Expect the anti Austerity situation to escalate in Greece. Follow link to livestream video from Athens,
Volker Kauder, parliamentary floor leader for Merkel’s Christian Democrats (CDU), told Bild newspaper in an interview to appear on Monday that any decision on whether Greece would get further aid was still far away.
“Greece is trying, but its efforts are insufficient,” said Kauder, a close Merkel ally and powerful figure in parliament. “We’ve got to use a firmer hand to lead Greece on the route to solidarity (with eurozone countries).
“We can’t let ourselves be influenced by the demonstrations in Greece,” added Kauder, a leading conservative voice in the CDU. “It’s time that Greece finally becomes a state with central European standards. That’s the only way we can prevent Europe from going to seed.”
Thousands of Greeks rally every evening outside parliament in Athens chanting “thieves, thieves!”.
A year after it turned to the EU and the IMF for a bailout, Greece is struggling to meet targets and convince its lenders that it should get extra funding to buy it more time to resolve its debt crisis.
Bleak macroeconomic data and increasing fears that Greece will have to extend debt maturities or impose a loss on investors highlight persistent risks to the current three-year reform plan.
Kauder said that there has not yet been any decision in Berlin about whether to approve further aid for Greece.
“Whether there will have to be another aid package for Greece has not yet been decided,” he said.
“But on the other hand, I would warn against ostensibly simple solutions,” he added. “If the money for Greece is switched off no one knows what impact that will have on us.
“The Americans thoughtlessly allowed Lehman Brothers to go bankrupt and that triggered a worldwide economic crisis. That should be a lesson to us,” Kauder said.
Some weekend news from Spain. The M 15 movement is according to El Pais, pushing for new protests, and new gatherings later this month. The movement is getting reorganized, and plans to become more powerful. The politicians cannot dismiss people’s anger, and be sure to get a further escalation of the protests we saw some weeks ago.
Second is the more or less bankrupt Castilla La Mancha region. As we reported yesterday, the region lacks 2 billion Euros to pay bills. Politicians have already started the blame game. Look for renewed regional debt problems that will become national problems. Don’t forget, the most vulnerable of the Spanish banks, are the regional Cajas. From El Pais;
After the opposition Popular Party (PP), which now controls most regional governments, sounded the alarm over the state of Castilla-La Mancha’s finances following 30 years of Socialist rule, the central administration struck back with similar accusations.
Deputy Prime Minister Alfredo Perez Rubalcaba – who will also in all likelihood be the Socialist candidate to next year’s general elections -on Sunday said the PP preaches austerity yet spends four times as much as the Socialists in the regional governments under its control. Rubalcaba asked PP leader Mariano Rajoy “to set an example in order to be credible.”
Although the face-off over regional spending is nationwide, it can be seen at its bitterest in Castilla-La Mancha. The PP, which will take over later this month, accuses the outgoing government of owing two billion euros to providers and racking up over seven billion euros in debt. The conservative party’s number two man in the region, Vicente Tirado, described the situation as one of “complete bankruptcy” and warned that there isn’t enough money to pay next month’s wages for the 70,000 public workers in the region. María Luisa Araújo Chamorro, the regional finance commissioner, denied the claim and said that civil servant checks are guaranteed indefinitely.
The outgoing government of premier José María Barreda also accused the PP of “disloyalty” and suspended the meetings to pave the way for the handover of power. It also noted that it has not given the PP any financial data yet, meaning that its claims are just estimates. The conservatives reacted by warning that once in power they will close between 50 and 75 percent of the 95 public agencies that they claim employ 3,000 people simply because of their Socialist connections.
Rubalcaba on Sunday said that the PP “is justifying what it plans to do based on what it has found, and that is bad, irresponsible politics. If they want to make cuts, let them just say it, rather than find excuses for it.”
Barreda’s administration admits that in April the regional deficit stood at 640 million euros, a whopping 290 million euros more than at the close of the first quarter and four tenths of a point higher than the annual ceiling of 1.3 percent for the regions.
Regional spending is becoming increasingly relevant after a year in which the central administration did most of the cost-cutting. Because of the country’s decentralized structure and the fact that regional savings banks (cajas) are viewed as the weakest link in Spain’s lending system, international observers will be keeping a close eye on how well regions do at reducing their deficits.
E Coli bacteria has now killed 22 persons. In Hamburg, epicenter of the outbreak, hospitals are receiving more patients with E Coli symptoms. Since Russia banned imports of vegetables from EU, some other countries will surely follow. Let’s hope this doesn’t evolve into bigger problems, although, the world economy still thinks all extraordinary events, such as earthquakes, riots, droughts, tornados etc all just are positives, as we have to rebuild (with more debt) all that is gone. From the Guardian;
German health authorities claim that locally grown beansprouts have been identified as the likely cause of an outbreak of E coli that has killed 22 people and infected 1,700 people across Europe.
Gert Hahne, a spokesman for the agriculture ministry in Lower Saxony, said an alert would be sent out immediately warning people to stop eating the sprouts, which are often used in mixed salads. It was also announced that the death toll from the outbreak had increased to 22.
German hospitals have been struggling to cope with the flood of E colivictims, said Daniel Bahr, the health minister. Hospitals in the northern city of Hamburg, where the outbreak began three weeks ago, have been discharging patients with less serious illnesses to handle the surge of people stricken by a rare, highly toxic strain of the bacteria.
“We’re facing a tense situation with patient care,” Bahr told the Bild am Sonntag newspaper. He said hospitals outside Hamburg could be used to make up for “insufficient capacity” in Germany‘s second-largest city.
Scientists suspect the source of the contamination may have been poor hygiene either at a farm, in transit, or in a shop or food outlet. Many of those infected have developed haemolytic uraemic syndrome, a potentially deadly complication attacking the kidneys.
On Saturday, a microbiologist said officials had identified a restaurant in the northern port city of Lübeck as a possible place where the bug had been passed to humans. At least 17 people infected with E coli had eaten there.
This week has been a bizarro trading week with regards to Greece bail out, on/off on a real time basis. The Dow has now been in it’s biggest loosing streak since 2004, and we expect this to be the start of a greater correction.
Thetrader has written extensively about the Greek Drama. It seems finally, Greece will get some money to survive, but as we argue, the country needs further bail outs, if they do not restructure and fix the economy. Greece and other PIIGS just can’t cope with the Euro. They are simply not competitive enough. Bail outs are not curing the patient, it simply prolongs the inevitable restructure. Of course, the banks have been saved, with the cost transferred to the tax payer. This is not new, but further Austerity will end up in massive protests where the people will force the government to give up. The Arab Spring will most likely spread to other countries, where we see a very bad economic situation. We are very concerned with how Spain will cope with it’s economy. From hmmm; “Is it Safe”
Yesterday, the pantomime in Europe continued apace as the first headline hit the tape:
ATHENS-SENIOR EUROZONE OFFICIALS AGREE IN PRINCIPLE ON NEW 3-YR ADJUSTMENT PLAN FOR GREECE-SOURCE — Reuters
So, it appeared, ‘it’ WAS safe (the ‘it’ in this case being, of course, Greece). A new three-year plan had been tentatively agreed upon which would successfully kick the can down the road and avoid the pain of a default/restructuring/reprofiling/rejuvenation/revitalization (delete according to taste).
The Euro leapt on the wonderful news that the tax payers of the world’s greatest flawed experiment would be on the hook for tens of billions more while the banks which were most exposed to the po- tential ramifications of a Greek default/restructuring/reprofiling/rejuvenation/revitalization (delete according to taste) would once again be spared any further pain.
“Is it safe?”
Of course, as things stand, the ECB has now succumbed to Stockholm Syndrome as it has managed to fill its coffers to bursting point with Greek bonds pledged as collateral by those same banks, increasing the vested interest it has in prolonging the game with every tap on its window.
But wait. What’s this? A short while later, another headline lit up the wires:
EU COMMISSION DENIES AGREEMENT ON NEW GREEK AID PLAN – Bloomberg
So, the new, new bailout hadn’t been agreed after all it would seem. The Euro dived as the follow-on headlines rolled by:
*DJ Greece Agrees To Quicker Privatization Efforts –Reuters
*DJ Greece Agrees To Deeper Austerity Measures –Reuters
What was needed were some calming words from someone on whom the public could count to not only tell the truth, but to be reassuringly correct in his assertions.
If only such a man were….. hold on. Up there, in the sky. Is it a bird? Is it a plane? No…. it’s even better than that. It’s the CEO of a major Wall Street investment bank:
*DIMON SAYS GREECE DEBT CRISIS WILL NOT ‘TAKE DOWN’ EUROPE
“Is what safe?”
But the thing is, it’s not about Greece anymore – and it hasn’t been for a while now if we’re honest. All the huffing and puffing that has surrounded the ‘Rumble in the Crumble’ is basically irrelevant. Greece will default. It’s just a matter of whether it will default sooner or later. It’s a matter of whether the powers-that-be are able kick the can sufficiently far down the road to ensure the long-promised recovery has kicked into high gear when the default is finally allowed to take place.
Curiously enough, the genesis of the word ‘crisis’ is the Greek word ‘krisis’ which is the name for the turning point in a disease and here we are, desperately looking for the turning point in the financial disease that nobody saw coming and desperately looking towards Greece for the first signs of any change in the collective fortunes of the world.
So let’s take a look at how that recovery’s coming along, shall we?
This week’s full “Things that make you go hmmm”
Bankrupt Castilla La Mancha region in Spain- can’t pay bills of 2 billion Euros-can’t pay state service workers
As we commented in the previous article, Castilla La Mancha region of Spain is Bankrupt. With 2 billion Euros of unpaid bills, the region needs a bail out. The problem of many provinces in Spain, is the high corruption. Last year the local government in Marbella was prosecuted of stealing hundreds of million of euros, and that is a small town….Expect more unpaid bills and corrupt politicians emerging from Spain, a country too big ignoring in Euro. From El Pais;
The PP leader said that this month other officials charged by the payroll but no money for months, but has sent a message of peace because the PP, he added, will find the mechanisms to pay thereafter, and cited, for example, privatization of public television.
Noted that the first data to get to know, although the secrecy of government functions is total and not given any documentation of the real economic situation in the region, the Board “does not have a euro” and pay “or electricity or the phone or suppliers. “
The secretary general of the ‘popular’ Castilian-La Mancha has said that a single provider, related to health, you should 60 million and that other suppliers of the Board who are owed around 15 million. According to Tirado, Barreda also has “suffocated” in the municipalities of the region to enter into service “not paid” and “does not pay.”
To all this, has joined Barreda has fictitious budget of 9,000 million expenditure when income was 6,000 million. So, has alluded to the “macrodeuda” that the Government has generated Barreda, of 7,000 million euros, which, he added, is ruining small and medium entrepreneurs and freelancers.
Tirado said that the PP is going to require “responsibilities” of the Board President, José María Barreda, and Vice President of Finance, María Luisa Araújo, who will go “beyond the political responsibilities” if the situation is “so grave “of having” ruined “in the region.
PP general secretary of Castilla-La Mancha has criticized Barreda have “paralyzed the administration” and that since his “irresponsibility want to mount a minefield” that can not pay anything.
He will be remembered, he added, as the “worst” president of an autonomous region that has more than 7,000 million euros of debt owed on unpaid invoices more than 2,000 million, which is leading to the ruin of small entrepreneurs as well to lead the ranking of communities deficit.
For Tirado, with this “legacy” is “intolerable” that the head of the Ministry of Economy has not met with the PP to facilitate the transfer of powers, “nor is or shall hold,” and says that despite that the words from the government were they would do a transfer model, “facts, none.”
However, the popular leader has sent a message of peace and called on the Castilian-La Mancha who “have faith” that the new government will struggle, with “sweat and toil, to remedy this” serious financial situation “that , as added, also affects the municipalities to which the Board did not pay the agreed services.
He also said that “there will audit all sites, and has been emphatic in saying,” we will review everything. “
Remember Spain, the country that was seized by protesters some weeks ago. Well, nothing is solved at all, and the new winner of the local elections, promises some real Austerity, if he wins next year’s national election. Look for more protests, and a Greece situation developing in Spain shortly. El Pais reports;
Just two days after Mariano Rajoy called on elected officials in the Popular Party to cut back on public spending, the opposition leader suggested on Friday that if he wins next year’s prime ministerial race, there could be drastic cuts in social services.
Speaking in Sitges, where he took part in a question-and-answer forum with a group of businessmen, Rajoy said that public spending must be scaled back while at the same time he advocated changes to the Constitution that would prevent governments from racking up deficits.
Prior to addressing the Círculo de Economía forum, US economist Joseph Stigliz, who won the Nobel Prize in 2001, argued that excessive cuts in public spending could lead to economic stagnation similar to that seen in Greece. But Rajoy was firm in his convictions.
“We will have a welfare state that we can afford,” he said. “An African nation may want to have a large welfare state but cannot. If we reactivate the economy and create jobs, then more taxes will be paid and we will have a welfare state. And we will have one to fit our means. As I said before, I would like to maintain public health and pensions ? that is the red line. But I think that coming up with a global package mixed with an austerity plan will be good.”
In Castilla-La Mancha, PP officials say there is no money to pay the regions 70,000 public servants from next month, because the situation is one of “total bankruptcy.” Regional party secretary general Vicente Tirado said the government owes some 2 billion euros to suppliers and accused outgoing Socialist premier José María Barreda of being “irresponsible.”