Domino Effect at Work with Euro - Last Days of the Eurozone ? - UPDATE: S & P put EU on Negative Watch

[DCon]

Merkel's back from holidays

*MERKEL SAYS `DEBT MEANS DEPENDENCY'
*MERKEL SAYS EU MUST ENSURE THAT IT FIRST EARNS WHAT IT SPENDS
*MERKEL SAYS `ECONOMY THERE FOR PEOPLE, NOT PEOPLE FOR ECONOMY'
*MERKEL SAYS EUROPE HAS TO LEARN TO ONLY SPEND WHAT IT TAKES IN
*MERKEL SAYS TOO MANY IN EUROPE HAVE LIVED BEYOND THEIR MEANS
*MERKEL 'ABSOLUTELY CONFIDENCE' ECB TO WORK WITHIN ITS MANDATE

http://www.zerohedge.com/news/social...el-calls-order

[MPB]

Merkel's back from holidays



http://www.zerohedge.com/news/social...el-calls-order

A pity she never told Germanies Banks that.

Who is going to bailout the Private German Banks when European Sovereign States call a halt?

The ECB cannot launder EU money through Banks forever, while charging EU citizens.

It won,t be long before every German citizen is fully supportive of printing money.

Nobody seems to have noticed how insolvent Germany is.

[C. Flower]

Golem on Spain.

http://www.golemxiv.co.uk/2012/09/sp...right-load-of/

People, and banks, are running dry of money.

I have a feeling – its just a feeling, I have no figures – that many, many Spaniards have been pulling money from the banks, from their savings in order t pay off their recourse mortgage. I wonder if many of them are now coming to the end of that road? You see I think the financial world and our rather wealthy and privileged leaders take so little notice of the lives of ordinary people that they think that ‘people will manage’ without ever wondering ‘how?’ If people have ‘managed’ so far, our leaders cease to think about them – it’s a strain to think about people you never meet, and frankly don’t care to meet – and assume they will continue to ‘manage’ for as long as they are required to. Much like grass is green and will continue to be green so ‘The People’ in the minds of those who rule over us, are just another part of the natural world to be taken for granted and used for profit.
But people cannot ‘manage’ indefinitely. At some point, like over fished seas, polluted rivers and melting ice-caps there comes a point where something gives. I wonder if we are now at that point in Spain. I think an increasing number of people in Spain, but elsewhere across Europe as well, are simply beginning to run out of the savings with which they have been keeping their families afloat. Don’t forget money taken from saving to pay for mortgages won’t re-appear back on the bank’s books because the banks did not hold the mortgages. They were securitized and sold on.
If I’m right then capital will leave the banks not just from capital flight but simply as accounts run dry. Is this not inevitable when unemployment runs at 20%+ for year after year? Regardless of my speculation, what is not speculation is that the Spanish Banks are running our of money. And this has rather profound knock on effects for the government. To wit, Spanish banks, which the Spanish government has relied upon to buy Spanish debt/bonds are now not buying but actually selling Spanish sovereign debt/bonds.

[Dr. FIVE]

Big long Soros piece. Will probably chime with that Prospect article I mentioned a while back

http://www.nybooks.com/articles/arch...gination=false

[Ephilant]

Big long Soros piece. Will probably chime with that Prospect article I mentioned a while back

http://www.nybooks.com/articles/arch...gination=false

There has been a massive surge in people paying their taxes by credit card in Greece, so much so that the officials are wondering what the catch is.
It's rather simple. Max out the credit card, tell the bank where to go, nothing left anyway, but at least you're not scrutinized and fined massive amounts by the revenue. Not until next year that is, when you can't repeat the trick, and there will still be nothing in the bank account.
Going hand in hand with this phenomenon is the statistic that over the last 3 months 1 in 3 retail shops in the cites closed up. That is 1 in 3 of those that were left after the previous carnage.
But, according to Samaras, all will be well. As soon as the EU coughs up the 30 billion bailout tranche due, "there will be liquidity". And then there will be 4 new French made Frigats, and the first delivery of 100 German made "Euro fighters", not to mention the 100 high-speed naval patrol boats, also made in France.
Existing contracts must be honoured...

[Greengoddess]

RTE:

The leaders of Greece's three-party government have once again failed to agree on a package of spending cuts worth around €11.5bn.

It has renewed fears the country will default on its massive debt.

The coalition has been trying for weeks to secure a deal on pension and wage cuts - and agreement is viewed as essential if Greece is to continue to secure billions of euros of bailout funds from the IMF and European Union.

Socialist party leader Evangelos Venizelos said the government could not exceed the people's limits of endurance, in particular across-the-board reductions in pensions and cuts in disability benefits.

Greek Prime Minister Antonis Samaras is due to be European Central Bank president Mario Draghi in Frankfurt on Tuesday, before the talks on spending cuts resume in Athens on Wednesday.

If the leaders fail to secure a deal, the EU and IMF could withhold bailout funds and Greece would inevitably default.
In the fifth year of a deep recession, Greece has seen its economy shrink by about 20% and the unemployment rate soar to 24.4 percent in June.

[Ephilant]

RTE:

The leaders of Greece's three-party government have once again failed to agree on a package of spending cuts worth around €11.5bn.

It has renewed fears the country will default on its massive debt.

The coalition has been trying for weeks to secure a deal on pension and wage cuts - and agreement is viewed as essential if Greece is to continue to secure billions of euros of bailout funds from the IMF and European Union.

Socialist party leader Evangelos Venizelos said the government could not exceed the people's limits of endurance, in particular across-the-board reductions in pensions and cuts in disability benefits.

Greek Prime Minister Antonis Samaras is due to be European Central Bank president Mario Draghi in Frankfurt on Tuesday, before the talks on spending cuts resume in Athens on Wednesday.

If the leaders fail to secure a deal, the EU and IMF could withhold bailout funds and Greece would inevitably default.
In the fifth year of a deep recession, Greece has seen its economy shrink by about 20% and the unemployment rate soar to 24.4 percent in June.

The ONLY reason a deal has not (yet?) been agreed is because the TROIKA has refused to accept cuts to the military budget. Both PASOK and Dem Left insist that the 3.7 billion they still need to find have to come from that. Samaras does as told and says "Nein" ("Existing contracts must be honoured", remember?)
The Troika insists that wages and pensions have to come down further...
to give you an idea, the vast majority of standard Greek families have a monthly income of around 480 €, which is supposed to keep on average 4 people in clothing, food, heat and a roof over their heads. This income, according to EU dictat, must be reduced to 400 or less.
If even Venizelos can see that this is impossible, then the Troika economists must be totally brain dead, or dangerous criminals. Here in Greece we know the answer. Hint: It's not A)

[Count Bobulescu]

George Soros has a long piece in the New York Review of Books on the crisis in the Eurozone.

The Way Out

Germany must decide whether to become a benevolent hegemon or leave the euro. The first alternative would be by far the best. What would that entail? Simply put, it would require two new objectives that are at variance with current policies:

1. Establishing a more or less level playing field between debtor and creditor countries, which would mean that they would be able to refinance their government debt on more or less equal terms.

2. Aiming at nominal growth of up to 5 percent so that Europe can grow its way out of its excessive debt burden. This will necessitate a higher level of inflation than the Bundesbank is likely to countenance. It may also require a treaty change and a change in the German constitution.

Both these objectives are attainable, but only after considerable progress toward a political union. The political decisions taken in the next year or so will determine the future of the European Union. The steps taken by the ECB on September 6 could be a prelude to the creation of a two-tier Europe; alternatively they could lead to the formation of a closer political union in which Germany accepts the obligations that its leadership position brings with it.

A two-tier eurozone would eventually destroy the European Union because the disenfranchised would sooner or later withdraw from it. If a political union is not attainable the next best thing would be an orderly separation between creditor and debtor countries. If the members of the euro cannot live together without pushing their union into a lasting depression, they would be better off separating by mutual consent.

http://www.nybooks.com/articles/arch...gination=false

[Dr. FIVE]

Kenny to meet Monti in Rome today

[ang]

Not a lot to be said tbh -

[Dr. FIVE]

German business confidence falls for fifth straight month. Economists had predicted an increase : /

http://www.businesspost.ie/#!story/H...3-d2e040440838

[DCon]

China calling for reforms before it uses its cash

China Investment Corp Chairman Jin says it’s unrealistic to expect China to invest in bonds issued by heavily indebted European countries until fundamental problems are resolved.

Says a Eurobond backed by core euro countries would be more attractive to international investors.

http://www.forexlive.com/blog/2012/1...-on-the-table/

[Dr. FIVE]

China calling for reforms before it uses its cash

Heard someone saying a while back that the Chinese have been flying a kite around Europe that they would write a cheque if they left NATO.

Seems plausible and implausible in equal measures.

[DCon]

Trouble in France?

FRANCE’S PRIME minister has warned that a French rejection of the EU fiscal treaty would cause a political crisis and the collapse of the euro.

Seeking to rally left-wing support for the pact amid signs of growing opposition, Jean-Marc Ayrault acknowledged colleagues’ “doubts” but insisted the treaty would not impinge on France’s budgetary sovereignty.

The pact has revealed clear divisions in French president François Hollande’s ruling majority, with the pro-European Green Party and a number of deputies in his own Socialist Party saying they will vote against it.

Opponents argue that by committing France to tight limits on public deficits and debts, the pact would enshrine austerity in French law. On the eve of the debate in parliament, thousands of protesters took to the streets of Paris on Sunday in the first major public display of anger towards Mr Hollande since his election in May.

“The consequence of a negative vote in our country would be, as you well know, a political crisis and the collapse of monetary union,” Mr Ayrault said

http://www.irishtimes.com/newspaper/...324776955.html

[C. Flower]

Big long Soros piece. Will probably chime with that Prospect article I mentioned a while back

http://www.nybooks.com/articles/arch...gination=false

Worth a read. A good analysis of the problem - and of how devastating it is for a country to lose control over printing its currency - in that it makes sovereign default possible, and this in tern pushes up borrowing costs and leads to flight of capital.

Soros wants a healthy Europe that he can make money out of. Whilst on paper, he doesn't explain why Germany would accept his solution of Germany leaving the Euro, or agreeing to a "transfer union" like the US.