(courtesy Bill Holter/Miles Franklin)
(courtesy Bill Holter/Miles Franklin)
The entire Western world is "Detroit"
As you must know by now, Detroit is bankrupt and must restructure...somehow. They once were the manufacturing capital of the United States and the largest concentrated manufacturer in the world. They now have over 28% unemployment (actually much higher), and cannot afford to pay for even basic services and much of the city is "bombed out" as in destroyed. There are calls for all sorts of remedies such as private equity rebuilding and public (federal) bailouts. ALL of this misses the point...
The point is that Detroit is not "fixable" and is actually only a signpost along the path that all of the U.S. (and entire Western world) is travelling. If you recall, Merideth Whitney forecast this scenario 3 years ago. She was early and made the mistake of saying "in the next 12 months"...BUT she was correct in her analysis. Monetization by the Fed only postponed the final reckoning, it has not been cancelled. Bond investors will be killed as the ability to service even a fraction of the debt does not exist, this is a "given".
What is not a "given" and only a very few have figured out yet is that pensioners will also be destroyed. I am not talking about "Detroit pensioners" (though this is a certainty), I am talking about pensioners in general, across the spectrum and all over the world. Let me explain. Pension "promises" have been made throughout the years by corporations, institutions, cities, states and sovereign governments during a "different era". Years ago pensions were actually funded, FULLY funded. Then along came the 80's and 90's and the actuaries started to "up" the assumed growth rates which meant that less money had to be deposited to pay future benefits.
Well here we are years later and the actuaries were wrong...REALLY wrong! We did not get the expected growth rates, interest rates were pushed to virtually zero AND not enough was deposited to begin with not to mention enough to make up for poor investment results. THIS is going to be a problem everywhere, a huge problem. Those already receiving pensions will see them curtailed, those expecting pensions will receive far less than they were promised AND the "kicker". The "kicker" being the fact that benefits will be paid out in currencies that have only a fraction of the value that they have today.
This will in essence wipe out a middle class that "played by the rules", they went to work, they saved, and they "trusted" their future in their employers promises. I have said for years and it now looks assured to have been correct, "when it comes to retirement, rely on your own investments and do your own thinking because promises will be broken at your expense".
The same could be said for everything else financial in your life. Do you feel good because you have large balances in the banking system? Or a huge muni portfolio that pays you tax free income? Or a large stock portfolio in a "house of cards" market that is supported by the low interest rates in a Ponzi currency and debt market? Or how about that ETF that allows you to sleep at night because it is "backed" by Gold? Do see my point?
"Promises were made to be broken" and they will be.
Regards, Bill H.
Cyprus - The first but certainly not the last bail in situation.....
Nicosia wants BoC restructured by end-July
The Cypriot government wants the restructuring of the bailed-out country’s biggest lender, Bank of Cyprus, to be completed by the end of this month.
Government spokesman Christos Stylianides said on Tuesday that once the restructuring is completed, management of the bank will return to its directors and shareholders.
Bank of Cyprus had to absorb the country’s now-defunct second-largest lender, Cyprus Popular (Laiki), as part of a 23-billion-euro financial rescue deal that was agreed in March with Cyprus’s euro-area partners and the International Monetary Fund.
Under the deal, savers in both banks were forced to take huge losses on deposits over 100,000 euros in order to cover for losses at Bank of Cyprus.
[AP]
Cyprus Real Estate Prices Post Record Plunge
Submitted by Tyler Durden on 07/23/2013 15:50 -0400
Days after Cyprus banks were bailed out (or, rather, in) in March, even if it meant the complete collapse of the local economy just to keep the country in the Eurozone and potentially the sale of the country's gold to provide its own funding toward the "common cause", the Eurogroup came out with a "Debt Sustainability Analysis" which predicted some hard times for the country but its eventual recovery. About a week later it emerged that the funding needs of the tiny island nation would be far greater than previously imagined, but for the time being, since the liquidity (if not solvency) situation had stabilized, all was well and that was one bridge that would be crossed when Europe came to it. That time may be coming fast. As Reuters reports, the Cypriot banking collapse has finally spilled over into the economy and resulted in a record collapse in local real estate values, which ranged from a 12.6% price drop in the valuation of an apartment to a 23.3% fall for office space in just the second quarter, which were the "sharpest recorded since RICS started collecting data in 2009, Loizou told Reuters."
From Reuters:
Cypriot property prices recorded one of their steepest falls in years in the second quarter, a survey showed on Tuesday, as an austerity-driven recession sapped demand in the country's once-buoyant property market.
Market sentiment on the bailed-out Mediterranean island was dampened by a worsening outlook and lack of available cash to invest in the property market, according to the survey by the Cyprus branch of the Royal Institution of Chartered Surveyors (RICS).
"Definitely the market is going to deteriorate further and faster than before. There is no lending available and people's money (in banks) is blocked," said Pavlos Loizou of RICS Cyprus, a compiler of the survey.
One wonders: with the complete collapse in modern Keynesian/monetarist economic machinery, in which the only "groath (sic)" comes from credit injection, did the local population expect otherwise? And if they had the chance to revote on their submission to Merkel's will, would they do so again, now that they finally see the absolutely collapse of not only their wealth but their retirement funds and pensions? If so, we hope they enjoy having the EUR. Or, technically, whatever Euros the local banks, which will likely have capital controls in perpetuity, will allow them to have.
Conceivably, they could be the sharpest over many years in a market not accustomed to sudden drops in valuations.
For at least a decade before 2009 Cypriot property prices were steadily growing on the back of foreign demand and liquidity-flush banks extending credit.
Over two growth cycles immediately before and after Cyprus joined the EU in 2004, property prices rose anywhere between 150 and 200 percent, Loizou said.
Surprised? Alas, too late. In the meantime, the capital is becoming a ghost town.
Boarded up shops have become commonplace in central Nicosia, the island's capital.
On Makarios Avenue, which was once a commercial hub teeming with traffic, dozens of shops stand empty, driven out by high rents and a shift in consumer preferences to other locations, including out-of-town malls
Loizou said some interest had been displayed by overseas investors looking at retail properties.
"But at the moment they are just sniffing around," he said, adding that fellow bailout recipients Ireland and Spain had also seen interest from overseas investors looking at distressed retail properties they could pick up at advantageous prices.
The punchline, of course, would be Spaniards and other insolvent Europeans, sick of their own "bailed out" economy, deciding to move over to yet another "bailout" recipient, Cyprus, and starting there afresh. Surely, stranger things have happened in the New Feudal Normal. All of this, of course, before Goldman LBOs southern Europe with cheap Fed credit.
Will Spain hit the wall before Greece ?
One-Third Of Europe's Unemployed Are Spanish
Submitted by Tyler Durden on 07/23/2013 08:33 -0400
With yet another promise about to go up in smoke (that of PM Rajoy's claim that Spain will be out of recession this quarter), we thought it worth a brief reflection on just what a disaster the nation is and how much it is weighing on the entire EU. Spain has been in recession for seven quarters in a row and survey indicators suggest it will extend to eight. House prices continue to collapse. Government revenue to GDP is among the worst in the union. But unemployment is where Spain has its peers beat - at 6.2 million unemployed, Spain accounts for almost one-third of the entire unemployed population of Europe. With expectations that the unemployment rate will break above 28% next year and a government embroiled in scandal, Rajoy's planned address to discuss the politicial and economic situation to his nation in August may just be the catalyst for the social unrest that has laid relatively dormant for so long. Is Spain the new Detroit?
GDP
GDP is unlikely to grow until next year and probably contracted 0.3 percent in the second quarter, according to Bloomberg’s monthly survey published on July 11. The economy has shrunk in 15 quarters during the past five years. The Bank of Spain is scheduled to release its second quarter growth estimate this week while the official figure from the statistics agency will be released on July 30. The services PMI is likely to remain below 50 in July.
Unemployment
A lack of economic growth may have pushed up unemployment to 27.2 percent in the second quarter, a Bloomberg survey shows, as seasonally adjusted figures strip out any rise in temporary jobs as a result of tourism. That is the highest unemployment rate since the country returned to democracy in 1975. About 6.2 million people are out of work, accounting for almost a third of those unemployed in the euro area. The OECD forecasts unemployment will surpass 28 percent next year.
Revenue
Government debt is rising and a series of tax increases failed to generate the required revenue as the economy weakens and a growing number move into the shadow economy. One million Spaniards have jobs in the underground economy, according to last week’s report by the Foundation for Financial Studies. The study estimates the shadow economy is equivalent to 20 percent of Spanish GDP. That is higher than every country in the EU apart from Italy, with 21 percent.
Housing
Domestic demand is likely to remain weak as house prices continue to fall and a 10th of households have no breadwinner. House prices are down 35.5 percent from their peak, having fallen 15.7 percent in real terms in 2012. A 7.6 percent decline in the house price index last quarter suggests prices have further to fall. House prices may drop by 13 percent in 2014, according to S&P.
Source: Bloomberg Briefs (@EconomistNiraj)
And more on Spain......
Spiegel Speculates On Spain Succession: Soraya Sáenz de Santamaría In, Rajoy Out
Submitted by Tyler Durden on 07/23/2013 11:58 -0400
Amid a collapsing economy and as illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now, Der Spiegel reports, Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor. As Rajoy becomes increasingly mired in the massive scandal over illegal party donations, corruption and financial contributions, Sáenz de Santamaría, a former state lawyer who represented the country's highest court, is one of the few in the party to remain untouched by the allegations. And that alone - sadly - may be enough to qualify her for the government's top job.
Via Der Speigel,
As illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor.
...Thousands showed up, assembling outside the headquarters of Spain's ruling People's Party in downtown Madrid...
The protests came in response to double accounting conducted by the party's former treasurer, Luis Bárcenas. His incriminating ledgers, uncovered by Spanish newspapers, also implicate Prime Minister Mariano Rajoy, as well as the party's secretary-general, other former ministers in the People's Party and further prominent conservative politicians. The only one who doesn't make an appearance in Bárcenas' accounts is Spain's most powerful female politician, Soraya Sáenz de Santamaría, the 42-year-old deputy and closest confidante of the prime minister.
...
The prime minister, meanwhile, is having to answer some uncomfortable questions: Why, for example,he continued to pay his party's former treasurer a monthly salary of €21,300 ($28,100), even though Bárcenas was forced to resign from his position three years ago after first being accused of corruption. Or why Rajoy continued to send Bárcenas friendly text messages even long after it emerged that Bárcenas had illegally moved many millions of euros into bank accounts abroad.
...
One reason Rajoy is pleased to be able to rely on his deputy prime minister is that he can always count on her to have his back at the expense of developing a political profile of her own. But is that qualification enough for Sáenz de Santamaría to take charge of the government?
Several times, Rajoy has sent Sáenz de Santamaría to talk to Angela Merkel, since he himself has little idea what to say to the German chancellor. Sáenz de Santamaría proudly displays a photograph of herself and Merkel on a bookshelf in her office.
The "Vice," as colleagues call her -- short for the Spanish vicepresidenta -- keeps her private life strictly private.
Items of note for Greece......
Troika will not accept any more deadline extensions
By Prokopis Hatzinikolaou
The troika has vetoed any more deadline extensions for the submission of taxpayers’ income declarations as well as declarations such as those concerning payment of value-added tax.
The representatives of the European Commission, the European Central Bank and the International Monetary Fund have told the Finance Ministry that they accept the extension of the deadline for taxpayers whose tax registration numbers end in 1 or 2 from July 22 to July 26 – as Monday was also the deadline for VAT declarations submission – but made it clear they would not put up with any other delays.
The troika ruled out the possibility of all taxpayers being able to submit their declarations regardless of the last digit of the tax registration number between August 10 or 15 and the end of the month, although a top ministry official told Kathimerini that the government will attempt to change the creditors’ mind on that.
He did however concede that the bad habit of one extension after another will have to stop if Greece wants to cover the 1.6-billion-euro shortfall it posted in budget revenues for the first half of the year.
ekathimerini.com , Tuesday Jul 23, 2013 (22:58)
July tranche postponed till next week
Five prior actions not yet confirmed by creditors, but Euro Working Group will likely give the nod
By Vassilis Ziras
Greece has again left it too late to implement all the prior actions required for the disbursement this Friday of the next bailout tranche due this month, which has now been postponed until next week.
There are five points whose implementation the European Commission is still awaiting, which means that even if the Euro Working Group of eurozone finance ministry officials does provide the nod on Wednesday via a conference call, Athens will still need to wait until Monday at the earliest for the 4 billion euros it is expecting to receive.
A letter sent by Germany’s Deputy Finance Minister Steffen Kampeter to members of the country’s lower house Budget Committee, seen by Bloomberg, says that the committee will not meet on Wednesday but next Monday, as Greece’s creditor representatives have postponed filing their report on Athens’s progress and the country has not yet fulfilled all of the required prior actions.
The country’s creditors were unable to verify all 22 prior actions for the disbursement of the tranche on Tuesday as five procedural points were still pending. These concerned the publication in the Government Gazette of the multi-bill voted last week (which was expected to take place on Tuesday night), the tabling of the new Code of Tax Procedures in Parliament, which was implemented on Tuesday (although the original plan was to do so last Monday), the publication in the Government Gazette of the ministerial decision for the transfer of two General Secretariat of Information Systems agencies to the General Secretariat for Public Revenues (expected on Wednesday), the issue of a ministerial decision for the return of money from pharmaceutical companies and clinics to the country’s main healthcare provider, EOPYY (also set for Wednesday), and the Central Council for Administrative Reform’s approval of organizational charts for 360,000 civil servants, which was implemented on Tuesday.
Finance Ministry sources said there would be no problem as all prior actions will have been fulfilled once the Code for Tax Procedures is tabled. The International Monetary Fund is also set to approve its own tranche to Greece, amounting to 1.8 billion euros, on Monday.
ekathimerini.com , Tuesday Jul 23, 2013 (22:45)
As you must know by now, Detroit is bankrupt and must restructure...somehow. They once were the manufacturing capital of the United States and the largest concentrated manufacturer in the world. They now have over 28% unemployment (actually much higher), and cannot afford to pay for even basic services and much of the city is "bombed out" as in destroyed. There are calls for all sorts of remedies such as private equity rebuilding and public (federal) bailouts. ALL of this misses the point...
The point is that Detroit is not "fixable" and is actually only a signpost along the path that all of the U.S. (and entire Western world) is travelling. If you recall, Merideth Whitney forecast this scenario 3 years ago. She was early and made the mistake of saying "in the next 12 months"...BUT she was correct in her analysis. Monetization by the Fed only postponed the final reckoning, it has not been cancelled. Bond investors will be killed as the ability to service even a fraction of the debt does not exist, this is a "given".
What is not a "given" and only a very few have figured out yet is that pensioners will also be destroyed. I am not talking about "Detroit pensioners" (though this is a certainty), I am talking about pensioners in general, across the spectrum and all over the world. Let me explain. Pension "promises" have been made throughout the years by corporations, institutions, cities, states and sovereign governments during a "different era". Years ago pensions were actually funded, FULLY funded. Then along came the 80's and 90's and the actuaries started to "up" the assumed growth rates which meant that less money had to be deposited to pay future benefits.
Well here we are years later and the actuaries were wrong...REALLY wrong! We did not get the expected growth rates, interest rates were pushed to virtually zero AND not enough was deposited to begin with not to mention enough to make up for poor investment results. THIS is going to be a problem everywhere, a huge problem. Those already receiving pensions will see them curtailed, those expecting pensions will receive far less than they were promised AND the "kicker". The "kicker" being the fact that benefits will be paid out in currencies that have only a fraction of the value that they have today.
This will in essence wipe out a middle class that "played by the rules", they went to work, they saved, and they "trusted" their future in their employers promises. I have said for years and it now looks assured to have been correct, "when it comes to retirement, rely on your own investments and do your own thinking because promises will be broken at your expense".
The same could be said for everything else financial in your life. Do you feel good because you have large balances in the banking system? Or a huge muni portfolio that pays you tax free income? Or a large stock portfolio in a "house of cards" market that is supported by the low interest rates in a Ponzi currency and debt market? Or how about that ETF that allows you to sleep at night because it is "backed" by Gold? Do see my point?
"Promises were made to be broken" and they will be.
Regards, Bill H.
Cyprus - The first but certainly not the last bail in situation.....
Nicosia wants BoC restructured by end-July
Government spokesman Christos Stylianides said on Tuesday that once the restructuring is completed, management of the bank will return to its directors and shareholders. Bank of Cyprus had to absorb the country’s now-defunct second-largest lender, Cyprus Popular (Laiki), as part of a 23-billion-euro financial rescue deal that was agreed in March with Cyprus’s euro-area partners and the International Monetary Fund. Under the deal, savers in both banks were forced to take huge losses on deposits over 100,000 euros in order to cover for losses at Bank of Cyprus. [AP] |
Cyprus Real Estate Prices Post Record Plunge
Submitted by Tyler Durden on 07/23/2013 15:50 -0400
Days after Cyprus banks were bailed out (or, rather, in) in March, even if it meant the complete collapse of the local economy just to keep the country in the Eurozone and potentially the sale of the country's gold to provide its own funding toward the "common cause", the Eurogroup came out with a "Debt Sustainability Analysis" which predicted some hard times for the country but its eventual recovery. About a week later it emerged that the funding needs of the tiny island nation would be far greater than previously imagined, but for the time being, since the liquidity (if not solvency) situation had stabilized, all was well and that was one bridge that would be crossed when Europe came to it. That time may be coming fast. As Reuters reports, the Cypriot banking collapse has finally spilled over into the economy and resulted in a record collapse in local real estate values, which ranged from a 12.6% price drop in the valuation of an apartment to a 23.3% fall for office space in just the second quarter, which were the "sharpest recorded since RICS started collecting data in 2009, Loizou told Reuters."
From Reuters:
Cypriot property prices recorded one of their steepest falls in years in the second quarter, a survey showed on Tuesday, as an austerity-driven recession sapped demand in the country's once-buoyant property market.
Market sentiment on the bailed-out Mediterranean island was dampened by a worsening outlook and lack of available cash to invest in the property market, according to the survey by the Cyprus branch of the Royal Institution of Chartered Surveyors (RICS).
"Definitely the market is going to deteriorate further and faster than before. There is no lending available and people's money (in banks) is blocked," said Pavlos Loizou of RICS Cyprus, a compiler of the survey.
One wonders: with the complete collapse in modern Keynesian/monetarist economic machinery, in which the only "groath (sic)" comes from credit injection, did the local population expect otherwise? And if they had the chance to revote on their submission to Merkel's will, would they do so again, now that they finally see the absolutely collapse of not only their wealth but their retirement funds and pensions? If so, we hope they enjoy having the EUR. Or, technically, whatever Euros the local banks, which will likely have capital controls in perpetuity, will allow them to have.
Conceivably, they could be the sharpest over many years in a market not accustomed to sudden drops in valuations.
For at least a decade before 2009 Cypriot property prices were steadily growing on the back of foreign demand and liquidity-flush banks extending credit.
Over two growth cycles immediately before and after Cyprus joined the EU in 2004, property prices rose anywhere between 150 and 200 percent, Loizou said.
Surprised? Alas, too late. In the meantime, the capital is becoming a ghost town.
Boarded up shops have become commonplace in central Nicosia, the island's capital.
On Makarios Avenue, which was once a commercial hub teeming with traffic, dozens of shops stand empty, driven out by high rents and a shift in consumer preferences to other locations, including out-of-town malls
Loizou said some interest had been displayed by overseas investors looking at retail properties.
"But at the moment they are just sniffing around," he said, adding that fellow bailout recipients Ireland and Spain had also seen interest from overseas investors looking at distressed retail properties they could pick up at advantageous prices.
The punchline, of course, would be Spaniards and other insolvent Europeans, sick of their own "bailed out" economy, deciding to move over to yet another "bailout" recipient, Cyprus, and starting there afresh. Surely, stranger things have happened in the New Feudal Normal. All of this, of course, before Goldman LBOs southern Europe with cheap Fed credit.
Will Spain hit the wall before Greece ?
One-Third Of Europe's Unemployed Are Spanish
Submitted by Tyler Durden on 07/23/2013 08:33 -0400
With yet another promise about to go up in smoke (that of PM Rajoy's claim that Spain will be out of recession this quarter), we thought it worth a brief reflection on just what a disaster the nation is and how much it is weighing on the entire EU. Spain has been in recession for seven quarters in a row and survey indicators suggest it will extend to eight. House prices continue to collapse. Government revenue to GDP is among the worst in the union. But unemployment is where Spain has its peers beat - at 6.2 million unemployed, Spain accounts for almost one-third of the entire unemployed population of Europe. With expectations that the unemployment rate will break above 28% next year and a government embroiled in scandal, Rajoy's planned address to discuss the politicial and economic situation to his nation in August may just be the catalyst for the social unrest that has laid relatively dormant for so long. Is Spain the new Detroit?
GDP
GDP is unlikely to grow until next year and probably contracted 0.3 percent in the second quarter, according to Bloomberg’s monthly survey published on July 11. The economy has shrunk in 15 quarters during the past five years. The Bank of Spain is scheduled to release its second quarter growth estimate this week while the official figure from the statistics agency will be released on July 30. The services PMI is likely to remain below 50 in July.
Unemployment
A lack of economic growth may have pushed up unemployment to 27.2 percent in the second quarter, a Bloomberg survey shows, as seasonally adjusted figures strip out any rise in temporary jobs as a result of tourism. That is the highest unemployment rate since the country returned to democracy in 1975. About 6.2 million people are out of work, accounting for almost a third of those unemployed in the euro area. The OECD forecasts unemployment will surpass 28 percent next year.
Revenue
Government debt is rising and a series of tax increases failed to generate the required revenue as the economy weakens and a growing number move into the shadow economy. One million Spaniards have jobs in the underground economy, according to last week’s report by the Foundation for Financial Studies. The study estimates the shadow economy is equivalent to 20 percent of Spanish GDP. That is higher than every country in the EU apart from Italy, with 21 percent.
Housing
Domestic demand is likely to remain weak as house prices continue to fall and a 10th of households have no breadwinner. House prices are down 35.5 percent from their peak, having fallen 15.7 percent in real terms in 2012. A 7.6 percent decline in the house price index last quarter suggests prices have further to fall. House prices may drop by 13 percent in 2014, according to S&P.
Source: Bloomberg Briefs (@EconomistNiraj)
And more on Spain......
Spiegel Speculates On Spain Succession: Soraya Sáenz de Santamaría In, Rajoy Out
Submitted by Tyler Durden on 07/23/2013 11:58 -0400
Amid a collapsing economy and as illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now, Der Spiegel reports, Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor. As Rajoy becomes increasingly mired in the massive scandal over illegal party donations, corruption and financial contributions, Sáenz de Santamaría, a former state lawyer who represented the country's highest court, is one of the few in the party to remain untouched by the allegations. And that alone - sadly - may be enough to qualify her for the government's top job.
Via Der Speigel,
As illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor.
...Thousands showed up, assembling outside the headquarters of Spain's ruling People's Party in downtown Madrid...
The protests came in response to double accounting conducted by the party's former treasurer, Luis Bárcenas. His incriminating ledgers, uncovered by Spanish newspapers, also implicate Prime Minister Mariano Rajoy, as well as the party's secretary-general, other former ministers in the People's Party and further prominent conservative politicians. The only one who doesn't make an appearance in Bárcenas' accounts is Spain's most powerful female politician, Soraya Sáenz de Santamaría, the 42-year-old deputy and closest confidante of the prime minister.
...
The prime minister, meanwhile, is having to answer some uncomfortable questions: Why, for example,he continued to pay his party's former treasurer a monthly salary of €21,300 ($28,100), even though Bárcenas was forced to resign from his position three years ago after first being accused of corruption. Or why Rajoy continued to send Bárcenas friendly text messages even long after it emerged that Bárcenas had illegally moved many millions of euros into bank accounts abroad.
...
One reason Rajoy is pleased to be able to rely on his deputy prime minister is that he can always count on her to have his back at the expense of developing a political profile of her own. But is that qualification enough for Sáenz de Santamaría to take charge of the government?
Several times, Rajoy has sent Sáenz de Santamaría to talk to Angela Merkel, since he himself has little idea what to say to the German chancellor. Sáenz de Santamaría proudly displays a photograph of herself and Merkel on a bookshelf in her office.
The "Vice," as colleagues call her -- short for the Spanish vicepresidenta -- keeps her private life strictly private.
Items of note for Greece......
Troika will not accept any more deadline extensions
By Prokopis Hatzinikolaou
The troika has vetoed any more deadline extensions for the submission of taxpayers’ income declarations as well as declarations such as those concerning payment of value-added tax.
The representatives of the European Commission, the European Central Bank and the International Monetary Fund have told the Finance Ministry that they accept the extension of the deadline for taxpayers whose tax registration numbers end in 1 or 2 from July 22 to July 26 – as Monday was also the deadline for VAT declarations submission – but made it clear they would not put up with any other delays.
The troika ruled out the possibility of all taxpayers being able to submit their declarations regardless of the last digit of the tax registration number between August 10 or 15 and the end of the month, although a top ministry official told Kathimerini that the government will attempt to change the creditors’ mind on that.
He did however concede that the bad habit of one extension after another will have to stop if Greece wants to cover the 1.6-billion-euro shortfall it posted in budget revenues for the first half of the year.
ekathimerini.com , Tuesday Jul 23, 2013 (22:58)
July tranche postponed till next week
Five prior actions not yet confirmed by creditors, but Euro Working Group will likely give the nod
By Vassilis Ziras
Greece has again left it too late to implement all the prior actions required for the disbursement this Friday of the next bailout tranche due this month, which has now been postponed until next week.
There are five points whose implementation the European Commission is still awaiting, which means that even if the Euro Working Group of eurozone finance ministry officials does provide the nod on Wednesday via a conference call, Athens will still need to wait until Monday at the earliest for the 4 billion euros it is expecting to receive.
A letter sent by Germany’s Deputy Finance Minister Steffen Kampeter to members of the country’s lower house Budget Committee, seen by Bloomberg, says that the committee will not meet on Wednesday but next Monday, as Greece’s creditor representatives have postponed filing their report on Athens’s progress and the country has not yet fulfilled all of the required prior actions.
The country’s creditors were unable to verify all 22 prior actions for the disbursement of the tranche on Tuesday as five procedural points were still pending. These concerned the publication in the Government Gazette of the multi-bill voted last week (which was expected to take place on Tuesday night), the tabling of the new Code of Tax Procedures in Parliament, which was implemented on Tuesday (although the original plan was to do so last Monday), the publication in the Government Gazette of the ministerial decision for the transfer of two General Secretariat of Information Systems agencies to the General Secretariat for Public Revenues (expected on Wednesday), the issue of a ministerial decision for the return of money from pharmaceutical companies and clinics to the country’s main healthcare provider, EOPYY (also set for Wednesday), and the Central Council for Administrative Reform’s approval of organizational charts for 360,000 civil servants, which was implemented on Tuesday.
Finance Ministry sources said there would be no problem as all prior actions will have been fulfilled once the Code for Tax Procedures is tabled. The International Monetary Fund is also set to approve its own tranche to Greece, amounting to 1.8 billion euros, on Monday.
ekathimerini.com , Tuesday Jul 23, 2013 (22:45)
Days after Cyprus banks were bailed out (or, rather, in) in March, even if it meant the complete collapse of the local economy just to keep the country in the Eurozone and potentially the sale of the country's gold to provide its own funding toward the "common cause", the Eurogroup came out with a "Debt Sustainability Analysis" which predicted some hard times for the country but its eventual recovery. About a week later it emerged that the funding needs of the tiny island nation would be far greater than previously imagined, but for the time being, since the liquidity (if not solvency) situation had stabilized, all was well and that was one bridge that would be crossed when Europe came to it. That time may be coming fast. As Reuters reports, the Cypriot banking collapse has finally spilled over into the economy and resulted in a record collapse in local real estate values, which ranged from a 12.6% price drop in the valuation of an apartment to a 23.3% fall for office space in just the second quarter, which were the "sharpest recorded since RICS started collecting data in 2009, Loizou told Reuters."
From Reuters:
Cypriot property prices recorded one of their steepest falls in years in the second quarter, a survey showed on Tuesday, as an austerity-driven recession sapped demand in the country's once-buoyant property market.Market sentiment on the bailed-out Mediterranean island was dampened by a worsening outlook and lack of available cash to invest in the property market, according to the survey by the Cyprus branch of the Royal Institution of Chartered Surveyors (RICS)."Definitely the market is going to deteriorate further and faster than before. There is no lending available and people's money (in banks) is blocked," said Pavlos Loizou of RICS Cyprus, a compiler of the survey.
One wonders: with the complete collapse in modern Keynesian/monetarist economic machinery, in which the only "groath (sic)" comes from credit injection, did the local population expect otherwise? And if they had the chance to revote on their submission to Merkel's will, would they do so again, now that they finally see the absolutely collapse of not only their wealth but their retirement funds and pensions? If so, we hope they enjoy having the EUR. Or, technically, whatever Euros the local banks, which will likely have capital controls in perpetuity, will allow them to have.
Conceivably, they could be the sharpest over many years in a market not accustomed to sudden drops in valuations.For at least a decade before 2009 Cypriot property prices were steadily growing on the back of foreign demand and liquidity-flush banks extending credit.Over two growth cycles immediately before and after Cyprus joined the EU in 2004, property prices rose anywhere between 150 and 200 percent, Loizou said.
Surprised? Alas, too late. In the meantime, the capital is becoming a ghost town.
Boarded up shops have become commonplace in central Nicosia, the island's capital.On Makarios Avenue, which was once a commercial hub teeming with traffic, dozens of shops stand empty, driven out by high rents and a shift in consumer preferences to other locations, including out-of-town mallsLoizou said some interest had been displayed by overseas investors looking at retail properties."But at the moment they are just sniffing around," he said, adding that fellow bailout recipients Ireland and Spain had also seen interest from overseas investors looking at distressed retail properties they could pick up at advantageous prices.
The punchline, of course, would be Spaniards and other insolvent Europeans, sick of their own "bailed out" economy, deciding to move over to yet another "bailout" recipient, Cyprus, and starting there afresh. Surely, stranger things have happened in the New Feudal Normal. All of this, of course, before Goldman LBOs southern Europe with cheap Fed credit.
Will Spain hit the wall before Greece ?
One-Third Of Europe's Unemployed Are Spanish
Submitted by Tyler Durden on 07/23/2013 08:33 -0400
With yet another promise about to go up in smoke (that of PM Rajoy's claim that Spain will be out of recession this quarter), we thought it worth a brief reflection on just what a disaster the nation is and how much it is weighing on the entire EU. Spain has been in recession for seven quarters in a row and survey indicators suggest it will extend to eight. House prices continue to collapse. Government revenue to GDP is among the worst in the union. But unemployment is where Spain has its peers beat - at 6.2 million unemployed, Spain accounts for almost one-third of the entire unemployed population of Europe. With expectations that the unemployment rate will break above 28% next year and a government embroiled in scandal, Rajoy's planned address to discuss the politicial and economic situation to his nation in August may just be the catalyst for the social unrest that has laid relatively dormant for so long. Is Spain the new Detroit?
GDP
GDP is unlikely to grow until next year and probably contracted 0.3 percent in the second quarter, according to Bloomberg’s monthly survey published on July 11. The economy has shrunk in 15 quarters during the past five years. The Bank of Spain is scheduled to release its second quarter growth estimate this week while the official figure from the statistics agency will be released on July 30. The services PMI is likely to remain below 50 in July.
Unemployment
A lack of economic growth may have pushed up unemployment to 27.2 percent in the second quarter, a Bloomberg survey shows, as seasonally adjusted figures strip out any rise in temporary jobs as a result of tourism. That is the highest unemployment rate since the country returned to democracy in 1975. About 6.2 million people are out of work, accounting for almost a third of those unemployed in the euro area. The OECD forecasts unemployment will surpass 28 percent next year.
Revenue
Government debt is rising and a series of tax increases failed to generate the required revenue as the economy weakens and a growing number move into the shadow economy. One million Spaniards have jobs in the underground economy, according to last week’s report by the Foundation for Financial Studies. The study estimates the shadow economy is equivalent to 20 percent of Spanish GDP. That is higher than every country in the EU apart from Italy, with 21 percent.
Housing
Domestic demand is likely to remain weak as house prices continue to fall and a 10th of households have no breadwinner. House prices are down 35.5 percent from their peak, having fallen 15.7 percent in real terms in 2012. A 7.6 percent decline in the house price index last quarter suggests prices have further to fall. House prices may drop by 13 percent in 2014, according to S&P.
Source: Bloomberg Briefs (@EconomistNiraj)
With yet another promise about to go up in smoke (that of PM Rajoy's claim that Spain will be out of recession this quarter), we thought it worth a brief reflection on just what a disaster the nation is and how much it is weighing on the entire EU. Spain has been in recession for seven quarters in a row and survey indicators suggest it will extend to eight. House prices continue to collapse. Government revenue to GDP is among the worst in the union. But unemployment is where Spain has its peers beat - at 6.2 million unemployed, Spain accounts for almost one-third of the entire unemployed population of Europe. With expectations that the unemployment rate will break above 28% next year and a government embroiled in scandal, Rajoy's planned address to discuss the politicial and economic situation to his nation in August may just be the catalyst for the social unrest that has laid relatively dormant for so long. Is Spain the new Detroit?
GDP
GDP is unlikely to grow until next year and probably contracted 0.3 percent in the second quarter, according to Bloomberg’s monthly survey published on July 11. The economy has shrunk in 15 quarters during the past five years. The Bank of Spain is scheduled to release its second quarter growth estimate this week while the official figure from the statistics agency will be released on July 30. The services PMI is likely to remain below 50 in July.
Unemployment
A lack of economic growth may have pushed up unemployment to 27.2 percent in the second quarter, a Bloomberg survey shows, as seasonally adjusted figures strip out any rise in temporary jobs as a result of tourism. That is the highest unemployment rate since the country returned to democracy in 1975. About 6.2 million people are out of work, accounting for almost a third of those unemployed in the euro area. The OECD forecasts unemployment will surpass 28 percent next year.
Revenue
Government debt is rising and a series of tax increases failed to generate the required revenue as the economy weakens and a growing number move into the shadow economy. One million Spaniards have jobs in the underground economy, according to last week’s report by the Foundation for Financial Studies. The study estimates the shadow economy is equivalent to 20 percent of Spanish GDP. That is higher than every country in the EU apart from Italy, with 21 percent.
Housing
Domestic demand is likely to remain weak as house prices continue to fall and a 10th of households have no breadwinner. House prices are down 35.5 percent from their peak, having fallen 15.7 percent in real terms in 2012. A 7.6 percent decline in the house price index last quarter suggests prices have further to fall. House prices may drop by 13 percent in 2014, according to S&P.
Source: Bloomberg Briefs (@EconomistNiraj)
And more on Spain......
Spiegel Speculates On Spain Succession: Soraya Sáenz de Santamaría In, Rajoy Out
Submitted by Tyler Durden on 07/23/2013 11:58 -0400
Amid a collapsing economy and as illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now, Der Spiegel reports, Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor. As Rajoy becomes increasingly mired in the massive scandal over illegal party donations, corruption and financial contributions, Sáenz de Santamaría, a former state lawyer who represented the country's highest court, is one of the few in the party to remain untouched by the allegations. And that alone - sadly - may be enough to qualify her for the government's top job.
Via Der Speigel,
As illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor.
...Thousands showed up, assembling outside the headquarters of Spain's ruling People's Party in downtown Madrid...
The protests came in response to double accounting conducted by the party's former treasurer, Luis Bárcenas. His incriminating ledgers, uncovered by Spanish newspapers, also implicate Prime Minister Mariano Rajoy, as well as the party's secretary-general, other former ministers in the People's Party and further prominent conservative politicians. The only one who doesn't make an appearance in Bárcenas' accounts is Spain's most powerful female politician, Soraya Sáenz de Santamaría, the 42-year-old deputy and closest confidante of the prime minister.
...
The prime minister, meanwhile, is having to answer some uncomfortable questions: Why, for example,he continued to pay his party's former treasurer a monthly salary of €21,300 ($28,100), even though Bárcenas was forced to resign from his position three years ago after first being accused of corruption. Or why Rajoy continued to send Bárcenas friendly text messages even long after it emerged that Bárcenas had illegally moved many millions of euros into bank accounts abroad.
...
One reason Rajoy is pleased to be able to rely on his deputy prime minister is that he can always count on her to have his back at the expense of developing a political profile of her own. But is that qualification enough for Sáenz de Santamaría to take charge of the government?
Several times, Rajoy has sent Sáenz de Santamaría to talk to Angela Merkel, since he himself has little idea what to say to the German chancellor. Sáenz de Santamaría proudly displays a photograph of herself and Merkel on a bookshelf in her office.
The "Vice," as colleagues call her -- short for the Spanish vicepresidenta -- keeps her private life strictly private.
Items of note for Greece......
Troika will not accept any more deadline extensions
By Prokopis Hatzinikolaou
The troika has vetoed any more deadline extensions for the submission of taxpayers’ income declarations as well as declarations such as those concerning payment of value-added tax.
The representatives of the European Commission, the European Central Bank and the International Monetary Fund have told the Finance Ministry that they accept the extension of the deadline for taxpayers whose tax registration numbers end in 1 or 2 from July 22 to July 26 – as Monday was also the deadline for VAT declarations submission – but made it clear they would not put up with any other delays.
The troika ruled out the possibility of all taxpayers being able to submit their declarations regardless of the last digit of the tax registration number between August 10 or 15 and the end of the month, although a top ministry official told Kathimerini that the government will attempt to change the creditors’ mind on that.
He did however concede that the bad habit of one extension after another will have to stop if Greece wants to cover the 1.6-billion-euro shortfall it posted in budget revenues for the first half of the year.
ekathimerini.com , Tuesday Jul 23, 2013 (22:58)
July tranche postponed till next week
Five prior actions not yet confirmed by creditors, but Euro Working Group will likely give the nod
By Vassilis Ziras
Greece has again left it too late to implement all the prior actions required for the disbursement this Friday of the next bailout tranche due this month, which has now been postponed until next week.
There are five points whose implementation the European Commission is still awaiting, which means that even if the Euro Working Group of eurozone finance ministry officials does provide the nod on Wednesday via a conference call, Athens will still need to wait until Monday at the earliest for the 4 billion euros it is expecting to receive.
A letter sent by Germany’s Deputy Finance Minister Steffen Kampeter to members of the country’s lower house Budget Committee, seen by Bloomberg, says that the committee will not meet on Wednesday but next Monday, as Greece’s creditor representatives have postponed filing their report on Athens’s progress and the country has not yet fulfilled all of the required prior actions.
The country’s creditors were unable to verify all 22 prior actions for the disbursement of the tranche on Tuesday as five procedural points were still pending. These concerned the publication in the Government Gazette of the multi-bill voted last week (which was expected to take place on Tuesday night), the tabling of the new Code of Tax Procedures in Parliament, which was implemented on Tuesday (although the original plan was to do so last Monday), the publication in the Government Gazette of the ministerial decision for the transfer of two General Secretariat of Information Systems agencies to the General Secretariat for Public Revenues (expected on Wednesday), the issue of a ministerial decision for the return of money from pharmaceutical companies and clinics to the country’s main healthcare provider, EOPYY (also set for Wednesday), and the Central Council for Administrative Reform’s approval of organizational charts for 360,000 civil servants, which was implemented on Tuesday.
Finance Ministry sources said there would be no problem as all prior actions will have been fulfilled once the Code for Tax Procedures is tabled. The International Monetary Fund is also set to approve its own tranche to Greece, amounting to 1.8 billion euros, on Monday.
ekathimerini.com , Tuesday Jul 23, 2013 (22:45)
Amid a collapsing economy and as illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now, Der Spiegel reports, Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor. As Rajoy becomes increasingly mired in the massive scandal over illegal party donations, corruption and financial contributions, Sáenz de Santamaría, a former state lawyer who represented the country's highest court, is one of the few in the party to remain untouched by the allegations. And that alone - sadly - may be enough to qualify her for the government's top job.
Via Der Speigel,
As illegal party financing allegations close in around Spanish Prime Minister Mariano Rajoy, his 42-year-old deputy has kept her name clean. Now Soraya Sáenz de Santamaría, the most powerful woman in Spanish politics, is well poised to be his successor....Thousands showed up, assembling outside the headquarters of Spain's ruling People's Party in downtown Madrid...The protests came in response to double accounting conducted by the party's former treasurer, Luis Bárcenas. His incriminating ledgers, uncovered by Spanish newspapers, also implicate Prime Minister Mariano Rajoy, as well as the party's secretary-general, other former ministers in the People's Party and further prominent conservative politicians. The only one who doesn't make an appearance in Bárcenas' accounts is Spain's most powerful female politician, Soraya Sáenz de Santamaría, the 42-year-old deputy and closest confidante of the prime minister....The prime minister, meanwhile, is having to answer some uncomfortable questions: Why, for example,he continued to pay his party's former treasurer a monthly salary of €21,300 ($28,100), even though Bárcenas was forced to resign from his position three years ago after first being accused of corruption. Or why Rajoy continued to send Bárcenas friendly text messages even long after it emerged that Bárcenas had illegally moved many millions of euros into bank accounts abroad....One reason Rajoy is pleased to be able to rely on his deputy prime minister is that he can always count on her to have his back at the expense of developing a political profile of her own. But is that qualification enough for Sáenz de Santamaría to take charge of the government?
Several times, Rajoy has sent Sáenz de Santamaría to talk to Angela Merkel, since he himself has little idea what to say to the German chancellor. Sáenz de Santamaría proudly displays a photograph of herself and Merkel on a bookshelf in her office.The "Vice," as colleagues call her -- short for the Spanish vicepresidenta -- keeps her private life strictly private.
Items of note for Greece......
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