More panic in Cyprus .....
http://www.cyprus-mail.com/co-op/co-op-rumour-spreads-panic/20130406
http://www.zerohedge.com/news/2013-04-05/investigators-hit-brick-wall-bank-cyprus-ceo-hard-drives-wiped
Submitted by Tyler Durden on 04/05/2013 11:09 -0400
http://hat4uk.wordpress.com/2013/04/06/the-saturday-essay-why-the-eurozones-capital-incontinence-is-the-beginning-of-the-end/
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_06/04/2013_492279
Submitted by Tyler Durden on 04/05/2013 13:40 -0400
http://www.cyprus-mail.com/co-op/co-op-rumour-spreads-panic/20130406
Co-op rumour spreads panic
By Stefanos EvripidouPublished on April 6, 2013
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THE GOVERNMENT, Central Bank and Cooperative Movement rushed to calm fears of a new
raid on bank deposits yesterday after rumours, texts and reports circulating spread panic among depositors who formed long queues mostly outside cooperative banks.
raid on bank deposits yesterday after rumours, texts and reports circulating spread panic among depositors who formed long queues mostly outside cooperative banks.
Massive lines of people formed outside cooperative banks across the country seeking ways to either get their money out or divide their fixed deposit accounts into smaller ones of under €100,000 following the circulation of text messages claiming the government was about to impose a haircut on cooperative bank deposits.
Other depositors whose fixed deposit accounts had yet to mature but who also heard the rumours turned up simply to withdraw the €300 maximum amount permitted from their accounts.
Head of the Cooperative Central Bank Erotocritos Chlorakiotis yesterday assured the public that deposits at the cooperative credit institutions were safe, insisting that the rumours of a haircut were completely “unfounded”.
He said the run on cooperative banks was a result of two developments: the untrue text messages going around the last few days and a misleading news article posted on a television channel website yesterday morning.
Chlorakiotis explained that rumours of a haircut culminated yesterday morning as a result of a misinterpretation of discussions between the government and unions about how to save provident funds deposited in the Bank of Cyprus (BOC) and Laiki.
One television channel had posted an article yesterday referring to discussions between the government and unions on preparing a bill regarding the provident funds deposited in BOC and Laiki.
The cooperative banker said the article failed to specify the difference between beneficiaries of the provident fund of up to €100,000 which are insured and beneficiaries of over €100,000 for which they are preparing a formula of a scaled haircut. In other words, the effort is to treat Laiki workers’ provident funds in the same way that deposits in BOC are being handled, that is, with up to 60 per cent wiped out and partly exchanged for shares in Bank of Cyprus.
However, the article in question omitted to refer specifically to the beneficiaries of the two banks’ provident funds, referring instead to depositors which caused confusion and distress among the public.
“Those who read it understood that this was about deposits in any bank, hence the peak in concern of the people,” said Chlorakiotis.
The banker put it down to a misunderstanding, but left a question mark over the motive behind the text messages doing the rounds, saying he did not want to believe this was an orchestrated effort to harm the cooperative movement.
He said the text messages were completely unnecessary and only served to spread panic. “Those spreading this know it’s not true.”
Speaking on state broadcaster CyBC, Chlorakiotis said it was made perfectly clear in the memorandum of understanding agreed with the troika, which has already been made public, that any recapitalisation needs of the Cooperative Movement and Hellenic Bank will be covered by their own capital and from the €10 billion bailout money.
Finance Minister Haris Georgiades yesterday confirmed that around €1.2 billion of the €10 billion has been earmarked for the cooperative banks and societies to cover any possible recapitalisation needs.
The Cooperative Societies’ Supervision and Development Authority yesterday called on members and customers of cooperative credit institutions to ignore text messages doing the rounds regarding the fate of deposits in coop banks.
The authority described the texts as “malicious”, and aimed at shaking people’s confidence in the cooperative movement.
“Our people are experiencing tragic moments,” said the supervisory authority, adding that it wants to believe the whispers and rumours emanate from people’s agony and are not part of an organised effort.
The Central Bank also released a statement denying media reports that a general haircut will be applied on deposits in other banks, noting that this would not happen “because such an action is not provided for in the political decisions taken by the Eurogroup on March 25, 2013”.
The Finance Ministry echoed the above institutions, saying the rumours of a possible haircut on coops were “groundless”.
“Such an issue was never discussed or tabled, as such it is categorically stated that no such issue nor intention exists,” said the ministry statement.
“The memorandum has been agreed with the troika, in which there is no additional measure included which would lead to the need to impose any new haircut on deposits on the cooperative movement of Cyprus,” it added.
The ministry argued that based on the implementation of the last Eurogroup decision for the winding down of Laiki and restructuring of Bank of Cyprus, the Cypriot banking system was “on track towards stabilisation and consolidation”.
The finance ministry urged the public “not to give weight to unfounded rumours that have the sole purpose of harming the banking system of Cyprus and shaking the public’s confidence in the banks and other credit institutions”.
Anger replacing shock........ when do the cries for punishment rain down ?
Investigators Hit Brick Wall; Bank Of Cyprus CEO Hard Drives Wiped
As the investigation into unusual loan write-downs and the 'premature' movement of capital away from Cyprus by the elites of that nation progresses, Cyprus Mail reports that the investigators - Alvarez and Marsal (A&M) - have found that the information provided by Bank of Cyprus (BoC) was incomplete and data deleting software were found on the computers of two senior executives. "Our computer forensic technologists have found that the computers of two employees, (former CEO) Mr. (Andreas) Eliades and (senior manager group treasury and private banking) Christakis Patsalides, have had wiping software loaded, which is not part of the standard software installations at the BoC." Investigators found no e-mail files, mailboxes or user documents on Eliades’ desktop computer - "we hadsignificant gaps in the e-mail data receivedfrom BoC for the period 2007 to 2010, a key period for our scope of investigation," and no email backups were performed. A&M is looking into how BoC accumulated €2.4bn worth of Greek government bonds (GGBs), later suffering huge losses because of that, and into BoC’s expansion to Romania and Russia. We are sure this is all above board and normal IT protocol for the bank... or not.
Deletion of data allegedly took place on computers belonging to senior Bank of Cyprus (BoC) executives, according to the leaked findings of a probe into the circumstances that forced the island’s biggest lenders to seek state assistance.Alvarez and Marsal, the firm tasked with investigating why Bank of Cyprus and Laiki sought state assistance, said the information provided by BoC was incomplete and data deleting software were found on the computers of two senior executives.“Our computer forensic technologists have found that the computers of two employees, (former CEO) Mr. (Andreas) Eliades and (senior manager group treasury and private banking) Christakis Patsalides, have had wiping software loaded, which is not part of the standard software installations at the BoC,” A&M said. “Mass deletion of data appears to have been undertaken on the Patsalides computer on October 18, 2012.”A&M’s findings were handed over to parliament on Wednesday....Investigators found no e-mail files, mailboxes or user documents on Eliades’ desktop computer....A&M said there were more gaps in the data collection.“We had significant gaps in the e-mail data received from BoCfor the period 2007 to 2010, a key period for our scope of investigation,” the firm said....A&M said its team was not authorised to issue subpoenas or compel anyone to attend an interview or compel the production documents and data if they did not work for an entity supervised by the CBC.However, any conduct identified as suspicious will be surrendered to the attorney-general, A&M said, citing the CBC.A&M looked into how BoC accumulated €2.4 billion worth of Greek government bonds (GGBs), later suffering huge losses because of that.It also looked into BoC’s expansion to Romania and Russia....
http://www.cyprus-mail.com/central-bank-governor/president-and-cbc-chief-receive-death-threats/20130406
President and CBC chief receive death threats
By Stefanos EvripidouPublished on April 6, 2013
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POLICE ARE investigating death threats against President Nicos Anastasiades and Central Bank of Cyprus (CBC) Governor Panicos Demetrides and their families over the raid on deposits in the island’s two biggest banks.
The threats were made in a typewritten letter addressed to the two men but sent by post to local daily Politis in Nicosia and signed by the ‘Deposit Rescue Group: To the Death’.
The paper’s assistant editor Manolis Kalantzis said he received the letter on Thursday morning and immediately notified police who sent CID investigators to the paper’s offices in the old town.
The letter itself was dated March 20, 2013, five days after the first Eurogroup meeting which introduced the notion of a haircut on insured and uninsured depositors in all banks in Cyprus.
If authentic, it also means the letter was written five days before the final meeting of eurozone finance ministers in Brussels on March 25, which concluded on the winding down of Laiki Bank and the restructuring of Bank of Cyprus, with uninsured depositors in both taking massive hits.
The letter, addressed to Anastasiades and Demetriades, warns that professional killers will be hired to carry out the group’s wishes.
“You have destroyed us following a very well prepared plan and you continue to destroy us showing indifference to what will become of us and our children and grandchildren.”
It adds: “We warn you that whatever you do to us you will get it back to a much greater degree because we have nothing to lose from this point on.”
The group highlights that it will operate “from coast to coast across all Cyprus and will punish all those who brought us to this wretched state”, warning those culpable for the current crisis to take their threat seriously.
“If you do not stop immediately all haircuts on people’s deposits, you will pay a very high price. With us we have professionals who are paid handsomely, understand nothing and have no god other than money.
“We warn you and we’re not bluffing. We will start with your grandchildren, then go to your children and leave you last so you can hurt as much as we are.”
The ‘Deposit Rescue Group’ warns that it has “the means and strength to know each moment where every member of your families is”, adding that if they are ignored, that’s when the party will really start.
The author(s) of the letter called both men “sold out scumbags” and “traitors to the nation”.
The letter ends with: “We belong to no party or organisation. You are fated to die.”
Justice Minister Ionas Nicolaou said yesterday the matter was being investigated but that no extra measures were requested for the protection of the President and governor.
Despite the letter dated March 20, the minister said police were only informed of its existence on Thursday.
Legal actions against deposit theft mounting.....
http://www.cyprus-mail.com/appeals/fifty-appeals-lodged-against-haircut/20130406
Fifty appeals lodged against haircut
Published on April 6, 2013
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THE Supreme Court yesterday cancelled two injunctions aimed at preventing bank restructuring procedures from going ahead as more than 50 appeals have been submitted against the Eurogroup decision to resolve Laiki and force losses on Bank of Cyprus (BoC) depositors.
At the same time the Church of Cyprus withdrew an appeal it had filed against writing off all of its current BoC shares, after the decision was reversed by the Central Bank.
The injunctions were cancelled because of possible conflict of interest.
The judge who issued them, Myronas Nikolatos, had recused himself from the cases after issuing the injunctions.
“The judge determined that a close family member had an interest in the outcome of these cases so he recused himself from two cases before him and that is why he is not with us today,” Supreme Court President Petros Artemi said.
The Supreme Court upheld the Attorney-general’s argument that not only must justice be done; it must also be seen to be done.
“We have arrived at the conclusion that the Attorney-general’s position regarding the matter of the objectivity of the judge who issued the order is correct,” Artemi said.
A second judge, Leonidas Parparinos, also recused himself from the procedure.
“I have a personal problem because a relative has a large number of shares in BoC,” Parparinos said.
Artemi himself said his brother Andreas had been a member of the BoC board in the past few years. “Personally I do not have a problem in trying the case, but I want to hear the views before deciding,” the Supreme Court President said.
No objections were raised. Over 50 appeals have been filed against the Eurogroup decision to resolve Laiki and force heavy losses on uninsured deposits – over €100,000 – which could reach 60 per cent.
The Supreme Court gave the state and the Central Bank 10 days to file their objections, starting the day they received all the appeals. The court decided to reconvene on April 23 at 11.30am.
The plaintiffs’ lawyers must decide on who will appear before the court after their clients’ cases were grouped accordingly.
“Capital outflow from eurozone especially pernicious” – UBS analysts
In trying to calm nerves, the ECB’s denial of Cyprus Template Syndrome is acting as a confirmation of what unofficial but well-informed sources already know: the investment seeds the eurozone so desperately needs for recovery have been blown far, far away by the hurricane of mistrust following the EC’s Cyprus energy grab. Not only is this going to get worse, it has ensured that the first domino of disaster is about to hit the second. The timescale remains, as ever, uncertain: but its duration just got decimated. The Slog analyses the ‘unforeseen consequences’ of depositor theft.
Mario ‘No Shadow’ Draghi arose from his coffin last Thursday afternoon for a grudging attempt at eurozone damage limitation.
“Cyprus is no template, Cyprus is no turning point in euro area policy,” said Mr Draghi. “I am absolutely sure that the chairman of the Eurogroup has been misunderstood.” He was of course referring to Dutch stream of consonants Jeroen Djisselbloem’s blasé agreement with the concept of stealing our money going forward. It had all been a terrible mistake, allegedly: there would be No More Nicosias, watch my lips.
I spoke to a representative cross-section of dealers, traders, wealth managers, and bond market opinion leaders afterwards. I also spoke to four expats in France, an Italian, a Spaniard, two Americans and three Greeks. None of them believed a word of it. All of them were convinced that, almost certainly, Draghi was trying to stem a capital flight crisis. I have been warned by a Brussels contact that the leakage of euro-investment monies to elsewhere after the Cyprus Heist has been “disastrous”. But I don’t as yet have any hard evidence about the total picture. (If anyone does, then jawslog@gmail.com is the place to send it).
I can tell you this, however: a Singaporean banker to whom a Slogger kindly introduced me earlier in the week said he had “never been busier” handling panicked demands to open investment and chequing accounts. Another institution in Singapore dealing in accounts larger than $5million had a record week for takings from the eurozone. And the Californian office of a senior banking firm saw “a mega-spike” in ezone euros switching into Dollars.
If all this feels too anecdotal and sample of one, think again: UBS Research Analyst Gareth Berry is happy to confirm the trend in full based on the bank’s own monitoring: “We expect that the theme of capital flight out of the Eurozone will continue to run for some time in the wake of the Cyprus bailout,” he says, “capital flight in the form of investment outflows is even more pernicious.”
Supporting The Slog’s ECB website observations, Berry adds:
“As timely data is still rather difficult to come by, we used our Equity Flow monitor from last week to see if asset managers are now liquidating underlying investments in the Eurozone, especially taking into account that our FX Flow Monitor has been showing such trends for several weeks. The Eurozone suffered the most out of all G10 markets we track, but the distribution of selling was even more troubling – ie, for non-Eurozone based investors it was one way: the US and UK both registered strong inflows last week but almost all of the buying came from their own clients leaving the Eurozone. If past history is anything to go by, the Eurozone’s funding gap may widen further and it’s the real economy, beyond the banks, that will suffer.”
However, the thing is, nobody outside the self-appointed élite knows the official numbers. And this is a bit naughty of the ECB, because it’s supposed in theory to publish some indicative figures on this every week. I’ve yet to read a single mainstream media article that’s noticed just how far behind on this the ECB’s website is. Somehow, Mario Draculaghi managed to get through his monthly report two days ago without being asked a single question about it. He said his forecasts for Q 3&4 2013 were on target “but subject to downside risks”, and that “all incoming data will be monitored closely”. In short, he said nothing whatsoever. Signor Draghi didn’t have to: he has no boss, he has no regulator, and he is not democratically responsible to anyone. But the idea of a Q 3&4 recovery in an investment desert is complete tosh.
Look at the schedule of media releases for the coming week, and you will see that eurozone capital flow trends are absent. The next Governing Council meeting of the ECB in Frankfurt is not until 18th April. The last eurozone risk dashboard was published on March 23rd. The April stats overview shows no data beyond Q3 2009.
In theory, The Big One is the euro area monthly balance of payments and quarterly international investment position to be issued on 19th April. However, that will cover up to the end of February…..long before the alleged capital flight panic got under way.
The reality, as I understand it, is that we are not going to know anything about the eurozone official capital investment position until mid July. And it gets more curiously inconsistent the more one digs into it: the eurozone balance of payments data is known already up to the end of January: but the eurozone international investment stats stop at the end of 2011. We don’t have a single published stat on this for 2012.
Clearly, the ECB’s inner sanctum (and, I’d imagine, the Chancellery, the Elysée Palace, and the Big Beast central banks) will know these numbers almost up to date. My Brussels source says yes, of course they know. He doesn’t know the details: he just alleges that the eurozone “is haemorrhaging money”. He admits that he is simply peddling inside gossip; but I believe him when he says he is sure it’s right. And the UBS monitoring analysis supports his contention entirely.
—————
It would be hard to overestimate the importance of this, a combo of informed gossip and hard data that reflect intuitive common sense. It isn’t conclusion jumping, it’s educated guesstimating: following the blatant theft from depositors in the Cypriot banking system, it should be clear to even the most anally pedantic commentator now that a major exit of vital investment capital from the eurozone is under way. Expect mendacious drivel from Olli Rehn, Tubby Barroso, the key eurogroup players, and it’s incompetent flappy-mouth Dijsselbloem: expect it, and ignore it. The cat is out of the bag, and unless the eurocrats can find a way to stop the outflow and/or replace it, not only is their precious currency project doomed: the eurozone economy will collapse at every point of the compass.
For the debtor eurozone countries, the obvious question to ask from here on is this: what on earth is the point of staying inside a millstone currency? Not only will it price them out of every export market in the world, loss of business investment trust will be swiftly followed by loss of debt bond trust…..the debt mountain ClubMed has will become a beanstalk to infinity they cannot possibly climb.
I suspect the key Sovereign in this context is Italy. That the unofficial certainty of capital outflow is now obvious plays straight into the hands of emerging radical voice Beppo Grillo. This too is clearly evidenced in the desperate attempts by Mario Monti there to cobble together (and force through with Presidential help) a technocratic administration to block further elections. But throughout the formerly supine ClubMed, local attitudes are hardening: Portugal’s Constitutional Court has ruled that the planned austerity measures there are unconstitutional, thus at a stroke derailing the Troika’s strategy. The Court threw out cuts in state pensions and public sector wages, potentially forcing Prime Minister Pedro Passos Coelho to negotiate alternative measures with the country’s international lenders.
In Greece, we have a bailout schedule that is really nothing more than a debt volcano spewing out more suffocating fumes and lava with every year. In Cyprus, a non-economy stabbed in the neck by frenzied rapists. In Italy, a growing tide of public antipathy towards the eurozone. And now in Portugal, a poke in the eye for the Troikanauts from the lawyers. The euro project faces a democratic crisis in southern Europe, and support for those ridiculing it is on the rise throughout the EU . Almost every ClubMed sovereign would today, technically, be better off defaulting on its debt.
For Brussels and ECB-Frankfurt, the game plan now must be to stifle any attempt at new elections in the South. I cannot see how this could succeed: there is no effective eurozone ‘standing army’ to enforce financial repression, and even if there was, the growing rift between Paris and Berlin would ensure the blockage of any such measures.
For Berlin, the pressure from hysterical anti-bailout Bankfurters is increasing and must soon become crucial to this inter-city power struggle. In a thunderinglead-article yesterday, its mouthpiece the Frankfurter Allgemeine Zeitung wrote:
‘The European heads of state and governments are sitting in a burning house haggling over the total sum they will have to rustle up for the water damages from putting out the fire. The reproach that they have lost contact with the citizens doesn’t ring true: the fact is, they never had any to start with. The system we live in neither provides for nor admits any legitimate representation for the citizens of Europe.’
Terribly stirring and all that, but the FAZ agenda remains “let’s GTF out of the euro now”. Angela Merkel may feel smug about public anger in Germany about ClubMed depictions of her as a Nazi control-freak, but still 41% of them don’t believe she can protect German savings. One bad election result and one default in the eurozone will put her under irresistible pressure to quite the common currency.
For Paris, Greek default remains the nightmare which dare not speak its name. Embroiled in an offshore banking scandal (Le Monde’s headline this morning is ‘Two French banks fingered’) Hollande found himself depicted as a lame duck on the front page of almost every newspaper yesterday. But whatever Credit Agricole and BNP Paribas have been up to, behind the headlines the French President knows this crisis for him is as nothing compared to the crisis rapidly heading for the country like a runaway truck. Ironically, Le scandale d’offshore is a distraction which may suit some of the Elysée’s advisers down to the ground.
If Berlin starts to make noises about leaving the eurozone – suggesting default as the route for Athens – then the French banking system is dead in the water. Just one ‘bad’ ClubMed election result would be enough to send French debt bond yields heading for the stratosphere. Hollande has, in reality, done little to rein in French State spending and employment: that which he had done is far too little far too late. There is now no way back for Paris, and I suspect the ENAs know it.
For Wall Street, beyond the standard MSM reassurance the growing fear is that two outcomes are likely. First, contagion from eurozone economic flatlining in Q 3&4 will openly reverse Obama’s fake recovery. Yesterday’s NFP Report continued a string of US data output falling short on hope: only 88,000 jobs were created in March, far less than the 190,000 expected. The markets responded with nervous selling of equities. The Great QE Stock Market Wily E Coyote illusion is about to get into serious trouble.
Second, it is fine to get your investment deposits out of the eurozone, but impossible to reverse one’s previously crazy bets. Again, an anarchic eurozone member election could be enough to trigger trouble for a major US bank: confirmed capital flight and economic standstill data from Europe would make one at least almost inevitable.
The first domino is no longer wobbling: it is about to hit the second.
———————
The twelve dominoes of Crashmas
Cyprus has turned out, against all the odds, to be the first domino to head towards the second domino. That Number Two will be the eurozone bond market going from sick to dead. Only events can dictate the exact order of dominoes after that one. But there follows a sensible attempt to suggest one.
The third will be the release (0r leak) of official capital flight figures from Brussels. The fourth will be a consequent acceleration of capital flight. The fifth will be the release of Q3 eurozone economic data.
The sixth will be a Chinese export slowdown. Few people grasp this, but the EU represents 16% of all Beijing’s exports – just one percentage point behind the US.
The seventh will be Berlin backing away from further involvement, while maintaining a vice-like grip over Cyprus. The eighth a Greek default alongside Italian political stalemate. The ninth a chaotic German election. The tenth a major French banking collapse. The eleventh a banking sell-off on Wall Street, and the Dow starting to slide as the White House mirage fades. The twelfth….the hyper-acceleration of a gold rush as global stockmarket confidence implodes.
Netherlands on the brink ?
Netherlands on the brink ?
globaleconomicanalysis.blogspot.com / By Mike “Mish” Shedlock / Sunday, April 07, 2013 9:36 AM
Most attention lately has been on Cyprus, Spain, and Italy. Long-time troubles have been brewing in Portugal and I have an update coming up shortly.
First consider Underwater: The Netherlands Falls Prey to Economic Crisis.
The Netherlands, Berlin’s most important ally in pushing for greater budgetary discipline in Europe, has fallen into an economic crisis itself. The once exemplary economy is suffering from huge debts and a burst real estate bubble, which has stalled growth and endangered jobs.“Underwater” is a good description of the crisis in a country where large parts of the territory are below sea level. Ironically, the Netherlands, widely viewed as a model economy, is facing the kind of real estate crisis that has only affected the United States and Spain until now. Banks in the Netherlands have also pumped billions upon billions in loans into the private and commercial real estate market since the 1990s, without ensuring that borrowers had sufficient collateral.
News from Greece......
Troika postpones meeting with Stournaras, to see Samaras on Sunday
The postponement came as a disagreement over how to reduce civil servant numbers threatened to cause a serious rift in Greece's coalition government. Prime Minister Antonis Samaras is due to meet with the troika on Sunday morning in a bid to resolve a simmering dispute over sackings in the civil service and reach agreement on several other issues that would pave the way for Greece to receive almost 9 billion euros of bailout loans in the next few weeks. The troika’s rejection of a plan put forward by Administrative Reform Minister Antonis Manitakis fed disharmony in the coalition. Manitakis was upset that his proposal of a mobility scheme to transfer civil servants to departments where there are shortages before any dismissals take place was turned down. However, he was also angry with Stournaras, feeling the finance minister had shut him out of the discussions with Greece’s lenders. Sources close to Manitakis, who was nominated to the cabinet by junior coalition partner Democratic Left, suggested the minister might step down. Samaras called Democratic Left leader Fotis Kouvelis on Saturday morning to insist that there was no question of Manitakis no longer being a valued member of the cabinet. “There is nothing in the rumors of Manitakis being marginalized,” the head of Democratic Left’s economic policy, Dimitris Chatzisokratis, told Skai TV on Saturday. However, the Manitakis issue was the second blow to the government’s unity in just a few days. Earlier in the week, Kouvelis was angered by the Finance Ministry when it provided a different interpretation of what was agreed regarding the emergency property tax at a coalition leaders’ meeting on Wednesday than the one he had given to the media. Kathimerini understands that during that meeting PASOK leader Evangelos Venizelos also told Samaras he was unhappy about comments emanating from the prime minister’s office suggesting that Samaras would call new general elections if he could not get the coalition partners to agree. The prime minister denied that he had made any such threats. |
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_05/04/2013_492178
Troika's demands for civil service sackings places strain on Greek coalition
Troika representatives met Finance Minister Yannis Stournaras for lengthy talks on Friday as several issues remained unresolved. Without an agreement, Greece cannot secure its next loan tranches of 2.8 billion and 6 billion euros. The visiting inspectors are insisting that at least 7,000 public sector workers are fired by the end of next year. This position has angered Manitakis, who insists that a mobility scheme can help reduce civil servant numbers without the government having to resort to firing bureaucrats on the spot. It has also caused friction between the minister and Stournaras, who incurred the wrath of Democratic Left, the junior coalition partner who nominated Manitakis, over the government’s position on property tax. “If the problem for the disbursement of the next 8 billion euros is the Administrative Reform Ministry, then Antonis Manitakis has no objection to turning over control of the ministry to Mr Stournaras so he can sign off on what the troika is demanding,” a close aide of Manitakis told Kathimerini. It appears that Manitakis is also upset that he has not been consulted over the content of negotiations with the troika and has informed Democratic Left leader Fotis Kouvelis that he is prepared to quit. The dispute leaves Prime Minister Antonis Samaras with plenty of patching up to do over the next couple of days if his coalition is to avoid a serious setback. Samaras is due to meet the troika tomorrow morning in a bid to break the deadlock in negotiations. Beyond the issue of job losses in the civil service, there are also obstacles to overcome regarding the planned merger of National Bank and Eurobank, property taxation, the tax collection system, payment in installments for debtors to the state and the government’s aim of reducing value-added tax for restaurants. |
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_06/04/2013_492249
Big depositors could suffer in future bank bailouts under new law, says Rehn
Big bank depositors could take a hit under planned European Union law if a bank fails, the EU's economic affairs chief Olli Rehn said on Saturday, but noted that Cyprus's bailout model was exceptional.
"Cyprus was a special case ... but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down,» Rehn, the European Economic and Monetary Affairs Commissioner, said in a TV interview with Finland's national broadcaster YLE.
"But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of 100,000 euros is sacred, deposits smaller than that are always safe."
The European Commission is currently drafting a directive on bank safety which would incorporate the issue of investor liability in member states' legislation.
To secure a 10 billion euro EU/IMF bailout last month, Cyprus forced heavy losses on wealthier depositors. Initially it had also pledged to introduce a levy on deposits of less than 100,000 euros - even though they are supposedly protected by state guarantees - before reneging in the face of widespread protests.
Rehn also said that the European Central Bank should launch fresh action to help boost the recession-hit euro zone economy.
ECB President Mario Draghi, at a press conference on Thursday, opened the way for the bank to possibly cut interest rates and to take fresh 'non-standard measures' - steps other than classic rate moves, such as government bond purchases or funding operations like the twin three-year loans it offered banks just over a year ago.
Rehn said that high financing costs for companies, especially in southern Europe, were a major problem right now.
"Therefore, the ECB's talk on Thursday about both standard and non-standard measures is very important because the ECB may have a role in making the situation easier,» Rehn said.
[Reuters]
http://www.zerohedge.com/news/2013-04-05/portugal-high-court-says-some-austerity-elements-2013-budget-are-unconstitutional
Portugal High Court Says Some Austerity Elements In 2013 Budget Are Unconstitutional
It appears the Portuguese PM's threats last week that he would resign if the constitutional court rules against the various austerity measures in the proposed 2013 budget (subsequently recanted because he may have just sensed which way the winds are blowing), were not enough to pressure the court into voting the way the German rulers of the Eurozone demanded, because moments ago the high court said that some budget elements are unconstitutional.Specifically it said that:
are not constitutional. Of course, trampling the constitution in Europe's insolvent vassal fiefdoms is nothing new. Recall that its the Central Bank of Cyprus that said deposit confiscation is just that: unconstitutional. Too bad that didn't stop anyone from trampling all over the laws and rules of the land in the namd of what? Lots and lots of political capital of course, that nobody, NOBODY, should underestimate.
And remember: No Plan B.
From Reuters:
http://internacional.elpais.com/internacional/2013/04/06/actualidad/1365243186_486454.html The Portuguese government meets after the drubbing of Constitutional cutsPassos Coelho has called for this Saturday a special CabinetThe Constitutional overturned on Friday the abolition of extra payments decreed by Passos CoelhoSocialist Party leader asked the government to resign and that the adjustments are renegotiatedThe coalition parties are perplexed and warn of the consequences of failure
Pedro Passos Coelho in parliament. / FRANCISCO SECO (AP)
A Portuguese Government in shock, as specified by the Portuguese press and "perplexed" as defined by their fellow party meets today in Lisbon, in an extraordinary meeting, at three in the afternoon (16.00 hours CET Spanish) for, according to an official statement, "examine the contents" of yesterday's ruling of the Constitutional Court to invalidate some key budget measures in force. The political impact of the decision of the judges, which cancels the withdrawal of bonus payments for civil servants and pensioners, among other standards, is brutal, says the Portuguese press.
The weekly Expresso quotes a couple of ministers, without revealing their names, to ensure that the Government is expecting a rejection, but not this amount. The journal Public entitled, on its front page, in a simple and meaningful: "The Government, in shock with the decision of the Constitutional Court." The vice president of the PSP, the ruling party, Teresa Leal Coelho, confesses that they feel "worried and perplexed".And in an interview on Portuguese television added: "This is not a problem for the government, this is a problem for the country."
Opposition calls the automatic resignation of the government and call elections. The secretary general of the Portuguese Socialist Party, António José Seguro, refused to be offered for a hypothetical national agreement to find a solution to the hole. "I offer myself to replace the government."
That is, the bridges between the opposition and the government have flown and the prime minister, the conservative Pedro Passos Coelho , must find a solution to this economic mess: Where did draw 1,200 million euros that the government will use to pay the pay extras and return part of subsidies also declared unconstitutional retired? Weeks ago, in a meeting with members of his party, threatened to resign Passos Coelho, the Portuguese press as if the judges threw him to the ground the budget. Now there is less talk of resignation but it is possible.
Some analysts predict a future (and inevitable) negotiation with the troika, to loosen it deadlines. It's something you've done in the last inspection carried out in Lisbon, three weeks ago, where he reached the Portuguese deficit for this year from 4.5% to 5.5%. Not to Constitutional Court decisions. So the question being asked across the country now, both the Prime Minister and the neighbor who just bought the paper today, is the same: "What now?"
What does it take for a Spanish Minister to resign ? http://www.testosteronepit.com/home/2013/4/7/spains-descent-into-banana-republicanism.html Spain’s Descent Into Banana Republicanism
SUNDAY, APRIL 7, 2013 AT 8:57AM
Contributed by Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media.
It seems that nary a day goes by without some new seismic political scandal breaking in Spain. In just the first few days of April, King Juan Carlos’ daughter, La Infanta Cristina, was charged with aiding and abetting her husband, Iñaki Urgangarin, in his myriad scams to embezzle money from the public purse.
Never one to be outdone in the corruption department, Spain’s governing party, the Partido Popular (PP), was also engulfed in yet another scandal, this time revolving around the president of the Galician regional parliament Alberto Núñez Feijóo’s past ties to a known smuggler and drug trafficker.
The uproar followed El Pais’s publication of a series of photos from 1995 showing Feijóo, then deputy health secretary of the region, enjoying both a luxury yacht cruise and a mountain road trip with Marciel Dorado, a known smuggler and widely suspected capo ofthe Galician drug-smuggling mafia.
A Smuggler’s Haven
Perched on Spain’s rugged North-Western coast and boasting a wealth of hidden bays and isolated beaches, Galicia has long been one of Europe’s most important entry points for contraband merchandise.
“It’s a historic tradition here that really took off in the late 1960s, early 1970s, with American tobacco,” Susana Luana, a journalist for the regional daily Voice of Galicia, told the BBC. “A number of local fishermen used their fishing infrastructure, including boats, to transport the goods and used their knowledge of the thousands of tiny coves and beaches here to bring them safely ashore.
“Later they increased their earnings considerably by smuggling drugs instead of tobacco. These former fishermen established a name for themselves as professional smugglers and so were able to make lucrative deals with the Colombian cocaine mafia.”
Much like Mexico, Galicia has become an indispensable link in the 21st century narco-traffickers’ distribution chain. And like their Mexican counterparts, Galician drug smugglers seem to have furnished cosy ties with key figures in the local and regional government.
Not that the revelation of said relations seems to faze Nuñez Feijóo, who in a recent press conference resorted to the Partido Popular’s now-standard defence against corruption charges: namely, to play dumb and deny all possible wrong doing, even as evidence mounts to the contrary.
“The photos are what they are: photos. There is nothing behind them,” said Feijóo. “No connection whatsoever to contracts with the Xunta [Galicia's regional government] or the health department, or party funding.”
Stretching the Limits of Credulity
As El PaÃs reports, Feijóo began his defence in confident manner, promising greater political transparency in the future. Which sounds all well and good, but could be a tough sell given the PP’s dismal track record of “open” governance, not to mention the fact Feijóo is yet to declare who it was who actually funded the trips he made with Dorado.
As the press conference progressed, Feijóos’ defence took on an increasingly desperate edge as he struggled to explain his relationship with Dorado, claiming that when he accepted the smuggler’s kind invitation to join him on a pleasure cruise and mountain trip, he had no inkling whatsoever of his host’s criminal past – Dorado had already been arrested twice on smuggling charges – or his current line of work.
Even in these times of political decadence, debauchery and ineptitude in Spain, Feijóo’s assertion that he was completely in the dark about Dorado’s line of business beggars belief. After all, when most normal people meet a new acquaintance, the conversation inevitably turns to the matter of one’s vocational calling. “How do you do?” quickly morphs into “What do you do?”
Such basic formalities should hold even greater weight for a junior government minister whose actions are, or are at least supposed to be, subject to official codes of conduct and public scrutiny. As such, Feijóo is guilty, at best, of woeful political judgment and incompetence and, at worst, of knowingly consorting with criminal elements. Either way, in any self-respecting democracy – which obviously excludes present-day Spain – Feijóo would have walked, or been pushed, as soon as the allegations were made public.
Indeed, so turgid is the state of democracy in Spain that, rather than penalise Feijóo, Rajoy’s government has given him its full backing, training its sights instead on the “irresponsible role” of the country’s press.
In a recent interview with esRadio, the president of the Madrid Community, Ignacio González, even floated the idea of setting strict limits on press freedom so as to avoid further harm being done to individual or institutional reputations, proving once again just how divorced Spain’s government ministers are from reality. It is as if they had all undergone a collective lobotomy of the parts of the brain responsible for general and self-awareness.
What Will It Take for A Spanish Government Minister to Resign?
 The adjacent collage, featuring rather unflattering photos of some of the protagonists in Spain’s recent corruption scandals, swept like wildfire across the country’s social media some months ago. Its one-sentence tagline speaks a thousand words: “A former British minister resigns for lying about a speeding fine,” in allusion to British cabinet minister Chris Huhne’s resignation after allegations that he had blamed a speeding offence on his ex-wife.
Granted, the U.K. is hardly a haven of political honesty and integrity. The country ranks 17th in Transparency International’s Corruption Index and, lest we forget, has been home to some of the worst banking scandals of recent years. That said, at least there still exists in the U.K. a veneer of political decorum and accountability.
In Spain, by contrast, one can but wonder what sordid specie of criminal charge or allegation will suffice to put paid to a minister’s career – especially given that political bribery, tax evasion and consorting with known criminals are now viewed as mere social faux pas by Rajoy’s raggedy team of government ministers and aides?
Would, say, bestiality be considered a sackable offence? How about wife-beating or child abuse? Or, while we’re it, arson, manslaughter or murder?
At what point will the line be drawn and, no less importantly – given the highly politicised nature of the Spanish judicial system – by whom? Because, put simply, if Rajoy’s government isn’t consigned to the history books soon, Spain’s descent into full-fledged banana republicanism, albeit King & family in tow, is all but guaranteed. Contributed by Don Quijones, of RagingBullshit.com
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Could Italy blow up the euro - Bridgewater asks the question....
http://www.zerohedge.com/news/2013-04-05/bridgewater-asks-could-italy-blow-euro
Bridgewater Asks "Could Italy Blow Up The Euro?"
- Bank of England
- BOE
- Bond
- Bridgewater
- CDS
- European Central Bank
- Gross Domestic Product
- Italy
- Japan
- LTRO
- Market Conditions
- Recession
- Sovereigns
Judging by the purchasing frenzy of Italian bonds today, most of it emanating out of Japan which after last night's epic snafu involvingJGBs and the double halt of bond trading which may have spooked the "New BOJ-frontrunning Normal" Mrs Watanabe, not to mention Albert Edwards' recent rekindled love affair with the Mediterranean country, one may have left with the impression that all is well, and Italy is "safe." Not so fast: according to the world's biggest hedge fund (after the ECB and the NY Fed of course), Bridgewater, whose daily letter today is titled "Could Italy Blow Up The Euro?" things in Italy are hardly as rosy as market conditions make them appear (although as the BOE itself admitted, any link the policy vehicle known as the "market" may have had with economic fundamentals is long gone), and in fact may be set to get far worse.
Some of the key highlights:
Economic conditions in Italy are as depressed as they've been since the end of WWII, the economy is still contracting, Italy's banks are in terrible shape, private sector lending is very strained, and the ECB's policy is not resolving the problems. As is typical in countries enduring this level of economic pain, the political situation is starting to get pretty chaotic. Bersani, the top vote getter in the recent elections, has been unable to form a government, new elections this year are increasingiy likely, and recent polling suggests a dead heat among Bersani, Berlusconi and the anti-establishment party of Grillo. Surge in support for Grillo creates a risk because it is not entirely clear what he would do if he came to power. He has made a clear promise to put the euro to a vote and generally thinks that the European fiscal and monetary policies have been a bad deal for Italy. Obviously, an attempt to revisit those policies by a country as systemically important as Italy could destabilize things fast, and the risk of a radical outcome is growing. And over the past few months there are indications of that risk getting priced in and putting pressure on Italy, particularly on its banking system. Italian banking spreads are up; there has been a modest pullback in banks' wholesale funding, a modest increase in their ECB borrowing and no bond issuance. So far, the Italian sovereign has not come under as much pressure. Spreads have risen a bit, but issuance has been steady, and the government is so far meeting its needs for the year. However, there are some indications that things are getting tighter for them (a postponed 30 year auction, worse auction technicals, weaker foreign demand). And there isn't much margin for error, as the gross issuance needs are big and steady. And the sovereign is still relying on Italian banks to buy a lot of bonds.So there is a risk that if economic conditions continue to be terrible and the political situation gets more extreme, the pressure on the banks will increase, and the sovereigns could start to have trouble (and with the political uncertainty, should the need arise, who would the Troika negotiate with?).
Those who have been following our coverage of the Italian fiasco in recent months will be quite aware with all of Bridgewater's caveats, however here are some of the important drill downs, especially as pertains the still woefully insolvent (and now leaking deposits) banking sector. To wit:
Italian banks increasingly look strained, both outright and relative to Spain. Bank CDS spreads have risen 150 basis points and bank eguity prices have fallen 30% in the past two months, and there are some indications of stress in the bank funding flows. Unlike in Spain, Italian banks have not decreased their reliance on the ECB at all, and in February they actually increased their net ECB funding. At the same time, wholesale funding lines with banks and non-banks are falling, and Italian banks have had substantial bond redemptions that they haven't rolled in February and March. Italian banks are getting liguidity by reducing private sector loans and through a healthy inflow of retail deposits, which is helping them to pay for the wholesale funding that is leaving. Italian banks bought government bonds at a healthy pace in January, but the purchases slowed in February, and they have been selling foreign corporate and bank bonds for the past six months.Funding costs for the banks have risen about 150 bps over the past few months and have noticeably diverged from sovereign spreadsAnd the stocks of the big Italian bank have sold off pretty sharply. The stock prices of the three largest Italian banks are down almost 30% since late January.Italian bank borrowing from the ECB has been increasing. Italian banks have only paid down a modest amount of their 3year LTRO borrowings, and their net reliance on the ECB increased by €11 bn in February (€6bn in new borrowing and a decline of €5bn in deposits). Spanish banks on the other hand have been reducing their ECB reliance at a rapid pace. Italian banks continue to fund 18% of domestic GDP and around 10% of their balance sheets at the ECB
The quality of Italian bank balance sheets has been deteriorating for years. NPLs are stili rising and Italy's banking system is on course to see historically bad losses.
And the scariest news for those few who are taking the words of UniCredit's CEO seriously, namely that deposit confiscations in Italy may well happen, is that NPL are soaring, and are likely orders of magnitude worse than the official data. Just like in Cyprus.
When we go asset-by-asset through the bank loan books, and look at various deleveraging cycles to gain historical perspective, we think a reasonable estimate is that Italian banks will end up with full cycle losses of 10% on their €1.5trIn of domestic loans, which would be a bit worse than bath the 1993 Spanish recession and similar to the recent US crisis (though the context of the Italian cycle would be that conditions continue to be worse and stimulation continues to be less than the recent US case, but with better quality loans and less leveraging up).
To summarize the adverse view:
So that's the situation in Italy:Conditions are depressed and play no small part in the prevailing political uncertainty. Increasing pressures are being placed on an already-stressed banking system. The sovereign is pretty reliant on those banks to buy their bonds, and there are modest signs of those sovereigns also getting pressured. But, there are a few countervailing forces: Growth conditions in Italy will probably stabilize a bit as the big impact of the fiscal austerity fades (but a new round of financial instability cuts the other way). The probability that Grillo actually gets some kind of mandate and then takes a radical path still seems low. The ECB's commitment to do what it takes should for now keep spreads from moving out too much. But the possibility of a dangerous outcome is real and one we're continuing to monitor.
So for all those scrambling to frontrun other lemmings in the global capital reallocation game, be it rushing into US stocks or Italian bonds, be careful: just because others are doing it, doesn't mean massive losses aren't lurking just over the corner.
Don't worry though, if all the bad news outcomes as forecast do hit, the ECB is prepared. After all, as was made abundantly clear yesterday, it has "No Plan B."
and.....
http://soberlook.com/2013/04/trends-behind-declining-ltro-balances.html
http://www.acting-man.com/?p=22530
and.....
http://soberlook.com/2013/04/trends-behind-declining-ltro-balances.html
FRIDAY, APRIL 5, 2013
Trends behind declining LTRO balances; Italy overtakes Spain as the largest LTRO borrower
As European banks find some private sources of capital to fund themselves, they continue to repay their ECB loans - particularly in the 3y LTRO program.
FoxBusiness: - Next week, nine banks will repay just over 4 billion euros ... in loans during the first round of three-year financing in late 2011, ECB data showed Friday. Eleven banks will repay just under EUR4 billion of the second borrowing spree in early 2012. Total repayment is just over EUR 1 billion more than was repaid this week.
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| LTRO balances in the Eurosystem (unit = €1mil; source: ECB) |
Part of this repayment trend however is coming from over-borrowing in early 2012. As banks, particularly in Spain saw their deposits dwindle, they went into a panic mode, borrowing all they possibly could - particularly with Spain's government "encouraging" them to buy government paper. But as portions of the deposits came back (see post) and banks being able to sell some government paper (thanks to the ECB's commitment to buy it), they are repaying some central bank borrowings.
One of the issues Eurozone banks are facing is that they simply can't grow their assets - in fact balance sheets are shrinking. Due to tougher regulatory capital environment as well as general fear of extending credit, lending has been grinding to a halt. Loans to corporations have been declining steadily for some time.
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| Change in loan balances to companies year-over-year (source: ECB) |
And loans to households are basically not growing.
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| Change in loan balances to households year-over-year (source: ECB) |
With banks not willing to extend credit nor sit on cash, the only viable option is to repay some of the liabilities - hence the decline in LTRO balances.
Of course the repayment of LTRO has been uneven across the Eurozone.
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| Source: Credit Suisse |
Spain, having been the largest borrower, also had the largest (in absolute terms) reduction. Clearly most German banks don't need this funding, given the growth in the nation's deposit base. Italy on the other hand remains a problem. In fact Italy is now the largest borrower from the Eurosystem, as Spain dropped to second place. Given the devastating recession and the political uncertainty Italy is facing, LTRO balances of Italian banks will be critical to watch going forward.
April 5, 2013 | Author Pater Tenebrarum
Draghi's Barb
In the ECB press conference on Thursday, Mario Draghi was asked about what could be done to revive the moribund euro area economy. And moribund it is, as the recent releases of services and composite PMI's by Markit once again confirmed (readers can check them out here – all in pdf format: Eurozone, France, Germany, Italy, Spain). In fact, these PMI releases were the usual litany of horror stories, with France once again a negative standout.
Draghi went into an extended explanation of what the central bank can and cannot do, what potential measures it is looking at, etc. and then mentioned that there are numerous things governments themselves could and should do, among them the payment of arrears.
Arrears? What arrears? It turns out one of the targets of this comment is Italy.
As Reuters reports:
“Italy's caretaker government announced on Wednesday it was delaying approval of a decree to pay back some 40 billion euros ($51 billion) of state debts to private firms.The legislation, which Mario Monti's outgoing administration says can provide vital liquidity to Italy's cash-strapped companies and help tackle a deep recession, was scheduled to be approved at a cabinet meeting later in the dayA statement from the cabinet office said the meeting would instead be held "in the next few days." Economy Minister Vittorio Grilli and Industry Minister Corrado Passera "pointed out to the prime minister the need to reflect further before drawing up the decree," it said.Several of the parties that must approve the measure in parliament said on Tuesday that they opposed a proposal to hike income tax to help fund it, forcing Monti to reconsider his plans. Monti, who has been the target of constant sniping from across the political spectrum since his centrist alliance won only around 10 percent of the vote at February's inconclusive election, faced more criticism after the delay to the decree.He told parliament last month that he "couldn't wait" to leave office, but the deadlock following the election has prevented him from stepping down because no other government can be formed to replace him. Stefano Fassina, economics spokesman for the center-left Democratic party, said the decision was "disconcerting" and that Monti must explain it in parliament, while Luigi Casero of the center-right People of Freedom called it "extremely grave." Before the delay, Fassina had said it was unacceptable for the government to fund the repayments through tax hikes.”
(emphasis added)
So apparently the Italian government owes some €40 billion in payments to companies it has bought goods and services from. The problem appears to be that it doesn't actually have the money.
It could raise the money via tax hikes, but Italians are already burdened by a plethora of new taxes Monti saw fit to introduce in the course of his 'austerity' regime. It is important to remember in this context that Monti's 'austerity' was structured as 'almost no spending cuts, but tons of tax increases'. As in many other European countries where austerity is practiced, it has been implemented in a manner designed to ensure that the State does not shrink. Needless to say, these tax increases are not exactly popular, so Italian politicians are now shying away from imposing even more of them (Monti's election result stands as a stark warning to them).
However, that leaves the arrears problem unsolved. We can only speculate here, but there has to be a reason why these arrears have piled up to such an alarming degree. One guess would be that additional borrowing to pay them would mean to violate Italy's fiscal targets in the context of the 'fiscal compact'. If any of our readers have a better idea or can provide some more color, please don't hold back.
It is clear though that with commercial suppliers are sitting on unpaid claims to the State amounting to €40 billion, there must be a noticeable impact on economic activity. After all, the suppliers have delivered and incurred costs. So Draghi had a point there.
However, one must also ask what it actually is the government is buying and whether the associated activities should not better be privatized anyway. All over Europe governments have a way too large share of the economy. This is inefficient and wasteful, and as can now be seen in Italy, even has the potential to become a life-or-death issue for suppliers relying on government payment in countries suffering a fiscal crisis. In this context, it is also not too big a surprise that the French economy is spiraling down the drain at such astonishing speed – the French government's spending amounts to 56% of GDP.
