Category : Euro

(FT) Scott Minerd–Europe must act now to avoid ”˜lost decade

The much heralded asset-backed securities purchase programme will only yield about €250bn-€450bn in assets over the next two years. More LTRO (or the newer targeted LTRO) will prove a challenge as sovereign bond yields in Europe are so low that a large balance sheet expansion through this means seems impractical. Perhaps there is another €500bn-€750bn to do over the next year or two. Outright purchases of sovereign debt would prove politically difficult, as many would interpret such purchases as violating the ECB’s mandate and the matter would probably end up in the European courts.

The bottom line is that none of the tools currently on the table will get the job done. There are not enough assets to purchase or finance and the timetable to get anything done is too long. Policy makers do not have the luxury of a year or two to figure this out. The ECB balance sheet shrinks virtually daily and as it shrinks, the monetary base of Europe is contracting and putting downward pressure on prices. Europe is clearly in danger of falling into the liquidity trap, if it is not already there. The likelihood of a “lost decade” like that experienced in Japan is rapidly increasing. The ECB must act and act quickly.

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Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Politics in General, The Banking System/Sector, Theology

(Economist) The world’s biggest economic problem–Deflation in the euro zone is all too close

The world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan’s economy is struggling and China’s growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond. But the biggest economic threat, by far, comes from continental Europe.

Now that German growth has stumbled, the euro area is on the verge of tipping into its third recession in six years. Its leaders have squandered two years of respite, granted by the pledge of Mario Draghi, the European Central Bank’s president, to do “whatever it takes” to save the single currency. The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity. Prices are falling in eight European countries. The zone’s overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.

Optimists, both inside and outside Europe, often cite the example of Japan. It fell into deflation in the late-1990s, with unpleasant but not apocalyptic consequences for both itself and the world economy. But the euro zone poses far greater risks. Unlike Japan, the euro zone is not an isolated case: from China to America inflation is worryingly low, and slipping.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, History, Stock Market, The Banking System/Sector, Theology

(Bloomberg) Draghi Takes ECB Deposit Rate Negative in Historic Move

The European Central Bank cut its deposit rate below zero and said it would announce further measures later today as policy makers try to counter the prospect of deflation in the world’s second-largest economy.

ECB President Mario Draghi reduced the deposit rate to minus 0.10 percent from zero, making the institution the world’s first major central bank to use a negative rate. Policy makers also lowered the benchmark rate to 0.15 percent from 0.25 percent.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Globalization, Housing/Real Estate Market, Labor/Labor Unions/Labor Market

(WSJ) Euro-Zone Economy Shows Weaker-Than -Expected Expansion

The euro zone’s economy expanded at a weak pace last quarter despite a strong recovery in Germany, putting added pressure on the European Central Bank to enact fresh easing measures to prevent the region from sliding into a lengthy period of low inflation and economic stagnation.

Gross domestic product grew 0.2% in the euro zone during the first quarter compared with the final three months of 2013, the European Union’s statistics agency Eurostat said Thursday, well short of the 0.4% quarterly gain expected by economists.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Theology

(Telegraph) Top German body calls for QE blitz to avert deflation trap in Europe

A leading German institute has called for full-blown quantitative easing by the European Central Bank (ECB) to head off a deflation spiral, marking a radical shift in thinking among the German policy elites.

Marcel Fratzscher, head of the German Institute for Economic Research (DIW) in Berlin, demanded €60bn (£50bn) of bond purchases each month to halt the contraction of credit and avert a Japanese-style trap.

“It is high time for the ECB to act. Otherwise Europe risks falling into a dangerous downward spiral of sliding prices and declining demand”, he wrote in Die Welt.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Globalization, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, Theology

ECB Executive Board member Benoît Cœuré says ECB is "considering very seriously" negative rates

To help money flow more evenly across the currency area, Coeure said the idea of cutting into negative territory the rate the ECB pays banks to hold their deposits overnight was “a very possible option”.

“That is something we are considering very seriously. But you should not expect too much of it,” he said of a negative deposit rate.

The ECB left policy on hold last week but President Mario Draghi put markets on alert for possible action in March, saying the Governing Council would have more information at its disposal by then, including new forecasts from the bank’s staff that will extend into 2016 for the first time.

Read it all from Reuters.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Globalization, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, The Banking System/Sector, Theology

France's credit rating cut by S&P to AA

Standard and Poor’s (S&P) has cut France’s credit rating to AA from AA+.

The moves comes almost two years after the country lost its top-rated AAA status….

S&P said in its statement: “We believe the French government’s reforms to taxation, as well as to product, services and labour markets, will not substantially raise France’s medium-term growth prospects and that ongoing high unemployment is weakening support for further significant fiscal and structural policy measures.”

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, France, Politics in General, The Banking System/Sector, Theology

(BBC) China tells US to avoid debt crisis for sake of global economy

A senior Chinese official has warned that the “clock is ticking” to avoid a US default that could hurt China’s interests and the global economy.

China, the US’s largest creditor, is “naturally concerned about developments in the US fiscal cliff”, vice finance minister Zhu Guangyao said.

Washington must agree a deal to raise its borrowing limit by 17 October, or risk being unable to pay its bills.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Asia, Budget, China, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, Foreign Relations, G20, Globalization, House of Representatives, Office of the President, Politics in General, President Barack Obama, Senate, Stock Market, The National Deficit, The U.S. Government

(Reuters) Angela Merkel romps to victory but faces tough coalition choices

Angela Merkel won a landslide personal victory in Germany’s general election on Sunday, but her conservatives appeared just short of the votes needed to rule on their own and may have to convince leftist rivals to join a coalition government.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Germany, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, Theology

The Economist on the German Election–One woman to rule them all

Ever since the euro crisis broke in late 2009 this newspaper has criticised the world’s most powerful woman. We disagreed with Angela Merkel’s needlessly austere medicine: the continent’s recession has been unnecessarily long and brutal as a result. We wanted the chancellor to shrug off her cautious incrementalism and the mantle of her country’s history””and to lead Europe more forcefully. She is largely to blame for the failure to create a full banking union for the euro zone, the first of many institutional changes it still needs. She has refused to lead public opinion, never spelling out to her voters how much Germany is to blame for the euro mess (nor how much its banks have been rescued by its bail-outs). We also worry that she has not done enough at home: in recent years no country in the European Union has made fewer structural reforms, and her energy policies have landed Germany with high subsidies for renewables and high electricity prices.

And yet we believe Mrs Merkel is the right person to lead her country and thus Europe. That is partly because of what she is: the world’s most politically gifted democrat and a far safer bet than her leftist opponents. It is also partly because of what we believe she could still become””the great leader Germany and Europe so desperately needs.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, Germany, Globalization, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Der Spiegel) Almut M̦llerРMerkel 3.0: Stasis You Can Believe In

Since the euro crisis began, many governments across Europe have been swept from power. France last year saw a presidential campaign heavily focused on Europe, and calls for alternatives to austerity have grown ever louder. So why is it that Germany, the country key to solving the euro crisis, seems immune to this polarization of views on the future of economic and monetary union?

Partly it has to do with the Greens and the Social Democrats, two opposition parties struggling to differentiate their euro policies from Merkel’s government, a coalition of her conservatives and the business friendly Free Democrats (FDP). Both the Greens and the SPD have supported all major euro rescue measures thus far. Even the Left Party, a stronger critic of the government, recently confirmed its overall commitment to the common currency. There is currently no anti-euro party in Germany parliament, with newcomers such as the euro-skeptic Alternative for Germany, media attention notwithstanding, yet to demonstrate their potential at the ballot box.

One reason is that Germans are still not feeling the pinch of the crisis. On the contrary, they continue to hear good news about strong exports, lower unemployment and economic growth. With the election looming, it is no surprise that the Merkel administration is wary of spoiling this mood of complacency by addressing the downsides of the “German model” for fellow euro-zone member states.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, Germany, Globalization, Politics in General

(Reuters) Portugal political crisis deepens as bond yields soar

Two more Portuguese ministers from the junior ruling coalition party were ready to resign on Wednesday, local media said, deepening turmoil that could trigger a snap election and derail Lisbon’s exit from an EU/IMF bailout.

Multiple newspaper radio and television reports said Agriculture Minister Assuncao Cristas and Social Security Minister Pedro Mota Soares will follow their CDS-PP party leader Paulo Portas who tendered his resignation on Tuesday. Party officials were not available to comment as the party’s executive commission was in a meeting.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, Globalization, Politics in General, Portugal, Stock Market

(WSJ) Europe's Transaction-Tax Climbdown

European governments are figuring out that taxing financial transactions won’t be a magical money machine and that the proposed levy might even damage the European economy.

Reuters first reported Thursday that EU officials are scaling back a transaction tax proposal supported by 11 countries that is supposed to take effect in January. The levy could instead be introduced on a “staggered basis,” one official told the news agency. The first phase might only tax sales and purchases of shares, not bonds or derivatives transactions, and at 0.01% instead of 0.1% as currently proposed. A rate of zero is more appropriate.

Enthusiasm for the tax has been dimming for a while, including in governments that have previously backed it. Christian Noyer, the Governor of the Banque de France, said in Paris on Tuesday that the levy will raise “nothing at all.” One unnamed EU official told Reuters that a scaled-back transaction tax would reap revenue of less than €3.5 billion. The full-fledged levy, as proposed by the European Commission in February, was supposed to rake in €31 billion a year.

Read it all (if necessary another link may be found here.

Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, Politics in General, Stock Market, Taxes, The Banking System/Sector

(NY Times Op-Ed) Ross Douthat–Prisoners of the Euro

But right now, the E.U. project isn’t advancing democracy, liberalism and human rights. Instead, it is subjecting its weaker member states to an extraordinary test of their resilience, and conducting an increasingly perverse experiment in seeing how much stress liberal norms can bear.

That stress takes the form of mass unemployment unseen in the history of modern Europe, and mass youth unemployment that is worse still. In the Continent’s sick-man economies, the jobless rate for those under 25 now staggers the imagination: over 40 percent in Italy, over 50 percent in Spain, and over 60 percent in Greece.

For these countries, the euro zone is now essentially an economic prison, with Germany as the jailer and the common currency as the bars. No matter what happens, they face a future of stagnation ”” as aging societies with expensive welfare states whose young people will sit idle for years, unable to find work, build capital or start families.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Economy, Euro, Europe, Foreign Relations, Politics in General

Ambrose Evans-Pritchard–Germany will think twice before saving France next time

In the thirty or so years that I have been following EU affairs ”“ or is it nearer 35 years now since I studied in French literature in Paris, and German philosophy in Mainz ”“ I have never seen ties between Europe’s two great land states reduced so low.

The French Socialist Party crossed a line by lashing out at Chancellor Angela Merkel in person. It is one thing to protest “German austerity”, it is quite another to rebuke the “selfish intransigence of Mrs Merkel, who thinks of nothing but the deposits of German savers, the trade balance recorded by Berlin and her electoral future”.

There is no justification for such an ad hominem attack. German policy is indeed destructive, but that is structural. It is built into the mechanisms of EMU and the anthropological make-up of the enterprise.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, City Government, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, France, Germany, History, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

'How do we fix this mess?' Archbishop Justin Welby on restoring trust and confidence after the crash

Culture change in financial services will not be achieved by “light touch” or “heavy touch” regulation, Archbishop Justin said at a Westminster discussion organised by the Bible Society.

Instead the banking sector must adopt “an aim of service to society and not mere rent-seeking, and a culture of virtue based in the realities of daily life and not a fantasy nirvana,” he said.

Describing what this change of culture might look like, the Archbishop said it would require “a ruthless honesty and a deep willingness to be made very uncomfortable indeed through listening to things one does not want to hear”.

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Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, --Justin Welby, Archbishop of Canterbury, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, European Central Bank, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Law & Legal Issues, Personal Finance, Politics in General, Religion & Culture, Stock Market, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, Theology

Walter Russell Read–The Wreck of the Euro

We have no way of knowing how this all ends. One problem is that the smartest solution””having Germany and perhaps a handful of other northern countries leave the euro for a new currency (the Deutche Mark 2.0, or a “neuro” for northern Europe)””would make life easier in the south. The south based euro would fall in value, but since debts and contracts are denominated in that currency, the adjustment would be the same as in a normal devaluation. This course would likely lead quickly to a new burst of growth in the south, though inflation and other problems would take a toll over time.

But the euro’s break up day would cause a lot of problems for Germany and its northern friends….

So we’re in an interesting situation. The crisis is crippling the south, but the south has no power to resolve the crisis. The crisis isn’t comfortable for the north but still looks less painful than the solution. So the north, which has the ability to resolve the crisis, doesn’t have the will to do it and the south, which has the will, lacks the ability.

Read it all (and please note that the Financial Times article by Wolfgang Münchau which is mentioned, entitled “The riddle of Europe’s single currency with many values,” is indeed a must read as Mr. Read says).

Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Very Early Margaret Thatcher Was Correct About Why The Euro Would Be Such A Big Problem

Basically, she outlined the problems with the euro perfectly, that Germany would chafe at the inevitable need for greater inflation, and that the poorer countries would inevitably be uncompetitive and need bailouts that would not easily be forthcoming.

This paragraph is from “The Path To Power,” where she discusses conversations with John Major (her successor) about negotiating with the rest of Europe. She just totally nails the inflation and competitiveness angles….

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Economy, England / UK, Euro, European Central Bank, History, Politics in General

(FT) Gavyn Davies–Another year in thrall to the central bankers

Understanding the developing attitude of the central banks, and the effects of their actions, obviously remains central for investors in all financial assets. The “big picture” for global financial assets, involving very low government bond yields and a gradual shift of risk appetite into credit and equities, is unlikely to change until one of two events takes place.

The first would be a decision by the central bankers themselves that the era of unlimited quantitative easing must end, either because of the risk of inflation and asset price bubbles, or because of concerns about fiscal dominance over the monetary authorities. The second would be a realisation by the markets that further action by the central bankers is irrelevant because they have run out of effective ammunition. Either of these events would probably remove the central prop from the equity bull market which began in March, 2009, but neither seems very likely in 2013.

There is certainly no sign that the central bankers themselves will call a halt to the extension of their balance sheets.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, America/U.S.A., Asia, China, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Federal Reserve, Globalization, Japan, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc)

France stripped of prized 'AAA' credit rating by Moody's

[Moody’s] said France’s long-term economic growth had been hit by its inflexible labour market and low levels of innovation eroding its competitiveness and industrial base.

Moody’s also flagged up the country’s exposure to the continuing eurozone crisis.

It warned the “predictability” of France’s resilence of further shocks in the eurozone was diminishing while the country’s exposure to the highly indebted countries such as Spain and Greece was disproportionately high.

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Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, France, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Economist) France and the euro–The time-bomb at the heart of Europe

The threat of the euro’s collapse has abated for the moment, but putting the single currency right will involve years of pain. The pressure for reform and budget cuts is fiercest in Greece, Portugal, Spain and Italy, which all saw mass strikes and clashes with police this week…. But ahead looms a bigger problem that could dwarf any of these: France.

The country has always been at the heart of the euro, as of the European Union. President François Mitterrand argued for the single currency because he hoped to bolster French influence in an EU that would otherwise fall under the sway of a unified Germany. France has gained from the euro: it is borrowing at record low rates and has avoided the troubles of the Mediterranean. Yet even before May, when François Hollande became the country’s first Socialist president since Mitterrand, France had ceded leadership in the euro crisis to Germany. And now its economy looks increasingly vulnerable as well.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, France, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(CBS) Return of Europe recession is bad news for U.S.

The eurozone’s return to recession is particularly bad news because it is now hitting once strong economies like Germany. This means the recession will last longer and have a bigger impact on U.S. consumers and companies.

Figures released today showed that collectively the economies of the 17-country eurozone contracted by 0.1 percent between July and September. While this is a slight improvement over the second quarter of the year when it shrank by 0.2 percent, the definition of a recession is two straight quarters of contraction. Most analysts believe that the recession will continue at least until the end of 2012.

“The recession in southern Europe is slowly creeping to other countries,” says Martin Van Vliet, an analyst with ING. “If you look at the indicators for the fourth quarter you see that even Germany many not grow again and that shows that the economy has an enormous need for a new impulse.”

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Germany, Globalization, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Reuters) Worried Germany seeks study on French economy – sources

German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone’s second largest economy could come back to haunt Germany and the broader currency bloc.

Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the “wise men”, to consider drafting a report on what France should do.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, France, Germany, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(BBC News) EU budget talks for 2013 collapse

Talks to agree the EU’s 2013 budget have collapsed, after negotiators from the EU and member states were unable to agree on extra funding for 2012.

The EU Commission and European Parliament had asked for a budget rise of 6.8% in 2013.

But most governments wanted to limit the rise to just 2.8%.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Politics in General, Taxes, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Europe’s separatists gaining ground, adding to continent's strains

As debt-burdened European governments struggle to overcome the disparities in their still-imperfect union, old demons of regional separatism have surged anew in recent months, raising another unwelcome challenge to the continent’s traditional nation-states.

Separatist movements have dramatically reinforced their positions here in Belgium’s prosperous Flanders region, where the independence-minded New Flemish Alliance captured Antwerp’s 16th-century City Hall on Oct. 14 and, under its populist leader Bart De Wever, is heading into national elections in 2014 with new wind in its sails.

“There is an outcry in Flanders for change,” declared Danny Pieters, vice president of the Belgian Senate and a senior Flemish alliance leader.

Read it all.

Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Economy, Euro, Europe, European Central Bank, Foreign Relations, Politics in General

Ambrose Evans-Pritchard on the Dramatic Deterioration of Support in France for François Hollande

French leader François Hollande is uncomfortably close to a collapse in credibility. His poll rating has sunk to 36pc. The speed of decline has been shocking.
The latest broadside comes from ex-German chancellor Gerhard Schröder, supposedly his ally on the Left.
“The election promises of the French president are going to shatter on the walls of economic reality,” he said in Paris.

Read it all.

Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, France, Politics in General, Taxes

(CS Monitor) George Papandreou–Europe must overcome the politics of fear around the debt crisis

To those who were surprised that the European Union received the Nobel Peace Prize, I say: “Think twice.” This was not only a deserved award for Europe’s contribution to bringing peace and stabilizing democracies in the recent past. The Nobel Committee was also sending a clear warning to contemporary leaders. I could almost hear them saying: “On this difficult odyssey, don’t abandon ship. In today’s world, the EU is too valuable to squander.”

It was an indirect but powerful rebuttal to the dangerous nationalist and populist rhetoric some politicians have adopted when describing the recent financial crisis.

This message couldn’t have come at a better time.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, Greece, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(WSJ) For U.S. Companies, Europe Brings Tears

Europe’s economic woes are washing over U.S. multinational companies, contributing to a season of weak corporate earnings.

Domestic sales are growing, as the U.S. housing market and consumer confidence recover. But China’s economy has slowed, robbing U.S. companies of their most reliable growth engine of recent years.

Almost uniformly, however, U.S. companies reporting third-quarter results identify Europe as the weakest link in the global economic chain.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, America/U.S.A., Consumer/consumer spending, Corporations/Corporate Life, Economy, Euro, Europe, European Central Bank, Globalization, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Der Spiegel) German Finance Minister Wolfgang Schäuble Warns Worst Is Yet to Come

The financial markets have been notably calm of late. Stock indexes have ticked upwards and interest rates on sovereign bonds have drifted downwards. The euro has also remained relatively stable against the dollar. And investor panic seems to have dissipated.

But appearances can be deceiving, said German Finance Minister Wolfgang Schäuble on Tuesday. “I’m not so sure that the worst of the crisis is behind us,” he said at a mechanical engineering conference in Berlin, warning that reform efforts needed to be re-doubled to ensure that trust in the euro returns.

His comments were echoed by Yves Mersch, a member of the European Central Bank Governing Council who was also present at the event. He warned that even if calm had returned to the markets, it could be deceptive. “The bleeding has been stopped, but the patient is not yet in the clear,” he said.

Read it all.

Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, Germany, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Busines Week) Spain has a modern Day Robin Hood?

For 33 years, Sánchez Gordillo has been mayor of Marinaleda, pop. 2,700, another farming settlement about 100 miles west of Jódar. Like Jódar, Marinaleda is mostly inhabited by jornaleros. Over the decades, Sánchez Gordillo has transformed the poor village into an islet of social justice and relative prosperity, with almost full employment through communal farming, low taxes, a salary of €1,200 ($1,572), food and housing considered as rights, and “direct democracy” exercised through frequent general assemblies. Sánchez Gordillo and his townsmen launched their movement to build what he calls “a communist utopia” after the death of general and dictator Francisco Franco in 1975, occupying land owned by a member of the royal family and distributing it for communal ownership as well as taking over local airports.

His efforts in Marinaleda long ago earned him a regional following, but Sánchez Gordillo and his lieutenant, the 57-year-old Diego Cañamero, the SAT union’s national spokesman, have gained renown in recent months with a series of controversial protests against the austerity measures embraced by Prime Minister Mariano Rajoy and the Spanish government. On Aug. 7, the two led union members on raids on Carrefour (CA) and Mercadona supermarkets, leaving the stores with shopping carts full of “expropriated” food they gave away to the hungry poor.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Law & Legal Issues, Politics in General, Poverty, Spain, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--