Thursday, December 6, 2012

Italian Prime Minister Monti loses Senate majority as Silvio Berlusconi parts abstains from the Government - will Monti resign today as rumored ? Will the UK lose its AAA credit rating by the end of the year ? Greek unemployment hits 26 percent - which is the 2013 -2014 target ( as unemployment head toward north of 30 percent as we haven't even implemented the additional austerity measures yet ! )

http://www.zerohedge.com/news/2012-12-06/charts-day-greek-unemployment-hits-escape-velocity


Charts Of The Day: Greek Unemployment Hits Escape Velocity

Tyler Durden's picture




It took one month for the 2013-2014 Greek medium-term unemployment target rate to be hit. The target rate? A grotesque, all time high 26%. Because as Elstat reports, this is what Greek unemployment was in the month of September. Which means that at the time Greece was preparing its latest "Third Greek Bailout" projections in November, the rate was already well above the long-term target. Elstat also tells us that in September, the total number of actively employed Greek workers (including government) was a tiny 3,695,053. The number of persons unemployed: 1,295,203, while the inactive ranks swelled to 3,373,692. As a reminder, last month's 25.4% unemployment rate has been promptly surpassed in a few weeks. Finally, that powderkeg of conflict, youth unemployment, was a jawdropping 56.4%.

So without further ado, here are the charts that summarize this.

Total workers employed:
Total workers unemployed:

And the unemployment rate:

And yes, by returning to the Drachma, Greece would at least have some chance of curing the unfixable internal and external imbalances, which unless resolved, will send this rate into the stratosphere, and a far bigger chart will soon be needed.
Source: ElStat
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_06/12/2012_473329

Concessions in tax bill

 Draft presented to party officials balances higher income tax with family benefits
 Finance Minister Yannis Stournaras leaving the Maximos Mansion on Thursday.
The draft of a new tax bill aimed at bringing in 3 billion euros in much-needed revenue over the next two years, presented by Finance Minister Yannis Stournaras to members of the three parties in the coalition on Thursday, combines an increase in income tax with a stricter system of issuing social benefits for families.
The draft, which must be approved by all three party leaders before it is submitted in Parliament next week, sets out less harsh increases to income tax than an earlier ministry proposal. It also offers benefits for families with children and low incomes. To make up for the revenue lost by offering this safety net to low-income families, the draft foresees an increase in the annual levy paid by self-employed professionals and businesses, from 500 euros to 650 euros and 1,000 euros respectively.
According to the plan, incomes of up to 25,000 euros will be taxed at a rate of 21 percent, incomes between 25,000 and 40,000 euros at 36 percent and incomes over 40,000 at 40 percent.
The income tax-free threshold of 5,000 euros will be abolished and a 1,950-euro reduction in taxes introduced for those earning up to 18,000 euros per year. This reduction will be smaller for higher incomes. The tax break will be boosted by 5 percent for every child in a family.
If the draft law is approved, a family with one child and an income of 30,000 euros would pay 630 euros more in income tax than now.
To offset the additional tax burden on ordinary citizens, the government has said it will come down harder on wealthier Greeks. Greece and Switzerland could be in a position to approve an agreement for the taxation of deposits held by Greek citizens in Swiss banks, a Finance Ministry official told Kathimerini. The key issue to be resolved is the rate at which the Greek savings in the Swiss banks will be taxed. According to sources, the two sides are considering a sliding scale of between 15 and 38 percent depending on the size of the deposit. Of some 38 billion euros held by Greeks at Swiss bank, about a third belongs to shipowners, sources said.


and....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_06/12/2012_473340

Municipal protests to continue

 Union decides to extend action against labor mobility scheme until Monday
Municipal workers who since last month have been protesting against plans to place several hundred employees in a labor mobility scheme that could lead to them losing their jobs are to continue their action at least until next week, it was agreed on Thursday.
Following a meeting of the municipal employees’ union (POE-OTA), the executive committee decided to continue the protests, which include sit-ins at town halls, until Monday. The decision followed a fruitless meeting between POE-OTA president Themis Balasopoulos and Interior Minister Evripidis Stylianidis.
Stylianidis said he could not alter plans to place municipal employees in a scheme where they will receive 75 percent of their salaries and face losing their jobs if new positions are not found for them within 12 months.
Civil servants occupying Athens City Hall briefly suspended their protest so the municipality’s accounts office could issue payments for employees on open-ended contracts.
Thessaloniki Mayor Yiannis Boutaris said that he could appeal to a prosecutor and ask for the police to end a sit-in protest at City Hall that has seriously disrupted the municipality’s work. “For the municipality to function properly, I will bring in [Joseph] Stalin if needed,” he said at a news conference. Boutaris said that 50 municipal employees are preventing staff who want to go to work from entering City Hall. He said that the municipality had failed to collect around 2 million euros in rates as a result of the protest.


and.....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_06/12/2012_473336

Most firms are unable to pay their taxes

Seven out of every 10 entrepreneurs are finding it difficult or are unable to keep up with their tax obligations, while no more than 5 percent say they will definitely be able to pay their taxes, a survey by the Athens Chamber of Commerce and Industry’s Studies and Research Center showed on Thursday.
The other major problem enterprises are facing is the lack of access to bank funding, as 51 percent said they are unhappy with the response to their applications for funding.
Meanwhile the Athens Chamber of Small and Medium-Sized Industries said in a statement on Thursday that, according to its data, for every enterprise that is set up, four are shutting down.


http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_06/12/2012_473332

Hedge funds, local banks eager to see who blinks first

 Finance Ministry seeks to secure big buyback participation
The tactical play observed between Greece’s Finance Ministry and international hedge funds regarding the latter’s participation in the bond buyback program is set to culminate on Friday, with the submission deadline for offers from bondholders slated for 7 p.m.
Hedge funds and Greek banks hold the bulk of Greek bonds eligible for a buyback (worth about 40 billion euros from a total of 61.4 billion). Up until last night most hedge funds were waiting to see what local lenders would do, as each side wants to keep their participation to a minimum in a bid to contain their losses. Still, some hedge funds have already applied to take part, with their bonds adding up to some 4 billion euros.
Finance Minister Yannis Stournaras has not ruled out an extension to the deadline, possibly until the beginning of next week, depending on the offers the ministry gets.
Bank chiefs had a final meeting with Stournaras on Thursday ahead of the decision-making board meetings to be held by all main lenders on Friday. The most likely scenario is that they will all take part, but not with all the bonds they hold.
However, it does look as though banks have had it their way this time, as in return for their participation in the buyback program, they appear to have secured a tax exemption for their losses from the PSI debt restructuring, amounting to taxes of 4.2 billion euros, and from the buyback, equal to 2 billion euros.
They have also reportedly secured the protection of the banks’ governing boards from civil liability.




and......



http://www.guardian.co.uk/business/2012/dec/06/debt-crisis


He is "very confident" the eurozone will reach an agreement on banking supervision, says the benefits of a single supervisor are not disputed.
Draghi says it is natural that different countries in the eurozone pay different levels of interest to borrow money.
I haven't said that higher credit costs are unjustified, acutally different credit costs are quite natural but [within a range].
He says today's rate decision was by consensus. But the ECB did discuss the possibility of negative interest rates.
We are operationally ready [for negative deposit rates].


Questions...
Is Italy precipitating into an abyss? This is a question markets are asking. What signal is necessary for markets to ensure Italy is going forward?
Draghi: no comment.
Draghi says a single supervisory mechanism for banks is a "crucial move towards reintegrating the banking system". Twice. It's that crucial.


ECB expects eurozone GDP to shrink by between 0.6% and 0.4% this year, and again next year by between 0.9% and 0.3%. Draghi only expects the region will get back to growth in 2014, of between 0.2% and 2.2%.

He says the ECB kept rates on hold, owing to high energy prices, an increase in taxes in some countries, inflation rates have been elevated for some time. Recently they fell and are expected to fall below 2% next year.
Inflation expectations remain aligned to target of staying below but close to 2%.

 Italian government bond yields continue to rise in response to the growing uncertainty over the future of the government. Tradeweb data shows theyield on the 10-year debt – effectively the interest rate – climbing to 4.57%.
Spanish bond yields are rising in sympathy, up 10bp at 5.53%.

Monti feels the heat

Is Italy entering a new era of political instability (see 12.01pm)? Open Europe thinks so.
The leader of Berlusconi's senators, Maurizio Gasparri, said ahead of the vote, "Our attitude [today] signals...the shift of our group to a position of abstention towards the government." This seems to suggest that Berlusconi's party has withdrawn its support for Monti's government.
If all of Berlusconi's senators and MPs show next time and abstain (which, by the way, cannot be taken for granted, given the internal divisions created by Il Cavaliere's latest hints to a comeback), Monti would be in danger of losing his majority - since the absents' votes do not count and bring the required majority down, as happened in the Italian Senate a couple of hours ago.
The big question is: was today's an isolated incident or a definitive change of position? Gasparri's words seem to suggest the latter could be true. Should this be the case, Berlusconi could be about to trigger another round of political uncertainty Italy really doesn't need.

  

Berlusconi party bails on Monti confidence vote

Meanwhile, in Rome, Berlusconi's party (PDL) has walked out of the Senate ahead of a confidence vote on prime minister Mario Monti's austerity bill.
Reuters writes that the "symbolic move" does not threaten the government's survival but shows strong disapproval of Monti's administration from the largest party backing him.
PDL senate leader Maurizio Gasparri said the party would not take part in the vote on Monti's latest package of reforms but would not vote against the decree or formally abstain, either of which would cause the government to fall.

  

Growing crisis in Italian government

Our Southern Europe editor John Hooper reports on the growing crisis in the Italian government.
Just an hour or so ago, I was saying I thought the markets were underestimating the potential for instability in Italy. But I didn't expect to be proved right quite so swiftly.
The absence (or abstention) of senators from Silvio Berlusconi's Freedom People (PDL) movement in the crucial vote this morning on the government's second economic stimulus package has not killed off the measure, nor – for the moment – the government. The bill went through by 127 to 17 with 23 abstentions. And there were enough lawmakers present to ensure a quorum. But the stimulus package (which
has still to be approved in the lower house) is far from safe. And the same could be said of Mario Monti's non-party government.
The PDL's move could be dismissed as a reprisal for a remark by the bill's sponsor, the economic development minister, Corrado Passera. In a clear reference to Berlusconi's hint that he was about to re-enter the race for prime minister, Passera said that "turning back is not a good thing for Italy".
But it is worth stressing that the leader of Berlusconi's troops in the upper house did not say it was a one-off rap over the knuckles. Maurizio Gasparri said the PDL's move signalled "the passage of our group to a position of abstention in relationship to the government".
If that is the case, then the Monti government has just lost its
majority in the upper house: La Repubblica calculated a few minutes ago that the government can only now count on 131 votes out of the 161 it needs.
Monti is not doomed. But no one in and around the Italian parliament is going to need reminding that Silvio Berlusconi left office in November 2011 after he too lost the support of one – and only one – of the two chambers.

            

Greek unemployment set to overshooot troika targets

Back to the Greek unemployment data briefly. Thinktank Open Europe notes that the target set by the troika of lenders – the EU, the IMF and ECB – for joblessness was 22.4% by the end of 2012. That is some way away from September's rate of 26%.
Updated 

Greek protests begin

Riot police are out in force in Greece for the protests marking the anniversary of the fatal shooting of a teenager by a police officer, according to reports on Twitter.

  

Berlusconi returns to the field

Here's a story to keep you awake at night, Italy's former prime minister Silvio Berlusconi is planning his return to mainstream politics. Our Southern Europe editor John Hooper writes:
All the talk in Italy this morning is of a statement put out late last night by - I'm afraid so - Silvio Berlusconi, strongly implying he intends to return as the candidate for the right in the general
election that has to be held in Italy by the spring. He had a meeting yesterday with top officials of his Freedom People (PDL) movement. An agency dispatch said he had told them he was not going to run because no one wanted him to. His statement said: "The reality is the opposite". The website of his family's newspaper, Il Giornale, headlined its frontpage with "Berlusconi returns to the field".
Certainly, Berlusconi's return would electrify politics in Italy, even though the PDL is currently getting only about 16% in the polls. But at least as significant as the billionaire TV magnate's intentions were the terms in which his statement was couched. Implicitly condemning the non-party government of Mario Monti, which took over from his in November 2011, he said: "The situation today is a good deal more serious than a year ago." He spoke of a country "on the brink of the abyss": unemployment was up by a million; public debt had increased; Italians' disposable incomes had collapsed and taxation was
at "intolerable levels".
There is inevitably speculation that Berlusconi might now try to bring down Monti's government before it completes its legislative programme (including some direly needed structural reforms) and that he will fight the next campaign on an anti-austerity, anti-Merkel platform. As Paul Krugman and any number of other economists will tell you, there are some pretty good arguments for a policy that puts growth before austerity. But Berlusconi is scarcely the man to implement such a policy. While he was in office, Italy's economy grew by less than
almost any other in the world.
With Italian sovereign bond yields, relative to safe-haven Bunds, at their lowest for two years, it is clear the markets are dismissing the risk of renewed political instability in Italy. That would seem to be a remarkably complacent view.
Silvio Berlusconi watches AC Milan vs Zenit St Petersburg at the Champions League on Tuesday.Silvio Berlusconi watches AC Milan vs Zenit St Petersburg at the Champions League on Tuesday. Photograph: Olycom SPA/Rex Features

  
  

Monti loses majority in senate


 ECB leaves rates on hold

And the European Central Bank has... 

Bank of England leaves rates at 0.5%




           

Monti loses majority in senate

  

Growing crisis in Italian government

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