Germany faces more pressure to back eurobonds

La crisis es una broma ... que nadie ha entendido

Ripples from Europe starting to hit US shores

By CHRISTOPHER S. RUGABER, JONATHAN FAHEY, MICHAEL LIEDTKE

NEW YORK — The tremors from Europe's financial upheaval have reached U.S. shores, rattling consumers and companies. The consequences have been limited so far. Yet the United States and Europe are so closely linked that any slowdown across the Atlantic is felt here. U.S. makers of cars, solar panels, drugs, clothes and computer equipment have all reported effects from Europe's turmoil.

Worries that Europe's crisis could worsen and spread are spooking investors and consumers just as the holiday shopping season nears. Some fear U.S. consumers could rein in spending. Europe's sputtering growth is already dragging on some U.S. companies' profits and could further slow the U.S. economy.

The crisis "seems to be coming to a head right at the time the U.S. economy is at its most vulnerable," said Mark Vitner, an economist at Wells Fargo.

It's affecting companies like Marlin Steel Wire Products, a 34-employee business based in Baltimore that's been seeking a $4 million contract from a German manufacturer for an industrial steel wire project.

Marlin's CEO, Drew Greenblatt, says the German firm is in "pause mode" because of Europe's turmoil. The German company had promised the order by early November.

Marlin's overall sales are growing briskly. But sales to Europe have been sinking.

"If they were ordering like they customarily do, we would have hired more guys," Greenblatt said.

The European Union is the No. 1 U.S. trading partner. Nearly $475 billion in goods crossed between the regions in the first nine months of 2011. About 14 percent of revenue for the 500 biggest U.S. companies — roughly $1.3 trillion — comes from Europe.

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Original Sin And The Euro Crisis

Paul Krugman/ NYT
A quick note right now, maybe more later.
One question that keeps coming up is, how can I reconcile my scorn for warnings about bond vigilantes with what is happening to Italy? This seems especially pointed because I have in the past used Italy’s ability to carry debt exceeding its GDP as an illustration that debt concerns were overblown.
The answer lies in the concept of original sin. Not the Pope’s kind, but the economics kind — the long-standing notion that developing countries were especially vulnerable to financial crises because they borrowed in foreign currency. (Yes, the linked paper actually raises some distinctions between currency mismatch and original sin; never mind for now).
The key point is that by joining the euro, Italy took a bite of the apple — it converted its advanced-country status, as a nation issuing debt in its own currency, into original sin, with debts in someone else’s currency (Europe’s in principle, Germany’s in practice). That is the root of its new vulnerability.
More on all this later, I hope.

The Italian financial crisis, the Euro, and how it may affect America

AMERICAblog

Italy looks like it won't be able to meet the payments on its outstanding government bonds if interest rates on them rise much higher than 7% - and the shakier the government looks, the more people will dump the bonds, and thus the higher the interest rate will go. This is a clear case of a self fulfilling fear/prophecy (i.e., the more paranoid you are, the more afraid you should be that the feared outcome might just happen).

What is excruciating is the knowledge that stopping the run, and saving the Euro zone, would be easy and relatively costless. In fact, the European Central Bank (ECB) could probably make a profit. It may seem too easy, but all the ECB has to do is to say that they stand ready to buy any and all Italian government bonds. Doing this would immediately erase any fear bond holders have of not being paid, and it would stop the run to dump the bonds dead in its tracks because everyone knows the ECB can buy literally infinite amounts of bonds if it wants to.

Paradoxically, simply SAYING they stand ready to buy any and all Italian government bonds means that they likely won't actually have to DO it. If bond holders' fears are calmed then they won't want to sell the bonds and the ECB won't have to buy them .

This is exactly what the Federal Reserve does in the US for our own government bonds. and it is why the Treasury can borrow at extremely low interest rates. People are happy to have our bonds because they know the Fed stands behind them, so the Fed doesn't actually have to hoover them all up to prop up confidence. Why won't the ECB just do the same thing?

The short answer comes in two parts.

First is a misguided fear of inflation. If anybody can find any evidence of any inflation in any data from anywhere please send me a news flash. It just isn't there and won't be so long as we are in a recession. And if inflation ever does get going, we can easily squash it since with interest rates near zero there is plenty of room to raise them. I know, I know, the German bankers have a fear of inflation burned so deeply into their brainstems that they can't help themselves, but really, the 1920's hyperinflation that caused this attitude is almost a century ago by now, and Germany is supposed to be the central core of the Euro zone. So perhaps they can try to adapt just a bit to modern realities.

The second problem is a political one. The German electorate doesn't want to spend a penny to "bail out" what they see as free-spending Italians (or Spaniards or Portuguese for that matter). But their lack of faith is more a CAUSE of the Italians' problems than a reaction to it. If the Germans were WILLING to bail them out, then they wouldn't have to actually do it, as explained above. And if they did go ahead and buy some Italian government bonds to show they meant business, then they would be able to make a profit on them once it became clear that nobody needs to be afraid of a default. 

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Engineering the Global Crisis: Financial Destabilization for Profiteering and Power

corbettreport

The Crisis of Europe and European Nationalism

By George Friedman

When I visited Europe in 2008 and before, the idea that Europe was not going to emerge as one united political entity was regarded as heresy by many leaders. The European enterprise was seen as a work in progress moving inevitably toward unification — a group of nations committed to a common fate. What was a core vision in 2008 is now gone. What was inconceivable — the primacy of the traditional nation-state — is now commonly discussed, and steps to devolve Europe in part or in whole (such as ejecting Greece from the eurozone) are being contemplated. This is not a trivial event.

Before 1492, Europe was a backwater of small nationalities struggling over a relatively small piece of cold, rainy land. But one technological change made Europe the center of the international system: deep-water navigation. Read more »

The Divided States of Europe

From STRATFOR

By Marko Papic

Europe continues to be engulfed by economic crisis. The global focus returns to Athens on June 28 as Greek parliamentarians debate austerity measures imposed on them by eurozone partners. If the Greeks vote down these measures, Athens will not receive its second bailout, which could create an even worse crisis in Europe and the world.

It is important to understand that the crisis is not fundamentally about Greece or even about the indebtedness of the entire currency bloc. After all, Greece represents only 2.5 percent of the eurozone’s gross domestic product (GDP), and the bloc’s fiscal numbers are not that bad when looked at in the aggregate. Its overall deficit and debt figures are in a better shape than those of the United States — the U.S. budget deficit stood at 10.6 percent of GDP in 2010, compared to 6.4 percent for the European Union — yet the focus continues to be on Europe. Read more »

Can Europe Overcome The Crisis? – OpEd

By Nawab Khan

Leaders of the 27-member European Union last Thursday agreed to a second bailout for Greece estimated to be around 120 billion euro.

The move is seen as a desperate attempt by the EU to save Greece from bankruptcy.

Last year, the EU and the International Monetary Fund (IMF) decided to give Greece a financial assistance package of 110 billion euro, but the economic situation in the Mediterranean country continues to deteriorate.

The new financial help depends on the Greek parliament adopting next week a harsher five-year austerity program that is bound to increase discontent and social unrest in the country.

EU leaders argue that without further support, Greece will have to default with all the negative consequences for the country and Europe as a whole.

Analysts, however, say that giving more money to Greece is like prescribing stronger medicine for a severely-ill patient without considering whether the treatment will cure or exacerbate his or her condition.

The media and think-tanks in Europe continue to be pessimistic about the chances of an economic recovery in Greece, while a feeling of helplessness and despondency hovers over the EU capital Brussels.

Read more...

#Cuba pide a la UE avanzar hacia normalización de relaciones...

Aqui...

#Cuba y la estulticia complice de la Union Europea

Mientras US denounces Cuba's treatment of dissidents
la UE y Cuba dan un nuevo paso en el diálogo en busca de la normalización de las relaciones

Brunito Rodriquez en su papelon de Canciller de la Infamia y el Crimen afirma sin recato la disposición de La Habana a proseguir con el proceso de normalización de las relaciones bilaterales, pero pidió claramente que la Unión Europea ponga fin a su "posición común" sobre Cuba.

"Expresé la disposición de Cuba a continuar avanzando hacia un marco de relación bilateral", dice el mal nacido en declaraciones a la prensa tras la reunión..., "para avanzar en la normalización de las relaciones entre la Unión Europea y Cuba han de removerse los obstáculos existentes" por parte de la UE..." ,mientras la Sra. Catherine Ashton, de quien se dice que es la "jefa" de la política exterior de la UE, acepta impasible tales blasfemias y "olvida" antes de expulsar de su despacho a tan despreciable personajillo, expresarle con toda firmeza, precisamente en el dia que se cumple el 1er aniversario del asesinato politico de Orlando Zapata y cuando decenas de cubanos estan siendo encarcelados y reprimidos en las calles de Cuba, la condena irrestricta de la Union Europea a tales hechos.

Los negocios inconfesables de la UE en Libia

ENRIQUE SERBETO / BRUSELAS. Empresas belgas, británicas y españolas venden armas a Libia, y Gadafi es accionista de la empresa italiana Finmeccanica, octava exportadora de armas del mundo según un informe del Sipri 

Los negocios inconfesables de la UE en Libia

Serbia: Investigation Kosovo's Prime Minister to organ trafficking

Serbia has called on the UN Security Council to launch an investigation into allegations linking Kosovo's Prime Minister to organ trafficking during the war for secession in 1999. ­A report by Dick Marty from the Council of Europe also linked former leaders of the Kosovo Liberation Army to abductions, disappearances and executions. RT talks to Marko Gasic from the British Serbian

Europe: The New Plan/ Peter Zeihan [Stratfor]

Europe: The New Plan

By Peter Zeihan | December 21, 2010

Europe is on the cusp of change. An EU heads-of-state summit Dec. 16 launched a process aimed to save the common European currency. If successful, this process would be the most significant step toward creating a singular European power since the creation of the European Union itself in 1992 — that is, if it doesn't destroy the euro first.

Envisioned by the EU Treaty on Monetary Union, the common currency, the euro, has suffered from two core problems during its decade-long existence: the lack of a parallel political union and the issue of debt. Many in the financial world believe that what is required for a viable currency is a fiscal union that has taxation power — and that is indeed needed. But that misses the larger point of who would be in charge of the fiscal union. Taxation and appropriation — who pays how much to whom — are essentially political acts. One cannot have a centralized fiscal authority without first having a centralized political/military authority capable of imposing and enforcing its will. Greeks are not going to implement a German-designed tax and appropriations system simply because Berlin thinks it’s a good idea. As much as financiers might like to believe, the checkbook is not the ultimate power in the galaxy. The ultimate power comes from the law backed by a gun. Read more »

Francia y Alemania se rebelan con el rescate financiero

París y Berlín se unen en el rechazo a ampliar el fondo de rescate

Sarkozy y Merkel pactan una postura común con vistas al Consejo Europeo que debe fijar los términos del mecanismo de rescate y es que hasta cuando los que trabajan y crean riqueza van a estar sacandole las castanas del fuego a los que empleando politicas populistas, mantienen al 50% de la poblacion viviendo de los cheques del estado.

Merkel: Alemania podria abandonar el Euro

Angela Merkel warned that Germany could abandon the euro

Si la locomotora de la Union Europea se retirara de la zona Euro, la debacle del bloque seria catastrofica. 

Putin propone mercado común entre Rusia y la Unión Europea

Vladimir Putin propone un mercado común entre Rusia y la Unión Europea

Rosalía Sánchez | Berlín

"Desde Lisboa a Vladivostok", el premier ruso pide una zona de libre comercio y la supresión del visado obligatorio.

Los mercados colocan a Portugal en el punto de mira

Los mercados colocan a Portugal en el punto de mira.

Dispatch: The Irish Bailout and Germany's Opportunity

En camino de la destruccion de la Eurozona

Irlanda el 2do pais de la Union Europea que requiere de un rescate financiero de 100,000 millones de euros, Portugal y Espana pueden ser los proximos.

Irlanda pacta con la UE su rescate y aprueba un drástico ajuste fiscal

El Eurogrupo da luz verde al respaldo financiero a Dublín

Camino a la destrucción de la eurozona