Sunday, July 7, 2013

Europe Update - July 7 , 2013 .... Greece seems likely to get several additional months to meet Troika demands ( whether they get all / some portion of the latest tranche / none of the tranche ) contingent on receiving an 8.1 billion tranche of bailout monies...... Italy can't pay bills for technical reasons ( in the new normal , being broke is a technical reason for not paying bills ) .... Portugal's political situation remains unclear despite the happy talk of solutions being found that would secure the stability of the government - and does any solution reconcile austerity demands of the Troika versus the need to take the foot off the neck of the portuguese people ? With the Troika coming in for a chat July 15 , 2013 - we shall see how they resolve Troika demand for more spending cuts vs solutions to ease depression imposed on Portugal....

Greek news ......

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_07/07/2013_507957

'Ball in Greek court,' says Rehn as progress on deal is confirmed

Greece is likely to reach a deal with foreign lenders on its latest bailout review before a meeting of eurozone finance ministers on Monday to decide on further aid, EU and Greek officials said on Sunday.

Athens has been in talks with inspectors from the European Union, European Central Bank and International Monetary Fund «troika» for nearly a week to show it can deliver on its pledges after failing to meet public sector reform targets.

Greece hopes eurozone finance ministers will free up its next 8.1 billion-euro ($10.4 billion) tranche of aid when they meet on Monday because it needs part of the money to redeem about 2.2 billion euros of bonds in August.

Bailed out twice by its foreign lenders, Greece relies on foreign aid to keep afloat. Failure to successfully conclude its bailout review could push it close to bankruptcy once again, triggering a new upsurge in the euro zone crisis.

"We made very good progress," Poul Thomsen, head of the International Monetary fund's mission to Greece told reporters on Sunday, adding that he hoped talks would be concluded early on Monday before the Eurogroup meeting of finance ministers.

Greece's Finance Minister Yannis Stournaras also said he was optimistic of a deal on Monday morning. The two sides were due to leave Athens on Sunday, but could remain in touch to nail down final details.

The latest loan installment is one of the last big cash injections that Greece stands to get as part of a 240 billion-euro rescue package that expires at the end of 2014.

EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters in France that the negotiations were almost complete, but Athens needed to intensify efforts to deliver on reform commitments.

"The ball is in the Greek court and it depends on whether Greece is able to deliver the remaining elements of the milestones that have been agreed," he said.

He reiterated that aid for Greece could be split into installments. Lenders have become increasingly frustrated with Greece's slow pace of shrinking the civil service and making it more efficient and less corrupt.

Talks with the troika stumbled last week over a missed June deadline to put 12,500 state workers into a mobility scheme, under which they are transferred or laid off within a year, but an agreement was finally reached on Saturday.

"The troika gave Greece an extension of a few months," an official at the administrative reform ministry said on Sunday. "A second wave of another 12,500 staff will be placed in the scheme until the end of the year."
Other issues discussed with the troika included ways to cover a fiscal gap, including a shortfall of more than 1 billion euros at state-run health insurer EOPYY, and a possible reduction in a sales tax for restaurants that Athens had sought as a concession from lenders.

Stournaras said the tax reduction issue remained on the table, adding that Athens managed to avoid further pay and pension cuts for military and police staff. [Reuters]



and.....



http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_06/07/2013_507899



Athens agrees on mobility scheme with lenders, waits for Eurogroup to clear loan

 Municipality police officers, from various municipalities of Attica perfecture, demonstrate - some of them on their vehicles - in central Athens, on Saturday.
Greece and its international lenders appeared to reach a compromise on Saturday over public sector reforms, which would permit the troika to complete its review of the adjustment program and allow eurozone finance ministers to decide on Monday whether to release another 8.1 billion euros of bailout funding for Athens.

The deal seems to have been clinched after the troika inspectors accepted Administrative Reform Minister Kyriakos Mitsotakis’s plans for completing a labor mobility scheme involving 12,500 civil servants.

However, Mitsotakis had to agree in return that the program would run for eight months rather than 12. It appears that as a result of agreeing to shorten the duration of the scheme, Mitsotakis will be allowed until the end of September to identify all 12,500 public sector workers who will be transferred to other positions. The original deadline had been the end of June.

“It is sealed, there will not be any more meetings regarding the public sector,” Mitsotakis said on Saturday afternoon. “All that is left is for the Eurogroup to give its approval.”

According to sources, 5,000 of those who will be included in the program will be local authority employees, including school crossing guards and cleaners. Some 3,500 municipal police officers will also be added. They will undergo an evaluation and for every one that is transferred to the main police force, another three will be dismissed. Another 2,000 employees are to come from the education sector, while ministry personnel will also be added once the restructuring of government departments is completed.

The two sides also appear to have reached an agreement over a supposed funding gap of about 2 billion euros for this year and next. The Greek government said that it would “claw back” much of the overspending at healthcare provider EOPYY by forcing private clinics that worked with the public organization to accept reduced payments.

There were also reports that the troika agreed to the seasonal reduction of value-added tax in the food service sector from 23 to 13 percent in return for a rise in tax on luxury goods. The government is expected to table in Parliament today a multi-bill containing a number of prior actions agreed with the troika, which will help secure further bailout funding.



Italy ...



http://www.zerohedge.com/contributed/2013-07-06/broke-italy-%E2%80%9Cwould-love-to%E2%80%9D-cant-pay-its-bills-year



(Broke) Italy “Would Love To” But Can't Pay Its Bills This Year

testosteronepit's picture




In most countries, it would be an act of mind-bending chutzpah, or perhaps a display of political insanity, but in Italy it barely made ripples: for a government official, a minister no less, to declare that the country cannot pay its long overdue bills, and not for a month or two, but for the rest of this year! Due to "technical" problems.
The Italian government is out of money. Not that the US government is in any better shape in that respect, or the Japanese government for that matter, but they have central banks that print the missing moolah with lavish abandon. Italy doesn't. It has the ECB which is run by an Italian who promised last year to print with lavish abandon to keep countries like Italy afloat. But that promise is not the same thing as having your own central bank.
On July 4, Italy's budget fiasco came to lightonce again. Wracked by the pretense of austerity, expenditures rose 1.3% in the first quarter, while revenues remained flat. So the deficit rose to 7.3% of GDP, up from 6.6% last year, bringing the national debt to 130% of GDP. Ballooning debt and deficits in a shriveling economy – Italy has been in recession since the fourth quarter of 2011 – is a toxic combination in the Eurozone.
How will Italy force its deficit under 3% of GDP, the line in the sand that would trigger the Eurozone’s excessive deficit procedure? The government is desperately trying. Economy Minister Fabrizio Saccomanni announced that he’d identified a1,600 “unused” properties that could be dumped. In the near term, this could haul in about €600 million, he said, though former Prime Minister Mario Monti's plan to do that had run aground on the reefs of the declining property market.
In any case, despite appearances to the contrary, "the trend of public finances in the first half is consistent with the achievement of a net deficit of 2.9%," he said. But €600 million, if they materialize, would be a drop in the rusty Italian budget bucket. Much more would be needed.
Hence, a eurocratic deus ex machina: José Manuel Barroso, president of the European Commission, told the European Parliament on Wednesday that the budget rules would bereinterpreted for 2014 so that some public spending on infrastructure projects could be excluded from the deficit figures – something Italy has long pushed for in its valiant efforts to keep its deficit under 3%. If all else fails, monkey with the rules. Abracadabra.
“For countries with high levels of public debt,” such as Italy, “this will be of limited use in the short term,” an EU official cautioned to appease any remaining Germanic deficit hawks. But these kinds of details didn't stop Italian Prime Minister Enrico Letta from declaring victory. “We made it!” he tweeted triumphantly. It would give “more flexibility in coming budgets for countries like Italy” that had their “accounts in order.”
What exactly he meant with “accounts in order,” given Italy’s deficit and debt spiral, remains a mystery – particularly in light of the fact that it cannot even pay its past-due bills.
Beppe Grillo, leader of the opposition 5-Star Movement, has long hammered on this point. In April, during the post-election interregnum, he’d clamored for “the immediate payment of about €120 billion” that the government and public entities owed the private sector.
The government’s refusal to pay its suppliers violates EU rules. But the EU has soft-pedaled the issue, for two very big reasons: payment of arrears would force Italy to sell a truckload of bonds when there might not be any demand; and it would push the deficit way beyond the 3% line in the sand. Thanks to cash accounting, only actual disbursements make it into the deficit figure. Italy has achieved its “austerity” goals by not paying its suppliers. Once again, abracadabra.
But it’s strangling businesses. So, paying a portion of those past-dues, namely €40 billion, has been kicked around. Most recently, Renato Brunetta, leader of the House and member of Silvio Berlusconi’s PDL party, demanded at a coalition meeting that payment be made by the end of the year. In a surrealist show of noble governance, Letta himself jumped into the fray and committed to pay those debts even faster – not in July or August, but sometime in the fall! Rousing applause!
"I would love to" pay the past-due debt of the Public Administration by 2013, "but I don’t know if it can be done," retorted Economic Development Minister Flavio Zanonato the next morning. "It's not ill will, but there is a technical problem,” he said. “The government has removed the obstacle; now all the various sources of expenditure must take action to pay." They don’t have the money, apparently. To say that it’s difficult to pay the debts of the Public Administration is "obvious and true," he conceded.
It would normally be an admission of default. But not for the Italian government. For them, it’s just another illustration of a budget absurdity: staying by hook or crook on this side of the 3% line in the sand – even if it strangles companies and the economy and makes the deficit and debt spiral worse.
Italy has become legendary about tax evasion, which is part of its budget absurdity. So now the G-8 wants to crack down. The first four items at the recent meeting was the need for governments to share information to “fight the scourge of tax evasion.” If only their primary targets were multinationals, banks, and hedge funds. But they’re going after the little guy. Read.... Beware, the Borderless Taxman Cometh


Portugal......


http://www.google.com/hostednews/afp/article/ALeqM5jWcNEj5HMk1S89jNDIWB7AwpsPIA?docId=CNG.12bb87a43347b3c35cbcb9812b041898.31

Accord reached to save Portuguese government coalition
LISBON — Portugal's centre-right government coalition on Thursday averted its break-up in a dispute over austerity policies after finding "a formula" that secures its survival, Prime Minister Pedro Passos Coelho said.
"A formula has been found that will secure the stability of the government," said Passos Coelho after talks with President Anibal Cavaco Silva.
The policies squeezing the bailed-out nation had led markets to plunge on Wednesday before rallying after
Passos Coelho said he was "convinced" he could maintain government stability despite his finance and foreign ministers saying they were quitting.
Foreign Minister Paulo Portas said Tuesday he was resigning, a day after the shock departure of finance minister Vitor Gaspar.
European Central Bank chief Mario Draghi sought Thursday to soothe market nerves, saying Portugal's economy was "in safe hands" with Gaspar's successor, Maria Luis Albuquerque.
The Portuguese reform process has been a "painful route and the results achieved have been quite significant, remarkable, if not outstanding", Draghi told a news conference in Frankfurt.
The Portuguese stock market's PSI-20 index rose to close 3.73 percent higher on Thursday, after plunging 5.31 percent the previous day.
Pressure on the bond market eased, too, with the Portuguese benchmark 10-year government bond yield sliding to 7.40 percent in the afternoon, having soared to 8.106 percent Wednesday.
The foreign minister's resignation had threatened to sink the government because Portas is also leader of the junior partner in the governing coalition, the small conservative CDS-PP party,
But the prime minister, desperate to hold together the coalition led by his Social Democratic Party (PSD), refused to accept Portas's resignation.
The prospect of a deal emerged when the CDS-PP leadership asked Portas to meet with the premier to find "a viable solution for the government of Portugal".
Passos Coelho and his foreign minister held talks in a "very positive atmosphere", the premier's office said earlier.
Portuguese newspapers said the prime minister could reshuffle the cabinet to give Portas the post of deputy premier in charge of the economy.
"The prospect of a snap election is so terrifying for the PSD that the prime minister will do anything to save the coalition", said Antonio Costa Pinto, a political scientist at Lisbon University.
Socialist opposition leader Antonio Jose Seguro had urged the Portuguese president to call snap elections in a meeting Wednesday.
European Union leaders, fearing a resurgence in tension in the eurozone's debt-laden periphery, pressed Lisbon to resolve the crisis.
"The political situation should be clarified as soon as possible," the European Commission's Portuguese president, Jose Manuel Barroso, said Wednesday.
The government has imposed unpopular spending cuts and tax rises under the 2011 bailout deal agreed with the "troika" of creditors -- the European Commission, the European Central Bank and the International Monetary Fund.
It is now under pressure to present a further 4.7 million euros in spending cuts to the troika when its delegates visit on July 15.
The austerity measures have plunged Portugal into a deeper recession with higher unemployment than had been expected, sparking mass protests and strikes.
In his resignation letter, Portas had said he disapproved of the prime minister's naming of Treasury Secretary Maria Luis Albuquerque as the new finance minister.
Her appointment was seen as an indication that Passos Coelho intended to push on with austerity despite protests.
"The big fear is this country has failed to demonstrate economic growth since its bailout and its government has also been unable to meet targets set out by the troika," said Ishaq Siddiqi, strategist at London-based brokerage ETX Capital.
"Now, without a stable government in power, investors are concerned Portugal will be unable to meet its debt obligations."



http://www.france24.com/en/20130706-portuguese-pm-detail-deal-averting-coalition-collapse

Portuguese PM to detail deal on averting coalition collapse
Hundreds of workers gather near the Belem Palace demanding the resignation of the government and calling for snap elections in Lisbon, on July 6, 2013. Portugal's prime minister is due Saturday to finalise a deal aimed at averting the breakup of his coalition government, after the resignations of two key ministers plunged the country into a political crisis.
Hundreds of workers gather near the Belem Palace demanding the resignation of the government and calling for snap elections in Lisbon, on July 6, 2013. Portugal's prime minister is due Saturday to finalise a deal aimed at averting the breakup of his coalition government, after the resignations of two key ministers plunged the country into a political crisis.
AFP - Portugal's prime minister is due Saturday to finalise a deal aimed at averting the breakup of his coalition government, after the resignations of two key ministers plunged the country into a political crisis.

The shock resignations of finance minister Vitor Gaspar and foreign minister Paulo Portas had raised the spectre of a fresh wave of instability in the eurozone's debt-laden periphery, where public anger was rising against painful reforms imposed by international creditors.
As Portuguese stocks plunged and country's 10-year borrowing rates soared to critical levels, Prime Minister Pedro Passos Coelho held frantic talks to save his shaky coalition.

Late Friday, he announced that he had reached an agreement with Portas -- who is also leader of the junior partner in the ruling coalition, to save the government from collapse.

The two men were to hold further negotiations on Saturday evening (from 1700 GMT), before making a statement.

However, any political deal would have to have the support of President Anibal Cavaco Silva, who has the power to dissolve parliament and call for elections.

Unions are piling on the pressure by calling a demonstration from 1400 GMT in front of the presidential palace to demand the government's resignation.

At the heart of the crisis are the painful economic reforms pushed by Passos Coelho's coalition in exchange for desperately needed loans from the "troika" of international creditors -- the European Union, the European Central Bank and the International Monetary Fund.

The austerity measures including layoffs and higher social security contributions have thrown Portugal into a deeper recession with higher unemployment than had been expected, sparking mass protests and strikes.

The government expects the economy to contract by 2.3 percent by the end of the year, while the unemployment rate has soared to a record 18.2 percent.

Despite growing opposition to the reforms, the government is under pressure to present another 4.7 million euros in spending cuts to the troika when its auditors visit Portugal on July 15.

According to a survey published Saturday by the bi-weekly Expresso, 37.2 percent of those surveyed said they favour early elections, while 45.1 percent wanted the status quo or a new government headed by the president.



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