We’ll begin with some upbeat news from a rating agency, a blocked law, then get back into the ongoing stream of economic alarms emanating from Europe.
We’ve got some really grim numbers from Spain, British plans to close their borders to refugees from economic disaster, mixed news from England, lots more from Greece, a possible Russian bailout of Cyprus, and lots more.
Neither Standard nor Poor
Not a rating exactly, but a pronouncement from the line-setter for the Wall Street bookies.
From David Jolly of the New York Times:
The crisis in the euro zone may be easing at long last, Standard & Poor’s said, citing the agreements reached last week by European leaders as important steps toward ending the turmoil that has led to questions about the very future of the 17-nation currency area.
“Some relief could be in sight for sovereigns in the European Economic and Monetary Union following the agreements reached at the euro zone summit on June 29,” the agency said in a report released late Tuesday. The agreements, it added, “could help to stabilize the eurozone and staunch any further weakening of sovereign creditworthiness.”
Standard & Poor’s cautioned that there were still significant risks associated with implementing the agreement, but said it believed the measures “can provide a more stable funding framework for sovereigns and banks on the periphery while their governments continue to implement growth-enhancing structural reforms and reduce their budgetary imbalances.”
Big league bookmaking operations live or die from the line, the numerical designation of the demarcation dividing the wagering handle [the sum of all bets] between winners and losers. The bookie makes money off the ten percent it takes from every bet.
With the demolition of Glass Steagall, the other players in the bookies’s game, the loan sharks and their legbreakers, have been transformed into dapper gents in Italian suits and eight-figure bonuses — wealth beyond the dreams of mere Mafia dons.
A death blow for ACTA
Like it really matters, given that similar provisions are being woven into those free trade agreements and the Trans-Pacific partnership.
From New Europe:
The European Parliament rejected on 4 July the international Anti-Counterfeiting Trade Agreement (ACTA) and the parliament’s rapporteur on the subject, David Martin, welcomed the decision, saying it “was the biggest ever defeat of a legislative proposal of the European Commission”.
He recognised the involvement of external campaigners, who demonstrated against the ACTA and organised signing of petitions throughout Europe. It is fair to assess that without a loud and strong public outcry, the ACTA would have had a much easier path to ratification.
Martin pointed out that, regardless of what some of his colleagues had said in the past several months, it is not a treaty that is needed “to battle counterfeiting, but better cooperation and training of customs officers”.
He also criticised the general approach of lawmakers to dealing with issues regarding the internet. “We tried as legislators over the last 10-20 years to deal with the internet as if it were a material thing, but it is not, so we have to start over,” he said and emphasised the need for a different approach.
More grim numbers from Spain
Following up on yesterday’s post on European unemployment, some fine-tuning of numbers, with an emphasis on Spain.
From ANSAmed:
Spain’s Ceuta region recorded 65.8% youth unemployment in 2011, the highest in the EU, according to Eurostat figures released today.
This is three times the European average of 21.4%, and was followed by Macedonian Greeks at 52.8% and Valencia youth at 50.9%.
The lowest rate was recorded in Tubingen, in Germany, at 4.3%. The spread in youth unemployment percentages between different parts of the EU is widening, and youth aged 15-24 are twice as likely to be unemployed as those 25 and up in three fourths of EU countries, according to Eurostat. Spain still leads in overall unemployment rates, with 30.4% in Andalusia and 29.7% in the Canaries, and there are 17 EU regions with over 19.2% unemployment, or twice the EU-27 rate: 10 Spanish regions, 4 French departments, and 3 Greek regions, Eurostat reported.
Cameron plans to seal Brit borders against Greeks
Yep, the Prime Minister fears an invasion by the destitute inhabitants of the land where Lord Byron fought and died for independence — and the land Britain looted of the Elgin Marbles, its most sacred national treasure — now poses a theat to the Sceptered Isle.
Of course The City, its myriad banks and brokerages, and the practices at the rotten heart of their enterprise played leading roles in steering Greece on the course to collapse, but, hey, that’s just the way the game’s played, right?
And now that the country’s spiraling into deeper catastrophe and chaos [Greek words, of course], Britain doesn’t want to have to literally face the human consequences.
Nikolaj Nielsen of EUobverver:
The UK revealed Tuesday (3 July) it is prepared to seal its borders from Greeks and other eurozone citizens caught up in the fall-out of the sovereign debt crisis in the event of “extraordinary stresses and strains”.
“You have to plan, you have to have contingencies, you have to be ready for anything – there is so much uncertainty in our world. But I hope those things don’t become necessary,” UK’s Prime Minister David Cameron told MPs at a home affairs committee.
UK ministers have been working on different scenarios. Under the worst case scenario, reports the Guardian, a Greek exit from the euro would provoke a near-total collapse in its economy and result in many thousands seeking work elsewhere in the EU.
The prime minister confirmed, after being posed the question directly by an MP, that he would be prepared to restrict the rights of Greeks to enter the UK.
More from Capital.gr:
Asked by Keith Vaz, the Labour chairman of the House of Commons home affairs select committee, whether he would restrict the rights of Greek citizens to travel to Britain, the prime minister said he would be prepared to trigger such powers.
“I hope it wouldn?t come to that,” he said. “But, as I understand it, the legal powers are available if there are particular stresses and strains. You have to plan, you have to have contingencies, you have to be ready for anything – there is so much uncertainty in our world. But I hope those things don?t become necessary.”
The Greek response came quickly, reported by ANSAMed:
European Parliament Vice President Anni Podimatà did not take kindly to David Cameron’s comment yesterday that he would shut down UK borders should Greece leave the euro zone.
‘’Such comments only contribute to the climate of division, fear and uncertainty that has been so damaging to Europe in recent years. We expect more from the UK government,’‘ she said in a statement issued today. ‘’We would expect the British to support ways to overcome the crisis, for example by exerting greater control on financial markets, as the recent Barclays debacle has shown.’‘
The Brits would do well to remember that their own regal spouse, Prince Philip, was born a Greek — indeed, as a Prince of Greece long before he held the English title. But he was really of Germanic heritage, as is his spouse [Hitler used to call the Shakespeare’s Merry Wives of Windsor the Merry Wives of Saxe-Coburg und Gotha].
The Royal Family dropped the old name and rebranded itself during World War I, right before the Americans renamed wieners hotdogs and sauerkraut liberty cabbage [all long before Dubya’s Freedom Fries].
And, of course, when you change your brand, the old logo’s gotta go too.
Wow, both Greek and German! Talk about conflicted. . .
The one bright spot in Old Blighty
That would be the nationally owned forests, which are going to stay that way, after the government abandons its plan to privatize them.
From Michael McCarthy of The Independent:
Controversial plans to sell off England’s public forest estate were finally abandoned by the Government today, after an expert panel called for the 637,000 acres of woodlands owned by the Forestry Commission to remain in public ownership.
The panel was hastily set up last year after the initial plan to dispose of the forests, and raise £250m, brought down an unprecedented barrage of criticism on the Government and forced the first major u-turn of the Coalition’s time in office, with the Environment Secretary, Caroline Spelman, shelving the scheme and publicly apologising for putting it forward in the first place.
Today, barely minutes after the report was published online, Mrs Spelman announced that she accepted its main recommendation and that the idea of a sell-off, one of the first of the Tories’ ‘Big Society’ policies, had been given up for good. “Our forests will stay in public hands,” she said.
“We will not sell the public forest estate. We’ll be talking to all those who are passionate about our forests to decide how we will manage our forests for the future.”
Fees ahead for British patients
One of Britain’s landmark social programs, the National health Service, is precisely the sort of institution neoliberals can’t abide. and now it’s coming under increasing heat, with predictions that the once-free service is is heading for the death by a thousand cuts.
Nina Lakhani of The Independent:
The NHS could start charging for some services and treatments within the next 10 years after new research suggests a further decade of austerity will leave the status-quo unsustainable.
Public funding for health, social care and welfare is set to be tight for at least 10 years, according to the Institute for Fiscal Studies (IFS), which means radical changes are needed to keep up with the growing demand from our aging population and rise in chronic conditions.
The research, funded by the Nuffield Trust, concludes that “serious thought” must be given to NHS spending which must include reconsidering which services should be free and increases in taxation to finance the service.
This opens up the prospect that the NHS would no longer be free at the point of use for some patients, some of the time. It could mean, for example, some patients being charged for GP appointments or IVF or treatments for non-urgent conditions.
Greek collapse reaches ‘astounding’ levels
That’s what the government will be telling the economic hit team from the Troika, writes Greek Reporter’s A. Papapostolou:
Greece says its recession is deepening and will present “alarming” information about the state of the country’s economy this week to international auditors in a new effort to ease the terms of the government’s latest bailout.
A government spokesman described the economic data as “astounding” in a television interview Tuesday, but gave no details. He said the information “shows beyond any doubt” that the austerity measures demanded by Greece’s creditors are hurting the country’s economy rather than helping it.
Deputy Finance Minister Christos Staikouras said the Greek economy, in its fifth year of a recession, would contract 6.7 percent this year compared to a previous forecast of 4.5 percent. At last count, in March, more than one of every five Greek workers was unemployed.
Privatization and “strategic partnerships”
Ah, the language of the austerians.
Whilst some folks might call it the sale of the public commons — the resources built up over decades from the wealth and labor of a nation — in the austerian, it’s called “strategic partnerships.”
But call it what you will, it’s the transfer of public wealth into private hands, and there’s yet another indication that the Greek government is taking the fateful step in hopes of convincing the money players of their dedication to the memorandum.
From ANSAmed:
Greek Prime Minister Antonis Samaras is due to meet troika officials in Athens on Thursday, when he will attempt to convince them that Greece can move ahead quickly with the sale of state assets and downsizing of the public sector in return for more favorable bailout terms.
Sources told daily Kathimerini the government would put forward privatizations that can happen quickly, strategic partnerships in public enterprises and the merging of various state organizations. Auditors from the International Monetary Fund, European Commission and the European Central Bank began their inspections at ministries in Athens on Tuesday but the top officials from these organizations are due in Greece on Thursday. Samaras will attend Finance Minister Yannis Stournaras’s swearing-in ceremony before meeting troika representatives at 1 p.m. on Thursday. He hopes that he will be able to use the privatizations and shrinking of the public sector as bargaining chips in the government’s bid to ask for more time to meet its fiscal adjustment target. Samaras will also explore the possibility of Greek banks being recapitalized by the European Stability Mechanism rather than via public debt.
A case of premature privatization?
Boy, the Greeks just can’t win.
First they lost one finance minister due to illness, and now the ministry’s second in command has been the victim of a little bit of non-memorandum expropriation.
From Agence France-Presse:
Burglars broke into the office of Greece’s new alternate finance minister, making off with his passport and documents ahead of a crucial audit by EU-IMF creditors, a police source said on Wednesday.
The break-in at the general accounting office occurred several days ago but was initially kept under wraps, the police source told AFP.
The alternate minister targeted, Christos Staikouras, is the official in charge of budget monitoring in the new conservative-led coalition government which emerged after an election last month.
Same old message from the IMF
Altering the memoradum? No thanks, says Christine Lagarde, who’s only interested in — you guessed it — discipline.
From Ekathemerini:
International Monetary Fund chief Christine Lagarde is in “no mood” to discuss Greece’s bailout program, she said in an interview on Wednesday, and is more interested in what progress Athens has made in implementing reforms.
“I am not in a negotiation or renegotiation mood at all,” Lagarde said in an interview on CNBC television. “We are in a fact-finding mood.”
Greek economic sentiment drops again
Though it’s still not at the previous bottom set three years ago.
From A. Papapostolou of Greek Reporter:
Economic sentiment in Greece fell to a seven month low in June as uncertainty stemming from the country’s elections weighed heavily on business activity, the Foundation for Economic and Industrial Research said Wednesday.
“It is clear that uncertainties during the election period were high, particularly in the business world, as economic activity was limited to the minimum possible transactions. On the other hand, it appears that expectations among consumers have been created for changes to the (government) policy mix,” it said in a report.
“The formation of a coalition has helped ease government uncertainties,” it added.
>snip<
IOBE has been tracking economic sentiment since 1981.
IOBE said its monthly economic climate index fell to 74.1 points in June from 76 in May. That is well below the 89.9 reading in the euro zone and 90.4 in the European Union overall.
The index fell to a record low 67.2 for Greece in March 2009 and hit a high of 111.9 in April 2004, during Greece’s boom years.
Italy experiences austerian conundrum
So your country’s in debt, and the cost of paying the interest is sucking away your nation’s wealth to pay its creditors.
To keep the game going, you borrow more money, but because your economy’s already in the tank, you have to pay more interest, further restraining the economy and cinching the chains of debt even tighter.
And such is the Italian predicament.
From Agence France Presse:
Italy’s deficit rose to 8.0 percent of gross domestic product in the first quarter of this year due to lower tax revenues and higher interest payments on debt, official data showed on Wednesday.
The deficit in the first quarter of 2011 had been 7.0 percent of GDP, the Istat data agency said in a statement.
It was Italy’s worst quarterly result since the 9.5 percent reached in the first quarter of 2009 at the height of the global financial crisis.
“The results of the first quarter 2012 were affected by increased spending on interest due to the increase in borrowing costs in 2011 and by the lower tax returns because of the negative development of the economy,” it said.
Even with the latest help from the Troika, the problem of all that interest remains, and the only way it ends is with total collapse or a debt jubilee. We’d hope for the latter.
Will Russia edge out the Troika in Cyprus?
Cyprus needs money, and the Troika’s already promised to step up, but now Russia’s stepping up with a better deal that the Usual Suspects.
From Agence France-Presse:
Russia is offering Cyprus more favourable conditions than the EU and IMF as the Meditarranean island seeks aid to shore up its banks, Cypriot President Demetris Christofias said Wednesday.
“The conditions offered by Russia are more favourable” because it doesn’t “impose any conditions” and offers “a lower interest rate,” Christofias told the European Parliament.
Cyprus currently holds the rotating European Union presidency.
But aid from the EU and International Monetary Fund comes with strict conditions on economic policy.
Experts from the European Commission, the European Central Bank and the IMF arrived in Cyprus on Tuesday to look into its request for financial aid.
The government has not said how much it is seeking, but local media speculated it would need around 10 billion euros ($12.6 billion).
According a Cypriot diplomatic source the country is also conducting negotiations in parallel with Russia, from which it secured a low-interest 2.5-billion-euro loan last year to cover refinancing needs for 2012.
This is getting interesting.
Europe ponders another banking reform
This time, in the form of a proposal that would make possession of a bank account a right for all Europeans.
From New Europe:
The European Parliament showed its support for the idea that access to basic banking is a consumer right. The Parliament passed a non-legislative regulation calling on the Commission to table legislation by January 2013 to tackle the issues of access to banking.
It’s estimated that over 30 million people in the European Union over the age of 18 don’t have access to a bank account. The Parliament said banking access should be a legal right for citizens.
“Banks have a responsibility to society,” said MEP Jurgen Klute. “This resolution has strong cross-party support, and we now count on the Commission to come up with the legislation.”
Many member states lack legal or voluntary requirements for providers to offer basic payment services to all consumers legally residing within the EU. The Parliament thinks EU legislation is needed because Commission recommendations have produced desired results in only a few countries and banks have a tendency to target commercially attractive clients only.
In close, a grim list of europroblems
Finally, from a Spiegel story about a meeting today between German Chancellor and Angela Merkel, some more reasons to be less than cheery about the plight of the European economy:
The reason is that celebration over the decisions taken in Brussels in the crisis-plagued Southern European countries has obscured the fact that much has been very vaguely formulated and that some decisive decisions still haven’t been made. The repercussions are already being felt.
The governments of Finland and the Netherlands, for example, said they would use a veto if they had to in order to stop the permanent euro bailout fund, the European Stability Mechanism (ESM), from buying up government bonds on secondary markets — precisely the flexibility Italy and Spain had demanded.
Britain has also expressed its opposition to transferring regulatory authority for all of Europe’s banks to the European Central Bank. But this was agreed to in Brussels as a precondition for the banking union that Italy and Spain have called for.
In France, a €40 billion shortfall has just been identified in the national budget that will have to be eliminated by 2013 if the country is to meet EU deficit targets. That doesn’t leave the country with much leeway for economic stumulus.
The plan to provide Spanish banks with direct capital, instead of funnelling it through the government, is proving in practice to be very difficult to implement, and it will take some time before a solution can be found. Thus, last week’s summit decisions are probably not relevant for the impending bank rescue.
Merkel must also make clear to her host that a number of lawsuits are pending at Germany’s highest court, the Federal Constitutional Court, regarding the country’s euro policies and that she will not be able to accept any agreements if they are rejected by the justices. On July 10, the court is to decide whether to grant an injunction against the launch of the ESM, pending its decision on complaints filed against the fund.
