Posted by Kendall Harmon

Clemens Fuest, from the Mannheim-based organization best known for its widely-watched economic sentiment index - told German business daily Handelsblatt that the euro zone region could be at a "turning point."

"I've got a bad feeling about this...I am concerned by the danger that the ECB is producing new bubbles with its policy of cheap money," he told the newspaper.

"We have all the ingredients of a bubble: The prices of real estate and stock markets continue to rise, and on the bond markets, yields are falling despite high risks."

Read it all.

Filed under: * Culture-WatchGlobalizationPsychology* Economics, PoliticsEconomyCredit MarketsCurrency MarketsEuropean Central BankStock MarketThe Banking System/Sector* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010* TheologyEthics / Moral Theology

0 Comments
Posted June 10, 2014 at 5:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The euro zone's economy expanded at a weak pace last quarter despite a strong recovery in Germany, putting added pressure on the European Central Bank to enact fresh easing measures to prevent the region from sliding into a lengthy period of low inflation and economic stagnation.

Gross domestic product grew 0.2% in the euro zone during the first quarter compared with the final three months of 2013, the European Union's statistics agency Eurostat said Thursday, well short of the 0.4% quarterly gain expected by economists.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankHousing/Real Estate MarketLabor/Labor Unions/Labor Market* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010* TheologyEthics / Moral Theology

0 Comments
Posted May 15, 2014 at 7:45 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

A leading German institute has called for full-blown quantitative easing by the European Central Bank (ECB) to head off a deflation spiral, marking a radical shift in thinking among the German policy elites.

Marcel Fratzscher, head of the German Institute for Economic Research (DIW) in Berlin, demanded €60bn (£50bn) of bond purchases each month to halt the contraction of credit and avert a Japanese-style trap.

"It is high time for the ECB to act. Otherwise Europe risks falling into a dangerous downward spiral of sliding prices and declining demand", he wrote in Die Welt.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeEuroEuropean Central BankThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010* TheologyEthics / Moral Theology

0 Comments
Posted March 10, 2014 at 9:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

To help money flow more evenly across the currency area, Coeure said the idea of cutting into negative territory the rate the ECB pays banks to hold their deposits overnight was "a very possible option".

"That is something we are considering very seriously. But you should not expect too much of it," he said of a negative deposit rate.

The ECB left policy on hold last week but President Mario Draghi put markets on alert for possible action in March, saying the Governing Council would have more information at its disposal by then, including new forecasts from the bank's staff that will extend into 2016 for the first time.

Read it all from Reuters.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyEuroEuropean Central BankHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/Sector* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010* TheologyEthics / Moral Theology

1 Comments
Posted February 12, 2014 at 6:01 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Standard and Poor's (S&P) has cut France's credit rating to AA from AA+.

The moves comes almost two years after the country lost its top-rated AAA status....

S&P said in its statement: "We believe the French government's reforms to taxation, as well as to product, services and labour markets, will not substantially raise France's medium-term growth prospects and that ongoing high unemployment is weakening support for further significant fiscal and structural policy measures."

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010France* TheologyEthics / Moral Theology

0 Comments
Posted November 8, 2013 at 5:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Angela Merkel won a landslide personal victory in Germany's general election on Sunday, but her conservatives appeared just short of the votes needed to rule on their own and may have to convince leftist rivals to join a coalition government.

Read it all.

Filed under: * Economics, PoliticsEconomyCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Politics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany* TheologyEthics / Moral Theology

0 Comments
Posted September 23, 2013 at 5:50 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Ever since the euro crisis broke in late 2009 this newspaper has criticised the world’s most powerful woman. We disagreed with Angela Merkel’s needlessly austere medicine: the continent’s recession has been unnecessarily long and brutal as a result. We wanted the chancellor to shrug off her cautious incrementalism and the mantle of her country’s history—and to lead Europe more forcefully. She is largely to blame for the failure to create a full banking union for the euro zone, the first of many institutional changes it still needs. She has refused to lead public opinion, never spelling out to her voters how much Germany is to blame for the euro mess (nor how much its banks have been rescued by its bail-outs). We also worry that she has not done enough at home: in recent years no country in the European Union has made fewer structural reforms, and her energy policies have landed Germany with high subsidies for renewables and high electricity prices.

And yet we believe Mrs Merkel is the right person to lead her country and thus Europe. That is partly because of what she is: the world’s most politically gifted democrat and a far safer bet than her leftist opponents. It is also partly because of what we believe she could still become—the great leader Germany and Europe so desperately needs.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

0 Comments
Posted September 15, 2013 at 3:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Since the euro crisis began, many governments across Europe have been swept from power. France last year saw a presidential campaign heavily focused on Europe, and calls for alternatives to austerity have grown ever louder. So why is it that Germany, the country key to solving the euro crisis, seems immune to this polarization of views on the future of economic and monetary union?

Partly it has to do with the Greens and the Social Democrats, two opposition parties struggling to differentiate their euro policies from Merkel's government, a coalition of her conservatives and the business friendly Free Democrats (FDP). Both the Greens and the SPD have supported all major euro rescue measures thus far. Even the Left Party, a stronger critic of the government, recently confirmed its overall commitment to the common currency. There is currently no anti-euro party in Germany parliament, with newcomers such as the euro-skeptic Alternative for Germany, media attention notwithstanding, yet to demonstrate their potential at the ballot box.

One reason is that Germans are still not feeling the pinch of the crisis. On the contrary, they continue to hear good news about strong exports, lower unemployment and economic growth. With the election looming, it is no surprise that the Merkel administration is wary of spoiling this mood of complacency by addressing the downsides of the "German model" for fellow euro-zone member states.

Read it all.


Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

0 Comments
Posted August 19, 2013 at 6:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Two more Portuguese ministers from the junior ruling coalition party were ready to resign on Wednesday, local media said, deepening turmoil that could trigger a snap election and derail Lisbon's exit from an EU/IMF bailout.

Multiple newspaper radio and television reports said Agriculture Minister Assuncao Cristas and Social Security Minister Pedro Mota Soares will follow their CDS-PP party leader Paulo Portas who tendered his resignation on Tuesday. Party officials were not available to comment as the party's executive commission was in a meeting.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyCredit MarketsCurrency MarketsEuroEuropean Central BankStock MarketForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Portugal

0 Comments
Posted July 3, 2013 at 7:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

European governments are figuring out that taxing financial transactions won't be a magical money machine and that the proposed levy might even damage the European economy.

Reuters first reported Thursday that EU officials are scaling back a transaction tax proposal supported by 11 countries that is supposed to take effect in January. The levy could instead be introduced on a "staggered basis," one official told the news agency. The first phase might only tax sales and purchases of shares, not bonds or derivatives transactions, and at 0.01% instead of 0.1% as currently proposed. A rate of zero is more appropriate.

Enthusiasm for the tax has been dimming for a while, including in governments that have previously backed it. Christian Noyer, the Governor of the Banque de France, said in Paris on Tuesday that the levy will raise "nothing at all." One unnamed EU official told Reuters that a scaled-back transaction tax would reap revenue of less than €3.5 billion. The full-fledged levy, as proposed by the European Commission in February, was supposed to rake in €31 billion a year.

Read it all (if necessary another link may be found here.

Filed under: * Economics, PoliticsEconomyCredit MarketsCurrency MarketsEuroStock MarketTaxesThe Banking System/SectorPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 3, 2013 at 5:31 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

But right now, the E.U. project isn’t advancing democracy, liberalism and human rights. Instead, it is subjecting its weaker member states to an extraordinary test of their resilience, and conducting an increasingly perverse experiment in seeing how much stress liberal norms can bear.

That stress takes the form of mass unemployment unseen in the history of modern Europe, and mass youth unemployment that is worse still. In the Continent’s sick-man economies, the jobless rate for those under 25 now staggers the imagination: over 40 percent in Italy, over 50 percent in Spain, and over 60 percent in Greece.

For these countries, the euro zone is now essentially an economic prison, with Germany as the jailer and the common currency as the bars. No matter what happens, they face a future of stagnation — as aging societies with expensive welfare states whose young people will sit idle for years, unable to find work, build capital or start families.

Read it all.

Filed under: * Economics, PoliticsEconomyEuroForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 2, 2013 at 11:16 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

We have no way of knowing how this all ends. One problem is that the smartest solution—having Germany and perhaps a handful of other northern countries leave the euro for a new currency (the Deutche Mark 2.0, or a “neuro” for northern Europe)—would make life easier in the south. The south based euro would fall in value, but since debts and contracts are denominated in that currency, the adjustment would be the same as in a normal devaluation. This course would likely lead quickly to a new burst of growth in the south, though inflation and other problems would take a toll over time.

But the euro’s break up day would cause a lot of problems for Germany and its northern friends....

So we’re in an interesting situation. The crisis is crippling the south, but the south has no power to resolve the crisis. The crisis isn’t comfortable for the north but still looks less painful than the solution. So the north, which has the ability to resolve the crisis, doesn’t have the will to do it and the south, which has the will, lacks the ability.

Read it all (and please note that the Financial Times article by Wolfgang Münchau which is mentioned, entitled "The riddle of Europe’s single currency with many values," is indeed a must read as Mr. Read says).

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

1 Comments
Posted April 17, 2013 at 5:30 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Understanding the developing attitude of the central banks, and the effects of their actions, obviously remains central for investors in all financial assets. The “big picture” for global financial assets, involving very low government bond yields and a gradual shift of risk appetite into credit and equities, is unlikely to change until one of two events takes place.

The first would be a decision by the central bankers themselves that the era of unlimited quantitative easing must end, either because of the risk of inflation and asset price bubbles, or because of concerns about fiscal dominance over the monetary authorities. The second would be a realisation by the markets that further action by the central bankers is irrelevant because they have run out of effective ammunition. Either of these events would probably remove the central prop from the equity bull market which began in March, 2009, but neither seems very likely in 2013.

There is certainly no sign that the central bankers themselves will call a halt to the extension of their balance sheets.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. GovernmentFederal ReserveThe United States Currency (Dollar etc)Politics in General* International News & CommentaryAmerica/U.S.A.AsiaChinaJapanEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted December 31, 2012 at 5:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The threat of the euro’s collapse has abated for the moment, but putting the single currency right will involve years of pain. The pressure for reform and budget cuts is fiercest in Greece, Portugal, Spain and Italy, which all saw mass strikes and clashes with police this week.... But ahead looms a bigger problem that could dwarf any of these: France.

The country has always been at the heart of the euro, as of the European Union. President François Mitterrand argued for the single currency because he hoped to bolster French influence in an EU that would otherwise fall under the sway of a unified Germany. France has gained from the euro: it is borrowing at record low rates and has avoided the troubles of the Mediterranean. Yet even before May, when François Hollande became the country’s first Socialist president since Mitterrand, France had ceded leadership in the euro crisis to Germany. And now its economy looks increasingly vulnerable as well.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010France

0 Comments
Posted November 18, 2012 at 5:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The eurozone's return to recession is particularly bad news because it is now hitting once strong economies like Germany. This means the recession will last longer and have a bigger impact on U.S. consumers and companies.

Figures released today showed that collectively the economies of the 17-country eurozone contracted by 0.1 percent between July and September. While this is a slight improvement over the second quarter of the year when it shrank by 0.2 percent, the definition of a recession is two straight quarters of contraction. Most analysts believe that the recession will continue at least until the end of 2012.

"The recession in southern Europe is slowly creeping to other countries," says Martin Van Vliet, an analyst with ING. "If you look at the indicators for the fourth quarter you see that even Germany many not grow again and that shows that the economy has an enormous need for a new impulse."

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

1 Comments
Posted November 15, 2012 at 5:01 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Police and protesters clashed in Spain on Wednesday as millions of workers went on strike across Europe to protest spending cuts they say have made the economic crisis worse.

Hundreds of flights were cancelled, car factories and ports were at a standstill and trains barely ran in Spain and Portugal where unions held their first ever coordinated general strike.

Riot police arrested at least two protesters in Madrid and hit others with batons, witnesses said, and in Rome students pelted police with rocks in a protest over money-saving plans for the school system.

Read it all.

Filed under: * Culture-WatchLaw & Legal IssuesPolice/Fire* Economics, PoliticsEconomyEuropean Central BankLabor/Labor Unions/Labor MarketThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Politics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010* TheologyAnthropologyEthics / Moral Theology

0 Comments
Posted November 14, 2012 at 6:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone's second largest economy could come back to haunt Germany and the broader currency bloc.

Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the "wise men", to consider drafting a report on what France should do.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermany

0 Comments
Posted November 11, 2012 at 12:16 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Talks to agree the EU's 2013 budget have collapsed, after negotiators from the EU and member states were unable to agree on extra funding for 2012.

The EU Commission and European Parliament had asked for a budget rise of 6.8% in 2013.

But most governments wanted to limit the rise to just 2.8%.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankTaxesThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Politics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted November 11, 2012 at 6:04 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

As debt-burdened European governments struggle to overcome the disparities in their still-imperfect union, old demons of regional separatism have surged anew in recent months, raising another unwelcome challenge to the continent’s traditional nation-states.

Separatist movements have dramatically reinforced their positions here in Belgium’s prosperous Flanders region, where the independence-minded New Flemish Alliance captured Antwerp’s 16th-century City Hall on Oct. 14 and, under its populist leader Bart De Wever, is heading into national elections in 2014 with new wind in its sails.

“There is an outcry in Flanders for change,” declared Danny Pieters, vice president of the Belgian Senate and a senior Flemish alliance leader.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeEuroEuropean Central BankForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted November 5, 2012 at 4:40 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

French leader François Hollande is uncomfortably close to a collapse in credibility. His poll rating has sunk to 36pc. The speed of decline has been shocking.
The latest broadside comes from ex-German chancellor Gerhard Schröder, supposedly his ally on the Left.
"The election promises of the French president are going to shatter on the walls of economic reality," he said in Paris.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankTaxesForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010France

0 Comments
Posted November 3, 2012 at 12:20 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

To those who were surprised that the European Union received the Nobel Peace Prize, I say: “Think twice.” This was not only a deserved award for Europe’s contribution to bringing peace and stabilizing democracies in the recent past. The Nobel Committee was also sending a clear warning to contemporary leaders. I could almost hear them saying: “On this difficult odyssey, don’t abandon ship. In today’s world, the EU is too valuable to squander.”

It was an indirect but powerful rebuttal to the dangerous nationalist and populist rhetoric some politicians have adopted when describing the recent financial crisis.

This message couldn’t have come at a better time.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted November 1, 2012 at 5:45 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Europe's economic woes are washing over U.S. multinational companies, contributing to a season of weak corporate earnings.

Domestic sales are growing, as the U.S. housing market and consumer confidence recover. But China's economy has slowed, robbing U.S. companies of their most reliable growth engine of recent years.

Almost uniformly, however, U.S. companies reporting third-quarter results identify Europe as the weakest link in the global economic chain.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryAmerica/U.S.A.Europe--European Sovereign Debt Crisis of 2010

0 Comments
Posted October 27, 2012 at 10:45 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The financial markets have been notably calm of late. Stock indexes have ticked upwards and interest rates on sovereign bonds have drifted downwards. The euro has also remained relatively stable against the dollar. And investor panic seems to have dissipated.

But appearances can be deceiving, said German Finance Minister Wolfgang Schäuble on Tuesday. "I'm not so sure that the worst of the crisis is behind us," he said at a mechanical engineering conference in Berlin, warning that reform efforts needed to be re-doubled to ensure that trust in the euro returns.

His comments were echoed by Yves Mersch, a member of the European Central Bank Governing Council who was also present at the event. He warned that even if calm had returned to the markets, it could be deceptive. "The bleeding has been stopped, but the patient is not yet in the clear," he said.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

0 Comments
Posted October 25, 2012 at 5:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

An exit poll showed Mr. Rajoy's conservative party winning 39 or 40 of the parliament's 75 seats in his native Galicia, a gain of at least one seat over the Spanish Socialist Party and two smaller rivals. He had touted Galicia as a regional model for the economic-austerity program his government has pursued amid rising popular protest in the rest of Spain.

In the Basque Country, another exit poll showed a surprisingly strong second-place finish by a new radical separatist coalition, apparently enough to help a more-moderate nationalist party oust the ruling coalition between Mr. Rajoy's party and the Spanish Socialist Workers Party.

The exit polls, taken by the regional government-owned television networks in Galicia and Basque Country, are widely regarded as reliable.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Politics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted October 21, 2012 at 12:20 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Greece is teetering on the edge of collapse with its society at risk of disintegrating unless the country's near-empty public coffers are shored up with urgent financial aid, the country's prime minister has warned.

Almost three years after the eruption of Europe's debt drama in Athens, the economic crisis engulfing the nation has become so severe that democracy itself is now imperiled, Antonis Samaras said.

"Greek democracy stands before what is perhaps its greatest challenge," Samaras told the German business daily Handelsblatt in an interview published hours before the announcement in Berlin that Angela Merkel will fly to Athens next week for the first time since the outbreak of the crisis.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

4 Comments
Posted October 6, 2012 at 2:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

"The Spanish were a bit hesitant but now they are ready to request aid," a senior European source said. Three other euro zone senior euro zone sources confirmed the shift in the Spanish position, all speaking on condition of anonymity because they were not authorised to discuss the matter.

German Finance Minister Wolfgang Schaeuble has said Spain is taking all the right steps to overcome its fiscal problems and does not need a bailout, arguing that investors will recognise and reward Spanish reforms in due course.

Privately, several European diplomats and a senior German source said Chancellor Angela Merkel preferred to avoid putting more individual bailouts for distressed euro zone countries to her increasingly reluctant parliament.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010GermanySpain

1 Comments
Posted October 2, 2012 at 6:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The Spanish government Saturday said the effort to clean up an ailing banking system will have a big impact on its finances, widening its budget gap and increasing its debt load.

Budget Minister Cristobal Montoro said the government forecasts its budget deficit will stand at 7.4% of gross domestic product this year. Excluding the impact of measures to help banks to digest a massive pile of toxic real-estate assets, he said Spain will comply with the deficit target of 6.3% of GDP for 2012 it has committed to with the European Union.

The new budget projections come at a time of uncertainty about the country's solvency amid soaring borrowing costs. Many analysts expect the government's effort to lower a budget gap to below the 3%-of-GDP limit for EU countries by 2014 to go off track also because of a deep recession that is pushing the unemployment rate to a record high of almost 25%.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

2 Comments
Posted September 30, 2012 at 5:15 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

...Rajoy is the victim of his electoral success: his majority government, ironically, is weaker for not including regionalist partners. The Catalan government sees the dissatisfaction with Madrid’s handling of the crisis as an opportunity: it may give the regionalists enough of a boost at the polls to force Madrid to hand them more autonomy, in other words, control of taxes. If Catalonia had control over its own taxes, the argument goes, the region would not have needed a bailout.

Rajoy’s choices are limited: he either refuses Catalan demands for more autonomy and risks enflaming Catalan nationalist sentiment, or agrees to increased autonomy, and risks enflaming Spanish nationalist sentiment.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankHousing/Real Estate MarketLabor/Labor Unions/Labor MarketStock MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreeceSpain

0 Comments
Posted September 26, 2012 at 8:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Citing the European churches’ “strong commitment over the past century to the ecumenical movement and fellowship in Europe,” WCC general secretary Rev. Dr Olav Fykse Tveit urged their direct engagement in the current financial and social crisis in and beyond Europe.

Their past commitment “has changed the realities of Europe. It has borne much fruit on other continents. That can, and should, happen again,” he added.

Tveit shared this message at the General Assembly of the Community of Protestant Churches in Europe (CPCE) on 21 September in Florence, Italy.

Read it all and note the link to the full text of his remarks at the bottom.

Filed under: * Christian Life / Church LifeParish Ministry* Culture-WatchReligion & Culture* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010* Religion News & CommentaryEcumenical Relations* TheologyEthics / Moral Theology

0 Comments
Posted September 23, 2012 at 2:18 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

An overwhelming majority of Greeks believe new austerity measures the government has promised its international lenders in exchange for more financial aid are unfair and hurt the poorest sections of society, a poll showed on Saturday.

Near-bankrupt Greece needs the European Union and International Monetary Fund's blessing on measures worth nearly 12 billion euros ($16 billion) to unlock its next tranche of aid, without which it faces default and a potential exit from the euro zone.

Read it all.

Filed under: * Culture-WatchHistoryPsychology* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeHousing/Real Estate MarketLabor/Labor Unions/Labor MarketTaxesThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

1 Comments
Posted September 22, 2012 at 11:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

When history books trace the evolution of the euro crisis, September 2012 will mark the beginning of a new chapter. Recent days have seen decisive moves from Europe’s notoriously incremental policymaking machinery. On September 12th Germany’s constitutional court backed the European Stability Mechanism (ESM), the euro zone’s permanent rescue fund, removing the last big hurdle to its launch. The same day, the European Commission laid out a blueprint for joint European banking supervision, the first step to a banking union. Days earlier the European Central Bank (ECB) announced that, under certain conditions, it would buy unlimited amounts of the bonds of troubled euro-zone countries.

Taken together, these actions mark a big change. At best, they constitute the foundations of a more sustainable monetary union. The euro zone now has a plan for bank supervision. It will be haggled over and watered-down, but the record of European diplomacy suggests that once proposals exist, something, eventually, tends to be agreed on.... Most important, the euro zone now has a central bank committed to being a lender of last resort. Yes, the commitment is conditional on countries securing help from, and adhering to, a rescue plan. But the ECB has made clear, for the first time, that it is willing to intervene without limit if need be.

Read it all.

Filed under: * Culture-WatchLaw & Legal Issues* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

1 Comments
Posted September 17, 2012 at 5:30 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Herewith the blurb about it:
The clock is ticking. Every second, it seems, someone in the world takes on more debt. The idea of a debt clock for an individual nation is familiar to anyone who has been to Times Square in New York, where the American public shortfall is revealed. Our clock (updated September 2012) shows the global figure for almost all government debts in dollar terms.

Does it matter? After all, world governments owe the money to their own citizens, not to the Martians. But the rising total is important for two reasons. First, when debt rises faster than economic output (as it has been doing in recent years), higher government debt implies more state interference in the economy and higher taxes in the future. Second, debt must be rolled over at regular intervals. This creates a recurring popularity test for individual governments, rather as reality TV show contestants face a public phone vote every week. Fail that vote, as various euro-zone governments have done, and the country (and its neighbours) can be plunged into crisis.
Now, before you click the link, note that for each country when you click on it you get the following: Public Debt, Public Debt/Person, Population, Public Debt as a % of GDP, and Total Annual Debt Change. Please guess these numbers for your own country and then go and check it out (the country to country comparisons are fascinating).

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyThe U.S. GovernmentThe National DeficitForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010* TheologyEthics / Moral Theology

0 Comments
Posted September 9, 2012 at 2:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Germany should leave the euro zone if it is not prepared to take a more decisive lead in helping the euro zone's weaker nations escape a spiral of increasing indebtedness and economic decline, veteran financier George Soros said on Saturday.

Soros said Europe faced a prolonged depression and an acrimonious end to the European unification project if steps were not taken to help its southern nations grow their way out of the debt crisis by collectively assuming some of their debt and relaxing its German-led insistence on austerity.

"Germany should either lead in developing a growth policy, political union and burden-sharing, accept the cost of leadership, or leave through an amicable arrangement," Soros said in an interview with Reuters television in Vienna.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

3 Comments
Posted September 9, 2012 at 12:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Greeted with initial fanfare by investors and economic officials, the unlimited bond-buying plan that the European Central Bank president, Mario Draghi, announced Thursday ran into immediate political problems in the crucial countries of Germany, Spain and Italy.

In Germany, despite Chancellor Angela Merkel’s support for Mr. Draghi and the independence of the Central Bank, political and news media reaction was scathing, with accusations that the bank, in seeking to stabilize the euro currency union, was subverting its mandate to fight inflation and forcing debt upon euro zone members.

“A Black Day for the Euro,” “Over the Red Line” and “Pandora’s Box Opened Forever” were some of the German headlines, with the normally sympathetic Süddeutsche Zeitung headlining an editorial: “The E.C.B. Rewards Mismanagement.” Even the German Bundesbank, officially part of the European Central Bank, put out a statement commenting acidly that the plan was “financing governments by printing bank notes.”

Read it all.

Filed under: * Economics, PoliticsEconomyCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010GermanyItalySpain

0 Comments
Posted September 9, 2012 at 6:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Euro-zone youth unemployment will remain elevated for at least the next half-decade, the International Labor Organization said Tuesday, forecasting a small reduction in the jobless rate will come from young people withdrawing from the labor market instead of stronger hiring activity.

The Geneva-based agency of the United Nations projects that 15-to-24 year-olds in the 17-member economic bloc will face jobless rates of nearly 22% in 2013 that will dip modestly to 21.4% in 2017. In the U.S., youth unemployment is forecast to fall from 17.4% this year to 13.3% in 2017.

Long-term youth unemployment has long-term consequences for young people and for businesses, according to the ILO and other labor market experts.

Read it all.

Filed under: * Culture-WatchYoung Adults* Economics, PoliticsEconomyLabor/Labor Unions/Labor MarketThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

2 Comments
Posted September 4, 2012 at 4:34 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The Fed chairman said the central bank intends to be “forceful . . . in supporting a sustainable recovery.” With Europe’s financial crisis and the United States’ looming budget cuts and tax hikes posing major risks for the recovery, he said, economic growth is “far from satisfactory,” and he pledged the Fed will take additional steps to help the economy as needed.

As is common of Fed pronouncements, Bernanke hinted but offered no certainty of action to come. Still, the urgent tone of his remarks will leave investors disappointed if the Fed does not launch new stimulus at its Sept. 12-13 policymaking meeting. Investors seemed hopeful, with stocks trending up by about 1 percent in the early afternoon.

“We must not lose sight of the daunting economic challenges that confront our nation,” Bernanke said. “The stagnation of the labor market in particular is a grave concern, not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years.”

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. GovernmentFederal Reserve* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

1 Comments
Posted August 31, 2012 at 3:11 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

In June, it seemed as if any day might bring about the collapse of the Greek economy and with it, the entire euro zone and its decade-old currency. Then in July and August, it seemed as if everyone was on vacation. Now they’re back — finance officials and political leaders have been flying all over Europe to meet with one another — and along with them the crisis that has been raging for the last two years. Here is a guide to the new season’s most intriguing (and terrifying) [seven] story lines....

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankStock MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted August 29, 2012 at 6:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Shortly after confiding to his countrymen that he had been unable to sleep at night because of all the young unemployed people in his country, Spanish King Juan Carlos secretly hopped aboard a plane and went on a lavish safari to Botswana, where he shot elephants.

When word leaked out this spring, Spaniards were outraged. Newspapers calculated that such hunting trips cost twice the country’s average annual salary. Tomas Gomez, a Socialist party leader, called on the king to choose between his “public responsibilities or an abdication.” Now, critics are calling on him to slash his budget and reveal how he is spending the money.

The backlash against the 74-year-old king is part of a broader soul-searching in Europe about the role and relevance of monarchies as the economic crisis deepens.

Read it all.

Filed under: * Culture-WatchHistory* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankTaxesThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain* TheologyEthics / Moral Theology

2 Comments
Posted August 24, 2012 at 5:45 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

German Chancellor Angela Merkel faces one of the toughest choices of her career in the coming weeks: whether to risk the unraveling of the euro zone, or her government.

After a summer lull, Greece is again Ms. Merkel's biggest headache.

The Greek government, struggling with depression-like conditions that have pushed the economy to the brink, is likely to need many billions of euros of additional aid to avoid bankruptcy.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010GermanyGreece

0 Comments
Posted August 22, 2012 at 7:31 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

....rather than scour tarnished Weimar, we should read much deeper into Germany’s incomparably rich history, and in particular the indelible mark left by Martin Luther and the “mighty fortress” he built with his strain of Protestantism. Even today Germany, though religiously diverse and politically secular, defines itself and its mission through the writings and actions of the 16th century reformer, who left a succinct definition of Lutheran society in his treatise “The Freedom of a Christian,” which he summarized in two sentences: “A Christian is a perfectly free Lord of all, subject to none, and a Christian is a perfectly dutiful servant of all.”

Consider Luther’s view on charity and the poor. He made the care of the poor an organized, civic obligation by proposing that a common chest be put in every German town; rather than skimp along with the traditional practice of almsgiving to the needy and deserving native poor, Luther proposed that they receive grants, or loans, from the chest. Each recipient would pledge to repay the borrowed amount after a timely recovery and return to self-sufficiency, thereby taking responsibility for both his neighbors and himself. This was love of one’s neighbor through shared civic responsibility, what the Lutherans still call “faith begetting charity.”

How little has changed in 500 years. The German chancellor, Angela Merkel, a born-and-baptized daughter of an East German Lutheran pastor, clearly believes the age-old moral virtues and remedies are the best medicine for the euro crisis.

Read it all.

Filed under: * Christian Life / Church LifeChurch HistoryParish MinistryStewardship* Culture-WatchGlobalizationReligion & Culture* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany* Religion News & CommentaryOther ChurchesLutheran* TheologyEthics / Moral Theology

2 Comments
Posted August 15, 2012 at 8:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

In Greece, which is in its fifth year of recession, such suicides have sparked violent clashes between police and those opposing austerity who have held the victims up as martyrs. In Italy, widows of businessmen who have committed suicide — such as builder Giuseppe Campaniello, who set himself on fire outside a government tax office in Bologna on March 28 after his company collapsed — have held demonstrations. And in Ireland, where citizens are jumping off quays in Dublin, Cork and Limerick in alarming numbers, the mobile telephone company Vodaphone volunteered to give up the stadium advertising space it bought at soccer and hurling games for a suicide prevention campaign.

So many people have been killing themselves and leaving behind notes citing financial hardship that European media outlets have a special name for them: “economic suicides.” Surveys are also showing increasing signs of mental stress: a jump in the use of antidepressants and illicit drugs, a rise in depression and anxiety among workers worried about salary cuts or being laid off, and an increase in the use of sick leave due to psychological problems.

“People are more and more uncertain about their future, which is leading to a sharp rise in mental health problems,” said Maria Nyman, director of Brussels-based Mental Health Europe, a multinational coalition of mental health organizations and educational institutions.

Read it all.

Filed under: * Christian Life / Church LifeParish MinistryDeath / Burial / Funerals* Culture-WatchGlobalizationPsychologyStressSuicide* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

1 Comments
Posted August 15, 2012 at 5:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

....for this very practical woman there is also a practical reason to start contingency planning for a break-up: it is looking ever more likely. Greece is buckling (see article). Much of southern Europe is also in pain, while the northern creditor countries are becoming ever less forgiving: in a recent poll a narrow majority of Germans favoured bringing back the Deutschmark. A chaotic disintegration would be a calamity. Even as Mrs Merkel struggles to find a solution, her aides are surely also sensibly drawing up a plan to prepare for the worst.

This week our briefing imagines what such a “Merkel memorandum” might say (see article). It takes a German point of view, but its logic would apply to the other creditor countries. Its conclusions are stark—not least in terms of which euro member it makes sense to keep or drop. But the main message is one of urgency. For the moment, breaking up the euro would be more expensive than trying to hold it together. But if Europe just keeps on arguing, that calculation will change....

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010GermanyGreece

1 Comments
Posted August 11, 2012 at 12:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Over at Capital Economics they’re spotlighting Aug. 9, 2007 as the “the unofficial onset of the global credit crunch” making tomorrow the fifth anniversary of, well, the beginning of the end of the uber-loose financial conditions that begat the U.S. housing boom, bust, financial crisis, bailout-a-palooza, deep recession and — if you believe Reinhart and Rogoff — the economic sluggishness we’re still contending with.

Of course, it’s a little bit squishy declaring any one moment the “start” of something. Some would argue that the birth of the securitization market way back in the 1980s might have been the true start of what eventually became the U.S. housing morass. Still, it’s instructive to remember what was going on in early August 2007, which was when the cracks in the foundation of global finance really started to get noticeable and the themes that have come to define the market for the last half-decade started to emerge.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. GovernmentBudgetFederal ReserveThe National DeficitPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted August 9, 2012 at 8:02 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The greatest economic catastrophe of the postwar world began five years ago today. Its consequences are still with us.

On this day in 2007 BNP Paribas, the French bank, halted withdrawals from three investment funds linked to the US subprime mortgage market. Risky financial products had spread a contagion of bad debts through the banking system. The interbank lending market froze because banks feared that they would not get their money back. The consequences included the first run on a British bank in more than a century (Northern Rock), the biggest corporate failure in American history (Lehman Brothers), and a huge recession.

With hindsight, this was not merely a crisis but a catastrophe that still overshadows the global economy. The crash was a far-reaching problem of solvency. It was not simply a banking crisis, but a debt crisis. It has not simply sunk financial institutions, but submerged governments too. Five years on, there are three questions. How did it happen? When will it end? What, if anything, can we do about it?

Read it all (requires subscription).

Filed under: * Culture-WatchHistory* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. GovernmentBudgetFederal ReserveThe National DeficitPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted August 9, 2012 at 8:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Madrid--The newest Apple store in Spain, like its counterparts in other parts of the world, is designed to draw you in. Stone floors, glass doors, and rows of blond wood tables stocked with scores of gleaming iPhones, iPads and MacBooks as far as the eye can see.

On a recent weekday afternoon, the cavernous showroom was missing only one thing: customers.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryAmerica/U.S.A.Europe--European Sovereign Debt Crisis of 2010

0 Comments
Posted August 3, 2012 at 5:31 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The anger within the three parties of the ruling coalition is understandable. These are the parties of the German taxpayer, after all, and ever since the sovereign debt crisis began they have been reciting the mantra that the eurozone is not and will not become a “transfer union”; that there will be no mutualisation of debt; that Mediterranean sloth and tax evasion will not be rewarded by payments from hardworking, honest Nordic Germany.

If this sounds racist, it’s because the debate is tinged on all sides by nationalist stereotypes. The German middle class feels it has been had and the country is digesting Moody’s downgrading of its credit rating. “Is this what we get for saving the Greeks?” asks the tabloid Bild. Good question....

It is impossible to explain to a German who has had her retirement age upped to 67, or an unemployed German whose benefits have been cut to balance the budget, why billions of euros should go south to support governments that didn’t have the guts to slash social spending or who let their citizens retire to the beach at 55.

Read it all (requires subscription).

Filed under: * Culture-WatchPsychology* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankForeign RelationsPolitics in General* International News & CommentaryEngland / UK--IrelandEurope--European Sovereign Debt Crisis of 2010GermanyGreeceItalyPortugalSpain

0 Comments
Posted July 31, 2012 at 5:31 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Mario Draghi has promised the moon. The European Central Bank’s council had better deliver on his pledge this week. If it does not, the crisis will surely escalate out of control in August or soon after.

We are beyond the point where a quarter point rate cut will achieve anything. Nor will it help to launch a fresh round of "temporary and limited" bond purchases - to use the self-defeating language that Mr Draghi is forced to utter.

The only issue that matters at this late stage is whether Germany is willing to let the ECB step up to its responsibility as a global central bank after two years of ideological posturing and take all risk of sovereign default in Spain and Italy off the table - which it can do easily enough once it stops playing politics and obeys the “financial stability” clause (Article 127) of the Lisbon Treaty.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

1 Comments
Posted July 30, 2012 at 7:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The euro has completely broken down as a workable system and faces collapse with “incalculable economic losses and human suffering” unless there is a drastic change of course, according to a group of leading economists.

Europe is “sleepwalking towards disaster”, according to the 17 experts, who warned that over the past few weeks “the situation in the debtor countries has deteriorated dramatically”.

“The sense of a neverending crisis, with one domino falling after another, must be reversed. The last domino, Spain, is days away from a liquidity crisis,” said the economists. They include two members of Germany’s Council of Economic Experts and leading euro specialists at the London of School of Economics, all euro supporters.

“This dramatic situation is the result of a eurozone system which, as currently constructed, is thoroughly broken. The cause is a systemic failure. It is the responsibility of all European nations that were parties to its flawed design, construction and implementation to contribute to a solution. Absent this collective response, the euro will disintegrate,” they added in a co-signed report for the Institute for New Economic Thinking.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

3 Comments
Posted July 25, 2012 at 5:16 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Spain is heading for a general bailout. It may not happen immediately, but that is what the figures suggest - that sometime in the autumn, maybe sooner, the country will need a full-blown rescue.

It is fiercely denied, of course. The Spanish Economy Minister, Luis de Guindos, said "Spain is a solvent country, there will be no bailout... I believe that Spain is a competitive country. We have a trade surplus with the eurozone, we have a very competitive tourism sector".

Then there are the facts on the ground. The bailout of the Spanish banks - sealed last Friday - lacks conviction. House prices are still falling. Indeed in the second quarter they were declining at the fastest rate since the start of the crisis. The real estate bubble, stoked by the eurozone's low interest rates, continues to take its toll.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankHousing/Real Estate MarketLabor/Labor Unions/Labor MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted July 24, 2012 at 5:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Greece has fallen behind with its budget cuts and is asking lenders for more time to meet the conditions of the 130 billion euro aid package. But that would require fresh help of up to 50 billion euros, SPIEGEL has learned. Neither Berlin nor the IMF are prepared to make that money available.

Germany and other important international creditors are not prepared to extend further loans to Greece beyond what has already been agreed, German newspaper Süddeutsche Zeitung reported on Monday. In addition, SPIEGEL has learned that the International Monetary Fund (IMF) too has signalled it won't take part in any additional financing for Greece.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

1 Comments
Posted July 23, 2012 at 6:59 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Discussion among eurozone leaders about the future of their single currency has become an increasingly divisive affair. On the surface, religion has nothing to do with it - but could Protestant and Catholic leaders have deep-seated instincts that lead them to pull the eurozone in different directions, until it breaks?

Following the last European summit in Brussels there was much talk of defeat for Chancellor Merkel by what was described as a "new Latin Alliance" of Italy and Spain backed by France.

Many Germans protested that too much had been conceded by their government - and it might not be too far-fetched to see this as just the latest Protestant criticism of the Latin approach to matters monetary, which has deep roots in German culture, shaped by religious belief.

Read it all.

Filed under: * Culture-WatchHistoryReligion & Culture* Economics, PoliticsEconomyPersonal FinanceThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Politics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany* Religion News & CommentaryOther ChurchesLutheranRoman Catholic* Theology

7 Comments
Posted July 19, 2012 at 3:29 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Angela Merkel took a tough stance ahead of the EU summit, insisting she would not make concessions. But Italy and Spain broke the will of the iron chancellor by out-negotiating her in the early hours of Friday morning. Germany caved in to demands for less stringent bailouts and direct aid to banks.

Mario Monti was so relieved that he even spoke about football. He is proud and happy that the Italian national team defeated Germany in the semi-finals of the European Football Championship, the Italian prime minister said in the early hours of Friday morning after the marathon night of European Union summit meetings. Given that Monti isn't much of a soccer fan, Italian journalists saw his comments as a veritable emotional outburst.

With good reason. Monti emerged from the late-night negotiations as a clear victor, having broken Chancellor Angela Merkel's resistance just as Italian striker Mario Balotelli cracked the German defense on the pitch in Warsaw earlier in the evening. In 15 hours of negotiations in Brussels, Monti together with Spanish Prime Minister Mariano Rajoy secured easier access to the permanent euro-zone bailout fund, the European Stability Mechanism (ESM)....

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 29, 2012 at 7:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Ambitious plans to be put before this week's EU summit – yes indeed, yet another crisis summit – to turn the eurozone into something much closer to a fiscal union make for easy analysis. On almost any level you care to take, they won't work.
Here's the plan. In return for debt pooling, Brussels would be given far reaching powers to rewrite national budgets for member states that breach debt and deficit rules.
Under the previously agreed fiscal compact, Brussels already has the powers to vet budgets before they are submitted to national parliaments, but this goes much further, allowing the EU in effect to over-rule national governments and impose its own diktats on member states....

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 26, 2012 at 4:06 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

European authorities have unveiled their vision for the future of monetary union.

It includes the creation of a European treasury, which would have powers over national budgets.

The document, released ahead of Thursday's EU summit, says such fiscal union could lead to common debt being issued by eurozone countries.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

1 Comments
Posted June 26, 2012 at 6:14 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Investment experts at Deutsche Bank now feel that a collapse of the common currency is "a very likely scenario." German companies are preparing themselves for the possibility that their business contacts in Madrid and Barcelona could soon be paying with pesetas again. And in Italy, former Prime Minister Silvio Berlusconi is thinking of running a new election campaign, possibly this year, on a return-to-the-lira platform.

Nothing seems impossible anymore, not even a scenario in which all members of the currency zone dust off their old coins and bills -- bidding farewell to the euro, and instead welcoming back the guilder, deutsche mark and drachma.

It would be a dream for nationalist politicians, and a nightmare for the economy. Everything that has grown together in two decades of euro history would have to be painstakingly torn apart. Millions of contracts, business relationships and partnerships would have to be reassessed, while thousands of companies would need protection from bankruptcy. All of Europe would plunge into a deep recession

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

3 Comments
Posted June 25, 2012 at 11:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

As financial markets slide toward disaster, scarcely pausing to celebrate the “success” of the Greek election or the deal to recapitalize Spanish banks, the euro project is finally revealing its fatal flaw. One country poses an existential threat to Europe – and it is not Greece, Italy or Spain. Every serious proposal to resolve the euro crisis since 2009 – haircuts for bank bondholders, more realistic fiscal consolidation targets, jointly guaranteed eurobonds, a pan-European bailout fund, quantitative easing by the European Central Bank – has been vetoed by Germany, and this pattern looks likely to be repeated next week.

Nobody should be surprised that Germany has become the greatest threat to Europe. After all, this has happened twice before since 1914. To state this unmentionable fact is not to impugn Germans with original sin, but merely to note Germany’s unusual geopolitical situation....

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankG20 The Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

0 Comments
Posted June 21, 2012 at 3:56 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Group of 20 leaders focused their response to Europe’s financial crisis on stabilizing the region’s banks, raising pressure on German Chancellor Angela Merkel to expand rescue measures as contagion engulfed Spain.

As U.S. President Barack Obama called after-dinner talks with euro-area leaders at the G-20 summit in Mexico, the Treasury department’s top international negotiator, Lael Brainard, said Europe is making an effort to “break the feedback loop” between banks and government debt, the link that is worsening Spain’s woes.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankG20 The Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted June 19, 2012 at 5:30 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The Eurogroup takes note of the provisional results of the Greek elections on 17th June, which should allow for the formation of a government that will carry the support of the electorate to bring Greece back on a path of sustainable growth.

The Eurogroup acknowledges the considerable efforts already made by the Greek citizens and is convinced that continued fiscal and structural reforms are Greece’s best guarantee to overcome the current economic and social challenges and for a more prosperous future of Greece in the euro area.

Read it all.

Filed under: * Economics, PoliticsEconomyEuroForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 17, 2012 at 9:20 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Greece's conservative New Democracy party eked out a slim victory in Sunday's elections and will seek to form a pro-austerity coalition government with other parties to take the immediate steps needed to comply with strict financial targets set by its international lenders.

The outcome is likely to ease fears—at least temporarily—of a Greek exit from the 17-nation euro zone, but political uncertainty is likely to continue as parties embark on contentious coalition talks, which, even if successful, may not result in a lasting government.

Read it all and there is a lot more .

Filed under: * Economics, PoliticsEconomyEuroForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted June 17, 2012 at 4:01 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

After spending yesterday in Berlin, I can tell you the German government is mightily fed up with all this speculation - and fed up with getting blamed for everything bad happening in the global economy (last week's cover of the Economist, for example).

I interviewed the Deputy Finance Minister - Secretary of State Steffen Kampeter - after the German chancellor's strident speech to the Reichstag.

He made clear that on one major point - eurobonds - the speculation about what Germany might be willing to accept in time for the summit was simply wrong.

Read it all (emphasis hers).

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

0 Comments
Posted June 17, 2012 at 6:01 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The mainstream parties "looted Greece, and afterward they took the Greek flag and they offered it to Angela Merkel," the German chancellor, Mr. [Alexis] Tsipras said in a campaign rally in Athens Thursday.

Though Syriza's message has caught on, not all of the disaffected are ready to embrace the party. Anna Konstantoulaki, a third-year Spanish-literature student at the University of Athens, voted in May for a tiny party. She doesn't know what to do now. She is upset with mainstream parties but not sure Mr. Tsipras is capable of running the country.

"I am very confused," she says. "The last few days, I can't stop thinking about what is going to happen." She adds: "I'm scared, actually."

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankG20 The Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted June 16, 2012 at 8:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

For one thing, such a bailout is illegal under the Maastricht Treaty, which governs the euro zone. Because the treaty is law in each member state, a bailout would be rejected by Germany’s Constitutional Court.

Moreover, a bailout doesn’t make economic sense, and would likely make the situation worse. Such schemes violate the liability principle, one of the constituting principles of a market economy, which holds that it is the creditors’ responsibility to choose their debtors. If debtors cannot repay, creditors should bear the losses.

If we give up the liability principle, the European market economy will lose its most important allocative virtue: the careful selection of investment opportunities by creditors. We would then waste part of the capital generated by the arduous savings of earlier generations. I am surprised that the president of the world’s most successful capitalist nation would overlook this.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryAmerica/U.S.A.Europe--European Sovereign Debt Crisis of 2010Germany

1 Comments
Posted June 14, 2012 at 8:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

After clinching Spain’s €100 billion bank bailout, Prime Minister Mariano Rajoy flew to Poland on Sunday for the Spanish team’s soccer match, declaring “this matter is now resolved.”

Not so fast, prime minister.

On Tuesday, Spain’s long-term borrowing costs soared to their highest level since the country joined the euro zone. Investors have apparently concluded that the rescue is potentially a much better deal for the banks and their shareholders than for the government, its taxpayers and bondholders.

Read it all.

Filed under: * Economics, PoliticsEconomyTaxesThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Politics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain* TheologyEthics / Moral Theology

1 Comments
Posted June 13, 2012 at 6:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

...there are too many unanswered questions. How much capital will actually be provided? Which banks will need to be recapitalized? How will the process be managed? The answers won't be known until two independent valuation experts have reported at the end of June. The International Monetary Fund assessment estimates €37 billion was needed to ensure all banks had a 7% core Tier 1 ratio on a phased-in Basel III basis. But the market will probably demand at least 9% on a fully loaded Basel III basis after substantial new write-downs, suggesting a number much closer to the full €100 billion.

One key unknown is where the bailout money will come from. Will it be from the old euro-zone bailout fund, the European Financial Stability Facility, or the new European Stabilization Mechanism, due to come into existence in July? If it comes from the ESM, existing government bondholders will be subordinated—no small concern given €100 billion is more than 10% of Spanish government debt outstanding. That could affect the willingness of bond markets to keep funding the government.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted June 11, 2012 at 5:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Europe may have sidestepped its latest catastrophe, at least for the moment, by hammering out a €100 billion bailout plan for Spain’s failing banks over the weekend.

But the intervention will do little to address the problem that continues to plague the Continent’s increasingly vulnerable financial institutions. Namely: a longstanding addiction to the borrowed money that provides the day-to-day financing that they need to survive.

Read it all.

Filed under: * Economics, PoliticsEconomyThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted June 11, 2012 at 5:16 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Spain's banking crisis did not come out of the blue.

In the 1990s, the Spanish suffered a bout of collective madness. Interest rates fell from 14 per cent (with the peseta) to 4 per cent (with the euro) in a matter of weeks.

In 1998, the centre-right government passed a law that increased the amount of land for development. Developers got rich, selling the idea that property would always go up in value. You could buy a flat on the Mediterranean for $156,000 and sell it the next day for $234,000; by the end of the month it would be worth $390,000.....

Read it all.

Filed under: * Culture-WatchHistory* Economics, PoliticsEconomyHousing/Real Estate MarketThe Banking System/SectorForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted June 10, 2012 at 4:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Europe is to offer Spain a bailout package of up to €100 billion ($125 billion) to help rescue the country’s banks and keep the 17-country eurozone from breaking apart.

After months of fierce denials, Spain admitted it would tap the fund as it moved faster than expected to stem the economic crisis that has ravaged Europe for two years.

Spain becomes the fourth - and largest - European economy to ask for help and its admission of help comes after months of market concern about its ability to pay its way. In recent weeks investors have demanded higher and higher costs to lend to Spain, and it became clear it would be just too expensive for the country to borrow the money necessary for a bank rescue from the markets.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankHousing/Real Estate MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted June 9, 2012 at 4:02 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Although they have rented it out to a restaurant for the past five years, the owners of one building in Aspe have never paid property tax. Nor have they ever paid tax on the apartments that house two of their employees. But that may be about to change. Last week, the city's government voted to partially rescind the exemption that the Catholic Church, landlord of those three properties and another eight more in town, has long enjoyed. And thanks to the crisis that threatens to upend Spain's economy, it's not the only place demanding change.

Three different laws, including a 1979 agreement with the Vatican, exempt the Catholic Church from paying property tax in Spain. The same provision holds for other recognized religions and non-profit organizations like the Red Cross, yet because Catholicism is the dominant religion in Spain, and because the Church's holdings there are so vast (España Laica, a pro-secularism group, estimates that were it not for the exemption, the church would annually owe 2.5 to 3 billion euros in property taxes), critics have long argued that the arrangement is part of the preferential treatment granted the Catholic Church. It's only now, however, with austerity measures bearing down and a European bailout looming, that anyone has thought to put that criticism into action. Economic pressure, in other words, may well accomplish what 33 years of democracy have not.

Read it all.

Filed under: * Culture-WatchLaw & Legal IssuesChurch/State MattersReligion & Culture* Economics, PoliticsEconomyTaxesPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain* Religion News & CommentaryOther ChurchesRoman Catholic

0 Comments
Posted June 9, 2012 at 1:20 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

From manufacturers in the Midwest to upscale retail shops in Manhattan, a wide variety of American companies are feeling the pinch of Europe’s economic contraction, helping to hold back recovery in the United States.

Ford, the iconic U.S. car company, says that Europeans are not only buying fewer cars, but are replacing fewer parts. Kraft Foods, which is behind such brands as Swedish Fish and Dentyne, says sales of candy and gum in Europe are lagging. And jeweler Tiffany & Co. says fewer European tourists are shopping at its flagship Fifth Avenue store.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryAmerica/U.S.A.Europe--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 8, 2012 at 5:30 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The eurozone sovereign debt emergency showed no signs of abating yesterday as the Spanish government desperately haggled over the terms of its expected bailout and the European Central Bank refused to ease monetary policy for the currency bloc, despite signs of stricken European economies sinking still deeper into recession.

Madrid's Economy Minister, Luis de Guindos, insisted once again he was not making any plans to follow Greece, Portugal and Ireland in requesting a bailout from the European Union and the International Monetary Fund. But, behind the scenes, Spanish ministers accept that an external rescue of the country's beleaguered banking sector is now necessary. Spain is trying to persuade its European partners to allow the European bailout fund to inject capital directly into its banks, rather than diverting the money through the state. Madrid fears that a full-blown national bailout would be accompanied by an onerous EU/IMF inspection system.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted June 7, 2012 at 5:31 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

An essential element of Greece’s recovery plan has been to collect more taxes from a population that has long engaged in tax avoidance. The government is owed 45 billion euros in back taxes, tax officials in Athens said, only a fraction of which will ever be recovered.

To understand the difficulty, just talk to Nikos Maitos, a longtime official in Greece’s financial crimes investigation unit.

When he and a team of inspectors recently prowled the recession-hit island of Naxos for tax evaders, a local radio station broadcast his license plate number to warn residents.

Read it all.

Filed under: * Culture-WatchLaw & Legal Issues* Economics, PoliticsEconomyTaxesThe Banking System/SectorForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted June 7, 2012 at 5:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

"Germany should reflect quickly but deeply, and act," Italian Prime Minister Mario Monti said late last week.

Few Germans, however, share that sense of urgency. With German unemployment at a 20-year low and falling, and the country's economy continuing to grow despite the debt crisis, not many Germans see the crisis as a threat to their way of life.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

4 Comments
Posted June 6, 2012 at 4:46 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Europe is at the abyss — again. Its turmoil is rattling global stock markets and stoking fear and bewilderment. The obvious question is, what’s the solution? The answer is, there is no solution. Europe faces choices, some bad and others worse. Unfortunately, it’s unclear which are which. The best that can be imagined is that Europe lurches from crisis to crisis and that its slumping economy weakens the already fragile global recovery. The worst is a massive flight from the euro and an economic free fall that resurrects the dark days of 2008 and 2009.

Can anyone doubt that the euro’s creation in 1999 was a huge blunder? It aimed to promote European prosperity and unity, but it’s doing just the opposite. The very belief in its early success reduced interest rates in Europe’s periphery (Greece, Portugal, Spain, Ireland, Italy). Low rates fed credit booms and housing bubbles that, once burst, caused recessions and swollen budget deficits.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

1 Comments
Posted June 5, 2012 at 5:46 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Euro-zone governments have around three months to ensure the survival of the single currency, billionaire investor George Soros said in a speech on Saturday.

“We are at an inflection point. After the expiration of the three months’ window, the markets will continue to demand more but the authorities will not be able to meet their demands,” he warned in a speech at the Festival of Economics in Trento, Italy. (Read the text of his speech.)

The European Union is “like a bubble” – not a financial bubble but a political bubble -- that could pop as a result of the euro -zone crisis, Soros said.

Read it all.

Filed under: * Culture-WatchHistory* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 4, 2012 at 5:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

On consecutive days last week, two of the most powerful figures in Europe — Mario Draghi, president of the European Central Bank, and Olli Rehn, the most senior economic official in Brussels — warned that the future of the euro zone was in doubt. In the words of Mr. Rehn, the union might well disintegrate unless policy makers took steps to bind the euro’s 17 nations closer together.

Coming as they did from two men at the very soul of the European project, the reprimands were a stark reminder of just how much the Spanish financial meltdown had shaken the confidence of the European brain trust, to say nothing of investors from New York to Beijing.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreecePortugalSpain

0 Comments
Posted June 3, 2012 at 3:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The euro faces 'disintegration' unless European governments do much more to work together, the European Commission has warned.

Olli Rehn, the economics commissioner, gave the warning as Mario Draghi, the head of the European Central Bank, criticised national leaders for a “lack of action” to help the single currency out of its crisis.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted June 1, 2012 at 11:24 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The euro crisis drags on and on. Spanish yields on ten-year debt hit 6.6% on May 30th, just ten basis points lower than last November's nadir, as the costs of sorting out Spain's banks sink in. With ten-year US Treasuries now at a 60-year low, investors are heading across the Atlantic for the perceived safety of the world's second-largest debt market. According to The Economist's credit-crunch index, credit is now tighter in the euro area than it was at the height of the financial crisis

Read it all and make sure to see that chart on the top left.

Filed under: * Economics, PoliticsEconomyCredit MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted May 30, 2012 at 5:12 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Two of the world’s biggest trade credit insurers have stopped providing cover for exporters to Greece in highly unusual moves reflecting their concern the country might leave the eurozone.

Brokers said the decisions by Euler Hermes and Coface were the only instances they could recall of trade credit insurers pulling out altogether from a European country.

Read it all (subscription required).

Filed under: * International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

1 Comments
Posted May 30, 2012 at 1:59 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

All eyes were fixed Wednesday on Spain, as the country’s borrowing costs showed no signs of slowing their climb amid nervousness about the health of the banking sector and the possibility of the crisis spreading to other euro countries.

Europe’s economic stagnation and continuing financial turmoil in the euro zone have weighed on confidence, the European Commission said Wednesday. The commission’s indicator of business sentiment in the 17-nation euro zone fell in May to 90.6 from April’s revised 92.9. The decline, it said, “was driven by falling confidence in all business sectors, especially in industry and retail trade.”

Jonathan Loynes, an economist in London with Capital Economics, noted that the sentiment data showed “acute weakness across the peripheral economies,” but that the Dutch, French and Germans were also less optimistic. He described it as “overall, an unambiguously weak picture which only looks likely to get worse as the debt crisis continues,” and predicted that euro zone gross domestic product would decline by 1 percent this year, with 2013 “likely to be much worse.”

Read it all. Also, if you want a single picture to keep an eye on, it is the Spanish German 10 year spread which you may see there (yes, that is correct, it is at all all time high).

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--The U.S. GovernmentTreasury Secretary Timothy GeithnerForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted May 30, 2012 at 6:10 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The crisis has exposed sharp differences between some Europeans. Germany is the most admired nation in the EU and its leader the most respected. The Germans are judged to be Europe’s most hardworking people. And the Germans are the strongest supporters of both European economic integration and the European Union.

Greece is the polar opposite. None of its fellow EU members surveyed see it in a positive light. In turn, Greeks are among the most disparaging of European economic integration and the harshest critics of the European Union. And they see themselves as Europe’s most hardworking people.

Read it all.

Filed under: * International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

4 Comments
Posted May 29, 2012 at 3:29 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

What will become of the European Union? One road leads to the full break-up of the euro, with all its economic and political repercussions. The other involves an unprecedented transfer of wealth across Europe’s borders and, in return, a corresponding surrender of sovereignty. Separate or superstate: those seem to be the alternatives now.

For two crisis-plagued years Europe’s leaders have run away from this choice. They say that they want to keep the euro intact—except, perhaps, for Greece. But northern European creditors, led by Germany, will not pay out enough to assure the euro’s survival, and southern European debtors increasingly resent foreigners telling them how to run their lives.

This has become a test of over 60 years of European integration....

Read it all.

Filed under: * Culture-WatchHistory* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreeceItalyPortugalSpain

1 Comments
Posted May 27, 2012 at 2:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon



Watch it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermany

5 Comments
Posted May 26, 2012 at 4:18 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The basic problem is that many people won’t keep their euros in a Greek bank, and perhaps not in a Spanish bank, either, when those euros can be moved to Germany or some other haven.

Yet German citizens do not appear ready to guarantee Spanish banks or, by extension, the whole credit system of Spain and the other periphery nations. Guarantees of that scope are probably impossible and may also require constitutional changes in some nations.

We thus face the danger that the euro, the world’s No. 2 reserve currency, could implode. Such an event wouldn’t be just another depreciation or collapse of a currency peg; instead, it would mean that one of the world’s major economic units doesn’t work as currently constituted.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Germany

4 Comments
Posted May 26, 2012 at 4:00 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

...while this might come as a surprise to Greeks suffering under extreme austerity, some say Lagarde's approach to the eurozone is less draconian than the IMF's traditional policy towards developing world economies. Is it easier to impose harsh demands upon small economies, but much harder to tell difficult truths to the big ones – particularly fellow Europeans? "No," she says firmly. "No, it's not harder. No. Because it's the mission of the fund, and it's my job to say the truth, whoever it is across the table. And I tell you something: it's sometimes harder to tell the government of low-income countries, where people live on $3,000, $4,000 or $5,000 per capita per year, to actually strengthen the budget and reduce the deficit. Because I know what it means in terms of welfare programmes and support for the poor. It has much bigger ramifications."

So when she studies the Greek balance sheet and demands measures she knows may mean women won't have access to a midwife when they give birth, and patients won't get life-saving drugs, and the elderly will die alone for lack of care – does she block all of that out and just look at the sums?

Read it all.

Filed under: * Economics, PoliticsForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

1 Comments
Posted May 26, 2012 at 7:35 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Ángel de la Peña, a Spanish government worker, is seriously considering the once unthinkable: converting some of his savings from euros to British pounds.

Alvaro Saavedra Lopez, a senior executive for I.B.M. in Spain, says many of his corporate counterparts across the country are similarly looking for safer havens by transferring their spare cash to stronger euro zone countries like Germany “on a daily basis.”

It is only a trickle so far, and not nearly enough to constitute a classic bank run. But these growing transfers of deposits out of troubled Spanish banks reflect a broader fear that the country’s problems could make it hard for Spaniards to get to their money if banks fail and cannot be supported by the government. In a worst case, some even worry their money will be worth substantially less if Spain is forced to leave the euro currency zone and re-adopt its old currency, the peseta.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

0 Comments
Posted May 25, 2012 at 5:32 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

With Greece’s membership in the euro zone teetering, fears of bank insolvency rising and Europe’s leaders bickering about what to do, the euro crisis is once again intensifying and threatening to undermine fragile growth globally.

At a summit meeting in Brussels on Wednesday, regional leaders failed to signal any significant new steps to stimulate the sputtering regional economy or resolve the competing agendas of President François Hollande of France, who favors stronger action to spur growth, and his German counterpart, Chancellor Angela Merkel, who has opposed aggressive moves to ease the pressure on Europe’s weakest economies.

Yet, the urgency for a solution to the region’s debt crisis, now in its third year, may never have been greater.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreece

1 Comments
Posted May 24, 2012 at 6:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The 17-country eurozone risks falling into a "severe recession," the Organization for Economic Cooperation and Development warned on Tuesday, as it called on governments and Europe's central bank to act quickly to keep the slowdown from dragging down the global economy.

OECD Chief Economist Pier Carlo Padoan warned the eurozone economy could contract by as much as 2% this year, a figure that the Paris-based organization had laid out as its worst-case scenario in November.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010

0 Comments
Posted May 22, 2012 at 11:01 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

...I do think that it would ultimately be better if the eurozone broke up. This might not involve a complete reversion to national currencies. A hard core of euro-users, centred on Germany, might survive. But the current euro will have to go.
It is true that the transition from here to there will be painful and dangerous. My colleague Martin Wolf laid out an updated version of the full horror scenario in Friday’s FT – involving a breakdown of law and order in Greece, and financial collapse across Europe. How could anyone responsibly run that risk?

The answer is that the alternatives to eurozone break-up are inherently implausible and deeply unattractive.At the weekend G8 leaders called for Greece to stay in the eurozone. Their present plan seems to involve some magical mix of stimulus and austerity that restores both budgetary balance and growth. But even if they can agree a real plan and even if it works – and neither outcome is likely – the eurozone’s structural problems would remain.....

Read it all (requires subscription).

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreece

1 Comments
Posted May 22, 2012 at 6:35 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The immediate future of the global economy, including Australia, now depends on Europe, and whether it can restore confidence to markets. If European leaders can resolve their tangle of problems, growth is ahead of us. If they can't, all bets are off.

Pessimism comes more naturally than optimism. It is now five years since we first heard the phrase ''the sub-prime crisis'', which rang the end of a golden era of debt-financed growth. Since then, we've had years of recurring crises, summits and resolutions that promised to solve the problems, but haven't.

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankStock MarketThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--* International News & CommentaryAustralia / NZEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreece

0 Comments
Posted May 22, 2012 at 5:15 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The leaders of the Group of 8, emphasizing growth as well as fiscal discipline at their meeting on Saturday, made a strong plea for Greece to stay in the euro zone and the European Union.

And no wonder.

Despite efforts at official reassurance, no one really knows the consequences of a Greek exit from the euro zone, or how rapidly big countries like Spain and Italy, and their banks, will feel the effects....

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted May 20, 2012 at 4:04 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Like the single market before, ...[the Euro] was conceived primarily as glue to bind Europe more closely together, tie Germany’s prosperity to that of its neighbors and prevent a third world war from the Continent, which had brought us two. A few engineering flaws wouldn’t be allowed to get in the way of such an important project.

A little over a decade since the first euro bills hit the shops in Madrid and Berlin, the euro’s design flaws have pushed much of the European Union into a deep economic pit. And political imperative is again being deployed as a major reason to stick to the common currency. “This enormously important motivation is often underestimated by outsiders,” argued the Financial Times columnist Martin Wolf, the most sober analyst of Europe’s economic maelstrom....

The main problem is that while leaders eagerly embraced the monetary bond, they rejected its necessary complement: a central budget that would transfer money from successful regions to underperforming ones, as the United States government sends tax dollars collected in Massachusetts to pay for unemployment benefits in Nevada.

The euro fed the illusion that Greece, Spain and Italy were as creditworthy as Germany or the Netherlands, propelling a decade-long credit boom in Europe’s less-developed periphery. And it was spectacularly ill-designed to deal with the shock when capital flows to those nations suddenly stopped. Weak countries not only had to rely on their own devices; they had to do so without a currency or a monetary policy of their own to absorb the blow....

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreeceItalyPortugalSpain

2 Comments
Posted May 19, 2012 at 8:31 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Homeward bound after the Trojan War, Odysseus of Greek myth had to pick a path through seas harboring a monster with six heads and a whirlpool that digested ships whole. Now, whether modern Greece exits the euro — potentially triggering global economic turmoil in the process — depends on the tough choices of Ivi Moreti and her 11 million countrymen.

Should the 60-year-old widow leave her nest egg of euros in a wobbly Greek bank and risk it being seized and converted into a devalued national currency? Or should she withdraw it all, joining what could become a panic forcing Greece out of the euro anyway by bringing down the financial system?

Who should she vote for June 17, when this nation mired in political chaos holds its second election in two months? A party willing to largely accept the crippling bailout conditions that have taken a bite out of her pension and run the economy into the ground? Or the rising rebels promising to buck the austerity imposed on Greece by its bigger neighbors, , a course that might cause total economic collapse?

Read it all.

Filed under: * Culture-WatchGlobalization* Economics, PoliticsEconomyEuroEuropean Central BankThe Banking System/SectorForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted May 19, 2012 at 8:00 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Brussels is preparing plans for Greece to quit the euro, a senior official has revealed, as analysts warned that the country’s exit would cost European taxpayers at least €225bn (£180bn).

European Union trade commissioner Karel De Gucht said that both the European Commission and the European Central Bank (ECB) were working behind the scenes on contingency plans for a break-up.

“Today there are in the European Central Bank, as well as in the Commission, services working on emergency scenarios if Greece shouldn’t make it. A Greek exit does not mean the end of the euro, as some claim,” he said.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted May 18, 2012 at 4:01 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

As Spain’s recession deepens, more workers like Juan are being shunted into an underground economy that amounts to as much as a fifth of Spain’s gross domestic product, according to some estimates, with broad implications as the country tries to revive itself, reform its labor market and keep at bay the kind of wrenching crisis that now threatens to push Greece out of the euro zone.

The happy news is that the size of the underground economy means that more Spaniards are working than it might seem, and that the official unemployment figure of 24.4 percent — the highest in Europe — may be overstated by as much as five to nine percentage points, economists say. That has given the Spanish government an important safety valve.

“Without the underground economy, we would be in a situation of probably violent social unrest,” said Robert Tornabell, a professor and former dean of the Esade business school in Barcelona.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeLabor/Labor Unions/Labor MarketForeign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Spain

2 Comments
Posted May 18, 2012 at 7:01 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

There could be immediate risks to the Spanish and Italian economies: Tens of billions of dollars have left those nations in recent months as investors doubt their ability to both control rising public debt and boost their economies from recession. A Greek departure from the euro would, officials and analysts fear, push the lack of confidence in the euro zone to another level, accelerate that capital flight and leave one or both nations close to economic collapse.

It is a pattern reminiscent of what happened in Latin America and Asia in the 1990s, and it is the most likely way that a Greek exit from the euro could ignite a global round of financial contagion. The risks were highlighted Thursday when the Moody’s rating agency cut its assessment of Spanish banks, saying it had less confidence in the ability of the Spanish government to support the country’s financial system.

Read it all.

Filed under: * Economics, PoliticsEconomyEuroEuropean Central BankThe Banking System/SectorPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010GreeceItalySpain

0 Comments
Posted May 18, 2012 at 5:55 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

French President Francois Hollande and German Chancellor Angela Merkel, who held their first meeting yesterday, might want to consider that they have been attacking the problems of Greece, the euro, Spain, Portugal, Italy, and even France backwards.

All the talk and all the effort has been aimed at keeping Greece and the others in the euro. But the real, ideal solution is to get Germany out.

Read or listen to it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermany

0 Comments
Posted May 18, 2012 at 5:35 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

The head of Greece's radical left party—throwing down a gauntlet that could increase tensions between Greece and its frustrated European creditors—said he sees little chance Europe will cut off funding to the country but that if it does, Athens will stop paying its debts.

A financial collapse in Greece would drag down the rest of the euro zone, said Alexis Tsipras, the 37-year-old head of the Coalition of the Radical Left, known as Syriza, and potentially the country's next prime minister. Instead, he said, Europe must consider a more growth-oriented policy to arrest Greece's spiraling recession and address what he called a growing "humanitarian crisis" facing the country.

"Our first choice is to convince our European partners that, in their own interest, financing must not be stopped," Mr. Tsipras said in an interview with The Wall Street Journal. He said Greece doesn't intend to take any unilateral action, "but if they proceed with unilateral action on their side, in other words they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors."

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece

0 Comments
Posted May 17, 2012 at 11:02 pm [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

A senior Greek Protestant has warned that minority denominations "face disaster" due to the country's worsening economic crisis.

"Heavy taxation, high unemployment and all our other difficulties are fast-forwarding us to collapse," said Dimitrios Boukis, general secretary of the Greek Evangelical church, which has 29 congregations in two regional synods in Greece and other communities abroad.

"We receive no state support and are fully dependent on our members, and we're already short of pastors because we can't afford them. The pastors we have are having to handle everything because we can't employ staff, so some congregations will end up without any spiritual care."

Read it all.

Filed under: * Christian Life / Church LifeParish Ministry* Culture-WatchReligion & Culture* Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/Sector* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010Greece* Religion News & CommentaryOther Churches

0 Comments
Posted May 16, 2012 at 6:10 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

There would be massive global pressure on Europe to handle the exit in a grown-up fashion, with backstops in place to stabilize Greece. The IMF would step in.

The German finance ministry is already drawing up such plans, and quite correctly so (unfortunately roping in the British too to spread the losses, which is a thorny subject).

Needless to say, the real danger is contagion to Portugal, Ireland, Spain, Italy, Belgium, France, and the deadly linkages between €15 trillion in public and private debt in these countries and the €27 trillion European banking nexus.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010FranceGermanyGreece

4 Comments
Posted May 16, 2012 at 5:51 am [Printer Friendly] [Print w/ comments]

Posted by Kendall Harmon

Greece may be forced to leave the euro if the country refuses to implement spending cuts agreed with the European Union, Angela Merkel warned.

Raising the spectre of a Greek exit, the German chancellor said “solidarity for the euro” was threatened by the ongoing political crisis in Athens.

Read it all.

Filed under: * Economics, PoliticsEconomyConsumer/consumer spendingCorporations/Corporate LifeCredit MarketsCurrency MarketsEuroEuropean Central BankThe Banking System/SectorThe Credit Freeze Crisis of Fall 2008/The Recession of 2007--Foreign RelationsPolitics in General* International News & CommentaryEurope--European Sovereign Debt Crisis of 2010GermanyGreece

1 Comments
Posted May 15, 2012 at 5:15 am [Printer Friendly] [Print w/ comments]




Return to blog homepage

Return to Mobile view (headlines)