UniCredit SpA, Intesa Sanpaolo SpA and Banca Monte dei Paschi di Siena SpA were among 34 Italian financial firms downgraded by Standard & Poor’s, after the credit-ratings company reduced the nation’s grade last month.
http://www.zerohedge.com/contributed/greece-point-no-return
Greece at the Point of no Return
Submitted by testosteronepit on 02/11/2012 16:11 -0500
Wolf Richter
www.testosteronepit.com
"The European Union is suffering under Germany,” Georgios Karatzaferis
said on Friday. He is the president of the right-wing LAOS. With 15 members in parliament, the party is a minority partner in the coalition cabinet of party-less technocrat Prime Minister Lucas Papademos. Karatzaferis accused German Chancellor Angela Merkel of trying to "impose her will on Southern Europeans." He called the Netherlands, Austria, Finland, and Luxembourg "satellite states" of Germany. And he said that the center of the EU was no longer in Brussels but in Berlin.
But the true toxin in his outburst was the phrase: "I cannot accept this credit agreement." With it, he backtracked on his support for the austerity package agreed to amid flickers of hope the day before. And it pushed Greece a step closer to disorderly default and bankruptcy.
To avoid that fate, Greece must make a €14.5 billion bond payment on March 20, but it won't be able to unless it receives the next bailout payment, this one for €130 billion, a mind-boggling 56% of Greece's shriveling GDP. That payment process has to be initiated over the next few
days,
according to ratings agency Fitch, to give all countries and institutions involved sufficient time to deal with the administrative complexities of bailing out a country with taxpayer money.
On Thursday, for a few minutes at least, hope was flying high in the media: the three governing parties had agreed on an austerity package that included cutting the minimum wage by 22% and trimming the bloated public sector. But the fallout was immediate.
Deputy Labor and Social Security Minister Yiannis Koutsoukos, a member of the socialist PASOK, resigned in protest over the cuts in social programs; he hadn’t been informed about them, nor had anyone asked him, he said.
Unions called for protests and a general strike for Friday and Saturday. The measures throw the unemployed, retirees, and young people into misery,
said Ilias Iliopoulos, head of the union for civil servants. "We will not accept that, there will be a social revolt."
Greece’s Police union threatened Troika inspectors with arrest. In a written
declaration sent to representatives of the Troika, the union accused them of trying to overthrow democratic order in Greece, injuring national sovereignty, and robbing the Greek people of important goods.
The small tabloid
Dimokratia featured Merkel in Nazi uniform (
joe.ie). The headline, “Memorandum Macht Frei,” evoked the infamous text above the entrance of the Auschwitz concentration camp. And demonstrators burned a German flag in front of the parliament.
Friday, public transportation came to a halt in Athens. Leaflets were
handed out with
Wanted printed on them, offering a reward of €1 euro for the arrest of a "Troikan." Peaceful demonstrations were followed by violent ones where demonstrators threw Molotov cocktails and rocks at police, who responded with teargas and clubs. More ministers offered their resignation. And on Saturday, the Prime Minister
warned of collapse if parliament failed to agree on the austerity package. For more on the rough politics of bailout extortion, read....
Greece’s Extortion Racket Maxed Out.
As the situation veers toward hopeless, it follows the step-by-step procedure laid out by Otmar Issing, former member of the Bundesbank and the ECB—a procedure that has been happening for months....
Kicking Greece out of the Eurozone.
The Troika hasn’t always played hardball. For two years, it sent billions of euros to Greece to keep it afloat for a month or two at a time—though Greece had systematically misrepresented its deficits and debt since before it acceded to the Eurozone. In return for the bailout billions, the Troika asked for reforms. The Greek government promised them but failed to implement many of them. Politicians, ministries, and agencies refused to go along. The Greek people took to the streets. The bailout billions went up in smoke. The economy got worse. And Greece’s refusal to wholeheartedly embrace these reforms exceeded Teutonic patience and willingness to throw ever more money their way.
So the Troika is letting Greece twist in the wind. At risk are €130 billion—many times larger than the smallish amounts with which it had been spoon-feeding Greece. If the payment were €5 billion, it would be made, if only to delay the inevitable another month. But €130 billion, 56% of Greece’s GDP, won’t happen unless
all conditions down to the last iota are met, humiliating to Greece as these iotas may be.
The Troika decided to let the inevitable happen, it seems. Their impossible-to-fulfill conditions offer plausible deniability. Mekel and colleagues can say “afterwards” that they tried everything, but that Greece simply couldn’t follow through. And Greek politicians are already planning for the “afterwards" as well. For that hair-raising debacle, read....
Greek Politicians Dive For Cover.
http://www.guardian.co.uk/business/debt-crisis
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12 Feb 2012: William Keegan: The chancellor has urged people not to be 'anti-business', but his policies are hardly good for it
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11 Feb 2012: The leftwing candidate in April's presidential elections, has built up a commanding lead in the polls by attacking big finance
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11 Feb 2012: Consequences of not backing rescue package 'incalculable', deputy finance minister says as country confronts euro exit
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Cartoon, 10 Feb 2012: Eurozone members defer bailout asking Greek ministers to commit to even deeper cuts to public spending
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10 Feb 2012: Populist Laos party warns $130bn deal would 'cause more poverty' and attacks Germany's influence over Europe
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10 Feb 2012: Editorial: The cuts strategy is not working in Greece: not economically, not socially and certainly not politically
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10 Feb 2012: • Finance minister says Greece must decide by Sunday
• Street violence returns as ministers call bailout terms 'extortion'
• Merkel warns of default's 'uncontrollable consequences'
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10 Feb 2012: Joblessness has surpassed 20% and the Greek Orthodox Church says it is feeding 250,000 people a day
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10 Feb 2012: Imports fell in January at the fastest annual pace since the lowpoint of the global financial crisis in 2009
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10 Feb 2012: Rajoy government cuts Bankia boss's pay by 75% to €600,000, while nationalised banks' chiefs limited to half that
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Gallery (17 pictures), 10 Feb 2012: A nationwide 48 hour strike was called in protest against planned reforms by Greece's coalition government
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10 Feb 2012: France's election hangs on the record-breaking unpopularity of a politician who once set out to transform the country
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10 Feb 2012: Bailout talks have generated new levels of brinkmansip that could leave a legacy of deep mistrust
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10 Feb 2012: Creditors demand to see action on new pledges as sovereign debt default looms in weeks if rescue package is withheld
http://www.nakedcapitalism.com/2012/02/europe%E2%80%99s-black-cygnets.html
By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.
Although the Greece default is the very obvious European black swan at the moment I thought it would be prudent to point out two other things happenning in
Europe
over the next 12 months that certainly have the potential for evolving from a cygnet into something bigger.
Elections
There a number of elections occurring across Europe over the next 12 months that have the potential to de-rail the current European status quo.
Greece itself is supposed to be having a national election in April which is adding to the current debacle. Greek party leaders have more than one eye on their electorates at the moment which means the bailout negotiations have politicking on top of all the other issues. The consensus appears to be that Greek politicians are playing to their electorates, but will fold at the last minute. The idea being that they will be able to say to their voters that they put up a strong fight, but will ultimately do what is demand by the rest of Europe. This is obviously a bet on a politician’s behaviour, so there is obvious downside risk.
Greece elections, however, are not the greatest concern in my mind. Greece will be defaulting in some form or another this year, the elections influence is simply a question of how ‘messy’ that default becomes.
Germany also has two state elections this year which are a chance for Merkel’s Christian Democrats to regain the national majority they lost last year. It is believed that the worry about these election result was the source of the recent
hamstringing of Angela Merkel by Volker Kauder, the floor leader of her party.
Latest polls have
Merkel’s popularity at a two year high, however the results of the next state election in
Saarland , to be held on March 25, are anything
but predictable given recent history.
Talks to form a grand coalition between the major parties in the German state of Saarland have broken down, with early regional elections due to be held instead. The poll would also have an impact at the national level.
Talks on a transitional government in the south-western German state of Saarland broke down on Thursday, almost two weeks after the regional coalition collapsed.
An early election will now be called after Christian Democrat (CDU) Saarland state premier Annegret Kramp-Karrenbauer and her center-left Social Democrat (SPD) counterpart failed to reach agreement on a new temporary administration.
The election means that Chancellor Angela Merkel’s coalition now faces a second potentially damaging political test this year.
Following the Saarland election is another election on May 6 in the state of
Schleswig-Holstein leading onto national elections in Autumn 2013. If Merkel’s party is unsuccessful in the Saarland election then their will be significant pressure on her to re-assess her approach to European policy.
Although both the Greek and German elections do add to the already unpredictable outcomes in the EuroZone they are not the major political risk. That place is left to France with presidential elections to be held on April 22 (first round) and May 6 (second round). These elections are very
quickly becoming Franco-German.
President Nicolas Sarkozy is not yet officially a candidate in the forthcoming French presidential election, but that hasn’t stopped German Chancellor Angela Merkel from backing him.
….
Hannelore Kraft, the SPD premier of North Rhine Westphalia, said that the SPD would in any case be backing Sarkozy’s likely rival for the post, the center-left Socialist Party’s Hollande. In the “family of European social democracy this has always been a matter of course,” she told the Rheinische Post newspaper
The cross-border campaigning has already begun with a number of German politicians claiming political interference and one going as far as to call a recent Merkozy interview a “rather embarrassing” affair. Given that, at this point, European nations are still supposed to be political separate one has to wonder exactly what is going on. But that answer is easy to find as soon as you hear the man who is currently Mr Sarkozy’s presidential front runner speak.
http://hat4uk.wordpress.com/2012/02/11/hackgate-day-396-more-plancton-arrested-killer-whales-still-at-large/
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