Spain wrestles with the threat of Regions such as Catalonia seeking independence - is the Military bluffing with its threat to crush any such revolt ? As for Greece , still no agreement within the presnt government for the Troika demanded cuts , Troika has thrown its hands in the air for now and gone home for a week or so - but what has the US ( US Admin - Geithner and Bernanke in particular ) promised Europe to stay the execution of Greece until after November 6th

http://www.nakedcapitalism.com/2012/09/wolf-richter-catalonia-cries-for-independence-while-the-spanish-military-threatens-to-crush-the-vultures.html

SATURDAY, SEPTEMBER 22, 2012

Wolf Richter: Catalonia Cries for Independence While the Spanish Military Threatens To “Crush” The “Vultures”

Yves here. Readers in Spain have dismissed the possibility of a Spanish breakup. But long-simmering regional frustrations combined with a rapidly deteriorating economy have the potential to produce paralyzing levels of civil disobedience. As Marshall Auerback said in a e-mail:

The big weak point is Spain. They just had 1.5 million people take to the street in Catalunia out of a total population of 7.5 million.

This week Bloomberg reported Spanish bank deposits declined by 224 billion euros or 10% in the twelve months ending July 31st. That is equal to more than 20% of Spanish GDP. When I started to warn about Spain as “the domino too big to fall” in May of 2011, I could not have imagined a deposit contraction of this magnitude.

Spanish banking system borrowings from the ECB rose from 82 billion euros to 412 billion euros in the twelve months through August of this year, according to the Bank of Spain. Once again this amounts to lender of last resort financing equal to over 30% of GDP in a mere year. This is also unimaginable.

There can be no doubt that the run on Spanish banks has been ongoing, massive, and most likely devastating.
Spanish real estate prices have been falling for years. Retail sales are collapsing from very depressed levels. Total employment has been crashing. Spain’s employment has been falling steadily year on year at a roughly 3.3% annual rate. That is equivalent to a 600,000 monthly fall in the U.S. We all agree that would translate into something like a 4% or 5% or 6% rate of GDP contraction.

No wonder Rajoy doesn’t want to submit to the barbarism of the ECB’s programs. If you loved what was happening in Athens, just wait until this show moves full steam ahead into Madrid.

*  *  *


By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.
Spain has enough problems: a debt crisis, a hangover from a housing bubble, unemployment of over 25%, youth unemployment of over 50%, massive demonstrations against “structural reforms” that the government is trying to implement in its desperate effort to keep its chin above water…. And now it has a new one: the possible breakup of the country. The military has already chosen sides.
It started last week in Barcelona, capital of the Autonomous Region of Catalonia, the richest region in Spain. Of the 7.5 million Catalans, between 600,000 and 1.5 million—an astounding 8% to 20% of the population!—protested in the streets, demanding independence.
Antagonism between Catalonia and Spain has simmered for a long time. But the financial fiasco that Spain is mired in deepened the fissures. Out-of-money Catalonia had to ask the central government for a bailout. Catalans are frustrated. They claim that under the current fiscal setup, Catalonia transfers €16 billion annually to the central government, and that these transfers bankrupted the region. Now, in exchange for the bailout, the central government has imposed austerity measures that cut into health care, education, and other services.
On Thursday, Catalan President Artur Mas met with Prime Minister Mariano Rajoy, originally to beg him for a new tax deal. But the massive demonstration in Barcelona had added independence to the agenda. Rajoy brushed him off, with references to the constitution that didn’t allow regions to secede.
“Constitutions may or may not be modified, but they do not subjugate the will of the people,” Mas lamented after the meeting. As leader of the Democratic Convergence of Catalonia and chairman of the governing Convergència i Unió (CiU) coalition, he represents the middle class and has supported Catalan independence only in an ambiguous manner. Until now. “Catalonia will follow its path,” he said. Parliament would meet next week to “consider the next steps.”
“Illegal and lethal,” howled Foreign Minister José Manuel García-Margallo and threated Catalonia with exclusion from the EU if it chose independence. Decisions in Brussels as to which country will be allowed to accede to the EU have to be unanimous, and Spain’s veto would bar Catalonia “indefinitely,” he said.
Nevertheless, Friday morning, CiU spokesman Francesc Homs pushed that agenda further: after the elections—early elections could be held on November 25—Parliament may initiate the path to independence. This could be by referendum, but there would be alternatives, he said, “for example” a parliamentary vote to declare statehood.
The CiU hasn’t yet decided how to articulate its demand for statehood in its electoral program, but the strategy toward independence is an “irreversible process,” Homs said. He described Spain as a “lion” attacking the Catalan “gazelle” whose sole weapon is “agility.” And the threat of getting kicked out of the EU? “Catalans are European citizens,” he said, and he didn’t know how it would be possible to kick them out. But he wasn’t worried about the all-important business community. “We won’t lose investments if things are expressed democratically,” he said.


The response was immediate. Catalan independence would be a “tremendously huge problem“ for businesses, said Joan Rosell, president of the Spanish Confederation of Employers’ Organizations (CEOE), which represents state-owned and private sector enterprises. Employers, he said, supported a single market as a way out of the current turmoil.
Declaring statehood would have no legal value, Deputy Prime Minister Soraya Saenz de Santamaria declared at a press conference after the Council of Ministers. And the government didn’t welcome early elections, she said; “political instability” would aggravate the crisis. But she threw Mas a bone: the government would be willing to consider reforming the financing model of the Autonomous Regions.
A discussion of the nitty-gritty of independence has broken out. Hot topic: the distribution of central government debt. Would Catalonia have to carry 20% or 16%? Or none because Spain issued the bonds and not Catalonia? Would Catalonia be better off within Spain or as independent state? Would it even be financially viable? Rumors are swirling that members of the governing coalition have asked the European Commission if Spain can legally stop Catalans from seceding, and if it can expel an independent Catalonia from the EU via its veto power. As there is no law that would allow secession, there is also no law regulating it. So everything is up in the air. But the fact that this is getting serious attention, shows just how far the process has already gone.
And the military staked out its role. Colonel Francisco Alaman promised to crush the “vultures” if they chose independence. “Independence for Catalonia? Over my dead body,” he said. “Even if the lion is sleeping, don’t provoke the lion, because he will show the ferocity proven over centuries.” Words of the crazed fringe? Apparently not. “Deeply-rooted thinking in large parts of the armed forces,” explained retired Lt-Gen Pedro Pitarch. And it opened a whole new chapter in the Eurozone saga that, despite all assurances to the contrary, simply keeps getting more uncertain.
When the German Constitutional Court nodded with a stern smile on the ESM bailout fund and the Fiscal Union treaty, politicians breathed a sigh of relief. The German revolt was over. But steam is billowing once again from the misaligned pipes of the Eurozone, this time in France, where the Fiscal Union treaty had been silenced to death. Read…. A French Rebellion Against Unelected Bureaucrats: “European Coup D’Etat And Rape Of Democracy”



and......

http://elpais.com/elpais/2012/09/21/inenglish/1348238059_604606.html

In the latest in a series of bold challenges to the Spanish government, a top Catalan administration official on Friday warned that the region’s parliament could put legal mechanisms in motion that would lead to a unilateral separatist drive for Catalonia.

In a radio interview, Catalonia spokesman Francesc Homs said that a referendum within four years “was a possibility,” and that independence could also be “obtained by way of a parliamentary vote after an election.”

Homs’ announcement comes on the back of a number of advisories issued by the Catalan nationalist CiU bloc and its leader, regional premier Artur Mas, who says that a process leading to eventual independence for the region is “unstoppable.” It also comes one day after a tense meeting was held between Prime Minister Mariano Rajoy and Mas, who has been demanding a new financing plan for his region.

While Rajoy told Mas on Thursday that there was “no margin for negotiation of a fiscal pact,” Deputy Prime Minister Soraya Saénz de Santamaría reiterated the Popular Party (PP) leader’s pledge that the central government will review the structure of regional financing this term.

“The prime minister made it clear that he wasn’t going to accept any type of proposals that are not backed by the Constitution,” she said following Friday’s Cabinet meeting.

Mas’s unsuccessful attempt to obtain a fiscal pact with Madrid has led to speculation that the CiU government will call early elections for November 25. Homs said the government has not yet made that decision.

For her part, Saénz de Santamaría didn’t give any details as to what changes could be made to the regional financing law (LOFCA), but said that a complete analysis would be done “to see which areas we can correct.”

The Catalan government has long complained that LOFCA is an unfair law because Catalonia’s tax base provides more money to Spain than any other region, yet it gets less back in return.

Referring to Homs’ announcement concerning independence, Saénz de Santamaría warned that such a move could only be done through “a radical” change to the Constitution along with a referendum or plebiscite in which all Spaniards can vote.

and neither the present Greece government nor the Troika can reach agreement on the cuts the Troika demands.....

http://globaleconomicanalysis.blogspot.com/2012/09/greek-bailout-on-hold-again-is-obama.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Saturday, September 22, 2012 10:52 AM

Greek Bailout on Hold Again, Is Obama Partly to Blame? IMF Economic Hit Man Hypocrisy

Once again talks between the Troika and Greek politicians broke down. Talks between the Greek political parties have also broken down.

Meanwhile support for Golden Dawn, a political party with a Nazi-like symbol is on a huge upswing. For details, please see, Greek State Tries to Stem Neo-Nazi Rise.

Talks in Greece over the next tranche of loans are now on hold until after the US election. There were numerous reports this week that Obama did not want failed talks before the election, preferring instead they not fail until after the election when it will not matter to him.

Limits? What Limits? 

The talks broke down when the Troika asked for more wage and benefit cuts.

The finance ministry says it can make the required savings from cuts in operational expenses and the restructuring of the public sector. But the troika of international lenders, especially the IMF, is unconvinced. It has asked for more wage and pension cuts, according to a person familiar with the talks.

Talk of tension between finance minister Yannis Stournaras and a member of the troika as well as strains within the coalition have fuelled rumours that talks have reached stalemate.

Fotis Kouvelis, the leader of the moderate Democratic Left party, said: “The troika must stop attacking Greek society. The troika must understand there are limits.”

Greek Bailout on Hold Again

So ... Greece Braced for Bailout Delay

 No deal was clinched on Friday, and the troika’s chief inspectors announced a pause from the discussions. The troika said in a statement that the mission was expected to return to Athens after about a week, saying “good progress” had been made during this period. 

People familiar with the situation said the US presidential elections had played a role in delaying the disbursement of the loan tranche to Greece, although others disputed this interpretation.

“Everything is being put back,” said one senior Greek official, insisting that the troika’s report and the disbursement of the loan tranche would take place after the US elections. “The disbursement may even be pushed back to late November.”

IMF, Economic Hit Man

Note the hypocrisy of the IMF, insisting Greece tackle its pension and deficit problems now, but urging the US to not do a thing about its problems.

I discussed this at length in Christine Lagarde, IMF Chief, Warns US About Short, Medium, and Long-Term Problems; Like All Keynesian Clowns, Lagarde Does Not Want to Deal With the Present.

The IMF is the protector of interests of big banks and does not give a rat's ass what small countries it destroys in the process. Bear in mind, Greece does need reform and plenty of it, especially in regards to pensions and work rules.



However, Greece does not need tax hikes and nor does Spain. Yet Brussels and the IMF have insisted on that, while openly cheering more deficit spending in the US.

Countries accepting money from the IMF on IMF terms are fools. Greece and Spain both need structural reforms, but they also need to default on foreign debt if they are to have any chance of recovery within a decade.

Mike "Mish" Shedlock



and.....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_25445_22/09/2012_462564

Troika leaves without final deal on cuts

Klaus Masuch (r) representative of the European Central Bank and Matthias Mors (l), representative of European Commission, arrive at the Greek Finance Ministry to meet Finance Minister Yannis Stournaras in Athens, on Friday.

Envoys representing Greece’s international creditors, the troika of the European Commission, European Central Bank and International Monetary Fund, were to leave Athens on Saturday for a “brief pause” after negotiations with government officials fell short of a final agreement on the composition of an 11.5-billion-euro austerity package.
But despite failing to reach a consensus on Friday, both sides issued positive messages on the progress in talks with sources telling Kathimerini that a batch of countermeasures proposed by Finance Minister Yannis Stournaras in a bid to avert deeper cuts to pensions and salaries had been accepted in principle by the troika with a caveat -- that failure to enforce them would result in the imposition of more onerous cuts.
According to a high-ranking official of the ministry, the two sides agreed on 9.5 billion euros’ worth of measures -- involving cuts to pensions, salaries and state funding -- and reached a compromise on how the 2-billion-euro gap would be filled.
Troika officials accepted Stournaras’s proposal for the savings to come from cutbacks to the defense and health sectors, and to local authority funding and public administration costs, sources said. But the foreign envoys are said to have demanded more practical details about the proposed countermeasures and to have said that authorities would be obliged to impose a new raft of harsh cuts if the softer measures failed to bear fruit by January 2014. “We agreed on quite a few of the measures,” a ministry source said, adding that “other areas must be explored and clarified.” He added that the government was set on “protecting the weaker members of society.”
Meanwhile, speaking to reporters during an official visit to Rome, Prime Minister Antonis Samaras denied reports that the new austerity package would include a tax on property owners who rent out their assets.

The troika, for their part, issued a written statement, saying that there had been “good progress” and that they would “take a brief pause” before returning “soon” -- probably next week. A report on Friday by Reuters quoting unnamed European officials as saying that the troika’s review on Greece’s progress would not be issued until after the US elections, scheduled for November 6, was swiftly denied by EC official Matthias Mors. But the fresh delay in efforts by Greek officials and the troika to seek a common line on the austerity package suggested that an agreement will take longer than expected, meaning that talks between Samaras and his restive coalition partners, expected in the middle of next week, will also be put back back, as will a vote in Parliament on the cuts. This is likely to delay the release of the troika’s report, which will determine whether Greece receives a 31.5-billion-euro loan on which its solvency relies. and does anyone think the ECB or IMF will suffer haircuts of any meaningful amount ???? http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_21/09/2012_462293 IMF reaches limit for loans to Greece, says Greek representative  Greece’s representative Thanos Catsambas sees good will for Athens but says any additional funding will be up to the EU By Tom Ellis Greece’s foreign creditors will rubber-stamp the country’s bailout deal based on the sustainability of its debt, as well as the securing of further funding, which will effectively come in the form of an extension to the fiscal adjustment program or a new haircut, Thanos Catsambas, the country’s representative to the International Monetary Fund, told Kathimerini. The Greek representative to the IMF -- which together with the European Commission and the European Central Bank comprises the so-called troika -- stresses, however, that any additional funding for the country would come exclusively from its European partners, as the IMF has exhausted its lending capacity for Athens. Catsambas, who is one of the IMF’s alternative executive directors, argues that Greece is currently enjoying a higher level of “good will” from its partners, stressing the importance of recent comments by the IMF’s Deputy Managing Director David Lipton, in which he said that Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras “are dedicated to finding an appropriate path for adjustment.” What are the goals and the timeline set by the troika’s inspectors in Athens over the next few weeks? The troika will try to assess the progress of the [fiscal adjustment] program according to the implementation of measures as well as in macroeconomic terms. Based on this data, it will negotiate with the government a modified memorandum aimed at economic growth in as short a time as possible, under two indisputable conditions: sustainability of the external debt and finding additional funds. The latter is also connected to a possible extension of the program and the targets of the adjustment. What role does the head of the IMF’s mission to Greece, Poul Thomsen, play and what are his expectations of the Greek government?As chief of the IMF mission, Thomsen is responsible for coordinating the technical team that is carrying out the program and for negotiations with the Greek government in regard to modifications to the memorandum. The objective is to draw up a “progress report” on commitments made by the Greek government to measures that should have been adopted by the end of May and by the end of August. This package includes the well-known commitments for reductions in spending amounting to 11.6 billion euros, which form the core of the fiscal measures for the 2013-14 period. The negotiations are focused on the level at which these commitments have been met and on reviewing the targets and commitments of the Greek government, if this is deemed necessary. When is the IMF’s Executive Committee scheduled to meet on Greece and when will the disbursement of the next tranche of funding be discussed? Based on the Fund’s internal deadlines, the annual summit with the World Bank on October 9-14 in Tokyo and certain other necessary actions, my estimate would be that the discussion cannot take place before the last week of October. The IMF’s internal procedures are pretty complicated. The first draft for the final report that will be presented for approval to the Executive Committee will be drawn up by the IMF’s European Department, which has the overall supervision of the Greek program. The final draft then includes the participation of experts from at least another three departments who carry out detailed checks of the legal, fiscal and comparative aspects of the program with other countries. Haircut or extension? Does the IMF foresee additional financing in the form of Official Sector Involvement [or OSI, a term which refers to a restructuring of the debts held by Greece’s international creditors] or an extension to the fiscal adjustment program as more likely? Both forms are complementary, though not mutually exclusive. An extension to the program will mean more funding as the adjustment will become milder and, as a result, the public sector’s borrowing requirements will be greater. Covering the borrowing requirements could take two forms: either additional funding (with more favorable terms) or by a restructuring of the debt held by the official sector. However, any additional funding in any form will come exclusively from Europe. The IMF has exhausted its possibilities to extend the loan beyond the amount approved last March. Therefore, and even if the IMF considers OSI to be the most advisable solution, the final decision rests with Greece’s European partners and will be determined by the political and institutional restrictions faced by governments and the ECB. What is the general feeling about Greece at the IMF, and how were Greek Prime Minister Antonis Samaras’s meetings with French President Francois Hollande, German Chancellor Angela Merkel and Eurogroup Chairman Jean-Claude Juncker viewed? Let me start with Juncker. In a recent telephone exchange between the prime minister and [IMF Managing Director Christine] Lagarde, she asked Samaras to share his impressions from his meetings with the European officials. The overall impression of the prime minister and the personal assessment of the managing director is that right now Greece is enjoying the highest level of good will from its partners that it has had since the long pre-election period.Personally I give greater weight to the recent comments by David Lipton, who said that the prime minister and finance minister “are dedicated to finding an appropriate path for adjustment, getting things back on track, and we’re trying to help.” Such words from a reserved and rational person are the best that the government could expect under the circumstances. Is the general feeling that Greece will get the next installment of funding and also remain in the eurozone? Right now Greece has a financial team of international caliber working like a well-oiled machine and working night and day to make up for ground lost during the extended electoral process. The prime minister has handpicked his closest associates on their merit and he himself has a reputation for being a hands-on manager who does not give in to political expediency. Therefore, I have faith in the former and hope for the latter. Is it true that in the spring of 2010 the IMF estimated that the program was not working and that a restructuring was necessary, as your predecessor Panayiotis Roumeliotis has asserted? I am not in a position to answer that question given that I was not acting in an official capacity in the spring of 2010 and had no participation in behind-the-scenes negotiations. I do not know what Roumeliotis was referring to exactly, but I can say this: The program has proceeded as planned and the only “failure” has been that the public sector still has significant borrowing needs, despite the unprecedented haircut on privately held Greek debt. In other words, the adjustment has not yet been as successful as one would have expected. Recession & unemployment Yet within the context of the fiscal adjustment, for the past two years Greece has been experiencing an unprecedented recession and a rapid rise in unemployment. Without structural reforms, the public sector’s borrowing needs can only be contained by a greater recession. With structural reforms and an increase in overall demand, the adjustment would have been achieved with far smaller negative consequences to the real economy. I must remind you, though, that a few months ago, Gikas Hardouvelis, the economic adviser to then-Prime Minister Lucas Papademos, had said that over the course of 2011 just 22 percent of the measures in the first memorandum had been implemented. It defies all reason to argue that the program failed when the government, consciously or not, implemented just one-fifth of the agreed measures. Was a recession of this length and magnitude expected? Any reliable macroeconomist with experience in fiscal adjustment programs would have expected Greece to go through a period of recession and to experience a drop in living standards that would last for several years. The economic term “internal devaluation” is a euphemism for the anticipated decline in living standards. I had drawn attention to the recession in February 2011, when I also made three observations: first, that the Greeks’ standard of living would drop significantly and systematically for three to five years; second, that if the authorities did not succeed in dealing with the persistent problem of tax evasion, the game would be lost; and third, Greece’s new growth model should be based on the service sector, with a small participation from the primary sector. http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_24429_21/09/2012_462566 Reports suggest a second haircut is under discussion  ECB chief has expressed opposition Greece may require another bond haircut, this time with so-called Official Sector Involvement (or OSI, a term which refers to a restructuring of the debts held by Greece’s international creditors) in order to render its debt sustainable, with talks on how this could be done already taking place, according to reports in Germany. Financial Times Deutschland reported Friday that talks in Brussels are increasingly focusing on a new debt swap for Greece after that involving the private sector, or PSI, in March. The OSI plan would see a slashing of the interest rates on the bilateral laons from the country’s first bailout package that was implemented from May 2010 to end-2011. “There are such talks,” the newspaper quoted a high-level European Union official as saying. Eurozone countries spent some 53 billion euros on the “Greek Loan Facility.” German state broadcaster Deutsche Welle reported that a group of eurozone member-states is strongly resisting such a haircut, at least for the time being, suggesting that this would harm the confidence that markets have in the euro area. “At this stage it is the approval and the application of the package of 11.5 billion euros of cuts that is needed, in order to send the right message to the markets,” sources from Berlin were quoted as saying. The German newspaper clarified that the haircut would not concern the temporary bailout mechanism, the European Financial Stability Facility (EFSF), but only bilateral agreements. In that sense, “a Greek debt haircut from the first package would not theoretically require the approval of the German parliament.” Even if that is the case for Germany, an OSI restructuring would be certain to generate major reactions in other eurozone countries as well as central banks. A few days ago the governor of the European Central Bank, Mario Draghi, rushed to rule out the possibility of a new Greek bond haircut, mostly concerning the debt that the ECB holds, expressing his opposition to such an idea. and what might Geithner and Bernanke promised Europe if they hold off giving Greece the boot until after november 6th ????..... Europe Finally Comes Out: Obama's Reelection "Uber Alles" Determines Europe's Future Submitted by Tyler Durden on 09/21/2012 09:46 -0400 default   European Central Bank   Eurozone   Germany   Global Economy   Greece International Monetary Fund   Obama Administration   Reality   Reuters   Sovereign Debt   Tim Geithner For those to whom this comes as a surprise, following the periodic jaunts of Tim Geithner to Europe explaining just what is truly important in life, not to mention Obama's daily phone calls to Mario Monti, we feel truly sorry: EU-IMF REVIEW OF GREEK DEBT SITUATION SET TO BE DELAYED UNTIL AFTER U.S. ELECTION - EUROPEAN OFFICIALS And the punchlines: "Obama doesn't want anything on a macroeconomic scale that is going to rock the global economy before Nov. 6," a senior EU official told "As far as European leaders are concerned, they don't want Romney, so they're probably willing to do anything to help Obama's chances," said the source, an EU official involved in finding solutions to the debt crisis. One kinda wonders: just what has Obama promised a broke Europe in return? Don't answer: it's rhetorical. It's also "fair." At least it is finally clear that the entire world's agenda is to get Obama reelected, broke Athens municipalities no longer collecting garbage, and running out of cash to pay the local Five-Oh notwithstanding. Get ready for reality to come crashing down once the second coming is completed on November 6, and surreality is no longer needed. Full article confirming that the entire developed world is now not only broke, but socialist as well: An EU-IMF report into whether Greece's debt is manageable looks set to be delayed until after Nov. 6 because policymakers want to avoid any shock to the global economy before the U.S. election, EU officials and diplomats say. The report by the 'troika' of Greece's foreign lenders -- the European Commission, European Central Bank and International Monetary Fund -- was expected during October, possibly before a meeting of eurozone finance ministers on Oct. 8. The study provides the basis for decisions on whether to disburse the next tranche of aid to Athens, which may otherwise run out of money to pay wages and pensions, default on its debt and perhaps be forced to leave the euro area. Differences inside the troika about the precise extent of Greece's debt problems, combined with political pressure to hold off for another few weeks, look likely to mean a delay until mid-November. In the meantime, Greece will be kept afloat by issuing short-term treasury bills and its banks will get access to emergency funds from the Greek central bank. "The Obama administration doesn't want anything on a macroeconomic scale that is going to rock the global economy before Nov. 6," a senior EU official told Reuters, adding that previous troika reports had also slipped. Several sources in Germany said top officials in Washington had made clear in numerous conversations with their German and European counterparts that they would prefer no surprises before the tightly contested election. "It's likely the troika report will be pushed back beyond the U.S. election date," said a Berlin official who spoke on condition of anonymity. Asked if that was a special request from Washington, he replied: "They don't want any surprises." The European Commission's spokesman on finance said on Friday the troika would take a week-long break from its work in Athens, the second time it has interrupted its mission since it began in late July, adding to expectations of a delay. "The inspectors are expected to return to Athens in about a week," spokesman Simon O'Connor told reporters. "As for a conclusion of the mission, I don't have any dates to share with you," he said, adding that it should be some time during October. "We can't say exactly when." If Greece is off-target by a wide margin, as many economists predict, financial markets will react negatively, concerned that another round of debt restructuring will be required to get government finances back on a stable footing. A negative troika report could also revive pressure to force Greece out of the single currency area with potentially devastating knock-on consequences for other European countries and the global economy. European leaders have the same interests as the U.S. president in not destabilising markets -- their own economies have also been badly affected by the fallout from Greece, where the sovereign debt crisis began in January 2010. But one source said EU leaders' motives went beyond macroeconomic stability. They also had political reasons to avoid rocking the boat before the U.S. election. "As far as European leaders are concerned, they don't want Romney, so they're probably willing to do anything to help Obama's chances," said the source, an EU official involved in finding solutions to the debt crisis. The problem for Obama is that if Europe's leaders are seen, implicitly or otherwise, to be working to bolster his reelection chances, it could provide ammunition for the Romney campaign. European leaders have repeatedly been accused of acting too slowly and in a confused way to resolve the crisis, with a knock-on negative impact on the United States. If they are now seen to be allying with Obama, it could dent his popularity. So dear Greeks, Spaniards, Portuguese, and all other soon to be broke nations, who are stuck not knowing if you will ever get a pension payment, if the money in your bank is safe, or if there is nobody to collect your garbage, thank the US president. Also: buy every December VIX call option you can find cause the feces sure are gonna hit the fan once the BS is finally over and truth can no longer be delayed.