Sunday, March 3, 2013

Europe is worse than believed and sinking beneath the waves - interview with Alasdair Macleod.

Protest in Portugal ( which had been relatively quiet ) , Spain is a mess between insolvent banks / various corruption intrigues and political drama with Catalonia and economic weakness prompting swelling unemployment , Italy is a political and economic mess these days and Greece is still Greece ! France is auditioning as the next country to join the PIIGS club and even Germany isn't the stalwart nation it previously was believed to be..... so yeah , Europe is worse than let on.....

http://www.zerohedge.com/news/2013-03-03/alasdair-macleod-europe-worse-shape-everyone-thinks


Alasdair Macleod: Europe Is In Worse Shape Than Everyone Thinks

Tyler Durden's picture




Submitted by Adam Taggart of Peak Prosperity blog,
From his perch in the United Kingdom, Alasdair Macleod provides an update on the ongoing economic crisis in Europe, which -- while largely absent from headlines in the US of late -- continues to worsen.
Due to bloated state-run programs and extreme malinvestment, EU governments find themselves in a box. Economic growth has stalled, and no amount of intervention seems able to get it going again. So in order to keep their economies moving forward, they are becoming increasingly rapacious in extorting tax revenues from wherever they can find them.

This, of course, is strangling the private sector  -- on which the government is counting on to grow the EU out of its recession (or depression, depending on which country in which you live). And so a vicious cycle ensues. Growing taxation reduces economic activity, unemployment worsens, the wealthy expatriate -- all leading to a declining income base to tax, and growing civil unrest.
These are desperate times. And the EU governments are taking increasingly desperate, and reckless, measures:
The Keynesians don’t understand why the growth isn’t there. They are very, very disappointed. And of course, their response is, the economy is not flourishing. You have to stimulate the economy more. The fact of the matter is that the average government size in the economy in the Eurozone is 50%. So 50% of every transaction is government.

Now that only leaves the private sector of 50%. The private sector, when it comes to recovering (recovery?), is carrying a huge weighted burden on its back. That burden is trying to tax the private sector horse who's carrying it. The tax burden is so great, the way in which they are doing it in most of these countries is that they are trying to preserve the public sector ,and they are trying to get the private sector to pay for it. The result is that there is no way there is going to be any growth at all.


If you look at countries like Spain, for example -- which has come out of this massive property bubble that's really been the reason for its downfall -- the property bubble has not unwound at all. You've got huge great levels of malinvestment, misdirection of funds in the wrong direction, the market has changed, people don’t want it anymore, and the market has got to adapt. And taxes are not going to be forthcoming until it has happened.

Unfortunately, governments have gotten themselves stuck into this position where they are not prepared to cut their spending enough. They think they can get taxes by taxing the rich, ratcheting up the taxes on anyone who you think has got any money -- but then people avoid it. Like in France, they just go abroad. It is that bad.
We are not seeing any recovery. The burden on private sector is far too great for that recovery to occur. Not only that, but the economies in the Eurozone are angled towards the wrong production. It is a huge great burden of malinvestment that needs to be addressed. You are not going to get any meaningful economic recovery without that slump happening.

Given that the slump is going to happens, you’ve got a choice: Either you get it over and done with and get it done quickly, or you have financial repression in the hope that over a long period of time something will turn up. Really, they are going for the latter rather than the former. But I don’t think they have got that much time. One of the things which Europe really does have a problem with is pension costs and the cost of health care for the elderly and all the rest of it. You think it is expensive in America; it is twice as expensive in Europe, on average. 
Click the play button below to listen to Chris' interview with Alasdair Macleod (49m:35s):

 
Greece ......

http://www.guardian.co.uk/business/2013/mar/03/greece-public-sector-job-cuts


Greece rules out more public sector job cuts

International creditors told that mass layoffs out of the question with unemployment at European high of 27%
Greece protests
Teachers and students in Athens stage a protest over education budget cuts by the government on 2 March, 2013. Photograph: Simela Pantzartzi/EPA
Greece was heading for a full-on collision with its international creditors on Sunday as Athens' uneasy coalition, struggling to meet the onerous terms of the country's latest bailout, ruled out layoffs in the public sector.

Flying into the capital at the start of a quarterly review of the debt-choked economy, mission heads from the EU, International Monetary Fund and European Central Bank were told flatly that mass firings were out of the question when unemployment had reached a European record of 27%.
"The public sector has shrunk by 75,000 people in the last one and a half years," the finance minister, Yannis Stournaras, told a newspaper in a taste of the stiff resistance the auditors are likely to meet. "There will be no layoffs."
The Eurogroup of finance ministers is expected to discuss the dire situation in Greece and Cyprus, which has asked for a bailout worth almost 100% of its national income.
Stournaras, a technocrat widely credited with smoothing often fraught relations between Greece and its foreign lenders, has encountered mounting hostility from within the tripartite government over the dismissals.
Athens agreed to cut 150,000 posts from its unwieldy public sector by 2015 as part of a wide-ranging package of austerity reforms promised when the "troika" unlocked €54bn in long overdue aid in December.
Under that plan, 25,000 employees were to be transferred this year to a "mobility" scheme, the first step towards redundancy. Streamlining so far has relied on a policy of natural attrition, with only one person being hired for every 10 who retire.
But the conservative-led administration has faced growing pressure from its leftwing junior partners. Acutely aware of the country's economic tailspin, Fotis Kouvellis, who leads the Democratic Left, has warned that with 1.4 million Greeks now unemployed, the prospect of yet more losing work could threaten the fragile social peace.
Mired in what economists are calling a "great depression", with its GDP set to contract for a sixth straight year, Greece is projected to see unemployment exceed 30% by the year's end as a growing number of businesses file for bankruptcy. Over 60% of those without work are under 25.
Public-sector firings are among a series of neuralgic points likely to be raised by the troika. Representatives, who indicated they would not be visiting Athens "to renegotiate its rescue package but supervise its economic performance", are also expected to address the thorny issues of progress on privatisations, tax administration reforms and bank recapitalisation.
Paitence is in short supply. Creditors have committed more funds to Greece – at €240bn, the biggest bailout in world history – than any other troubled economy since the tiny nation, revealing the unsustainable level of its public debt, triggered the eurozone crisis in late 2009.
Piling on the pressure ahead of the monitors' visit, the Euro Working Group chief, Thomas Wieser, emphasised that Athens had to keep its side of the deal. "All that was agreed in the bailout plan has must be implemented. These reforms were agreed to make the Greek economy stronger, flexible and more competitive," he told the Greek newspaper Realnews.
Although the IMF has publicly admitted that it seriously underestimated the impact of Greece's recession on its ability to deliver, there are growing concerns over the government's determination to crack down on tax collection – the single biggest drain on the country's economic performance.
A confidential report prepared by the EU and IMF and leaked to the Greek media last week showed that the nation was lagging severely in key revenue targets, with Athens' tax collection mechanism being singled out for particular criticism.
While Greece had managed to rein in public spending – pulling off the biggest fiscal consolidation of any OAED country – tax avoidance, particularly among high earners, remained "astounding", said the report, estimating that at €55bn unpaid tax amounted to nearly 30% of GDP.

Indicative of the febrile mood enveloping Greece, the radical left Syriza opposition party said that in light of the missed targets, it was clear the coalition partners were preparing new wage and pension cuts. "They are discredited and dangerous," it said in a statement. "The sooner they leave, the better for Greek society and the economy."

and....
















http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_03/03/2013_485576

( Things are about to get interesting again in Greece - at some point , the chit chat stops and Greece has to take the tough steps the Troika has demanded or else the plug gets pulled for good ... ) 

http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_03/03/2013_485576


Stournaras discusses nine issues with troika


By Sotiris Nikas
The first meeting between the heads of the representation of Greece’s creditors in Athens and Finance Minister Yannis Stournaras this month took place on Sunday in a good climate, according to sources, without any serious disagreements and with nine main issues on the table.
According to a top Finance Ministry official, the discussion that lasted for about four hours came to no decisions as the representatives of the country’s international creditors did not have a full picture of the situation.
In the absence of the head of the International Monetary Fund’s mission to Athens, Poul Thomsen, the Fund was represented by Mark Flanagan and Bob Traa, who sat by Matthias Mors of the European Commission and Klaus Masuch from the European Central Bank.
The discussion concerned estimates on the course of this year’s budget, the course of Greece’s macroeconomics for 2013, growth and unemployment, structural changes such as the opening-up of closed-shop professions, the optimum use of some 60,000 ministry employees, tax administration, privatizations, the recapitalization of banks, and the measures that have failed to improve state revenues, with the government asking for changes to the value-added tax on food catering and to the special consumption tax on fuel.
The issue of public sector layoffs was not discussed, but will form a key part of the meeting the foreign representatives will have on Monday with Interior Minister Antonis Manitakis.
They will meet with Stournaras again on Wednesday, as the Greek Finance Minister will be in Brussels on Monday and Tuesday for the Eurogroup and ECOFIN meetings.


and....


http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_03/03/2013_485574


Structural deficit must enter equation

 The cyclically adjusted shortfall of budgets has not been taken into account in bailout programs

By Dimitris Kontogiannis
The Fiscal Compact, an intergovernmental treaty that aims at putting the public finances of ratifying European Union members in order, has broadened the definition of the balanced budget by including the notion of the structural deficit. However, the structural or cyclically adjusted budget balance is not a target in the adjustment economic programs for Greece and other euro periphery states.
The outcome of the Italian elections, as well as Greece’s struggle to meet revenue targets in the midst of the worst economic slump in decades, should remind policymakers in core eurozone countries of the missing target variable.
Many analysts interpret the outcome of the Italian elections as a condemnation of the country’s political elite and, to some extent, as a vote against austerity. At the same time, the Greek government is trying to meet the fiscal targets agreed with its creditors by intensifying its efforts to bring in more revenues to state coffers despite the continuing decline of output, which is reminiscent of a depression.
The two countries find themselves at different stages, but both feel the impact of austerity, like others in the euro periphery.
Italy, which has a public debt-to-gross domestic product ratio close to 125 percent, recorded a primary budget surplus of around 2.9 percent of gross domestic product (GDP) last year, meaning revenues exceeded expenditures excluding interest payments by a wide margin. It also saw its current account deficit fall well below 1 percent of GDP after undertaking austerity measures to the tune of 3 percent of its output. It was thought – prior to the recent general elections – that it would take additional measures of a smaller scope this year.
Greece, whose public debt-to-GDP ratio is seen approaching 179 percent in 2013 from around 158 percent last year, saw the primary budget deficit shrink to an estimated 0.5-1.5 percent of GDP last year. It also saw the current account deficit drop sharply to 2.9 percent of GDP in 2012 from 9.9 percent in 2011 and expects it to break even this year.
The country has committed to implementing new austerity measures amounting to 11 billion euros, or more than 5 percent of GDP, in 2013 and to continue to do so next year and beyond.
In both cases, the general government budget deficit looks much better when adjusted to take into account the state of the economy. The so-called structural or cyclically adjusted budget deficit of Italy is projected at 0.1 percent of potential GDP in 2013 from 1.3 percent last year by the European Commission.
In contrast, the Italian unadjusted budget deficit is bigger, and estimated at 2 percent of GDP in 2013 from 2.8 percent last year. The difference is explained by the inferior performance of actual GDP compared to potential GDP, that is, the level of output that could be achieved with all the cylinders of the economy working at full capacity.
The difference between actual GDP and potential GDP is much bigger in the case of Greece due to the protracted recession, and this is reflected in the fiscal figures. The reported budget deficit is seen falling to about 4.5 percent of GDP in 2013 from 6.6 percent in 2012.
However, when adjusted to take into account the business cycle, Greece’s structural or cyclically adjusted budget points toward a surplus of 1.8 percent of potential GDP in 2013 from a deficit of just 0.8 percent last year. The surpluses become even bigger when one adjusts the primary budget balance for the state of the economy.
Consequently, we may conclude that the country’s large budget deficits are due to the poor state of the economy, which in turn is mainly due to an overdose in fiscal austerity and secondarily to other factors, i.e. loss of confidence etc.
It is indeed ironic that the definition of the balanced budget in the Fiscal Compact – which came into force on January 1, 2013 for a number of EU member-states, having completed ratification by then – takes into account both the general budget balance and the structural budget balance. Specifically, the treaty defines a balanced budget as an overall budget deficit of less than 3 percent of GDP and a structural deficit of less than 0.5 percent of GDP for the member-states whose public debt-to-GDP ratio is above 60 percent.
On the other hand, the structural budget balance is not a target variable in the bailout programs, like the general and the primary budget balances, even though it features in the Fiscal Compact.
This makes a big difference because the dose of austerity could have been smaller, perhaps much smaller, if the cyclically adjusted budget balance had been a target in the economic adjustment programs. A smaller dose could have perhaps helped break the vicious cycle of excessive austerity deepening the recession and leading to missed fiscal targets, necessitating more restrictive measures.
Of course, Italy and Spain are implementing their own economic programs and this is not an issue of immediate concern for them, unlike for Greece and Portugal. However, convincing the European Union authorities, and more specifically the German government, to include the structural budget balance as a target variable in bailout programs along the lines of the Fiscal Compact could have been to the benefit of everyone concerned.



Ireland - keeps getting shafted....


It has endured a fiscal squeeze of 16pc of GDP. It has stabilized the colossal debts left from taking on the gambling losses of Anglo Irish Bank at EU behest, that is to say from shielding German, British, Dutch and Belgian lenders from systemic contagion at a critical moment.
It has clawed its way back to market credibility, issuing bonds at respectable rates. “Our last issue of routine 3-month treasury bills was at 0.26pc, not quite what Germany gets but very low,” said finance minister Michael Noonan.
It was spared serious contagion from last week’s anti-austerity revolt in Italy, evidence of sorts that the Celtic Tiger is off the sick list. Deo volente, it will be the first of the EMU victim states to regain its sovereignty by early next year and escape control of the EU-IMF Troika, though it will answer to inspectors for another 20 years and the yet unborn will be paying off the €67bn of Troika indenture until 2042.
“If measured in terms of what the Troika expects, we have been very successful,” said Mr Noonan.
Other measures are less cheerful. The EU’s latest survey on “poverty and social exclusion” shows that the number of children at risk in Ireland has reached 37.6pc, worse than Italy (32pc), Greece (31pc), Spain (30pc) or Portugal (29pc).


There is a fascinating twist to the data, a glimpse of what 1930s deflation can do to the social structure of an indebted society. Just 12.9pc of Ireland’s elderly are at risk of poverty, lower than in Germany, Austria, Belgium or Britain.
Budget-busting pensions granted in the good times have risen in real terms. So have savings. But young families that took out 100pc mortgages at the peak of the bubble face debt servitude after a 58pc fall in Dublin property prices, if they can keep their jobs. “What we need here in Ireland is a good dose of inflation,” confided one official.
European Commission chief Jose Manuel Barroso was in Dublin last week to celebrate Ireland’s heroic fortitude. Brussels needs a poster-child for its theory of “expansionary fiscal contraction” and discerns one in the Gaelic mists.
“The Irish economy is turning the corner. It shows that the bailout programmes can work”, he said, citing fresh figures that show a dead-cat bounce in jobs last Autumn before Europe crashed back into recession.
Whether or not Ireland’s economy is in fact turning the corner is a subject of hot debate, but what is crystal clear is that none of the Club Med countries trapped in depression can easily replicate the Celtic come-back.
Ireland will export as much as India this year, and more than Brazil, fruit of an industrial policy dating back to the early 1990s that has made the country a hub for global pharma, software, medical equipment, and financial services. It will rack up a very German current account surplus above 4pc of GDP.
Exports make up 106pc of GDP, compared to 35pc for Portugal, 30pc for Spain 30pc, 29pc for Italy, and 21pc for Greece. Ireland has a much higher trade gearing than Club Med peers, and that is what has kept the country afloat despite a 26pc collapse in domestic demand. Growth was 1.5pc in 2011 and 0.9pc in 2012, better than the EU average.
The export story is by now well-known. The global drug giants almost all have plants in Ireland, employing 44,000 people and producing half the country’s merchandise exports, though this may be losing its edge. The country is facing a “Patent Cliff” as a clutch of drugs - such as Pfizer’s statin pill Lipitor - come off patent in the US. It is the reason why Irish exports slipped 15pc in December.
Microsoft, Google, Facebook, Twitter, and a host of household names have regional headquarters in Dublin, whether drawn by a corporation tax of 12.5pc or by the critical mass of a high-tech skills. How much value is added to the Irish economy is an open question. Google rotates some 45pc of its global revenues through Ireland under transfer pricing schemes.
Even so, Ireland is clearly a different animal from the Greco-Latins. It never had a seriously misaligned currency within EMU. It had a misaligned monetary policy that set off a credit bubble. Real interests set in Frankfurt averaged minus 1pc from 1998 to 2007 (compared to plus 7pc in the early 1990s). As Irish eurosceptics foretold, the effects were ruinous.
The country has since deflated the froth. The gap in unit labour costs with the EMU-core has been closed again, at least on paper. “We have cut costs right through the economy with an internal devaluation of 15pc or 16pc,” said Mr Noonan.
One can quibble with the claims. Nearly all the gain in labour costs has been in the non-tradeable public sector - nurses, policemen, teachers - where wages have been slashed 14pc, with another 5.5pc to come. Productivity levels have been flattered by the annihilation of the building industry. “Private wages have declined only modestly,” says the IMF in its latest report.
Yet the point remains that Spain has not begun to see this level of deflationary shock. Were it to try with such a closed economy, it would tip into free-fall, push the jobless rate above 30pc, and cause the debt trajectory to spin out of control. As for Italy, its unit labour costs rose as fast as Germany’s last year. Its deflation lies ahead.
Club Med can take no comfort from Ireland’s success, but is even Ireland itself out of the woods? The budget deficit is still 8pc of GDP five years into the ordeal, and public debt is already nearing the limits of viability at 121pc of GDP this year.
Dublin has pencilled in a 3pc deficit by 2015, but dissidents say 6pc is more likely. The IMF warns that a “stagnation” scenario of 0.5pc growth a year into the middle of the decade would cause the debt ratio to spiral up to 146pc by 2021.
That is a serious risk as Europe persists in botching macro-economic policy, and US austerity threatens the fragile world expansion later this year.
As you can see from this chart, investment has collapsed to 10pc of GDP.
Source: CSO/National Treasury Management Agency
This is the lowest in recorded Irish history and the currently the lowest in the EU. “If this does not recover over the next couple of years, I’ll be worried”, said Rossa White from the National Treasury Management Agency.
Indeed, it is the crux of the matter. Spending has been slashed through the muscle and into the bone. This presumably is what Laszlo Andor, the EU employment commissioner, was talking about last week when he decried a slash-and-burn policy in the name of competitiveness that is tipping the crisis economies into a “downward spiral” and making it even harder to cut control debts. Are his colleagues in the Berlayment listening to him?
A mass exodus of 40,000 to 50,000 each year to the four corners of the Irish Diaspora have kept unemployment down to 14.1pc, but 60pc of those left on the rolls have been out of work for over year -- the highest rate in Europe -- and that is where the “hysteresis” effects of lasting damage bites hardest. It steals from growth from the future by degrading work skills.
Irish trade union chief David Begg was speaking with poetic licence last week when he accused the Troika of doing more damage to Ireland than the British Empire ever did in eight hundred years, snapping that the English had at least left some “beautiful Georgian buildings.” Needless to say, he has not forgotten the Wexford massacre and the potato famine, and nor have we at this newspaper. Yet he made his point.
“When we meet the Troika, we tell them that austerity is not working, and they tell us that it is. It is a dialogue of the deaf,” he said.
Mr Begg said he had come to realise that EMU is constructed in such a way that the “entire burden of cost adjustment” falls on workers if there is macro-shock. He is right. An internal devaluation is achieved by forcing unemployment to such excruciating levels that it breaks the back of labour resistance to pay cuts. It is the polar opposite of a currency devaluation that spreads the pain. Note that Iceland’s unemployment is just 5.4pc today, and Britain’s is 7.7pc.
“Such a callous disregard for distributional justice - which we have witnessed in this country over the last five years - is a fatal flaw,” he said.
“For much of its history, European integration has proceeded on the basis of a ‘Permissive Consensus’. European citizens thought it was a good thing, or at least did no harm. I doubt that view is still current. From what I hear in the circles in which I move, today’s labour movement is disaffected from the European project,” he said.
“What will happen when people eventually realise that they are trapped in a spiral of deflation and debt. We may reach the tipping point,” he said.
Europe’s labour movement is the dog that has not barked in this long crisis. Bark it will.









In Italy , the elites are playing with fire - after not liking the last Election results , would they dare install a second Technocratic and unelected Government ? Maybe is the answer.....



http://www.telegraph.co.uk/finance/financialcrisis/9906213/Anger-builds-in-Italy-as-old-guard-plots-fresh-technocrat-take-over.html





Anger builds in Italy as old guard plots fresh technocrat take-over

Italy’s president Giorgio Napolitano is exploring the creation of a second technocrat government to break the political log-jam and calm markets after key parties failed to reach an accord, risking a serious popular backlash.

Comedian Bepe Grillo could claim up to 20 per cent of the vote during the Italian election. Harriet Alexander reports on the man the causing the mainstream politicians a major headache.

Comedian Beppe Grillo repeated his vow to “bring down the old system”. Photo: Reuters


Italian officials say the Bank of Italy’s governor Ignazio Visco is front-runner to take over as premier despite warnings that this will be seen as an elitist ploy. It is far from clear whether the Democrats (Pd) in charge of the lower house will back the idea.
The plans amount to a near replica of the outgoing team of Mario Monti, though one greatly weakened by the earthquake upset in the elections a week ago. Almost 57pc of the vote went to groups that vowed to tear up the EU-imposed austerity agenda.
Stefano Fassina, the Pd economics chief, said his party is vehemently opposed to “any form of technocrat government, new or old”, insisting that the election result must be respected. Mr Fassina said 90pc of the country had rejected the Monti agenda and warned that it would be a grave error to try to force through the same reviled plans a second time.
Comedian Beppe Grillo repeated his vow to “bring down the old system” and dismissed the latest talks as cattle market trading by a depraved political class trying to circumvent the will of the people. “I repeat for the umpteenth time, the Five Star Movement will not back any government. It will vote law by law in keeping with its platform,” he said.
“We’re not a political party, we’re a civic revolution. This country is in ruins with two trillion in debts and we have to rebuild it from scratch,” he told a scrum of journalists. In a rhetorical play on the slogans of 1789 and 1917 he exhorted “all citizens” to descend on parliament.






Spain - the latest corruption and political  intrigue as economic weakness continues - for years......

http://elpais.com/elpais/2013/03/03/inenglish/1362332253_539489.html

Mystery still surrounds the abortive inspection by police at PP headquarters

Interior opens inquiry to determine who ordered fingerprints to be dusted at party’s offices

Lawyer says that Bárcenas’ computers were not stolen, just put in another room for safekeeping

Police rushed to the Popular Party (PP) national headquarters on Friday afternoon after Luis Bárcenas filed a criminal complaint over stolen computers setting off considerable confusion throughout the day and raising the stakes even higher in a legal battle between the party’s embattled former treasurer and PP officials whom he worked for 30 years.
What was to be an inspection by a scientific police brigade to dust for fingerprints and take other evidence where the alleged robbery occurred was immediately canceled when Madrid’s police commissioner stepped in and stopped the investigation, sources said.
This perplexing situation unfolded over the course of several hours after Bárcenas filed a complaint against the PP’s chief counsel, Alberto Durán, for allegedly breaking into his office and stealing his laptops. It was the latest round in an ongoing public battle between the man who handled the party’s finances over the past two decades and top PP officials who are trying to distance themselves from balance sheets he purportedly kept that recorded bonuses paid out to the party hierarchy from a slush fund.
Bárcenas has filed a civil lawsuit against the PP for firing him from his post as political consultant without just cause on January 31, the day EL PAÍS published the handwritten ledgers. The PP, meanwhile, maintains that Bárcenas has not worked for the party since 2010, when he stepped down as party treasurer after being officially targeted as a probable defendant in the massive Gürtel kickbacks-for-contracts inquiry involving certain local PP governments and a network of corrupt businessmen.
Since then, Bárcenas made more headlines when it was discovered that he had 22 million euros – 38 million according to his acknowledgement before the High Court – in Swiss bank accounts. A judge has confiscated his passport and ordered him to report every 15 days as the investigation continues.
But Friday’s incident has only widened the rift between the disgruntled former treasurer and his one-time employer. About 1pm, Bárcenas walked into the police station in the Salamanca district, which he lives, to file a complaint against Durán for breaking the lock to his office at party headquarters on Génova street on February 18 and taking his personal computers so that they could be evaluated by technicians. What subsequently occurred afterwards is still unclear. According to sources, the Salamanca commander contacted his counterpart at the Chamberí district, where the PP headquarters are located, so that they could hand a Durán a citation so that he could come to Salamanca and give a statement, according to different police and PP sources.

Durán came downstairs and spoke to the officers in a small room where vending machines are located
About 30 minutes after Bárcenas lodged his complaint, the Chamberí station contacted the scientific police brigade to go PP headquarters to conduct an on-site inspection, including dusting for fingerprints and collecting any DNA evidence to determine who was responsible for the break-in, police sources said.
After they arrived, three officers from that brigade were told by the party’s security team that they would have to wait until PP officials were notified to see if they could proceed with the investigation. While they were waiting, an officer from the Chamberí station arrived with the subpoena for Durán. According to party sources, he was allowed to go up to the sixth floor where the party officials have their offices while the brigade team waited at the entrance of the PP headquarters.
Sometime later, Durán came downstairs and was invited to speak with the three waiting officers in a small room where vending machines are located. The brigade officers explained to him why they were there: to take fingerprints from Bárcenas’ office. But Durán told them that the former treasurer didn’t have an office, except for a space in the Andalusia conference room that he had been using. He then explained that he had sent Bárcenas several emails advising him to come and pick up his personal effects or otherwise they were going to be put in another room for safekeeping, but he never answered Durán.
The lawyer said that he was willing to go down to the Salamanca district station to give a statement.
Meanwhile, according to police sources, the Madrid provincial police commissioner ordered the technical police not to conduct the inspection because it wasn’t necessary.
It is not clear who ordered the scientific brigade to go to the PP in the first place. The Interior Ministry has opened an internal inquiry into the matter.



http://economia.elpais.com/economia/2013/03/02/actualidad/1362258698_087711.html

Assault on Banco de Valencia

The bailout fund accuses two former and the former CEO of offenses that caused a damage of 630 million to the state.

Almost all real estate transactions were


Facade of Banco de Valencia in the city of Valencia. / CARLES FRANCESC
The Banco de Valencia, which the Minister of Economy, Luis de Guindos, recently described as the sum of "all things badly," suffered one of the biggest assaults of which has been a Spanish financial institution. Suffered property damage is around 630 million euros, according to the eight complaints filed so far in the High Court by the Fund for Orderly Bank Restructuring (FROB), which has managed the company since it was taken over in late 2011. The authors were the bank's own executives-including its president José Luis Olivas and its former CEO Parra-Sunday, several major developers Valencian, Spanish and a renowned entrepreneur, as president of Metrovacesa Joaquín Rivero as the FROB, who has reported a total of 29 people.
The Banco de Valencia, which the Minister of Economy, Luis de Guindos, recently described as the sum of "all things badly," suffered one of the biggest assaults of which has been a Spanish financial institution. Suffered property damage is around 630 million euros, according to the eight complaints filed so far in the High Court by the Fund for Orderly Bank Restructuring (FROB), which has managed the company since it was taken over in late 2011. The authors were the bank's own executives-including its president José Luis Olivas and its former CEO Parra-Sunday, several major developers Valencian, Spanish and a renowned entrepreneur, as president of Metrovacesa Joaquín Rivero as the FROB, who has reported a total of 29 people.

Eight complaints of FROB: 29 recipients

- Operation Metrovacesa.involved in this operation Joaquín Rivero, president of Metrovacesa. Rafael Ruiz-Jarabo, businessman. Sunday Parra, former CEO of Banco de Valencia.
- The Reva. states The state fund several construction related businesses: Salvador Vila, promoter. Juan Bautista Soler, promoter. Carlos Pascual, notary. Fernando Polanco, businessman. Teresa Villalba. Monferrer Alfonso, former director of the bank's real estate holdings. It is also linked Domingo Parra.
- Investment in Alicante and Murcia . This operation includes: José Luis Olivas, president of Bancaja, Banco Valencia and Valencia. José Cortina, former CEO of Bancaja Habitat. Aurelio Izquierdo, former Director General of Bancaja Habitat and president of Banco Valencia. Ramon Salvador Agueda, promoter, Parra and Monferrer.
- Homes in El Puig. Vicente Fons, businessman. Maria Victoria Soler, exvicepresidenta Metrovacesa.Izquierdo, Monferrer and Parra.
- Land south of Valencia .Sunday Parra, his wife, Maria Jose Aznar, and his son José Parra. Andrew Dimas, businessman. Francisco Andres, businessman.Salvador Pons, businessman.Isabel Pons.
- Business in Móstoles. Tito José San Román Pajares, businessman. San Román José Antonio Rosado, businessman. Parra.
- Palma de Mallorca. Cursach Society (Bartolomé Cursach, entrepreneur), Parra and Monferrer.
- Aguas de Valencia. Calabuig Eugenio, president of Aguas de Valencia. Enrique Calabuig.Celia Calabuig. Pedro Calabuig. Maria Mercedes Calabuig. Parra and his wife.
The rescue fund state designated as primarily responsible to Sunday Parra, contained in the eight complaints and you're accused of fraud, misappropriation and unfair administration. The FROB accused of ruinous decisions for the bank, very lucrative for entrepreneurs involved and which took on hand. Only the first of the lawsuits, filed last summer, in which he accompanied several members of the family and its background Calabuig control of Aguas de Valencia, the bailout fund that Parra remains pocketed more than 14 million euros in complex corporate transactions designed to clear the money trail.
The bill alleged criminal and irresponsible management of Parra, Olivas, who also chaired the Generalitat Valenciana and Bancaja-president Aurelio Izquierdo-bank-and-responsible Monferrer Alfonso estate holdings in the entity, even though the background directed by Enrique Carrascosa state has laid off more than 60% of the workforce, employers still have taken the one hand, the shareholders, who on Friday saw the titles lost 90% of its value until it is reduced to a penny. And secondly, the taxpayers: the entity has required 5,500 million in state aid that will not recover. Your buyer Caixabank, who paid a euro for the entity, will also include an asset protection scheme, the cost will rise another 500 million.The sum amounted to 6,000 million.
One of the objectives expressed by the FROB to announce the complaints was not in vain, trying to recover as much as possible of the money injected.
Most of the complaints are related to loans granted by the bank for real estate projects frustrated, which were canceled in exchange for participation in companies and assets, especially land-entity paid the price of gold, although in several cases the bursting of the housing bubble was a fact.
That would be, as the FROB, the case of transactions agreed with the promoter Ramon Salvador, owner of abundant land in Alicante and Murcia and charged in the case Brugal Part investigating the rigging of the general plan of the city of Alicante. In the operation known as La Reva, on more than nine million square meters of land in Riba-roja de Turia (Valencia), with employers Juan Bautista Soler, Salvador Vila and others. Project to build 6,500 homes in El Puig (Valencia), with Maria Victoria Soler, Juan Bautista and sister exvicepresidenta Metrovacesa. And the orange groves planned on the families of Andrew and Pons in Oliva (Valencia).
Complaints also reveal an allegedly criminal involvement of former CEO shareholding in the battle that was fought around Metrovacesa and its subsidiary Gecina, the largest French property, with Rivero and Rafael Ruiz-Jarabo. And credited Parra's appetite exceeded the Valencia region, as shown by the complaint that includes the employer Tito José San Román Pajares, Móstoles by an operation, and it is directed against a society of Cursach Bartholomew, president of RCD Mallorca.

http://economia.elpais.com/economia/2013/03/02/actualidad/1362257899_219022.html

"Spain will have 10 years of crisis and a 30% internal devaluation"

The president of the prestigious German economic institute advises Rajoy to follow the German model


Hans-Werner Sinn poses in IFO headquarters in Munich. / MICHAELA REHLE (REUTERS)
It should not be easy to be Angela Merkel. German Chancellor takes years dictating European economic policy and faces, by the left flank, a large group of the brightest economists Stiglitz, Krugman, Blanchard and many others, who believe that neoliberal ideas are embedded in basic infrastructure Berlin and Europe, and they warn that austerity will not generate neither growth nor the trust we promised Berlin and Brussels.Just on the other side, there is a second group accuses Merkel of wimp.They argue that Berlin should oppose frontally European policies, from bailouts to the extraordinary measures the ECB, because they are a kind of placebo therapy wrong will not get more than delay the necessary adjustment and very painful to come. Hans-Werner Sinn, president of the influential German Ifo think tank, is perhaps the best example of that faction claiming to Merkel who opposes almost everything, holding that the wave of austerity has only just begun.

Controversial, opinionated, with a reputation for rigorous and with that peculiar air give Captain Ahab beard and ideological grounds that it becomes a kind of Moby Dick in the economy, Sinn is the closest thing to a pop star among German economists. His books-with titles hopeful: Can save Germany? - Are selling like hotcakes. His talks fill auditoriums.His views are a formidable traction, even in the chancery, who faces when considering yielding too much to Europe. Agitator and propagandist himself, at the start of the crisis set off any alarms with an apocalyptic prophecy: "Years from now, our children will be forced to go to the South of Europe to get our money back." Now, proclaims that the South has to undertake a sensational internal devaluation, and that there are no excuses: that or the end of the euro. Come from Munich, Sinn receives this newspaper at the headquarters of the Centre for European Policy Studies (CEPS) in Brussels. Hits hard. But interestingly some of their recipes match those of his antagonists most lefties and Keynesians. Things of that lasagna complexities which has become the European economy.
Question . Considers that the South has just begun the path settings.What then served three years of austerity?

"Less austerity now will mean more pain in the future"
Response . The tango effect that caused the euro for years now requires a strong rebalancing. There are no easy solutions: going to be painful. There are three alternatives.A: internal devaluation in the South. Two: internal devaluation in the South through the North expansion. And three out of the euro in some countries. Most likely a combination of these options. Spain, Portugal and Greece need an internal devaluation of 30%, France 20%, Italy, a price cut of 10%. While Germany be 20% more expensive. It is true that since the start of the crisis there were adjustments in the periphery, but generally poor.

"Greece is desperate, can not succeed with the euro"
P . What awaits Spain?

"Rajoy should back down wages but not win the election"
A. The advantage of Spain is its potential to recover competitiveness.Has shown flexibility, and that makes it possible to improve through exports.The disadvantage is its foreign debt of more than a billion euros. But most important is competitiveness, and there I am moderately optimistic. As well, I have no doubt that they expected a decade, even more austerity to reach that 30% internal devaluation.

"The only possibility is to move the German model across the EU"
P. The End of the tunnel ... 2023?
R . Yes, something like that, because the first measures just adopted. When Germany was in crisis, back in 1995, it began to raise its head until 2002, seven years later. Spain needs a period corresponding to that society and politicians understand the gravity of the crisis, to create the enabling environment for reform. That is coming. From there you have to wait another decade for efforts to succeed.
Q. Would Germany should not change policy to smooth the passage of the desert?
R . Germany can expand, other surplus countries can do the same. It is preferable that the German savings do not go to other countries, but believes a bubble in house. Market forces will favor this movement, although Germany is not easy. There is already an incipient construction boom, and prices and wages go up along with the economy. The export competitiveness will drop gradually.
Q. Is it that easy?
A. Maybe not. Germany will not expand as fast as did the South when we needed: the Germans have a paranoid relationship with inflation. But there are things that can help: a fiscal devaluation in the periphery (reducing social security contributions and raise VAT) facilitate things. In addition, there must be significant in the South take away: some countries can not meet their debts, and that's better than the bailouts.
Q. What mutualise debt?
R. is the right recipe to resurrect conflicts. It shows the history of the U.S..
P. The IMF, which is not exactly heterodox defends mutualisation. And keeps excess European austerity is counterproductive.
R . In the euro zone austerity is inevitable. It is an extremely difficult process, but there is no alternative. Some would want fewer adjustments. I understand. But less would mean less suffering austerity now in exchange for more pain in the future and increase the risk of rupture of the euro. There should be no illusions about the pain that comes. It will be tough. The internal devaluations can be cruel. But if a country thinks it will be too much, you can leave the euro.
P . This is the case of Greece, according to his thesis. What about Spain?
R . I do not think that Spain has to leave. Greece itself: is in a desperate situation, can not thrive in the euro. The current European demands sacrifice a generation to mass unemployment. Portugal is in a similar situation.
Q. What role does the ECB?
R . The ECB has used a compelling logic to not allow the collapse. But printing money underestimating the risks is not a long term solution. It has eased the pain, but it only postponed the necessary adjustments.The ECB, the Commission and the IMF misdiagnosed the crisis as if it were a purely fiscal and financial, without falling into the loss of competitiveness of the South. So we come to tinkering rather than real solutions. There are serious risks of destabilization to continue with the policy of bailouts.
Q. In Spain there is the feeling that the German Government crisis deepens with malicious statements and decisions ...
R . Depends ... The crisis was caused by excessive capital flows from Germany to the south, it overheated economies of the periphery and became dependent on foreign credit. Markets have understood that mistake, they are correcting. But you can not wash your face without getting wet.
Q. Any advice for Rajoy?
R. Rajoy must pass another more flexible labor reform wages downward. That made ​​Schröder in 2003. Eliminated the minimum wage and the welfare state rolled depriving millions of people of their social benefits: it caused riots and protests. It took the position. However, it was the right policy. Rajoy may not get with that rule a long time, but that's what Spain needs.
P. Advises germanizar Spain: move the German model throughout Europe.
R . That is the only possibility.




http://www.telegraph.co.uk/news/worldnews/europe/france/9904848/Let-them-eat-horse-say-French-officials.html

( Taking a page from Queen Marie I see... And we know how that worked out ! ) 

http://www.telegraph.co.uk/news/worldnews/europe/france/9904848/Let-them-eat-horse-say-French-officials.html



Officials insist that as there is no health risk from the dishes and that their were withdrawn because of mislabelling they can be donated.
Stéphane Le Foll, France's agriculture minister said, however, it was for charities to decide if they wanted the controversial meals.
"From its side the government can only say that as far as health is concerned, it's fine. It's not for me to decide what should be done with it," Le Foll said.
His junior minister Benoît Hamon added: "It's up to the associations to decide under what conditions they may wish to take these dishes. Those who don't want them won't take them."
One of France's leading charities, Secours Catholique said the question of giving the withdrawn meals to the poor posed a "serious ethical problem" and it would refuse.


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