Europe Launches War On Italy’s Fiscal Plans: Warns Of Debt “Explosion”, Threatens Savers

 

In the aftermath of Italy’s defiant announcement that it would expand its 2019 budget deficit to 2.4% of GDP, above both the initial proposal from finmin Tria which was 1.6%, and also higher than the European “redline” of 2.0%, the question was how would Europe respond to this open mutiny by Italy.

The answers started to emerge on Friday, when European Parliament head Antonio Tajani said that fiscal targets set by Italy’s eurosceptic government were “against the people” and could hit savers without creating jobs.

“I am very concerned for what is happening in Italy,” said Tajani, who is a center-right opposition politician in Italy and close ally to former Prime Minister Silvio Berlusconi. The budgetary plans “will not raise employment but will cause trouble to the savings of the Italians,” Tajani said.

Commission lays out vision to complete euro

The EU executive is proposing a two-phase calendar to complete the architecture of the economic and monetary union. (Photo: Hannelore Foerster)

 

The European Commission presented on Wednesday (31 May) its proposal to “move forward” on eurozone integration with a treasury, a finance minister and several instruments to make the financial sector less vulnerable to crises.

The document, which is part of an ongoing reflection about the future of the EU, aims to “fill the gaps” in the single currency and to help the eurozone economies to converge.

“We cannot and should not wait for another crisis,” said commission vice president Valdis Dombrovskis, who admitted that “doubts remain about the full stability and safety of the system”.

Juncker issues WARNING SHOT to Spain: There will be NO MORE funds if debt isn’t controlled

SPAIN has been warned by Brussels it could be refused a huge amount of financial support if it fails to get its budget deficit under control.

The European Commission has to re-rule on the possible freezing of funds for Spain, after consulting the European Parliament later this month or in early October.

It’s thought president Jean Claude Juncker is in favour of applying the first sanction if the Spanish government fails to fulfil its commitments to start taking measures to reduce the deficit in the second half of 2016 and in their draft budgets for 2017.

Portugal under Supervision

LISBON/BRUSSELS/BERLIN (Own report) – The EU is exerting massive pressure to prevent the new Portuguese government from reversing austerity measures. Last Friday, the EU Commission conditionally accepted – with stipulations – Prime Minister António Costa’s Draft Budget Plan aimed at phasing out the austerity policy. Brussels has already scheduled a budget reassessment for the spring. During her meeting with Costa, the day of the Commission’s decision, Angela Merkel urged Portugal’s prime minister to continue to pursue his predecessor Pedro Passos Coelho’s austerity policy. Powerful financial market actors, notably the Commerzbank, are also opposing the democratically elected Prime Minister. The socialist minority government – supported by smaller leftwing parties – is facing a crucial test.

Bank Of Greece Pleads For Deal, Says “Uncontrollable Crisis”, “Soaring Inflation” Coming

The situation in Greece has escalated meaningfully since last week. After the IMF effectively threw in the towel and sent its negotiating team back to Washington on Thursday, EU and Greek officials agreed to meet in Brussels over the weekend in what was billed as a last ditch effort to end a long-running impasse and salvage some manner of deal in time to allow for the disbursement of at least part of the final tranche of aid ‘due’ to Greece under its second bailout program. Talks collapsed on Sunday however as Greek PM Alexis Tsipras, under pressure from the Left Platform, refused (again) to compromise on pension reform and the VAT, which are “red lines” for both the IMF and for Syriza party hardliners. 

How Greece Folded To Germany: The Complete Breakdown

Through all the ups and downs in the EU at the moment, keep in mind the bigger picture: The Euro was designed to fail.

It was known a lot of the countries allowed into the EU didn’t meet the requirements to begin with, but were intentionally let in to fulfill the end goal: Break nations in half and create vassal states in subservience to a resurgent German hegemon through bailouts from it’s Troika proxy that require giving up national sovereignty in exchange.

 

Having, as we previously explained, been given ‘just enough rope’ by the Germans, we thought it worth looking at just what Greece capitulated on (or perhaps a shorter version – what they did not capitulate on) and how Tsipras and Varoufakis will sell this to their fellow politicians… and most of all people.

As OpenEurope explains,

What points has Greece capitulated on?

A Controlled Gaffe

PARIS/BERLIN (Own report) – Paris has strongly reacted to Germany’s new attempts to impose its austerity dictate on the French national budget. Following the German government’s massive interventions in Brussels, German EU Commissioner Günther Oettinger called the French government a “recidivist” in a newspaper column last Friday – because it does not accept the full extent of Germany’s austerity dictates. This is an “uncontrolled gaffe,” said the General Secretary of the ruling French Socialist Party (PS) and called on Oettinger to resign. To impose more massive budget cuts, Berlin continues its efforts to torpedo the budget compromise reached by the French government with the EU Commission in late October. Since months, observers have been warning against a deflationary spiral and strong social protests in France. The EU Commission’s position statement on France’s budget, scheduled for today, may have to be postponed because of German interventions.

France’s triumphant ‘Joan of Arc’ vows to bring back franc and destroy euro

Marine Le Pen is spoiling for a fight. The leader of France’s Front National vows to smash the existing order of Europe and force the break-up of monetary union, if she wins the next election.

It is no longer an implausible prospect. “We cannot be seduced,” she said, brimming with confidence after her party secured 46pc of the vote in a by-election earthquake a week ago. Her candidate trounced the ruling Socialists in their own bastion of Villeneuve-sur-Lot.

“The euro ceases to exist the moment that France leaves, and that is our incredible strength. What are they going to do, send in tanks?” she told the Daily Telegraph at the Front National’s headquarters, an unmarked building tucked away in the Paris suburb of Nanterre. Her office is small and workaday, almost austere.

German euro founder calls for ‘catastrophic’ currency to be broken up

Oskar Lafontaine, the German finance minister who launched the euro, has called
for a break-up of the single currency to let southern Europe recover, warning
that the current course is “leading to disaster”.

“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said.

“The Germans have not yet realised that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he said, blaming much of the crisis on Germany’s wage squeeze to gain export share.