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European Salon de News, Discussion et Klatsch - 10 October | 110 comments (110 topical, editorial, 0 hidden)
Re: Europe (none / 0)
Eurointelligence Daily Morning Newsbriefing: IMF says crisis will come back without banking union (10.10.2012)
Global financial stability report warns of large-scale capital flight with the potential to trigger a credit crunch and an ensuing recession; IMF predicts further bank asset shrinkage of between $2.8 trillion to $4.5 trillion by end-2013; José Viñals says it is of utmost necessity that the eurozone achieves banking and fiscal union; it says the function of a banking union must be to break the pernicious link between banks and their sovereign; says a banking union requires a fiscal union to be credible in the form of a resolution fund and deposit insurance; Peter Orszag warns Europeans not to underestimate the hysteresis effect that results from the austerity policies;  Luis de Guindoes said the IMF forecasts for Spain are too pessimistic; Vittorio Grilli presents the 2013 budget law, which includes further savings to achieve the budgetary target; there will be new cuts to the health budgets, and a non-renewal of temporary contracts of public workers; Angela Merkel's visit to Athen was no PR disaster after all; the Wall Street Journal says the purpose of her visit is to stabilise the Samaras government and to defend herself against attacks from Peter Steinbruck; says no one in Merkel's surrounding is under any illusion about her perception by ordinary Greeks; Kathimerini reports that Merkel assured Samaras that he will get the next round of money as long as he keeps on going with the reforms; the Greek finance ministers says that talks about an extension of the Greek programme are finally on the table; the French parliament passes the fiscal pact with a wide margin - Hollande managed to secure a small majority of leftist MPs, not having to rely on opposition vote; Portugal replaces tax measures with spending cuts in 2013 budget; a former German government advisor says Germany is using bailouts to rescue its own banks; Ecofin reaches agreement on financial transaction tax on the basis of  enhanced coordination; Finland has yet to decide whether it wants to take part in this programme; Suddeutsche Zeitung wonders how this tax could conceivably stop the next financial crisis; Silvio Berlusconi, meanwhile, reiterates his support for Mario Monti, but nobody believes him.


I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Carrie (migeru at eurotrib dot com) on Wed Oct 10th, 2012 at 03:53:41 AM EST
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Re: Europe (4.00 / 3)
German economic advisor says Germany is using bailouts to rescue its own banks

On Sunday Salvados, a TV program from Spanish station La Sexta, aired a reportage (video) on the relationship between Germany and Spain in the crisis, under the title Viva Spanien. The program culminated in an 18-minute interview (see clip with supporting text from La Sexta) with Spanish-born German economist Jürgen Donges, which has had a great impact in Spanish media. Donges is a former German government economic advisor to the Kohl and Schröder administrat[ion]s, mischaracterised in some current press reports as an advisor to Merkel. There is an English-language summary at Forex Crunch.

Some of the key moments of the interview are as follows:

Donges points to household debt as a key indicator that 'Spain had been living above its means', for instance buying high-end German cars. This leads to a discussion of the mutual responsibility of Spanish borrowers and German lenders, which Donges resolves by pointing out that a car buyer informs himself about the car much more than he cares to do about taking a loan. Conversely, on lender responsibility Donges says he never advocated rescues of other countries "if the issue is to save our banks we should give the money to our banks" which is not done for political reasons. He concludes "it is true that, when we talk about 'rescuing Greece or Spain', and we economists say so, we're rescuing our banks exposed to those countries. It is clear to us."



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Carrie (migeru at eurotrib dot com) on Wed Oct 10th, 2012 at 03:59:14 AM EST
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Re: Europe (none / 0)
A swedish kind of death linked to the Forex Crunch story in yesterday's Salon.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Carrie (migeru at eurotrib dot com) on Wed Oct 10th, 2012 at 04:09:53 AM EST
[ Parent ]
Re: Europe (4.00 / 4)
I watched the programme last night. There's more than is reported on Eurointelligence:

On politics, Donges first explains that Merkel must insist on conditionality because Germany has a large number of bankrupt municipalities, and social services are being cut affecting the citizens, who cannot then understand that Germany is negotiating the size of large bailouts of other countries. He then says Merkel's hard image abroad 'doesn't fly' in Germany where people know 'she always gives in' (as in last June's summit where she was 'blackmailed by Hollande, Monti, and Rajoy'). Finally, in relation with the 'fiscal pact' or 'golden rule' Donges says he prefers the behaviour of Zapatero and Rajoy, who religiously implement agreements reached at the European level, to that of France.

On cuts to the social safety net, Donges argues that cuts to support for people with dependents "wouldn't have been done in Germany", but that he would have preferred (as Germany has done) to reduce the length of time but not the amount of unemployment subsidies which he calls "a perverse incentive" to not seek work until the subsidy runs out. This leads to a discussion of German reforms, and Donges concludes that the choice is between precarious employment and outright unemployment, and that there is no alternative.

People on twitter reacted to dogwhistles such as when he said men study cars in detail before buying them, like women study washing mashines. Also when he referred to people affected by social cuts as "collateral damage" "as in a war" they had no part in initiating.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Carrie (migeru at eurotrib dot com) on Wed Oct 10th, 2012 at 04:13:54 AM EST
[ Parent ]
Re: Europe (4.00 / 5)
To add, the "political reasons" for not bailing out the banks directly were explored in other segments of the programme, but not very explicitly. For instance, the situation of the German banking sector is discussed with the Germany correspondent of La Vanguardia. The German public's frustration over Hypo Real Estate and SOFFIN in 2008 is mentioned. though the name SOFFIN is never uttered (presumably because it would mean nothing to a Spanish audience), the figure of €300bn is given. I am reminded of a Spiegel story from 2008, The Bottomless Pit: Germany's Faltering Bank Bailout Program. The introduction of the debt brake in the Constitution in 2009 at the end of the latest Grand Coalition is also mentioned, though Donges paints it as the culmination of a decade of "reforms" started by Schröder (again, the Hartz reforms are discussed but not mentioned by name). The presence of 5,000 professional lobbyists at the Bundestag is also touched upon. This is a phenomenon that we know is common in Brussels, too, but it is mostly alien to the Spanish political culture which interprets lobbying as outright cronyism (not that it doesn't happen, but it is seen as corrupt and not done openly).

Overall, the programme was well worth watching in full.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS

by Carrie (migeru at eurotrib dot com) on Wed Oct 10th, 2012 at 05:32:28 AM EST
[ Parent ]
Re: Europe (4.00 / 2)
The banking union currently under discussion in the EU, do we know the details of how it sucks?

That it sucks is a given considering the lot negotiating it, I assume it will something to the form of "countries must back up their banks, ECB will rule budgets of peripheral countries". But that is just an ssumption.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Wed Oct 10th, 2012 at 07:24:47 AM EST
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askod does Insane Clown Posse (4.00 / 3)
Fucking banking union, how does it suck?

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Carrie (migeru at eurotrib dot com) on Wed Oct 10th, 2012 at 08:26:50 AM EST
[ Parent ]
Re: askod does Insane Clown Posse (none / 0)
Like your ... no I can't do that properly.
by Number 6 on Wed Oct 10th, 2012 at 11:20:37 AM EST
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Re: Europe (none / 1)
You could do worse than this summary by Münchau (from a recent Salon): Welcome back to the eurozone crisis (FT.com, September 30, 2012)
... This is how I would summarise the German position:

First, we do not really want a banking union all, but if we have to have it, we would like to limit the remit of the pan-European supervisor to a few large cross-border banks.

Second, ideally the supervisor should not be the ECB; if it has to be the ECB, there must be safeguards, stronger than those proposed, to ensure that monetary policy remains independent from the banking supervisor.

Third, there shall be no joint deposit insurance.

Fourth, the banking union shall not deal with any legacy risk, only problems that arise in the future. The Spanish bank programme remains a Spanish bank programme.

Fifth, the ESM should not be able to undertake direct bank recapitalisations until the banking union is fully implemented. This will take many years.

Whether or not you call this a banking union, or a breach of the June 29 agreement, is irrelevant. ...



I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Carrie (migeru at eurotrib dot com) on Wed Oct 10th, 2012 at 08:29:27 AM EST
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Re: Europe (none / 0)
I'll have to register to read in full. Going by way of Google does no longer work. Ah well, what is another source of spam?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Oct 10th, 2012 at 01:58:28 PM EST
[ Parent ]
Re: Europe (none / 0)
Works for me. Clean out your cookies and try again?
by generic on Wed Oct 10th, 2012 at 03:06:14 PM EST
[ Parent ]

European Salon de News, Discussion et Klatsch - 10 October | 110 comments (110 topical, 0 editorial, 0 hidden)
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