash needs. What is obvious is that with time more and more of the funding need will be met through debt issuance, and thus, debt monetization.

Paradoxically, and a continuation of our article from yesterday on the mechanics of QE, the US will need to raise its debt issuance, and thus accelerate its fiscal profligacy in order to allow Bernanke to monetize more debt, so that more brand new money can enter stocks (recall that the Russell 2000 has been the Fed's only mandate for years) via the Fed's LSAP channel, without impairing the liquidity of the now very much limited long end of the Treasury (and MBS) market.

Finally, it wouldn't be the New Normal if this latest development in the socialist backlash was not accompanied by a hollow statement signifying nothing:

LVMH confirmed Mr. Arnault's request in a statement, but stressed the billionaire would remain a taxpayer in France.

For one more week? One more month? In other news, subprime is contained. And speaking of amusing, and very much hollow, rhetoric, we wonder if Mr. Whitney Tilson, who may or may not be a millionaire any longer, still endorses this April 11 point of view:

A millionaire for higher taxes

Whitney Tilson is a hedge fund manager and a member of Patriotic Millionaires for Fiscal Strength.

I am part of the 1 percent of the 1 percent. By that I mean that I am fortunate to be a wealthy American and I say, “It’s okay to raise my taxes.”

This morning I was at the White House supporting President Obama in his call for Congress to pass the “Buffett rule.” This legislation — inspired in part by Warren Buffett’s exasperation upon learning that his assistant paid a greater percentage of her income in federal taxes than he did — would require anyone whose income exceeds $1 million a year to pay a minimum 30 percent in taxes. It would hit me hard. I haven’t finished my taxes for 2011, but in 2010, my federal tax rate was 21.4 percent; if the Buffett rule had been in effect, my federal tax bill would have been 40 percent higher. Some years, my taxes would probably be more than 50 percent higher.

Why am I okay with this? The answer has to do with simple math and basic fairness.

This country is running enormous and unsustainable budget deficits that will bankrupt us all if they are not narrowed — and there is no way to do that without both cutting spending and raising revenue. (Grover Norquist’s anti-tax pledge is pie-in-the-sky fantasy and dangerous demagoguery.) Everyone is going to have to make sacrifices as part of a comprehensive budget deal along the lines of Simpson-Bowles, with tens of millions of people getting smaller entitlement benefits, for example, and tens of millions of people paying higher taxes.

It’s not class warfare to say that people like me — who aren’t suffering at all in these tough economic times, who are in many cases doing the best we’ve ever done and who can easily afford to pay more in taxes with no impact on our lifestyle — should be the first to step up and make a small sacrifice.

I think most people agree with the idea of shared sacrifice, but for many, when push comes to shove, that principle goes out the window. I don’t kid myself that I’m making any real sacrifices. The men and women who have been fighting for the past decade in Iraq and Afghanistan — thousands of them coming home in coffins or missing limbs — are making true sacrifices. And when they enter the domestic workforce, they shouldn’t have to pay taxes at a significantly higher rate than the vast majority of millionaires pay.

Some critics of the Buffett rule point out that it would raise only an estimated $47 billion over 10 years, which is a sliver of the 2011 deficit of $1.3 trillion, let alone the national debt of $15.6 trillion. They’re right that this, by itself, won’t be enough. But we have to start raising money somewhere, and if it isn’t from people like me, it will have to come from people less fortunate than I am. Think of it this way: Every billion dollars not raised from millionaires is equal to a million average U.S. families each paying an extra $1,000 in taxes. That would be real hardship for a lot of families that, unlike mine, are struggling to make ends meet.

Other critics argue that there’s no need for anyone to pay more taxes, because our government is so ineffective and wasteful that we can generate the savings we need just by running it better. I disagree. While there’s always plenty of room for improvement, our government is actually quite effective and efficient. Our military and judicial systems and national parks are the best in the world. Unlike in countries where government corruption is rampant, I’ve never once been solicited for a bribe. And our police departments generally do a good job protecting citizens. My wife and I walk our dog in Central Park every night after 10 p.m. and have never feared for our safety.

I think that most people who complain about our government have no idea what they’re talking about because they’ve never been to a country with a bad government. I regularly visit Kenya (my parents retired there and my sister works there), I visited Ethiopia many times when my parents lived there, and growing up I lived for three years each in Tanzania and Nicaragua. So I’ve seen what life is like under corrupt, dysfunctional, underfunded governments. To quote Hobbes, it can be “solitary, poor, nasty, brutish and short.”

I am grateful for the effective government we have in this country, which is the absolutely necessary foundation for our wonderful capitalistic economic system that has benefited me so greatly. And I’m willing to do my fair share — in fact, more than my fair share — to help rein in our deficits and put this country on a more sustainable path.

Perhaps now that Whitney no longer has a need to pander to Buffett in every form, courtesy of the recent terminal blow up of his now former hedge fund T2 aka BRK/C (in everything but return of course), he may readdress his feelings on the matter.

Finally we leave readers with what we said last time we addressed this issue:

The good news is that with the entire world set to adopt 100%+ taxes on "wealthy" individuals as defined arbitrarily by Ph.Ds, there will be no place to hide.

The irony of course, is that while the central planners give with one hand, by ramping stocks through the issuance of unrepayable debt, which benefits primarily the 1% the bulk of whose assets are in equity-related products, with the other they demand an ever larger pound of flesh in the form of ever more creeping taxation. Sadly, what should be well-known by now is that the "rich" (whether defined by the "fairness doctrine" or otherwise) always win, and it is the poor and the nearly defunct middle class that ends up picking up the pieces. It always has, and it certainly will this time around as well.

and.....

http://hat4uk.wordpress.com/2012/09/07/greek-polls-update-syriza-out-in-front/

GREEK POLLS UPDATE: Syriza out in front.

Tsipras’s hardline stance pays dividends

This from a regular Athenian source tonight:

I read your article today for the Greek crisis. What you probably do not know is that a new poll from VPRC today (a very good company in polling) puts Syriza in first place with 30%, New Democracy in second with 28% and Golden Dawn in 3rd with 12%. Pasok is in 4th place with 7.5% . Venizelos is feeling the breath of Panos Kammenos of Independent Greeks on his back (7%) while Kouvelis with Dimocratic Left is on a slipery downtrend (4%).

So the Socialists are in the ascendancy, and the Nazis have 80% more support than Pasok.

Moral of the story: if you don’t want to lose the respect of the Greek people, don’t offer your bumhole the Troika.

and...

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_21308_07/09/2012_460286

PM appeals for funding as troika arrives

Finance Minister to meet inspectors on Sunday

Greek prime minister Antonis Samaras (r) welcomes European Council chairman Herman Van Rompuy prior their meeting in Athens on Friday.

As crucial talks loom between government officials and envoys representing Greece’s foreign creditors, Prime Minister Antonis Samaras on Friday appealed for the timely release of a crucial tranche of rescue funding, on which the country’s solvency relies, following talks with European Council President Herman Van Rompuy.

Van Rompuy emphasized that the future of Greece was within the eurozone but stressed that economic reforms must move forward “to break the monopolies and narrow interests” that were hindering economic recovery. “I have no doubt that as long as Greece remains committed to the euro, its partners will continue to support it,” Van Rompuy told a joint press conference with Samaras. The premier, for his part, said the government was “committed to dealing with our fiscal problem” but that rising unemployment and an unprecedented recession posed barriers.

Van Rompuy was not the only European official to comment on Greece Friday. German Chancellor Angela Merkel also emphasized the importance of Greece moving ahead with reforms.

The country’s economic reform progress is to be assessed by officials of the European Commission, European Central Bank and International Monetary Fund, or the troika, who returned to Athens Friday and are to compile the report that will determine whether or not Greece will receive a 31.5-billion-euro tranche of rescue funding.

The envoys are to discuss the content of an 11.5-billion-euro austerity package for 2013 and 2014 with Finance Minister Yannis Stournaras on Sunday at 4 p.m. According to sources, troika officials have rejected 2 billion euros’ worth of measures included in the draft proposal which foresees cuts to pensions, social benefits and state spending.

Meanwhile, the premier’s coalition partners are insisting that some of the more onerous terms of the blueprint should be replaced by less harsh measures. Four members of socialist PASOK sent a letter to Stournaras, calling for proposed cuts to low-level pensions, civil servants’ salaries and disability benefits to be taken off the table of negotiations. The letter also claimed that foreign creditors had underestimated the revenue of Greece’s social security organizations by around 1.5 billion euros and called for this amount to be subtracted from the package of measures. The letter emphasized that Greece’s request for a two-year extension of its fiscal adjustment period should be raised again at the European Council summit on October 18 “at the latest.”

As for Democratic Left, a spokesman said the party had submitted proposals for 4 billion euros in alternative measures. These include the postponement of payment for defense procurements and further health spending instead of cuts to low-level pensions and social benefits.

Samaras is to meet with his coalition partners at 7 p.m. Sunday to brief them on the progress of talks with the troika on the blueprint.

On Saturday the premier has other concerns -- he must conduct a lightning visit to Thessaloniki, where he is to inaugurate the annual international trade fair, though he will not stay for the traditional economic policy speech. Some 3,500 police are on standby in the northern port city as several labor unions have planned anti-austerity rallies.

and larger zombie banks to be formed......

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_07/09/2012_460285

Government chooses bank mergers over closures

Finance Minister Yannis Stournaras said on Friday the government plans to reduce the number of banks through mergers and that a Blackrock review of bank portfolios will be released after a recapitalization plan is completed.
“We chose the path of mergers and not of shutting down banks, as in other European Union countries,” Stournaras told lawmakers in Athens. “Deposits are completely guaranteed.” Hellenic Postbank SA was deemed unviable, Stournaras said. Greece must press ahead with its state asset sales plan, where time has been lost, Stournaras said.
To this end, Prime Minister Antonis Samaras has asked the state legal council if it has the authority to cover legal issues related to the country’s state asset sales and real estate development program as well as mergers of state organizations.
The inquiry is part of steps being taken that aim to speed up the state asset sales program and to identify ways to reduce state spending on legal fees for third parties, according to an e-mailed copy of a letter sent by the government to the president of the state legal council at Samaras’s request. [Bloomberg]

and let the looting of enrgy resources begin...

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_22762_07/09/2012_460297

Hydrocarbon reserves attract major oil firms

Key market players express interest

By Chryssa Liaggou

After some of the top seismic survey companies in the world vied for the job of searching for hydrocarbons in the Ionian Sea and off southern Crete, major oil companies including Exxon, Total and Statoil are now expressing an interest to the Greek government in the utilization of reserves under the country’s seas.

Kathimerini understands that requests for information by medium-sized and large oil companies are constantly reaching the government, while Exxon, Total, Statoil, Noble, Delek and seven other companies have already lodged official expressions of interest in Greek hydrocarbons with the competent government officials.

The existing data, collected over the last couple of years, constitute more than just good omens for the results of the search process, and after this week’s announcement of the selection of Norwegian surveying company Petroleum Geo-Services (PGS), the utilization of the reserves is becoming more realistic.

The areas for concession add up to 225 square kilometers, from the northern Ionian to the south of Crete, and are considered among the less surveyed locations internationally while also being very promising, given the geological data collected by the Geological and Mining Studies Institute of Greece in the past.

The data point to particularly interesting reserves to the south of Corfu and off southern Crete. The indications for Crete have been bolstered since the positive results of surveys and drilling in the exclusive economic zones of Israel and Cyprus as these areas belong to the same geological basin.

Although the industry had known of these reserves for years, it is only now that their use is becoming profitable, thanks to the rise in oil prices, while technology has made the extraction of oil cheaper and easier too.

and austerity leads to this type of conduct - also note Golden Dawn has gained popularity.....

http://www.businessinsider.com/stunning-video-shows-greek-neo-nazis-smashing-an-immigrants-stand-at-a-market-2012-9

This is Greece's Golden Dawn in action. The Golden Dawn is Greece's Neo-Nazi party that now has a substantial seat in parliament. Welcome to a society that's been pushed to its breaking point

Around the horn in Europe .....

http://www.google.com/hostednews/ap/article/ALeqM5g_lJXDs45LFvGV_eZcvU4Crl9gug?docId=ed481a3277564d338f56131fb505871b

Hungarian prime minister unfriends IMF on Facebook

By PABLO GORONDI, Associated Press – 1 day ago

BUDAPEST, Hungary (AP) — Hungary's prime minister has long had a testy relationship with the International Monetary Fund — and on Thursday he used Facebook to unfriend the agency and reject its allegedly tough loan conditions.

Prime Minister Viktor Orban said in a video message on his official Facebook page that Hungary could not accept pension cuts, the elimination of a bank tax, fewer public employees and other conditions in exchange for an IMF loan that other officials have said could be about €15 billion ($18.9 billion).

The IMF's list of conditions, Orban said, "contains everything that is not in Hungary's interests."

Orban's announcement took the markets by surprise, in part because just a day earlier he had said loan negotiations with the IMF and the European Union were going according to schedule and both sides were willing to reach an agreement.

The forint, Hungary's currency, initially weakened 1.5 percent against the euro after Orban's Facebook video, while the benchmark index of the Budapest Stock Exchange fell from over 18,000 points to below 17,700 before closing at 17,949 points.

Orban said his government would work on an "alternative negotiation proposal" because both he and his Fidesz party agreed that a deal under such IMF demands would be unacceptable.

The IMF did not immediately respond to a request for comment Thursday but at the end of loan talks in July, the Washington-based fund outlined some views about Hungary's economy.

The IMF said Orban's government needed to focus on "measures to encourage labor participation, advance competition, reform loss making state-owned enterprises, notably in the area of transport, and put in place a regulatory level playing field for all companies."

Experts said only the European Central Bank's announcement Thursday of a new bond-buying program meant to ease Europe's debt crisis and ensure the future of the joint euro currency prevented Hungary's currency and stock market from falling more.

"There have been many U-turns in the IMF story in the past, surprises are kind of part of the game already," analyst Gabor Ambrus of London's 4Cast said about Orban's latest comments.

In late 2008, under a Socialist government, Hungary became the first EU country to receive an IMF-led bailout. The Orban government, however, decided not to renew the loan agreement in 2010 so it could implement its economic policies without IMF control. But the increasing weakness of the forint, the Hungarian currency, and investors' growing loss of trust in the country's economy made the government abruptly change its mind late last year, when it again sought IMF help.

The Hungarian economy is in a recession and contracted an annual 1.2 percent during the second quarter of 2012, while the country's annual inflation rate stood at 5.8 percent in July, the highest in the EU.

Still, Hungary has been able to keep financing itself through bond sales. The government has repeatedly said it only wants a precautionary loan from the IMF for emergency funds.

"The market movements will be the main influence on what the government does," said analyst Zoltan Arokszallasi of Erste Bank in Budapest. "If the state auctions of forint-denominated bonds are unsuccessful — and this is not at all the case right now — the IMF deal will become more important."

http://www.telegraph.co.uk/finance/financialcrisis/9528894/Brussels-plans-to-make-ECB-bank-super-regulator-leaked.html

By Louise Armitstead, Chief Business Correspondent

4:51PM BST 07 Sep 2012

14 Comments

The European Commission (EC) wants to give the ECB supervisory power over 6,000 eurozone banks as the first move in a rapid advance toward banking and then fiscal union.

The documents, that were due to be unveiled on Wednesday, reveal highly anticipated plans for Europe’s "bank union". The ECB will have the power to wind up banks; remove bank licenses; and force recapitalisation programmes when it think it's necessary, according to the documents.

The ECB will also be empowered to “enter into administrative arrangements” with regulators outside the eurozone - or act and negotiate on behalf of all members in talks on global financial regulation.

José Manuel Barroso, president of the EC who was due to unveil the plans next week, has set a tight deadline of January 1 for the deal to be agreed by eurozone countries. “Phased implementation” would start from the middle of 2013, with the rules being in place by the beginning of January 2014.

The EC may face opposition from Germany, which had advocated joint supervision for the eurozone’s 25 biggest banks only. Non-eurozone members can “opt-in” but Britain, which has been staunchly against a bank union, is not expected to join.

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