Catharsis Ours: No Deal Over A Banking Supervisor At today's Ecofin Meeting - next Ecofin Meeting next week at the latest EU Summit .....Hope premium priced into Europe ( and US as well ) , Greece still striking while Greek politicians keep their Kabuki going for the Troika ! !

Overnight Sentiment: Snoozefest

Submitted by Tyler Durden on 12/04/2012 - 06:49Australia Bond China Eurozone fixed Germany headlines Jim Reid New Normal Nikkei Reality Recession recovery Tax Revenue Unemployment United Kingdom White House

Quiet session so far, with a notable move higher in the last block of trading in China pushing the SHCOMP for its first gain in 6 days, and off post-2008 lows. What precipitated the buying is irrelevant, although we got a good glimpse into the state of the Chinese economy thanks to Australia prior where the RBA cut rates by 25 bps to a historic low 3.00% (a move that sent the AUD higher), a level last seen during the financial crisis, and confirming that not all is well for the Chinese derivative economy despite loud promises from the Chinese politburo that growth is back. Bypassing the bullish propaganda were Renault Nissan's Chinese car sales for November which fell by 29.8% Y/Y. Some "recovery" there too. In Europe, the status quo continues, with chatter out of Germany's Merkel who begins her 2013 election campaign today, that Germany wants a strong Eurozone (it doesn't), and a strong Euro (it doesn't), but that nobody can predict when the Eurozone crisis will end (not even Hollande or Monti who did just that yesterday?). Otherwise sentiment there is still driven by the formal Spanish re-request of aid (and imminent receipt of €39.5bn in bank recap funds) from the EU by mid-December. As a reminder Spain did this originally in June but the algos were so confused yesterday they thought this was an official sovereign bail out request sending risk soaring only to tumble later (only in the New Normal is admission of sovereign insolvency a "good thing"). Nonetheless, despite the massive overvaluation of European markets (more on that later), the EURUSD continues to the upward momentum (in the process further curbing German exports and assuring the German recession), and was last seen trading up to 1.3075, about 30 pips higher.

http://www.zerohedge.com/news/2012-12-04/overnight-sentiment-snoozefest

Deutsche Bank: A 15%-35% "Hope" Premium Is Now Priced In

Submitted by Tyler Durden on 12/04/2012 - 08:01Bond Deutsche Bank Equity Markets European Central Bank Eurozone France Germany Gross Domestic Product Italy New Normal recovery

Confused by the recent surge of capital into Europe (which somehow is supposed to indicate that all is well because local stock and bond markets are faring better)? Don't be: it is merely the latest and greatest manifestation of that most prevalent of New Normal investment strategies: hope. Hope that this time it is different, and that the latest injection of capital from the Fed via QE3 coupled with the OMT perpetual backstop of liquidity via the ECB (still merely at the beta stage: expansion to actual gold/production phase TBD) will kick start the European economies. Alas, it won't, at least not until Europe actually undergoes the inevitable internal devaluation which we described over the weekend (since an external one is impossible) and crushes local wages of the PIIGS, which in turn would lead to revolution, and thus will never happen. That, or somehow discharges about 40% of consolidated Eurozone debt/GDP, which it also won't as it would wipe out the global banking system. So what does this mean? Well, as Deutsche Bank explains looking simply at manufacturing output in the developed world, global markets are now overvalued anywhere between 15% and 35%. This is the hope premium now embedded in stock prices.

http://www.zerohedge.com/news/2012-12-04/deutsche-bank-15-35-hope-premium-now-priced

and from Greece......

State arrears continued to climb higher in October

The state’s arrears to the private sector have grown to 9.4 billion euros in the year to October, officials figures showed yesterday, explaining why the Greek market is choking to such an extent. In the year’s first nine months, the figure had stood at 9.2 billion euros.
The state’s overdue debts at end-October amounted to 8.7 billion euros, while unpaid tax returns came to 755.9 million euros, out of which 520.4 million were in the form of indirect taxes and 229 million in direct taxes.
More than half of the overdue debts concerned social security funds, which owe their suppliers some 4.6 billion euros, while the National Organization for Healthcare (EOPYY) owes no less than 2.3 billion euros. Hospitals owe 1.8 billion euros, ministries 915 million, local authorities 903 million and other state corporations 380 million euros.
Alternate Finance Minister Christos Staikouras has already presented the government plan for the repayment of its dues by the end of next year.

ekathimerini.com , Tuesday December 4, 2012 (23:11)

Four key measures left for this month

By Sotiris Nikas
There are just four measures left for Greece to implement – albeit very important ones – within this month as demanded by the Eurogroup of eurozone finance ministers. While the agreement with the country’s creditors provides for more than 40 steps that have to be completed by the end of the year, the following measures are essential:
– The voting of the tax bill. The memorandum of understanding provides for the country’s creditors to study the tax reform, and unless it secures revenues of 1.8 billion euros within 2014, the government will have to bring in new measures for fiscal targets to be met in 2014. The government must also introduce measures to improve the tax administration within the month.
– The adoption of laws to speed up privatizations. The country’s creditors place great significance on the independence of the state privatization fund (TAIPED), while remaining very suspicious of Greek governments. Given that the debt sustainability assessment relies to a great extent on sell-off revenues, the government now has to secure the rapid implementation of the program so as to avoid any further delays or shortfalls that would change the forecasts for the course of the state debt.
– The creation of a regulatory framework for the country’s water companies, mainly those of Athens (EYDAP) and Thessaloniki (EYATH). These two utilities are in the privatizations program and the creation of such a framework will have to precede any sell-off move for them.
– The completion of the reform concerning auxiliary social security funds. The aim is for their benefits to correspond to the level of contributions.
Besides these four steps that the Eurogroup has singled out, the government intends to implement as many measures dictated by the memorandum as possible, although it is all but certain that it will not manage to complete all its obligations before the end of the year.
One more important measure, according to the draft of the new memorandum, is the announcement by the Bank of Greece of the capital requirements of all commercial banks, which have been told that they have until December 21 to announce their financial results.

ekathimerini.com , Tuesday December 4, 2012 (23:06)

Minister gets tough on civil servants' redundancy scheme

As dozens of mayors across the country continue to resist government plans to put thousands of civil servants into a redundancy scheme demanded by the troika, Administrative Reform Minister Antonis Manitakis on Tuesday resorted to passing an emergency law that will bypass the need for mayors to approve the inclusion of their employees in the scheme.
Manitakis had warned last week that the government would choose employees for the redundancy scheme from a recent census if rebel mayors refused to submit the requested lists of employees.
Of the 2,000 civil servants that the government has promised its foreign creditors it will put in a fast-track program for redundancy, 1,000 are to come from municipal and regional offices and the other 1,000 from state entities that are either overstaffed or due to be merged or abolished. According to sources, the names of the staff from state entities have been finalized. The ministry had expected to draw the names of the 650 municipal and 350 regional authority workers from the mayors’ lists that it has yet to receive. Another 750 municipal workers who have been found guilty of disciplinary offenses face immediate dismissal, Kathimerini understands.
Government officials have expressed fears that failure to put 2,000 state employees into the fast-track redundancy program by the end of the year could prompt the troika to demand immediate and random dismissals.
Resistance to the redundancy scheme has been strongest among municipal employees, with several mayors, including those of Athens and Thessaloniki, joining the protests. Athens Mayor Giorgos Kaminis has toned down his objections recently however and on Tuesday sent letters to municipal workers’ unions, warning them that the continuation of a 20-day sit-in at City Hall’s administrative offices could put the disbursement of workers’ salaries and holiday pay in jeopardy.
This month is the last time that civil servants are to receive the additional salary traditionally paid at Christmas, in accordance with a new austerity program voted through Parliament last month.

ekathimerini.com , Tuesday December 4, 2012 (21:48)

Samaras to hold coalition talks over contentious tax bill

Prime Minister Antonis Samaras has called for a meeting with coalition leaders and Finance Ministry officials to settle a dispute over some aspects of the new tax law.
Samaras is expected to hold talks with several ministers on Tuesday after concerns were expressed by New Democracy’s coalition partners, PASOK and Democratic Left, about some aspects of the bill.
Government sources, meanwhile, denied reports that the Finance Ministry has proposed to raise tax on annual incomes above 26,000 euros to 45 percent.
PASOK leader Evangelos Venizelos said this would turn society in its entirety against the government.
“People cannot pay this. We need to find alternatives,” said Democratic Left spokesman Andreas Papadopoulos. “There is no way the tax bill will reach Parliament in its current form.”
Finance Minister Yannis Stournaras is due to meet representatives of the two parties on Wednesday to discuss the matter. Samaras is also expected to meet with Venizelos and Democratic Left chief Fotis Kouvelis.
Democratic Left is likely to propose higher taxes on property and deposits as a way of avoiding such high income tax on a relatively low wage bracket.

ekathimerini.com , Tuesday December 4, 2012 (10:37)

Municipal workers to continue labor mobility protests until Thursday

Municipal workers are to continue their protests, including sit-ins at town halls, until Thursday, their union (POE-OTA) decided late on Monday.
It is the fourth week of protests by the employees, who are attempting to prevent mayors sending to the Administrative Reform Ministry lists of municipal workers that could be placed into a labor mobility scheme.
The civil servants will receive a reduced salary while in the scheme and could be fired if a new position has not been found for them after 12 months.
The protests will be accompanies by work stoppages between noon and 3 p.m. and 3 p.m. to 6 p.m. depending on whether employees are on morning or afternoon shifts.

ekathimerini.com , Tuesday December 4, 2012 (10:47)

http://www.guardian.co.uk/business/2012/dec/04/eurozone-crisis-ministers-banking-supervision-juncker

Ministers fail to reach a deal

It's official - European finance ministers have failed to reach a deal over a banking supervisor for the eurozone.

Pierre Moscovici has just told reporters in Brussels that another Ecofin meeting will take place on 12 December (that's next Wednesday).

As Europe editor Ian Traynor explains, there has to be a deal before EU leaders begin their two-day summit on Thursday 13th.

The talks failed for the reasons that we've been banging on about in the blog all morning (Ian's 9.48am post explains the main hurdles). In a euro-sized nutshell, France and Germany are simply too divided over how the eurozone's banks should be regulated.

Paris wants every bank in the region to be covered by the new regulator, and full banking union as soon as possible.

Berlin does not want smaller banks (such as its own savings banks) to be overseen, and is also in no rush to see banking union. Wolfgang Schauble suggested today that treaty changes might be needed - which would delay things for years.

Behind Germany's refusal to cave in is the fear that it will foot the bill for future banking losses in weaker members of the eurozone. A delay gives more time to implement the tighter budget controls that German politicians believe are necessary to keep those peripheral countries in line.

Maria Fekter rules out replacing Juncker

Austria's finance minister has declared that the next president of the eurogroup should be a head of government, following the example of Jean-Claude Juncker (see 8.07am for details of his decision to vacate the role)

Asked if she might fancy the job, Maria Fekter replied:

That's a position for a head of government and as you know I'm not a head of government. The bosses will decide how they want to handle this.

Unusually, Juncker was prime minister and minister for finance when he took on the eurogroup presidency in 2005. Obviously this is not the case for two likely front-runners - Wolfgang Schauble or Pierre Moscovici.

How France and Germany clashed today

From Brussels, Ian Traynor confirms that France and Germany are deeply divided over banking union (less than two weeks after falling out over the EU budget at the last summit)

Ian writes;

Amid the worst Franco-German frictions for years over Europe, both countries’ finance ministers have been keen to radiate common purpose in recent weeks and engage in damage limitation.

Wolfgang Schäuble and Pierre Moscovici made a joint appearance before the European Parliament on Monday while also appearing together before the media following a recent EU ministerial session.

The gloves came off today, though, with both men clashing utterly on the fundamentals of the eurozone’s proposed banking supervisor.

Schäuble said there was no way that the European Central Bank could supervise 6,000 banks in the eurozone, while Moscovici retorted there was no way the eurozone could introduce a “dual” system of banking supervision, meaning some are monitored at the eurozone level, while others (mainly German) stay under a national regime.

These may be opening shots in the long and bloody battle to reach agreement. “A game of two halves,” said an EU official. Or they may represent an unbridgeable divide.

The River Rhine just seems to get wider and wider.

Spain's jobless total up 1.5% in November

Just in - Spanish unemployment total has risen again.

Spain's labour ministry reported that another 74,296 people registered as unemployed in November, a rise of 1.5%.

That's the fourth monthly rise in a row - Spanish firms have been cutting headcount since the end of the summer tourist season.

(this survey is separate to the unemployment data released by Eurostatlast Friday, which put the Spanish jobless rate at 26.2%)

8.13am GMT

Juncker steps down

Jean-Claude Juncker is finally stepping aside as president of the eurogroup.

Luxembourg's prime minister told reporters late last night that he would end his seven years as the head of the group of eurozone finance ministers at the end of this month.

The BBC has the quotes:

I don't have to endorse anyone," Mr Juncker told reporters. "I was asking my colleagues to provide for my succession.

"And I asked them to do everything possible to appoint another minister as chair of the Eurogroup."

Likely successors are Germany's Wolfgang Schäuble and France'sPierre Mosvovici - therewas speculation recently that the two men could even share the post....

Juncker's time at the eurogroup will probably be remembered for all those long meetings where eurozone ministers struggled to make progress towards resolving the crisis – and his affectionate manner with fellow ministers....