Saturday, September 22, 2012

Items of note from Europe - Saturday September 22nd......

http://www.zerohedge.com/news/2012-09-23/greece-caught-underreporting-its-budget-deficit-nearly-50
( Now we see why the evaluation of Greece was kicked past Nov 6th... )


Greece Caught Underreporting Its Budget Deficit By Nearly 50%

Tyler Durden's picture
Submitted by Tyler Durden on 09/23/2012 16:44 -0400



There was a time about a year ago, before the second Greek bailout was formalized and the haircut on its domestic-law private sector bonds (first 50%, ultimately 80%, soon to be 100%) was yet to be documented, when it was in Greece's interest to misrepresent its economy as being worse than it was in reality. Things got so bad that the former head of the Greek Statistics Bureau Elstat, also a former IMF employee, faced life in prison if convicted of doing precisely this.
A year later, the tables have turned, now that Germany is virtually convinced that Europe can pull a Lehman and let Greece leave the Eurozone, and is merely looking for a pretext to sever all ties with the country, whose only benefit for Europe is to be a seller of islands at Blue Aegean water Special prices to assorted Goldman bankers (at least until it renationalizes them back in a few short years). So a year later we are back to a more normal data fudging dynamic, one in which Greece, whose July unemployment soared by one whole percentage point, will do everything in its power to underrepresent its soaring budget deficit.
Case in point, on Friday the Finance Ministry proudly announced its budget deficit for the first eight months was "just" €12.5 billion, versus a target of €15.2 billion, leading some to wonder how it was possible that a country that has suffered terminal economic collapse, and in which the tax collectors have now joined everyone in strikingand thus not collecting any tax revenue, could have a better than expected budget deficit. Turns out the answer was quite simple.According to Spiegel, Greece was lying about everything all along, and instead of a €12.5 billion deficit, the real revenue shortfall is nearly double this, or €20 billion, a number which will hardly incentivize anyone in Germany to give Greece the benefit of another delay, let along a third bailout as is now speculated.
To quote Greg House: "Everybody lies"
From Spiegel:
The gap in the Greek national budget is greater than previously expected. According to a preliminary Der Spiegel finding, the troika of European Commission, European Central Bank and International Monetary Fund reported that the government of Prime Minister Antonis Samaras is missing currently around 20 billion euros -nearly twice as much as last admitted. Only if the funding gap is closed, the next EU tranche will be transferred to Athens.
What is well-known is that for all intents and purposes Greece has already stopped trying:
That Greece can bridge the financing gap on its own seems unlikely. The already adopted austerity program has encountered great opposition in the population. In one published study in Athens on Saturday 90 percent of survey respondents declared that the new reform package go almost exclusively to the detriment of the poorer sections of the population. Only 33 percent also believe that the new cuts in the social network can not solve the country's problems would be. Nevertheless, 67 percent of respondents argued that Greece remains in the euro zone.


But at what cost? Already 8000 people in Athens alone have to resort to soup kitchens to find some food in a country in which there are virtually no opportunities left to make a living.
Sure enough, in a world in which no politician has any credibility left, it took Greece a few short hours to issue its canned response to the allegation that it has been making up numbers all along... as usual. Per Dow Jones:
Greece's finance ministry late Sunday refuted a report in a German magazine claiming that Athens must cover a 20 billion euros ($26 billion) budget shortfall--twice previous estimates--in order to satisfy international conditions for emergency aid.
Now we just need two more denials to have no doubt that every number out of that particular economic basked case is a lie. Which we don't now. Don't forget: this is what the Greek Finance Ministrylooks like:
And the kicker of course is that as reported on Friday, Europe is now desperate to not rock the boat ahead of the Obama reelection, because as Reuters reported all of Europe wants to give Obama a second term. Which makes sense: in a world of wealth redistribution, it will be only fair that America, which has taken the place of China as the world's growth dynamo, and where fund flows out of Europe have pushed the S&P to a few percentage point shy of all time highs, will repay its reelection debt to Europe for avoiding reality as long as possible, by "sharing" US taxpayer funding, from those who for one reason or another still pay taxes, with its European proletariat cousins and bailout all of Europe's insolvent countries on Uncle Sam's tab yet again, starting just after November 6, 2012.
Because it's only "fair."
 








http://www.zerohedge.com/news/2012-09-22/former-ecb-chief-economist-says-ecb-panic-czech-president-warns-end-demoracy-imminen


Former ECB Chief Economist Says ECB Is In Panic, As Czech President Warns The End Of Demoracy Is Imminent

Tyler Durden's picture
Submitted by Tyler Durden on 09/22/2012 21:16 -0400




If anyone thought the bad blood between Germany and the rest of the insolvent proletariat, aka the part of the Eurozone which is out of money (most of it), and which has been now confirmed will be supporting Obama, complete collapse of the Greek neo-vassal state of the globalist agenda notwithstanding, had gone away, here comes former ECB chief economist Juergen Stark to dispel such illusions. In an interview with Austrian Die Presse, the former banker said what everyone without a PhD understands quite well: "The break came in 2010. Until then everything went well..."Then the ECB began to take on a new role, to fall into panic.... Together with other central banks, the ECB is flooding the market, posing the question not only about how the ECB will get its money back, but also how the excess liquidity created can be absorbed globally. "It can't be solved by pressing a button. If the global economy stabilises, the potential for inflation has grown enormously... It gave in to outside pressure ...pressure from outside Europe" Why, whichever bank headquartered at 200 West, NY, NY might he be referring to?
From Telegraph:
He added that "panic" about the eurozone breaking up was "nonsense" but that the only way to end the crisis was for member states to bring down their debts and implement structural reforms to boost economic growth.

"Governments have recognised that returning to budgetary discipline is indispensable. Markets focus much more on whether states will be able to service their debts in five years' time," he said.

Mr Stark quit in late 2011, following in the footsteps of former Bundesbank head Axel Weber, who stepped down earlier in the year from Germany's central bank because of unease about the ECB's policies.

Mr Weber's successor Jens Weidmann was the only member of the ECB's policy-setting governing council to vote against the bank's new programme earlier this month.

"Weidmann's arguments ... should not be made light of," Mr Stark told Die Presse. "The way in which his position has been publicly commented upon by the ECB leadership has crossed the line of fairness."
And speaking of continuing takeover of the world by a few not so good banks, a loud warning that the advent of globalist influences (i.e., bankers) is taking over Europe and that the "destruction of Europe's democracy is in its final phase" comes not from some European fringe blog, but from the 71 year old president of the Czech Republic, someone who certainly knows about the difference between communism and democracy, Vaclav Klaus. In an interview with The Sunday Telegraph, "Václav Klaus warns that "two-faced" politicians, including the Conservatives, have opened the door to an EU superstate by giving up on democracy, in a flight from accountability and responsibility to their voters. "We need to think about how to restore our statehood and our sovereignty. That is impossible in a federation. The EU should move in an opposite direction," he said."

Alas, what also is impossible in a Federation is for a banker-controlled entity to provide money out of thin air, i.e., public debt, which dilutes the "common currency" in the process preserving the illusion that credit-fueled growth (the only kinds the world has seen since the advent of the Federal Reserve) can continue for ever, when in reality all that is happening is the ongoing dilution of sovereignty alongside the destruction of individual currencies. This is precisely what the status quo, i.e., the abovementioned company headquartered at 200 West, wants.
And what the status quo wants it always gets, absent a revolution.
Back to Klaus:

Speaking in Hradcany Castle, a complex of majestic buildings that soars above Prague, and is a symbol of Czech national identity, Mr Klaus described Mr Barroso's call for a federation, quickly followed by the German-led intervention, as an important turning point.

"This is the first time he has acknowledged the real ambitions of today's protagonists of a further deepening of European integration. Until today, people, like Mr Barroso, held these ambitions in secret from the European public," he said. "I'm afraid that Barroso has the feeling that the time is right to announce such an absolutely wrong development.

"They think they are finalising the concept of Europe, but in my understanding they are destroying it."

President Klaus, 71, is one of Europe's most experienced conservative politicians; he has served as his country's prime minister twice after winning national elections and will complete his second term as Czech President next year.

Frequently referred to as the "Margaret Thatcher of Central Europe", Mr Klaus was born in Nazi-occupied Prague, played a key role in the 1989 Velvet Revolution that overthrew Communism and became founder of the Czech Civic Democratic Party, which has remained in government for most of the Czech Republic's independence.

He reluctantly recommended Czech Republic membership of the EU in 2004 and five years later was the last European head of state to sign the Lisbon Treaty, delaying signature, under intense international pressure, until all legal and constitutional appeals had been exhausted against it in his country. "We were entering the EU, not a federation in which we would become a meaningless province," he said.
"When it comes to the political elites at the top of the countries, it is true, I am isolated," he said. "Especially after our Communist experience, we know, very strongly and possibly more than people in Western Europe, that the process of democracy is more important than the outcome.

"It is an irony of history, I would never have assumed in 1989, that I would be doing this now: that it would be my role to preach the value of democracy."
Even more ironic than the return of corporation-controlled statism under the guise of socialism, will be the return of fascism, whose neo-variants are already exhibiting themselves in countries like Greece.
But more on that in a few months, when other European countries get sick and tired of the banker oligarchy and realize that there is really no party that represents the people in a world in which democracy is merely a mirage.
And so, once again, the most horrific aspects of humankind history will repeat themselves, only this time with far more potent and destructive weapons to enforce one's ideological superiority. Just as soon as the "Democratic" Emperor is exposed as having no clothes by more than just those who still are not afraid to tell the truth.


and..... 







http://www.zerohedge.com/news/2012-09-22/guest-post-draghis-coup-detat-and-why-omt-illegal


Guest Post: Draghi's Coup D'Etat And Why OMT Is Illegal

Tyler Durden's picture
Submitted by Tyler Durden on 09/22/2012 20:16 -0400



Submitted by Blankfiend of Fibs And Waves blog,
According to Mario Draghi, OMT, or Outright Monetary Transactions, is a program of conditional bond buying targeted at specific countries to restore the perception of the euro's irreversibility and stability, and repair a broken monetary policy transmission mechanism.  Once launched, OMT has no ex antelimits, it is within the ECB's price stability mandate, and it can be halted or interrupted based on achievement of its objectives or non-compliance with conditions imposed upon the targeted national government.
I would posit that OMT is much more than what the party line states.  Here are some alternative interpretations for your consideration.  I challenge you to refute the logic of any of them.

OMT is a Eurobond equivalent, targeted toward specific countries.  Given that ECB holdings are joint and several backed by all of the National Central banks (NCB's) that make up the European System of Central Banks (ESCB), any losses on these bond purchases would be distributed among the NCB's according to their capital key.  OMT would be a peculiar type of Eurobond, with some parallels to the discard red vs. blue Eurobond schema.  Instead of being differentiated by levels of debt-to-GDP (greater or less than 60%), these bonds would be differentiated by country of issue.  For example, if Spain enters this program, its bonds would now have the backing of the ECB, while Italy's would not.  Now, the red vs. blue idea was discarded precisely because it would have established a market preference for the blue bonds (joint and severally backed Eurobonds) versus the red bonds, which would have only had the backing of the issuing sovereign.  Is it so difficult to imagine that the market would quickly develop a preference for the bonds of countries on OMT life support, to the detriment of those NOT on it?

OMT is a banking license for the ESM.  Once the ESM buys the debt of a target country on the primary market, the ECB will follow with potentially unlimited purchases on the secondary market.  This obviously allows the resources of the ESM to be greatly extended without a formal banking license or leverage scheme.  At the same time, it completely bypasses any safeguards countries may think they have in place to limit their bailout related losses.  This is, of course, due to the joint and several liabilities of the NCB's that comprise the ESCB.  Ironically, an official banking license for the ESM has been declared clearly in violation of Article 123(1) of the TFEU by no less than the ECB itself.  The OMT is an obvious scheme to bypass that "technical inconvenience."
OMT is a sham.  While I have no doubt that our beloved Italian central banker will be more than willing to purchase the bonds of program countries, I do not believe for one minute that he would have the resolve to either permanently halt or reverse those purchases if a large target country backslides on its commitments.  I am sure that the markets - and the beneficiary national governments- recognize this as an empty threat as well.  If Draghi carried through on his threat in any meaningful way, he would be abandoning the goals of monetary transmission and euro irreversibility he claims to be striving for.  This is particularly true for big countries like Spain and Italy, sort of like mutually assured destruction.  Once countries like this are on the OMT methadone program, there will be no discharging them for abuse.

OMT is fiscal policy by Central Bank fiat.  Eurobonds, ESM banking licenses, and ESM leverage schemes have all been previously rejected by various European political leaders, most notably Angela Merkel and the Finns, but also Nicholas Sarkozy.  OMT is a clever way to skirt all of those objections and concerns in order to restore confidence in sovereign European debt markets.  At the same time, it is a backdoor method of committing national fiscal authorities to backstopping potential extra-national losses far in excess of what those fiscal authorities were ever willing to commit their taxpayers.  OMT is a full-scale abandonment of the concept that a supra-national central bank should not be able to undertake measures which could subsequently force the hand of national fiscal authorities.  OMT embarks us upon the treacherous path of fiscal policy by unelected, unaccountable central bank bureaucrats.

OMT is a Credit Facility.  Let's see....  We have an unlimited program specifically designed to support the sovereign debt of targeted countries.  We have implausible revocability, dubious terms for enforceability, open-endedness regarding both time and quantity of support provided, and, supposedly, no recourse by the lender.  Furthermore, the provider of this credit is specifically willing to buy even if no one else will.  Admittedly, the credit provider will not buy on the primary market.  However, when you examine the TFEU, there are two distinct restrictions in this regard.  The commonly cited one obviously forbids the ECB from primary market sovereign debt purchases.  But the one that Draghi wants us to ignore forbids ECB credit facilities in favor of national governments.  "In favor of" is clearly broader in scope than the primary market restriction.
OMT is ILLEGAL.  Here I am beating a dead horse, as I have made this argument several times before.  But, one more time for effect:


OMT IS ILLEGAL AS IT VIOLATES ARTICLE 123 (1) OF THE TFEU, WHICH CLEARLY PROHIBITS THE ECB FROM ESTABLISHING A "CREDIT FACILITY ... IN FAVOR OF NATIONAL GOVERNMENTS."


other italian perversion apart from the OMT.....









http://roma.corriere.it/roma/gallery/roma/09-2012/polverinifesta/01/feste-pdl_7bf6967c-0253-11e2-9f2e-6124d1c3f844.shtml


La festa al Foro Italico organizzata dal consigliere regionale del Lazio Carlo De Romanis (Pdl) in costume da antichi greci (foto da Facebook)

news regarding Greece......

Greece: General strike with a silver lining - even the taxman's walked o

Public services are being affected as strikers oppose another round of cuts





I





f you wanted to get a hip replacement, file for divorce or pay your taxes in Greece this week, you were
 out of luck as unions staged a series of strikes in key services to protest against a new round of painful cuts being hammered out to secure the next round of eurozone bail-out cash.

Politicians in the coalition government have been locked behind closed doors all week, first with inspectors from the European Union and the International Monetary Fund, and then with each other as they try to scrape together the deep cuts needed to stop the country going bankrupt.

Most of the striking workers – from tax officers to university professors – oppose looming salary cuts which are included in the austerity package that is meant to save Greece at least €11.5bn (£9.2bn) over the next two years. More than half of the cuts will come from cutting wages, pensions and social benefits again, a finance ministry official confirmed. But Athens has yet to agree on the entirety of the austerity programme, which could threaten the release of a €31.5bn tranche the country needs to avoid debt default and stay in the euro.

"The negotiations are difficult," the Finance Minister, Yannis Stournaras, said this week, in reference to talks with representatives of the EU and IMF. "We're doing everything possible to minimise the social 
cost, especially for the lower income groups."

Government officials remained hopeful, however, that Greece could be close to agreeing the full spending cuts soon. Yesterday afternoon, Mr Stournaras met with the inspectors for the final time before they leave Athens today to consider their findings. The inspectors said they had held "productive discussions" and the government had made "good progress", adding that officials would return for further meetings in about a week.

The auditors' report on Greece was initially expected to be ready in time for a eurozone finance ministers' meeting on 8 October, but a Reuters report – later denied by Greek officials – suggested it could be pushed back until after the US presidential elections on 6 November to avoid anything that could "rock the global economy".
Some good news emerged yesterday from the finance ministry, which revealed that for the first time this year, Athens presented a budget surplus. But with 24.4 per cent of the country unemployed, experts warn that the succession of austerity measures have only compounded the country's deep recession, now in its fifth year.
With more than a quarter of the population living below the poverty line, the planned austerity measures revived public anger. Hospital doctors have been striking since Monday, leaving many hospitals running with skeleton staff. "Most of us continued to work; we can't just give up on our patients," said Alexandros Bachariou, an eye doctor at one of Greece's largest hospitals, Evangelismos. But he lamented the conditions medical staff had to work under. "We're seriously understaffed: retiring colleagues aren't being replaced while the number of patients using public hospitals has soared because of the crisis," he said.
Tax officers yesterday joined prosecutors and judges who continued their week long work stoppages. Vassiliki Thanou, the president of the Union of Judges and Prosecutors, said her colleagues had previously agreed to salary reductions to help the country battle its financial crisis. "But the new planned cuts mean our wages could drop by up to 60 per cent and that means we're stripped of a dignified living." On Thursday, various small protests – by tourist operators and metal workers – and a strike by metro and tram drivers led to lines of snarled traffic in the capital.
Authorities ramped up security measures around the office of Prime Minister Antonis Samaras. Most of the gates of an adjacent public park were locked suddenly, trapping tourists inside, while scuffles broke out between police guarding the building and protesting firemen.
The protracted negotiations over the cuts have added pressure on Mr Samaras' fragile coalition government. The ruling party's popularity has dropped while MPs have threatened to vote against the cuts. Fotis Kouvelis, the leader of the Democratic Left party, urged representatives to "stop attacking the Greek society" and spoke against further cuts to pensions and social benefits. Unions have called for a general strike next week.

'Absolute need' to preserve the eurozone

The leaders of Italy and Greece are insisting on the "absolute need" to preserve the eurozone.
Italy's Prime Minister, Mario Monti, met his Greek counterpart, Antonis Samaras, on the sidelines of a political conference in Rome yesterday, also attended by the Irish and Spanish premiers.
A statement from Mr Monti's office said the two leaders reiterated their conviction of "the absolute need to safeguard the integrity of the eurozone, stabilise markets and proceed in the process of European integration".
While Ireland and Greece have both applied for bailouts to prop up their economies, Italy and Spain have not, despite high levels of government debt. Spain in particular is under pressure to apply for funds beyond the €100bn loan it has procured for its banks.



and.....

http://www.telegraph.co.uk/finance/financialcrisis/9559991/Debt-crisis-Spain-will-need-extra-bail-out.html

7:45PM BST 22 Sep 2012
Comments23 Comments
A bank-by-bank test of financial stability due on Friday is expected to conclude that Spain's lenders are dangerously over-burdened with toxic debts and need to be recapitalised, restructured or shut down.
The stress test is expected to show a dramatic deterioration since the previous tests were carried out at the beginning of the summer which suggested a €60bn cash injection would be the worst-case scenario.
Nomura Global Economics said in a note: "Our initial reaction to the publication of those estimates has been negative. The announced figures are well below the market expectations, which start at around €100bn, and, in our view, not only fall short of bolstering market confidence but may actually increase the risk of Spain losing market access."
Last week, the Bank of Spain said bad debts at Spanish lenders had risen to record levels, with almost one in 10 loans in arrears. It is the highest bad-loan ratio since central bank records began in 1962.
In June, Mariano Rajoy, the Spanish prime minister, negotiated a deal that secured lending from Brussels of up to €100bn to recapitalise the banks. Experts now think that it will not be enough. Amid soaring borrowing costs and a stricken economy, Spain has come under intense pressure to ask Brussels for a full sovereign bail-out.



Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)