Well, it had to happen. Barack Obama is campaigning in the Greek election.
Lots to report today, including a United Nations report on the eurocrisis, a Spanish bank bailout [which could happen in days], more bad news for the French and German economies, mixed eurozone calls from the Brits, a mafia eurocrisis bonanza, border controls, a marijuana clash in France, and odd political developments in Italy.
Except for our first item, we’ll be posting separately about Greece.
Obama enters the Greek election campaign
And the man of Hope™ and Change™ is calling on Greeks to vote for the same rascals who were responsible for the crisis.
Like his other political peers, the American president is cared silly that Syriza could end up with the most votes, and he’s doing everything he can to prevent it, including the usual misrepresenations about Syriza’s platform.
From Agence France-Presse:
US President Barack Obama called Friday for urgent, decisive action by Europe’s leaders to beat back the economic crisis, as he urged Greeks ahead of elections to stay in the eurozone.
Speaking as European officials worked on a huge rescue plan for Spain’s feeble banks, Obama said he was confident EU leaders appreciated the severity of a crisis that weighs heavily on his prospects of reelection in November.
“The leaders understand the seriousness of the situation and the urgent need to act,” Obama told a press conference at the White House. “The decisions required are tough but Europe has the capacity to make them.
“And the sooner that they act and the more decisive and concrete their actions, the sooner people and markets will regain some confidence and the cheaper the costs of clean-up will be down the road.”
Just nine days before Greeks go to the polls for the second time in six weeks to vote on a new government, Obama urged them to take a path that will keep them inside the eurozone.
“It’s in everybody’s interest for Greece to remain in the eurozone while respecting its commitments to reform,” he said.
UN says eurodebt threatens the world
Needless to say, the one thing that’s not mentioned in the mid-year update of the World Economic Situation and Prospects mid-year update is a debt jubilee.
Here’s the key quote:
The debt crisis in the euro area remains the biggest threat to the world economy. An escalation could trigger turmoil in financial markets and a sharp rise in global risk aversion, leading to a contraction of economic activity in developed countries and a sharp slowdown in developing countries and economies in transition.
And here are the proposed solutions:
First, countries need to shift away from self-defeating fiscal austerity and towards a renewed stimulus, which provides support to weak global demand. Second, fiscal policies need to be redirected to more directly support job creation and green growth. Third, stability of the global monetary and financial system needs to be increased through better coordinated policies and accelerated financial sector reform. And fourth, policymakers need to ensure that sufficient resources are made available to developing countries, especially those possessing limited fiscal space and facing large development needs.
The report comes from the U.N. Secretariat’s Development Policy and Analysis Division.
AlYunaniya reports on some of the highlights:
Produced by the UN Department of Social and Economic Affairs (UN DESA), the UN Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions, the report flags that most developed countries are still trying to recover from the 2008-2009 global financial crisis, and notes fiscal austerity measures aimed at ameliorating the debt situation are backfiring.
“The severe fiscal austerity programmes implemented in many European countries, combined with mildly contractionary policies in others, such as Germany and France, carry the risk of creating a vicious downward spiral with enormous economic and social costs,” it notes.
The report stresses that it is essential to change the course in fiscal policy and shift the focus from short-term consolidation to medium- to long-term fiscal sustainability. It also emphasizes that fiscal policies should be internationally coordinated and should support direct job creation and green growth.
High unemployment, deleveraging by banks, firms and households, and bank exposure to sovereign debts are also contributing factors to the economic downturn, the report says, noting that European countries in particular are struggling to overcome these weaknesses.
The update warns that the situation in Italy and Spain currently poses the biggest danger for the euro area as the size of their debts would likely challenge the region’s rescue funds.
More bad news for the German economy
As Chancellor Angela Merkel well knows, Germany’s part of Europe, and European buyers fuel Germany’s industrial machine, a machine that runs on a euro/dollar mix.
With Europe in slowdown [and the U.S. and China following close behind], Merkel’s all about keeping the German engine flowing. Hence her repeated calls for a power transfer to nearby Brussels and now for a two-tier eurozone, separated from contaminating German by a new economic/political Berlin Wall.
And here’s her stimulus, from Deutsche Welle:
German exports plummeted by 1.7 percent in April, with goods and services shipped abroad reaching a total volume of 87.1 billion euros ($108.9 billion) compared with 98.9 billion euros in March, the German statistics office, Destatis, said Friday.
In addition, imports to Europe’s largest economy nosedived even more markedly, contracting 4.8 percent to an overall volume of 72.7 billion euros.
On a year-on-year basis, exports were still 3.4 percent higher than in April 2011, while imports shrank by 1.0 percent from the same month last year.
The April decline had brought to and end three consecutive months of gains, Destatis said, after exports had peaked in March at an all-time high.
In addition, the export figure was three times lower than predicted by analysts, and adds to signs that the global economy is faltering on the back of deepening economic gloom in the eurozone.
According to Citigroup analyst Jürgen Michels, the dip in exports must be attributed to “weakening global demand,” as well as an “escalation” of the eurozone debt crisis, after elections in Greece and France
Sarkozy’s parting gift to France
Don’t get us wrong. We don’t think François Hollande will be able to fix things according to the current rules of the Age of Austerity.
But given the latest economic predictions, Sarkozy may be glad he was forced out when he was.
From Deutsche Welle:
The Bank of France on Friday curtailed its French growth projection, saying the economy was on course to shrink by 0.1 percent in the second quarter.
If the estimates are correct, it would represent France’s first quarterly contraction since the country managed to extract itself from recession in 2009. Although the current alleged shrinkage would not put France back into recession territory, if the economy were to experience a second contraction in the third quarter, the country would officially join other EU states like Greece, Spain and Italy in recession.
The forecast contrasts with the central bank’s prior projection of essentially flat-line growth in the three months from April to June.
The news comes after the French national statistics office, INSEE, reported on Thursday that unemployment rose to one in ten people in the first quarter of 2012, a level of joblessness that the country has not endured since 1999.
Tory money minister signals a eurospat
England’s already in a sort of second tear of European nations, preferring pounds to euros.
But one thing Britain’s Tories defend at all costs is the untrammeled power of The City, that ancient square-mile bastion of financial power.
Even many folks in the EU recognize that some sort of damper on the market’s highly volatile high-speed transactions is in order; if nothing else, at least a Tobin Tax on each transaction to yield some dividends for the states that are invariably called up to bail out banksters when their games invariably collapse.
So now that the eurozone’s in the throes of collapse, what better time to stand up for The City?
From The Independent’s Nigel Morris and Tony Paterson:
George Osborne delighted Tory MPs yesterday – and fired a shot across the bow of European leaders – as he signalled that ministers were prepared to call a referendum over Britain’s place in the European Union.
The Chancellor also warned that the Government was ready to wield its veto in Brussels if there was an attempt to impose fresh controls on British banks as a result of moves to tackle the deepening eurozone crisis.
Britain strengthened its rhetoric over Europe yesterday after months of demands from Tory MPs to use the chaos to stage a referendum on British membership of the EU. The Coalition’s policy is to stage a nationwide vote only if there is any attempt to transfer power from Britain to Brussels.
But in remarks that were aimed as much at EU leaders as the Tory right-wingers, Mr Osborne suggested that could happen if negotiations over the eurozone resulted in a “reshaped relationship with Europe”. He said: “A reshaped relationship with Europe would imply, would involve, a transfer of sovereignty or powers to Brussels. I think we have a very clear safeguard in the system now, thanks to this Government.
“If there is any transfer of power from this country, transfer of competence or transfer of sovereignty from this country to the European Union, then there will be a referendum.”
After the stick, the British carrot
The Brits still know how to throw a one-two punch. First a referendum punch from the right, followed by a love tap from the left.
From the London Telegraph:
The Prime Minister has put his weight behind proposals for closer fiscal union between the 17 eurozone nations – perhaps by the issue of eurobonds which would allow them to share the burden of debts.
But [Thursday] he left no doubt that Britain would not be involved in any such arrangement.
Speaking in Berlin, Mr Cameron said: “I can understand why eurozone countries may want to look at elements of banking union.
“Because we are not in the single currency, we won’t take part in the profound elements of that banking union.
“I wouldn’t ask British taxpayers to stand behind the Greek or Spanish deposits. It is not our currency, so that would be inappropriate to do.”
It’s hard to send a more revealing message about the real source of power in Old Blighty.
Spain: Show us the money!
After all those prime ministerial denial of plans to call for a eurobailout for those bankrupt banks, the call finally comes.
According to Reuters, two senior EU officials said finance ministers of the 17-nation single currency area would hold a conference call on Saturday to discuss a Spanish request for an aid package, although no figure had yet been set.
The Eurogroup would issue a statement after the meeting, they said.
“The announcement is expected for Saturday afternoon,” one of the EU officials said.
The move comes after Fitch Ratings slashed Madrid’s sovereign credit rating by three notches to BBB from A on Thursday, highlighting Spain’s exposure to its banks’ bad property loans and to contagion from Greece’s debt crisis.
“The government of Spain has realized the seriousness of their problem,” a senior German official said.
He added that an agreement had to be reached before a Greek general election on June 17 which could lead to Athens leaving the euro zone if parties opposed to the terms of an EU/IMF bailout win.
And the EU is ready to bail Spanish banks
A European Commission spokesman said Friday that the euro area has instruments “ready to use” if Spain asks for help for its banks, but refused to confirm rumours about a weekend conference to discuss the issue.
“If such a request were to be made, the instruments are there, ready to be used, in agreement with the guidelines agreed in the past, in 2011. We are not at that point,” said Amadeu Altafaj.
In response to questions about earlier media reports of a weekend conference call among Eurogroup finance ministers to discuss a bailout of Spain’s struggling banks, Altafaj said, “I cannot confirm it.”
Wiseguys launder as Italy crumbles
This one’s a fascinating tale on several levels.
Crime syndicates have to legalize their criminal profits, and to do it, they need to launder their money — to make it appear to have come from some legitimate enterprise.
And to do that, they need banks.
During our years of reporting on organized crime, we learned a lot about money-laundering. Sadly, that was six after we had a pleasant Las Vegas lunch with the mob’s resident money launderer, Morris Barney “Moe” Dalitz, who struck then as a kindly, grandfatherly type and not the cold-hearted gangster that he really was.
Moe maneuvered the skim, with a lot of it going through the machine set up by Meyer Lansky, which used offshore banks to greenwash their loot.
We once wrote of an offshore bank run from a suite in Sunset Strip highrise by a Swede who called himself “Eric, Marquise de Lafayette.”
While offshore banks were used in the old days, domestic banks are doing it know [like Wachovia and those infamous cash-laden cartel planes from Mexico.
And they’re doing it in Italy too. Or, more accurately, they’re doing it more openly. [We can never forget this scandal, when the CIA was bankrolling black ops in a mafia-controlled bank tied to the Vatican.]
Italy’s worst economic crisis since World War Two has been a boon to the country’s mafia organizations with reports of suspicious bank transactions rocketing, the Bank of Italy said on Wednesday.
Reports of suspected money laundering through financial institutions rose 147 percent in 2010-11 from the previous two years “and they are still on the rise,” Anna Maria Tarantola, deputy director at the central bank, said in testimony to parliament.
About 800 of the total reports involved people arrested or under investigation for mafia activities, she added. A quarter of those were reported in northern Italy, outside of the territories historically controlled by the mafia, she said.
But here’s the real question: Where’s all that money coming from? Because it’s clear somebody’s making a lot of dirty money out of a life-destroying crisis.
Border closures approved, parliament excluded from vote
The consistent clarion call for consolidation of power in the hands of the few came when the European
Nikolaj Nielsen of EUobserver:
EU countries have given themselves more freedom to block passport-free travel, causing outrage among MEPs.
Member states can close their borders for up to 30 days if there is a serious threat to internal security (such as major sporting events), up to 10 days in urgent cases (terrorist attacks) and up to six months if persistent problems exist at external borders.
Under the old system, in place since 2006, member states were allowed to impose border controls in urgent cases for only up to five days.
Additionally, if a member state fails to control its external EU border, then its peers may on the basis of a European Commission proposal, recommend for neighbours to reintroduce border controls as a fall-back.
The ministers also excluded the European Parliament from co-decision on issues dealing with external borders, giving it observer status only. Schengen will therefore effectively remain an inter-governmental treaty based on peer assessment.
More from euronews:
[T]he decision appears to have set national government’s on a collision course with MEPs. Many are now calling for legal action to block the agreed changes. Martin Schulz, the Parliament’s president also heavily criticised the EU Council’s move.
“It’s a provocation! In the middle of the legislative procedure, in which we have been working together, the European Council, which means national interior ministers, have changed the legal framework. They have the right to do this and have done so. However, the European parliament sees this as an unanimous demonstration of mistrust,’‘ Schulz said.
The European Commission’s home affairs chief Cecillia Malmstrom said she was disappointed with the decision to alter Schengen, but said there were no plans, as yet, to take legal steps.
More power to the center, even when it’s the center of the center.
Don’t let France go to pot, harumph Sarkozians
Ah, yes. When all else fails, bring up Demon Marijuana.
Folks in ex-President’s UMP are up in arms about a call by the housing minister [who’s both a Green and a woman] for decriminalization of marijuana.
It’s a perfect play to the base, conjuring up fear and loathing of dangerous Others on whom so many inconvenient ills can be blamed.
With the drugs taken care of, will sex and rock follow?
From Radio France Internationale:
France’s right-wing opposition is up in arms after a Green Party minister on Tuesday called for the decriminilisation of cannabis. François Hollande opposed any change in the law during his presidential campaign and members of ex-president Nicolas Sarkozy’s UMP have seized on what they see as a division in the new government.
“This idea of legalising cannabis is a real moral disaster,” said former Sarkozy adviser and National Assembly candidate Henri Guaino after housing minister Cécile Duflot told a television interviewer that the drug should be decriminalised.
“If the left wins [the legislative election], cannabis will be made legal. I’m sure of it,” said former health minister Xavier Bertrand said, while former justice minister Rachida Dati declared herself “deeply shocked”.
“The health and security risks associated with its consumption and traffic are too serious,” she said.
About 1.2 million people regularly smoke cannabis and its sale is worth between 700 million and one billion euros a year, according to the French drug control agency.
Italian power loses confidence in ‘Three-card’ Monti
The Troika [and the forces they represent] gave the boot to Silvio Berlusconi when his buffoonery grew so ludicrously extravagant [Bunga Bunga, anyone?] that they had no choice.
You can’t have a con game without a credible confidence artist, and Berlusconi had lost all credibility, what with all those criminal charges and the lavish mammary displays on his TV monopoly.
So they ousted Bunga Bunga and replaced him with Gray Technocrat in hopes he could exercise that all-important discipline austerity requires.
No such luck.
And now Mario Monti is sounding singularly unconfident.
Italian Prime Minister, Mario Monti, admitted yesterday (7 June) that his government has lost the support of Italy’s ‘big powers’ in business and finance.
In a speech at the Association of Banking Institutions and Savings Bank, Monti said: “Today we don’t have anymore the support of strong powers and the support of a newspaper which is the voice of strong powers. Today we are not very popular even in Confindustria [the Italian employers’ organisation].”
“I do not deny that we could do more and better, but many reforms have been developed with great rapidity and in the wake of need, and now are given as achievements, but these reforms have broken the taboo remained untouched for decades,” Italy’s Prime Minister added.
Earlier this week, Alberto Alesina and Francesco Giavazzi wrote in the Corriere della Sera that the government has taken the wrong direction and is focusing on “false priorities.” Italy’s leading newspaper, which has championed Monti to replace Berlusconi last November, has launched an offensive criticising Monti’s government saying his reforms risked failure.
Growing confidence in a comedian
A confidence expressed in a surprising turnout at the ballot box.
Beppo Grillo [previously] has emerged as a significant force in Italian politics, placing second in popularity in recent Italian polls.
Here’s a look at some of the numbers and their implications from Tonia Mastrobuoniof Turin’s La Stampa via Presseurop:
In the Italian local elections held in May, the Five Star Movement founded in 2009 by comedian Beppe Grillo, which advocates an exit from the euro and a return to the lire, won a major victory in the city of Parma.
With a popular appeal based on anti-establishment propaganda, trenchant criticism – which is not unfounded – of a political class that is unable to renew itself, and a strong presence on the Internet, the first Italian political movement to declare itself as anti-European has demonstrated an impressive ability to reach out to a rapidly growing section of the electorate.
Most Five Star voters are former supporters of the centre-right, which is now on the wane in the wake of the resignation of Silvio Berlusconi and the corruption scandal which has struck the Northern League. However, Beppe Grillo has shown that he can also win over far-left voters and the younger generation with whom he is very popular.
On 28 May, a poll conducted by SWG credited Five Stars with 17% of intentions to vote in general elections in 2013 – a level of support that would make it Italy’s second political force behind the left-wing Democratic Party (24%), and ahead of Silvio Berlusconi’s People of Freedom (16%). The success of the movement’s anti-euro platform is a reflection of the dangerous climate of euroscepticism that is increasingly prevalent in Italy.