The Euromezz situation is now getting rather amusing. Apparently, the European Parliament has also been hit by austerity. Hotels are so expensive, so they need to cancel important meetings. Sad. From Folha.
The European Parliament decided to cancel travel plans for the Members of the European Parliament that were going to participate in Rio+20, due to high travel expenses.
The decision was made by the coordinators of the European Environment Commission, who explained that the cost of sending deputies to Brazil would be too high, and unjustifiable in a time of crisis.
On Twitter, the Dutch MEP Gerben Jen Gerbrandy criticized the “abusive” prices set by the hotel industry in Rio. “The European Parliament is cancelling its delegation to Rio+20 because of the excessive cost. Brazil should control the prices in order to keep the conference from being a failure,” said Gerbrandy.
The Member of the European Parliament said he was “disappointed” with the abuses in the Rio hotel system, with prices of approximately 600 euros a night. He said that the Brazilian government should intervene in the situation, especially considering other important upcoming events, such as the 2014 World Cup and the 2016 Olympic Games.
Guest post by Azizonomics.
So we know that the pro-bailout parties in Greece have failed to form a coalition, and that this will either mean an anti-bailout, anti-austerity government, or new elections, and that this will probably mean that the Greek default is about to become extremely messy (because let’s face it the chances of the Greek people electing a pro-austerity, pro-bailout government is about as likely as Hillary Clinton quitting her job at the State Department and seeking a job shaking her booty at Spearmint Rhino).
It was said that the E.U.’s existence was justified in the name of preventing the return of nationalism and fascism to European politics.
Well, as a result of the austerity terms imposed upon Greece by their European cousins in Brussels and Frankfurt, Greeks just put a fully-blown fascist party into Parliament.
From the Telegraph:
The ultra nationalist far right party Golden Dawn supporters celebrated on Sunday after exit polls showed them winning between 5 to 7 per cent of the vote, enough for them to gain representation in parliament for the first time in Greek history. Golden Dawn Leader, Nikolaos Michaloliakos shouted “The Europe of the nations returns, Greece is only the beginning” as he walked towards party headquaters and pledged to deal with illegal immigrants first.
Guest post by Peter Tchir of TF Market Advisors.
I continue to believe that longer dated Spanish and Italian bonds are poised for a significant sell-off. At this stage everyone knows the problems the two countries are facing. Spain’s economy seems to be doing worse than Italy, but Italy has a heavier debt burden.
Over the past few weeks, more and more investors are coming to the conclusion that either debt restructuring or a currency conversion or both are real possibilities. The short lived success of LTRO is very concerning. It demonstrates that liquidity has its limits when solvency is the real risk.
So my first premise is that the risk of restructuring or currency conversion is real. It is not imminent as politicians and central bankers continue to do what they can to avoid that outcome, but virtually everyone now believes that this is a potential, if not inevitable outcome. That has changed in the past few weeks and has not been fully digested.
The other key premise is that the ECB is unlikely to intervene in a meaningful way anytime soon. That seems to have been confirmed yesterday by Mr. Draghi himself. From conversations I had, the unintended consequence of the ECB’s tough stance during the Greek debt negotiations has meant that countries no longer welcome ECB intervention with open arms. If restructuring is on the table, having a party that is unwilling to take a loss yet holds all the cards when it comes to future financing of the banks, it is an awful situation. Greek post-PSI bonds trade poorly at least in part because of the ECB’s stance on its position. The ECB’s secondary market purchases of Greek debt turned out to be disastrous for Greece in their attempt to restructure and create a workable debt load. This has not been lost on Spain and Italy. The desire to retain flexibility in any future negotiations is incompatible with inviting the ECB to buy more bonds. That is one reason that the EFSF and ESM are supposed to assume that role. Though in typical EU fashion, rather getting those entities ready to assume secondary market purchases when the markets were calm, they dragged their feet and aren’t quite ready. The EFSF will eventually be ready to buy bonds. They will be the preferred buyer because they can be made to take a loss. That may become an issue as countries providing the guarantees that let EFSF function may decide it isn’t in their best interests to be the patsy at the negotiating tables.
Spain’s Rajoy has had his first 100 quite bumpy days. The honeymoon is over as reality strikes the Spanish economy. What are the future challanges for the new president as austerity must be implemented, the unemployment figures continue going higher and the banking sector falls further into the abyss? Via El Pais.
Four months after general elections in which Spaniards gave an absolute majority to the Popular Party, citizens are deeply discouraged and skeptical, according to opinion polls. An avalanche of austerity measures and budget cuts imposed by the government, which have had serious social repercussions, has not managed to calm foreign investors, and the constant barrage of bad news about the state of the economy and the financial sector, the relentless rise in unemployment (now more than 5.5 million people) and the deepening economic depression has worn Spaniards out. Day after day, they are witness to the extent to which Mariano Rajoy is prepared to go in order to regain the confidence of the markets; and day after day, their hopes of solid results – and not just momentary relief – are dashed.
Biderman on the sell in May theory. It was proven right in 2011 and 2010. Is this time different?
In 2010 the US stock market peaked at the end of April and then sold off until the Fed announced QE2 several months later. In 2011 the stock market peaked at the end of April and sold off until the Fed announced Operation Twist several months later.
This will be the third year in a row that stocks have started selling off in May. I predict the drop will continue until the Fed announces the next version of stock market stimulus; probably in August at the Fed’s Yellowstone confab.
Why stock prices did not peak at the end of this April was that in April 2010 and April 2011 there were decent inflows into US equity mutual funds and US ETFs. This April there were outflows not inflows from both US equity mutual and Exchange Traded Funds.
Remember all there is in the stock market are shares of stock, 80% of all stock being owned by intermediaries such as mutual, exchange traded, pension and hedge funds. Since the start of October, which was right after the FED announced operation Twist, stocks are up by 25% or so. Video below.
The austerity pinch is being felt throughout many European countries. Ordinary people, already in economic troubles, won’t be willing to write the sole checks for austerity. Some more on the rising anti austerity movement in Europe. By Matt Taibbi via Rolling Stones.
It didn’t take long to crank up the backlash against European voters. This is inevitable whenever a socialist wins a major election, but particularly now, when new French president François Hollande rode to victory shouting, “Austerity can no longer be inevitable!”
This sounds like the beginning of what will be a very heated debate over who has to pay for the excesses of the financial crisis. It was previously assumed that everybody but the actual financial services sector would have to pay, but voters in Europe now are refusing to go along, sparking a wave of eye-rolling editorials in the financial press. Even David Brooks got into the act today, penning a lugubrious editorial about the errant political instincts of the populist masses here and abroad.
Markets all over the world freaked out over the prospect of having ignorant European voters meddling in the recovery process the geniuses of the high finance world had already painstakingly laid out for them. The model for economic progress in the financial bubble era, after all, is supposed to go something like this: