Record unemployment for the eurozone, another Greek warning, a telling resignation in the financial sector, a bleak labor outlook, still more from Greece,
a bit of boomerism, and another blow to the Spanish economy.
And we’ll close with a good news story.
Euro jobless at another record high
More confirmation than surprise.
From the BBC:
Unemployment in the eurozone reached a record high again in March as spending cuts continued to hit the working population.
For all 17 nations in the eurozone, the jobless rate rose again to 10.9%, the highest since the euro was formed in 1999, Eurostat said.
For the eurozone, 17.4 million are now looking for work and more than 3 million of those are under 25.
Italy’s unemployment rate reached a 12-year high, up to 9.8%.
And in a surprise move, the jobless rate in Germany rose to 6.8% in March, official figures showed, having been expected to stay at the previous month’s 6.7% after six months of declines.
The number of Germans out of work is now at 2.87 million.
Here’s the grim news in graphic form, from the Eurostate report via Real-World Economics Review:
Another Greek eurozone exit alarm
Again, no surprise.
From Andy Dabilis of Greek Reporter:
After two years of pay cuts, tax hikes, slashed pensions, a reduced minimum wage and the slated firing of 150,000 public workers imposed during his watch as Finance Minister, new PASOK Socialist leader Evangelos Venizelos has now admitted that it could all fail and Greece could still be pushed out of the Eurozone of countries using the euro as a currency. Greece administered the austerity measures on orders of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) in return for two bailouts of $325 billion to prop up an economy killed by generations of politicians packing public payrolls with hundreds of thousands of needless workers in return for votes.
And with the May 6 elections looming to elect a new leader, Venizelos again pushed for support for his party and a pro-European agenda. PASOK is uneasily sharing power with its bitter rival New Democracy Conservatives but both parties have seen their popularity plummet because of their support for austerity. Venizelos had warned Greeks against reacting with anger to punish the ruling parties, a stance he said could bring in anti-bailout parties.
Financial axis sparks a resignation
One more confirmation of the power of that Nicolas Sarkozy-Angela Merkel austerian alliance.
From Brian Parkin of Bloomberg:
Luxembourg Prime Minister Jean-Claude Juncker said he’s stepping down as head of the group of euro-area finance ministers because he’s tired of Franco-German interference in managing the region’s debt crisis.
“They act as if they are the only members of the group,” Juncker said today at a podium discussion in Hamburg. At the same time, Juncker said he’d “fully support” a potential candidacy of German Finance Minister Wolfgang Schaeuble to succeed him at the helm of the Eurogroup.
Schaeuble has “superb qualifications” for the job, Juncker said. As a fundamental requirement, the job needs a “personal capacity” to listen to others, he said.
A decision on replacing Juncker has been postponed until after the second round of France’s presidential election. Juncker has repeatedly stated that he won’t seek to remain in the job. On March 2, he cited “time constraints” as his reason for stepping aside.
Students of history must be wondering what the next stage of the game will be. For the past few centuries, a four-power dynamic has be waged over consolidation of power on the continent, with Britain, Russia, France, and Germany making alliances to maintain a balance of force. In the New Europe, Russia hasn’t been invited into the game, setting a new dynamic.
ILO issues a labor alarm
The International Labor Organization is the last surviving remnant of the League of Nations, and is sadly disempowered. But it keeps a close watch on the global labor picture.
What it’s seeing is, as usual these days, grim.
From the BBC:
The International Labour Organization (ILO) has warned that the global employment situation is “alarming” and unlikely to improve soon.
The agency said that austerity measures, especially in advanced economies, were hurting job creation.
The ILO said the situation was likely to get worse amid slowing global growth and more people entering the workforce.
High unemployment has been a concern in the US and other major economies and has hurt the global economic recovery.
“It is unlikely that the world economy will grow at a sufficient pace over the next couple of years to both close the existing jobs deficit and provide employment for the more than 80 million people expected to enter the labour market during this period,” the agency said in its latest report.
Drachma decision deplored, deleted?
In a financial game where appearances are everything, the imposition of clauses into Greek agreements with the European Import Bank providing to a repayments in Greece’s pre-euro currency was a clear sign that certain players weren’t as confident as their public poses.
Seems the point has been made, and promises are changed.
European Commissioner for Economic and Monetary Affairs Olli Rehn said drachma clauses being inserted by the European Investment Bank (EIB) into new loan agreements with Greek companies are “unfortunate”, as daily Kathimerini reports. The Commission has put pressure on the lender to withdraw all clauses that relate to a possible Greek exit from the eurozone or the collapse of the euro area in general. Its intervention appears to have borne fruit. According to sources, Rehn met this week with his Greek colleague, Maria Damanaki, and informed her of his personal disagreement with the EIB requirements. He also reported that the bank’s governor, Werner Hoyer, had promised that the the clauses will be removed from the agreements. The same sources told Kathimerini that the Finnish commissioner branded the terms “bureaucratic” and the EIB’s intention to impose them “unfortunate and incomprehensible.”
In other words, too much honesty wasn’t deemed the best policy.
But the signal was sent for ears that would hear.
And yet another Greek alarm sounded
Swiss banking powerhouse UBS doesn’t have much faith in the Greek electoral process, the bank made clear in a just-released report.
According to recent opinion polls, party political support in Greece has fragmented significantly over the last six months or so, with voters appearing to have moved support away from the two major parties (New Democracy and PASOK) in favour of the smaller parties. Many of these advocate the renegotiation of agreements with official sector creditors, a rejection of austerity measures, or even leaving the euro altogether.
Both main parties have campaigned on the idea that they will renegotiate the Memorandum of Understanding (MoU) with the IMF. In UBS’s view, that suggests a degree of liberty they do not have; we think there is little, if any, appetite at the Fund or at the EC to renegotiate the agreement. Rather, the new government’s task will be daunting: €3bn of spending cuts to implement immediately and an additional €12bn to be detailed for 2013-14. Risks have risen around Greece’s ability to implement austerity measures, against a backdrop of increasingly frustrated and impatient official sector lenders.
As a consequence of the above, we see a high risk of a temporary suspension of official sector financing. If Greece does not fulfil its commitments, we think it is entirely possible that the IMF, and in turn the EU, will simply refuse to make the next payment. “However, it is unlikely in our view that payments would stop altogether – rather, they might be postponed until Greece fulfilled its obligations”, UBS notes.
According to the report, this could generate considerable tension, with the Greek government quickly running out of cash and being forced to stop paying salaries and pensions. Social turmoil would almost certainly follow.
So, got drachma?
Another European bailout package?
They call it a “pact for growth,” but it’s clear that it’s what folks on this side of the pond call a stimulus package.
And now the eurocrats are preparing another round of stimulus, but this time without debt.
While some of the money is slated for building national infrastructure, an unspecified but presumably large sector is going to alternative energy and high tech with the “involvement” of the private sector.
The European Commission is preparing a €200 billion “pact for growth” to be presented at the next EU summit in June.
According to leading Spanish newspaper, El País, the plan aims to raise funds valued at €200 billion for investments in infrastructure, renewable energies and advanced technologies with the involvement of the private sector, in a bid to kick-start economic growth without raising public debt in the 27 member states.
The plan, which takes into consideration ideas of the French Socialist front-runner François Hollande, namely leveraging the European Investment Bank to boost growth and jobs, will be presented after the French elections.
Responding to widening criticism of austerity-led reforms, European Commission President José Manuel Barroso said on Friday (27 April) that the EU already had an agenda for growth, Europe 2020, but added that this agenda could be ‘updated’.
“It is always possible to complement it, adapt it to more challenging situations. And indeed I see some progress now in the debate,” he said.
Some bad news for Spain
With their economy already in deep recession and unemployment over 25 percent, Spain needs all the cash that it can get.
So there’s considerable concern at yet another Latin American nationalization of assets of a Spanish-owned corporation.
Just two weeks ago, Argentina nationalized the local assets of Spain’s largest oil company, Reposo, and now Bolivia is following up with a nationalization of local assets of Spanish electric utility company REE.
From the BBC:
Bolivian President Evo Morales has nationalised a Spanish-owned electric power company.
Mr Morales ordered the military to take over the subsidiary of Spanish power company REE, which owns and runs around three-quarters of Bolivia’s power grid.
Mr Morales said he had ordered the take-over in honour of the Bolivian people fighting to regain control of their natural resources.
Last month Argentina took control of Spanish-owned oil company YPF.
Speaking at a May Day ceremony, President Morales said that “in honour of all Bolivian people who have struggled to recuperate our natural resources and basic services, we are nationalising Transportadora de Electricidad (TDE)”.
He said he was expropriating the company because it had failed to invest sufficiently in Bolivia.
Another embrace of local currency
This time it’s in Nantes, France, the largest-ever European city to embrace the concept.
It’s an interesting concept, where the value of the medium of exchange is set by the community [to the degree possible in a globalized world] rather than on an official currency brought into being by the creation of private banking debt.
From Worldcrunch, based on an article in Les Echos:
The measure addresses the increasing importance of non-monetary exchanges between firms, a tendency that is particularly visible in times of financial crisis. By the summer of 2013, businesses that have signed-up for this system will be able to pay or be paid in currency units already nicknamed “Nanto.”
Firms won’t be able to amass Nantos or to cash them in, and there will be a system of penalties – for companies over a certain negative or positive fixed limit, as the objective is to converge towards a balanced budget. Nantos that aren’t spent can be used to finance non-profit organizations.
One of the main goals of the system is to accelerate trade between local companies. Members of the “Nanto zone” will be able to limit the use of cash, thereby reducing cash flow problems and making exchanges easier.