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by Migeru
Thu Nov 22nd, 2012 at 05:57:20 PM EST
Shortly before midnight, after a dinner whose start was delayed to 10pm for undisclosed reasons, the following was released via twitter: Opening remarks by President Herman Van Rompuy at the European Council (22 November 2012) Today we must decide on our Union's budget from 2014 to 2020. Maybe this meeting will be long and complicated. Fortunately this issue only comes up every seven years!
The decision before us is simple: making sure the Union has the money to do what we want it to do, for all of us, knowing the budgetary constraints in each of our countries.
Over these past weeks and in the course of the day, I already met all of you individually, and I listened carefully. All the views around this table are well known: red lines, requests for spending, requests for savings, and much more.
The proposal which I put on the table is a moderation budget. The times call for it. Doing more with less money involves political choices. This is painful, even when cuts are evenly spread. So we must be sensible and realistic.
But we must not forget this is budget for the rest of the decade. It must be future-oriented. My proposal focuses on jobs and growth in all regions and in different economic sectors, on research and investments, for instance in connecting Europe, while ensuring our Union can also continue to deliver the actions our citizens have come to expect.
I am working now for a deal with all of you. We have to work with the European interest in mind, alongside the national interests. Together we will find a balanced solution. It's necessary and I'm convinced it's within our reach. So, dear colleagues, let's get down to business. The content of this statement would itself have fit in a tweet, or even a Haiku...
by Migeru
Wed Nov 21st, 2012 at 02:50:34 AM EST
Statement by the Eurogroup President, Jean-Claude Juncker (20 November 2012) The Eurogroup welcomed the staff-level agreement reached between the Troika and the Greek authorities on updated programme conditionality, including a wide range of far reaching measures in the areas of fiscal consolidation, structural reforms, privatisation and financial sector stabilisation.
The Eurogroup noted with satisfaction that all prior actions required ahead of this meeting have been met in a satisfactory manner. This reflects a wide ranging set of reforms, as well as the budget for 2013 and an ambitious medium term fiscal strategy for 2013-16. These efforts demonstrate the authorities' strong commitment to the adjustment programme.
The Eurogroup commended the considerable efforts made by the Greek authorities and citizens to reach this stage.
Against this background, the Eurogroup has had an extensive discussion and made progress in identifying a consistent package of credible initiatives aimed at making a further substantial contribution to the sustainability of Greek government debt.
The Eurogroup interrupted its meeting to allow for further technical work on some elements of this package. The Eurogroup will reconvene on Monday, 26 November. Which is Eurospeak for "this was the worst meeting since the December 2000 Nice Summit extravaganza on European Council voting rights".
by Migeru
Tue Jul 24th, 2012 at 07:09:43 AM EST
Five years into the Global Financial CrisisGreat Clusterfuck, former ECB board member Lorenzo Bini Smaghi emerges from under the stone where he's spent all this time, reports Eurointelligence: How long can this go on? (Daily briefing, 24.07.2012) Lorenzo Bini-Smaghi says the survival of the euro is now more important than the narrow goal of price stability
Writing in the FT, Lorenzo Bini-Smaghi says a key assumption underlying the ECB’s analytical framework is the efficiency of financial markets, which is no longer given. Words fail. “The euro area financial market, in all segments and maturities – including the very short term money markets – does not function properly, as banks deposit their excess liquidity with the central bank instead of lending to other banks. Cross-border banking flows have dried up.” He had to be out of his job at the ECB for nearly a year to figure this out? He writes there are two ways out: either the central bank addresses directly the disruption in the system, or member states repair it. His conclusion is that what is in danger right now is not price stability, but the euro itself. You think, Mr. Bini Smaghi?
The Central Banking Hall of Fame series:
by Migeru
Wed Apr 25th, 2012 at 05:21:58 AM EST
From the NY Review of Books comes an article by Physics Nobel Prize winner Steven Weinberg about The Crisis of Big Science. After documenting the dire state of science founding and recounting his own experience with the killing of the Superconducting Supercollider in the 1990s, he concludes with Big science is in competition for government funds, not only with manned space flight, and with various programs of real science, but also with many other things that we need government to do. We don’t spend enough on education to make becoming a teacher an attractive career choice for our best college graduates. Our passenger rail lines and Internet services look increasingly poor compared with what one finds in Europe and East Asia. We don’t have enough patent inspectors to process new patent applications without endless delays. The overcrowding and understaffing in some of our prisons amount to cruel and unusual punishment. We have a shortage of judges, so that civil suits take years to be heard.
The Securities and Exchange Commission, moreover, doesn’t have enough staff to win cases against the corporations it is charged to regulate. There aren’t enough drug rehabilitation centers to treat addicts who want to be treated. We have fewer policemen and firemen than before September 11. Many people in America cannot count on adequate medical care. And so on. In fact, many of these other responsibilities of government have been treated worse in the present Congress than science. All these problems will become more severe if current legislation forces an 8 percent sequestration—or reduction, in effect—of nonmilitary spending after this year.
...
It seems to me that what is really needed is not more special pleading for one or another particular public good, but for all the people who care about these things to unite in restoring higher and more progressive tax rates, especially on investment income. I am not an economist, but I talk to economists, and I gather that dollar for dollar, government spending stimulates the economy more than tax cuts. It is simply a fallacy to say that we cannot afford increased government spending. But given the anti-tax mania that seems to be gripping the public, views like these are political poison. This is the real crisis, and not just for science Why is is that every discussion these days revolves around the folly of austerity?
by Migeru
Fri Feb 24th, 2012 at 06:30:11 AM EST
The European Sovereign has spoken. Draghi: The European social model has already gone when we see the youth unemployment rates prevailing in some countries. These reforms are necessary to increase employment, especially youth employment, and therefore expenditure and consumption. I guess that's that, then.
by Migeru
Tue Jan 3rd, 2012 at 07:03:34 AM EST
From Izabella Kaminska of FT Alphaville comes: The collateral crunch gets monetary Put another way, there are not enough creditworthy counterparties in the system to encourage any sort of money multiplication effect at all. Banks and investors just want to get their principal back and are even prepared in some cases to pay out a negative interest rate to ensure that as much of their principal as possible is returned at some date.
Put another way still, the central bank transmission mechanism has been compromised because expansion or contraction of high-powered money makes no difference to the overall amount of money which is multiplied into the system.
And as we’ve noted before, that is exactly what happened during the Great Depression. Clearly what we need is another round of fiscal consolidation...
by Migeru
Fri Nov 25th, 2011 at 04:25:08 AM EST
With this morning's Eurointelligence Daily Briefing [Subscription only] comes the following snippet and editorial commentary: And Reuters reports that the Dutch have changed their position and now want the ECB to become more active in crisis resolution. (It is interesting to see what widening spreads and a domestic credit crunch can do to focus minds. ) Updated Euro crisis scorecard:
GDP rank Country CAB/GDP status
--------------------------------------------
17 Romania -5.13% under IMF
22 Bulgaria -3%
7 Poland -2.41%
3 UK -2.23%
16 Czech Republic -1.21%
--------------------------------------------
12 (8) Greece -10.84% under EFSF
14(10) Portugal -9.98% under EFSF
25(15) Cyprus -7.92% under attack
27(16) Malta -5.39% under attack
5 (4) Spain -5.23% under attack
4 (3) Italy -2.86% under Troika
15(11) Ireland -2.73% under EFSF
2 France -1.79% under attack
19(12) Slovakia -1.36% under attack
21(14) Slovenia -0.73% under attack
--------------------------------------------
8 (6) Belgium +0.5% under attack
13 (9) Finland +1.43%
10 (7) Austria +2.31% under attack
26(17) Estonia +4.21%
6 (5) Netherlands +5.72% under attack
1 Germany +6.06%
20(13) Luxembourg +6.91%
--------------------------------------------
18 Hungary +0.51% under IMFattack
23 Lithuania +1.86%
11 Denmark +3.42%
24 Latvia +5.49% under IMF
9 Sweden +5.95%
by Migeru
Wed Nov 23rd, 2011 at 04:49:14 PM EST
This blog post by Brad de Long (h/t kcurie) comments itself... The Austerity Play: Euronomics of Speculative Attacks It used to be that speculative attacks against the currencies of sovereigns were successful in two cases:
- When the central bank is trying to keep its currency above its real fundamental value, and is intervening by buying its currency and selling its (limited) supply of harder assets. Then you can break a central bank.
- When the central bank is trying to keep its currency above its real fundamental value, and is intervening by selling domestic bonds for cash and so pushing up interest rates to make its currency attractive to hold. Then it is defending the dollar by attacking the economy--creating a recession and boosting unemployment. The central bank's ability to do this is determined by its (limited) politicians' willingness to make their voters poor and unemployed. Then you can break a central bank.
Now we have a third case. Note that it is not a speculative attack on a currency: core eurobond interest rates are very very low. And within the current eurozone, the ECB can print enough euros to peg the europrices of the eurobonds of peripheral eurosovereigns wherever it wants to. Given this power, under what circumstances can a speculative attack succeed? Answer below the fold.
by Migeru
Tue Nov 22nd, 2011 at 04:16:17 AM EST
Everything the EcoFin crisis "resolution" "strategy" touches turns to shit: Investors fretting over the role the European Investment Bank (EIB) may take to help solve the euro zone crisis has led to the issuer’s bonds underperforming versus its closest peers.
The issuer has been at pains to state that its role remains unchanged and that any change would need the approval of all 27 members, but the damage caused by the crisis has been clear.
Since November 7, when rumours that European finance ministers were considering calls to bolster the EIB so that it could lend more and set up a single state guarantee scheme for bank, the issuer’s 10-year spreads have widened to swaps by 43bp. Even the EFSF, one of the worst performers during that time, is only 22bp wider since it launched a €3bn long 10-year on November 7. Meanwhile, EU paper is 27bp wider, according to Tradeweb. ( International financing review)
by Migeru
Tue Jun 21st, 2011 at 10:38:42 AM EST
Yesterday, June 20, marked the 4th anniversary of the Global Financial Crisis: Merrill sells assets seized from hedge funds A plan to restructure Bear Stearns' funds heavily invested in securities backed by subprime mortgages gets thrown into doubt.
Merrill initially seized the assets Friday and planned to sell them Monday, but it refrained from doing so until it saw the restructuring plan from Bear Stearns, sources told Reuters.
After seeing the plan, which included $1.5 billion of additional capital from Bear, Merrill decided instead to sell off the assets, the news agency reported. Happy birthday, Global Clusterfuck!
by Migeru
Tue Jun 21st, 2011 at 02:37:00 AM EST
Yesterday, June 20, marked the 4th anniversary of the Global Financial Crisis: Merrill sells assets seized from hedge funds A plan to restructure Bear Stearns' funds heavily invested in securities backed by subprime mortgages gets thrown into doubt.
Merrill initially seized the assets Friday and planned to sell them Monday, but it refrained from doing so until it saw the restructuring plan from Bear Stearns, sources told Reuters.
After seeing the plan, which included $1.5 billion of additional capital from Bear, Merrill decided instead to sell off the assets, the news agency reported. Happy birthday, Global Clusterfuck!
by Migeru
Thu Feb 24th, 2011 at 02:23:28 AM EST
My views on the ECB's policies get airtime on Eurointelligence: A critique of the ECB’s liquidity policies At the end of last week the financial community was awash with speculation surrounding a more than 10-fold increase in volume of the ECB's Marginal Lending Facility (MLF), which offers banks an overnight gateway to cash at a penalty rate. It turned out that Anglo Irish Bank and Irish Nationwide Building Society wanted to release some assets from the weekly collateral held by the ECB in its main financing operations.
This incident may have been much ado about nothing, but it provides an opportunity to take a closer look at the liquidity conditions in the Eurozone interbank market, and the picture isn't pretty. In its deflationary zeal, the ECB is draining an increasing amount of cash – in the form of one-week deposits - from the money markets to offset its modest purchases of sovereign Euro bonds. Eurointelligence's editor Wolfgang Münchau did a good job of streamlining my turgid writing.
by Migeru
Thu Jan 13th, 2011 at 09:20:28 AM EST
In last Sunday's New York Times, Paul Krugman wrote a lengthy background article on the Euro crisis.
The Road to Economic Crisis Is Paved With Euros (January 12, 2011) ... Europe is in deep crisis — because its proudest achievement, the single currency adopted by most European nations, is now in danger. More than that, it’s looking increasingly like a trap. Ireland, hailed as the Celtic Tiger not so long ago, is now struggling to avoid bankruptcy. Spain, a booming economy until recent years, now has 20 percent unemployment and faces the prospect of years of painful, grinding deflation.
by Migeru
Sat Dec 18th, 2010 at 06:48:15 AM EST
European Commission: Green Paper on the future of VAT– Towards a simpler, more robust and efficient VAT system The Commission invites all interested parties to submit their contributions in response to the questions raised in the ‘Green Paper on the future of VAT– Towards a simpler, more robust and efficient VAT system’.
All stakeholders affected by this initiative – all citizens, organisations, businesses, public authorities, tax practitioners, tax experts and academics - are invited to provide their views on this matter That's us Period of consultation
From 01.12.2010 to 31.05.2011 That's now.
by Migeru
Wed Nov 17th, 2010 at 04:27:25 AM EST
Deutsche Welle: EU steps up the pressure on Irish banks, opens talks with IMF(16.11.2010) The European Union on Tuesday announced it is in talks with the International Monetary Fund (IMF) and the European Central Bank (ECB)about taking on growing problems in Ireland's banking sector.
EU economy commissioner Olli Rehn said ahead of a meeting with eurozone finance ministers in Brussels that Ireland's banking crisis was "the most pressing problem" facing the monetary union.
Meanwhile, Luxembourg Prime Minister Jean-Claude Juncker, who headed Tuesday's talks by the panel of financial ministers known as the Eurogroup, vowed to protect the 16-nation euro currency. Colour me astounded.
by nanne
Sun Jan 17th, 2010 at 05:22:02 AM EST
Are we going to write a submission? As a refresher, Colman wrote a story on the consultation, which runs until the end of January: [The Lisbon Treaty] provides that "not less than one million citizens who are nationals of a significant number of Member States may take the initiative of inviting the Commission, within the framework of its powers, to submit any appropriate proposal on matters where citizens consider that a legal act of the Union is required for the purpose of implementing the Treaties"
The details of implementation are to be determined by a regulation to be proposed by the Commission and adopted by Parliament and the Council.
The green paper of the Commission specifies 10 issues for consultation:
- Minimum number of Member States from which citizens must come
- Minimum number of signatures per Member State
- Eligibility to support a citizens' initiative - minimum age
- Form and wording of a citizens' initiative
- Requirements for the collection, verification and authentication of signatures
- Time limit for the collection of signatures
- Registration of proposed initiatives
- Requirements for organisers - Transparency and funding
- Examination of citizens' initiatives by the Commission
- Initiatives on the same issue
This list provides a fairly comprehensive coverage of the issues, but one criticism I have is that it does not go very deeply into the obligations of the Commission itself. For instance, should Commissioners be allowed to comment upon a petition prior to the Commissioners receiving it? I think they shouldn't be. Should there be legal redress if a submitted petition is deemed inadmissible? I think there should be. But these issues are not addressed. So there would be a need to more fully address the obligations of the Commission than has been reflected in the green paper. The questions the Commission asks in the consultation are organised below as topics, please click on "Reply to this" to respond by topic.
by DoDo
Sun Mar 8th, 2009 at 01:09:44 PM EST
When discussing energy policy, many ET readers have stressed the importance of transfer infrastructure, e.g. pipelines and electricity grids. Apparently, networks are now on the EU Commission's agenda, too.
You'll find this feature prominently in the Commission's SER-2 [03] Communication on the Security and Solidarity Action Plan (as diaried by Luis de Souza). But, with more focus, in the Green Paper titled Towards a secure, sustainable and competitive European energy network (pdf!).
Last November, the Commission started a Public consultation about said Green Paper. Submissions can be sent by email until 31 March 2009. With our history of participation in prior consultations, European Tribune should participate!
by In Wales
Sat May 10th, 2008 at 10:32:44 AM EST
Original text put below the fold. Story bumped because the discussion is still active and useful. -- Jérôme
by afew
Thu May 8th, 2008 at 03:54:32 AM EST
More and more interest is shown on ET in food and agriculture, given the tension that has reigned on commodity markets for some time now, and the high food prices that are the result. These are essential questions in any case, as essential as those regarding energy, to which they're profoundly linked. Not long ago ATinNM suggested we try to put together some position papers, using the Debates box to keep the thread in view.
Elsewhere, asdf posted a comment that (following links through) led to an MIT project rather uglily called the Collaboratorium, that plans to pool knowledge and discussion on climate change. They will have sophisticated tools like computer simulation at their disposal, unlike us, but they propose a scheme for discussion I thought we might ado/apt, (or at least try!). As asdf's comment makes clear in a quote:
Dr. Klein's group is designing an "argument tree" in which contributions must fit into one of four categories: issues needing addressing, options for resolving them, information supporting an option and information rebutting one.
I don't think we can reproduce this formally in a discussion thread, but we can attempt to order the discussion by keeping it in mind. We can start with an main issue or question, and I suggest
Can the world feed its population?
which can be defined and discussed -- by saying, for instance, that "world" here may mean the planet Earth, but also the set of institutions and powers that make up what is sometimes called the international community, it being understood that the latter is strictly limited in its ability to pull rabbits out of the former's hat; and that "population" is dynamic. We can see that the question lights up major topics for discussion: demographics, ecology, agronomy, economics, trade and transport policy, agricultural structure and methods, global versus local, policy elaboration and application and institutions ad hoc, etc.
by Jerome a Paris
Sun Feb 3rd, 2008 at 10:02:53 AM EST
This is a new attempt at summarising what the "Anglo Disease" is about, in a format meant to be publishable as an Op-Ed, ie 800-1000 words. I hope, as usual, that eurotribbers will help me improve the wording, as well as, if they are so inclined, try for translations in other languages.
In the 70s, the Economist coined the label "Dutch Disease" to describe the economic travails of the Netherlands as the country's export-oriented industrial sector struggled with the increased exchange rates caused by the rapid growth in gas exports that followed the discovery and development of the massive Groningen field. The extractive sector was so profitable that it captured a large share of new investment, and its export volume was large enough to alter the trade balance and boost the currency, further rendering other activities less attractive.
Today, we can observe a similar phenomenon on a large scale around the financial industry, whose high profitability for many years has also caused weakness for other sectors of the economy. As this has developed around the money centers in New York and, in an even more concentrated way, London, I would propose to label this the "Anglo Disease."
While the Dutch managed to avoid the "oil curse" that has struck many oil exporting countries, I will also argue that the Anglo Disease carries its own curse, whose early symptoms are reflected in the current financial crisis.
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