We begin with a recession prediction, then on to some upbeat trade numbers, the banking coup that’s on for next month, Finland’s about-face on a eurozone exit, and the Portuguese are selling off their gold jewelry and heirlooms.
From Spain we have bad numbers for the leading parties, record bad bank loan numbers, signs the Spailout call is coming, and a grocery-expropriating mayor on the march.
From Italy, bad news for immigrant workers, the pending closure of Europe’s largest steel plant, and a tax dodge lament.
From Britain we’ve got a surge in suicides and an overeager former Murdoch minion turned into eager privatizer of schoolyards, while Denmark gives us downsized journalists and a novel solution to the growing numbers of evicted tenants.
Wse close with an ominous court ruling from Germany.
Economists predict year-plus recession
Considering that Britain’s already in one — and Greece and Spain already have depression-level unemployment numbers, consider this an easy call.
The eurozone will slip into recession and won’t grow until 2013, according a poll of economists who also don’t expect any new aggressive policy response from the European Central Bank.
The latest monthly survey results of the Reuters poll, released yesterday (16 August), follow news that the eurozone just barely skirted recession in the first half of the year, with only Germany growing in the three months to June and France, the second largest eurozone economy, flatlining.
Taken together with a worsening outlook for the eurozone’s most vulnerable economies in a Reuters poll published last week, there appears little expectation for an end to the euro crisis or any prospects for a meaningful economic rebound.
Adding to the deeper concerns, Finnish Foreign Minister Erkki Tuomioja said in the Daily Telegraph published today (17 August) that European leaders must prepare for the looming breakup of the eurozone.
But the eurozone had a record trade surplus
So that should mean everything’s hunky-dory, right?
Well. . .
From Agence France-Presse:
New EU data out on Friday showed the eurozone logging a record trade surplus and bumper cash earnings in what some analysts said was evidence that austerity and structural economic reforms pay off.
However, the devil in the detail for others was a huge depreciation year-on-year in the real-terms value of the single currency and darker signals from more recent Chinese trade data — with a prolonged recession still tipped into next year.
The Eurostat agency said the 17-nation eurozone’s surplus in the trade of goods surged to 14.9 billion euros in June ($18.4 billion), the highest since the European Union began collating numbers in 1999.
The preliminary headline figure was up from just 200 million euros for the same month in 2011. Seasonally-adjusted exports rose by 2.4 percent compared to May, while imports remained stable.
At the same time, the European Central Bank in Frankfurt announced that the eurozone’s current account surplus grew to 12.7 billion euros in June from 10.3 billion in May.
Banking coup set for next month?
The Merkel agenda, backed by the Bundesbank, is to force common currency countries to yield sovereignty over the national purse strings to the eurocrats.
Now comes word that a major plank in the platform, centralizing control of all the eurozones banks in the money wizards of the eurobank in Frankfurt, will be rammed through next month.
The European Commission will propose next month giving the European Central Bank supervision over all of the euro zone’s major banks, Handelsblatt daily reported on Friday, citing Commission sources.
That would include Germany’s Sparkassen savings banks and Genossenschaftsbanken cooperative banks, which Germany had hoped would be exempt when it signalled it wanted supervision only over the biggest 25 banks, the paper reported.
The Commission’s proposal, due on September 11, envisages national authorities supervising day-to-day business and the ECB only intervening where it sees “dangerous risks”, Reuters said citing Handelsblatt.
Outside the euro zone, national banking supervisors would stay in charge of their banks, the paper reported.
Finland does a skinback on the Finxit
No sooner do folks in Helsinki suggest their country may dump the euro than words comes that it ain’t so.
We suspect phone lines to the south were burning up before this latest turn of events.
From Angela Monaghan of the London Telegraph:
Finland is totally committed to the euro, its European affairs minister said following comments from its foreign minister that the country was preparing for a break up of the single currency.
“Foreign minister Tuomioja’s statement in no way reflects the Finnish government position,” said Alexander Stubb, highlighting deep divisions within the coalition government. “Finland stands 100pc behind the euro,” the European affairs minister added.
He was speaking after foreign minister Erkki Tuomioja told The Daily Telegraph “we have to face openly the possibility of a euro-break up.”
Mr Tuomioja, a member of the coalition’s Social Democratic Party, said that Finnish officials had an “operational plan for any eventuality.”
Mr Stubb, a member of the centre-right Kokoomus Party, said his colleague had probably spoken in a personal capacity. “The government’s position is very clear: we stand pro-European and we stand to work, to improve the situation in the eurozone,” he said.
Immiserated Portuguese cash in their gold
Yesterday’s heirlooms and cherished gifts are headed to the smelter as people resort to desperate measures in the face of need.
From Bloomberg’s Henrique Almeida:
In Portugal, the historical home of some of Europe’s biggest gold reserves, the number of jewelry stores, which include cash-for-gold shops, increased 29 percent in 2011 from a year earlier, a study commissioned by parliament found. In the first quarter, an average of two new stores opened every day, the report said. Now some of them are closing.
“Business has gone from great to terrible in a matter of months,” Luis Almeida, whose family has owned a gold store near Lisbon’s Rossio Square for more than 40 years, said in an interview. “The sad truth is that most of my clients have already sold all of their gold rings.”
Portugal’s gold exports increased by more than five times to 519.4 million euros last year from 102.1 million euros in 2009, according to data published on the Lisbon-based National Statistics Institute’s website.
While central banks bought 157.5 tons in the second quarter, compared with 66.2 tons a year earlier, jewelry use slipped 14 percent to 418.3 tons, the council said. Jewelry demand from India, 2011’s biggest buyer, plunged 30 percent to 124.8 tons, accounting for 30 percent of the global total.
“The loose scrap in the market has already been melted,” said Nikos Kavalis, an analyst at the Royal Bank of Scotland Group Plc in London who forecasts gold prices will fall to $1,250 an ounce by 2015.“People are also less willing to sell their jewelry amid lower gold prices.”
Spanish voters sour on both leading parties
Gee, considering the one held office when the bubble burst and the other hasn’t been able to do much about cleaning up the ensuing mess, surprised we’re not.
Support for Portugal’s main ruling party has ebbed to its lowest since 2011 elections although it remains just ahead of the opposition Socialists who kicked off the country’s eye-watering program of budget austerity two years ago.
The centre-right administration has enacted tax hikes, spending cuts and much-needed reforms in the labor market under a 78 billion euro EU/IMF bailout for the debt-laden nation. The international lenders have praised it for its resolve, but its popularity at home has been waning.
A survey by pollsters Eurosondagem showed Prime Minister Pedro Passos Coelho’s Social Democrats with support of 34.1 percent of voters, 0.5 percentage points down from the previous poll a month ago. The Socialists had 33 percent, up 0.5 percentage points.
The other member of the ruling coalition, the rightist CDS-PP, had 10.1 percent of voting intentions, unchanged from the previous month.
Bad loans hit record levels for Spanish banks
The figure’s approaching 10 percent.
From Álvaro Romero of El País:
The number of bad loans listed at Spanish banks jumped to a record high level in June, according to figures released Friday by the Bank of Spain.
The historic figure was registered during the same month that the Spanish government asked the European Union for a bailout for its financial institutions.
The value of dubious credit jumped to 164.36 billion euros in June, which is equal to an unprecedented 9.42 percent of the banks’ total loan portfolio, central bank said.
This figure was up sharply from the 8.96-percent share of total loans recorded in May, and was the largest bad-loan ratio recorded since the central bank began compiling the series of data in 1962.
Moreover, the increase in terms of hard currency in delinquency between June and May, which was 8.387 billion euros, also represents a milestone in the Bank of Spain records, and the second-worst figure in the series. Only in July 2009 did the amount of delinquent credit rise more in one month — by 9.346 million.
At the same time AFP quoted a spokeswoman for the euro zone’s bailout fund, the European Financial Stability Facility (EFSF), as saying that some 30 billion euros has already been set aside in case of Spain’s urgent request.
The Spailout’s inevitable, says Madrid’s mayor
Given that the folks in Brussels have already said they’d give it the greenlight, the statement from a close ally of the prime minister sounds like one of those signals that almost always precede a major move.
The mayor of Madrid, a prominent member of Spain’s ruling party, said on Friday it seemed inevitable that the central government would apply for some kind of international aid package as the country’s borrowing costs soar.
Ana Botella, wife of the former prime minister José Maria Aznar, is the first high-level official to say publicly that Spain would need a financial rescue.
“There’s no doubt about it. It’s very probable that we’re going to have to ask for help from the European Union,” she told the Spanish news agency Europa Press.
“It seems inevitable.”
Grocery-expropriating mayor leads a long march
His goals include opening up of public land for the jobless to farm.
Ginés Donaire of El País:
Shouting “workers united to fight unemployment,” more than 400 farm laborers began on Thursday the first of a series of long marches across the Andalusia region, which will take them to a number of different provinces over the coming days.
The first stage of the march, some 20 kilometers between the towns of Jódar and Jimena, was led by United Left (IU) coalition mayor and regional deputy Juan Manuel Sánchez Gordillo, and the leader of the Andalusian Union of Workers (SAT), Diego Cañamero. Several SAT members were arrested last week for their Robin Hood-style looting of supermarkets in Écija and Arcos de la Frontera.
“We want a special plan for employment in the fields, the turning over of public farms that are not being used, and a basic income for the 350,000 families in Andalusia who don’t have any type of financial protection,” said Sánchez Gordillo, who was one of the instigators of the supermarket raids. The IU politician hasn’t been charged given his immunity as an elected official.
The laborers are also demanding that the government stop throwing off families who have been squatting on empty plots owned by the state. Some of the “squatter” families, including children, are taking part in the marches.
And on to Italy. . .
Immigrant workers hit hard by Italian crisis
The job losses are greatest in small companies.
Unemployment caused by Italy’s crisis is also affecting immigrants with 22.420 less new jobs (-27 percent) estimated this year for non-seasonal foreign workers in the industrial and service sectors, according to the annual survey of the Unioncamere association and the Labour Ministry.
The decrease in new hires will mostly concern small companies (-88.5 percent) and regions in northern Italy (-69 percent).
The estimate on hire cuts for immigrants was based on the 60.570 jobs offered to immigrants this year against the 82.990 offered last year (-27 percent).
The negative employment rate mostly concerns companies with less than 50 employees which are expected to hire 30.190 immigrants, 19.840 less than last year (totalling 88.5 percent of the overall decrease forecast this year); and northern regions which are expected to hire 36.060 immigrants compared to last year’s 51.550 (15.490 less than last year, 69%).
Court order threatens Europe’s biggest steel plant
For some the story is good news — the Taranto residents who say they’re being poisoned by the refinery’s pollution — but for the plant’s 20,000 workers, the ruling is a disaster.
Two Italian government ministers have been meeting representatives of Europe’s largest steel factory which is threatened with closure and the loss of up to 20,000 jobs.
The ILVA factory in Taranto in southern Italy was ordered to stop production by a judge because of high levels of pollution which, its claimed, are causing health problems for local people.
Magistrates fear that chemicals pumped from the site may have led to the deaths of hundreds of people in the past 13 years.
Steelworkers and local people gathered to demonstrate on Friday but opinions are divided because while they are worried about health, they are also concerned about unemployment in one of the poorest regions of Italy.
Tax dodges and Italian debt politics
Mario Monti, the technocrat the Troika installed to run Italy says tax-dogers are causing him no end of grief when it comes to working with the lords of money.
Italian Premier Mario Monti said Friday mass local participation in tax evasion has turned Italy into a fiscal “war zone,” adding that this has in turn contributed to the negative factors that have made some countries “badly predisposed towards Italy.” The prime minister said he was referring to countries “which Italy could need to turn to from time to time for financial assistance,” according to an interview with Tempi, an Italian online daily. Monti was appointed in November 2011 to replace outgoing Prime Minister Silvio Berlusconi amid spiralling public debt costs in a bid to salvage Italy from a Greek-style debt crisis. Monti said the countries in question were Northern European countries that were aware “that Italy is a very rich country, but that it also has a heavy public debt that these very nations may be called upon to help sustain, and yet that there are many high and medium Italian earners that don’t pay their taxes”.
The prime minister said that this justified the very strong measures that have been taken by his government since he was appointed in November, which he personally approved. A wide-scale crackdown on tax evasion in Italy has even led in some cases to multiple suicides amongst citizens that have found themselves laden with tax bills they were unable to pay.
Monti said his technocrat government has since November been focussed on reducing Italy’s public deficit and on introducing structural reforms, and said these very measures have convinced Europe and the rest of the world that Italy is “able and determined” to introduce far-reaching changes in its structures.
Suicides? That brings us to Britain. . .
British suicides spike in crash’s aftermath
We’ve heard a lot about suicides in Greece, Spain, and Italy, but Britons are killing themselves as well, according to a new study.
From The Guardian’s Sarah Boseley:
More than 1,000 people in the UK may have killed themselves because of the impact on their lives of the economic recession, according to a new analysis.
Suicides tend to rise in hard economic times, and there has been evidence of the numbers increasing in Greece and more recently in Italy as people have lost their jobs and struggled to support themselves and their families.
A paper published in the British Medical Journal suggests that the same pattern is now visible in Britain.
The suicide rate had been dropping steadily in the UK for 20 years before the recession hit, but in 2007-2008 it rose by 8% among men and 9% among women.
British education minister zealous to sell schoolyards
Secretary of State for Education Michael Gove, a former scribe for pal Rupert Murdoch’s London Times, has been so zealous in selling off school ball fields to private developers that’s he’s sold off real estate even his own advisors urged keeping.
Now that’s a dedicated neoliberal!
From the London Telegraph’s Christopher Hope:
The Education Secretary overruled internal advice from his own independent experts to force through the sale of school playing fields, The Daily Telegraph can disclose.
Michael Gove has ignored the opposition of the School Playing Fields Advisory Panel to approve sell-offs five times in the past 15 months, documents show. It has also emerged that the number of sales given the go-ahead by Mr Gove is far higher than the amount admitted by the Coalition this month.
Mr Gove apologised for publishing the wrong figures, saying he had been given incorrect information by his officials.
In a response under the Freedom of Information Act earlier this month, Mr Gove disclosed that his department had approved the disposal of 21 school playing fields “since May 2010”.
However, figures seen by The Daily Telegraph — which last week started a Keep the Flame Alive campaign to boost school sport following the success of the London Olympics — show that the true figure is significantly higher.
They show that the panel, which must by law give a recommendation on all sales before ministers make their final decision, received 35 applications to sell school playing fields between May 18, 2010 and July 22, 2012. Of these, 30 sales were approved by ministers, two were rejected, one was withdrawn and two are outstanding. The decisions were mostly taken by Lord Hill, the education minister, on behalf of Mr Gove. The documents show that Mr Gove overruled recommendations not to sell school playing fields five times between February 2011 and July this year, more than for the previous nine years.
Danish journalists get the ax
Berlingske Media is your typical major media conglomerate, with more than a dozen newspapers, plus television and radio broadcasters.
They’re cutting jobs for the usual reason, declining revenues.
From Ray Weaver of the Copenhagen Post:
Employees of Berlingske Media have endured the brutal scythe of layoffs for the second time in just over six months. A total of 66 employees will lose their jobs this time around: 35 administrative, 13 editorial and 18 managerial jobs will be cut and 17 currently vacant positions will be permanently axed.
The cuts, most of which will come this month, will add 16 million kroner to the company’s bottom line this year. Along with other cost-saving measures, they will help Berlingske reach its goal of ending 2012 in the black.
In January, Berlingske cut 87 positions in a round of layoffs that included the shutdown of its free newspaper, Urban. At that time, journalists walked off the job to protest the cuts.
News of the layoffs came via a lunchtime email to staff citing disappointing summer sales and calling the action a “regrettable, but necessary step”.
Danes mull subsidizing broke renters
With costs of caring for evicted tenants rising as the economy worsens, the proposal, from Copenhagen’s mayor, is based on the notion that its cheaper to subsidize rent at their current abodes than to relocate and rehouse them.
From Christian Wenande of the Copenhagen Post:
A proposed law change that would see councils help pay skint tenants would also save councils a bundle of money.
The financial crisis has put a strain on many Danes, leaving them unable to pay their rent. But the mayor of Copenhagen, Frank Jensen (Socialdemokraterne), wants to change the law so that the City Council would pay the rent for prospective evictees.
It may sound like foolish economics, but Jensen’s plan could potentially save the city millions of kroner, while helping citizens in acute financial trouble remain in their homes.
That’s because when a person or family are unable to pay their rent and are evicted, it is the responsibility of the council to find them a new place of residence, and to put them up until they do so.
A very ominous sign from Germany
German law bans use of the nation’s armed forces within the country, but the nation’s highest court says it’s overidden in case of catastrophe.
What we’re not rtold in this BBC story is who brought the case to the court, and why?
The German military will in future be able to use its weapons on German streets in an extreme situation, the Federal Constitutional Court says.
The ruling says the armed forces can be deployed only if Germany faces an assault of “catastrophic proportions”, but not to control demonstrations.
The decision to deploy forces must be approved by the federal government.
Severe restrictions on military deployments were set down in the German constitution after Nazi-era abuses.