European news and data - March 12 , 2013....

Do we see Spain and Italy told to seek bailouts after the German Elections this Fall ?




http://globaleconomicanalysis.blogspot.com/2013/03/an-offer-you-cannot-refuse-eu-passes.html

Tuesday, March 12, 2013 1:56 PM

An Offer You Cannot Refuse; EU Passes Law Forcing Countries to Take Bailout; Is Spain the First Target?

Want a bailout? Need a bailout? Actually, it does not matter what your country wants or needs.

By a 526 to 86 vote, the nannycrats in Brussels just passed a regulation that will require a country to accept a bailout if offered.

Via Google translate from El Economista, Brussels may force a country to ask for a rescue if eurozone threat.

 The full European Parliament on Tuesday gave its final approval to the rule giving new powers to the European Commission to monitor national budgets of eurozone countries and even request changes before parliamentary approval. According to this regulation, agreed with the Twenty, Brussels may force a state to ransom.

According to this rule, which goes ahead with 526 votes in favor, 86 against and 66 abstentions, the governments are obliged to send to Brussels its draft budget for next year by 15 October each year.

The EU executive may publish its opinion on the national and even request changes if it believes that deviate from the objectives of consolidation undertaken by each country. However, your request will not be binding.

In addition, the new standard allows Brussels submit to increased surveillance to countries that threaten the stability of the eurozone and even force them to ask for a rescue, with the objective of minimizing their costs.

Surveillance cycle

Vice President of the Commission responsible for Economic Affairs, Olli Rehn, said on Tuesday that the adoption of this standard "will complete the cycle of budgetary surveillance for euro area Member States."

Rehn has argued that if these rules had existed since the birth of the euro "would never have experienced a crisis of such magnitude."

An Offer You Cannot Refuse

Rehn is a liar, a fool, or both. I vote both.

The EU had nothing but praise for Spain when the Spanish housing bubble was brewing. It would not have done anything other than what it did, which is cheerlead the housing boom, just as Bernanke and Greenspan did in the US.

I like the translation "force a state to ransom".

The EU has twice offered Spain a bailout. Spain has rejected the offer twice. The next offer just may be the one that Spain cannot refuse.

Mike "Mish" Shedlock

Greece still wrestling with the Troika - trying to figure out how to fire 150,000 public workers by 2015, small and medium businesses still getting tommy hammered , asset sales getting rolling.....

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_12/03/2013_487442

Samaras's meeting with troika due on Wednesday but differences remain The meeting between Prime Minister Antonis Samaras and the troika that was scheduled for Tuesday afternoon was postponed for a day, with Greek government insistence that the delay is due to technical matters not managing to cover up the fact that there are some substantial differences between the two sides. “There are no complications, there are quite a few unresolved issues but because technical discussions are continuing with the troika teams, we thought it would be useful to allow for an extra day so the meeting [with the PM] can be effective,” Finance Minister Yannis Stournaras said. The two sides have failed so far to agree on a range of issues, which include civil service firings, the continuation of the emergency property tax introduced in 2011 and the recapitalization of Greek banks. Athens has also failed to convince the troika to ease up on some aspects of the consolidation program by allowing value-added tax for restaurants and the special consumption tax on heating oil to be reduced. Greece and the troika also appear far apart on the issue of how to recover unpaid taxes and social security contributions, with the Greek side wanting more installments and lower interest penalties than the European Commission, European Central Bank and International Monetary Fund. Kathimerini understands that the troika wants debts to social security funds to incur annual interest rates of about 8.75 percent and for any payment plan to offer 36 installments from a fixed date rather than whenever debtors come to an arrangement with the funds. Samaras is keen for an agreement to be reached on Wednesday as it should secure the release of another 2.8 billion euros in bailout funding. The government also has its eye on the next tranche of 6 billion euros. There is concern that protracted negotiations or a failure to reach a compromise will be interpreted as a defeat for the coalition and lead to a new round of speculation about the country’s future.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_12/03/2013_487443

Threat of closure still very real for SMEs The rate of deterioration seen in the economic indices for small and medium-sized enterprises eased marginally in the last six months of 12012, according to a survey conducted by the Hellenic Confederation of Professionals, Craftsmen & Merchants (GSEVEE) and presented on Tuesday. Some 170,000 enterprises expect to face the prospect of closing down in the next 12 months, of which 64,000 are in the commerce sector, while GSEVEE forecasts that some 55,000 will shut down eventually, including 20,000 commercial businesses. If that proves true, an estimated 195,000 employers, self-employed people and salary workers will lose their jobs. Thomas Gerakis, of research company Marc, which conducted the survey, said the recession is showing signs of stabilization instead of further deterioration but there is no sign of a recovery as yet. He added that the policies that the government is adopting will likely lead to an increase in the illegal labor market and underemployment.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_12/03/2013_487439

Chinese group eyes Athens airport By Vangelis Mandravelis The launch of the process for the sale of the state’s 30 percent stake in Athens International Airport came closer on Tuesday as Finance Minister Yannis Stournaras received a group of Chinese entrepreneurs. The officials from Shenzhen Airport and Friedmann Pacific Asset Management are acting together and are reportedly interested in the forthcoming privatization of the country’s main terminal. Both companies are considered to be strong and reliable investors, as the former manages the airport of the Chinese city of the same name and the latter administrates $1.5 billion. The government intends to sell its stake through the TAIPED privatization fund and to amend the existing concession contract to German company Hochtief AirPort, which owns 40 percent of Athens International Airport. http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_12/03/2013_487438 Gazprom expresses concern over DEPA  CEO tells PM terms must be clear and that TAIPED has not handled tender in the best possible fashion By Chryssa Liaggou The chief executive officer of Russian energy giant Gazprom, Alexey Miller, reportedly asked Prime Minister Antonis Samaras for clear terms regarding the privatization of the Public Gas Corporation (DEPA) during their meeting on Tuesday in Athens. The Gazprom chief’s visit to Greece was meant to send a message to Washington and Brussels concerning Russia’s strong interest in the broader region of Southeastern Europe, where new developments are taking shape in the energy sector. Miller’s meeting with the prime minister lasted about 40 minutes and was conducted without an interpreter in order to ensure there would be no leak of the contents of the talks. Although no statements were made afterward by either side, Gazprom issued a press release confirming its CEO’s meetings in Athens. The two men were said to have discussed cooperation in the field of natural gas and particularly Gazprom’s participation in the DEPA sell-off. A meeting also took place between Miller and Development Minister Costis Hatzidakis “in the context of which the current and future activities of the Greek energy market were discussed,” the Gazprom press release stated. Sources from the prime minister’s office said the government welcomes the Russian interest and that “Mr Miller left satisfied with the discussions.” The same sources responded to American reactions on the issue, saying that the tender will proceed in full transparency and that whoever tables the biggest offer will win it. They added that Gazprom expressed concern about the handling of the tender by the state privatization fund (TAIPED) to date. The Russian firm also raised the issue of what it deems as unfavorable terms that TAIPED has set in the tender proclamation. Gazprom is said to have specifically cited the risk the company runs of losing the 180-million-euro guarantee that comes with its bid if the European competition authorities decide against ratifying its winning the tender or set any limitations that would render it a loss-making venture for the Russians.

http://www.zerohedge.com/news/2013-03-12/150000-greek-public-sector-job-cuts-pending-greece-launches-another-grexit-plan-b-mo

150,000 Greek Public Sector Job Cuts Pending As Greece Launches Another Grexit "Plan B" Movement

Submitted by Tyler Durden on 03/12/2013 07:57 -0400

• Creditors
 
• European Union
 
• fixed
 
• Germany
 
• Greece
• Nationalization

The eye of the hurricane over Southeast Europe may soon be shifting, exposing Greece to the same 150 mph gale turmoil everyone has grown to love and expect over the past three years as soon as this month, when a new proposal by Greece is due on how to cut a massive 150,000 public sector jobs: a move which will result in an immediate surge in public unrest, and an exponential jump in strike activity. As Bloomberg reports, "Greece is locked in talks with international creditors in Athens about shrinking the government workforce by enough to keep bailout payments flowing.Identifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a 2.8 billion-euro ($3.6 billion) aid installment due this month. More than a week of talks on that has so far failed to clinch an agreement."

“Public sector job cuts are a major part of the program and they are one of the most politically difficult parts to achieve,” said Holger Schmieding, chief economist at Berenberg Bank in London. “And for the Greek government, which has two left-of-center parties, it is extremely difficult to really implement those job cuts. I’m afraid this will likely stay a point of contention, review after review after review.”

As a result Europe can continue keeping its eyes closed and continue handing over billions in unconditional aid to Greece, however, with Germans increasingly unhappy with the arrangement where their country is the only designated driver at the European alcoholic relapse free for all, this may be untenable. Therefore, it is likely that Greece will have to come through with at least some major muscle cutting proposals. These in turn will certainly inflame the country, and force it to rethink its pro-European majority stance, especially now that as Kathimerini reports, the country has not one but two counter-Eurozone political powers:

Former SYRIZA leader Alekos Alavanos has announced plans to launch a movement that will campaign for Greece to leave the euro.

"All countries have a Plan B for Greece, only Greece does not have a Plan B should it have to leave the euro," Alavanos told Skai television on Tuesday.

He said the movement would aim to stand in the European Parliament elections in 2014 and would favor a return to the drachma.

"If Greece were to exit the European Union we would be much better off than we are today and would never have had to reach this point," he said, adding "that no country has ever managed to exit a crisis with a 'hard' currency. The euro is a hard and expensive currency."

He said that his movement will also favor the nationalization of banks and for Greece to repudiate its debt.

"It is madness to have the same currency as Germany when Germany, unlike us, has a stable economy," Alavanos said.

Alavanos is, of course, right. However, with the empirical evidence of what 2 years of Greece on the brink of European departure has shown, is that the last thing Europe will agree to is a return to a Greece that is one foot in, one foot out of the Euro, as this will immediately put the OMT in play: an OMT, which as we have repeatedly discussed in the past, is wonderful in Draghi talking points to clueless reporters, but an epic failure if and when it should actually be put into use.

And Greece, where it all started back in 2010, may be just the catalyst that brings Europe,where nothing at all has been fixed in the past three years when one ignores the central bank-manipulated markets, full circle.

and France is slowly but steadily becoming a PIIGS type lower tier  nation....




http://globaleconomicanalysis.blogspot.com/2013/03/housing-construction-in-france-lowest.html

Tuesday, March 12, 2013 1:55 AM

Housing Construction in France Lowest in 50 Years; Hollande Responds With Measures to Support Building "For the Public Good"

Housing starts in France will fall to 280,000-300,000 in 2013, the lowest level in 50 years warns developer Nexity. The government wants 500,000 units per year.

French president Francois Hollande thinks he knows the proper amount of houses that need to be built. Therefore, Hollande confirmed measures to support building quickly.

Here is a Mish-modified translation from Les Echos... 

 Emergency. This is the word that comes to everyone's lips about building. Housing is at its lowest level since fifty years. François Hollande confirmed in an interview yesterday that "support for building" will be amplified quickly for the "public good".

The Ministry of Housing was happy about yesterday's statements from the Head of State: "This means we are moving towards an ambitious plan". We recall the campaign promise to build 500,000 homes per year, of which 150,000 will be in social housing to offset the increase in the VAT rate.

France is in the midst of a deflating property bubble. Nonetheless, Hollande wants to build more houses anyway. His rationale is interesting. Hollande wants to offset the increase in the VAT, taxes that he hiked.

Hollande is on a mission to wreck France, and he is succeeding spectacularly as the following history shows.

June 8, 2012: Please consider economically insane proposal by French president Francois Hollande "Make Layoffs So Expensive For Companies That It's Not Worth It"

August 13, 2012: In France, Government spending amounts to 55% of total domestic output. For discussion, please see Hollande's Honeymoon is Over; 54% of Voters Unhappy; Unions Promise "War" in September.

November 29, 2012: Given that any clear-thinking person should quickly realize that if companies cannot fire workers they will be extremely reluctant to hire them in the first place, it should be no surprise to discover French Unemployment Highest in 14 Years (And It's Going to Get Much Worse).

December 28, 2012: Economic implosion in France is underway. French Retail Sales Contract 9th Consecutive Month as Cost Inflation Surges

February 6, 2013: Germany Rebounds but ... France Economic Implosion Accelerates; Record Decrease in Service Employment in Italy

February 21, 2013: France Sinks Further Into Gutter; PMI Accelerates to 4-Year Low; "Core" of Europe Now Consists of Germany Only

March 6, 2012: Eurozone Downturn Accelerates Despite German Growth; Divergence to France Widest in 15 Years

For the public good, Hollande ought to resign along with his entire socialist government.

Mike "Mish" Shedlock

and morning news items from Greece.....



http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_11/03/2013_487082

PM, troika to discuss crunch issues on Tuesday  Civil service overhaul, property tax extension, payment plan for those with social security debts on agenda  IMF mission chief Poul Thomsen seen in a recent photo. Prime Minister Antonis Samaras is to meet troika mission chiefs in Athens on Tuesday afternoon as the two sides aim to reach consensus on a series of structural reforms, including a much-delayed streamlining of the civil service, which are a prerequisite for the release of the next installment of rescue loans to Greece worth 2.8 billion euros, before Samaras and Finance Minister Yannis Stournaras fly to Brussels for a European Union summit starting on Thursday. The talks on Tuesday come after troika chiefs and government officials spent several hours on Monday discussing a series of points of contention including a payment plan for companies and individuals with social security debts and a property tax which was introduced in the fall of 2011 as an emergency levy but which the troika is reportedly pushing to be extended to plug a revenue gap. Lax tax collection efforts are also expected to be broached a day after Stournaras heralded the recruitment of an additional 4,000 tax inspectors to boost the government’s crackdown. One of the most significant issues on the scheduled agenda of talks between the premier and troika envoys on Tuesday is that regarding a mobility scheme in the civil service. Troika officials reportedly expressed satisfaction with an initial set of staffing plans for streamlining government ministries given to them by Administrative Reform Minister Antonis Manitakis. According to sources, the plan includes a monthly analysis of the progress of the so-called mobility scheme into which 25,000 civil servants must be transferred by the end of the year, according to Greece’s pledges to creditors. Troika officials are expected to assess the progress of the scheme in early June, by which time 12.500 public workers should have been inducted into the scheme. An evaluation of ministry staff is expected to be finished in the coming days, according to sources. More than 1,300 public workers found to have broken the code of conduct or to have obtained their jobs by using forged documents are also under scrutiny. They are expected to be the first to go if there are any civil service layoffs, which appears unlikely until next year but is expected to be clarified this evening following talks between Samaras and troika envoys. The planned merging and abolition of some 700 state bodies, expected by the end of April, will release some 13,000 civil servants into the mobility scheme.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_12/03/2013_487165

Greek industrial output falls 4.8 pct y/y in January Greek industrial output fell 4.8 percent year-on-year in January after a downwardly revised 0.9 percent drop in the previous month, the country's statistics service said on Tuesday. [Reuters] http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_11/03/2013_487093 PM eyes corporate tax of 15 pct  Samaras advocates the reduction of taxation for companies to rekindle growth after cutting labor costs Prime Minister Antonis Samaras said on Monday he is in favor of a flat corporate tax rate of 15 percent in order to bolster investment and growth in the crisis-hit country. Opening the Europe 2020 conference organized by the government and the European Commission in Athens, the premier said that the hardship Greece is going through actually favors the development of enterprises, stressing that entrepreneurship is the way out of the crisis. He went on to explain that there cannot possibly be any growth without primary surpluses “as no matter how much costs are cut, it is impossible to reach our target with such high taxation.” “It is only through private initiative that we will emerge from the crisis,” he stated, blaming the problems encountered in entering the Greek market on the obstacles raised by unions and bureaucracy. Samaras reiterated that there will be no extra fiscal measures and that the credibility of the Greek economy will have to be preserved, otherwise the sacrifices of the Greek people will be wasted. “This year will be the crucial one for the rebound,” he said, expressing certainty that “Greece will make it.” He pointed to the issues of cash flow and the need for more entrepreneurship as being crucial for the rebound. “We are fighting under difficult circumstances,” he stated, noting that the recapitalization of banks will safeguard the sustainability of the credit sector and boost liquidity in the market. The state has also gradually started paying back its arrears, at a time when it owes the private sector some 9.6 billion euros. “Along with confidence, the flow of deposits returning to local banks is growing, while liquidity is supported by the state repaying its dues to citizens,” the prime minister said. Samaras also announced that a program offering guarantees to exporting companies will start at the end of April, adding up to 1.5 billion euros, while a letter-of-guarantees system is also being set in motion.

http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_11/03/2013_487072

Bourse index falls to lowest point in 2013 The local bourse posted further losses on the week’s first day of trade, one of very low turnover, on worries generated by repeated inconclusive meetings between the Greek government and representatives of the country’s international creditors. The Athens Exchange (ATHEX) general index closed at 929.69 points, shedding 2.38 percent from Friday’s 952.34 points, reaching the lowest point seen this year. The large-cap FTSE/ATHEX-25 index contracted by 2.19 percent, ending at 306.27 points. Marfin Investment Group was the worst off among the blue chips, giving up 6.99 percent, Ellaktor contracted by 6.90 percent and Viohalco declined 6.68 percent. Two banks bucked the trend and headed north, as National gained 3.25 percent and Alpha grew 0.69 percent. Folli Follie Group, listed as Duty Free Shops, enjoyed a 2.69 percent rise on its inclusion in the FTSE Developed Europe Small-Caps Index as of next week. In total 46 stocks registered gains, 107 sustained losses and 16 remained unchanged. Turnover amounted to 42.1 million euros, the lowest of the last 20 sessions, compared with last Friday’s 56.4 million euros. and around the horn from Europe ......

http://www.guardian.co.uk/business/2013/mar/12/eurozone-crisis-live-greek-pm-troika-crunch-talks

UK manufacturing down but trade balance improves - Reuters wrap

Here's the Reuters report on the UK data: 

British manufacturing output fell in January at the fastest pace since June, wiping out the previous month's gains and reinforcing fears that the economy made a weak start to the year.

Manufacturing output dropped 1.5% on the month, the Office for National Statistics said on Tuesday, noting that snowy weather at the end of January had had little impact.

The wider reading of industrial output, which includes energy production and mining, fell 1.2% after a 1.1% rise in December, partly due to a shutdown of a North Sea oil field that typically accounts for 3%-6% of Britain's oil production.

Economists had predicted broadly steady readings for both manufacturing and industrial production. The latest figures will worry finance minister George Osborne as he prepares to deliver his annual budget to parliament next week.

The sluggish trend may persist. A survey of purchasing managers revealed earlier an unexpected contraction in the manufacturing sector in February, raising the risk that Britain is entering its third recession since the 2008 financial crisis.

However, separate ONS data released at the same time showed a rare improvement in Britain's trade position. The goods trade deficit shrank to £8.195bn in January from £8.738bn in December, versus forecasts for a modest deterioration to £9bn.

Italy's borrowing costs rise

Over to Italy, where there is more bad news. Hit by the political instability in the country, its borrowing costs have risen in the latest auction of one-year debt.

Italy paid a yield – effectively the interest rate – of 1.28% in an auction of €7.75bn of one-year debt, the highest rate since December.

But it could be a lot worse. After an initial shock, the markets recovered and appear relatively sanguine about the current political impasse.

Stournaras says Greece is out of the woods

The Greek finance minister Yiannis Stournaras says Greece is close to overcoming its financial crisis and can look forward with optimism, in the Guardian this morning.

Speaking to our correspondent in Athens, Helena Smith, Stournaras said:

To a large extent, Greece is out of the woods. No one talks about Grexit now – even economists who advocated Grexit have apologised for it.

As far as fiscal adjustment is concerned, we have covered two thirds of the goal. As far as competitiveness is concerned, we have covered three quarters of the distance to the goal. Greece has paid a very high price in terms of austerity … But I think the worse is behind us and we can look at the future with hope.

Prompting some derision on Twitter...

Russian Market @russian_market

And now sitting in a bush and eating bitter apples?@Dealingroom_EN: Greece Fin Min Stournaras: Greece Is Almost Out of the Woods

8:59 AM - 12 Mar 13

Hollande hits the road

In France, embattled president François Hollande is attempting to reverse a vertiginous decline in his popularity with a road trip around the country.

Our Paris correspondent Angelique Chrisafis reports:

François Hollande tried today to reverse his record unpopularity by embarking on old-fashioned, lingering trips to the provinces in the style of Charles de Gaulle, whose made-to-measure bed he will pointedly be sleeping in on his first trip in Dijon.

Several polls have shown Hollande's approval ratings to be the lowest of any modern French leader 10 months into a presidency. French military intervention in Mali, which the Socialists hoped would improve his presidential stature and neutralise the right's charges of dithering, produced only a slight, short-lived bounce.

The latest TNS-Sofres poll found only 30% of French people had confidence in him to solve France's problems. An Ifop poll for Paris Match found only 37% of the French approved of his politics.

Hollande's unpopularity is linked to the growing economic crisis and rising unemployment. No French leader has ever managed to climb in the popularity stakes while joblessness was rising fast. French unemployment is at a 14-year high and has steadily grown for almost two years. It threatens soon to reach the 1997 record of 3.2 million without work.

A woman takes her picture with François Hollande as the French president visits Gresilles, in the Socialist stronghold of Dijon. Photograph: PHILIPPE WOJAZER/AFP/Getty Images