What organisations are included?
The European Commission is an executive arm of the EU. It does the day-to-day work of implementing EU policies and spending EU funds. But it must still answer to the member states of the EU.
Germany is the EU’s largest economy and is perceived to have the final say on the Greek bailout.
This is how fragile the entire EU system is. If Greece sneezes, Italy coughs. The EU at best might be able to handle a Grexit, although that doesn’t look likely as stated here many times before. Look for the markets to go through a lot of turmoil but Greece is here to stay, whether its within the EU or a newly formed United States of Europe currently underway. Almost all experts agree it’s too strategically important to lose to the Sino-Soviet axis.
While things have normalized since the open thanks entirely to the SNB’s aggressive EUR-buying, CHF-selling intervention (good to see that central banks have read the BIS’ report and have learned from their prior intervention mistakes), earlier this morning we got a snapshot of what happens if and when the SNB, and then the ECB itself, finally lose control when as a result of the Greek crisis the contagion promptly spread a few hundred kilometers west to Italy where as the WSJ reported, “several Italian banks failed to start trading on Monday as fears over a Greek debt default induced many investors to shed peripheral stocks, including Italian, with banks suffering the most.” Continue reading
As it turns out, the Greek crisis ends not with a bang, but with a referendum.
It has been easy to ignore the doings in Greece for the past few years, with the perpetual series of summits in Brussels that never seem to resolve anything. But it’s time to pay attention. These next few days are shaping up to become a transformational moment in the 60-year project of building a unified Europe. We just don’t yet know what sort of transformation it will be.
Whatever the exact phrasing of the question (and assuming the referendum goes forward as planned), it really boils down to this simple choice: Continue reading
There has been some confusion why Germany and the Eurozone are so strict in negotiating with France and unwilling to concede even to the smallest of what they deem as outlandish Greek demands. The reason is not so much whether Spain or even Italy, both countries with soaring unemployment, a lost generation and a sweeping movement against “austerity”, follow with comparable demands should Europe concede to Tsipras, but France, where the frontrunner for the next president, the National Front’s Marine Le Pen, has just warned that not only is a Grexit inevitable, but that France would follow shortly.
Here it is worth reminding that one of the biggest European concerns with Greece is not so much its resolute attitude toward Greek demands which Europe can easily squash and force a regime change by cutting off ELA to Greek banks forcing a prompt and violent coup d’etat, but dealing with political parties who promise anything and everything just to be elected, in the process pushing aside Europe’s preferred technocrats who will do the bidding of Brussels without the smallest objection. Continue reading
They all come close, but never precisely to the true endgame: The ECB is run by the Troika, which is run by Germany.
Almost every time you hear something about the Greek crisis, you’re going to hear either about the Troika (ECB/IMF/European Commission) and its components or Germany having its say in the situation. As with Cyprus, they want to create a vassal state out of Greece. We were told Cyprus was all about getting rid of corrupt Russian money laundering, etc. when it really wasn’t. What they had in mind was natural resources such as oil and gas within the area, plus a strategic military launching pad for the Middle East and Mediterranean region. Given that the Greek leadership doesn’t want to give up power, they will cave in and hand over more sovereign rights as well as the deposits of taxpayers.
When they’re finished with Greece they’ll move on to Italy, Spain and France who are facing a situation ten-fold worse. They will not stop until the entire European continent or whatever they can grab is under their control.
Last week, we showed a curious thesis by Goldman, which asked if there is a new and “ominous” development in European currency swings, namely the emergence of what may be a “under the table” fight between the ECB and the Bundesbank on which bonds to monetize.
This is what Goldman said then:the average maturity of ECB bond buying is around 8.0 years, in line with what Executive Board member Coeure said in his May 18 speech. However, while Italy and Spain see purchases that have an average maturity above that of the outstanding debt stock, Bundesbank buying has fallen short from the very beginning…. This kind of signal – from the key hawk in the Eurosystem – has the potential to undercut the credibility of ECB QE, since it weakens the portfolio balance channel.
After all, it was supposed to be low yields in core Europe into risk assets. If those yields now rise and become more volatile, such portfolio effects will be lessened.
We’ve long said that negotiations between Greece and its creditors are more a matter of politics than they are a matter of economics or finance.
From the troika’s perspective, breaking Greece and forcing PM Alexis Tsipras to concede to pension cuts and a VAT hike is paramount, and not necessarily because anyone believes these measures will put the perpetually indebted periphery country on a sustainable fiscal path, but because of the message such concessions would send to Syriza sympathizers in Spain and Portugal. In short, the troika cannot set a precedent of allowing debtor nations to obtain austerity concessions by threatening to expose the euro as dissoluble. Continue reading
Everyone says Germany is the main benefactor in all of this, but they continue to miss the bigger picture: All roads lead to Berlin as the Euro was designed to fail. It is devouring the continent and won’t stop at Greece. In no particular order, after Greece comes Italy, Spain and France. The German-dominated EU might be able to withstand a Greek collapse, but will not any one of the three mentioned or all combined.
Europe’s leaders must face the truth that the single currency now poses fundamental threat to global financial stability
There will be a temptation to gloat over the Greek crisis over the next week and a queue of people waiting to say “I told you so”. Both would be unwise.
In the six years from 2004, Greek output increased in nominal terms by 40 per cent, while government spending rose by 87 per cent and tax revenues rose by a mere 31 per cent.
The European authorities charged with overseeing the single currency should have acted then. Their failure to do so has been partly to blame for today’s crisis. Continue reading
The periphery scenario keeps coming back. On another note, this isn’t the first time warning trumpets have been sounded over Spain or Italy. You can find more information on them HERE and HERE. And while we’re at it, lets not forget about our friends in France, either.
“As long as it’s just Greece, then I think the consequences for the United States will be very limited, and that’s because the US market already have factored in, that they’ve priced in a high probability of Greek exit,” Institute for Economic Affairs Deputy Editorial Director Richard Wellings in London said on Thursday.
Some people have misread my posting on an observation in Spain. The retail sale of gold coins was virtually nonexistent in Spain. This is not a shortage of gold. In Italy, bullion coins were being sold in stores. It is France that is after gold coins, demanding no cash sales and reporting on buyers and sellers. Even the rare coin shows have left Paris for the dealers refused to comply with such reporting. The French were driving to Belgium to deal in gold and the French government was complaining about that.
Even the banks are requiring explanation for every deposit in an account to get a mortgage in the USA. Gold refiners are now required to report to the U.S. government every shipment of gold, reporting where it comes from and where it went. Continue reading
Goldman previously argued that the weak activity reading rattled a market that had been operating on a core thesis of strong US growth. The resulting uncertainty caused Bund yields and EUR/$ to rise, with the DAX also selling off on the day. Since then, something more ominous has come into play…One clue has been the communications ping pong from the ECB. On May 18, Executive Board member Coeure said “the rapidity of the reversal in Bund yields is worrisome,” citing it as another example of “extreme volatility in global capital markets.”
ECB President Draghi sent the opposite message on Jun. 3, saying “one lesson is that we should get used to periods of higher volatility,” followed on Jun. 10 by Executive Board member Coeure stating that “the ECB does not intend to counter [Bund] volatility in the short term.”
Goldman took a dim view of all this in our last FX Views, even if a charitable interpretation is that President Draghi basically sent a dovish message on Jun.10 and simply didn’t want to signal “activism” in the face of short-term volatility. Continue reading
The European Commission braces for a “state of emergency” in Greece, fearing social unrest and a break-down of basic supplies
Greek premier Alexis Tsipras has accused Europe’s creditor powers of trying to subvert Greece’s elected government after five years of “pillaging”, warning in solemn terms that his country will defend its sovereign dignity whatever the consequences.
The defiant stand came as the European Commission lashed out at the Greeks and warned that the country would collapse into a “state of emergency” unless there is a deal to avert a financial crash.
Markets ignored clear warnings in Europe and America that the money supply is catching fire, signalling a surge of inflation later this year
The global deflation trade is unwinding with a vengeance. Yields on 10-year Bunds blew through 1pc today, spearheading a violent repricing of credit across the world.
The scale is starting to match the ‘taper tantrum’ of mid-2013 when the US Federal Reserve issued its first gentle warning that quantitative easing would not last forever, and that the long-feared inflexion point was nearing in the international monetary cycle.
Paper losses over the last three months have reached $1.2 trillion. Yields have jumped by 175 basis points in Indonesia, 160 in South Africa, 150 in Turkey, 130 in Mexico, and 80 in Australia.
- Europe’s impoverishment, resulting from its economic underperformance and unrestrained immigration, mostly from Islamic countries, has caused its voters to opt for national identity, nationalism, regionalism, and the chance to express themselves through a referendum on Europe. Austria’s Freedom Party warmed voters of the prospect of becoming “strangers in their own country.”
- Thanks to this promise — a referendum on Britain’s membership in the European Union — and that Britain never adopted the euro as its currency, Britain’s Prime Minister David Cameron was the only sitting European leader not punished by the voters.
- Everywhere in Europe, electorates have lost confidence in the bureaucrats of the European Union in Brussels and those of the European Central Bank in Frankfurt. They want once again to be empowered to decide their own political and economic fate.
Europe is in political turmoil. In ever larger numbers, European voters are turning their backs on the established parties and are flocking to populist or nationalist parties on both the right and the left. This shift is happening all over Europe. Last month, one could see it in Britain, Spain, Poland, Italy and Austria. What all the parties have in common is their dissatisfaction with the policies of the European Union, whether because of immigration, the EU’s austerity policies, or its social/ethical agenda. Continue reading
Greek prime minister warns of the ‘the beginning of the end of the eurozone’, but says a deal between Athens and creditors could be close
Alexis Tsipras warned on Tuesday that the failure to agree a rescue deal for Greece would spell the end of the eurozone as he submitted a revised package of reforms to negotiators in Brussels.