Friday, November 23, 2012

While Greek households losses 5.4 billion in income over the past year due to the wicked combination of soaring taxes as salaries and benefits have been shrunken through , Greece and the Troika look for solutions by monday - note the IIF representing private investors are already warning Greece and the Troika not to squeeze them again ( while the ECB / EU Countries and IMF refuse to take haircuts ! Expect many trial balloons to be floated and re-floated over the next few days ! Meanwhile the EU Budget snipe hunt continues fruitlessly.......

http://ransquawk.com/headlines/finnish-finance-minister-says-finland-is-ready-to-extend-greek-loan-maturities-but-no-new-lending-to-greece-through-efsf-esm-23-11-2012


Finnish finance minister says Finland is ready to extend Greek loan maturities but no new lending to Greece through EFSF, ESM

- Greek debt sustainability, funding main issues.
Update details:
- European governments want to give Greece an extra two years, until 2022, to cut its debt to a sustainable level of 120% of GDP but the IMF does not agree.





http://www.zerohedge.com/news/2012-11-23/five-little-pigs


The Five Little PIGS

Tyler Durden's picture
Submitted by Tyler Durden on 11/23/2012 08:29 -0500



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

"Oh, sure. Of course, you're entitled. Who doesn't want this, that, and the other?"

                      -Jerry & Elaine, Seinfeld


So we have the Greek debt crisis, the European Union budget problem and the European bank oversight issue and twenty-seven countries all wanting “this, that and the other” except “the other” is not that much fun unless Ms. Merkel surprises everyone by saying she is a little tired and pulling a Mae West and telling all twenty-seven nations that one will have to leave.“Boys, tell that fellow from Athens that tonight is just not his night.”


The scenario is unlikely of course but then everyone involved is now playing the grand old game of “Work Around” where someone must pay and it is going to be anybody but them. “Not this little piggy,” says the IMFand “not this little piggy” says the ECB and“not this little piggy” says the European Union. This is all because no one wants the political winds to “blow their house down” but there is the grinning big bad old wolf sitting on the mountain of debt and all of the hairs on their “chinny, chin, chins” aren’t going to change that fact. In the classic tale there were three houses with the least stable being the one made of straw and let me tell you; Greece is the straw house. Now you may have thought that the IMF’s contribution was kind of like the Fed or the ECB and that they just created money from some pork barrel but this is not the case. As a matter of fact the United States, as a 16.75% contributor to the International Monetary Fund, is on the hook for $13.4 billion of the money lent to Greece, Ireland and Portugal. Soon, in my estimation, we will have two more pigs in the pen which will be Cyprus and Spain. Change the bed sheets; its “PIGS in a blanket” for everyone!Why did the PIGS cross the road?



“Whether the PIGS crossed the road or the road crossed the PIGS depends upon your frame of reference.”

                 -Attributed to Albert Einstein



It used to be, in the good old days, that the amounts of money were trivial and the European stockpile was large so that more money could be shoveled into the trough and no one really cared. Every problem was handled by “Mo’ money.” Then one day the wolf trotted back to the Piggly Wiggly and the straw house had grown cavernous and Parthenon Pig had grown from piglet to porker and the credit card bill for the food and the entertainment is sitting on the table of Francois and Angela while they stare at it, try to ignore it as Austria, Finland and the Netherlands declare the offing “Not Kosher” and refuse to partake.
Three PIGS become five PIGS. “Deal or no Deal” results in three no deals. Howie Mandel is nowhere in sight. The wolf bangs at the door and begins to “huff and puff.” Truffles are being replaced with pork and beans. The Euro goes up. The ECB will save the world.












http://www.zerohedge.com/news/2012-11-23/black-friday-fails-bring-budget-deal-europe


Black Friday Fails To Bring A Budget Deal For Europe

Tyler Durden's picture
Submitted by Tyler Durden on 11/23/2012 07:14 -0500



First it was Greece, which Europe couldn't "resolve" on Monday night despite Juncker's vocal promises to the contrary, and was embarrassed into postponing until next Monday when everything will surely be fixed. Now, the time has come to delay the "resolution" of the EU budget, which was supposed to be implement last night, then a decision was delayed until today, and now every European government leader is saying a new meeting will likely be needed to resolve the budget impasse.

As BBG summarizes, "Divisions between rich and poor countries flared over the European Union’s next seven-year budget, leading German Chancellor Angela Merkel to rule out an accord until the new year. France defended farm subsidies, Britain clung to a rebate and Denmark demanded its own refund, while countries in eastern and southern Europe said reduced financing for public-works projects would condemn their economies to lag behind the wealthier north. “Positions remain too far apart,” Merkel told reporters early today after the first session of a summit in Brussels. “Probably there will be no result at the end of this summit. There may be some progress but it is probable that we will need to meet again at a second stage."  In other words the same old absolute and total chaos from the European Disunion we have all grown to love, in which the only solution each and every time is to delay reaching a solution, at least until after Merkel is reelected and in the meantime kicking the ever greater ball inventory in Draghi's court, where he too will promise to make everything better as long as he actually dosn't have to do anything.
On the surface this kind of political clowning should be bad for risk: however, in Europe BIS' FX trading team always operates deep below the surface, and while all the news about fixing being interrupted are ignored, what did impact the EURUSD, and thus broad risk, overnight was the reflexive German IFO Confidence release, which printed at 101.4, above expectations of 99.5, and higher than the October print of 100.0 which also happened to be the February 2012 low. Nevermind the ongoing deterioration in German PMIs, of which the service component dropped to 2009 low levels, andthat an IFO economist warned German Q4 GDP may (read "will") come in negative for the first time in years - the jittery headline scanning algos took the news and sent EURUSD higher by 40 pips, making German exports that much more uncompetitive.

In other news, the Greek deal was percolating, with various permutations being contemplated, and now even Goldman's Themistoklis Fiotakis on hope the debt buyback will be greenlighted over objections by the broader Greek society, and all those other European countries who will soon realize their EFSF funding is being used not to bailout Greece, for whom it is not a question of debt stock, but lack of GDP flow, but to generate massive hedge fund profits.
Finally, with the US trading session today at half mast, expect another record low volume half-trading day, which means a risk levitation is practically guaranteed. Headlines scanned for by the few trading algos will be anything promising a "massive", "unprecedented", "record" Thanksgiving retail season, just like last year, when a month later everything was inverted and it was subsequently learned that the bulk of the purchases had been returned to the sellers.

Some more macro previews from SocGen:

The market should be very quiet today, as many US investors are off on Thanksgiving break.

All eyes will thus be on the eurozone with the publication of French and German business confidences indices. The French index hit its August 2009 low last month ahead of the publication of the 2013 budget. Thus, a correction is expected, but the index will remain at low levels. German IFO business confidence could continue to deteriorate, although it hit its February 2012 low in October.
We note that lower-than-expected indicators could revive expectations of rate cuts by the ECB on 6 December. The SG scenario does not factor in an interest rate cut as they are already very low (repo rate at 0.75% and deposit rate at 0.0%): the potential disadvantages (money market fund outflows) would outweigh the advantages (could a 25bp cut have a major impact on activity?). We will also be paying close attention to President Draghi's speech today.

Overall, the EUR/USD could rapidly hit a ceiling and 2Y Bund yields fall back into negative territory.

And a complete review of what little happened overnight from Jim Reid:

Black Friday actually began on Thursday for many US consumers who cut short their Thanksgiving dinners to be amongst the first through the doors of retailers that opened earlier than usual this year. A number of chain retailers including Walmart and Toys R US were said to have opened at 8pm yesterday in an effort to kick-start sales ahead of the all-important holiday shopping season. Although for those who wish to let the fingers do the walking and shop from the comfort of your homes Cyber Monday also presents an attractive alternative. So watch out for commentary from retailers and industry groups next week for this weekend’s sales performance which should shed some light on consumer sentiment amid the ongoing ‘fiscal cliff’ uncertainty.
With the US markets closed for Thanksgiving, yesterday was a relatively quiet day for markets. In Europe, the Stoxx600 closed at the day’s highs (+0.59%) led by solid gains in the peripheries. Main bourses in Greece, Italy and Spain finished +1.99%, +1.03% and +0.90% higher on the day, respectively. The European market seemingly breathed a collectively sigh of relief that the manufacturing sector PMIs, although still mired in contractionary territory, have showed some signs of improvement. Indeed the flash Eurozone manufacturing PMI for November came at 46.2 (vs 45.6 expected and 45.4 previous) helped by improvements in France (44.7 vs 43.7 prev) and Germany (46.8 vs 46.0 prev). The services PMIs were softer though which took some shine away. The eurozone services PMI fell 0.3pts on the month to 45.7. This was also accompanied by a 0.5pt and 0.4pt drop in France’s and Germany’s services series, respectively.

Assuming no change in the November and December final readings, our European economists noted that the PMIs would point to a euro area GDP contraction of 0.5% qoq in Q4 which is broadly in line with their forecasts (-0.4% qoq). Staying on PMIs for a bit and turning back to  yesterday’s flash HSBC manufacturing PMI in China. DB’s Jun Ma thinks that yesterday’s 50.4 print correlates with an official PMI reading (to be reported on Dec 1st) of around 51 which would be a 0.8pt improvement on the October reading. Also in yesterday’s flash PMI report, the sub-indices of new export orders and output rose by 5.7pts and 3.0pts to 52.4 and 51.3, respectively. Jun believes that the rise in output was driven by raw material inventory restocking which is consistent with the recent rally in commodity prices.
The positive risk tone is extending into the overnight session with Asian bourses mostly higher across the region. Gains are led by the Hang Seng (+0.28%) and Shanghai Composite (+0.73) although volumes and news flow are predictably thin given Japan’s Labor Thanksgiving holidays. Sentiment in Korea was initially weighed by reports that North Korea is preparing to test a long-range ballistic missile. Away from geopolitical headlines, Airline Cathay Pacific overnight described the cargo business as a “huge challenge” and added that cargo revenues are down 13% YTD.

In the FX space, USDJPY is trading 0.3% lower this morning (82.2) and is on track for its biggest downward move in two weeks. This follows a WSJ article which cites Japan’s opposition leader Shinzo Abe as saying that he would be reluctant to intervene in the Yen. In a departure from his strong dovish rhetoric of recent weeks, Abe said that past intervention hasn’t been effective, and monetary policy alone isn’t enough to stop deflation.
Turing back to Europe, EU President Van Rompuy called an end to the first day of the EU Summit at around 11pm London time last night to allow heads of state some time to study a revised budget proposal that provides for EUR1 Trillion of spending between 2014-2020. The revised proposal allows for EUR80bn in spending cuts which are designed to appease the more hawkish leaders. EU leaders will study the proposals overnight and reconvene at midday today for negotiations. Merkel said that she doubts a budget deal will be reached at this week’s summit and most likely a second summit will be needed early next year.

Moving on to today, there will be very little as far as data flow is concerned. Germany’s IFO survey and Italian retail sales are the two main reports out today. We may get further headlines out of the EU Summit but we should see a relatively quiet end to the week with only a half-day market in the US.






and how does the EU want to spend its budget and what new powers does Brussels seek - looks like they want in on the war mongering game....


http://rt.com/news/eu-parliament-military-resolution-380/


'Direct assault on sovereignty'? EU resolution forces members to beef up security

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Published: 23 November, 2012, 08:01
TAGS:
Arms, Military, EU, Politics, Europe, Army
Members of the European Parliament take part in a voting session. (Reuters / Vincent Kessler)
Members of the European Parliament take part in a voting session. (Reuters / Vincent Kessler)
The European Parliament has voted through a resolution calling for national militaries to ramp up their might. The EU believes economic downfall must not become a pretext to give up defense and security efforts.
MEPs in Brussels have approved a resolution saying the EU must respond to growing geostrategic changes and threats to global security and make full use of all existing means, including military, to secure peace and security for its citizens.
This means a new EU operational headquarters is in the cards, and that Brussels will have the authority to jump into different crises, including what it calls “high intensity conflicts” – otherwise known as wars.

It is a question of business as well. European MPs stressed that building up Europe’s capabilities would save and even create jobs, pumping more investment into the military industry. 
Not all EU member states are going to be jumping for joy over the plans. The more ambitious EU common security and defense policy could leave Britain between a rock and a hard place. The UK could end up getting dragged into military campaigns that it has no interest in joining.
MEP David Campbell Bannerman from the UK Conservative Party voted against the move and slammed the move. Bannerman told RT that Brussels is encroaching on the sovereignty of its members, with Britain relinquishing control of its own defense and security decisions.
“It really does trespass into national responsibilities for defense,” Bannerman said. “And it’s talking about the EU looking after its citizens. It is a direct assault on sovereignty as I see it.”
Bannerman believes the move is really is about politics, rather than defense. “This is about actually furthering the course of one united state in Europe, because they want a single army, a single defense industry, because this is part of their foreign policy.”
“They want to get involved in high-intensity conflicts, in their terminology, and that means war in my terminology,” he explained. “They want actually for the EU to be involved in wars and commit our soldiers and our navy people in these kinds of conflicts – and that is not acceptable.”


and....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/11/2012_471344

( Stournaras has his thousand yard stare back , excuse any muttering from his mouth at this point. his Junkeritis must be inflamed as he is back to making uncorroborated statements soon to be proven " premature " , " inaccurate " , " misinterpreted " , etc... )


Eurozone teleconference on Saturday to focus on Greece


Eurozone finance ministers are to participate in a teleconference on Saturday in a bid to narrow their differences regarding the best way to make Greece's debt sustainable ahead of yet another crucial Eurogroup summit on Monday which, Athens hopes, will yield a decision for the release of vital rescue loans.
Initial reports on Friday suggested that the conference call would take place at 5.30 p.m. Greek time on Saturday though subsequent reports said the discussion might be pushed back to the evening.
Finance Minister Yannis Stournaras, who will sit join his 16 eurozone peers for the call on Saturday, said late on Thursday that just 10 billion euros are standing in the way of a deal on Greek debt sustainability. He added that eurozone ministers have aleady agreed on measures to reduce Greece's debt to 130 percent of gross domestic product by 2020 and that a gap of between 5 and 6 percent of GDP, or 10 billion euros, remained to be covered.
Meanwhile Reuters quoted a ministry source as saying that foreign creditors are considering having the European Central Bank forego 9 billion euros of profits on its Greek debt as part of options to make the country's debt sustainable. The lenders are also mulling cutting the interest rate and extending maturities on loans as well as a 10-billion-euro debt buyback by the government, the source told Reuters. The ministry has already begun preparations for the debt buyback, which could be completed by the end of the year if approved by eurozone finance ministers, the source was quoted as saying.





http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/11/2012_471312


Small bondholders demand meeting with gov't officials


Greek small bondholders who suffered losses from the country's debt restructuring in March staged a protest on Friday outside the offices of conservative New Democracy which leads the government's tripartite coalition.
The protesters, who chanted «Thieves, we want our money back,» demanded a meeting with the secretary of the conservative party's political committee, Manolis Kefaloyiannis. Shortly after noon, dozens of protesters entered ND's headquarters.
Bondholders have been insisting that the government offer relief on individual bondholdings up to 100,000 euros, similar to the state guarantee that covers bank deposits.




and....


http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/11/2012_471293


Attica municipalities grind to halt amid worker action


Local authority employees on Friday continued sitins at city halls and municipal buildings across the country to protest a scheme aimed at puttng thousands of them into a fast-track redundancy scheme.
In Attica, all city halls were to remain shut as workers pressed on with their action with a protest rally scheduled to take place outside the Administrative Reform Ministry before noon.
The union representing local authority workers, known by its acronym POE-OTE, was to meet on Friday to decide on how to continue with industrial action.
On Thursday Manitakis issued a statement that appeared to go against the ministry’s declared commitments to the country’s foreign creditors by stating that he would not approve a single layoff, only transfers of civil servants from one department to another. “I will not fire a single civil servant, nor will I put my signature under any decision for dismissal,” Manitakis told Parliament’s public administration committee. He was responding to a question lodged by leftist SYRIZA MP Alexis Mitropoulos about impending civil servant layoffs.







http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_22/11/2012_471261


Households see billions of euros of income wiped out

 Taxation has increased by 37 pct in 12 months as salaries tank

Households in Greece have seen their combined incomes shrink by 5.4 billion euros (or 13.6 percent) within a year due to soaring taxes and reductions in salaries and benefits, according to the Hellenic Statistical Authority (ELSTAT).
As a result, households have dramatically curtailed their spending and been forced to resort to dig into their savings, while investment in the country continued to decline over the last 12 months, shrinking by 20 percent year-on-year, second-quarter figures have shown.
The disposable income of Greek households amounted to 34.1 billion euros in the April-June period, down from 39.5 billion euros a year earlier. ELSTAT attributes this to the 37.3 percent increase in taxation on incomes and property starting from the second quarter of 2011, along with the 15.1 percent reduction in employees’ salaries and the 9.5 percent drop in social benefits.
Consumer spending contracted by 7.3 percent in Q2 compared to the same period in 2011, amounting to 37.1 billion euros, against 40 billion a year earlier.
The ELSTAT figures also showed that household savings shrank 8.5 percent, after dropping 1.2 percent in the same quarter a year earlier. Investments declined by 20.6 percent to 3 billion euros, against 3.8 billion in Q2 of 2011.
The net borrowing needs of the economy in general amounted to 2.4 billion euros, down from 6.1 billion a year before, thanks to the major reduction in the trade deficit.


and......



Greece and lenders edge towards compromise on debt


Greece and its lenders appear to be edging toward a formula that would make the crisis-stricken country’s debt sustainable, with Finance Minister Yannis Stournaras suggesting on Thursday that only 10 billion euros stood in the way of a deal.
Technical experts on the Euro Working Group continued to crunch the numbers in a bid to come up with a strategy for reducing Greek debt that would be acceptable to all members of the eurozone and the International Monetary Fund. Sources said that another 8 to 10 billion euros was needed to meet the target.
The IMF has accepted that Greek debt will not meet its target of 120 percent of GDP in 2020 and is willing for this to change to 124 percent in the same year.
So far, the technical experts have found ways, including the European Central Bank giving up profits on Greek bonds and Greece embarking on a bond buyback scheme, to reduce debt to 130 percent of GDP by 2020. Greece is also set to save 40 billion euros if its euro partners agree to lower the interest rates on bilateral loans to Athens.
“In Greece, we have done our part, now it is our European partners’ and the IMF’s turn to deliver as well,” said Samaras as he headed into a meeting of EU leaders in Brussels that would focus on the 2014-20 Union budget.
However, German Finance Minister Wolfgang Schaeuble presented a new potential obstacle to an agreement on Monday when he suggested that Greece could not benefit from a haircut and continue to receive bailout loans as well.
“The moment we decide to give Greece a haircut, we cannot give any new guarantees,” he said on Thursday.
“That is logical because the budget law rightly says you can only take on guarantees if you believe that the debt will be paid back, so you can’t do both,” he added.
However, there were others in Germany who called for a compromise to be found when eurozone finance minister reconvene next week.
“Those who want to avoid a haircut of public creditors and see that as a red line must be ready to move on other issues,” Joerg Asmussen, Germany’s representative at the ECB, was quoted as saying in Passauer Neue Presse.


and as far as that buyback scheme goes , note private investors already saying don't try it Greece - not a second time ........



http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_21/11/2012_470907


IIF warns against debt buy back plan for Greece


By John O'Donnell
A tentative plan to further restructure Greek bonds owned by private investors risks undermining the euro zone's credibility, a senior bank industry representative said on Tuesday.
The Institute of International Finance (IIF), which helped coordinate a large writedown of Greek bonds owned by banks and pension funds earlier this year, said any further effort to have the private sector carry the can would be taken badly and could wreck Athens' chances of raising money from the markets in the future.
The comments from the IIF's deputy managing director came as euro zone finance ministers were meeting to consider a proposal for Greece to buy back a portion of its private-sector debt at a deep discount, thereby lightening its overall debt burden.
"Debt restructuring was clearly explained to investors as a one off, as unique, not to be repeated,» Hung Tran told Reuters.
"If they do restructure again, their own credibility is at risk,» said Tran, who was closely involved in a «haircut» carried out in March which handed losses of around 75 percent to private bondholders and reduced Greek debt by 100 billion euros.
The proposal being discussed by ministers on Tuesday is somewhat different, but would still constitute an overhaul of Greek bonds.
The plan as explained to Reuters would involve Greece offering private-sector bondholders around 30 cents for every euro of Greek debt they own, allowing Athens to pay down some of its vast outstanding obligations.
Depending on their maturity, Greek bonds are currently trading at between 20 and 30 cents on the euro.
The private sector still holds about 60 billion euros of Greece's total 340 billion euros of sovereign debt, and officials told Reuters the buy-back could cover 30-40 billion of the 60 billion. Depending on the price, such an operation could knock 20 billion euros of more off Athens' debt mountain.

Tran, whose organisation represents around 400 of the world's largest banks and insurers, was critical of the idea.
"An attitude of the official sector that views the private sector as a source of funding after the earlier unprecedented debt forgiveness would be badly received,» he said, adding that it could undermine Greece's chances of borrowing in the future.
Tran warned that any attempt to coerce investors into taking such a discount, by using collective action clauses that force a minority of dissenters to accept, would exacerbate the problem.
There is no indication at this stage that the plan, if put into effect, would involve CACs.
"That would be an abusive use of CACs. It would be a very bad faith action on the part of the authorities,» said Tran, adding that it would prompt investors to fear similar moves by other struggling euro zone countries.
Greek debt is forecast to reach almost 190 percent of economic output next year. The International Monetary Fund says it needs to be cut to 120 percent of GDP by 2020 if the debt level is to be sustainable in the long run.
[Reuters]







http://www.guardian.co.uk/business/2012/nov/23/eurozone-crisis-eu-budget-summit-cameron








Monti: Cameron position was incoherent

Italy's prime minister, Mario Monti, has laid into David Cameron for his conduct during the summit.
In his press briefing, Monti claimed that the UK PM had taken an "incoherent" position on budget cuts, accusing him of being full of 'demagoguery'.
Mario Monti after EU summit, 23rd November 2012 Photograph: Rai News
The ever-urbane Monti added that Italy (which is a net contributor to the EU budget, incidentally), is certainly in favour of better management of EU spending and administration (the pay and perks which Cameron attacked), but suggested the UK had gone too far in its attacks.
Monti also reiterated that he believes rebates should be abolished, saying it is not fair for richer countries (Britain) to be subsidised in this way.
Monti added that Italy was also not happy with the budget plans that were on the table, but predicted agreement in "weeks, not months".
Finally, the Italian PM said the atmosphere at the meeting was better than on other occasions. So that's one positive.











Why the summit broke up

Briefings are continuing, but it's pretty clear now that the Summit collapsed because Britain and Germany, with the Netherlands and Sweden in support, made it clear that Herman Van Rompuy's budgetproposals were unacceptable.
The lack of progress forced Van Rompuy to throw in the towel, explain Ian Traynor and Nick Watt from Brussels:
Britain made clear that David Cameron was happy to continue with the negotiations over the weekend. But Van Rompuy decided to postpone the negotiations, possibly into the new year, after a furious row about the overall level of the budget.
Mark Rutte, the Dutch prime minister, was adamant that Van Rompuy's €973bn budget would have to be cut by €100m. He won some support from Cameron, Angela Merkel and Fredrick Reinfeldt, the Swedish prime minister.
Cameron was keen to shave at least €50bn from the budget. Merkel was keen to see further cuts on the Van Rompuy proposal, though she would have accepted more modest cuts.
Updated 








Cameron: Dutch and Swedes stood with us

Finally, David Cameron reiterates that he was not a lone voice in Brussels over the last two days, saying:
We had strong allies, particularly the Dutch and the Swedes in ensuring that unacceptable spending was blocked.
And then the final soundbite:
We've not got a deal, but we've not got an unacceptable deal either.
That's the end of Cameron's press conference.
Updated 

Cameron: Europe needs to join the real world

David Cameron has blasted European Union leaders for their failure to agree with him, and the other countries who wanted a smaller budget.
Giving a press briefing now (live on Sky), the prime minister said that Van Rompuy's proposal was "just not good enough".
EU institutions, he said, are living in a "parallel universe", and must adjust to the "real world" where countries are making real terms cuts to their spending to ride out the financial crisis.
Updated 

The official statement

Just in: the official statement from the Members of the European Council:
The European Council gives its President the mandate together with the President of the European Commission to continue the work and pursue consultations in the coming weeks to find a consensus among the 27 over the Union's Multiannual Financial Framework for the period 2014-2020. 

The bilateral talks and the constructive discussion within the European Council show a sufficient degree of potential convergence to make an agreement possible in the beginning of next year. 

We should be able to bridge existing divergences of views. A European budget is important for the cohesion of the Union and for jobs and growth in all our countries.







UK: summit has ended in deadlock

The UK government is briefing that the summit is over, without a deal.
Senior UK government sources have announced that the talks have broken up with the various sides still in deadlock over the issue of funding the EU for the next seven years (Ian Traynor reports from the scene).
Updated 

Summit on brink of collapse...

The EU summit seems to have descended into chaos and confusion -- with reports that the whole thing has been called off, and other officials insisting that talks will continue.
Reuters is snapping that the summit is over.
However the Polish delegation, for example, insists that talks should continue tonight.
As Ian Traynor just explained to me by phone, leaders can't even agree if they're talking. Some countries would like to push on tonight, but others would rather come back later -- next week, or next year.
Marco Zatterin of La Stampa also believes talks are off:
Developing...









Leaders press on after deer and fondue

Back to Brussels, where leaders have been discussing the budget over lunch. Luke Baker of Reuters tells me that they've been tucking into cheese fondue and deer filet (which sounds like an improvement on last night's cold cuts).
Alexander Stubb, Finland's foreign affair's minister, is not optimistic:
But leaders haven't given up yet!











IMF downplays talk of Cyprus deal

The IMF has just released a statement, effectively denying that it has reached a deal over Cyprus's bailout (as was rumoured this morning - see 10.56am)
Here's the full text:
An EC/ECB/IMF mission has had productive discussions with the Cypriot authorities on the policy building blocks of a macroeconomic adjustment program.
The authorities and EC/ECB/ IMF teams made good progress towards agreement on key policies to strengthen public finances, restore the health of the financial system, and strengthen competitiveness, so as to pave the way for the economy to return to sustained growth and financial stability. Discussions are expected to continue from respective headquarters with a view to making further progress toward a potential program.
The preliminary results of a bank due-diligence exercise, expected in the next few weeks, will inform discussions between official lenders and Cyprus on financing solutions consistent with debt sustainability.
'productive discussions...'good progress'...'potential program' - all phrases that don't scream BAILOUT AGEEED.
Curious -- reports from Cyprus say the government has been holding talks with the country's trade unions to explain the details of a deal with the IMF. Once again, though, debt sustainability looks like the the big hurdle.


















































































Ian Traynor has been working his contacts in Brussels, and reports that the UK prime minister got the cold-shoulder treatment from the heads of the European Council and Commission

Van Rompuy hoping for a 'good deal'

Herman Van Rompuy's team have been telling the media in Brussels that the European Council feels there are "many options" available towards reaching a "good deal".
Van Rompuy should be unveiling his revised EU budget proposals shortly, although David Carretta of Italian radio station Radio Radicalereports that Van Rompuy may wait until after lunch.
Carretta adds that the Van Rompuy team are still optimistic:

Cameron and Merkel form budget alliance

Angela Merkel and David Cameron held talks this morning, in a sign that the UK and Germany are forging a partnership over the EU budget.
From Brussels, our Europe editor Ian Traynor reports that Merkel is offering Cameron strong support. She appears concerned that the UK could be isolated from other net contributors to the EU budget - thus weakening those who want a lower settlement.


Angela Merkel received a dose of good news as she arrived at the Brussels summit - German business confidence brightened surprisingly in November.
The Ifo business climate index, a barometer of economic health in Europe's largest economy, rose to 101.4 from 100.0 last month, an increase for the first time since six consecutive declines. Analysts had forecast a modest drop to 99.5.
Munich's Ifo Institute said:
The German economy is holding up in the face of the euro crisis.
Companies expressed slightly greater satisfaction with their current business situation. They were also far less pessimistic about future business developments. Export expectations were positive for the first time in three months (my colleague Nadine Schimroszik reports).
The news pushed the euro to a three-week high of €1.291.
Conversely, Italy's economy continues to suffer, with consumer spending dropping 1.7 % in September as the country continued to contract.

Euro finance ministers to speak tomorrow over Greece

Dow Jones Newswires is reporting that eurozone finance ministers will hold a telephone briefing on Saturday to discuss the Greek financial programme.
Which suggests they're getting their plans in place for the Eurogroup meeting on Monday.

The leaders of Sweden, Finland, the Netherlands and Denmark have been holding talks (a quadrilateral-meeting?) to discuss the EU budget deadlock -- here's a picture of them as it broke up.

Progress on Greece bailout?

There are also reports this morning of progress over the EU's other huge headache - Greece.
Reuters claims that the International Monetary Fund has conceded that Greece should be given until 2022 to bring its debts down to 120% of GDP, not 2020 as it had previously insisted. That's a significant move, if so, and would bridge most of the funding gap.
A separate Reuters story claims that Greece's "foreign lenders" (the IMF, presumably) are considering forcing the European Central Bank to forego the profits on its Greek bonds (which it bought at a discount). That would save Greece around €10bn.
Put together, these two reports suggest a compromise is being strung together, with both the IMF and the ECB giving enough ground to get Greece's delayed aid tranche through.

Cyprus bailout 'agreed'

There are a few important developments in the eurozone crisis this morning, including the news that Cyprus has agreed the terms of a bailout.
Government spokesman Stefanos Stefanou told reporters in Nicosea this morning that the behind-the-scenes briefings were taking place this morning, adding:
We are awaiting the official announcement from Brussels in the afternoon.
This would make Cyprus the fourth member of the Eurozone to seek financial help since the crisis began.
Cyprus has been locked in negotiations with the International Monetary Fund for months, since its banks suffered huge losses through their exposure to Greece.
The final bailout could be €17bn -- or almost its entire GDP last year. A remarkable sum for such a small country.

Finnish PM: It's going to be difficult

More leaders have arrived at the summit meeting in Brussels and there is little sign of a breakthrough.
Jyrki Katainen, prime minister of Finland, warned the press pack that it would be "difficult" to reach a deal on the EU budget deal today, adding:
everything is open.
And the prime minister of Sweden, Fredrik Reinfeldt, indicated he was in for the long haul:
 I am not in a hurry. It will take a long time.
Reinfeldt had previously said he would not accept Sweden being hit with a larger budget increase than other richer nations.



Angela Merkel has just arrived at the Justus Lipsius building in Brussels, and suggested that another Summit will be needed to resolve the budget row.
The German chancellor added that failure to reach agreement today over spending from 2013-2020 would not be "dramatic"

David Cameron has just arrived back at the Summit, and told journalists that EU leaders need to stop tinkering and make real cuts to spending levels.
Cameron said:
Well I don't think there's been enough progress so far.
There really is a problem that there hasn't been the progress in
cutting back proposals for additional spending.
It isn't the time for tinkering. It isn't the time for moving money
from one part of the budget to another. We need unaffordable spending cut. That's what's happening at home and that's what needs to happen here.

Germany and France at loggerheads


The Brussels press pack are up and about and pondering whether the real message of this summit is that Germany and France have drifted apart.
As I flagged up at 8.00am, president François Hollande refused to accept reductions to farm subsidies -- and is one of the most powerful voices lobbying for a higher budget.
Angela Merkel, though, is leaning towards the UK position (although not as extreme)
The Daily Telegraph's Bruno Waterfield agrees that Merkel and Hollande are on opposite side of this battle. He tweets that four Northern countries - Britain, Germany, the Netherlands and Sweden - are battling three Southerners - France, Italy and Spain.

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Cameron guns for EU pay


David Cameron didn't make much progress in his push for a real-terms freeze in the EU budget.
The UK prime minister failed to persuade other leaders that EU administration costs should be sliced by €6bn, leaving the UK's proposal still €50bn higher than the Van Rompuy 'compromise'.
As my colleagues Ian Traynor and Nick Watt reported last night,Cameron proposed:
• Increasing the retirement age to 68 for all EU officials now under the age of 58. The current retirement age is 63. This would save €1.5bn.
• Cutting the overall EU pay bill by 10% for officials, saving €3bn.
• Lowering the pension cap from 70% of an official's final salary to 60%, saving €1.5bn.
A UK official said:
These are not dramatic changes. The commission and others are telling the Greeks, the Italians and others that they should put the retirement age up to 68. In the UK we have cut [public sector] pensions to a career average salary. They argue that it is very difficult legally to change people's terms and conditions. Well, we have managed it in the UK.

The proposal didn't please Brussels (EC president José Manuel Barroso apparently reacted 'defensively'), but certainly went down well with the Daily Mail, which gushed:
David Cameron brandished a list of the ‘outrageous’ pay and perks of tens of thousands of Eurocrats last night as he clashed with EU leaders over British demands for cuts to Brussels’ vast budget.

France wins farm subsidy reprieve

French President Francois Hollande gestures while speaking during a media conference after an EU summit in Brussels on Friday, Nov. 23, 2012.Francois Hollande at a press conference in the early hours of this morning. Photograph: Michel Euler/AP
France was the early winner in last night's talks, with president François Hollande persuading Herman Van Rompuy to water down proposed cuts to agriculural subsidies and regional aid.
Poland had also attacked the plans, and the upshot of both countries' lobbying was that Van Rompuy proposed a revised plan, scaling back the cuts to farm subsidies and regional development funds.
But with Van Rompuy's plan still meaning an €80bn cut to the EC's original proposal, other areas are likely to take the hit.
The development was not welcomed by British and German officials, who said it made a budget deal this week more remote.

Deadlock in Brussels over EU budget

European Union leaders are struggling to agree a deal over the EU budget after the first day of talks ended without agreement.
Negotiations broke up after midnight in Brussels, after the revised seven-year funding plan proposed by European Council president Herman Van Rompuy wasn't enough to bridge the divide among EU leaders.
Talks resume at 11am GMT (noon local time), but diplomats and politicians are downbeat about the prospects of a deal – threatening weeks, or even months, of conflict that would overshadow efforts to resolve the eurozone financial crisis.
Although Van Rompuy is pushing for a smaller budget increase than originally suggested, his draft proposal is still tens of billions of euros higher than the sums acceptable to the likes of Britain – who has been playing the traditional role of a trouble-making Scrooge.
Angela Merkel, Germany's chancellor, has already said there has been limited progress. She warned last night:
I believe that we will move forward a little tomorrow but I have my doubts that we will achieve a result
There is a high likelihood of a second stage.
British officials are also downbeat, saying that much more talking will be needed before the "right" deal can be agreed.
Last night's talks (which began three hours late) have highlighted the bitter divisions within the EU. As our Europe editor Ian Traynor tweeted, it's yet another missed opportunity to make a deal:



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