Business as usual in Europe. From The Telegraph.
Eight hours of negotiations in Brussels ended in walkouts after MEPs refused to drop demands for an extra £13.8 billion in European Union spending for this year and 2013.
The failure of the talks casts a fresh doubt on whether a major summit to agree to the EU’s future funding from 2014 to 2020, scheduled for later this month, can go ahead.
There had already been speculation that the summit would be cancelled because David Cameron was refusing to drop his threat of using Britain’s veto to block any future increase above the level of inflation.
Friday night’s deadlock was over demands by the European Commission for a £7.3 billion spending increase by the end of this year to meet a funding shortfall, figures that are disputed by Britain and other governments.
At the same time, the European Parliament wants to reinstate over £6.5 billion in funding that had been cut by governments from next year’s budget to reflect national austerity programmes. (Full article here)
Stiglitz reminds us again.
“If you don’t do that, you have this adverse dynamic: the weak countries get weaker and the whole system falls apart,” Stiglitz said today in an interview in Geneva. “And this has to be done fairly quickly” because in a couple of years, “there won’t be any money in Spanish banks.”
Full video below.
Biderman on nobody telling the truth with regards to the US Economy. Forget the ISM and other bullshit figures….
While vacationing at the Mauna Kea on the big island of Hawaii, which by the way is my favorite resort hotel on the planet, I realized during a dinner time conversation that no one is talking the truth about the US economy. The truth is that the US is being bankrupted by the actions of the Obama Administration hand in hand with the Bernanke Fed. Bankruptcy sooner or later has to occur when an individual, company or government keeps borrowing more then they can pay anytime soon. The US has borrowed and continues to borrow more money then it will ever be able to repay, and that is true even if economic growth zooms.
Guest poist by Azizonomics.
So Romney has picked Paul Ryan for Vice President; a man with a remarkably similar “deficit-reduction” strategy to that of George Osborne here in the UK, where unemployment and budget deficits have soared, and GDP remains well off its peak.
If Ryan or his Democratic rivals really understood the budget deficit, they would understand that its huge size is a result coming primarily out of a depression brought on by excessive total debt:
As debt soared from the 80s to the 90s, tax revenues soared as the economy boomed on borrowed money. But as the debt continued to grow relative to income, the costs of the debt mountain meant that income that might once have been invested in businesses and consumption went toward debt service instead. And so once we hit the point at which debt repayment exceeded new debt acquisition, we were flung into a depression. This has had a relatively severe impact on growth; since the deleveraging hit in 2008, GDP growth fell considerably from its long-term trend (nominal potential GDP):
The news out of England have been mostly filled with the LIBOR scandal and what the executives knew or did not know. Meanwhile, as the recession has hit the UK, hunger is a new problem, the country hasn’t seen in a long time. From Bloomberg.
Virtually unheard of during the decade-long economic boom that ended in 2007, food banks are opening at the rate of two a week. Mould said the number of people receiving emergency grocery parcels doubled to almost 130,000 in the 12 months ended in April — about 33 percent of them as a result of benefit reassessments — and the figure may reach 500,000 by 2016. Those referred for food aid, usually by doctors or social workers, are typically not destitute, rather people on low wages or on welfare.
“There is a lot of hidden hunger in Britain,” Mould said. “These are people who are working and trying their best to make ends meet. They are often working a concoction of part-time jobs, with zero-duration contracts. Their benefit support is being reduced and that will get significantly worse.” (Full article here.)
European governments are prodding Spain to make deeper budget cuts in a first test of stiffer fiscal rules. Ten days after Prime Minister Mariano Rajoy unilaterally raised the 2012 Spanish deficit target, European finance chiefs called on Spain to cut an extra 0.5 percent of gross domestic product out of the 2012 budget.
Junker’s body language speaks for itself. Video below from Bloomberg.
Must read on the Spanish Economy, statistics, and what “they” tell you. By Edward Hugh via Economonitor.
Like Leo Messi charging his way through a packed Real Madrid defense, twisting now this way, now that, never stopping without being stopped, so did the Spanish sovereign debt surge forward, breaking directly into the red zone near the penalty box, provoking confusion and consternation amongst horrified EU officials and regulators forced to look on as it blindly sought to touch down somewhere well beyond the authorised 100% finishing line.
Spain’s deficit has been much in the news in recent days. Both the target for this year and actual details of last year’s outcome have been the source of muchcomment, scrutiny, and consternation, but the deficit itself will not form the primary subject matter of this post. What we will be concerned with here is debt, sovereign debt, and the current trajectory of the Spanish variant. In a recent article in the Financial Times Victor Mallet draws attention to the situation and shows how an excessive emphasis on deficits may sometimes mislead people into missing the bigger picture, since at the end of the day deficits are only interesting as they add to debt, and in the long run what matters – as we have seen in the Greek case – is whether or not the debt itself is sustainable. (Full article here).
We are getting that deja vú feeling again. Spain has suddenly been spending 90 billion Euros more than estimated. How they calculate these figures, nobody knows, but this sure is resembling the Greek saga. 90 Billion Euros is the size of the Portugese bail out by the way.
On the other hand, when it comes to the property sector, we would really enjoy trying to understand the explanations on out how the banks are valuing all those “cheap” properties they hold in their prop book. Expect cheap properties to become cheaper, while the budget blame game resumes.
The white knight, China, is back to rescuing the World once again. Southern Europe is implementing austerity, and all will be fine. The question is thought, has Spain (and maybe others) been involved in creative accounting, just like Greece? From Open Europe;
Spain seems to be doing its best to steal a couple of headlines from Greece. Why? Well, according to sources quoted by Reuters, the European Commission suspects that the newly elected centre-right government led by Mariano Rajoy (pictured) might have inflated Spain’s deficit figures for 2011 – potentially a pretty harmless exercise, given that the new cabinet only took office before last Christmas, meaning most of the blame for failing to meet the deficit reduction targets will fall on its predecessor anyway.