Tag Archives: europe

Fitch Cuts Greece To ‘CCC’ On Possible EMU Exit

By Sue Chang | From MarketWatch.com | On Thursday, May 17th, 2012

SAN FRANCISCO (MarketWatch) — Fitch Ratings on Thursday downgraded Greece’s sovereign rating to CCC from B- due to heightened risk that Greece may have to exit the Economic and Monetary Union. The strong showing of political parties opposing austerity in the recent election and the failure of the parties to form a government underscores the lack of national support for the E.U.-IMF bailout program, Fitch said. “In the event that the new general elections scheduled for June 17 fail to produce a government with a mandate to continue with the E.U.-IMF program of fiscal austerity and structural reform, an exit of Greece from EMU would be probable,” said Fitch in a statement. A Greek exit from the EMU is likely to result in defaults in the private sector as well as sovereign euro-denominated obligations, the ratings agency said. Triple-C grade is categorized as “poor quality” with possibility of default.

The original article was posted at http://www.marketwatch.com/story/fitch-cuts-greece-to-ccc-on-possible-emu-exit-2012-05-17

EDITOR’S NOTE: According to Wikipedia, A CCC bond rating means: An obligor is CURRENTLY VULNERABLE, and is dependent upon favourable business, financial, and economic conditions to meet its financial commitments. According to Fitch, anything below a B/B- has reached junk bond status.

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

Dow Declines 8th Day In 9

By Kate Gibson | From MarketWatch.com | On May 14, 2012

U.S. stocks drop to 3-month lows on Europe fears.

NEW YORK (MarketWatch) — U.S. stocks closed at more than three-month lows Monday, and the Dow industrials slid for the eighth session in nine, as investors worried about Greece’s potential exit from the euro zone.

“The market appears to be discounting a Greek exit from the euro,” said Linda Duessel, senior equity strategist at Federated Investors Inc.

The Dow Jones Industrial Average ended down 125.25 points, or 1%, at 12,695.35, its lowest close since Jan. 31, after Greek politicians over the weekend failed to reach an agreement on a unity government, raising the likelihood of new elections and the risk of halted international aid payments.

J.P. Morgan Chase & Co. led decliners on the Dow, with a drop of 3.2%, followed by a 2.6% drop in Bank of America Corp. shares.

(Photo: Aris Messinis/Press Pool)Europe facing a ‘Lehman’ moment?

One of Poland’s top bankers said the euro-zone crisis was could head in a direction that may be as bad as the start of the 2008 financial crisis.

Ina Drew became the first high-ranking casualty of the scandal that has put a dent in J.P. Morgan’s reputation, with the bank saying that the chief investment officer is resigning after more than 30 years with the bank. Read more about Drew’s exit from J.P. Morgan after trading losses.

J.P. Morgan’s $2 billion trading loss sharpens the battle over financial regulation, with presumed Republican presidential nominee Mitt Romney favoring the repeal of the Dodd-Frank law, which is supported by President Barack Obama. It also prompted Elizabeth Warren, the Massachusetts Democrat running for U.S. Senate, to call on J.P. Morgan Chief Executive Jamie Dimon to resign from the board of the New York Federal Reserve.

The S&P 500 Index slid 19.64 points, or 1.5%, to 1,338.35, its lowest close since Feb. 2. Financials led the slide among its 10 sectors, all of which ended lower.

With the S&P 500 starting off the day about 5% from recent highs, not much “damage” has been done, according to Dan Greenhaus, chief global strategist at BTIG LLC. Declines of 7% are perfectly normal, and would not be all that worrisome, he said.

In executive shake-ups, electronics retailer Best Buy Co. said founder Richard Schulze would step down as chairman following a board probe that concluded he failed to report allegations of personal misconduct by former chief Brian Dunn to its audit committee. Shares rose 1.5%.

Stocks down at closing bell

The latest news from Steve Orr, including the closing numbers and J.P. Morgan Chase’s executive departure in the wake of a massive trading loss.

Scott Thompson on Sunday stepped down as Yahoo Inc.’s chief executive, with the resignation coming 10 days after hedge-fund activist Daniel Loeb accused him of faking a computer-science degree. Ross Levinsohn has been named interim chief. Shares rose 2%.

Shares of Groupon Inc. rallied more than 18% ahead of first-quarter results after the close from the daily-deal company.

The Nasdaq Composite Index declined 31.24 points, or 1.1%, to 2,902.58, its lowest close since Feb. 6.

For every stock rising five fell on the New York Stock Exchange, where 803 million shares traded. NYSE composite volume topped 3.6 billion.

Gold futures closed at a 2012 low, with the contract for June delivery losing $23, or 1.5%, to end at $1,561 an ounce on the Comex division of the New York Mercantile Exchange.

Oil prices also ended their floor session at their lowest level so far this year, with the crude contract for June delivery down $1.35 to finish at $94.78 a barrel.

In Greece, a political stalemate entered a second week with no agreement on a unity government. Greek, Spanish and Italian bond yields spiked, and European stocks dropped. German government yields, like U.S. Treasurys, fell as investors sought the two countries’ debt as relative safe havens.

“No region has done more to insulate itself from a Greek exit than Germany, where banks’ consolidated risk exposure to Greece fell from $34 billion at the end of 2010 to $13 billion at the end of 2011,” said Duessel of Federated Investors. “U.S. banks had less than $4.5 billion of exposure to Greek debt at the end of 2011.”

As for the debt crisis engulfing Spain, also in the lower Mediterranean, “the cost of ensuring against a Spanish default is now more expensive than for Hungary,” Peter Boockvar, equity strategist at Miller Tabak, noted in an email.

Boockvar also noted that shares of London-traded shares of De La Rue hit a 52-week high on Monday, with the analyst calling it another indication of what the market thinks of the chances of Greece remaining in the euro. De La Rue makes physical currency, and if Greece exits the euro, “a lot of drachma will have to be created and De La Rue would be the likely maker of it.”

Kate Gibson is a reporter for MarketWatch, based in New York.

This article was originally posted at http://www.marketwatch.com/story/us-stocks-begin-down-on-europe-woes-2012-05-14?dist=afterbell

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

Eurozone Private Sector “Contracts Sharply”

From BBC News Business | On Friday, May 4th, 2012

The eurozone service sector figures were described as "truly dire" by one analyst.

The eurozone service sector figures were described as "truly dire" by one analyst.

The eurozone’s private sector contracted sharply in April and by more than initially thought, a survey says.

The Markit eurozone composite purchasing managers’ index (PMI) fell to 46.7 in April from March’s 49.2. Any figure below 50 suggests contraction.

This is the sharpest fall since October last year, and one of the steepest contractions in almost three years.

“Marked declines in new business” and weak manufacturing exports were largely to blame for the falls, Markit said.

Markit said the figures suggested the eurozone economy as a whole contracted at a quarterly rate of 0.5% in April.

‘Truly dire’

Italy saw output from its manufacturing and services sectors hit a three-year low, while Germany, Europe’s economic powerhouse, slipped “towards stagnation”.

New business contracted for the ninth straight month, while employment fell for fourth month in a row.

The eurozone’s services sector PMI dropped to 46.9, down from 49.2 in March, a figure described by Howard Archer from IHS Global Insight as “truly dire”.

Markit’s chief economist Chris Williamson said business and consumer confidence “appears to have deteriorated markedly across the region since the upturn at the start of the year”.

“The final PMI came in well below the [initial] estimate. The survey suggests that the economy was contracting at a quarterly rate of around 0.5% in April, extending the downturn into a third successive quarter,” he said.

“Growth has practically ground to a halt in Germany and France as they have  joined Italy and Spain in seeing a strong rate of economic decline.”

The original article was posted at http://www.bbc.co.uk/news/business-17952847

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

More Dire Predictions? Soros Compares EU Crisis To Collapse of The Soviet Union

By Becket Adams | From TheBlaze.com | On April 24th, 2012

George Soros

George Soros

Two weeks ago, billionaire currency speculator George Soros said that the financial crisis in Europe had “taken a turn for the worse” and warned of “a long period of economic stagnation or worse” for the EU.

Shortly after making those comments, the infamous market guru was back in the news for talking about betting against the euro.

This week, he says the EU financial crisis reminds him of the collapse of the Soviet Union.

“Europe is similar to the Soviet Union in the way that the euro crisis has the potential of destroying, undermining the European Union,” he said during a debate on public policy education Tuesday.

“With the profound social, economic and moral crisis that Europe is in, we can see a similar process of disintegration.”

His Soviet Union comparison is similar to remarks he made in Denmark last week, where he said the eurozone crisis is “not over yet, and it is going in the wrong direction.”

“The euro is undermining the political cohesion of the European Union, and, if it continues like that, could even destroy the European Union,” he said, according to Reuters. “You can grow out of excessive debt, you cannot shrink out of excessive debt.”

As mentioned before on The Blaze, Soros has embarked on something of a personal crusade “to save” the EU and has chosen to do this by railing  against the Bundesbank (Germany’s federal bank) — a lot.

German banks and lawmakers are, according to Soros, “dead set” on enforcing the “status quo” by supporting laws that don’t work while the financial crisis threatens “still-incomplete political union.”

Soros says the EU can only be saved through bold and drastic action taken by eurozone authorities.

“The crisis can be stopped at any time. But this requires that the authorities realize that extraordinary situation requires extraordinary responses, ‘outside the box,’” Soros said in a Le Monde interview. “But the rules need to be changed to be sure the system does not emerge from its box.”

“Mr. Soros said other countries, such as Japan and Latin American nations, have come through similar experiences and survived, but the EU is not a country and is ‘unlikely to survive,’” according to the Wall Street Journal.

The article was originally posted at http://www.theblaze.com/stories/more-dire-predictions-soros-compares-eu-crisis-to-collapse-of-the-soviet-union/

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

World Economy Update For Friday, April 13, 2012

LONDON (MarketWatch)—Spanish stocks plunged to a three-year low on Friday, leading European stock markets lower, while disappointing growth data from China also slashed the buying appetite of investors. Shares dipped deeper into negative territory in afternoon trade after a surprise decline in U.S. consumer sentiment.

The Stoxx Europe 600 index sank 1.6% to 253.11, leaving it set to break a two-day winning streak.

The Spanish IBEX 35 tumbled 3.9% to 7,222.80, a level not seen since March 2009, after data showed Spanish banks sharply increased borrowing from the European Central Bank, underscoring the sector’s dependence on central-bank liquidity.

Bearishness is back in mode among investors, as U.S. and Chinese economic data pose questions about growth. Google, J.P. Morgan Chase and Wells Fargo all trade lower following financial results.

The IMF is raising its forecasts for global growth from levels it expected in January, but there is still a “high degree of instability” in the world economy, Managing Director Christine Lagarde says in an interview with the WSJ’s David Wessel.

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

Europe’s Future Is Not Up To The Bundesbank

By George Soros | From FT.com | On April 11, 2012

George Soros

George Soros

Far from abating, the euro crisis has recently taken a turn for the worse. The European Central Bank relieved an incipient credit crunch through its longer-term refinancing operations. The resulting rally in financial markets hid an underlying deterioration; but that is unlikely to last much longer.

The fundamental problems have not been resolved; indeed, the gap between creditor and debtor countries continues to widen. The crisis has entered what may be a less volatile but more lethal phase.

At the onset of the crisis, the eurozone’s break-up was inconceivable: assets and liabilities denominated in the common currency were so intermingled that it would have caused an uncontrollable meltdown. But, as the crisis has progressed, the eurozone has been reoriented along national lines.

The LTRO enabled Spanish and Italian banks to engage in very profitable and low-risk arbitrage in their own countries’ bonds. And the preferential treatment received by the ECB on its Greek bonds will discourage other investors from holding sovereign debt. If this continues for a few more years, a eurozone break-up would become possible without a meltdown – but would leave creditor countries’ central banks holding big claims that would be hard to enforce against debtor countries’ central banks.

The Bundesbank has seen the danger. It is now campaigning against the indefinite expansion of the money supply, and it has started taking measures to limit the losses it would sustain in a break-up. This is creating a self-fulfilling prophecy: once the Bundesbank starts guarding against a break-up, everybody will have to do the same. Markets are beginning to reflect this.

The Bundesbank is also tightening credit at home. This would be the right policy if Germany was a freestanding country, but the eurozone’s heavily indebted members badly need stronger demand from Germany to avoid recession. Without it, the eurozone’s fiscal compact, agreed last December, cannot possibly work. The heavily indebted countries will either fail to implement the necessary measures or, if they do, they will fail to meet their targets because of collapsing demand. Either way, debt ratios will rise, and the competitiveness gap with Germany will widen.

Whether or not the euro endures, Europe is facing a long period of economic stagnation or worse. Other countries have gone through similar experiences. Latin American countries suffered a lost decade after 1982, and Japan has been stagnating for a quarter of a century; both have survived. But the European Union is not a country and it is unlikely to survive. The deflationary debt trap threatens to destroy a still-incomplete political union.

The only way to escape the trap is to recognise that current policies are counterproductive and change course. I cannot propose a cut-and-dried plan, only some guidelines. First, the rules governing the eurozone have failed and need radical revision. Defending a status quo that is unworkable only makes matters worse. Second, the current situation is highly anomalous, and exceptional measures are needed to restore normality. Finally, new rules must allow for financial markets’ inherent instability.

To be realistic, the fiscal compact must be the starting point, although some obvious defects will need to be modified. The compact should count commercial as well as financial debts and budgets should distinguish between investments that pay and current spending. To avoid cheating, what qualifies as investment should be subject to approval by a European authority. An enlarged European Investment Bank could then co-finance investments.

Most important, some new, extraordinary measures are needed to return conditions to normal. The EU’s fiscal charter compels member states to reduce their public debt annually by one-twentieth of the amount by which they exceed 60 per cent of gross domestic product. I propose that member states jointly reward good behaviour by taking over that obligation. They have transferred to the ECB their seignorage rights, valued at €2tn-€3tn by Willem Buiter of Citibank and Huw Pill of Goldman Sachs, working independently. A special-purpose vehicle owning the rights could use the ECB to finance the cost of acquiring the bonds without violating Article 123 of the Lisbon treaty.

Should a country violate the fiscal compact, it would be obliged to pay interest on all or part of the debt owned by the SPV. That would surely impose tough fiscal discipline.

By rewarding good behaviour, the fiscal compact would no longer constitute a deflationary debt trap. The outlook would radically improve. In addition, to narrow the competitiveness gap, all members should be able to refinance existing debt at the same interest rate. But that would require greater fiscal integration. It would have to be phased in gradually.

The Bundesbank will never accept these proposals, but the European authorities ought to take them seriously. The future of Europe is a political issue: it is beyond the Bundesbank’s competence to decide.

The writer is chairman of Soros Fund Management. His latest book is titled ‘Coming Soon: Financial Turmoil in Europe and the United States’

The original article can be viewed at http://www.ft.com/intl/cms/s/0/f7ac05c8-82fa-11e1-ab78-00144feab49a.html

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

Analysis: Resistance to Austerity Stirs in Southern Europe

By Barry Moody and Fiona Ortiz | From Reuters.com | Sun Apr 1, 2012

Spain amid protests. (Photo credit: Reuters / Jon Nazca)

Spain amid protests. (Photo credit: Reuters / Jon Nazca)

Reuters is reporting that most of the people of southern Europe have stayed surprisingly stoical up to now in the face of some of the most painful budget cuts in living memory, but signs are stirring that patience may soon run out.

An unexpectedly broad general strike in Spain on Thursday and mounting opposition to Prime Minister Mario Monti in Italy are among indicators that resistance is growing in a region at the center of concerns about a resurgence of the euro zone debt crisis.

Portugal remains very subdued for the moment and even Greece, scene of repeated violent street protests, has quietened recently. But there are signals that political leaders will soon be directly in the firing line across Europe, especially if more cuts are required to reduce sovereign debt.

The atmosphere seems a combination of two opposite tendencies – acceptance of the message that deep cuts are the only way to save their countries from economic catastrophe, and a mounting feeling that greater pain cannot be borne by populations suffering deprivation and misery.

The problem for politicians like Monti and Spain’s Mariano Rajoy is that the very austerity measures imposed to cut debt under pressure from euro zone leaders could deepen recession and create a need for even more severe cuts.

There may only be a few more months left for reforms to start producing benefits before populations either retaliate in electoral tests or take to the streets in increasing numbers.

Investors are starting to show concern again about both economic difficulties and political uncertainties in Spain and Italy, with bond yields starting to climb after being brought under control earlier this year.

“There is a kind of resigned acceptance, but this resigned acceptance is not a stable equilibrium position. People do get fed up with being made to feel guilty for their horrible situation,” said Professor Erik Jones of Bologna’s Johns Hopkins University.

He said populations were prepared to suspend judgment on their politicians and accept sacrifice if they believed there would be long term gain, but not indefinitely.

ONLY MONTHS LEFT FOR BENEFITS

“We have only got about six months to run before voters start looking at their politicians and taking off the rose-tinted glasses.

“Once that happens, we are going to find not just a rapid turnover in incumbent governments that happen to go to the polls, but also an increase in the general level of disquiet that will be expressed in the form of strikes and other forms of social disobedience,” Jones told Reuters.

Jean-Paul Fitoussi, an economics professor at the Sciences Po institute in Paris, told reporters at a business conference in northern Italy on Friday that austerity measures were “a dangerous approach that could trigger social unrest”.

Many Spaniards seem resigned to fierce belt tightening from Rajoy, whose conservative government was elected in a landslide last November in the full knowledge that he planned austerity.

On Friday the government announced savings of 27 billion euros ($36 billion) from the central government budget, equivalent to 2.5 percent of gross domestic product.

A recent poll showed half of Spanish adults would accept cuts in treasured healthcare and education services if that was what it would take to put the economy back on track.

Unions represent only a fifth of workers and many people crossed picket lines on Thursday in fear of losing their jobs.

However, the strike had a much bigger impact than a previous stoppage 18 months ago in a sign that patience may be wearing thin in a country with the European Union’s worst unemployment.

Hundreds of thousands attended protest marches and factories and ports ground to a halt. There were brief outbreaks of violence on the streets.

“A lot of people accept austerity and economic reforms like some kind of divine punishment. But when the high unemployment drags on, I am convinced the social protests will take off,” said Jose Antonio Garcia Rubio, economic secretary for the United Left, a minority leftist party that did well in the November general election.

Rajoy also suffered an unexpected setback in a regional poll in Andalucia on March 25, another sign that his room for maneuver is not as big as previously thought.

MONTI’S HONEYMOON ENDS

In Italy, former European Commissioner Monti has won wide plaudits from Europe, America and elsewhere for his economic expertise and swift action to head off the debt crisis.

But he too has recently run into trouble over a labor reform that is at the center of his program to jump start Italy’s chronically stagnant growth.

Trade unions are planning protests and a general strike, his approval ratings have dropped and he has got involved in a messy row with the political parties he depends on to pass laws.

The political problems are partly a function of local polls in May; politicians are anxious to move out of the shadow of technocrat Monti and improve their woeful public esteem levels ahead of a general election next spring.

Politicians are also likely to be punished in Greece, where a general election is expected on May 6 after the country was obliged to swallow even bigger cuts in pensions, wages and services in exchange for a second international bailout.

Apart from a violent protest in February when shops and banks were set on fire, Greece has been comparatively quiet recently in contrast to almost daily demonstrations last summer by tens of thousands of people outside parliament.

Greeks appear to be waiting to punish the thoroughly discredited political class in the election, with nearly a third planning to abstain or cast blank ballots, according to polls.

“Last year, I spent the whole summer protesting outside parliament but nothing changed. No one is listening,” 58-year old Angeliki Koutsioumba told Reuters.

“Damn them all. We must punish them with our vote in the elections,” she said, adding that she suffered a heart attack last year after a bank refused to give her a loan.

The Portuguese have been the most resigned to the pain of austerity following an international bailout, and a general protest strike on March 22 had little impact on the economy.

“This kind of strike does not help anyone, they are not the solution. It is all about hard work, only that will take us out of this hole,” designer Filipa Almeida told Reuters in Lisbon.

But Antonio Costa Pinto, research professor at Lisbon’s Institute of Social Sciences, said the mood of resignation would not last forever.

“Discontent is there, so if there are no signs of a turnaround, if the European slowdown prevents the Portuguese economy from starting to recover towards the end of the year, this acceptance will be hard to sustain, especially if more austerity measures are needed,” he said.

That is the picture across Europe. “Socially and politically, people are accepting austerity but you need to have light at the end of the tunnel,” said American economist Nouriel Roubini–nicknamed Dr Doom after predicting the subprime crisis.

“Growth, jobs, income, otherwise the political and social backlash; that is demonstrations, strikes, weak governments failing,” he told reporters at a business conference at Cernobbio on the shores of Lake Como.

(Additional reporting by Lisa Jucca in Cernobbio, Daniel Alvarenga and Andrei Khalip in Lisbon, Renee Maltezou in Athens; editing by Philippa Fletcher)

The original article can be viewed here.

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

A Harder Default To Come

By Wolf Richter | From TestosteronePit.com | On Friday, March 9, 2012

“We owed it to our children and grandchildren to rid them of the burden of this debt,” said Greek Finance Minister Evangelos Venizelos about the bond swap that had just whacked private sector investors with a 72% loss. While everyone other than the bondholders was applauding, the drumbeat of Greece’s economic horror show continued in its relentless manner.

In central Athens, a stunning 29.6% of the businesses ceased operations, up from 24.4% in August; in Piraeus 27.3%, a 10-point jump since March. The whole Attica region lost 25.6% of its businesses. “This worsening of the survival index in the commercial sector … shows that resistance is waning,” said Vasilis Korkidis, president of the National Confederation of Hellenic Commerce. “We must continue the battle of daily survival and keep our shops open,” he pleaded—while fourth quarter GDP was being revised down to -7.5% on an annual basis. The Greek economy has shrunk about 20% since 2008.

Unemployment is veering toward disaster. The overall rate of 21% in December, announced Thursday, was horrid enough, but youth unemployment rose to a shocking 51.1%, double the rate before the crisis. A record 1,033,507 people were unemployed, up 41% over prior year. Only 3,899,319 people had jobs—a mere 36.1% of a total population of 10.8 million!

No economy can service a gargantuan—and rapidly growing—mountain of debt when only 36.1% of its people contribute (by comparison, the US employment population ratio is 58.6%, down from 64.7% in 2000). Hence, another bout of red ink. The “cash deficit” at the end of 2011 hit €24.9 billion, 11.5% of GDP, far above the general budget deficit. Government-owned enterprises, such as the public healthcare sector, couldn’t pay their bills. Total owed their suppliers: €5.73 billion.

Yet, forcing down the deficit is one of the many conditions that the bailout Troika of EU, ECB, and IMF have imposed on Greece. And: “If the Greek people or the Greek political elite do not apply all of these conditions, they exclude themselves from the Eurozone,” said Luxembourg’s Finance Minister Luc Frieden. All of these conditions. Then he added the crucial words: “The impact on other countries now will be less important than a year ago.” Read…. Firewalls In Place, Markets ready: Greece Can Go To Heck.

Under pressure to cut its healthcare budget, the government reduced the prices that the industry can charge state-owned insurers. So wholesalers are selling their limited supply outside Greece, while out-of-money state-owned insurers delay payments to pharmacies and hospitals, which then can’t pay their wholesalers for the medications they do get. In return, wholesalers turn off the spigot. And the system is locking up.

Even Health Minister Andreas Loverdos conceded that there were shortages, but that they were limited to lower-priced medications. Of the 500 most common drugs, 243 have disappeared from the shelves, including antibiotics and drugs for treating diabetes and hypertension. The Panhellenic Association of Women with Breast Cancer, for example, received many complaints from patients who claim they weren’t treated due to lack of oncology drugs. And the world’s largest pharmaceutical companies are worried that Greece and some other countries might not be able to pay them at all.

A bright spot: tourism. In 2011, receipts rose by 9.5% over prior year as the Arab Spring had scared tourists away from destinations such as Egypt and Tunisia. In July, receipts jumped 14.4% and in October 15%. Alas, in December they declined 4.9%. And that reversal has now infected 2012. Tourist arrivals so far this year are down 10.7% in Athens and 6.7% for the country. Its last growth industry has hit the skids, too.

With unemployment climbing, production and consumption tanking, businesses shutting down, and tourism nose-diving, there is only one way for tax revenues: down. Budget deficits will be worse than promised. Greece’s debt—now largely to taxpayers of other countries—will continue to balloon. The standard of living of the vast majority of Greeks will get slammed, though the elite that are negotiating these deals will do just fine.

“We still don’t have a solution for Greece, so there will be a harder default to come,” predicted Charles Wyplosz, director of the Geneva-based International Center for Money and Banking Studies. Yet, in a bitter irony, Germany—the country where tax dodging is a national sport—has decided to send 160 employees of its Ministry of Finance to Athens to fix against all odds the tax collection system, a debacle that will endear the already reviled Germans even more to the Greeks. Read…. Final Spasm: Greco-Teutonic Wrestling.

The original article can be viewed at http://www.testosteronepit.com/home/2012/3/9/a-harder-default-to-come.html

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

Moody’s Declares Greece in Default of Debt

From Yahoo! News Canada via AFP

Moody’s declared Greece in default on its debt Friday after Athens carved out a deal with private creditors for a bond exchange that will write off 107 billion euros ($140 billion) of its debt.

Moody’s pointed out that even as 85.8 percent of the holders of Greek-law bonds had signed onto the deal, the exercise of collective action clauses that Athens is applying to its bonds will force the remaining bondholders to participate.

Overall the cost to bondholders, based on the net present value of the debt, will be at least 70 percent of the investment, Moody’s said.

“According to Moody’s definitions, this exchange represents a ‘distressed exchange,’ and therefore a debt default,” the US-based rating firm said.

For one, “The exchange amounts to a diminished financial obligation relative to the original obligation.”

Secondly, it “has the effect of allowing Greece to avoid payment default in the future.”

Ahead of the debt deal, Moody’s had already slashed Greece’s credit grade to its lowest level, “C,” and so there was no impact on the rating.

Moody’s said it will revisit the rating to see how the debt writedown, and the second eurozone bailout package, would affect its finances.

However, it added, at the beginning of March “Moody’s had said that the risk of a default, even after the debt exchange has been completed, remains high.”

This article was originally posted at: http://ca.news.yahoo.com/moodys-declares-greece-default-debt-232804003.html

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About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.

George Osborne: UK Has Run Out of Money

By Rowena Mason | From http://www.telegraph.co.uk | Tuesday 28 February 2012

The Government ‘has run out of money’ and cannot afford debt-fuelled tax cuts or extra spending, George Osborne has admitted.

In a stark warning ahead of next month’s Budget, the Chancellor said there was little the Coalition could do to stimulate the economy.

Mr Osborne made it clear that due to the parlous state of the public finances the best hope for economic growth was to encourage businesses to flourish and hire more workers.

“The British Government has run out of money because all the money was spent in the good years,” the Chancellor said. “The money and the investment and the jobs need to come from the private sector.”

Mr Osborne’s bleak assessment echoes that of Liam Byrne, the former chief secretary to the Treasury, who bluntly joked that Labour had left Britain broke when he exited the Government in 2010.

He left David Laws, his successor, a one-line note saying: “Dear Chief Secretary, I’m afraid to tell you there’s no money left”.

Mr Osborne is under severe pressure to boost growth, amid signs the economy is slipping back into a recession.

The Institute of Fiscal Studies has urged him to consider emergency tax cuts in the Budget to reduce the risk of a prolonged economic slump.

But the Chancellor yesterday said he would stand firm on his effort to balance the books by refusing to borrow money. “Any tax cut would have to be paid for,” Mr Osborne told Sky News. “In other words there would have to be a tax rise somewhere else or a spending reduction.

“In other words what we are not going to do in this Budget is borrow more money to either increase spending or cut taxes.”

The strongest suggestion of help for squeezed family budgets came from the Chancellor’s claim that he was “very seriously and carefully” considering plans to help lower earners by raising the personal allowance for income tax, a proposal that has been championed by Nick Clegg, the Deputy Prime Minister.

But he implied there would be no more help for motorists struggling with record petrol prices this spring. “I have taken action already this year to avoid increases in fuel duty which were planned by the last Labour government,” he said.

The Chancellor’s tough words were echoed by Liberal Democrat Jeremy Browne, the foreign minister, who warned that Britain faced “accelerated decline” without measures to tackle its debt and increase competitiveness.

In an article published today in The Daily Telegraph, he writes that Britain’s market share in the world used to be “dominant” but was now “in freefall” compared with the soaring economies of Asia and South America. “This situation has been becoming more acute for years,” he adds. “It is now staring us in the face. So we need to take action.”

Mr Browne writes that reform of pensions, welfare and defence is essential to stop the departments “collapsing under the weight of their own debt”. “Just because the spending was sometimes on worthy causes does not in itself mean it was affordable,” he says.

“Doing nothing when your prospects are at risk of declining is not the safe option. More of the same may be superficially more popular in the short-term but that does not make it right.”

Amid warnings that Britain urgently needed to adopt a more pro-business outlook, senior Conservatives have urged the Government to get rid of the 50 pence top rate of tax.

Figures from the Treasury last week suggested the policy was not raising the expected amount of revenue and was threatening to drive leading business people and entrepreneurs away from Britain. Dr Liam Fox, the former Conservative Defence Secretary, yesterday argued for the top tax rate to be scrapped, but added that cutting taxes on employment was even more important.

“I would have thought the priority was getting the costs of employers down and therefore I would rather have seen any reductions in taxation on employers’ taxation rather than personal taxation,” he told the BBC’s Sunday Politics show.

Any efforts to scrap the rate this parliament would face severe opposition from within the Coalition.

Simon Hughes, Liberal Democrat deputy leader, said yesterday that keeping the current 50p rate was “the right thing to do”. He told the BBC: “I represent people in a pretty solid working-class community. What they’re concerned about is what happens to ordinary people out of work and where they get jobs.”

Last night, Labour argued Mr Osborne needed to take a more proactive stance on boosting growth by increasing public spending.

Chris Leslie MP, the shadow Treasury minister, said it was wrong of the Chancellor to argue that Britain was broke and to rely on business alone to create economic growth.

“George Osborne can’t complacently wash his hands and claim the lack of jobs and growth in the economy is nothing to do with him,” he said.

“He needs to realize that government has a vital role to play in creating an environment where the private sector can grow and create jobs.”

Harriet Harman, Labour’s deputy leader, urged Mr Osborne to cut VAT.

Meanwhile, the Chancellor made it clear he was resisting pressure to hand over up to another £17.5billion in taxpayers’ money to help bail out struggling European Union countries.

He said Europe had not “shown the colour of its money” by taking measures to help itself tackle its debt problems.

Until that happens, Britain will not give any extra funds to the International Monetary Fund.

The Chancellor was speaking as finance ministers from the world’s 20 most powerful economies met in Mexico.

Mr Osborne said: “While at this G20 conference there are a lot of things to discuss; I don’t think you’re going to see any extra resources committed (to the IMF) here because eurozone countries have not committed additional resources themselves, and I think that quid pro quo will be clearly established here in Mexico City.”

This article originally appeared at http://www.telegraph.co.uk/news/politics/9107485/George-Osborne-UK-has-run-out-of-money.html

PG
About The Author: RSOP is the co-founder & Executive Editor of Radical Survivalism Webzine, as well as a Family Preparedness Consultant with nearly five years of personal experience in the self-reliance game. RSOP's many preparedness roles within his own group include team mechanic, head of security, electrician, and project designer/engineer.