http://www.zerohedge.com/contributed/2013-03-23/draghi-headlights
and.....
http://www.zerohedge.com/news/2013-03-23/unsecured-depositors-world-unite-and-get-hell-out-these-countries
here we go.........
http://www.zerohedge.com/contributed/2013-03-23/forget-cyprus-japan-real-crisis
( When things go wrong in Japan as they will , watch the shit storm when bank there try the new deposit snatch scam..... )
and.......
http://hat4uk.wordpress.com/2013/03/23/the-saturday-essay-six-unresolved-questions-about-the-cyprus-fiasco-2/
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_22/03/2013_489482
and....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489567
here we go......
http://www.businessinsider.com/how-the-crisis-in-cyprus-can-spread-2013-3
http://online.wsj.com/article/SB10001424127887324103504578376292557972354.html
A DRaGHi IN THe HeaDLiGHTS...
and.....
http://www.zerohedge.com/news/2013-03-23/unsecured-depositors-world-unite-and-get-hell-out-these-countries
Unsecured Depositors Of The World, Unite... And Get The Hell Out Of These Countries
Submitted by Tyler Durden on 03/23/2013 15:39 -0400
Based on the most recent data, JPMorgan notes that the share of large or uninsured deposits is likely to be close to half of total deposits in the European Union. With deposits already flowing out of some of the peripheral EU nations...
we thought it appropriate to point out just which nations have the largest share of uninsured deposits (and are not yet under the ECB's 'standard of living' capital controls). It seems - among many others - that despite France throwing in the towel on the 75% income tax, there is another good reason for the wealthy to leave...
The only reason why Europe has been slow to impair its loans (as shown by the artificial rise in Italian and Spanish bad debt) over the past 4 years, is that a full representation of reality on the asset side (such as that which finally caught up with Cyprus) would lead to a dramatic collapse in balance sheet assets, requiring a comparable crunch on the liability side, where unsecured liabilities such as deposits would certainly take a big hit as well (especially if an equity cram up such as that of Citi is required to preserve the equity tranche).
Which is why the only thing preventing a "Cyprus-type event" from spreading to other nations is the gradual, determined bad debt impairment.
Of course, should there be a risk flaring event and banks are forced to remark bad debt to reality, what just happened in Cyprus will be a gentle breeze compared to what would come.
here we go.........
http://www.zerohedge.com/contributed/2013-03-23/forget-cyprus-japan-real-crisis
( When things go wrong in Japan as they will , watch the shit storm when bank there try the new deposit snatch scam..... )
Forget Cyprus, Japan Is The Real Crisis
Submitted by Asia Confidential on 03/23/2013 12:00 -0400
- Bank of Japan
- Bond
- European Central Bank
- Fail
- Germany
- Gross Domestic Product
- Hyperinflation
- Japan
- M2
- Monetary Base
- Money Supply
- Quantitative Easing
- Reality
- recovery
- Unemployment
- United Kingdom
- Yen
Forget Cyprus. A much bigger story in the coming weeks and months will be in Japan, where one of the greatest economic experiments in the modern era is about to begin. A country where government debt even dwarfs those of Europe's crisis-ridden nations, Japan will attempt to inflate its way out of a 23-year deflationary spiral.
The overwhelming consensus among the world's economists is that quantitative easing (QE) has saved the day in the U.S. and that Japan needs to follow suit, on a larger scale. I beg to differ and suggest this policy will almost certainly lead to a hyperinflationary disaster in Japan. If that's right, it will have serious ramifications for other countries, dragged down by an acceleration of the so-called currency wars. More broadly though, it is likely to destroy the myth pushed by today's economists that QE is a cure-all for downtrodden economies. It isn't and Japan will become the template to prove it.
Monster stimulus on the way
The new Bank of Japan (BoJ) Governor, Haruhiko Kuroda, started work on Thursday and his first day on the job disappointed investors. At a press conference, Kuroda pledged to do whatever it takes to defeat deflation and reiterated the government's target of 2% inflation. But he provided little in the way of specifics and investors promptly bought the yen and sold stocks.
More concrete measurers will almost certainly come by the central bank meeting on April 3-4. There are good odds that they may come even earlier via an emergency meeting of the bank.
It's widely expected that the BoJ will expand its 101 trillion yen (US$1.06 trillion) asset buying program by more than 10 million yen. Also, it will start buying Japanese government bonds with remaining maturities of up to five years by scrapping the upper limit of three years by the end of April.
The idea behind the strategy is that you create money out of thin air, use that money to buy government bonds off private institutions and others, thereby increasing money supply and possibly inflation. Also, the institutions will start lending the money out, thereby kick-starting spending and the economy. That's the theory anyhow.
What was fascinating to watch was the verbal sparring between the outgoing and incoming BoJ governors. In Japan, where group consensus rules, this was almost an outright brawl.
Outgoing Governor Masaaki Shirakawa has never been a believer in the inflationist policies of the new government and he didn't mince his words in his final days in office:
"Even if prices rise 2% and wages do the same, that won't mean an improvement in people's living standards ... what we want to achieve is an increase in real economic growth...
... Past figures in Japan as well as in Europe and the U.S. show that the link between monetary base and prices has been broken."
The latter refers to the fact that printed money in the U.S. and Europe hasn't flowed through to economies as banks have sat on the money rather than lent it out.
And if Shirakawa wasn't clear with the above, he was with the following:
"If there was one single measure that would have resolved the problem, just like clearing a fog, then we wouldn't have been in this state for the past 15 years."
The new BoJ chief, Haruhiko Kuroda, wasted little time trampling on his predecessor's legacy. Though couched in economic jargon, his statements were clear enough: Shirakawa was part of a failed era of central banking and something new needed to be done:
"It's very important for the BoJ to make itself responsible for the 2% [inflation] target by a certain period ... We should not make excuses that it wasn't our responsibility if we fail to achieve it."
And:
"In the long term, the correlation between money supply and inflation is high."
In other words, if we print enough money, inflation will come. And we'll do whatever it takes to get the job done.
Is it the right path?
The sparring between the two central bankers isn't just an arcane discussion. It's part of a much larger debate about the effectiveness of stimulus policies. And it matters because Japan is the world's third-largest economy and it's about to pursue these policies on a grander scale.
What's amazing is the extent to which those advocating stimulus in the slow-growth developed world now dominate public debate. Consider a recent article by Financial Times columnist Martin Wolf, entitled "The sad record of fiscal austerity". In it, Wolf takes Europe to task for enforcing spending cuts while their economies were in dismal shape:
"By adopting [outright monetary transactions], the [European Central Bank] could have prevented the panic which drove the [credit] spreads that justified the austerity. It did not do so. Tens of millions of people are suffering unnecessary hardship. It is tragic."
He goes on to recommend a mix of stimulus, increased public spend and structural reforms to help Europe's plight. And he finishes with this:
"In the long run, the fiscal deficit must close. In the short run, the UK has the chance to pursue growth. It should take it. So should the US."
The arguments of Wolf and others of his ilk can be crudely summarised by three facts, which most of them would regard as beyond dispute.
Fact 1: The U.S. recovery proves stimulus works and the recovery will happen faster if there's more aggressive QE.
Fact 2: Europe remains in the doldrums because it's pursued spending cuts which have failed to repair economies.
Fact 3: Japan has never tried aggressive stimulus to overcome its long-term deflation problem and it needs to follow in U.S. footsteps immediately.
Given these are "facts" beyond dispute, let me dispute them.
Fact 1: It is far too early to tell whether U.S. stimulus policies have worked. They have propped up the economy in the short-term, but whether that's sustainable in the long run is open to question. Even in the short-term though, the recovery has been slow and unimpressive. Consider: 2012 GDP growth of 2.2% vs a post World War Two average of 3.2%, a current unemployment rate at 11.3% if you include that have dropped out of the workforce since 2008, real household incomes are still 10% below levels in 2000 and the velocity of money (M2) is the lowest in more than 50 years (indicating printed money hasn't circulating into the real economy).
Fact 2: Europe hasn't pursued austerity. Anyone who says it has is lying. But it makes for a nice political argument in favour of stimulus. European total debt has kept climbing, now at 390%, as the private sector hasn't paid down any debt, while governments have increased their debt portions. No cutbacks here!
And for the curious, unlike QE, there is some historical evidence that austerity can actually work. In my neighbourhood of Asia, the financial crisis of 1997-1998 brought tremendous pain to many Asian countries, but through austerity and sweeping economic reforms, they recovered relatively quickly and in much better shape.
Fact 3: Those that claim that Japan has never pursued aggressive stimulus are talking rubbish. But again, it's nice propaganda for Keynesian advocates. From 2001-2006, Japan embraced large-scale stimulus, with its monetary base increasing by a mammoth 36% year-on-year at its peak. During the period, the monetary base rose 82% in total. But economic growth was never revived, the currency rose rather than fell and inflation continued to decline. QE in Japan was dropped because it was seen as failing.
So the question must be asked: will the conventional wisdom advocating enormous stimulus be Japan's saviour or its noose?
Why Japan will fail
The subtitle indicates where I stand on the matter. Given its over-indebtedness, Japan has few good options left. But the policies being pursued by Shinzo Abe will fast-forward a major debt and currency crisis. It's a matter of when, not if.
Government debt to GDP in Japan is now 245%, far higher than any other country. Total debt to GDP is 500%. Government expenditure to government revenue is a staggering 2000%. Meanwhile interest costs on government debt equal 25% of government revenue.
There's no way that Japan will ever repay this debt. It has two main options: either go through extraordinary pain by cutting back on government expenditure or print substantial money to inflate some of the debt away.
Japan is choosing the second option, as are most governments around the world. It would rather print money than cut spending and doom the economy to a substantial contraction. The choice to print money though will result in an even more painful and drawn-out outcome.
It's inevitable that the yen will fall further from here, potentially much further. I've previously said that the yen at 200 or 300 on the dollar would not surprise. This could prove optimistic.
It also seems inevitable that Japanese interest rates will rise and bonds will sell off. Yields have to rise to just 2% for interest costs on government debt to take up 80% of government revenue. The jig will be up well before that though.
Those that argue this won't happen as 91% of Japanese government bonds are held by domestic investors are missing some key points. Foreign ownership of bonds is rising as domestic investors need more money to fund their retirements (Japan's rapidly ageing population). Foreigners will demand higher yields for the risks that they're taking on. And even domestic investors aren't going to sit by earning 0.6% on a 10-year bond as hyperinflation takes hold and the currency tanks.
Currency wars to begin in earnest
Talk of currency wars has been on the backburner for a few months. Expect that talk to heat up and become a reality as Japan ramps up stimulus in the next two weeks.
The likes of South Korea and Taiwan are already suffering from the sharp fall of the yen. They, and many others such as Germany and emerging countries, aren't going to sit by and watch their exporters get priced out of the market by the Japanese. They'll retaliate with currency depreciations of their own and the currency wars will be on in earnest. But the question is whether these countries will be able to keep up with a hyper-inflating Japan. I highly doubt it.
and.......
http://hat4uk.wordpress.com/2013/03/23/the-saturday-essay-six-unresolved-questions-about-the-cyprus-fiasco-2/
THE SATURDAY ESSAY: Six unresolved questions about the Cyprus fiasco
Robbing banks, reducing wages, increasing hours worked: the lessons to take from the Cyprus bailin.
What is the American State Department up to? What will Turkey do? Why didn’t things develop in Moscow? Where is Mario Draghi?WTF is this really all about?
How do you tell if a eurocrat is short-sighted? You ask him to spot the difference between a Russian billionaire’s pocket money and a Cypriot’s life savings.
That gag doing the rounds in southern Europe sums up the perfectly natural focus of most people in ClubMed: this is just more of the same old same old Brussels-am-Berlin bullying cock-up, followed by mealy mouthed denials and a screwed up financial system. As indeed it is. Put with less humour but equal bluntness is this verdict from the OECD Director General’s adviser Adrian Blundell-Wignall:
‘The Cyprus crisis is the result of policy mistakes and a failure of collective responsibility, as well as an illustration of what bad policy can do and could do if it’s not corrected.’ Quite. But not everyone is as stupid as they pretend to be.
Type ‘Cyprus’ and ‘Putin’ into The Slog’s search engine, and you can see that this small island is, and always has been, of pivotal strategic importance in relations between Europeans and Arabs. The energy and rare-earth mineral finds of recent years have merely accentuated what was already a place of obvious military importance: access to the Med for Moscow, and a jumping-off point for the US and its obsessive concern with securing energy supplies and the ever-more tenuous Al Qaida.
What very few people do for starters is just look where the hell Cyprus is. As you can see from this map, it is a long way east of Rhodes. That country it appears to be pointing a finger at is Syria. Just after that comes Iraq and Iran. A spit and a throw to the north is Erdogan-run Turkey. Every one of these countries is in one form or another the victim (willing or otherwise) of Islamist advance.
Since 9/11, the so-called War on Terrorism plus Peak Oil theories have had the Americans in a fit of manic focus on this entire area.
Erdogan has always wanted Cyprus ‘back’ (although it was never his in real terms) but more especially he wants the energy fields reconfigured to favour Turkey. Being a NATO ally, he is more than capable of making this mess even more complicated – and the Turks confirmed two days ago that they’d challenge any move by Cyprus to speed up offshore natural gas exploration. Yet there seems to be no pressure from NATO to shut Erdogan up. Why?
For Moscow, the stakes are very high both strategically and in relation to the energy reserves.
In a number of key areas of the region, one of the biggest prospectors in Noble Energy. Former employee Jim Cramer explains:
“…about the nexus between the Cyprus bank bailout deal and the natural gas and oil development in the western Mediterranean…I believe there are some places where these two seemingly unconnected events meet. Since 2010, Noble Energy has been on the front line in exploring the massive Levant basin, including large potential deepwater fields located in both Israeli and Cypriot waters. At every turn, enthusiasm has grown, and it is now thought that the many fields inside the Levant basin could change the natural gas supply dynamic in the entire Western Mediterranean, including both Greece and Italy. Eastern Europe has been forced to depend exclusively on very undependable Russian gas supplies, periodically cut by the Russians dependent upon prices and their own national demand, as well as their national interest. But the now-nearly ready supply from the Leviathan and Tamar fields might begin to break that Russian hegemony. The Tamar field will begin production in April, promising more than a 1 billion cubic feet a day of natural gas, a small but important start….”
So here is a way for Moscow to escape into the Med, have a finger in both energy pies, and avoid being stitched out of its all-important energy-supply business. But also here is an American company leading the charge. What we haven’t seen is any evidence of the US State Department getting heavy with Brussels, Berlin, or Moscow in public.
Even more mystifying (although there were cold Muscovite feet from the start of the the Russo-Cypriot bailout talks) the sessions came to nothing: Russia walked away. Why?
The EC itself is now admitting (a rarity in itself) that this Cyprus bailout offer was a cock-up. But the ECB has delivered an ultimatum (anyone remember there being a vote on that?) to Nicosia saying ‘Monday is it guys: if you’re in fine, if you’re not, you’re broke’. Yet of the most powerful financial officer in Europe, Mario Draghi, there is no sign: nothing, in fact, since March 7th. Why?
Former Foreign Minister and losing Presidential candidate of Cyprus George Lillikas said Wednesday last that he was certain a Cypriot eurozone exit would lead to the collapse of the single currency. “I am sure that if one country, no matter how small, leaves the eurozone, the euro will collapse,” he said, “but the troika’s suggestions of imposing a tax on deposits in Cypriot banks would destroy the island’s banking system”. As indeed it would. Yet Berlin turned up the heat on Cyprus yesterday, increasing the amount Nicosia must raise to secure a bailout…despite the mortal injury that Cypriot exit could inflict on the eurozone via a mélange of rebellion and financial contagion. Why?
This leaves us with a number of questions to answer. And you must, I’m afraid accept most of what follows for what it is: informed speculation. I’ve been given some steers and hints along the way, but nothing concrete.
I think there’s every reason to suspect that the US is giving Turkey a long leash, because it needs Turkey as a base (and a suitable place to invent fictitious crap about Syria) through which it can neutralise first Assad and then Iran. The American strategy is clear: support the Sunni Muslim Brotherhood against the Shi’ite Iranians and Allawite Syrian élite, and thus secure energy access throughout the Middle East. As so often with the US, the policy is naive, its consequences haven’t been considered enough, and it has no basis in terms of how the Sunnis will run things as and when Assad finally loses. But America is ultimately selfish in foreign policy, and paranoid about energy and raw materials.
That reality may also partly explain why the US State department has been surprisingly private about this whole affair. There are some who will tell you that the long term Pentagon aim for Cyprus is a shared hegemony over the place with Turkey. So a weak Cyprus in hock to the EU might suit both very well. It would also, of course, remove the legal obstacle Brussels would face in having two members, both claiming the island as theirs. But whatever the EU says in public, several key members remain implacably opposed to Turkish entry.
The bigger mystery at first sight is why Putin looked this gift-horse in the mouth. I think there is probably far more to this than Moscow simply being unwilling to clear up the mess created by Brussels-am-Berlin. At a total bailout cost of €18 billion – small change for Russia these days – the Kremlin could’ve broken out from its perceived encirclement and neutralised any EU/US attempt to stitch it out of new energy reserves. In purely geopolitical terms, this looks like an act of completely myopic idiocy.
But there are other important factors. The Mafia/oligarch axis in Russia is virtually indistinguishable from the energy sector. They might get control of the sub-ocean finds – but they might not. If they didn’t – with Nicosia and Putin heavily involved – then their control over the Russian economy would be reduced. It’s likely that the top blokes applied pressure to the talks on that basis.
The Kremlin was also worried about the British naval presence on Cyprus. They seem to have seen the deal as rather like buying a low-priced house with sitting tenants already in place: it isn’t really your house until they leave. In a military dimension, that sort of thing is very important.
Finally, it is clear that Moscow doesn’t trust Anastasiadi, seeing him virtually as an enemy. Allegedly, at the outset of the discussions very little seemed to be on offer from the Cypriots, and this convinced more than one on the Russian side that Nicosia wasn’t serious: that it was using Moscow’s interest as a bargaining tool against the EC. Others in turn pointed out that the bailout amount seemed hazy (as I showed yesterday, it was worked out on the most facile of bases) and likely to pave the way for more debt until Cyprus became a money pit. On the other hand, a Cypriot source thinks the Russians were never serious either, and wished only to wind up the West.
I still find much of this hard to rationalise. It is just possible that Russia no longer sees military attack as the best way to influence events, so the Med has a lower strategic importance for them: that energy and cyberspace are better weapons. That’s what one source in Washington thinks. I’m not convinced.
The mystery of Mario Draghi the Invisible Man is more disturbing in some ways.I posted about Schäuble briefing bigtime against him the week before last, and I now think it boils down to two serious possibilities. The first is that Berlin has somehow neutralised the ECB boss, and told him to stay out of public and leave it to them. If so, he has managed very well to be AWOL during a classic Brussels-am-Berlin cock-up. But even as the ECB demanded a Nicosia decision by Monday and then demanded more money after the Moscow talks broke down, SuperMario was nowhere to be seen. That is odd.
The second possibility – and one I increasingly favour – is that from the outset Mario Draghi saw Cyprus as a distraction, no more: he knows that via his control over the banking purse-strings, he can bring the island to its knees any time he likes. Either he knew (or guessed) that the Berlin mentality would jackboot into the situation and use it as a test-case for (a) future events where threats are felt to be necessary and (b) setting the precedent for State theft of depositor funds under the guise of bollocks like Open Bank Recontruction (OBR) or fantasy ‘levies’. Of course, he would prefer to be away from that grubby operation, but I return to the key word here – distraction: Germany’s aim is control; Draghi’s aim is the survival of the euro, whatever it might cost. The two need not be the same, and in the long term probably won’t be.
I have heard but one rumour about what is distracting Draghi, but that’s all it is. I can however say with near-certainty he has been genuinely busy in recent weeks on the subject of eurozone exports.
In almost his last public appearance just over a month ago, ECB President Mario Draghi tried to take the heat out of the currency wars debate by dismissing it as a fantasy. That always makes my nose twitch: when any top Wally says never, unique, impossible, poppycock or fantasy, you know you’re onto something. And while Mario worked hard to rubbish the idea, he did quite openly say that the ECB would “still have to assess the economic impact of the euro’s strength”.
His chief concern at the moment is high costs making eurozone exports uncompetitive. This problem doesn’t seem to afflict Germany, but it is at base the fundamental problem with the euro: you can’t devalue it here and revalue it there. It’s all or nobody, as it were. Devalue the whole eurozone currency, and it may help ClubMed for a while: but in the medium term, it will make things even easier for Germany to get richer and richer. Draghi does not, in private, want that at any cost. What he wants is an efficient EU ensuring a stable, respected currency.
While there’s no doubt that on balance the ECB would like a cheaper euro (another reason to have left Germany alone to f**k up the Cyprus bailout?) Mario’s ideas are far more focused on cost reduction in the real world of manufacturing: and the biggest single way to do that is to drive down wages.
Two weeks ago, the ECB boss made a late-night presentation to senior eurocrats and euro pols about the twin issues of productivity and wages. Six years ago Germany went through the studied process of maintaining a voluntary pay freeze. Draghi thinks the rest of Europe must follow suit, but ClubMed workers tend to be less obedient than Shop Floor Fritz. He has not, in fact, been neutralised by Berlin: he is supporting Berlin’s plan to provide cheap labour working longer hours, but via another, less public, method: helping to make people desperate.
The toughest immediate challenges ahead now are Italy and Spain. Both countries have powerful leftwing Parties unwilling to put up with much more austerity. Draghi’s opinion is strongly towards easing off on the cuts, finding the money for stimulus, and lowering the expectations of those re-entering the job market. It’s a tough circle to square, but he’s on the case.
Equally, Spain, Italy and France could soon find themselves at the epicentre of a european bond market panic…especially if Greek default becomes more likely (it must) and Italian rebellion gains speed (it will). As I reported some time ago, Mario Draghi is keen on the idea of using gold as a bond-backing instrument to overcome this. That’s no easy task either.
The point is this: Draghi may have had his own career reasons for being off the set during the last fortnight. But thinking about it in the round, he is clearly very busy. It may add up to no more than that. Personally, what he plans to do adds up to yet another form of citizen pauperisation alongside the bank robbery approach. I think it is bound to make things worse, but there you are: what do I know?
And so the final question sets itself really: peering out from the helicopter, WTF is going on here? I think there is one further possibility. You may have noticed that President Obama conveniently turned up in Israel this week, talking airily about peace – in that rhetoric-dominated manner he adopts when there’s no beef in the sandwich. In fact, he got Netanyahu to utter some encouragingly nice bromides about America as an ally and the bonds of friendship being unbreakable and so forth. I don’t think Barack Obama was in the region to talk about peace. He was doing the “I’m here to remind you all that I’m keeping a beady eye on this sh*t”.
There is a theory that runs like this. The commitment to Berlin remains strong in Washington, as the only place likely to sort out the eurozone disaster. Merkel’s husband is extremely well-connected in the American security sector. State under Hillary Clinton made it very obvious she was “betting the farm” on Germany, as indeed did Timothy Geithner. Both sides now have a vested interest in a supine ClubMed in general (less threat to Wall Street) and Greco-Cypriot weakness in particular (the EC remains dominant, Berlin gets tough on the euro, the Americans retain their access to mining, energy and military bases, the Russian monopoly on gas supply is broken). That also, of course, suits Turkey.
This may very well be how the interested parties see it. Erdogan mouths off and gets to look macho, Schäuble plays hardball and gets another one over Draghi, and the US President turns up to remind everyone who’s really in control here. I cannot believe that these NATO allies didn’t at least discuss some of the possible outcomes beforehand. Thus I would also assume that all this – and the dangers of messing with it – will also have been politely explained to Moscow. There may even have been a carrot on hand if necessary.
The total picture on Cyprus is on three main levels: Brussels-am-Berlin mendacious control to blame austerity’s failure on nasty billionaires, lazy Greeks, and dumb Cypriot potato-heads; Washington-am-Berlin geopolitical power games; and a deregulating financial élite working along side Major League politicians to find ‘solutions’ to the problems they themselves created. This last dimension is the one I think the most significant: if the Berlin-dominated EC decides it wants a power bulwark against Russia, China, the US or whomever, there’s nothing I can do to stop them, and there are plenty of ways to avoid the effects of it. I’m British, and sixty-five years old. I’ll continue to try and wake people up to it, but I’m past the barricades stage of life. Ditto the likelihood that US Friedmanite mercantilism will wind up blowing us all up. But in the end, most power and almost all misery stems from money.
It’s very clear now – and the catalyst here has indeed been the Cyprus crisis – that most developed countries have a plan in place for buying their way out of self-inflicted trouble, and that we aren’t going to even loan them the dosh: they’re going to find ways to cut out the middle men (the Revenue services) and simply steal it from our bank accounts, bond investments, gold punts, interest on capital, dormant accounts and so forth. What RBS has been doing to SMEs for the last four years is going to happen globally to all of us…..unless we resist. Confirmation of this is, in my view, the main by-product of Nicosia’s collapse at the prospect of Berlin smash-and-grab.
Without money, States cannot fulfill their objectives. On the other hand, money does get people off the sofa in the end. On those encouraging bases, I foresee some change of focus for The Slog from here on.
http://www.golemxiv.co.uk/2013/03/cyprus-the-nuclear-option/
http://www.golemxiv.co.uk/2013/03/cyprus-the-nuclear-option/
Cyprus – The ‘nuclear’ option
Europe, the ECB and the IMF have put a gun to Cyprus’ head.
The threat has been made public – you do as we say and seize depositor’s money or -
Germany to Cyprus: your banks might never re-open
Either Cypriot members of parliament ignore the will of the Cypriot people or the ECB stops supporting Cypriot banks and they implode. Which would mean either Cyprus leaves the Euro and re-introduces its own currency (which it could do) or it tells its people that ALL their money is now gone.
The problem is the private Cypriot banks spent a great deal of the money deposited in them on buying high yielding Greek bonds/debt which were partially defaulted by Greece with the say-so of the ECB et al. So bear in mind that whatever else Cyprus is guilty of (and there is plenty of guilt to go around) it is NOT a case of a government spending profligately. Cyprus debt to GDP at 87% was lower that the Europe area average of 93%.
The ECB doesn’t care about that it just wants Cyprus to dry-run the new idea of making depositors pay for the sins of private banks directly from their savings rather than through the lengthy and ‘political’ process of official bail outs that we have had so far. Cyprus is the test of a more ‘free market’, no messy voting, no lengthy arguments, technocrats-decide-for-us solution.
I expect the Cypriot parliament will do what its told by the man holding the gun. It will be interesting to see if they enforce it themselves or resign en-masse and allow Europe to install another non-democratic ‘Technocratic’ dictatorship. If so it will be just another sign we have left the modern era and that Europe, if not the whole West, is now Post Democratic.
So does Cyprus have an option? I think they do. A nuclear one.
It is true they have no fiscal bullets left. They never really had any. All they ever really had was a little plastic tomahawk they got from Woolies. Even that’s bent now. Even if they decide to let the ECB pull the life support on their banks the EU has said it feels confident no contagion will spread to the rest of Europe. What they mean is financial contagion. The contagion of one defaulted debt, causing another to default causing another. That danger, the EU thinks it has contained. And it may well have.
But Cyprus has one other option – not fiscal but legal.
The nuclear option of Cyprus is to not seize the money in peoples’ accounts but the information about that money. Such as where it came from, if it was criminal or laundered, and if so which banks, businesses and professionals knew about it and helped it on its way. The information which their regulators should have been collecting but never bothered to for the last 15 years. But even so, it is still there. Could still be used.
Cyprus has been laundering money. Its banks and businesses have helped. But so too have the banks and businesses of other countries. To my knowledge there is documentary evidence which implicates at least two huge European banks. A third, a German bank, would, I think, find itself dragged in also. As would dozens if not hundreds of British registered shell companies and the British authorities who do nothing to regulate them, and yet are implicated in four major fraud cases I know of personally.
You might say, ‘So what! Nothing ever happens to the banks when they are found guilty of laundering. How does that count as a nuclear option for Cyprus?’ and you’d be right. Nothing ever does happen to the banks. They pay a fine, and then carry on. But what would change everything and strike a cold fear into the heart of Europe, its banks and its ruling class, is if Cyprus decided to do what nobody anywhere has done – begin a proper criminal investigation.
And it is the word criminal which would set a fuse burning which if not extinguished WOULD spread a contagion that would threaten Europe’s banks and political system.
To understand why, you have to look at the monumentally important ruling in America in the case against HSBC. When the case first broke the headlines were all about the $1.92 billion fine HSBC had agreed to pay. What was made slightly less clear was that there had been an agreement between HSBC and the US Justice Department that HSBC would pay the fine in return for not being found criminally guilty of anything.
HSBC was not criminally prosecuted. They agreed on what is called a ‘Deferred Prosecution Agreement”. Which means they were only ever going to pay a fine, agree to improve, try to look sorry and walk away with a ‘No admission of guilt’ settlement.
This despite the FACTs that, as Lanny Breuer, Assistant Attorney General for the Department of Justice (DOJ) said, the evidence they had gathered proved,
“…stunning failures of oversight .… The record of dysfunction that prevailed at HSBC for many years was astonishing.”
To which U.S. Attorney Loretta Lynch a lawyer involved with the case added,
“HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the US financial system…”
Yet HSBC were not guilty of any criminal act, certainly not guilty of Money-laundering. Not only that but even though the case found that,
”…senior bank officials were complicit in the illegal activity.”
No senior management was taken to court, no one faced criminal charges, no one went to gaol. Officially no one was guilty of anything more serious than having “turned a blind eye”. That was the phrase used.
All of which festered quietly just out of public consciousness. Until Eric Holder, the U.S. Attorney General testified before the U.S. Judiciary Committee in March 2013 and made the astonishing admission,
“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,”
In other words here was the starkest admission, from the most powerful judiciary in the world, that the big banks are officially above the law. The law will not be applied to them. The U.S. Justice department made clear is that if you criminally prosecute a bank, and find it criminally guilty, the bank would most likely lose its banking license and the many institutions that the bank relies upon to buy its bonds, lend it money and purchase its securities would no longer be able to. They would not be allowed by law to do business with a criminal institution.
So the answer is to allow the institutions to act illegally but not prosecute them. That way everybody can do business with people breaking the law but without the nasty word ‘criminal’ being around to stink up the party.
Only poor and ordinary people are Criminals. Rich people have regulatory failures.
Sorry for the lengthy digression. Now back to Cyprus. I think you can see where this is going.
Cyprus’ nuclear threat and option is to make it clear it is going to open criminal investigations into not just its own banks and those who run them, but the huge, systemically important foreign banks who have been dealing with Cyprus and its dirty money for years.
Every nation has so far done what the U.S. did to HSBC. They investigate and fine them making VERY sure there is no mention of criminal guilt. If one single country were to break this agreement and go after the criminals as criminals, the whole edifice is threatened with destruction.
It does not matter that Cyprus is small. Of course being found criminally guilty in a large country like the U.S. is an immediate death sentence. Guilt in Cyprus would not have the same immediate effect. But there would be a legal contagion because a judgment in one country is the basis of filing suit in others.
Currently the opposite is the staple of international banking. A regulator in one country ‘investigates’ one of its own systemically important banks and surprise, surprise finds that though there were ‘problems’, there was no criminal guilt. There are any number of ways of making sure you arrive at this happy conclusion. One way or another no one finds their important financial institutions criminally guilty – ever.
If Cyprus did, the plague would be out.
Even the knowledge such an investigation was underway would shake share prices at the banks under investigation. Once the evidence came out in court it could not be put back. That evidence would be there for all to use in their own countries. Even if governments refused to do it, ordinary people and NGOs could.
This is the option Cyprus still has. I know, as well as you it won’t happen. But it could. It should.
The Cypriot people know they have been guilty of turning a blind eye to tax evasion and laundering. They know the EU wants to strip them of their low tax regime just as they want to strip it from Ireland as well. But they also know the EU doesn’t really want to lift the stone and expose the extent of criminal activity that has been going on because of who and which banks they might find hiding under there.
The Cypriot people have to decide will they try to save themselves by trying to carry on with the same criminals or will they turn to the one option no one even seems to be aware is a possibility – the Truth.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_22/03/2013_489482
| |||
and....
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489567
Golden Dawn stage 'solidarity rally' for Cypriots
A group of around 500 members and supporters of the ultra-rightwing Golden Dawn staged a rally outside the German Embassy in Athens on Saturday in what organizers described as an expression of solidarity with the people of Cyprus where government and troika officials are trying to hammer out an economic rescue package for Nicosia.
The crowd gathered close to the German Embassy, targeted due to the dominant role of Germany in the formation of eurozone policy, but were unable to gain access to the building due to the strong presence of riot police officers.
Protesters waved Greek flags and banners bearings slogans including «No to the repression of the Cyriot people» and «Cyprus, Aegean, a united front.»
Party spokesman Ilias Kasidiaris and other deputies of Golden Dawn addressed the crowd which sung the Greek national anthem before dispersing peacefully.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_23/03/2013_489556
|
EC official: 'intensive contacts' on Cyprus, no meetings planned
"Intensive contacts are ongoing at many levels , Simon O'Connor said in a message on his Twitter account. At this time there are no meetings confirmed in Brussels this weekend,» he added amid speculation that Cyprus President Nicos Anastasiades would visit the seat of the European Commission ahead of a scheduled Eurogroup summit on Sunday expected to focus on the Cypriot crisis. On Friday, O'Connor told reporters in Brussels that it was vital for the Cypriot Parliament to implement new legislation well before Monday when the European Central Bank has said it will cut off liquidity to Cypriot banks. |
here we go......
http://www.businessinsider.com/how-the-crisis-in-cyprus-can-spread-2013-3
How The Crisis In Cyprus Spreads
REUTERS/John Kolesidis
Last weekend, when Europe announced that to bail out Cypriot banks, there would be a sizable one-off tax on all bank depositors, there was worry about bank runs elsewhere in Europe. Would depositors in Greece, Italy, and Spain start lining up to (further) move their assets into banks in more stable countries, for fear of a similar fate down the line?
So far that part of the story hasn't borne out. There are good reasons to think that mechanistically, Cyprus is a one-off. Other Eurozone countries don't have such gigantic banking sectors relative to GDP. And the notion that Cyprus is a haven for offshore Russian money is well understood.
But what is a real precedent here is Cyprus getting a tough deal because Angela Merkel is in a re-election fight, and playing tough with Cyprus is politically popular. Her coalition partners and opposition parties have made a big deal of not giving Cyprus a blank check.
So Cypriots are told: Tax your depositors or the ECB will let your banks collapse on Tuesday because of German politics.
And this is explosive.
The above picture is of supporters of Greece's Golden Dawn Party (which is basically a Neo-Nazi party) protesting in front of the German embassy in Athens last night, due to the treatment of Cyprus. The leftist Alexis Tsipras has also been making hay over the treatment of Cyprus, and is doing well in the polls, so this is a common point of agreement for the extreme right and the extreme left. The middle ground New Democracy party — the party with which the rest of Europe prefers to play ball — can only get squeezed.
Meanwhile, Italy faces the risk of another election sometime in the next few months. One of the most salient issues in the February election was the notion that the existing Mario Monti government was just a puppet for Germany and Brussels. Now imagine if elections are held tomorrow against the Cyprus backdrop. The parties that are simpatico with Brussels wouldn't do better.
With the ECB at the ready, there are good arguments that financial contagion will be limited regardless of what happens with Cyprus (if it takes the deal, if it goes bust, if it leaves the Eurozone, etc.). But with the economy going to garbage all over the place, this is a big shot in the arm to politicians and parties that are not going to be so friendly towards the status quo.
http://www.zerohedge.com/news/2013-03-23/former-cyprus-central-bank-head-and-senior-fed-economist-european-project-crashing-e
Former Cyprus Central Bank Head And Senior Fed Economist: "The European Project Is Crashing To Earth"
Submitted by Tyler Durden on 03/23/2013 11:21 -0400
- Central Banks
- default
- European Central Bank
- Eurozone
- Federal Reserve
- Netherlands
- New Normal
- None
- Reality
- Recession
Back in August 2011, one of the most prescient European (ex) central bankers, Cyprus' very own Athanasios Orphanides wasoptimistic, but with a caveat: "I am optimistic that with the right actions and effort by all we will pull through this," Orphanides told reporters after a meeting with Finance Minister Kikis Kazamias. They were Orphanides' first public comments since warning authorities in a July 18, 2011 letter that Cyprus ran the risk of requiring an EU bailout unless urgent action was taken to shore up its finances."
Two years later, following endless dithering and pretense that just because the ECB has stabilized the markets, all is well, and "action was being taken" when none was (because in the New Normal the lack of market collapse is somehow supposed to represent structural changes are taking place, which neveractually happen), Cyprus is beyond the bailout stage - it is now quite literally on the verge of total collapse. This is also why Orphanides, who recently (and perhaps prudently) quit as Central Banker of Cyprus following a clash with the new communist government (and was replaced by a guy named Panicos), no longer is optimistic. "The European project is crashing to earth,” Athanasios Orphanides told the Financial Times in an interview. "This is a fundamental change in the dynamics of Europe towards disintegration and I don’t see how this can be reversed.”
It can't. Which is what we have been saying all along. But it apparently takes a former Federal Reserve senior economist to say the perfectly obvious, and for reality to finally hit front and center.
More from the FT's interview with Orphanides:
This week’s events had made “a mockery” of EU treaties, he added. “It suggests that in Europe not all people are equal under the law.”“We have seen other eurozone countries, the Netherlands, for instance, put national interests ahead of the European interest by trying to bring down the economic model of countries such as Cyprus or Luxembourg.”He also called into question the credibility of the ECB’s threat to pull the plug on the Cypriot banking system. On Thursday, the ECB warned that if an EU-IMF rescue programme was not agreed by Monday, it would ban the use of “emergency liquidity assistance” to prop up the Cypriot banking system.According to Mr Orphanides, about €10bn of ELA is being provided via Europe’s Target2 payments system used by its central banks. “If you say it is no longer authorised, it would force the Central Bank of Cyprus to default on its Target2 obligations. Cyprus would then have to leave the euro area.”“The ECB will have forced Cyprus out. This is the one thing Mario Draghi doesn’t want to happen – he does not want to be the ECB president who triggers the break-up of the euro. It is painful to watch.”So far, global financial market reaction to the Cyprus crisis has been subdued. But Mr Orphanides warned that would change. “I don’t think that the full extent of the shattering of the trust that we have seen in this case . . . has been seen fully yet.“Banks’ funding costs in the [southern eurozone] periphery will rise further – there is no way we will avoid that. This, in turn, will make the recession in the periphery deeper, adding to the misery that the mishandling of the crisis has caused so far.”“Financial markets are over-influenced by what happens in London or New York – there, the intricacies and processes of European politics are not very well understood.”
We couldn't agree more.
As a reminder, Mr Orphanides was governor of Cyprus’s central bank from 2008 until last
year, when he was replaced after clashing with the island’s then
communist government. As member of the ECB’s governing council, Mr
Ophanides’ views were respected because of his background as a senior
economist at the US Federal Reserve. He has since returned to academic
economics in the US.
year, when he was replaced after clashing with the island’s then
communist government. As member of the ECB’s governing council, Mr
Ophanides’ views were respected because of his background as a senior
economist at the US Federal Reserve. He has since returned to academic
economics in the US.
We can't wait until the world of very serious economist, some of them even with Nobel prizes, turn on one they proudly praised as their own, as recently as months ago.
In the meantime, Orphanides is absolutely correct.
http://www.zerohedge.com/contributed/2013-03-23/liar-liar-banking-system-fire-watch-i-spit-fact-burns-down-sham-formerly-know
( Some editing here to cut to the chase.... )
Liar, Liar Banking System On Fire! Watch As I Spit Fact That Burns Down The Sham Formerly Know As The EU Banking System
Submitted by Reggie Middleton on 03/23/2013 08:21 -0400
- Bank Run
- Bear Stearns
- Counterparties
- Covenants
- Fractional Reserve Banking
- France
- Greece
- headlines
- Lehman
- Lehman Brothers
- Sovereign Debt
- United Kingdom
On Monday, 25 June 2012 I penned "No Capital Controls In The EMU? Liar Liar Pants On Fire". Let me excerpt the first paragraph so as to bring those who have not read it up to speed before we jump into current events...
I have outlined the upcoming EU bank runs up to two years in advance (see the many links below). Whenever one expects a bank run, the first things TPTB do is institute capital controls to stem said bank run - which of course makes the bank run that much more necessary to get your capital out - wash, rinse, repeat! Remember, by treaty, no country in the EMU may use capital controls without automatically being removed from the union. Well, do you believe that to be fact that will last? Yeah, I don't either. Simply watch as the money bleeds from the banks and the bumbletrons attempt to staunch the flow using mechanisms that will simply exacerbate the flow. Even more incredible is the fact that even to this date, with the existence of publications such as BoomBustBlog, entire nations as well as their financial advisors, leaders, regulators and politictians STILL DO NOT EVEN COMPREHEND the nature of the modern bank run. You cannot stem the tide with capital controls, you can only exacerbate it.
Now, As Predicted Last Year, The French and the Greeks Are In A Race For The Biggest Bank Run!
On Saturday, 23 July 2011 I penned "The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!" wherein I went through both the motive and the mechanism of a European bank run, focusing on Greece and France as impetus.
Okay, I'm writing this on 3/23/2013, referring to the events of yesterday. I apologize to my paying subscribers for being 9 months and a few miles/kilometers off, but as the more intellectually capacitive among you know, this stuff is not an exact science. Now, yesterday's headlines...
Cyprus passes laws for capital controls
Lawmakers in Cyprus passed legislation to impose capital controls on its banks and create a "solidarity fund" to pool state assets, according to media reports late Friday. The measures will help fulfill conditions for Cyprus to get a euro-zone bailout. With a Monday deadline, Cypriot lawmakers still need to vote on measures needed to restructure banks in Cyprus and possibly place levies on deposits.
I appeared on the Max Keiser show in London yesterday, and broke down the Cyprus issue as simply as could be done. In essence, "What is a bank???!!!"
In "The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!" I detailed for my readers and subscribers the mechanics of the modern day bank run, particular as I see (saw) it occurring in Europe.
You see, the problem with this bank holiday thing is that the real damaging bank run will not be staunced by the conventional bank holidays, et. al. because it is a counterparty run that will cause the damage, not depositors. TPTB in Europe don't have the chops to stem this one, at least not from what I've seen. As for how that institutional bank run thing works, we excerpt "The Fuel Behind Institutional “Runs on the Bank" Burns Through Europe, Lehman-Style":
The modern central banking system has proven resilient enough to fortify banks against depositor runs, as was recently exemplified in the recent depositor runs on UK, Irish, Portuguese and Greek banks – most of which received relatively little fanfare. Where the risk truly lies in today’s fiat/fractional reserve banking system is the run on counterparties. Today’s global fractional reserve bank get’s more financing from institutional counterparties than any other source save its short term depositors. In cases of the perception of extreme risk, these counterparties are prone to pull funding are request overcollateralization for said funding. This is what precipitated the collapse of Bear Stearns and Lehman Brothers, the pulling of liquidity by skittish counterparties, and the excessive capital/collateralization calls by other counterparties. Keep in mind that as some counterparties and/or depositors pull liquidity, covenants are tripped that often demand additional capital/collateral/ liquidity be put up by the remaining counterparties, thus daisy-chaining into a modern day run on the bank!
Make no mistake - modern day bank runs are now caused by institutions!
A reader has convinced me to consult with him on a specific situation, regarding overseas monies and the (lack of) safety of those funds, which prompted me to dig up the Sovereign Contagion Model that we developed in 2010. Long story short (if it's not already too late), my next extensive series of posts on this topic will likely spark bank runs throughout the periphery and the core of Europe, for much of the assets that depositors think are there are simply not, and I proffer ample proof for all to see. For the banks, it's too late to pull the evidence down from your various web sites, for I already have it safely stored and distributed. Keep in mind, once the fissures form in one section of the already weakeed EU, cracks widen in the other sections...
Description: foreign claims of PIIGS
France news item - Hollande loses his Budget Minister...
http://www.france24.com/en/20130320-france-budget-minister-resigns-hollande-loss-press
France news item - Hollande loses his Budget Minister...
http://www.france24.com/en/20130320-france-budget-minister-resigns-hollande-loss-press
Jérôme Cahuzac’s resignation as the French budget minister made headlines in France on Wednesday, shining a spotlight on an important but –until now– little known member of President François Hollande’s inner circle.
Cahuzac, 60, a former mayor and French MP with a long track record with the Socialist Party,stepped down on Tuesday after judges opened an inquiry into allegations he held a secret Swiss bank account.
The claims have given new ammunition to the conservative opposition UMP party, which tabled a vote of no confidence in the government at the National Assembly on Wednesday.
The motion, planned even before Cahuzac dramatically stepped down, had virtually no chance of passing the Socialist-controlled chamber.
A victim of the pesky investigative press
While Cahuzac’s resignation caught the French off-guard, the allegations have been festering since December.
The claim he stashed money away until 2010 was made by Mediapart, a subscription-based news website known for its investigative reports.
Launched by a former Le Monde editor in 2008, Mediapart honed its craft with stinging reports often targeting the right-wing government of Nicolas Sarkozy.
Cahuzac has denied Mediapart’s allegations, telling reporters in December that the final outcome of the affair would either ruin him or the news group.
The left-leaning daily Libération said Hollande had no choice but to accept Cahuzac’s resignation, though maintaining that “there was no concrete evidence” the former minister ever had an illegal Swiss bank account.
Le Parisien daily said Mediapart, for now, could boast of having the upper hand in an article titled “Mediapart: 1 – Cahuzac: 0”.
“Until now he has been used to winning his fights. This time, Cahuzac has chosen to abandon the political boxing ring to prove his innocence,” the newspaper wrote.
Avoiding a ‘political catastrophe’
The French media have pointed out that the ministerial exit represents a double blow for Hollande, who will likely face embarrassing questions over the affair, and has lost a competent ally tasked with whipping the country’s finances into shape.
The right-leaning Le Figaro, which routinely criticises Hollande, said the president had lost a “major chess piece” with Cahuzac’s departure.
It showed sympathy for Cahuzac, who opposed the president’s failed bid to tax France’s top earners at a 75% rate. Hollande has introduced a series of tax hikes and cuts to deliver on his promise to balance France's budget by the end of his term in 2017.
“Resigning is a personal tragedy if one is innocent. But staying on would have been a political catastrophe, whether he is guilty or not,” Le Figaro noted.
Bernard Cazeneuve, who was until Tuesday a junior minister in charge of European affairs for Hollande, will replace Cahuzac at the Finance Ministry.
“One can’t replace Jérôme Cahuzac, only succeed him,” Cazaneuve told RTL radio on Wednesday, admitting he lacked his predecessor’s “fine-tuned knowledge” of the French budget.
Cahuzac, 60, a former mayor and French MP with a long track record with the Socialist Party,stepped down on Tuesday after judges opened an inquiry into allegations he held a secret Swiss bank account.
The claims have given new ammunition to the conservative opposition UMP party, which tabled a vote of no confidence in the government at the National Assembly on Wednesday.
The motion, planned even before Cahuzac dramatically stepped down, had virtually no chance of passing the Socialist-controlled chamber.
A victim of the pesky investigative press
While Cahuzac’s resignation caught the French off-guard, the allegations have been festering since December.
The claim he stashed money away until 2010 was made by Mediapart, a subscription-based news website known for its investigative reports.
Launched by a former Le Monde editor in 2008, Mediapart honed its craft with stinging reports often targeting the right-wing government of Nicolas Sarkozy.
Cahuzac has denied Mediapart’s allegations, telling reporters in December that the final outcome of the affair would either ruin him or the news group.
The left-leaning daily Libération said Hollande had no choice but to accept Cahuzac’s resignation, though maintaining that “there was no concrete evidence” the former minister ever had an illegal Swiss bank account.
Le Parisien daily said Mediapart, for now, could boast of having the upper hand in an article titled “Mediapart: 1 – Cahuzac: 0”.
“Until now he has been used to winning his fights. This time, Cahuzac has chosen to abandon the political boxing ring to prove his innocence,” the newspaper wrote.
Avoiding a ‘political catastrophe’
The French media have pointed out that the ministerial exit represents a double blow for Hollande, who will likely face embarrassing questions over the affair, and has lost a competent ally tasked with whipping the country’s finances into shape.
The right-leaning Le Figaro, which routinely criticises Hollande, said the president had lost a “major chess piece” with Cahuzac’s departure.
It showed sympathy for Cahuzac, who opposed the president’s failed bid to tax France’s top earners at a 75% rate. Hollande has introduced a series of tax hikes and cuts to deliver on his promise to balance France's budget by the end of his term in 2017.
“Resigning is a personal tragedy if one is innocent. But staying on would have been a political catastrophe, whether he is guilty or not,” Le Figaro noted.
Bernard Cazeneuve, who was until Tuesday a junior minister in charge of European affairs for Hollande, will replace Cahuzac at the Finance Ministry.
“One can’t replace Jérôme Cahuzac, only succeed him,” Cazaneuve told RTL radio on Wednesday, admitting he lacked his predecessor’s “fine-tuned knowledge” of the French budget.
Italy still has no Government....
Italy Moves to Break Political Impasse
MORE IN WORLD »
By CHRISTOPHER EMSDEN And GIADA ZAMPANO
ROME—Italy took a step toward solving its political impasse, as President Giorgio Napolitano asked the head of the center-left Democratic Party to try to forge a government with viable parliamentary support—a task that will be hard to accomplish.
The presidential nod Friday gave Pier Luigi Bersani a few days to sound out lawmakers in his own and other parties to see if he could stitch together a cabinet able to win the 30 or so extra Senate votes he needs following his center-left coalition's unexpectedly narrow victory in last month's general elections.
At the end of this short round of consultation, Mr. Bersani will report back to Mr. Napolitano and, if successful, will officially be given the task to form a new government.
Acquiring those missing votes, however, will involve reaching across the aisle and cajoling support from the upstart Five-Star Movement, whose leader—former comedian Beppe Grillo—has said he would never vote in support of any government led by a traditional party. Mr. Bersani has been trying to do that for the past two weeks to no avail.
Mr. Napolitano indicated Friday he would have preferred to explore the chances of creating a broad coalition government—backed by both the center-left block led by Mr. Bersani and the center-right coalition headed by his archrival and former Prime Minister Silvio Berlusconi. But the head of state said that option appeared unviable, due to the "strong infighting" between the two rival blocs.
The broad coalition formula failed in December, when Mr. Berlusconi's center-right group withdrew its support from the technocrat government led by Premier Mario Monti, who had been backed by both coalitions.
President Napolitano made clear that Mr. Bersani's attempt to form a government will be challenging, and encouraged him to reach out to all the other political parties represented in Parliament. So far, Mr. Bersani has rejected Mr. Berlusconi's offers for a bipartisan government.
Political analysts believe the president's move was dictated by the urgency to give Italy a stable government and avoid prolonged political uncertainty. Still, they said Mr. Bersani's chances of forming a government are slim.
Mr. Bersani on Friday pledged to open a dialogue in the coming days with all political forces, seeking "a government able to provide the change expected by the Italians and one able to carry out reforms."
Mr. Bersani and Mr. Berlusconi, as well as other senior lawmakers, have emphasized the urgency to give the euro-zone's third-largest economy a government that will take measures aimed at ending a prolonged recession and participate in European debates, which have intensified in the wake of demands being made as part of a bailout package for Cyprus.
"The president had to offer Bersani the opportunity of a few days to seek a majority" said Duncan McDonnell, a political analyst at the European University Institute near Florence. But "we know he will not be able to form a government."
The Democratic Party and its left-leaning allies narrowly emerged as the winner of last month's general elections, giving it an absolute majority of seats in Parliament, but only 121 seats in the 315-member Senate.
A poll released Friday by the SWG institute found Mr. Berlusconi's center-right coalition would overturn election results and win if a vote were held today. It also showed the anti-establishment Five-Star Movement would be the single largest party. That alone will make the Democratic Party reluctant to trust any ordinary coalition deal.
If Mr. Bersani doesn't deliver a convincing plan, the head of state will likely hold another round of consultations with the parties, and would probably appoint an outsider candidate to head a government, with a mandate to pursue a narrow policy menu and to try to change the electoral law while politicians prepare for elections in the autumn.
The rhetoric of urgency "is paving the way for a caretaker administration of some type," Mr. McDonnell said.
Political gridlock also raises the risk of a sovereign rating downgrade, which could trigger market pressure on Rome to request a bailout of its own, Citigroup warned in a note Friday.
Italy's economy is struggling even more than bleak headline data show, as job and business declines began to accelerate late last year, said Mariano Bella, chief economist at the Confcommercio retailers lobby.
"We can't ignore the public suffering," President Napolitano said Friday.
Sprain corruption grinds on.....
http://elpais.com/elpais/2013/03/22/inenglish/1363974536_476511.htm
Prosecutors uncover links between Gürtel network and PP accounts
Judge to delve further into ruling party’s finances based on evidence from Court of Auditors
For the first time in four years since the Gürtel investigation began, anticorruption prosecutors have found indications that the Popular Party (PP) may have gotten kickback donations from a group of corrupt businessmen who received juicy public contracts from local and regional governments controlled by the conservatives, a judge said Friday.
High Court Judge Pablo Ruz, who is overseeing the massive Gürtel inquiry, has decided to delve further into the PP’s finances after prosecutors presented him with evidence based on the ruling party’s accounting turned over by the Court of Auditors.
In a ruling, Ruz laid down the reasons why he won’t give up an angle of the investigation regarding the accounting ledgers of former PP treasurer Luis Bárcenas, which allegedly record the amounts of bonuses paid out to top party officials, including Prime Minister Mariano Rajoy, during an 18-year period.
His colleague at the High Court, Judge Javier Gómez Bermúdez, asked Ruz earlier this week to recuse himself from that part of the inquiry to prevent “duplication” after he had taken jurisdiction of a complaint filed by the United Left (IU) coalition over the PP’s financing.
The Bárcenas ledgers and the Gürtel kickbacks for contracts inquiry are two separate issues, Gómez Bermudez argued.
But Ruz revealed that anticorruption prosecutors have found at least four similarities in the records allegedly kept by a Gürtel accountant reflecting kickbacks paid by the corrupt businessmen and contributions to the PP in the Court of Auditors’ records.
Judge Ruz has also ordered that the PP turn over all of its records regarding appearance fees, contributions and revenue intakes from 1990 to 2011, and the personal financial statements filed in the Senate by Bárcenas while he served as senator.
Bárcenas, who has said the handwriting in the ledgers isn’t his, has refused to take a calligraphy test for the High Court. Ruz wants to match his handwriting in Senate papers to that of the ledgers.
No comments:
Post a Comment