EU to decide who pays when banks fail

The European Union will seek on Friday to forge rules to force losses on large savers when banks fail, a sensitive reform that could shape how the euro zone deals with its sickly banks.

Finance ministers in Luxembourg will try to resolve one of the most difficult questions posed by Europe’s banking crisis – how to shut failed banks without sowing panic or burdening taxpayers. Continue reading

German Finance Minister Schaeuble Warns of Revolution

Let the austerity backlash begin. Who knew that an excel error could cause so much social strife. Granted common sense would have got you there, but this is politics. German Finance Minister Schaeuble warned on Tuesday that unless Europe wins the battle against youth unemployment, revolution is a distinct possibility.

The dreaded r-word came about as some corners push to reform the welfare standards to closely correlate with American standards. This would be a monumental mistake according the German finance minister. Youth unemployment as it stands now across the EU is at 25%, double the rate of older citizens. Continue reading

Clouds of crisis return to Europe

Europe’s brief respite from political and financial turmoil has come to an abrupt halt in the wake of a nerve-rattling Italian election, Britain’s loss of its cherished triple-A credit rating and troubling developments on other fronts.

On Monday, the euro fell to its lowest level against the U.S. dollar in six weeks, but strengthened slightly against the British pound, which was shaken by the credit downgrade announced late Friday by Moody’s Investors Service. The Standard & Poor’s 500 index lost more ground in a single session that at any time since November. Italian bonds plunged and German bonds and U.S. Treasuries rallied, as nervous investors once again looked for safer harbours.

Two unlikely political hotheads – loudmouth comedian Beppe Grillo and Silvio Berlusconi, the aging schmoozer who never says die – turned the Italian election on its head, virtually guaranteeing that the country faces a period of political chaos. Continue reading

Europe baffled by British reluctance

From another outside view, Britian is wishing to maintain is national sovereignty and control over its own destiny. It has seen the traps laid before it, such as what Greece and Cyprus have fell  into: Keep receiving bailouts (which momentarily keep the riots at bay) in exchange for piece-by-piece control over every inch of your economy by waiving jursditcion and handing it over to the troika. Sadly, this also is not a permanent solution as it will still cause the economy to crash, and even harder.

On the eve of the British PM’s much-anticipated speech on Britain’s EU membership, the Brussels correspondent of Greek daily I Kathimerini says that, no matter what David Cameron may say in Amsterdam, Britain has already cut itself loose.

To an outsider here in Brussels, Britain’s stance toward Europe is utterly incomprehensible. Continue reading

Why the EU Crisis Will Be Bigger and Worse Than 2008

As noted earlier today, the entire European banking and corporate system is over-burdened with debt.

Jagadeesh Gokhale of the Cato Institute puts the situation as the following, “The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the government’s borrowing rate, in order to fund current policies indefinitely.”

Suffice to say, no EU country has that kind of money lying around. Continue reading

Camouflage and Deception

There’s war on the European continent once again, and at the moment it’s political/economic. The source? Germany. In this tangled web of European politics at the moment, there are also two parties involved: The blind caught in the snares and the complicit.
BERLIN/PARIS (Own report) – Using a deceptive strategy, Berlin seeks to ward off the French President-elect François Hollande’s demand to put an end to the German austerity dictate. Other heads of EU member nations have begun to demand alongside Hollande that the EU return to credit financed stimulus programs, to prevent the complete collapse of several national economies, such as Greece is now confronting. Since the demise of the coalition government in the Netherlands, Berlin has found itself rather isolated and, alongside declarations of not allowing the EU zone to budge from its current austerity course, is resorting to methods to create confusion within the rebelling populations. The government is keeping “a placebo for the Euro partners” on hand, explains the press. The chancellor will most likely adopt some of the terminology used by François Hollande, but with her own interpretations. For example, she will speak of “promotion of growth,” while meaning the imposition of “structural reforms,” as envisaged by the austerity dictates. No new expenditures are planned. This is how the French growth offensive will be verbally ensnared, without having ceded an inch on the essence.

Full article: Camouflage and Deception (German Foreign Policy)