Voters will turn out in France and Greece Sunday in two very closely watched elections.
The French race will decide the presidency, with incumbent Nicolas Sarkozy trailing in the polls against “socialist” Francois Hollande, while the Greek race will determine the makeup of parliament — which, in turn, will pick the next prime minister, who’ll replace bankster-installed former central bankster Lucas Papademos [who also serves as finance minister].
We got some election updates, including some testy exchanges in Athens and Paris, more financial news from Greece [mixed], the latest news from Spain [bad], some lecturing by Bill Clinton [snicker], a cry of despair from the Bank of England, a failure to regulate, big European losses for GM, and a cultural warning.
Capital Account on the eurocrisis
We open with with the latest segment of Lauren Lyster’s Capital Account:
The program notes:
Nicolas Sarkozy and challenger Francois Hollande face off today in a live French election TV debate. This is reportedly being seen as the climax of the campaign. With elections in France and Greece this weekend, the results have the potential to send shockwaves across theEuropean debt-landscape. We speak with former diplomat and investment banker, and founder of creditwritedowns.com, Edward Harrison about how politics in single countries could impact the global economy. This includes a conversation on the latest PMI numbers that show growth could be slowing across the globe, including in China.
Meanwhile, what did outspoken and famed fund manager Hugh Hendry tell a panel about Europe at the Milken Institute Global Conference yesterday that has people talking? Could asset confiscation be top on the list of concerns for investors and businessmen in Europe? He seems to think so, saying that he believes we are a year away from the french nationalizing their banking system.
And speaking of asset confiscation, foreign financial institutions are reportedly frantically preparing and shelling out serious money in order to comply with US tax regulations. It’s the Foreign Account Tax Compliance Act (FATCA), and as US citizens are shunned by Swiss and German banks facing these rules, more evidence reveals American expats are lining up to give up their passports. We’ll talk about what this means, and why we continue to see this trend of Americans preparing to flee the country.
The latest poll results show Hollande leading Sarkozy by seven percent, which probably accounts for Sarko’s ridicule of his opponent in last night’s three-hour televised debate.
In one testy exchange Wednesday night, Hollande accused Sarkozy of cronyism.
“You appointed your close colleagues everywhere, in all the ministries and regional government. If I understand correctly, you appointed them everywhere,” he said.
In response, Sarkozy, who is trailing in opinion polls, questioned his rival’s grasp on the truth.
“Can I finish my phrase? What you are saying now is a lie. It is slander. You are nothing but a little slanderer,” he said.
We don’t have a horse in this race. Beneath the bluster, both guys are waging a predictable campaign, just as in presidential races on this side of the pond, reaching out to voters who lost out in that last round of voting [primaries here in the U.S.].
Beneath the bluster, we suspect a Hollande win means about the same as Obama’s win four years ago: The only real difference is the image, while the substance stays the same.
Three-card Monti says he’ll help
With German Chancellor Angela Merkel solidly in the Sarkozy camp, pundits are predicting that a Hollande victory Sunday would add new tensions to the already troubled eurozone.
Well, not to worry. The bankster-installed former eurocrat-turned-Italian Prime Minister promises to pour some [olive] oil on troubled waters.
Italy can help France and Germany find “a new equilibrium” if Socialist frontrunner Francois Hollande wins the French presidential election on Sunday, Prime Minister Mario Monti said Wednesday.
“We have become more pressing and, I hope, more persuasive in a European context,” Monti said at a debate with former World Bank economist Joseph Stiglitz in Rome hosted by a centre-left think tank.
“What could happen in France would be a very important factor,” he said.
“I think Italy has placed itself in a good position to help France and Germany find a new equilibrium if it comes to that,” he added.
Now isn’t that all better now?
‘The [Greek] centre cannot hold. . .’
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
So of worst of Greek intensity is coming from a name with which Yeats is also identified, Golden Dawn.
Yeats’ Golden Dawn [formally, the Hermetic Order of the Golden Dawn] was something Madonna would’ve joined — a smorgasbord of offerings drawn from various mystical traditions, ranging from Kabbalah to Theosophy. It lasted from 1887 to 1978.
The latter-day incarnation is the extreme Right Greek party whose members give the Nazi salute and wear hoodies adorned with Nazi-esque eagles.
The Greek version bears more in common with the one lasting creation of another early 20th Century mystical order, the Thule-Gesellschaft, a Munich-based smogarsbord that created the shell of what became both the Nazi Party and its newspaper, while contributing several key luminaries to the Party’s ranks, including Hermann Goring, Rudolf Hess, and Alfred Rosenberg.
Which brings us back to Greece, and a center that cannot hold.
Greece is in gloomy mood as it prepares to go to the polls on Sunday, with campaigning taking place against a backdrop of public protest.
Politicians are blamed for painful austerity that has slashed wages and pensions, with the big Socialist and Conservative parties bearing the brunt of public anger.
“The two main Greek parties have signed what Greece’s future will be for many years to come and it’s a one-way street for Greeks to put them through even more hardships,” said agriculturist Kostas Georgiou, speaking in Athens. “It is a road towards disaster and not prosperity.”
“Why should I vote? Should I vote for those thieves?” asked pensioner Stratos, also in the Greek capital. “I could vote for a small party but not for the two big ones. No. I used to vote for the Socialist PASOK party. I won’t now.”
Another familiar tune: Turning on the Left
Any real pretense of socialism has been long since abandoned, replaced by a version of the welfare state, now the target of relentless attack by financial speculators and looters, armed with an tidal wave of cash atop an ocean of debt.
With real power in the hands of of the debt-invested elite, nominally “socialist” parties are pale shadows of visions of those who founded them. The latter-day version goes along to get along.
And so they must ruthlessly attack anyone who campaigns on anything resembling that earlier vision of socialism.
From Athens News:
Socialist officials are sharpening attacks on Left wing opponents in the final days of campaigning, hoping to win back 2009 voters hit by the financial crisis.
Pasok leader Evangelos Venizelos lashed out at Alexis Tsipras, the Radical Left Coalition (Syriza) leader, saying his policies would turn Greece into Albania.
“Mr. Tsipras – and I regret to say this – has lost it. He is a political slanderer, and his behaviour has nothing in common with the standing of the Left,” Venizelos said in his main pre-election news conference.
Syriza was in third place in the final opinion polls, published in April 20, with 10.3 percent according to a Rass survey for the Eleftheros Typos newspaper, and is in line to receive an exploratory mandate if New Democracy and Pasok fail to resolve the expected election deadlock.
Another porn star aspires to parliament
Greece’s most famous porn star has declared her candidacy for parliament, running on the platform of the tiny Outraged Ecologists of Greece party.
She does differ from the Staller and Frevert in one notable way: They were both conservatives.
Emmanouela Seiradaki of Greek Reporter offers her take on the candidate:
“Julia” is none other than the Greek Ciciolina. She’s the porn star who wants to become an MP, the force of nature whose scandalous career broke every taboo. Now, Julia Alexandratou is determined to replace her provocative miniskirts and cover her long legs with elegant Chanel suits. She wants to leave behind the singing career and erotic DVDs for the sake of politics.
Some say that indeed Julia is a revolutionary. She has thrown her outstanding beauty in the garbage and denied all the petty bourgeois aspirations for professional success and social recognition. While she could have easily married a tycoon and have no worries about the crisis whatsoever – like all Miss Greece/models/celebrities in Greece have done before her – she prefers ridiculing herself as a mirror of the current moral decay Greece is facing today, which in itself is a type of revolution, even if it’s fully unconscious. Yet Alexandratou doesn’t realize that this is just another form of exploitation, this time in suits and in parliament; more exploitation, for different and more abstract ends, but barely less cynical than that of the porno barons who have been making money out of her for the last couple of years.
The IMF casts a Greek ballot
Yep, Europe’s leading money lord has declared a preference in Sunday’s election: Elect the same failed bunch as before.
From Spiegel’s Julia Amalia Heyer:
When the Greeks go to the polls in a few days, an election that would once have attracted the attention of few people outside the country will now be of interest to a sizable portion of the world. Even the day of the election became a political issue when German Finance Minister Wolfgang Schäuble bluntly told the Greeks that they would be better off waiting to vote until after the country’s budget for the next two years has been ironed out in June.
International Monetary Fund (IMF) Managing Director Christine Lagarde even played a role in the campaign, when she openly expressed her confidence in the two main parties. Only New Democracy or its socialist counterpart, PASOK, could ensure that the country would remain part of the euro zone, Lagarde said, thereby guaranteeing “the security and stability that Greece so urgently needs.”
“It’s absurd that precisely those who drove the cart against the wall are now expected to pull it out of the dirt again,” says political scientist Seraphim Seferiades.
Greece upgraded from terminal to critical
The country’s credit eeked upward on the books of a leading U.S. rater.
From Anastasios Papapostolou of Greek Reporter:
Standard & Poor’s raised Greece’s credit rating out of default territory on Wednesday, as expected after Athens slashed its debt by about a third by completing the biggest sovereign debt restructuring in financial history.
But the firm kept Greece firmly in the junk category with a CCC rating and warned that a deep recession, unpredictable elections on May 6 and popular anger against austerity could threaten Athens’ efforts to put its finances back on track.
“While the exchange has, in our view, alleviated near-term funding pressures, Greece’s sovereign debt burden remains high,” S&P said in a statement, adding that it expected the debt to stay as high as 160-170 percent of GDP in the next three years.
S&P assigned Greece’s rating a stable outlook, indicating it was not planning to change the rating again soon, but it warned that risks remained.
Public Service Announcement
There’s a solidarity rally for Greece coming up in the belly of the beast.
From Keep Talking Greece:
An event to show solidarity with Greek people in times of crisis is organized in Brussels on May 16, 2012. “12 Hours for Greece, is a unique way to discover Greece, its culture, its food and its people !! Objectives to combat stereotypes , on the occasion of a cultural and festive gathering, “ write the organizers . The solidarity action is an initiative of citizens of various nationalities living in Brussels, the capital of the European Union.
Th event includes the reciting of Homer’s Ulysses in a marathon reading from 10 am until midnight. Greek musicians like Lavrentis Machairitsas and Dionysis Savvopoulos will entertain the audience.
The event aims also to raise donations for the financial support of childrens’ charity organisation “To Xamogelo tou Paidiou” (The Smile of the Child).
Spanish debt grows pricier
The good news: They sold it. The bad news: It cost them half again as much as the latest time they went bond-peddling.
From the BBC:
Spain, which many investors worry will be the next eurozone country to need help, has successfully sold 2.52bn euros ($3.3bn, £2bn) of debt but at much higher interest rates.
The Bank of Spain sold three-year bonds at average yields of 4.04%, up from 2.6% at its last sale on 1 March.
The central bank beat its targets for how much to sell.
Separately, producer prices in the eurozone rose by 3.3% in March, from 3.6% the previous month.
EU Financial advice from Bill Clinton
Clinton? Wasn’t he the guy who gave us NAFTA?
And, uh, didn’t he kill the Glass-Steagall Act — the legal restrictions on banking enacted in 1933 and designed to head off the same pattern of speculative insanity that led to 20th Century’s Great Depression?
Yeah, he sounds like a guy you want to take financial advice from!
And the advice is what you’d expect, tinkering rather than addressing root causes [obeisance to debt and its controllers].
Europe cannot end its budget crisis by belt-tightening alone and must promote growth, US ex-president Bill Clinton said Wednesday, lamenting its “jerry-rigged” rescue efforts so far.
He said the countries sharing Europe’s single currency should have designed an exit strategy in advance for weaker countries like Greece admitted to the eurozone in good times, but threatened with expulsion in bad.
Clinton, who oversaw sustained economic growth during his two terms in the White House, likened Europe’s current crisis to Japan’s economic crisis of a decade or more ago, saying long-term solutions are needed, not quick fixes.
“This European crisis has laid bare two problems: one (an) organizational problem of letting in the more vulnerable countries with no exit strategy,” he told a business and economic conference in Beverly Hills.
“The other problem is .. the prescription of austerity has continued to be pushed in the face of all the evidence that it (won’t) work,” he said.
He added: “Theres no evidence that in a country where there is no private demand, where interest rates are already functionally zero, that an austerity will work.
“In the short run it may suit the credit markets until the day after tomorrow,” he said.
A King sounds a British financial alarm
That would be Meryn King, a Sir but not a monarch — except of the world’s first powerful central bank.
The problem: His private sector counterparts are fighting reform to proitect their bonuses.
From Ben Chu of The Independent:
The Governor of the Bank of England, Sir Mervyn King, has demanded that the Government speed up its reform of Britain’s financial sector. He also attacked bankers for resisting new financial regulation in order to protect their large bonuses.
Sir Mervyn warned last night that “vested interests” in the City of London were trying to scupper reforms meant to prevent another crisis.
The Chancellor, George Osborne, met the bosses of Barclays, the Royal Bank of Scotland and Lloyds in the days before the Vickers report on reforming the banking sector was published in September 2011. Last December, The Independent revealed that senior bank executives met or called Treasury ministers nine times in the weeks after the report’s release.
“Already we see vested interests rise up to defend their bonuses and profits,” the Governor said during the 2012 BBC Today Programme lecture.
The Governor’s call for reforms of the banking sector to be speeded up is likely to meet a hostile reception in the Square Mile.
Meanwhile, back in Brussels
European finance ministers just can’t seem to agree on how much capital banks should be required to hold.
Just what the disagreements are isn’t clear from our cursory reading, but the notion that banks should hold higher capital in relation to their debts is palliative only so long as central banks create money through debts created by and for the profit of private banks, which can then create a blizzard of speculate ways to bet on whether that debt will even by paid..
From Deutsche Welle:
European Union finance ministers put off an agreement on higher capital requirements for banks early on Thursday after 16 hours of negotiations in Brussels failed to produce a compromise.
EU leaders have been discussing how to best implement the so-called Basel III guidelines, which require banks to keep more safe and healthy investments on the books so they are less vulnerable to financial crises.
While Basel III was agreed to in principle by the EU and other Group of 20 leading economies in 2010, it has yet to be officially written into European law. The finance ministers of the EU’s 27 member states agreed to discuss the details again at their next scheduled meeting on May 15.
An American company hit by eurocrisis
The company in question is General Motors.
From Agence France-Presse:
General Motors’ earnings fell by nearly two-thirds in the first quarter as the company’s European operations racked up losses due to the eurozone crisis, the company said Thursday.
Net income fell to $1.35 billion from $3.42 billion a year earlier, after the company lost $300 million in its European operations.
Basic earnings per share sank to 64 cents from $2.09, or 60 cents on a diluted basis.
The leading US carmaker said its key US and China markets remained strong, with global vehicle deliveries rising by about 100,000 units to 2.3 million in the period to March 31.
And a point we’ve been making all along
From Nikolaj Nielsen of EUobserver:
EU austerity measures are helping to feed racism and intolerance, according to a report by the Strasbourg-based human rights watchdog, the Council of Europe.
In its annual survey out on Thursday (3 May), the council’s European Commission against Racism and Intolerance (ECRI), said welfare cuts and shrinking job opportunities are factors behind the recent rise in intolerance and violence directed at immigrants and other vulnerable minorities.
“Immigration is [being] equated with insecurity, [that] irregular migrants, asylum-seekers and refugees either steal jobs or risk capsizing our welfare system, while Muslims are not able to integrate in Western societies,” the survey says.
It adds that talk by mainstream politicians of reintroducing border controls in the passport-free Schengen area is beginning to give xenophobia and far-right extremism a respectable face. “Political leaders must at all costs resist pandering to prejudice and misplaced fears about the loss of ‘European values,’ terrorism and common criminality,” it says.