The eurobank has agreed to guarantee the latest Greek bailout debt and more warnings of a eurozone breakup.
From Italy, we’ve got a major business loan shortfall and a gold rush that leads to mafia coffers. From Spain, a government broadcast news purge, the inevitable retirement age increases [and a ban on early retirements], and troubles with a major arms sale.
From Greece comes news of the latest austerity developments and some faint praise from the Men in Black, news that pension cuts will strike deepest at those who receive least, warnings of implementation roadblocks, another German Grexit prediction, a major immigrant roundup, and a Golden Dawn call to ban TV soap operas [just some, the ones immigrants like].
And out last item is a German presidential backstep in Islamic tolerance.
Eurobank agrees to guarantee Greek loan debt
And it’s precisely the move that members of German Chancellor Angela Merkel’s party say they didn’t want — and we’ll have more on that later in today’s wrap-up.
From New Europe:
The European Central Bank’s governing council has agreed to guarantee loans from the Greek central ban, thus allowing the debt sticken nation to access €4 billion in loans needed to stave off bankruptcy in August.
The move comes after the ECB raised the limit on the amount of treasury bills the Bank of Greece could accept as collateral for emergency aid to €7 billion, up from €3 billion.
ECB head Mario Draghi disappointed analysts with a speech last Thursday, but after experts examined his wordsd, they began to feel more confident.
They detected hints that the ECB may begin to buy stricken states bonds do lessen the crippling interest rates some nations, like Spain, are having to pay.
Christian Schulz of Berenberg bank said the ECB had “finally stepped up to the plate meaningfully.” He added, “the ECB convinces markets that it is providing a reliable safety net for solvent sovereigns which stay on the reform path, it may lure more investors back into these markets. In that case, the ECB may not have to buy many bonds.”
Monti warns of eurozone breakup
The Troika-technocrat installed — without benefit of election — Italian prime minister is upset about those Germans and other folks up north about their reluctance to part with euros to help the folks down south.
From the Associated Press:
Italy’s prime minister has warned that the euro zone’s sprawling debt crisis has created resentment amid the bloc’s nations, which could ultimately trigger a breakup of the wider European Union.
Mario Monti told German news magazine Der Spiegel in an interview published Sunday that euro zone tensions over the past few years “bear the traits of a psychological dissolution of Europe,” adding that Europe “must work hard to contain it.”
Asked about a strengthening in resentment between the allegedly profligate southern European nations and the bloc’s thrifty northern members, Monti told Der Spiegel “it is very alarming, and we have to fight against it.”
“Yes, there is a front line in this area between north and south, there are reciprocal prejudices,” he said according to the interview’s German translation.
More from the BBC:
“There is a front line in this area between north and south. There are reciprocal prejudices,” he said. “It is very alarming and we must fight against it.”
In Greece, Germany’s Chancellor Angela Merkel has often been caricatured as a Hitler figure in protests and in the media.
This week an Italian newspaper is set to run a front-page article describing Ms Merkel’s domination of the European political scene as a “Fourth Reich”, according to the Associated Press news agency.
Mr Monti warned that a disintegration of the eurozone would “destroy the founding of the European project”.
“Therefore it is the prime task of the nations’ leaders to explain to their citizens Europe’s real situation, and not give in to prejudices.”
The irony, of course, is that he’s halfway right. There’s a lot of northern prejudice about “lazy” southerners and their corrupt governments, though there’s evidence against the former and some truth in the latter charge.
But reluctance to add to the already insurmountable debt burdens of all European nations is, in many ways, a healthy sign — given that the ever-accumulating interest on the ever-mounting debt is unsustainable.
What we’re not hearing is any sign of proposals that seek solutions outside the rules of the current money game, and that’s precisely what’s needed.
And on to Italy. . .
Debt crisis starves Italian firms
First the story, from Lisa Jucca of Reuters:
Italy’s “war” with international debt markets has sent borrowing costs soaring for its traditionally prudently managed private companies, stifling their efforts to invest in competing more strongly with rivals in Germany and beyond.
Just as Prime Minister Mario Monti tries to fix the problems that have hindered Italy’s private sector for decades, notably its legendary official red tape, companies are paying significantly more to borrow than competitors to the north.
The European Central Bank has slashed its interest rates and showered banks with cheap cash in the hope they will lend to companies and consumers in the struggling southern nations such as Italy, which have been worst hit by the euro zone crisis.
But at the same time, a jump in Italy’s borrowing costs on the sovereign bond market has dragged up interest rates on bank loans to Italian industry.
“We used to be able to borrow at 2.5-3 percent. But since this war of the sovereign bond spreads began, things have changed dramatically,” said Paolo Bastianello, Chairman of textiles group Marly’s. “The cost of credit has certainly risen by a couple of percentage points.”
Reluctance to lend isn’t a strictly Italian problem, since here in the U.S., banks and investors are hoarding cash as well, reluctant to part with money in a time of great uncertainty.
Mob crashes Italian cash-for-gold trade
Once again, not surprising, given the long and intimate connections between government and Italy’s crime clans — which are as thick as, well, thieves.
And don’t forget that even Silvio Bunga Bunga Berlusconi is alleged to have doled out cash to wiseguys, who allegedly targeted him in a protection scheme.
First, a video report from Agence France-Presse:
And the story, via the London Telegraph:
Italy’s traditional goldsmiths are up in arms over a boom in the poorly regulated cash-for-gold sector that is making billions for the mafia as hard-up Italians rush to sell off their bling.
Cash-for-gold shops have filled Italy’s streets in recent months, with blanket television adverts urging Italians to sell off their medallions and jewels for quick cash, AFP reports.
Much of the gold eventually makes its way across the Alps to Switzerland – whether legally or smuggled across the border – making gold Italy’s fastest growing export and Switzerland an increasingly prominent market for Italy.
Custom seizures of gold are up 50pc, officials say, with one of the latest cases a father and daughter arrested trying to get out 110 pounds of the metal worth over €2m in unmarked ingots.
“It’s a booming sector for criminal organisations. Smuggled gold ends up all over the world, in countries where it is swapped for arms, drugs, you name it,” said Ranieri Razzante, head of AIRA, an anti-money laundering watchdog.
Legal gold sales to Switzerland totalled 120 tonnes last year – up from 73 tonnes in 2010 and 64 tonnes in 2009, with foundries built on the border having to work flat out to meet demand and almost daily truckloads crossing over.
Spanish government purges critical broadcasters
The old “kill the messenger” game is alive and well on the Iberian peninsula.
From The Guardian’s Stephen Burgen:
A government making a raft of public spending cuts might not be expected to win many friends. But critics of Mariano Rajoy’s rightwing Partido Popular (PP) claim that a series of departures from Spain’s leading state broadcasting organisations are a sign that it will not tolerate any criticism.
A number of journalists who have presumed to question the administration’s austerity policy have been purged from the national RTVE radio and TV channel. And this weekend the most high-profile exit in recent months – that of Ana Pastor, the presenter of Los Desayunos de TVE, a popular breakfast news magazine programme – was announced.
Spanish politicians tend to get an easy ride from the press and rarely face a grilling. Pastor, however, has a reputation for calling the people she interviews to account and asking difficult questions. “They’re getting rid of me for acting as a journalist,” Pastor declared, adding that it was a political decision.
On Saturday the channel said Pastor was leaving after refusing the offer of a job as a presenter of a night-time programme. For her part, Pastor said: “I thought they were going to offer me something [else] but there was nothing of substance. The head of news said we should both think about my future but it was all vague. He said let’s see what happens between now and January. They didn’t want to say I was sacked, but I was, and I’m not one to hang around earning public money and doing nothing.”
Pastor said it was clear that politicians “don’t like uncomfortable interviews”, while another source at TVE said the government was “allergic to discussion”. The departure – one of a number of controversial exits critics insist are sackings – comes after the removal of Fran Llorente, the RTVE head of news whom the government accused of political bias. Pepa Bueno, a former news anchor who, according to one source, “would have been sacked if she hadn’t already left last month”, said Llorente was under constant pressure from PP officials.
“I never received any sort of political instructions from Llorente,” Bueno added. “He always took the heat and left the rest of us to get on with being journalists.” Some 70% of staff voted against the appointment of Llorente’s successor, Julio Somoano.
It’s not a lot different here in the U.S., where ever-downsizing corporate media have purged many of the most critical voices of the MSM.
But here it’s largely a question of self-censorship, since reporters known full well that it’s the nails that stick up who get the hammer.
Spain to up retirement ages, ban early retirement
One of the universal planks of neoliberalism calls for cutting pensions and raising retirement ages, a move that bodes well for corporations but not for workers.
The Spanish measures, as currently proposed, wouldn’t be fully implement for another 15 years, but you can rest assured that when the crisis grows deeper, the date will draw much, much closer.
From Manuel V. Gómez of El País:
The Spanish government’s budget program for 2013-2014, which it handed in to Brussels last Friday, includes legal reforms that will affect the retirement age and speed up the date for implementing changes, now set for 2027.
The plan includes restricting access to early and partial retirement, and faster implementation of the new retirement age as well as different parameters for calculating pensions.
Pensions are currently the biggest expense on the Spanish budget. This year, the government will pay out 120 billion euros, representing around a quarter of all spending and over 10 percent of the nation’s GDP.
And these figures will only go up in future, to an estimated 15 percent of GDP, as baby boomers born in the 1960s reach their retirement age. This fact already led the previous Socialist government of José Luis Rodríguez Zapatero, a year and a half ago, to initiate a reform process that raised the retirement age from 65 to 67. The move created great social rejection and the conservative Catalan nationalists of CiU were the only political group in parliament to support it. The Popular Party (PP), now in power, voted against it at the time.
PP spokespeople then argued that a reform of the pension system was “inopportune, disoriented, imprecise and incoherent;” they also criticized the Socialist government for modifying such an important issue in such a “rushed way” and forecast that the system would be “more unfair” because it would lead to financial losses for workers even if they put in more years of work.
Now, the PP not only accepts those Socialist reforms, but is promising European authorities a new turn of the screw to ensure Spanish workers retire even later.
Note once again that it was a socialist [sic] party that originally proposed the anti-social measure.
Spain hopes to generate cash through arms sales
Spain wants to peddle 600 tanks — made to a German design by a Spanish branch of an American military/industrial giant — to Saudi Arabia.
The Leopard 2E is the Spanish version of the German Bundeswehr’s Main Battle Tank, and built in Spain by General Dynamics Santa Bárbara Sistemas. If the deal is approved, the Saudis would end up with nearly three times as many Leopard 2Es as Spain, and the Spanish economy would receive a major economic boost.
But there’s a problem. . .
From Gara Naiz, in San Sebastian, Spain, via Google Translate:
On 30 July, the Defense Minister Peter Morenés, traveled to Berlin for emergency talks with his German counterpart, Thomas de Maiziere. Background, the sale of 600 tanks ‘Leopard 2′ to Saudi Arabia, which the Spanish state has spent months negotiating with the Saudi monarchy, but is now hampered by the interests of Germany, which owns the patent for manufacturing.
The operation has been brewing for months and at the highest level, with the involvement of the Royal House and the Government itself, which on May 25 approved a Royal Decree authorizing the Spanish government to sign contracts for the supply of arms foreign governments. He did so to satisfy a demand from Saudi Arabia, which required that the contract with the manufacturer, Santa Barbara, had the backing of the state.
This is a battle tank created by the German company Krauss Maffeei, but also manufactured by the Santa Barbara Spanish-owned by General Dynamics. In order to close the deal, the Spanish company should obtain permission from the German owner of the patent, but seems to not want to miss Krauss Maffeei a business valued by German media at 10,000 million euros.
The problem lies in the morals of the operation, which involves selling heavy weapons to a dictatorship like Saudi repressing opposition both internally and revolt in their area of influence, as seen in Bahrain . From the Studies Centre per a la Pau Delàs JM reported that the sale would violate Spanish law “by violating the common position of the European Union.” The violation would occur, “at least” in the second-criteria on human rights in the buying country-and fourth-referring to preserve peace, security and regional stability.
The original article, in Spanish, is here.
So once again the military/industrial complex hopes to generate some cash from stoking the fires of war in the world’s most incendiary region. Dick Cheney and Paul Wolfowitz must be smiling.
H/T to For what we are… they will be.
And on to Greece. . .
The Greek cuts become final in September
The coalition’s kept busy this weekend, hacking away, and they’ll be at it throughout the week, presumably with the kindly assistance of the Troika’s ubiquitous Men in Black.
From Marcus Bensasson of Bloomberg:
The package of budget cuts Greece has to make to qualify for international rescue funds and keep it in the euro area will be completed by early September, a Greek finance ministry official said today.
Talks between representatives of Greece’s international creditors, the so-called troika, and the government agreed on a “good proportion” of measures, said the official, who declined to be identified because the talks are ongoing.
Work will continue on the package this week, the official said.
Bensasson has more details in a second story:
Representatives from the so-called troika of the European Commission, European Central Bank and International Monetary Fund met with Greek Finance Minister Yannis Stournaras in Athens [Sunday] at the conclusion of the meetings. The talks will determine whether Greece continues receiving funds from the country’s 240 billion euros ($297 billion) of rescue packages.
“The discussions on the implementation of the program were productive and there was an overall agreement on the need to strengthen policy efforts to achieve its objectives,” the troika institutions said in a joint statement today. Inspectors from the country’s creditors will return to Athens in early September to continue the talks, according to the statement.
“We made a lot of good progress,” the IMF’s representative Poul Thomsen said today in Athens. “We’ll take a break now and come back in early September.”
Troika inspectors offer faint praise
The upper echelon of those Men in Black offered their assessment before heading back to their respective headquarters.
Their conclusion: A good start, but lots more to be done.
From the London Telegraph:
Greece has made some progress in finding budget cuts needed to continue its bailout programme but not all work is done and international inspectors will return in September for a final verdict, officials said on Sunday.
Inspectors from the International Monetary Fund, the European Commission and the European Central Bank – known as the troika – concluded a visit to Greece on Sunday saying the talks with the new coalition government were productive, Reuters reports.
“Talks went well, we made good progress. We will take a break and come back in early September,” the IMF’s mission chief for Greece Poul Thomsen told reporters after a meeting at the finance ministry.
“The discussions on the implementation of the programme were productive and there was overall agreement on the need to strengthen policy efforts to achieve its objectives,” the EU Commission, IMF and the ECB added in a joint statement.
“The Greek authorities are committed to proceeding with determination in their work over the next month,” they said.
Pension cuts will prove worst for the poorest
Details of the coalition’s proposed cuts emerge almost daily.
Now it looks like pension cuts will be striking hardest at those who receive the smallest pensions, without imposing similar slices on the checks of those at the top end of pension spectrum.
Is the coalition intentionally fomenting out to foment class war?
From Greek Reporter’s Andy Dabilis:
Looking to slash government spending everywhere it can to satisfy the demands of international lenders, the coalition led by Prime Minister Antonis Samaras is mulling whether to force Greeks who were set to retire to work at least another year, raise the retirement age to 66, and make further cuts to pensioners whose benefits have already been cut to $743 while protecting those who get the current ceiling of $4,905 monthly. And more austerity measures might be coming next year.
The newspaper Kathimerini reported those moves were under consideration as Finance Minister Yiannis Stournaras met on Aug. 5 with officials from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) who have insisted the new government impose more harsh austerity measures and cut $14.16 billion in spending. The Troika said it wants a detailed list of cuts when it returns to Athens on Aug. 27.
After the meeting, Troika officials said they were satisfied with the progress report and would return in September. The newspaper Kathimerini reported that the coming package includes reductions to auxiliary pensions, more than 30 percent to lump sums paid on retirement and to social benefits. The retirement age is to increase to 66, from 65, while low-level pensions are expected to be trimmed by up to 6 percent. Also, the operational spending of ministries is to be cut more than first planned. No mention was made of going after tax evaders owing the country $70 billion.
The TV station SKAI reported that Troika officials presented a list of cuts they wanted made and that government officials agreed with most of them. Prime Minister Antonis Samaras and his coalition partners, Socialist PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis, are to meet on Aug. 6 and Aug. 7 to discuss the outlook for privatizations and the merging of state organizations. Venizelos and Kouvelis last week gave in to Samaras’ insistence that Greece must do what the Troika says and backed away from insisting he ask for more time to implement reforms.
But cutting public assistance’s the easy part
Other structural changes will prove much harder to implement, reports Dina Kyriakidou of Reuters:
Greece’s latest fiscal and reform pledges may be enough to convince international lenders weary after years of broken promises to keep Athens hooked to a 130 billion euro lifeline, but the battle to implement it will be epic.
Few question the new coalition government’s resolve but many doubt whether the cantankerous public sector can or will implement the measures or the Greek public, reeling from years of austerity, can take much more without putting up a fight.
“The political will is strong, but so are the obstacles – red tape, a demoralized and increasingly underpaid public administration are principal among them,» said George Pagoulatos, professor of economics at Athens University.
Greek officials say 11.5 billion euros of fiscal measures roughly agreed this week – although more painful for the public – will be easier to implement than the structural changes.
Reforms such as liberalizing professions and markets including lawyers and pharmacies, have stumbled on strong union protests. Others, such as cutting red tape for setting up a business, have been stuck in a bloated and ineffective public administration incapable of change.
Yet another German Grexit prediction
There’s not a single day of late that doesn’t come with a verbal slap or two from Germany.
Here’s the latest, via Athens News:
On Sunday, a senior member of Chancellor Angela Merkel’s conservative alliance, Bavaria’s finance minister Markus Soeder, said Greece would leave the euro zone by the end of 2012.
“I’ll stay in office if all goes according to plan until April 2013, and I hope that I can help rescue Italy from financial ruin with moral support from some European friends, especially Germany,” Monti told Der Spiegel.
“But I say quite clearly: moral support, not financial,” he added. “I emphasize: not with financial help. But they should cut some slack to those countries that are following the European guidelines precisely.”
More from Agence France-Presse:
Markus Soeder, finance minister in southern Bavaria state and a member of the Christian Social Union (CSU), the region’s sister party to Chancellor Angela Merkel’s CDU, said the euro itself was “right and important”.
“But when a country like Greece on a continuing basis cannot pay back debts, it must leave the eurozone,” he told Sunday’s mass-circulation Bild am Sonntag newspaper in an interview.
“The way I foresee it, Greece should quit by the end of the year. Any new aid, any easing of the conditions would be the wrong path,” he said.
Athenian police conduct major immigrant roundup
From the Greek Streets reports:
In the past few days, police have been conducting their largest ever pogrom operation in the centre of Athens. According to the released information, 1,500 people were detained by police in the first two days of the operation (August 2-3) and another 4,900 in its third day alone (August 4). The operation has been taking place in Athens and in Evros, at the NE border with Turkey. At least 1,630 people have been arrested and are facing deportation.
In an Orwellian twist, the racist pogrom operation has been named “Zeus Xenios” — the ancient god of travelers and hospitality.
The racist operation is continuing for a fourth day today (Sunday, Aug 5). It appears that today’ s operation is centred around Omonoia Square, Monastiraki, Mars’ Fields (Pedion tou Areos) and Vathis Square, all in central Athens. We are getting reports that police stop, search and detain all migrants in their path, regardless of whether or not they carry documents.
More from Athens News:
Indeed, the operation is set to continue in central Athens on Monday in the environs of Omonoia Square, Monastiraki, Vathys Square and the Pedion tou Areos park vicinity.
Public Order and Citizens’ Protection minister Nikos Dendias told a press conference on Saturday that “today is a good day for Greek Police, regarding both the smooth development of the major ‘Xenios Zeus’ operation and the success in solving the hideous crime on Paros”.
He said that the living conditions of the unregistered migrants in the Athens center were a shameful, noting that entire areas of Athens have been turned into a no-man’s land, rife with drug trafficking, prostitution, smuggling, theft, serious injuries, murders, and all other types of delinquent behavior.
Dendias stressed that even the area encompassing the famed Athens University, Athens Academy and Athens University Library buildings in downtown Athens, has been turned into a “supermarket” for narcotics, while the environs of Omonoia Square, the ‘crossroads’ of the Greek capital, has become a center of lawlessness.
Greek neo-Nazis wants Turkish soaps banned
No, not the stuff you use to scrub up, but the Turkish soap operas popular with immigrants.
From Yorgo Kirbaki of Hurriyet Daily News in Istanbul:
The leader of Greece’s far-right Golden Dawn party has called on the nation’s citizens to boycott Turkish soap operas while barring his MPs from watching them, daily Hürriyet reported today.
“I call on deputies of Golden Dawn and its supporters not to watch Turkish series,” party leader Nikolaos Michaloliakos was quoted as saying. He also recommended not watching the commercials that run during the airing of Turkish shows.
Michaloliakos said it was a “shame” that Turkish shows were being aired in Greece, which had a “unique” cultural heritage and said friendly relations between Turks and Greeks was against the well-being of Greece and its citizens.
The neo-Nazi leader said they would bring the issue of the popularity of Turkish soap operas to the Greek Parliament’s agenda and would ask the Greek broadcasting authority to intervene.
Yeah, kill all those Turkish soaps. Maybe their American counterparts will demand the end of telenovela broadcasts?
German president’s remarks raise Muslim concerns
And while we’re on the subject of folks from Muslim lands, the latest German grumble on the place of Islam in Europe.
From Deutsche Presse-Agentur:
Joachim Gauck, the German president, upset Muslim groups Thursday with a newspaper interview in which he rejected his predecessor’s view that Islam now has roots in Germany.
Conservative groups were incensed when Christian Wulff, who was president at the time, used Germany’s national day in October 2010 to say that “Christianity belongs in Germany without any doubt. Judaism belongs without any doubt. But now, Islam belongs too.”
In an interview with the weekly newspaper Die Zeit, Gauck, who was visiting the Palestinian territories, disagreed.
“I would have simply said the Muslims who live here belong in Germany,” he said, adding that while he could not concur with Wulff’s phrasing, “I accept his intention” about urging Germans to adapt to reality. “The reality is that many Muslims live in this country,” said Gauck, a retired Lutheran pastor who replaced Wulff in March. The interview took place before Gauck left for Israel and the West Bank.
Gauck added in the interview that he could sympathize with those Germans who asked, “How did Islam shape our Europe? Did it undergo the Enlightenment or even a Reformation? … I’m looking forward to theological debate within European Islam.”