http://globaleconomicanalysis.blogspot.com/2012/11/dreadful-economic-data-in-germany-italy.html
The Markit Germany Construction PMI® shows German construction activity falls at accelerated rate in October.
and.....
http://hat4uk.wordpress.com/2012/11/07/greek-parliament-passes-austerity-law-but-will-it-be-enough/
http://www.nakedcapitalism.com/2012/11/wolf-richter-eu-bureaucrats-dont-follow-own-austerity-prescription-siphon-off-eu-money.html
( When do the PIIGS say enough of the looting and waste of Brussels ??? )
Today's Tragicomedy in Greek Politics......
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_08/11/2012_468997
The coalition government narrowly passed an omnibus bill containing structural reforms and austerity measures shortly after midnight on Wednesday.
A total of 153 out of 300 MPs approved the measures, which pave the way for Greece to receive its next tranche of bailout founding - 128 deputies voted against the package, while 18 voted «present».
The vote, however, came at a cost for the coalition as it lost several MPs. PASOK leader Evangelos Venizelos ejected six lawmakers from his party for voting against the package. This included former minister Costas Skandalidis, who was rumored to be mounting a leadership challenge. The move reduces the number of PASOK lawmakers to 27.
One MP was ejected from New Democracy, reducing the conservative party's tally of deputies to 126.
Addressing Parliament a few hours before the vote, Prime Minister Antonis Samaras appealed to MPs to back the package, noting that Greece’s future in the eurozone was at stake. “Today we are voting on whether we stay in euro or we return to isolation,” he said. Samaras admitted that cuts to salaries and pensions were unfair but insisted that they they would be the last and any “future adjustments” would be limited to curbing tax evasion and waste.
http://www.zerohedge.com/news/2012-11-07/greek-austerity-vote-passes
Submitted by Tyler Durden on 11/07/2012 17:21 -0500
http://blog.occupiedlondon.org/
http://www.zerohedge.com/news/2012-11-07/mario-draghi-sends-risk-reeling-after-exposing-bitter-european-truth
http://www.telegraph.co.uk/finance/debt-crisis-live/9659704/Debt-crisis-Cameron-attacks-ludicrous-EU-budget-live.html
12.00 The first protests have started in Syntagma Square outside of the parliament, as local authorities workers driving their motorbikes in front of the parliament.
Wednesday, November 07, 2012 2:03 PM
Dreadful Economic Data in Germany, Italy, Spain France
With all the focus (mine included) on the US elections it was easy to overlook some quite a lot of extremely poor economic reports in the Eurozone.
By the way, many people are attributing the stock market decline to the election of Obama. I was up at 3:00AM and the futures were still green. Futures turned red following comments by ECB president Mario Draghi regarding economic weakness in Germany.
Here are some dreadful Eurozone news stories you may have missed.
Sharpest Fall in French Service Sector in a Year
The Markit France Services PMI® shows the sharpest fall in French service sector business activity for a year.
By the way, many people are attributing the stock market decline to the election of Obama. I was up at 3:00AM and the futures were still green. Futures turned red following comments by ECB president Mario Draghi regarding economic weakness in Germany.
Here are some dreadful Eurozone news stories you may have missed.
Sharpest Fall in French Service Sector in a Year
The Markit France Services PMI® shows the sharpest fall in French service sector business activity for a year.
Key Points:
- Final Markit France Services Activity Index at 44.6 (45.0 in September), 12-month low.
- Final Markit France Composite Output Index at 43.5 (43.2 in September), 2-month high.
Summary:
Business activity in the French service sector decreased at a substantial rate in October. This primarily reflected a further drop in incoming new business, as weak economic conditions weighed on demand. The rate of job losses accelerated as service providers responded to excess capacity. Output prices continued to be cut at a sharp rate, despite a further (albeit weaker) rise in input costs. Future expectations deteriorated again, slipping to the lowest level since January 2009.
Across the French private sector as a whole, new business fell sharply, albeit at a slightly slower rate than in the previous month.
Employment in the French service sector continued to fall in the latest survey period. The rate of job cutting quickened to the fastest since December 2009, as a number of companies pursued restructuring strategies and chose not to replace voluntary leavers.
Comment:
Jack Kennedy, Senior Economist at Markit and author of the France Services PMI®, said: "The pace of contraction in private sector output during the last two months has been the sharpest since the post-Lehmans slump in early 2009. With ebbing confidence having resulted in widespread belt-tightening among clients, the economy heads towards the end of the year on a decidedly precarious footing."
Spain Business Activity Drops 16th Successive Month
The Markit Spain Services PMI® shows Sixteenth successive reduction in business activity.Key points:Margin Squeeze in Italy
- New orders and activity fall sharply
- Charges decrease at faster pace
- Companies forecast decline in activity over coming year
Summary:
Further sharp reductions in activity and new orders were recorded in the Spanish service sector during October as the economic crisis in the country persisted. Falling demand led companies to offer discounts in an attempt to stimulate new orders, despite a solid increase in input costs. Meanwhile, the labour market continued to suffer as the rate of job cuts remained marked.
New business has fallen in each month since July 2011. October data pointed to the fastest reduction in outstanding business in 2012 to date. The rate of job cuts remained sharp, and was broadly in line with those seen in previous months.
Comment:
Commenting on the Spanish Services PMI® survey data, Andrew Harker, economist at Markit and author of the report said:
"The latest Spanish services PMI data point to another dreadful month for companies in the sector as the economic crisis showed no signs of letting up. Rates of decline in activity and new business remained substantial, with clients reluctant to spend amid deteriorating economic conditions."
The Markit/ADACI Italy Services PMI® shows Weakest fall in business activity for 14 months.
Key points:
- Output, new work and employment all fall at reduced rates
- Margins squeezed by diverging trends in input and output prices
- Future expectations remain subdued
Summary:
Trends in business activity, new work and employment in Italy’s service sector improved during October, each falling at rates that were weaker than those registered one month before. Future expectations were little-changed since September, however, while developments in input and output prices put further pressure on profit margins.
Comment:
Phil Smith, economist at Markit and author of the Italy Services PMI® said:"October data showed that Italy’s service sector continued to struggle under the weight of austerity as well as economic and political uncertainty. The latest contraction in business activity was considerable overall and pointed to Italy’s recession continuing into Q42012. That said, the headline index is clearly moving in the right direction, with the implied rate of decline a far cry from that recorded at the depths of the current downturn in services output back in April. That was in part reflective of the trend in new business, which also fell at a reduced pace over month."
New Business Declines in Germany
The Markit Germany Services PMI® shows Marginal reduction in German services activity amid ongoing new business declines.Key points:
- Final Germany Services Business Activity Index(1) at 48.4 in October, down from 49.7 in September.
- Final Germany Composite Output Index(2) at 47.7 in October, down from 49.2 in September.
Historical Overview:
Summary:
October data indicated a slight reduction in German service sector output, following a near-stabilisation during the previous month. The final seasonally adjusted Markit Germany Composite Output Index – which measures the combined output of the manufacturing and service sectors – posted 47.7 in October, down from 49.2 in September. This was the lowest reading since August and below the neutral 50.0 mark for the sixth successive month.
Service providers suggested that subdued underlying client demand continued in October, as highlighted by a seventh successive monthly decline in new business intakes.
Comment:German Construction Falls at Accelerated Rate
Commenting on the final Markit Germany PMI® survey data, Tim Moore, senior economist at Markit and author of the report said:
"October’s final German PMI data highlight a lack of momentum in either services or manufacturing at the start of Q4 2012, with both sectors posting slightly sharper output falls than one month previously. At its current level, the composite PMI figure raises the likelihood of an outright GDP contraction during the final quarter of the year."
The Markit Germany Construction PMI® shows German construction activity falls at accelerated rate in October.
Key points:
- Steep decline in civil engineering activity leads downturn
- Jobs cut amid further weakness in new orders
- Construction firms pessimistic about the year ahead
Summary:
The downturn in German construction gathered pace in October, with the civil engineering subsector showing particular weakness over the month. Activity fell on the back of another sharp decline in inflows of new orders, and firms responded to reduced workloads by cutting staff numbers. Meanwhile, future expectations were the lowest since the depths of the global financial crisis in late 2008.Mike "Mish" Shedlock
Total construction work in Germany decreased at a faster rate in October, as signalled by the seasonally adjusted Germany Construction Purchasing Managers’ Index® (PMI®) – a single-figure snapshot of overall activity in the construction economy – dipping from September’s mark of 48.6 to 44.6. That was the lowest since July, and the eighth sub-50 reading in the past nine months.
and.....
http://hat4uk.wordpress.com/2012/11/07/greek-parliament-passes-austerity-law-but-will-it-be-enough/
Greek Parliament passes Austerity Law…but will it be enough?
There are many times in any given month I lose the plot about what exactly has or hasn’t been agreed between Brussels and the ClubMeds. But tonight it seems that Greek MPs have narrowly passed a crucial austerity bill by majority vote, albeit with huge dissent from within the three-party governing coalition.
Immediately after the vote tonight, two of the coalition parties expelled a total of seven dissenting deputies from their ranks. The third party in the coalition, the Democratic Left, mostly abstained. Yahoo News reports:
‘The passage of the bill was a big step for the government to secure continued funding from the country’s international creditors. Without the loans, Prime Minister Antonis Samaras has said Greece will run out of euros on November 16th’
But the last time I looked (before the new Slogette came into the world) the IMF had told the EU FinMins that Greek austerity was miles off target, and they shouldn’t be given any more bailout tranches.
So: will this vote tonight secure the release of the November tranche….or not? If you scan the media via Google over the last two weeks, there is no trace anywhere of Brussels saying – officially – that they’ve decided to ignore the IMF paper and bail Greece out anyway.
“It is clear that Greece is off track and there is no chance they will cut the debt to 120% of GDP in 2020 as envisaged. It will be rather 136%, and this would be under a positive scenario of a primary budget surplus, a return to economic growth, and privatisation,” a euro zone official told Reuters 12 days ago.
One thing the Greeks need to remember: the US election is over, and the Black Dude is back in the White House. So the brakes are off. The Sprouts and Berliners are just mad enough to say, “Nice vote guys, but we think you’re dead anyway and we have no desire to throw good money after bad.”
I don’t think they will. But it would be nice, would it not, if the eurocrats were at least well-mannered enough to fill up the gaps in the narrative.
( When do the PIIGS say enough of the looting and waste of Brussels ??? )
WEDNESDAY, NOVEMBER 7, 2012
Wolf Richter: EU Bureaucrats Don’t Follow Own Austerity Prescription, Siphon Off EU Money
By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.
The European Union has been pursuing a dream, and in doing so, it has created a ballooning superstructure of governance manned by 41,000 bureaucrats and mostly unelected politicians. In 2011, they spent €129 billion that had been obtained from member states and their taxpayers. But now, the European Court of Auditors released its audit report for that year—a damning document that outlines how up to 4.8% of the EU budget had seeped through the cracks without ever reaching its target.
Already, the EU is under fire. As member governments are tightening the belts of their people to get deficits under control, and as austerity measures are tearing into healthcare benefits, wages, pensions, and safety nets, and as living standards are being hammered to smithereens, the EU government demands another budget increase.
It’s going to be quite a sight when the 27 member states have to sit down around the negotiating table on November 22 and 23 to cobble together a budget compromise for the next seven years. Some of them want the budget to be cut, and UK Prime Minister David Cameron, who has to quell a conservative rebellion in the House of Commons, threatened to veto the budget if it isn’t. France threatened with a veto, but in the opposite direction: it wants its beloved agricultural subsidies to survive intact. And Denmark threatened with a veto if it doesn’t get a juicy rebate.
So the audit report came in the nick of time. It concluded that, overall, payments were “materially affected” by error and that supervisory and control systems for payments were only “partially effective.” The numbers were stunning: 44% of all transactions were “affected by material error,” and anywhere from 3.0% to 4.8% of the entire budget was unaccounted for, with 3.9% being the “most likely error rate” (MLE).
The worst offender in percentage terms was the policy group, Rural Development, Environment, Fisheries, and Health, which spent €13.8 billion. A cool 7.7% of it dissipated into the atmosphere.
The largest policy group, the Agricultural Guarantee Fund, handed out €43.8 billion in subsidies to farmers and landowners and lost track of 2.9% of it.
Regional Policy, Energy, and Transport, the second largest policy group, spent €33.4 billion, and a blistering 6.0% remained unaccounted for.
Research and Other Internal Policies spent €10.6 billion, of which 3.0% disappeared along the way.
Employment and Social Affairs spent €10.1 billion, with 2.2% not reaching its target.
These policy groups with their deficient controls and “material errors” spent 87.6% of the EU budget. The accounts of the rest of the policy groups, responsible for 12.4% of the outlays, were deemed “free from material error.”
There were also problems on the revenue side. Though much of the revenue was collected with an iron fist from member states, there were other sources, such as “Fines and Penalties” imposed on companies. The rules stipulate that the European Commission has to “enforce the recovery of amounts receivable by any available means.” But the Court found that in 57% of the cases that were in arrears, the Commission had been lackadaisical in its collection efforts.
In its rebuttal, the Commission claimed that enforcing recovery “at any price could have irreparable consequences and destroy or make bankrupt companies that are subject to fines.” And so it prefers “negotiating with the companies.” Companies prefer that too—negotiating being cheaper than paying. But are 57% of the companies that have to pay fines really this close to the edge that the fines would kick them over it? Or are the fines so harsh, and the rules they’re trying to enforce so intrusive, that the Commission doesn’t want to enforce them? Or is it just bureaucratic oversight?
The unelected but powerful Commission, which is ultimately responsible for the implementation of the EU budget, knows how to defend itself. It was the Court’s 18th annual report in a row that criticized the Commission for its shortcomings in controlling the money flows. With its bland jargon, the Court pointed at the infamous black holes where billions sink from view every year without trace—because entities across the continent have perfected the art of siphoning off the money. The audit results for 2011 were worse than 2010 when 36% of all transactions were “affected by material error,” and when 3.7% of the moneys disappeared along the way. However, some years were much worse. In 2006 for example, 7% of the EU budget seeped through the cracks.
In another act of impeccable timing, a “secret” report by the German version of the CIA, the Bundesnachrichtendienst, bubbled to the surface, asserting that the bailout of Cyprus would use money from taxpayers in other countries to bail out mostly rich Russians who have over the years deposited their “black money” in Cypriot banks that are now collapsing. Read…. The Bailout Of Russian “Black Money” In Cyprus.
These policy groups with their deficient controls and “material errors” spent 87.6% of the EU budget. The accounts of the rest of the policy groups, responsible for 12.4% of the outlays, were deemed “free from material error.”
There were also problems on the revenue side. Though much of the revenue was collected with an iron fist from member states, there were other sources, such as “Fines and Penalties” imposed on companies. The rules stipulate that the European Commission has to “enforce the recovery of amounts receivable by any available means.” But the Court found that in 57% of the cases that were in arrears, the Commission had been lackadaisical in its collection efforts.
In its rebuttal, the Commission claimed that enforcing recovery “at any price could have irreparable consequences and destroy or make bankrupt companies that are subject to fines.” And so it prefers “negotiating with the companies.” Companies prefer that too—negotiating being cheaper than paying. But are 57% of the companies that have to pay fines really this close to the edge that the fines would kick them over it? Or are the fines so harsh, and the rules they’re trying to enforce so intrusive, that the Commission doesn’t want to enforce them? Or is it just bureaucratic oversight?
The unelected but powerful Commission, which is ultimately responsible for the implementation of the EU budget, knows how to defend itself. It was the Court’s 18th annual report in a row that criticized the Commission for its shortcomings in controlling the money flows. With its bland jargon, the Court pointed at the infamous black holes where billions sink from view every year without trace—because entities across the continent have perfected the art of siphoning off the money. The audit results for 2011 were worse than 2010 when 36% of all transactions were “affected by material error,” and when 3.7% of the moneys disappeared along the way. However, some years were much worse. In 2006 for example, 7% of the EU budget seeped through the cracks.
In another act of impeccable timing, a “secret” report by the German version of the CIA, the Bundesnachrichtendienst, bubbled to the surface, asserting that the bailout of Cyprus would use money from taxpayers in other countries to bail out mostly rich Russians who have over the years deposited their “black money” in Cypriot banks that are now collapsing. Read…. The Bailout Of Russian “Black Money” In Cyprus.
Today's Tragicomedy in Greek Politics......
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_08/11/2012_468997
Greek Parliament passes new austerity package with tiny majority
  |
A total of 153 out of 300 MPs approved the measures, which pave the way for Greece to receive its next tranche of bailout founding - 128 deputies voted against the package, while 18 voted «present».
The vote, however, came at a cost for the coalition as it lost several MPs. PASOK leader Evangelos Venizelos ejected six lawmakers from his party for voting against the package. This included former minister Costas Skandalidis, who was rumored to be mounting a leadership challenge. The move reduces the number of PASOK lawmakers to 27.
One MP was ejected from New Democracy, reducing the conservative party's tally of deputies to 126.
Addressing Parliament a few hours before the vote, Prime Minister Antonis Samaras appealed to MPs to back the package, noting that Greece’s future in the eurozone was at stake. “Today we are voting on whether we stay in euro or we return to isolation,” he said. Samaras admitted that cuts to salaries and pensions were unfair but insisted that they they would be the last and any “future adjustments” would be limited to curbing tax evasion and waste.
| He said the changes being pursued by his government constituted “a revolution.” The key goal remained the release of a 31.5-billion-euro tranche of rescue funding, he said, noting that only 3.2 billion euros of this amount that would go toward serving Greece’s debt. Socialist PASOK leader Evangelos Venizelos struck a similar note, saying that Greece had two options. “One is dramatically difficult, the other total disaster,” he said. The Socialist leader lashed out at the leader of leftist opposition SYRIZA Alexis Tsipras, accusing him of “investing in the country’s political death” by calling for new elections. Earlier Tsipras had repeated demands for snap polls, noting that the coalition had reneged on its promises. Tsipras said the government’s efforts to secure an extension for fiscal adjustment were redundant. “The only extension we need is for the rope with which we will hang ourselves.” The leader of the junior coalition partner Dmocratic Left, Fotis Kouvelis, for his part, defended his party’s opposition to changes to labor laws. “Some insist that labor reforms are a secondary issue. That is not so. Labor laws are a road map for Greece after the crisis.” “We don’t want to be part of rebuilding the country after a collapse,” he said. Before the party leaders’ speeches there had been a different type of drama in Parliament. Finance Minister Yannis Stournaras retracted a proposed amendment to include parliamentary employees in cuts to civil service salaries, after the employees threatened to strike, though he said the bill would be resubmitted. Earlier in the day, left-wing SYRIZA and right-wing Independent Greeks caused upheaval in Parliament by calling for a snap vote on whether the austerity package was constitutional while a larger number of coalition MPs had been absent from the House. The vote went ahead despite SYRIZA’s attempt to withdraw it after coalition deputies returned to Parliament to avert a possible challenge. Between 70,000 and 100,000 people gathered outside Parliament from about 6 p.m. to protest ahead of the vote. The peaceful protest was broken up later when rioters clashed with police. Molotov cocktails were thrown and officers responded with tear gas and water cannons. Earlier in the day, the Supreme Court deemed that proposed reductions to judges’ wages were unconstitutional. The Court of Audit had also deemed the measures to be in violation of the Constitution. |
http://www.zerohedge.com/news/2012-11-07/greek-austerity-vote-passes
Greek Austerity Vote Passes
Just in case someone thought Greece would voluntarily vote to cut out the funding - any funding - of free money from the ECB, via ELA or otherwise, regardless if only 10% of said money actually makes it into Greek society, we have some bad news: the Greek parliament once again voted to impose austerity upon itself. This includes numerous Yay votes by deputes who had said previously they would vote against the measure.
- SAMARAS HAS VOTES FOR GREEK AUSTERITY BILL
- FINAL VOTE: 153 FOR, 128 AGAINST, 18 ABSTAIN
- PASOK EXPEL 6 MEMBERS; ND EXPELS 1 MEMBER FOR VOTING AGAINST PARTY LINE
- And yes, this time will certainly be different unlike all those other times. Or maybe not. In the meantime, the rioting, and daily strikes by everyone, most certainly the tax collectors, will continue indefinitely, until even more spending has to be cut to match the decline in revenues, and so on, until finally the singularity of no more revenues and no more spending is hit.Until then, the main resurgent sponsor of any business venture will be, as reported earlier, local brothels.Now the ball is back in Germany's, and Troika's, court to come up with further conditions to not disburse the €31.5 billion in addition aid, which judging by the EURUSD's exuberant response (+2 pips), will be quite copious.Finally, for those confused about the Greek mindset, here is the only explanation you need:
http://blog.occupiedlondon.org/
Heraklion, Crete: as the Parliament in Athens votes in further austerity cuts, a city shows the way forward for the struggle
Wednesday, November 7, 2012
At the same time that in Athens the new measures were voted in parliament and the protest outside was hit by repression and rain, some remarkable events in Heraklion, Crete show how the struggle against the memorandums can be intensified. At tonight’s demo in the city, more than 10,000 people took part – including an anarchist block of approximately 800.
The even more astonishing events took place after the demo though, where a mass Popular Assembly decided the following:
- To block off the city’s economic activity (not on a symbolic level) by blocking off tax offices and the bank of greece at 7 AM on Thursday.
- Meanwhile, the Labor Union of Heraklion called for another 24h strike tomorrow, to facilitate workers’ participation in the blockade. The strike was called following the pressure of anarchists and leftists present at the Popular Assembly.
- The occupation of the administrative building of the Periphery of Crete (the administrative HQ for the entire island) continues.
- Finally, the Assembly will produce a call-out for workers and unemployed across the country to take similar action.
Day 2 of the 48-hour strike, November 7: Live updates
Wednesday, November 7, 2012
00.25 The third memorandum and the severe austerity cuts that come along with it have been passed through parliament (153 out of 300 MPs voted in favour).
22:45 The hard rain continues and people have dispersed from the area around Syntagma.
21:44 Riot police still attacks manically to the dispersed demonstrators, tear gas and a lot of beating up under rain. Tear gas and clashes until Sygrou Avenue and in Plaka, people may be dispersed but still on the streets.
21:27 Clashes still going on, police is trying to push people towards Panepistimiou. The water from the rain and the water canon combined with chemicals of the tear gas make the atmosphere unbearable, but people are ready to fight and still fighting very effectively against the police. At least 40 injuries of demonstrators so far, but probably the number is higher. Earlier 100-150 people chased riot police towards Metaxourgeio, clashes still going on all around the center of the city.
20:41 More teargas as people try to re-take syntagma square.
20.21 Striking health workers help injured demonstrators at the impromptu Health clinic set up inside the Amalia Hotel. It is estimated that at least 40 demonstrators have been injured so far.
19:58 Large amounts of teargas pushes the crowd down Filellinon.
19:42 People regroup in the square after having been dispersed by the teargas. Firebombs in ermou.
19:31 More clashes outside the parliament. Still a large crowd in the square.
19.18 First molotovs in Syntagma, as demonstrators tear apart part of the fence protecting the parliament. One molotof hits the police water canon, behind the fence.
19.00 It is now confirmed – the employees of the parliament have just gone on strike. This comes in response to a law submitted to parliament as part of the third memorandum, which would end their partial exemption from the cuts. Leftist MPs now claim it is impossible for the voting of the new memorandum to go on tonight.
18.50 Unconfirmed reports that the employees of the parliament will go on strike from 7pm on. This would make the continuation of the electoral process impossible (since it would be impossible to take minutes of the parliamentary proceedings).
Syntagma, Athens, Nov 7, 18.55. People start pushing at the metal barrier protecting the parliament.
18.35 The number of the demonstrators in the streets of Athens could be even higher – possibly up to 200,000. Almost impossible to estimate. It has just started raining in central Athens.
18.25 At least 100,000 demonstrators in the streets of Athens already.
17:18 Undercover police officers in almost every single metro station of Athens metropolitan complex do preemptive detains. Strikers pre-gatherings in Peristeri district of Athens have been attacked without any reason by riot police. First people gathered in Syntagma.
16:16 Hundreds have been detained while the police has attacks and blocked demonstrators who were trying to go to Syntagma. Most metro stations around the center were ordered by the police to be closed in order to make difficult for demonstrators to reach Syntagma. However, the metro was packed and Syntagma Square is packed. Dozens of thousands so far are there.
http://www.zerohedge.com/news/2012-11-07/mario-draghi-sends-risk-reeling-after-exposing-bitter-european-truth
Mario Draghi Sends Risk Reeling After Exposing Bitter European Truth
Submitted by Tyler Durden on 11/07/2012 08:10 -0500
It was shaping up like the perfect overnight ramp following yesterday's Goldilocks election result... and then Mario Draghi opened his mouth.
- DRAGHI SAYS DEBT CRISIS STARTING TO HURT GERMAN ECONOMY
- DRAGHI SAYS GERMAN RATES LOWER THAN THEY WOULD BE OTHERWISE
- DRAGHI: CRISIS MAKING GERMAN INTEREST RATES VERY LOW
- DRAGHI SAYS ECB'S OMT IS NOT DISGUISED FINANCING OF GOVERNMENTS - correct: it is quite overt
-
End result, after surging to nearly 1.29 last night, the EURUSD plunged in minutes, and just hit 1.275, the lowest in over two months. Of course, to our readers, none of this is surprising. Recall this tweet from October 24:
And so finally, after months and months of explaining the fundamental dichotomy in Europe (see here), it is finally becoming transparent. And it is as follow:
Germany, which is the economic dynamo of Europe, needs a weaker EURUSD to keep its export economy running. Period, end of Story. The problem is that the lower the EURUSD, the greater the implied and perceived EUR redenomination risk, which in turns send the periphery reeling, and will force first Spain, and then everyone else to eventually demand (not request) a bailout.Which is just the way Germany likes it, which in turn is as was said here 5 months ago.
It was shaping up like the perfect overnight ramp following yesterday's Goldilocks election result... and then Mario Draghi opened his mouth.
- DRAGHI SAYS DEBT CRISIS STARTING TO HURT GERMAN ECONOMY
- DRAGHI SAYS GERMAN RATES LOWER THAN THEY WOULD BE OTHERWISE
- DRAGHI: CRISIS MAKING GERMAN INTEREST RATES VERY LOW
- DRAGHI SAYS ECB'S OMT IS NOT DISGUISED FINANCING OF GOVERNMENTS - correct: it is quite overt
- End result, after surging to nearly 1.29 last night, the EURUSD plunged in minutes, and just hit 1.275, the lowest in over two months. Of course, to our readers, none of this is surprising. Recall this tweet from October 24:And so finally, after months and months of explaining the fundamental dichotomy in Europe (see here), it is finally becoming transparent. And it is as follow:Germany, which is the economic dynamo of Europe, needs a weaker EURUSD to keep its export economy running. Period, end of Story. The problem is that the lower the EURUSD, the greater the implied and perceived EUR redenomination risk, which in turns send the periphery reeling, and will force first Spain, and then everyone else to eventually demand (not request) a bailout.Which is just the way Germany likes it, which in turn is as was said here 5 months ago.
12.48 So forecasts for the Eurozone countries from that European Commission report which you can read here.
Here is an overview of the main figures.
12.28 Sticking with that EC report, it has also said that the outlook for growth in the UK remains "very weak" in the short term, with the main risks to the macroeconomic forecast stemming from weaker-than-expected consumption and investment, and increased turmoil in the eurozone.
The outlook for the remainder of 2012 "remains bleak", the Commission said, which expected the British economy to contract by 0.3pc this year.
It has forecast a "marginal improvement" to growth of 0.9pc in 2013, and growth of 2pc in 2014.
12.00 The first protests have started in Syntagma Square outside of the parliament, as local authorities workers driving their motorbikes in front of the parliament.
(AP Photo/Dimitri Messinis)
(AP Photo/Dimitri Messinis)
The main protests in the square are expected to take place at 5pm local time (3pm GMT).
11.51 In parliament the results on constitutionality of austerity bill finds the bill to be constitutional by a vote of 170 to 47.
11.47 So, parts of the austerity measures have been ruled as unconstitutional by the Supreme Court, including cuts to judiciary and all other unsustainable/difficult cuts.
Parliament, on the other hand, has said the measures are legal.
Syriza refused to take part in the roll-call. The debate on the actual bill can now start.
11.31 It is worth noting that the Democratic Left's leader Kouvelis is not in parliament for the vote. Don't forget he is the leader of one of the ruling coalition parties in Greece
11.27 Another walk out at the Greek Parliament The charade continues.
11.20 Ok, the Greek MPs are now back in the Chamber and are voting on the constitutionality of the austerity bill.
11.15 It is going to be a very long day in the Greek Parliament if it continues in the same way as the past couple of hours.
Twitter has started to question whether there is a Coup d'Etat happening in Greece today.
MPs are arguing over the legality of procedures and opposition MPs have claimed the bill is unconstitutional.
The result was that the session was suspended while a full "roll-call"vote on the issue was organised, which took far longer than it should have done.
MPs then went back in the chamber where Syriza leader Alexis Tsipras denounced the government's handling of the situation. He had earlier walked out.
10.52 In contrast to the scenes outside Parliament in Athens yesterday, here is a picture of the same road this morning.
A police car drives through one of Athens' usually busiest avenues in front of the parliament in Syntagma square. REUTERS/Yannis Behrakis
10.48 Sticking with Greece, eKathimerini.com is reporting that the first hurdle has been cleared ahead of the vote, which it reports will happen at Midnight tonight. Here's the story:
Parliament’s economic affairs committee approved late on Tuesday the multi-bill containing a series of structural reforms and which sets out fiscal measures worth 13.5 billion euros for the next two years. MPs will get the chance to vote on the package at around midnight on Wednesday in a ballot the government is expected to win narrowly.
The majority of deputies on the committee, whose make-up reflects the seats each party has in Parliament, approved the omnibus bill in principle and when voting on it article by article.
Some last minute adjustments were made to the legislation following requests by some lawmakers.
Finance Minister Yannis Stournaras accepted a call from PASOK MPs for reductions of pensions for heavily disable people not to be implemented. Stournaras said these particular savings would instead be made from pensioners earning more than 1,500 euro a month.
Stournaras also told the committee he would withdraw the word “voluntary” from an initiative designed to make Greek shipping firms contribute more to public revenues.
That contribution will have to be at least 140 million euros in the period from 2013 to 2016.
Protests in Syntagma Square yesterday, outside the parliament.
10.38 The protests in Greece are not just occurring in Athens. According to Twitter demonstrations have started in Greece's second largest city ofThessaloniki.
If you want to follow the Greek protests on Twitter today then you can search the hastags #7ngr or search #Greece.
10.28 So, Spain's El Pais newspaper reported on the EU Commission's forecasts yesterday after getting hold of a draft copy (see 09.08).
Well now France's Le Monde has got its mitts on the document and has reported that the Commission is forecasting French economic growth of just 0.4pc next year, half the 0.8pc level the government's 2013 budget is based on,
The full report will be published later today.
10.21 Some pictures are starting to come out of Athens, as the country faces a second day of strikes by public and private sector unions, who are protesting against the government's austerity budget, which is expected to be passed by parliament tonight.
A man walks through an empty shopping arcade in Athens. REUTERS/Costas Baltas
A man walks through an empty commercial street. REUTERS/Costas Baltas
10.18 Over to Germany, where the 'wise men' have released their annual report.
It's not great for the eurozone's largest economy as the government’s council of economic advisers said that German economic growth will fail to pick up next year as the euro region’s sovereign debt crisis saps demand for German exports.
In its 476-page report, the five-member council forecast that Germany's economy would expand 0.8pc in 2013, the same pace as this year.
"The second half of 2012 is characterized by widespread recessionary trends in the euro zone that impact on the German economy through foreign trade and confidence” and damp the economy’s expansion through declining investment, the report said.
10.08 Over to the eurozone. Retail trade fell 0.2pc in September compared with August, according to first estimate figures from Eurostat, the statistical office of the EU, while in the 27-member EU retail tradeincreased by 0.2pc.
However, looking at the figures compared to a September 2011, the retail sales index fell by 0.8pc in the eurozone and increased by 0.3pc in the EU.
In September 2012, compared with August 2012, food, drinks and tobacco increased by 0.8pc in the eurozone and by 0.5pc in the EU.
The non-food sector fell by 0.6pc in the eurozone and rose by 0.1pc in the EU.
09.40 Back in the UK, David Cameron is due to meet with Germanchancellor Angela Merkel this evening for dinner in Downing Street. Cameron said he would hold 'robust' talks on cutting the EU budget.
Speaking during a three-day visit to the Middle East, he attacked the EU's "completely ludicrous" decision to increase the seven year budget.
"I believe everyone who signed that letter should stick to that letter," he said.
"As I have said, I've always wanted at best at cut, at worst a freeze. I'll be in there fighting for Europe's taxpayers, particularly British taxpayers. We are net contributors to the budget, we have a rebate and we are keeping that rebate but over and above rebate that I also want to see a good budget outcome for the UK."
David Cameron receives a sash from King Abdullah of Saudi Arabia at the King's palace in Jeddah (PA)
09.32 Meanwhile in the eurozone's largest, construction fell at an accelerated rate in October, according to the latest PMI data.
Total construction work in Germany decreased at a faster rate in October, as signalled by the seasonally adjusted Germany Construction Purchasing Managers’ Index – a single-figure snapshot of overall activity in the construction economy – dipping from September’s mark of 48.6 to44.6.
That was the lowest since July, and the eighth sub-50 reading in the past nine months.
The civil engineering subsector showed particular weakness over the month.
Activity fell on the back of another sharp decline in inflows of new orders, and firms responded to reduced workloads by cutting staff numbers.
09.18 Over to Greece again. eKathimerini.com is reporting that Prime Minister Antonis Samaras and his aides were busy last night to ensure that the fragile coalition manages to pass the painful new measures into law.
The Greek website reports that the coalition is expecting a narrow wintoday on the budget, being passed on a narrow majority.
Samaras and PASOK leader Evangelos Venizelos reportedly spoke several times on Tuesday in a bid to ensure that the two “no” votes expected from the Socialist camp would not grow to four or five and that the coalition’s majority would not drop below 154 in the 300-seat House.
And reports on Twitter say that after a mamonth day of debating in the Greek parliament the vote will take place at 8pm tonight (GMT).
09.08 Over to Spain where industrial output plunged in September.
Spain's factories slashed output in September as consumer demand plunged in the midst of a recession and austerity cuts, official data showed Wednesday.
Factories, mines and utilities lowered production in September by 7.0pc year-on-year after smoothing out seasonal blips, the National Statistics Institute said.
It was the 13th straight month showing an annual decline.
Industry slowed in response to evaporating demand after more than a year of recession and with unemployment at 25pc.
Shaun Richards, economist at the London School of Economics give us his view on it.
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