EuroGroup Meeting to save Greece descends into comedically sad food between IMF and EU , Germany and IMF - Greece still has gotten a euro as plan to discuss what was just discussed set for next week.....

http://rt.com/news/italy-crisis-unemployment-clashes-598/

( Not Greece , not Spain - this is Italy...... )

The Italian jobs? Unemployed youth clash with police in Italy (PHOTOS, VIDEO)

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Published: 13 November, 2012, 19:47

Demonstrators clash with riot police officers during a demonstration against unemployement in Naples on November 12, 2012 (AFP Photo / Mario Laporta)

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About 3,000 unemployed demonstrators have clashed with riot police in Naples during a protest against rocketing youth unemployment. The violence erupted in the city after a visit by Labor Minister Elsa Fornero and left 23 people injured.

Protesters donned masks of the unpopular Fornero and waved banners calling for Prime Minister Mario Monti to step down. Fornero and the German labor minister, Ursula von der Leyen, are in Naples for talks on Italy’s economic and unemployment problems.

A skirmish erupted when a breakaway group hurled stones and bottles at police, who returned fire with teargas, leaving 23 injured.

Fornero infuriated many Italians when she told them last month not to be “choosy” when looking for work.

Italy’s youth have borne the brunt of the economic crisis and government measures to tackle it do not appear to be working. Unemployment among 15-24-year-olds stood at 35.1 per cent in September, up 4.7 per cent on last year.

Italy is laden with debt and entered into recession at the end of last year. The economic gloom has been exasperated by reports of corruption and misuse of public funds by officials and politicians.

Italian prosecutors have filed charges of market manipulation against seven officials of the Standard & Poor's (S&P) and Fitch ratings agencies the rating agencies for a number of downgrades of Italy last year.

An Italian expert said that firms like S&P and Fitch are meddling where they shouldn’t and creating hysteria in regard to Italian debt:

“These agencies came out with declarations when the markets would be open and therefore this created a big cult [panic] on the markets about Italian sovereign debt.” Paolo Raffone told RT.

S&P and Fitch say they are cooperating fully with the Italian inquiry.

Demonstrators clash with riot police officers during a demonstration against unemployement in Naples on November 12, 2012 (AFP Photo / Mario Laporta)

Demonstrators clash with riot police officers during a demonstration against unemployement in Naples on November 12, 2012 (AFP Photo / Mario Laporta)

Demonstrators stay undercover behind a plastic wall during a demonstration against unemployement in Naples on November 12, 2012 (AFP Photo / Mario Laporta)

Hooded demonstrators stand behind a makeshift fence during clashes with riot police officers during a demonstration against unemployement in Naples on November 12, 2012 (AFP Photo / Mario Laporta)

Demonstrators clash with riot police officers during a demonstration against unemployement in Naples on November 12, 2012 (AFP Photo / Mario Laporta)

Demonstrators hold masks of Elsa Fornero, Italy's Minister of Labour, during a demonstration against unemployement in Naples on November 12, 2012 (AFP Photo / Mario Laporta)

and......

http://www.spiegel.de/international/europe/greek-mayors-refuse-to-send-athens-lists-of-employees-to-lay-off-a-867060.html

11/13/2012

 

Civil DisobedienceGreek Mayors Rebel Against Public Layoffs

By Georgios Christidis in Thessaloniki, Greece

AP

Greeks have been highly resistant to the austerity measures demanded by international creditors.

While the Greek government has passed the most recent austerity measures demanded by its international lenders, it continues to encounter resistence to their implementation. In a rare act of unity, cities and unions are refusing to comply with demands for layoffs.

The atmosphere was tense at the courtyard of the Thessaloniki city hall. Dozens of municipal workers in Greece's second-largest city staged a protest Monday morning against the planned lay-offs of 27,000 civil servants. "I have been working for the city for 22 years," said one of the city administration's 4,000 employees. He requested anonymity for fear of jeopardizing his position even further. "I fear for my job. All of us do."

A few hours later, city workers and journalists packed inside city hall to observe the city council meeting. The meeting ended with a decision to disobey the central government. Mayor Yiannis Boutaris had submitted the motion -- a refusal to send the Interior Ministry a list of workers ripe for dismissal. City administration and unions, so often enemies, were united.

Public sector lay-offs are a key condition set by Greece's international lenders for receiving further aid. Thousands of civil servants are to be placed on reserve for one year with reduced salaries. If they prove to have no useful function, or if they find work in the private sector, they lose their jobs. According to a report by the troika representing Greece's international public lenders comprised of the European Commission, the European Central Bank and the International Monetary Fund, 27,000 civil servants are to be placed into the mobility scheme over the next 12 months.

As SPIEGEL ONLINE reported earlier this week, the troika expects 2,000 public sector employees to be part of the scheme by the end of the year, and insists on concrete lists of people. Previous promises by the government to create a labor reserve failed miserably: While 15,000 employees should have been placed on reserve by the end of this year, fewer than 100 were transferred -- most of them part-time employees.

That resistance to shrinking the public sector is not going away. In a rare show of unity in Greece's infamously partisan politics and tense labor relations, both the national union of municipal employees, POE-OTA, and the Central Union of Municipalities, KEDE, have built up an anti-lay-off campaign. Starting on Monday, municipal workers occupied local government offices in Athens, Thessaloniki and other major cities. In some municipalities, protesters used wooden boards to seal off the personnel offices that hold the names of city workers.

Reformer Turned Rebel

Thessaloniki Mayor Yiannis Boutaris won accolades from the European Union and the press as a rare modernizer in Greece, yet he was among the first to rebel. "Both the government and the troika need to realize that such measures decapitate an already castrated local administration," he said at Monday's city council meeting.

Boutaris' position comes as a surprise to Nikolaos Tachiaos, a liberal politician who served as deputy mayor of Thessaloniki: "It is disappointing to see that even mayors like Boutaris who sponsor a modernizing agenda refuse to send the lists," he told SPIEGEL ONLINE. "Was it not Boutaris who said last year that the city of Thessaloniki can operate 'with half the staff?' The message they are sending is that there is a huge gap between words and actions in Greece."

The head of the Central Union of Municipalities, Kostas Askounis, says no other branch of government in Greece has done as much cost-cutting as the cities, and that any further cutbacks will give the fatal blow to already overstretched local authorities. "More than 3,500 staff have left since 2010," he said. "Do they want to totally destroy us? Who will teach children in municipal kindergartens? And was it not Angela Merkel who praised local authorities during her visit to Athens? How are we supposed to perform the 200 additional responsibilities the law gives to municipalities in 2013?"

Tachiaos is not convinced. He says local authorities were loaded with redundant and often unskilled employees as part of rampant cronyism in local administration in the 1980s and early 1990s.

"Municipalities would hire literally everybody who came knocking," he said. "The workers who are targeted for the reserve scheme are people with low skills, who took on permanent posts by the mayors through back channels. And they are the same people who booed the city council politicians who appointed them."

Rebellious Greek mayors are undeterred by the criticism. They could even go as far as submitting their resignations en masse -- an idea to be discussed and decided on at an upcoming union meeting.

and....


http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_13/11/2012_469874

Greece hopes for timely release of enhanced loan installment

Prime Minister Antonis Samaras sought on Tuesday to appear upbeat on the prospects of crucial rescue loans being released to Greece even as Finance Minister Yannis Stournaras warned that the risk of the country defaulting on its huge debt was still very real.
Stournaras and Samaras returned to Athens last night hopeful that foreign creditors will release not only a pending 31.5-billion-euro rescue loan but another two loans worth 12.5 billion euros after European officials made positive noises about Greece’s progress in approving and implementing austerity measures and reforms.
Samaras, who met with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso in Brussels, declared that “Greece has already turned the page,” noting that only “technical details” remained before funding could be released.
Earlier in the day Stournaras had been significantly more reserved, saying in a speech before the European Parliament’s economic and social affairs committee that the risk of Greece defaulting was still real. “The troika is pressing us very hard to implement prior actions,” he said, referring to measures and reforms demanded by the troika. “But the risk of an accident is very great,” he said.
Speaking to reporters in Brussels, German Finance Minister Wolfgang Schaeuble said that Greece had made “significant decisions in the right direction” and would get three aid tranches before the end of the year, adding however that this would necessitate the operation of an enhanced “control mechanism” for the funding. Schaeuble did not provide any details but, clearly mindful that such supervision would ruffle feathers among Greeks, he acknowledged that the issue of such a mechanism was sensitive in Greece, adding however that he was confident Greek ministers would agree to it in a bid to restore confidence in Greece.
“This topic has a certain sensitivity in Greece and that’s why it’s important that it’s dealt with publicly in a certain way,” Schaeuble added.
One of the aspects involved in the enhanced control mechanism that Berlin would like to see is the bailout loans being paid into a special account, through which lenders could ensure that the money is not spent to cover Greece’s primary deficit unless outstanding debt obligations can be met.

This account already exists at the Bank of Greece but there had been suggestions by some eurozone officials that it should be located outside the country. It appears that this option is now off the table and that the account will remain in Athens. Beyond that, the terms in a draft version of a new memorandum of understanding between Greece and the troika foresees that Athens will be obliged to automatically make fiscal adjustments if it is not meeting budget targets. This includes making up for any shortfall in revenues from privatizations. Greece will also agree to using 70 percent of any revenues beyond its targets for growth and welfare-related projects. and...... http://www.ekathimerini.com/4dcgi/_w_articles_wsite3_1_13/11/2012_469873 Greece’s debt problem is eminently solvable. How about imminently? By Nick Malkoutzis The speed with which the eurozone’s key players reacted to Greece’s coalition government narrowly winning a vote on the latest austerity and reform package was impressive. If they could show the same haste and purpose in addressing the economic capitulation threatening to undermine Greek society and politics, we might be in for better days. Even before 153 out of 300 Greek MPs had voted in favor of the legislation last Wednesday, which foresees more than 18 billion euros of cuts and tax hikes over the next four years, European Economic and Monetary Affairs Commissioner Olli Rehn admitted that Greek debt was not sustainable but that the most obvious method for tackling this problem, restructuring, was not an option. Penchant for self-harm A few hours after the vote, having seen the three-party coalition in Athens stagger over the finishing line, German Finance Minister Wolfgang Schaeuble said Greece would not immediately receive the 31.5-billion-euro loan tranche, which it had been expecting since the summer to recapitalize its wheezing banks and moisten the lips of its liquidity-parched market. The eurozone, it seems, has developed a dangerous penchant for self-harm. There is also more than a dose of irony in the fact that the Eurogroup was not in a position to confirm the disbursal of Greece’s next loan tranche on Monday partly because longstanding issues such as the extra financing of up to 30 billion euros needed for a two-year extension and the sustainability of Greek debt had not been settled. They spent the last two-and-a-half years harrying Greece over the slow pace of reforms (justifiably) and its apparent inability to meet fiscal targets (Monday’s preliminary budget data for the first 10 months of 2012 showing deficit targets being beaten is confirmation that this criticism should now be dropped). But over the last few months, Greece’s lenders have shown they are prone to procrastination themselves. Frosty exchange The frosty exchange between International Monetary Fund Managing Director Christine Lagarde and Eurogroup chief Jean-Claude Juncker after Monday’s meeting in Brussels emphasized that in this crisis, Greece is not just battling its own demons but is also threatened by others’ fears. Pinballing between the institutional reservations and individual hang-ups of the ECB, IMF and eurozone partners, the coalition government finds itself battered and bruised, although just five months old. Its 179 seats have dwindled to 167. It has staked its survival on the success of the measures it approved last week but for these to take root, its lenders will have to rise above the short-termism that has pervaded their crisis management strategy. “While disbursement is likely and Greece will be put on a more stable footing in the near term, eurozone member states and the troika have once again been myopic in their dealing with Greece,” wrote Wolfango Piccoli, the head of the European division at the Eurasia Group, in a note to clients on Monday. “By leaning so hard on this government now, coalition fragility has increased.” A longer-term strategy, despite what Rehn argues, will surely have to involve some kind of debt restructuring. There is now growing consensus that a large chunk of what Greece owes will have to be written off so it can wriggle out from under the debt mountain that is flattening hopes of an economic recovery. The latest to add his voice to those calling for a multi-pronged strategy to deal with Greek debt and remove the uncertainty seeping through the eurozone is Zsolt Darvas of the Bruegel think-tank in Brussels in a paper titled “The Greek debt trap: an escape plan.” It should be noted that Bruegel and Darvas recommended a restructuring of privately held Greek debt a full year before the Private Sector Involvement took place. Darvas’s comment in February 2011 is as valid today as it was then.“If something is not sustainable and you try to muddle through then the outcome could be worse for everyone involved, including the Greek government, the Greek people, Greek banks and creditors,” he told Kathimerini English Edition at the time. Twenty-one months later, we have come full circle, only now there is a need to write down official sector debt, not just bonds held by private investors. Darvas starts his paper by pointing out the obvious, which in this crisis can never be repeated enough: If it remains on its current course, Greece is heading for disaster. Debt will be pass 190 percent of GDP over the next few years, the economy will have contracted by almost a quarter compared to pre-crisis levels and, as the Bruegel economist points out, the number of employed Greeks will be lower next year than at any point since 1980. Dangerous liaisons “The high public debt ratio and the deep economic contraction feed off each other, especially when there are widespread expectations of a Greek euro exit scenario,” writes Darvas. “With an increasing debt ratio, more fiscal consolidation is needed, which in the short term has a negative impact on output. But more importantly, when several consolidation packages follow each other, the government and the parliament may be unable or unwilling to pass new measures, perhaps due to social pressure and unrest. This can lead to a collapse of the government, domestic political paralysis and a stop in the external financial assistance.” Greece finds itself staring at a debt mountain it had supposedly dynamited with the Private Sector Involvement (PSI) initiative earlier this year. A few months later, it has proved to be a damp squib – as many predicted it would be. While Greece restructured almost 200 billion euros of debt held by private investors, it also had to borrow substantially to provide cash incentives for investors and cover the domestic impact of the haircut, while some 60 billion euros of new Greek bonds were issued. As a result, Greece’s public debt only fell by about 12 billion euros in 2012 and its ratio in relation to GDP actually increased by 5.5 percent, according to the figures presented in Darvas’s paper. Along with the worsening recession and the impact of the further austerity measures, this means that piecemeal solutions will no longer do for Greece.Juncker’s suggestion during Monday’s late-night news conference, much to Lagarde’s chagrin, that official sector involvement (OSI) will not be considered was very worrying. This leaves a limited number of tools for reducing Greek debt on the table. These include lending Greece about 50 billion euros to buy back the remaining privately held debt, reducing the interest on its bilateral loans and Athens being given the profits from the Greek government bonds held by the ECB. Darvas says this is unlikely to be enough. After crunching the numbers, he found that all these measures, plus the front-loading of privatization measures, would reduce Greek debt from 343.8 billion euros in 2012 to 299.6 billion in 2013. This would not put Greek debt on a sustainable path. Darvas sees the debt-to-GDP ratio falling to 162.4 percent of GDP in 2013 and reaching 127 percent in 2020, rather than the 120 percent demanded by IMF. Instead, the Bruegel economist proposes a much wider array of measures to tackle Greek debt. These include maturity extensions for bilateral and IMF loans, a zero interest rate on all forms of loans until 2020 and indexing official loans to Greek GDP. Darvas also makes the point that despite the eurozone’s reluctance to provide more funding, Greece will need an extra 30 billion euros on top of the 15 billion needed to carry out the bond buyback that has been proposed. This combination of measures would help bring Greek public debt down to about 100 percent of GDP by 2010, Darvas argues. He sees the option of providing zero-interest loans to Greece as a much more palatable one than accepting a write-off on what Greece owes its partners. Darvas writes: “While the two ways of restructuring official lending can have the same outcome, from a public relations perspective the message that ‘Greece won’t pay any interest for eight years but will pay interest later and will pay back the principle in full,’ could be preferable to the message: ‘We write down one quarter of Greek debt, yet Greece will continue to pay interest and will pay back the rest of the principal later.’” Taboos to be broken While the proposals in the policy paper mean the ECB does not have to become involved in assisting Greece, and therefore won’t be accused of direct monetary financing of a eurozone member state, they do mean that a number of other taboos have to be broken: Greece will need more funding and the official sector will have to be involved somehow in the effort to restructure Greek debt. Darvas’s suggestions are the latest in a series of ideas put forward by economists and commentators that would allow Greek debt to be tackled decisively, Greece to be able see on the horizon an exit from the crisis, and the eurozone to rebuild credibility, trust and a sense of unity. The Lagarde-Juncker tiff, however, suggested there is no overriding acceptance within the eurozone of the need to break the bailout mold in the next few days. When eurozone finance ministers meet again on Tuesday, the onus will be on them to take, or at least put in motion, historic decisions. If they let shortsightedness rule, economic reality is likely to be unforgiving and Greece will be the first to feel its destructive impact.

http://www.zerohedge.com/news/2012-11-13/greece-renegs-troika-terms-hours-after-getting-bailout-extension

( Hmm , Greece reneged before Germany this time around...... )

Greece Renegs On Troika Terms Hours After Getting Bailout Extension

Submitted by Tyler Durden on 11/13/2012 17:52 -0500

• Deutsche Bank
 
• ETC
 
• Germany
 
• Greece

Earmuffs time for Europe's carefully sculpted theater of goodwill, solidarity and cohesion. Because this has to be some sort of record. Hours after Greece got its much desired two year bailout extension of Deutsche Bankfrom Germany Europe, Greece is already in breach of the terms it, and Europe, all "fought so hard" for. From Kathimerini: "A planned 25 percent increase in the price of public transport tickets next March is to be postponed until October, the general secretary of the Development Ministry, Nikos Stathopoulos, said on Tuesday. The increase originally demanded by the troika would have pushed the price of a ticket for all modes of public transport to 1.75 euros from 1.40." Instead the Troika's demand is overruled, and in its place is a promise that some efficiency has been extracted elsewhere, until of course, said promise is probed and uncovered to have also been a lie.

“We managed to postpone the increase until October, from March, and we hope to eventually be able to avert the measure,” Stathopoulos said, attributing the change of plan to a crackdown on fare dodging on public transport.

Sources told Kathimerini last month that the campaign has contributed to a 9 percent increase in ticket purchases, bringing in nearly 300,000 euros in revenue in just three weeks.

Perhaps a far better indication of Greek society is that the local ministry is now making provisions to reimburse travellers with prepaid transit cards for "strike days" on which the transport services are offline. Lately, this has been a majority of them.

The ministry is also planning to change the regulations relating to weekly, monthly and annual travelcards to allow commuters to be reimbursed for strike days when transport services do not operate. Earlier this week, the Athens Urban Transport Organization (OASA) said it was not obliged to compensate travelcard holders who were unable to use public transport last week because of a series of strikes by employees. 

As for what one can expected from a "reformed" and "contrite" Greece, here it goes: "The Finance Ministry admitted on Tuesday it does not know the identities of the owners of the 500,000 properties for which last year’s special tax levied via electricity bills was not paid."

In a written response to a parliamentary question, Deputy Finance Minister Giorgos Mavraganis stated the tax corresponding to each electricity connection may not be listed in the name of the owner, but in that of the tenant, a former or a deceased owner etc. However, Public Power Corporation and the alternative power suppliers charged with collecting the tax submitted lists of tax evaders to the ministry in May.

In other words, not only has Greece not stepped up its tax collections efforts, it has no idea who or where the tax evaders are as part of its much (self) lauded plan from 2011 to boost government revenues... 

And finally:

If and when the ministry establishes who is supposed to pay for each property, tax authorities will issue payment orders including fines. Confiscating salaries and properties would be a last-resort measure.

Would that be the 14th monthly salary, or 16th for the Parliamentary workers? Either way, we are certain they are all shaking in their boots. Shaking.

and more on the Grecian formula for faking it until they make it.....

http://www.zerohedge.com/news/2012-11-13/greece-comes-collateral-loophole-has-enough-cash-roll-%E2%82%AC5-billion-bill-maturity

Greece Comes Up With Collateral Loophole, Has Enough Cash To Roll €5 Billion Bill Maturity

Submitted by Tyler Durden on 11/13/2012 12:36 -0500

• Asset-Backed Securities
 
• Bond
 
• default
 
• Deutsche Bank
 
• European Central Bank
 
• Germany
 
• Greece
• Netherlands
 
• Newspaper
 
• Real estate
 
• Shadow Banking

Over the past several days there had been concerns that even if Greece managed to roll its maturing €5 billion in Bills with a new Bill issuance (which it did earlier today), it would be unable to actually obtain cash for this worthless paper, through a repo with the European Central Bank. The reason being that last week the ECB allowed a temporary extension in Greek ELA collateral eligibility to expire, enacted on August 2, which in turn reduced the amount of repoable T-Bills from €7 billion to just €3.5 billion, in the process reducing the amount of cash Greece can obtain in half from the Bill roll. And while there had been lots of speculation and rumors that the ECB would, as in the case of Spain, either make a "mistake" or extend the collateral pool exemption once more, this did not occur. Instead, as we have just learned, the ECB has allowed Greek banks to use "asset-backed" securities to plug the collateral gap. Needless to say, one can only conceive just what unencumbered assets still can be found on Greek bank balance sheets (here is one artist's impression) but it was largely expected that in the race to debase its currency, the ECB would once again admit that when it comes to perpetuating the Ponzi, especially at a marginal cost of a token €3.5 billion, anything goes (just don't tell Germany). And so, Greece kicks the can once again.

From Bloomberg:

Greek banks will keep receiving the same amount of emergency central bank aid despite a reduction in the amount of treasury bills they can offer in exchange, a euro- area central bank official said.

The European Central Bank’s Governing Council last week allowed a temporary increase in the amount of T-bills Greek banks can pledge for so-called Emergency Liquidity Assistance to lapse, reducing it to 3.5 billion euros ($4.4 billion) from 7 billion euros, said the official, who was briefed on the decision.However, other acceptable collateral including asset- backed securities on banks’ balance sheets have increased in value enough to make up the difference, he said.

This is where Jean-Claude Juncker solemnly says "I was not joking"

It goes on:

Spokespeople for the ECB and the Greek central bank declined to comment.

Greece today sold a total of 4 billion euros of four-week and 13-week T-bills before a redemption of 5 billion euros of similar securities on Nov. 16. After the ECB’s decision to reduce the total amount of T-bills acceptable as collateral, banks could have faced funding difficulties unless they were able to find other acceptable collateral. Overall, Greece is trying to plug a financing gap of as much as 32.6 billion euros.

German newspaper Die Welt reported yesterday that the ECB would widen the pool of acceptable collateral to help Greek banks over the financing hump. The ECB later issued a statement denying the report, saying the collateral list hasn’t changed.

Bottom line: good enough to avert a default. The problem is that soon Greece will find itself needing to fund far greater bond maturities, in addition to rolling short-term debt, at which point the hilarious excuse that Greek "assets" have gone up in value will no longer cut it. And the worst news for Greece is that Europe's AAA club, in this case mostly the Netherlands (because Germany will kick and scream but in the end never jeopardize the ultimate beneficiary of the endless Greek bailout - Deutsche Bank) just said that not one additional penny of money will be given to Greece as there is a "big risk Greece will cost us extra money."

Of course it will.

The question, however, now is - just what creative shadow banking accounting gimmicks will Greece and the ECB use to literally hand over to Greece money for which there is no eligible collateral pledge, unless of course going forward the ECB demands a strip lien on Greek real estate, thereby starting to "sequester" Greek sovereign territory in exchange for payments that ultimately go to pay off debt held primarily by the... ECB.

One can also only hope that the Greek population never understands the true insidious nature of this creeping "bailout" which for three years now does absolutely nothing for Greek society as not one new penny enters the Greek economy, but all the money is merely recycled back into banker pockets with ever more liens being imposed on whatever Greek assets are still available.

and..... 

http://www.zerohedge.com/news/2012-11-13/living-day

Living In 'The Day Before'

Submitted by Tyler Durden on 11/13/2012 08:21 -0500

• Bond
 
• China
 
• default
 
• Fail
 
• fixed
 
• Flight to Safety
• Great Depression
 
• Greece
 
• Gross Domestic Product
• International Monetary Fund
 
• Iran
 
• Israel
 
• Italy
• Middle East
 
• Napoleon
 
• Portugal
 
• Reality

Via Mark J. Grant, author of Out of the Box,

The Day Before

• March 15, 44 BC                    Julies Caesar was assassinated
• December 25, 4 BC                Jesus Christ was born
• 476 AD                                 Augustulus deposed ending 505 years of the Roman Empire
• • July 16, 622                            Mohammed began writing the Koran
  • December 25, 800                  Charlemagne crowned “Emperor of the Romans” by the Pope
  • October 14, 1066                    William of Normandy defeated the English
  • June 15, 1215                          The Magna Carta was signed
  • October 12, 1492                    Christopher Columbus set sail
  • 1687                                        Isaac Newton published the “Principia”
  • July 4, 1776                            The Declaration of Independence is signed
  • July 4, 1789                            The French Revolution begins
  • June 19, 1815                          Napoleon is defeated at Waterloo
  • November 24, 1859                Charles Darwin published the “Origin of the Species”
  • April 12, 1861                         The Civil War begins in America
  • March 6, 1876                         Alexander Graham Bell makes the first telephone call
  • • December 17, 1903                The Wright brothers make their historic flight
    • June 23, 1914                          The first World War starts
    • October 29, 1929                    The Stock Market crashes & the Great Depression begins
    • December 7, 1941                  The second World War is set-off
    • September 3, 1945                  The first atomic bomb is dropped
    • October 1, 1949                      The People’s Republic of China is born
    • October 1990                          The World Wide Web was inaugurated
    
    In each of these instances, at each of these critical moments in time, there was a “day before.” The “day before” was just another normal day, time running its course, twenty-four hours where people may have known that something was up but supposed nothing would change. Markets, you see, always live in this “day before” where the bend in the highway never comes, where the path is always straight and fixed and where it is generally thought that nothing of consequence will happen. Then some event takes place, something magical or wonderful or awful occurs and the world is turned on its axis and nothing is ever the same again. The lead time for many of these moments in history is often long and could have been prepared for but, people being what they are, we tire of the wait and the markets continue to operate on the assumption that this “day before” will always be in effect right up until the moment when it is not. You see; the “day before” is transmuted by Time and what was becomes what is and that could be something very different than our last turn around the sun and to not be prepared is a disservice to your own position and to the capital of your clients.“After all tomorrow is another day.”
    
                         -Gone with the Wind
    
    The Looking Glass
    
    Women are much better at it than men but we all need to stand and stare into the mirror and take a very hard look at what is staring back. An honest reappraisal is imperative now! Syria fires on Israel, Israel fires back and Iran looms like the grey robed man with a scythe. War in the Middle East is an outlier no longer.
    
    Greece has risen from its recent obscurity, a Phoenix from the fire but, unlike the mythological bird re-born, this Greece is covered in fire, soot and dirt and Hercules himself could not make their debt sustainable.  The IMF may not fund and Europe promises, promises, promises and delivers nothing, no one wants to take any losses when losses must be taken and so Greece has become a dead man walking. Greece promises, Europe promises, platitudes are delivered like meat on a platter at a steakhouse and the silver cover is swept away and, low and behold, there is nothing there. Debt extensions, the lowering of interest rates, the buy-back of Greek debt in the open market and all of the other slivers of even more promises will not solve the problem, cannot solve the problem as the numbers have overtaken any relatively painless solutions. The figures will not add up without debt forgiveness, significantly more money or default. “Where’s the beef” is soon to be found or not found in the European Parliaments as the IMF rejects any new methodology for counting the coins in the vault. Breakpoint; we are at Breakpoint.The United States is staring into a fiscal abyss affecting 4.52% of our GDP and the priorities of the Republicans and the Democrats are as opposite as they have been in my lifetime. Perhaps there will be a compromise but maybe not and the risks enlarge with the passing of the days. Forget gloom, doom, optimism or muddle; the reality is that huge, giant risks are at hand and that you have no control over them and that in the Middle East, in Europe, in America that things could swing wildly out of control and that we do not face one cliff but jagged edges on three sides where Spain, Portugal, Italy, Greece could cause an avalanche while another may occur in the United States and a third could come rolling out of the sands of the desert countries.
    
    “Get ready, skanks! It’s time for the truth train!”
    
                          -The Simpsons
    
    I am not talking of betting this morning but of preservation and, in my humble opinion, only a fool would fail to see the risks at hand and take precautions. We are in danger, “clear and present danger” and the strategy of the “day before” is no longer appropriate. I can also tell you that the scent of Fear is picking up as the calls to the Wizard increase and as many institutions begin to assume “fall back positions” that are not only reasonable but mandated out of necessity by our present circumstances. Take note, $400 billion has poured into bond funds this year, an all-time record, with yields at depressed levels indicating a quite real flight to safety. The United States lost thirty-six percent of its wealth during the American Financial Crisis and, people or institutions, the song rolls across the landscape, “We won’t get fooled again!”Don’t get fooled again!
    
    “Soon enough, soon enough; a string of tomorrows that will be the most critical days of the year.”
    
                                  -The Wizard

http://www.zerohedge.com/news/2012-11-13/overnight-sentiment-europe-stumbles-over-itself-again

Overnight Sentiment: Europe Stumbles Over Itself, Again

Submitted by Tyler Durden on 11/13/2012 07:16 -0500

• Aussie
 
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• default
• European Central Bank
 
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• France
 
• Germany
 
• Greece
 
• Gross Domestic Product
• headlines
 
• International Monetary Fund
 
• Jim Reid
• New Normal
 
• Nikkei
 
• Recession
 
• SocGen

It wouldn't be the New Normal if the basket case that is Europe, and its amusingly named "Union", didn't somehow manage to trip over itself. This is precisely what happened last night at the European finance ministers meeting after IMF head Lagarde and pathological liar and chair of the Europe's mostly broke Finance Minister, Jean-Claude Juncker, openly disagreed with each other, an event even the FT called a "feud" after they proposed two alternative visions for Greece, one which envisioned the 120% debt/GDP debt target goal pushed forward to 2022 (for Juncker), and on the other hand, IMF, which has been humiliated enough with its horrible predictions, and which refuses to budge from its 2020 Greek target. Per the FT: "In a rare breach, Mr Juncker told a post-meeting press conference the target would be moved to 2022, prompting Ms Lagarde to insist the IMF was sticking to the original timeline. When Mr Juncker again insisted it would be moved – “I’m not joking,” he said – Ms Lagarde appeared exasperated, rolling her eyes and shaking her head. “In our view, the appropriate timetable is 120 per cent by 2020,” Ms Lagarde said. “We clearly have different views.” Officials will meet again November 20 in an effort to reach agreement, Mr Juncker said. Despite the delay, officials insisted Greece would not default on Thursday, when Athens must make a debt payment of about €5bn without the benefit of international aid." Nothing like total coordination and organization within a monetary union that may not exit if Greece does not make its November 16 bond payment, which it likely will, by issuing debt and forcing the ECB to accept it as eligible collateral so that Greece can roll the maturity. And concluding this hilarious incident was Juncker's statement this morning that there is "no real dispute" with the IMF. When it gets serious...

Of course, when this round of acrimony is finally resolved through various denials, the question remains where Greece will get the additional €32.6 billion in additional funding needed even with it getting an additional 2 year to build up 200%+ debt/GDP.

And confirming that there are few oxymorons more aptly named than "European Union", here is a smattering of the day's headlines:

• German Investor Confidence Unexpectedly Declined in Nov
• Germany’s Schaeuble Says France Isn’t “Sick Man of Europe”
• Europe Gives Greece Extra Time, Spars With IMF on Debt Plan
• De Guindos Says No-One Suggested Spain Needs More Aid
• Monti Says Germany Should Appreciate Gains From Euro: Le Figaro
• U.K. Inflation Quickens More Than Forecast on Tuition Fees

Stability all around, and getting better by the day.

What to expect, aside from more European headline terrors, via SocGen:

Greece will remain the centre of attention today. Greece must reimburse EUR5bn in T-Bills on Friday. Several solutions, including help from the ECB, are currently being considered; however, no decision has been officially announced. Prime Minister Samaras will meet President Barroso today, and Minister of Finance Stournaras will speak before the European Parliament. The Greek Parliament has adopted the austerity measures and 2013 budget requested by the Troika. Nevertheless, the EU has still not disbursed the EUR31bn tranche. This climate keeps the markets cautious: 2Y Bunds are in negative territory, EUR swap rates are close to 2012 lows, and the EUR is sliding. The issue of the eurogroup meeting was not enough clear to prompt risk-on? A concrete outcome surrounding the reimbursement of the EUR5bn by the end of this week will not make much difference in our view. And how long would the EUR31bn tranche (expected by the end of the month) reassure investors?

Apart from the purely political aspect, the interpretation of European indicators will require prudence: the German ZEW indicator is expected to be down today, eurozone industrial production will follow tomorrow and Q3 GDP data on Thursday. The eurozone is slipping into recession, justifying low interest rates, and is unlikely to prompt a long-lasting rebound in the euro.

The full event recap from DB's Jim Reid:

Developments in Greece have dominated the news flow over the last 24 hours culminating in Monday’s late-night press conference where Eurozone finance ministers announced that they were giving Greece two more years to meet their budget deficit targets. The announcement came amidst a rare public display of disagreement between EU’s Juncker and the IMF’s Lagarde as both leaders openly offered contradictory assessments on Greece’s debt sustainability targets. Juncker told reporters that Greece’s should now be given until 2022 to cut debt to 120% of GDP (from 2020 previously) which was countered by an astonished Ms Lagarde who then promptly asserted that “In our view, the appropriate timetable is 120% by 2020” and “We clearly have different views.” Lagarde also said that additional work on the debt sustainability will be done in the coming days.

A draft Troika report noted that the two-year extension means Greece may need an extra EU32.6bn. There is no detail yet on how this additional financing requirement will be met although Juncker was quoted as having said that “We started to discuss a certain number of avenues” and “My personal feeling is that [official write downs] will not be the one that will be privileged”. The FT, quoting senior officials, noted that the IMF believes that without any relief, Greek debt will stand at nearly 150% of GDP by 2020 while the EC believes it will be just over 140%.

In terms of getting clarity on whether Greece will get its next disbursement from the bailout program, we’ll have to wait a few more days to find out. Juncker has convened a Eurogroup meeting for November 20th, after which the group expects to make a “definite decision” by November 26th. Juncker also said that the final troika report on Greece will be due by November 17th. With regards to Greece’s T-bill maturity of EU5bn this Friday, EU’s Rehn said that Greece will meet the redemption by using a combination of T-bill issuance and existing cash reserves.

With the Eurogroup meeting seemingly creating more questions than answers, markets overnight are predictably trading with a cautious tone with the Hang Seng (-0.8%), Nikkei (--0.2%) and the KOPSI (-0.6%) lower. The Shanghai Composite (-1.2%) is also down sharply on news that the Chinese government may expand a property tax trial. The risk-off tone is extending to currencies, where the EURUSD is trading at a 2-month low of 1.267. The Aussie dollar is 0.2% lower against the greenback (1.0414), not helped by the latest NAB business confidence index reading which printed at its lowest level since  May 2009. In the credit space, the Asian and Australian IG indices are flat to marginally wider.

In the US, the fiscal cliff looks set to return to the headlines today as lawmakers return to DC for the first time post-election. The WSJ is reporting that Obama plans an aggressive public campaign to build broad support for his plan to tackle the fiscal cliff starting with a meeting with union leaders on Tuesday, and a number of business leaders on Wednesday. This is in an effort to solidify backing for his proposals ahead of meeting with congressional leaders on Friday. The rhetoric from Republican leaders has softened in recent days, with a number of Republicans conceding that increased tax revenues may be part of reducing the fiscal deficit.

More on Greece, the leaked draft troika report described the risks to Greece’s bailout program as “very large” driven by “overall policy implementation, given that the coalition supporting the government appears fragile and some components of the programme face political resistance, despite the determination of the government”. Nevertheless, Juncker described the report as “broadly positive” and said that he was “impressed by Greece’s recent performance”. In Spain, the Asociación Española de Banca (AEB banking association) has said that it will freeze for two years the eviction of people from foreclosed homes “due to extreme necessity”. Spanish equities underperformed yesterday (-0.90%) weighed by financials. Spain’s Finance Minister Luis de Guindos reiterated the Government’s official view that the country should be paying no more than 200bps over bunds for financing.

Staying on the peripherals and as an interesting anecdote, Lamborghini’s CEO told Bloomberg TV that the company has not sold any cars in Greece this year and has put plans for Greece on hold given the crisis. The company also remains very cautious on Europe next year. Overall he doesn’t expect industry ultra-luxury car sales to be higher in 2013 although he sees improvement in the US market while HK is still growing. On China he noted that sales have been affected by the slowdown.

Turning to the day ahead, Germany ZEW sentiment index and French employment data are the main economic releases. The EC’s Jose Barroso will meet the Greek PM today, while the Greek finance minister is due to speak at the European Parliaments Economic Affairs committee. Greece’s T-bill auction is scheduled for 10am London time where the government is expected to raise EU1bn in 3-month bills and EU2.125bn in 1-month bills.

and........

http://www.telegraph.co.uk/finance/debt-crisis-live/9673327/Debt-crisis-live.html

12.15 Germany could bundle Greece's next three aid tranches into one payment of more than €44bn, according to reports.

Bild said that the government was considering adding Greece's latest €31.3bn tranche with further tranches of €5bn and €8.3bn for the third and fourth quarters.

A German finance ministry spokeswoman told Reuters that no final decision had yet been made on next loan payments to Greece.

12.01 Jean-Claude Juncker has attempted to allay fears of a growing rift between the IMF and EU over Greece's debt sustainability target.

Speaking in Hingene, Belgium, the head of the Eurogroup said that there was "no real dispute" with the IMF, and that any disagreement was just part of an "ongoing debate" on Greece's adjustment programme. He said:

The IMF is in its right to be asking Europeans to bring the necessary attention to the debt- reduction problem.

We think that the debt reduction has to be of a magnitude of 120pc in 2020, or as some of us believe that this 120pc level could be postponed to the year 2022. This is no major set of disagreement.

11.27 While Nicholas Spiro at Spiro Sovereign Strategy, says:

Athens' creditors' ability to kick the Greek can further down the road knows no bounds.

[...] Eurozone members, led by Germany, want to have their cake and eat it too: they want Greece to remain in the eurozone (at least for the time being) but are politically unwilling to accept losses on their loans to Athens.

All solutions to ease Greece's financial plight are on the table except the one that is most likely to put the country's finances on a more secure footing and help keep Greece in the eurozone: the forgiveness of official loans. Rescue fatigue on the part of Greece's creditors, coupled with persistent doubts about Athens' ability to implement reforms in the face of a seemingly never-ending recession, are conspiring to keep Greece in limbo: in the eurozone but economically and financially crippled.

While fears of an imminent Greek exit from the eurozone have receded, the Greek tail is beginning to wag the eurozone dog once again - although mounting concern about the US fiscal cliff and Spain's own woes are also contributing to the deterioration in risk sentiment.

Greece remains a cancer on the eurozone economy which the bloc's leaders have yet to treat effectively. The most competent doctor, meanwhile, the IMF, is losing credibility.

11.19 The FT's Alan Beattie has posted a blog on the EU-IMF spat, where he writes that the trouble in t'troika had been brewing for some time:

Reports of discord within the troika over Greece’s financing gap and who is going to have to fill it are hardly new: it’s now more than a year since the IMF started to dig in its heels over the Greek rescue, at least behind closed doors, and point out the Panglossian nature of the troika’s forecasts for debt and deficits.

Yet the fund was still rolled into supporting a clearly unsustainable revised bailout for Greece back in March, signing up to a debt sustainability analysis over which its staff had grave doubts and warning that any slippage from the targets was going to mean Greece and the eurozone/ECB having to come up with new austerity measures and fresh cash respectively. As its report at the time concluded (page 38):

It should nonetheless be stressed that this assessment leaves little to no margin in case policy implementation and economic and financial variables do not evolve in line with program assumptions and projections, in which case continuing to meet the substantive exceptional access criteria in future reviews may require additional efforts by the [Greek] authorities and/or their European partners.

The only real import of Monday’s 2020 vs 2022 disagreement is that, by publicly drawing a line, it will be more obvious – and more damaging to what remains of the IMF’s reputation as a speaker of truth to power – if it is forced to give way.

11.05 Jennifer Mckeown at Capital Economics added:

November's renewed fall in German ZEW investor sentiment suggests that financial markets' optimism about the prospect of ECB bond purchases is fading...

Meanwhile, there have been clear signs of a downturn in the German economy itself, with business surveys weakening further in October and industrial production falling sharply in September. For now, the ZEW looks broadly consistent with economic stagnation in Germany. But we think the economy will slide back into recession next year as the peripheral debt crisis intensifies and business and consumer confidence weaken further.

10.57 Commenting on the survey data, ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz (yes, he does have all those titles), said:

Since mid-2012 the economic expectations of the financial market experts move more or less sideways while remaining in the negative territory. Prevailing recessionary developments in the Eurozone impact the German economy via foreign trade and a lack of confidence. This is likely to be a burden for economic growth in Germany during the next six months.

10.55 From the eurozone's weakest nation, to its strongest.

German investor sentiment unexpectedly fell in November, as the eurozone crisis weighed on confidence.

ZEW's monthly survey of 263 analysts and investors showed that economic sentiment fell to -15.7 from -11.5 in October.

Analysts polled by Reuters had expected a reading of -9.8 (the number reflects the difference between positive and negative assessments).

10.40 According to Bloomberg, Greece may issue a further €637.5m of 4-week T-bills and €300m of 3-month bills in a second auction this week.

This will allow the country to redeem a €5bn bond that matures on Friday.

10.36 Greece has got its debt auction away, where it has sold just over €4bn of short term debt.

It sold €1.3bn of three month debt at average yields of 4.2pc, according to country's debt management agency. This compares with 4.24pc at a similar auction last month.

There were 1.66 bidders for every bond on offer (v.1.9).

It also sold €2.762bn of 4-week Treasury bills at average yields of 3.95pc.

10.27 I will be keeping a close eye on events in Brussels. This Greekdeal is far from signed, sealed and delivered.

Follow our Brussels correspondent Bruno Waterfield on Twitter for more live updates.

10.25 He added:

There are no considerations to top up the programme. We must find ways to close the gaps without using this path. That's not trivial, but it is also not beyond imagination. Then we presume the programme will function, so in the end it will be all about guarantees, not transfer for Greece.

But it may be that we take some measures to reduce interest rates that will have an immediate effect on the budget. That's true, but that's about forgoing of profits or marginal changes.

Apart from that, we expect that the problems will be solved within the financial framework of the second programme by allowing more time with additional measures.

10.20 More from Mr Schaeuble, courtesy of Reuters:

We know that the worsening economy in Europe... leads to Greece reaching debt sustainability in 2020... as being possibly a little too ambitious.

We will need to find solutions on some difficult points in the coming days, but given the progress made we are confident we will manage that together.

_{German Finance Minister Wolfgang Schaeuble (L) and French finance minister Pierre Moscovici (R), arrive to give a join press conference during a Ecofin European finance minister meeting in Brussels on Tuesday (Photo: EPA)}

On official sector involvement (OSI), he said:

I am very happy that in retrospect we are getting so much support for the PSI (private sector writedowns on Greek debt) by the IMF. It's a good sign that proposals developed by France and Germany together are usually so good that they can be accepted by others. For private creditors there is no opportunity of a second haircut anymore.

What can be done is a debt buy, and that's being talked about. There's a debate about a haircut for official creditors.

On that I will say, and most countries have said so in the past few weeks, that that's legally not possible. And to reiterate the position of the ECB is not the job of the German finance minister, but if you ask the president of the ECB you get a clear answer.

Without speculating, I believe we should in future concentrate on other solutions.

10.15 The Economist newspaper examines what it calls the "Battle of the (third) bailout" in a blog this morning:

...extending the bailout by two more years means Greece will need to borrow some €32.6 billion more from its euro-zone partners. That amounts to a third bail-out.

Even if this extra help is agreed somehow, Greece will be far from safe. The previous bailout, which included a big haircut on private bondholders (aka Private Sector Involvement, or PSI), was supposed to bring Greece's debt below 120% of GDP by 2020. That will be missed by a wide margin.

Quite how wide is still a matter of dispute. The “debt sustainability analysis” has been omitted from the troika's report. But sources say the IMF reckons Greek debt will be around 160% of GDP in 2020, while the European Commission puts it lower at about 140% of GDP. Massaging of the figures, which are sensitive to forecasts of the rate of economic growth (or Greece's case, of shrinkage) and the interest rate should eventually reconcile the two.

10.12 Back to Greece, where Wolfgang Schaeuble, Germany's finance minister, risks widening the rift with Christine Lagarde by describingGreece's 2020 debt sustainability target as "possibly a little too ambitious".

He also said that the €32.6bn (£26bn) funding gap created by the two year extension should be plugged by lowering the rate that Greece pays on its loans, NOT via governments taking a writedown on their holding of Greek bonds, something that the IMF has long advocated.

Oh dear, this could get nasty.

09.53 Ross Walker at RBS, added:

They are a little bit disappointing, higher than expected, above the range. Ironically, we had the tuition fee increases that are roughly what we expected and the surprise for us was the extent of the food price increase and also to some extent the transportation numbers.

Half the rise is an administered price increase if you like, it reflects a legislative change in terms of university fees... I don't think it's a game changer, I don't think it's going to alter the policy outlook, they [the Bank of England] seem to be pausing on QE or further loosening anyway.

08.56 Here's what Mr Juncker had to say last night:

...the Eurogroup concludes that the revised fiscal targets, as requested by the Greek government and supported by the Troika, would be an appropriate adjustment for the further path of fiscal consolidation in view of recent economic developments. The Eurogroup looks forward to the adoption of the related legal texts by the Council.

The Eurogroup calls on the Greek authorities to implement the few remaining prior actions as a matter of urgency so as to allow for a swift conclusion of the review.

Together with the review of the Greek adjustment programme, the Eurogroup will further discuss financing needs and debt sustainability, at an extraordinary meeting that will be convened on 20 November. The Eurogroup expects that by that time, the necessary elements will be in place for Member States to launch the relevant national procedures required for the approval of the next EFSF disbursement, subject to the Troika's final positive assessment of all prior actions by the Greek authorities.

08.51 It's far from happy families in Europe this morning. Last night,Christine Lagarde, the managing director of the International Monetary fund, clashed with EU leaders over Greece's debt sustainability target. Bruno Waterfield reports:

Jean-Claude Juncker, president of the Eurogroup of finance ministers, announced Greece would be given an extra two years to meet its debt reduction target of 120pc of GDP by 2022 instead of 2020.

“The target, as far as the time-frame is concerned, has been postponed to 2022,” he said.

A visibly angered Mrs Lagarde, the managing director of the IMF, shook her head and rolled her eyes at the announcement that breaches the Washington-based fund’s condition that Greek debt must become sustainable by 2020.

“We clearly have different views,” she said. “In our view the appropriate target is 120pc by 2020. It is critical that the Greek debt be sustainable."

The 2020 “debt sustainability” target was agreed as the condition for the IMF’s involvement in the second Greek bail-out agreed in March this year and an EU decision to breach it could jeopardise the whole international package.