20 November 2013 - 11:58 am
In the early morning hours of November 17, 1973 soldiers of the Greek military junta, supported by NATO, stormed the Technical University of Athens. They attacked workers and students on the premises and those protesting at other locations against the junta of the Colonels. At least two dozen protesters were killed.
Today, the Polytechnio is once again at the center of social and political conflict recalling the mobilization of the security forces against the Polytechnio four decades ago. Education Minister Konstantinos Arvanitopoulos (New Democracy) has threatened to place striking university staff under martial law if they do not return to work on Wednesday. He also threatened to use police to clear university buildings currently occupied by students and staff.
The Polytechnio and the larger University of Athens, together with other universities across the country, have been on strike for over ten weeks. Administrative workers are opposing the dismissal of over 1,300 employees in the government’s so-called mobility reserve. Those affected will receive up to eight months reduced pay before losing their jobs completely.
The cuts to the universities are part of a wave of redundancies across public service. A total of 25,000 employees in hospitals, schools and offices are due to be transferred to the mobility reserve this year. By the end of next year, 150,000 public service jobs are to be slashed. >> Read More
29 September 2013 - 23:51 pm
Greece’s international creditors announced Sunday a pause in their discussion with Athens over the release of rescue loans.
Teams from the International Monetary Fund, European Union and European Central Bank have been in the Greek capital since September 17 for a fresh audit of the country’s finances.
The “troika” of donors said in a statement that the break would “allow completion of technical work” and that “the government’s economic program has made good progress.”
Discussions, they said, are to resume in the coming weeks.
Greek Finance Minister Yannis Stournaras indicated Saturday that negotiations were going “well.”
In the past, “technical” pauses have sometimes been implemented by the international donors over obstacles with Athens as it grappled with accompanying austerity commitments.
On Tuesday, Greek civil servants went on strike for the second time since the beginning of the month, aiming to influence troika discussion on a vast reform of Greece’s public sector and advancement of privatization in the country.
The troika and Greek authorities have different views on the timing of public sector layoffs. >> Read More
22 September 2013 - 18:21 pm
Here are the three things you need to know.
1. How the election will impact the eurozone
Societe Generale economist Anatoli Annenkov expects that if the current CDU/CSU coalition with FDP remains in power, Germany will be unlikely to budge from its current approach toward the eurozone.
“As the current government has already shown flexibility on Europe -accepting some trade-offs of short-term austerity for long-term structural reform - we see no change in its determination to pursue reform in the crisis-struck countries, nor in its willingness to accept any form of debt mutualisation/forgiveness,” says Annenkov.
Morgan Stanley economist Elga Bartsch believes there will be “no post-election shift in [the] German stance on euro crisis,” regardless of whether the composition of the government changes or not.
“Many market participants and political counterparties seem to believe that Germany’s stance on the euro crisis will shift materially after the election,” writes Bartsch in a note to clients. “In our view, a major shift on key issues, such as debt relief, joint issuance, or direct bank recaps, is unlikely given public opinion and constitutional constraints in Germany. In fact, we are concerned that a narrow majority for the centre-right may reinforce a relatively tough stance on additional aid.”
2. What the election will change in Germany
“In our view, the election result will have greater implications for domestic than European policy,” wrote BofA Merrill Lynch economist Laurence Boone in a report published earlier this month.
“Euro-area policies have not been a major issue in the campaign so far,” said Boone. “In our view, the main challenge facing the new government will remain the implementation of ‘Energiewende’ (energy transition). This could significantly impair Germany’s competitiveness and, absenting as yet undebated structural reforms, poses a risk to Germany’s recent economic miracle.”
SocGen’s Annenkov asserts that “Germany will be less stable after the election.” >> Read More
17 September 2013 - 0:09 am
For all complaints about painful, unprecedented (f)austerity, the PIIGS (even those with restructured debt such as Greece) sure have no problems raking up debt at a record pace. Over the weekend, Spanish Expansion reported that Spanish official debt (ignoring the contingent liabilities) just hit a new record. “The debt of the whole general government reached 942.8 billion euros in the second quarter, representing an increase of 17.1% compared to the same period last year. Debt to GDP of 92.2% exceeds the limit set by the government for 2013…” Moments ago, it was Italy’s turn to show that with employment still plunging, the only thing rising in Europe is total debt. From Reuters, which cites a draft Treasury document it just obtained: “Italy’s public debt will rise next year to a new record of 132.2 percent of output, up from a previous forecast of 129.0 percent.”
The Treasury is due to officially update its economic and public finance forecasts on Friday.
The debt-to-GDP ratio came in at a record 127.0 percent last year and is forecast at 130.4 percent for 2013. The document did not contain any new forecast for this year. >> Read More
15 September 2013 - 23:06 pm
Over the past week, some of Germany’s most prestigious newspapers have almost all but given up reporting on the election campaign under way in Europe’s biggest country. It has simply become too boring.
Yet, the elections on September 22 are ultimately very important. The interesting question is not so much who is going to be the next chancellor – that seems all but settled. The important question is whether the new German parliament is more or less likely to agree steps to a resolution of the eurozone crisis. The important player to watch will be the opposition Social Democratic party. Depending on the result, it may, or may not, shift its position.
The SPD has not gained any traction against Angela Merkel, the chancellor. Perhaps more than any other social democratic party in the west, it has bought into the neoclassical economic policy consensus. That makes it hard to find a narrative with which to attack Ms Merkel. >> Read More
05 September 2013 - 5:48 am
Turmoil in emerging markets this summer has forced the International Monetary Fund into a humbling series of U-turns over its global economic assessment.
In a confidential note on world economic prospects seen by the Financial Times, the fund has dropped its view that emerging economies were the dynamic engine of the world economy, instead noting that “momentum is projected to come mainly from advanced economies, where output is expected to accelerate”.
The note, which was produced for world leaders attending the Group of 20 summit in St Petersburg this week, urges them to take action to mitigate risks from weakness in poorer countries. But its clout with presidents and prime ministers is likely to be diminished by the IMF’s failure to provide an accurate assessment of the world economy as recently as its spring meetings in April.
The IMF did warn in April, however, that the end of extraordinarily loose monetary policy in advanced economies might cause turmoil in financial markets and sharp depreciations in emerging economy exchange rates. >> Read More
Stounaras a little earlier today said
If there is need for further support to Greece, it will be in the order of about 10 bln euros, or much smaller than the previous programmes
But he said that Greece would not accept new austerity measures
Meanwhile German chancellor Merkel has been trying to please the voters by repeating her view that Greece will not need a debt write-down but does not rule out further aid.
The BBC carries both stories here
07 August 2013 - 11:12 am
Interesting note here from Bridgewater on the Euro crisis (via ValueWalk). They cite 5 reasons why the Euro crisis isn’t over:
1) Financial institution stress tests could raise worries about specific banks
2) Plans for dealing with problematic banks could lead to Cyprus type situation
3) Portugal’s debts problem signals worries for other countries as well
4) France’s continuing debt build up could cause serious problems
5) International attention to all these problems could exacerbate the issues.
They go on to detail several core problems in Europe. I’ve maintained a similar message in recent years though stated a bit more simplistically. In my opinion, the single currency system remains unworkable because it has no rebalancing mechanism. Any single currency system like the Euro or the Dollar will create trade imbalances (for its users – the states in the USA and the countries in Europe). If those trade imbalances are not rebalanced by a federal tax that redistributes funds then the heavy lifting results in deflationary wage and price rebalancing. Obviously, there can be no currency rebalancing because they all use the same currency. So we get what’s going on in places like the periphery of Europe where a crushing deflation is ravaging the economy. >> Read More
07 August 2013 - 10:30 am
Developed country equity and credit markets snapped back quickly after the Federal Reserve tapering wobble a few weeks ago. From the crow’s nest, markets have accepted that Fed policy normalisation will be gradual, become more confident about economic prospects, and put to one side earlier concerns about the risk of deflation. At the coalface, though, things look more nuanced, and suggest that Fed tapering is much less of a risk than rising concern over a ‘fin de siècle’ moment in emerging markets, especially China, which could spark new deflation fears.
Since early May, the top-performing equity markets have been the US and core Europe, putting Japan and southern Europe in the shade. Nearly all developed market indices are outgunning emerging markets, which have lost almost all the gains made from last summer to January, and the continuing slide in commodity prices is undermining countries such as Australia and Brazil.
The tapering announcement, expected after the September meeting of the Fed’s Monetary Policy Committee, has already been well discounted, with US 10-year government bond yields up by nearly 1 percentage point since June. Markets know there is a country mile between tapering and a reversal of quantitative easing, let alone a rise in policy rates. That said, some uncertainty remains about the behavioural consequences for investors, banks and borrowers as the monetary policy regime of the past four years starts to change.
Elsewhere, although the Japanese government is expected to confirm in October the planned two-stage consumption tax increase, starting next year, Europe is a bigger cause for concern. Claims that recent economic indicators portend a return to sustainable growth in southern Europe look way off the mark, and are overshadowed by the absence of aggregate demand, the unsustainability of debt levels and default risk, and the difficult politics of austerity. >> Read More