Lots happening in Greece, with the election two weeks away and opinion polls shut down for the duration, an all-star/bankster/bureaucrat/pols/investor/ regulatory Grexit meet-up, the final poll of the season, salvoes from the leading political parties, China’s Gexit plans, and a Libyan embassy seizure in Athens.
From Spain we’ve got a prime ministerial plea, money manipulation, and a potential prison sentence for a labor leader. From Paris, an odd economic crisis, and from Cyprus hints of a bailout.
And to close, the costly Washington lobby efforts of German banksters.
But first, two strong signals about what’s coming next, in demands for greater power for Brussels and less for eurozone nations.
Merkel’s minimum: All power to Brussels
It was a year ago then-French central banker President Jean-Claude Trichet proposed creation on a finance ministry for the eurozone, exercising power over the budgets of member nations.
And now German Chancellor Angela Merkel is demanding Trinchet’s vision as the price for any future loosening of the purse strings of Europe’s dominant economy.
But she wants much more.
From Noah Barkin and Daniel Flynn of Reuters:
After falling short with her “fiscal compact” on budget discipline, German Chancellor Angela Merkel is pressing for much more ambitious measures, including a central authority to manage euro area finances, and major new powers for the European Commission, European Parliament and European Court of Justice.
She is also seeking a coordinated European approach to reforming labor markets, social security systems and tax policies, German officials say.
Until states agree to these steps and the unprecedented loss of sovereignty they involve, the officials say Berlin will refuse to consider other initiatives like joint euro zone bonds or a “banking union” with cross-border deposit guarantees – steps Berlin says could only come in a second wave.
The goal is for EU leaders to agree to develop a road map to “fiscal union” at a June 28-29 EU summit, where top European officials including European Council President Herman Van Rompuy will present a set of initial proposals.
“Reforming labor markets and social security”?
Maybe labor reforms like the German law that exempts many menial service jobs from minimum wage laws? And what social security and tax “reforms”? Given the neoliberalism at the heart of the austerity agenda, we really have to wonder just what’s on Merkel’s agenda.
More oversight for European Central Bank?
Europe’s Court of Auditors says the ECB dpesn’t do all that well is the risk management department.
Now that’s a shock.
From Agence France-Presse:
In its report on 2010 activities at the Frankfurt-based central bank for the euro, the Luxembourg-based court said ECB procedures when assessing danger “increases the risk that the view of the bank’s exposures might not be comprehensive.”
A spokesman for the court said the central bank “does not apply the same processes for the management of financial, and operational risks.”
It urged the bank to appoint “a hierarchically independent… chief risk officer,” to ensure the same rigour is applied when making political judgments as those concerning financial forecasting.
“The court believes that if those two sides could talk more to each other, they could better mitigate the risk,” the spokesman told AFP.
So their financial judgements are better than their political ones? What precisely does that mean? Based on Europe’s fix, the bank’s financial judgements don’t seem the soundest?
That leaves aside the whole question of odious debt, of loans made with no rational expectation they could ever be repaid.
No debtors allowed?
Here’s another of the stories we’re like to see fleshed out, but the gist is that a whole lot of folks on one side of the money game are getting together Wednesday in Copenhagen to plan for the Grexit and a possible Spanish bailout, all the while trying to figure out if the eurozone is salvageable.
With nearly a thousand eurocrats, investors, banksters [450 banks are presented], and regulators in attendance over three days, one has to wonder just how exactly how much real planning is to be done as compared to say, rubber-stamping. . .
It’s all under the aegis of the Institute of International Finance, which represents investors in those debt restructuring arrangements.
Whatever the partisans come up with will be presented to the G20 meeting in Mexico next week.
From Athens News:
The European Central Bank’s supply of 1 trillion euros of cheap cash through its long-term refinancing operation (LTRO) gave banks and markets a lift earlier this year, but policymakers are struggling to find a more permanent fix.
Help could come from a pan-European deposit guarantee scheme, which is gaining support as a way of reducing the threat of a bank run, or by using some of the European Stability Mechanism’s 500 billion euro firepower on helping banks.
The task is to decouple the sovereign crisis from the banking crisis and the Institute of International Finance’s (IIF) spring conference, which runs from Wednesday to Friday, marks a rare forum for the private sector to discuss ideas.
Bank profits and share prices have been hit by a slump in trading activity and the cost of regulations being brought in to safeguard the system, which is forcing lenders to tear up business models to streamline and lift returns for investors.
And the last pre-election poll is in
Greek election law bars polling in the two weeks prior to an election, and with the new round of parliamentary voting coming the 17th, the last public polls is out, and Syriza came out on top — though most voters said they expect the conservative New Democracy to place first when the votes are finally counted.
In the last opinion poll to be published by Kathimerini before the June 17 elections, leftist SYRIZA maintains a clear lead over New Democracy, although short of enough support for a clear parliamentary majority.
According to the Public Issue survey, SYRIZA garners 31.5 percent of the vote, 1.5 more than just a week ago. Support for New Democracy is largely unchanged at 25.5. PASOK has lost 2 percent and falls to 13.5. It is followed by Democratic Left (DIMAR) on 7.5 percent and the weakening Independent Greeks on 5.5. The Communist Party (KKE) also has 5.5 percent, while the neo-Nazi Chrysi Avgi (Golden Dawn) has fallen to 4.5 percent. The liberal alliance of Dimiourgia Xana (Recreate Greece) and Drasi attracts 2.5 percent.
In terms of parliamentary seats, this translates into 134 for SYRIZA, 68 for New Democracy, 36 for PASOK, 20 for DIMAR, 15 for KKE, 15 for Independent Greeks and 12 for Chrysi Avgi. Most would fall slightly if the liberals reach the 3 percent parliamentary threshold.
Most Greeks, however, are not convinced that SYRIZA will win. The poll indicates that 58 percent believes ND will come first and only 34 percent see the leftists triumphing.
Leading parties on the attack
Athens News posted stories about the latest campaigning by the three leading parties, and we’ll give you some highlights.
Syriza’s everyone else’s target, given that Pask and New Democracy formed the last coalition government — the one that did so much to bring the crisis about.
Here’s the latest from the Left coalition’s leader:
Greece’s exit from the euro is not an option for Syriza, party leader Alexis Tsipras said in an interview with Kathimerini newspaper appearing on Sunday, accusing his political opponents of danger-mongering, while adding that the first action of a Syriza government will be to annul the Memorandum.
Tsipras attributed the big rise in Syriza’s popularity to the mistakes of his opponents, accusing New Democracy (ND) and Pasok of initially supporting the Memorandum that leads to disaster and then of leading the country to repeat elections although they could have formed a coalition government after the inconclusive May 6 elections.
The Syriza leader said that if he forms a government after the June 17 repeat elections, he will repeal the Memorandum through appropriate legislation.
He also said that an exit from the euro was not a choice of his, and accused his political opponents of danger-mongering.
But New Democracy insists a wiu for Syriza would end with cash registers full of drachmas:
Greece’s possible exit from the eurozone would be tantamount to “death”, the New Democracy (ND) leader said on a televised interview on Skai tv station on Sunday, warning that the threat of a return to the drachma was very real at the June 17 election polls.
At the same time, addressing representatives of the tourism sector on the island of Rhodes on Saturday night, Samaras said that the ‘battle for growth’ would begin with the tourism sector and marine infrastructures, and pledged to establish an autonomous Ministry of Tourism as well as an autonomous Merchant Marine ministry.
Samaras pledged that, if ND was elected to government, there will be no more reductions of salaries or increases in taxes, adding that the 18 measures for boosting growth he announced last week while unveiling ND’s economic platform will “remedy” injustices, such as those suffered by the low-pension earners, certain categories of beneficiaries and special benefits.
And Pasok, the deceptively named Pan Hellenic Socialist Party, would much rather partner with the Greek version of the Republicans than with folks who pay more than lip service to what Pasok only pretends to be:
Pasok will not support or tolerate any government formation if it does not ensure the national unity character that will lead to progress through the national strategy that has been proposed by Pasok, party leader Evangelos Venizelos told a campaign rally in Halkida on Saturday night, while he also expressed fear that the lack of governance will continue after the June 17 repeat elections because a superficial scenery of a supposed two-party system has been set up.
He criticized the platforms presented last week by New Democracy (ND) and Syriza as “dangerous and dead-end scenery”, contrary to the message sent by the people on May 6 (inconclusive general elections) that the era of single-party governments has passed and that the crisis is so deep that a nation-wide effort is needed, not solutions “that divide the society”.
Venizelos also warned “those who are pre-electorally promising a manufactured paradise” that the people will be enraged and will be very harsh when they realise that all those were lies and delusions. “The people cannot withstand any more disorientation”.
The irony, of course, is that only because of Syriza have the other two parties been forced to adopt a softer line on the austerity mandate.
China prepares for the Grexit
Everybody else’s doing it, so why not China?
The Chinese government has called on key agencies including the central bank to come up with plans to deal with the potential economic risks of a Greek withdrawal from the euro zone, three sources with knowledge of the matter told Reuters on Monday.
The sources said the plans may include measures to keep the yuan currency stable, increase checks on cross-border capital flows and stepping up policies to stabilise the domestic economy.
As investor concerns over Greece’s possible exit from the euro zone grow, the central government has called on related state agencies, including the National Development and Reform Commission, the central bank and the banking regulator, to discuss contingency plans, the sources said.
“It’s very urgent,” a source with direct knowledge said. “The government has asked every department to analyse measures to cope with a Greek exit from the euro zone and make their own suggestions as soon as possible.”
Libyans seize their embassy in Athens
While NATO was gung-ho to launch their warplanes and missiles against Moammar Gadaffi’s military and praise the motley crew fighting against him, yesterday’s heros have become today’s discards in Greece.
Around 20 to 25 Libyans, flown to Greece for medical treatment and physiotherapy after the country’s uprising that ousted Muammar Gaddafi, stormed the Libyan embassy in Athens at around 11- 12 PM and held a diplomat hostage all night.
According to sources, private Greek hospitals that had been earning revenues from treating rebels injured in their country last year, have stopped accepting them as patients due to a mounting unpaid bill by the Libyan government.
Alyunaniya correspondent, Mohamed Benghuzzi, who was there at the embassy last night, has confirmed that “police and ambulance cars have surrounded the embassy as they cannot enter without the approval of the ambassador who has said to have been in negotiations with the Libyan rebels all night, threatening to kill the hostage of their demands are not granted.”
This morning, the Libyan authorities informed that the diplomat and embassy had been evacuated by forces of the Police.
The police have arrested 20 people, which will set free to go if the Libyan embassy does not press any charges.
So among the victims of the Troika-imposed austerity are Libyans once toasted as the heroes of NATO.
Spain’s prime minister: Don’t worry, be happy
If not happy, then at least be cool.
From Agence France-Presse:
Prime Minister Mariano Rajoy sought to reassure Spain on June 2 that the country would eventually exit the financial crisis, after a dismal week that saw its borrowing costs soar.
Speaking at an economic forum in Sitges in eastern Spain, Rajoy said he was sending a “message of calm” as fears mount that Spain will need an international rescue to pay its bills.
“Spain is a very solid country, although right now, no one seems to remember this,” he said.
Doubts about Spain’s solvency rocked global markets this week and saw the interest rate on 10-year government bonds hit a record 5.48 percentage points on Friday, as Spanish markets slumped to lows not seen since April 2003.
The country “will get through the storm through its own efforts and with the support of our European partners,” the prime minister added.
Spare change? Lend a hand?
Spain wants cash for its banks, but no more austerity.
And perhaps fears of further chaos will loosen up some extra cash to make up for the mass exodus of deposits flowing out of the country’s banks.
Spain is negotiating a plan to recapitalise the Spanish banking system with the European leaders. The plan involves direct aid, but not as part of an international bailout with new austerity measures, El Pais reports, quoting a source in the Spanish government. The newspaper explains that the plan is based on the idea of a direct support mechanism for all European banks, surpassing the legal obstacles of a similar intervention with ”intergovernmental agreement.”
Union leader could face draconian sentence
The Spanish government wants a 36-year prison sentence for a nonviolent protest on the floor of Spain’s stock exchange by a Barcelona union official.
Laura Gómez is secretary-general of of the Confederación General del Trabajo, the world’s largest anarchist labor union.
From Maju at For what we are… they will be:
Laura Gómez, Secretary General of the labor union General Confederation of Labor (CGT), took part in a nonviolent action in the Barcelona stock market (in the context of the General Strike of March) which consisted in burning some fake bank notes in a box.
For that action she was arrested without trial for 23 days and it has been known now that the state’s attorney is asking for nothing less than 36 years of prison!
Laura and other CGT leaders believe that this is part of a plot to criminalize the union and have also expressed their deep concern (video[es])for the fact that the Spanish justice system is essentially one of political magistrates at the service of the regime with absolutely zero independence.
Odd that an arrest of a prominent union leader and the threat of sentence of the sort usually handed out only to murderers has received no coverage by the American media.
Saudi royal stick it to Parisian hotel
And the bill is big enough that a bailout may be in order!
From Radio France Internationale:
A Saudi princess was stopped by police as she tried to sneak out of a Paris luxury along with her 60-strong entourage, leaving unpaid bills worth six million euros. Staff called the cops when Maha al-Sudani, the former wife of Crown Prince Nayef ben Abdel Aziz, tried to leave at 3.30am Thursday.
Paris police on Saturday confirmed press reports that the princess had tried to do a runner on the swanky Shangri-La hotel on Paris’s posh avenue Iéna, near the Arc de Triomphe.
They contacted the Saudi embassy and searched the dozens of bags being carried by her companions.
No charges appear to have been made since Al-Sudani enjoys diplomatic immunity and the hotel said Saturday that it has no unpaid bills at the moment.
The princess already had a dubious reputation in Paris’s luxury establishments after leaving bills of as much as 15 million euros for jewels, clothes and hotel accommodation behind her in 2009.
Will a Cypriot bailout be next?
When the words “confident” an “but” appear in the same sentence, we suspect a confidence game is afoot.
And given that Cypriot banks haven’t been able to borrow a single euro for the last year, we’re confident that we’ll be hearing more of this story.
From Agence France-Presse:
The European Commission said Monday it remained ”confident” that Cyprus can avoid calling in a eurozone bailout, but only if it implements a host of reforms already deemed well off-target.
”The Commission is in close contact with Cyprus as with many other countries in the euro area,” said senior economy spokesman Olivier Bailly. ”We are indeed confident that Cyprus can overcome the current challenges provided it implements the reforms we set out last week.” Bailly was responding to reporters after central bank governor Panicos Demetriades told the Financial Times that Cyprus, a recession-hit eurozone economy, was nearing an EU bailout request to deal with the impact of the Greek crisis on its own banking system.
Demetriades acknowledged that with an end-June deadline to find at least 1.8 billion euros ($2.3 billion) to recapitalise Cyprus Popular Bank, the country was at ”an important crunch time.” Cyprus news agency CNA reported on Monday that Communist President Demetris Christofias has not ruled out turning to a new eurozone firewall set to enter service on July 1, the 800-billion-euro European Stability Mechanism.
Last week, releasing detailed annual recommendations for economic and public finance management for all 27 EU states, the Commission said Cyprus was facing ”multi-dimensional challenges.” ”The banking sector suffers from a large exposure to Greece, in terms of both the private sector and the sovereign, and needs to raise fresh capital,” Rehn’s report said.
And those German banks lobby U.S. legislators
Presumably some of the same banks that will send their lobbyists to that G20 meeting.
From Michael Knigge of Deutsche Welle:
In the pre-crisis year 2006 the finance industry spent $378 million (304 million euros) on lobbying. Five years later banks, insurers and real estate companies paid out $477 million, an increase of 26 percent, according to the Center for Responsive Politics.
The list of financial institutions coughing up millions every year to lobby the US government reads like the ‘Who is Who’ of American banking. Goldman Sachs, Bank of America, JP Morgan, Citigroup – all the Wall Street heavyweights invest heavily and consistently in exerting influence on regulators and legislators.
But after analyzing hundreds of publicly available documents filed under US law, DW has learned that four German financial companies also invested heavily in lobbying the US government last year. The four – Deutsche Bank, Allianz, Munich Re and Deutsche Börse – combined spent at least $4.7 million in lobbying in 2011, records reviewed by DW show.
These lobbying expenses filed on official forms include money spent on direct lobbying as well as payments for trade groups and other organizations.
Deutsche Bank, Germany’s biggest bank, spent $2.2 million last year on lobbying while Allianz, Europe’s biggest insurer invested $2.4 million.
To compare: Goldman Sachs, widely believed to be the best politically connected Wall Street firm spent $6.1 million while Bank of America spent $3.7 million.