LVHS IR/GSI Blog: Europe and Russia (2nd): November 2012

Friday, November 30, 2012

OPINION: Fighting back against the eurozone tyrants

Crisis countries in Europe must find more ways to tilt the market to produce more favourable outcomes for workers.

One thing eurozone crisis countries should begin doing is forcing property owners to lower rents for their housing and apartments by imposing a vacancy tax [EPA]

The eurozone crisis countries still have not developed a workable strategy for countering the policies being imposed by the troika - the European Central Bank (ECB), the IMF and the European Union. Their main problem is not profligate government spending, as fans of data everywhere have long known; the problem is an imbalance in relative prices between the crisis countries and Germany and other northern countries.

This imbalance is causing the crisis countries to run chronic trade deficits. Prior to the collapse of housing bubbles in the peripheral countries, this deficit was financed primarily through massive lending to the private sector in the crisis countries by banks in the northern countries. Since the collapse, the trade deficit has been largely financed with official lending to peripheral country governments. However, the core problem is the trade deficit, not government borrowing in the crisis countries.

Global economy 'set for sharp downturn'

Eurozone debt crisis "remains the greatest threat to the world economy at present", the OECD warns.

A potentially catastrophic budget standoff in US could threaten business activity around the world [GALLO/GETTY]

Global growth is set for a sharp slowdown next year and the eurozone debt crisis "remains the greatest threat to the world economy at present," the Organisation for Economic Co-operation and Development (OECD) has warned.

"Economic prospects are very uncertain and highly dependent on the risks associated with the nature and timing of policy decisions related to the euro area crisis, [and] the US fiscal cliff"

- OECD analysts

In its latest Economic Outlook, drafted on Tuesday before the eurozone and IMF unblocked almost $57bn (44 billion euros) in emergency loans for Greece, the OECD also cautioned that "the risk of a new major contraction cannot be ruled out" after a global slump in 2009.

Eurozone and IMF agree Greek bailout deal

Loans will be released to Greece in order to keep the near-bankrupt economy afloat and reduce debt by $51bn.

Workers across the continent are protesting against unemployment and spending cuts.

Anti-austerity demonstrators clashed with police in Spain, Portugal, France and Italy [AFP]

Workers across the European Union have launched an unprecedented string of strikes in a co-ordinated battle against austerity cuts on Wednesday.

The strikes are intended to paralyse factories and public sector offices, and have grounded more than 700 flights. Organisers are urging national leaders to abandon fiscal austerity measures and address growing social anxiety.

Walkouts are expected in Spain, Greece, Portugal and Italy, with other protests planned in Belgium, Germany, France and the United Kingdom.

Italian students stage anti-austerity protest

Marches against education spending cuts fill Rome's famed avenues after leaders push through new economic measures.

Three student protests converged into one mass march in the Italian capital [AFP]

Thousands of students and teachers have marched through central Rome to protest against education spending cuts.

Saturday's demonstration comes as Mario Monti, the prime minister, pushed through "austerity measures"; raising taxes and reining in public spending, at a time when schools and universities say they desperately need more support.

"We need to fight for our rights. This government doesn't represent us and these austerity measures and all the cuts they've introduced are totally anti-democratic," Tommaso Bernardi, student protester, said.

'Good progress' made on Cyprus bailout

Government officials say they have reached 'in-principle' agreement with the troika on terms of a bailout deal.

Cyprus' President Demetris Christofias says his team and the troika had "reached a convergence" [Reuters]

Cyprus’ potential international creditors say they have made "good progress" in negotiations on a possible bailout for the crisis-hit country.

Despite earlier hopes that a deal was imminent, representatives from the so-called troika of the European Commission, the European Central Bank and the International Monetary Fund said long-distance talks would continue on securing an agreement.

In a statement issued on Friday, the troika said that there had been "productive discussions" with Cyprus on the "policy building blocks of a macroeconomic adjustment programme."

EU budget talks end in failure

Tensions between rich and poor states and UK demands for austerity had set Brussels summit on rocky course from start.

A European Union summit in Brussels has wound up with "no agreement" sealed for the bloc's next long-term budget.

With the 27 heads of state and government bitterly divided over spending policy, there had been little hope of a deal on a trillion-euro budget for 2014-20 during the two-day summit.

"There is no agreement," one EU official said on Friday.

Tensions between rich and poor states and Britain's demands for austerity in the budget for the seven years from 2014 to 2020 had set the summit on a rocky course from the start.

German Chancellor warns another summit may be needed as EU diplomats say UK's "virulent" demands are blocking deal.

German Chancellor Angela Merkel has said that she doubts European leaders taking part in a summit this week on the EU's 2014-2020 budget would reach an agreement.

Merkel's statements on Friday came as EU diplomats said that UK Prime Minister David Cameron's "virulent" demands for austerity measures were blocking a deal on the budget.

A day after talks on the nearly one trillion euro spending framework saw a rocky start with serious disagreements among officials in Brussels, Merkel said that another summit on the budget of the 27-country bloc would most likely be required at a later date, probably early next year.

The vultures swooping on vulnerable nations

Could vulture funds be turning their sights on troubled eurozone countries like Ireland and Greece?

Their critics call them vulture funds because they prey on vulnerable countries that have defaulted on their debts - usually poor countries in Africa. But this time, a vulture fund has swooped on the Libertad, a ship belonging to the Argentine navy and now docked in a port in Ghana. A court there impounded the ship at the request of NML Capital, which is owned by a US hedge fund called Elliot Associates and run by Paul Singer, one of Mitt Romney's supporters.
The dispute goes back almost a decade to when Argentina decided to default during its economic crisis.

French party in chaos over leadership row

Leadership crisis further divides France's UMP, with Francois Fillon alleging voter fraud and calling for a re-vote.

Jean-Francois Cope, who won the controversial vote, dismissed calls from his opponent for a re-vote [EPA]

France's opposition conservatives have sunken deeper into a leadership crisis that could split the party, as moderates demanded a new vote to replace the disputed election of a hardliner and formed a breakaway wing.

An appeals court in the northern French town of Douai has postponed a ruling on whether to annul pimping charges levelled against Dominique Strauss-Kahn, the former International Monetary Fund chief.

The charges are the last sex crime case against him in France.
The court, which was due to pass the ruling on Wednesday, set December 19th for the case known as the "Carlton affair" in France. It centres around allegations that business leaders and police officials in Lille operated a vice ring supplying girls for sex parties.

Hungarian MP denounced for 'Jewish list' call - Europe - Al Jazeera English

A call in the Hungarian parliament for Jews to be registered on lists as threats to national security has sparked international condemnation of Nazi-style policies and a protest outside the legislature in Budapest.
The parliamentarian, from the far-right Jobbik party, dismissed demands on Tuesday that he resign, however, and said his remarks during a debate on Monday had been misunderstood. Marton Gyongyosi said he was referring only to Hungarians with Israeli passports.

Court clears US airline over Concorde crash - Europe - Al Jazeera English

A French appeals court overturned manslaughter convictions against Continental Airlines and a mechanic for the July 2000 crash of an Air France Concorde that killed 113 people, ruling that their mistakes did not make them legally responsible for the deaths.
The crash hastened the end for the already-faltering supersonic Concorde, synonymous with high-tech luxury but a commercial failure.
The programme, jointly operated by Air France and British Airways, was taken out of service in 2003.

UN court acquits former Kosovo prime minister - Europe - Al Jazeera English

The UN Yugoslav war crimes court acquitted Kosovo's ex-Prime Minister Ramush Haradinaj and two aides in a retrial on charges of murder and torture during the 1990s war of independence from Belgrade.
"The chamber finds you not guilty on all counts in the indictment," Judge Bakone Justice Moloto told the Hague-based court, ordering the men released.
Judges in the retrial ruled on Thursday that there was no evidence that Haradinaj and two accomplices had taken part in such a plan.
The court's public gallery erupted in cries of joy as the acquittals were announced.
The proceedings were broadcast live on a giant screen in the Kosovo capital Pristina, where Haradinaj is considered a hero by Kosovo's ethnic Albanian majority who had high hopes of an acquittal.

France to support Palestinian 'statehood' - Middle East - Al Jazeera English

"This Thursday or Friday, when the question is asked, France will vote yes," Foreign Minister Laurent Fabius announced in the lower house of parliament.
The move recognises efforts made by Palestinian officials to establish a statehood bid for the occupied territory.

Russian mafia whistleblower found dead in UK - Europe - Al Jazeera English

A Russian businessman helping Swiss prosecutors uncover a powerful Russian fraud syndicate has died in mysterious circumstances outside his mansion in Britain.
Alexander Perepilichnyy had collapsed on a road early on the evening of 10 November, in the county of Surrey, southern England, in a chilling twist to a Russian mafia scandal that has strained Moscow's ties with the West.

Ukraine's Chernobyl site reaches milestone

Colossal arch-shaped structure created to shelter exploded reactor raised to its full height by decontamination workers.

Construction of a shelter at the Chernobyl nuclear power plant reached a significant step on Wednesday [AFP]

Work to build a permanent shelter to secure the exploded reactor at the Chernobyl nuclear power plant in Ukraine has reached a key milestone when workers raised the arched section that will cover the destroyed unit.
The explosion at reactor number four at the Chernobyl power plant on April 26, 1986 sent radioactive fallout into the atmosphere that spread from the Soviet Union across Europe. It remains the world's worst nuclear accident.
The structure that was raised to its full height on Tuesday will be part of the so-called New Safe Confinement, a colossal arch-shaped structure which when completed will be slid on rails over the existing sarcophagus covering the reactor.

Farmers spray EU parliament with milk

Hundreds of angry farmers from across Europe protesting at falling dairy prices have sprayed fresh milk in Brussels.

Thousands of dairy farmers joined a demonstration to urge politicians to take action over the milk market [Reuters]

Dairy farmers sprayed thousands of litres of fresh milk at the EU parliament in Brussels in protest at what they say are excessive milk quotas and prices below the cost of production.
Hundreds of farmers from across Europe took up position with tractors in a park near the European Commission and at a square in front of the parliament building in the early afternoon on Monday, after blocking traffic along several of Brussels' busiest streets.
They then turned their hoses on parliament, a collection of vast marble, glass and steel buildings on a downtown city square, unleashing torrents of milk, some of it raining down on police and passers-by.
Afterwards, they set alight barrels of hay and a pile of tyres, sending plumes of black smoke billowing into the sky.
They planned to stay put outside parliament until Tuesday afternoon.

Milk quotas

The European Milk Board, which co-ordinated the two-day protest, said prices with current quotas were putting small
farmers out of business.

The EU is the world's largest milk producer and spends more than 40 per cent of its annual 130 billion euro ($173bn) budget paying subsidies and other forms of financial support to farmers, including those in the diary industry.In Belgium, for example, the board said the wholesale price for a litre of milk was 0.26 euros, but the cost of producing it is 0.40 euros.
It sets an annual milk production quota - which sits at around 130 million tonnes, too much for EU-consumption - but has agreed to phase that out by 2015.
Farmers have held similar protests in the past, including one in 2009 which led to a small increase in wholesale prices.
On Monday, tractors came from across Belgium as well as neighbouring France, Germany, Luxembourg and the Netherlands.
Among a total of nearly 2,500 farmers, around 100 came from Poland, with many other nationalities also present.

Pretty amusing, but messing with the farms means no food.

Eurozone and IMF agree Greek bailout deal

Loans will be released to Greece in order to keep the near-bankrupt economy afloat and reduce debt by $51bn.

Greece will receive urgently needed loans to rescue its stricken economy after eurozone finance ministers and the International Monetary Fund agreed a deal on reducing the country's debt.
The agreement was reached on Monday after 12 hours of talks at the third meeting of the finance ministers and the IMF in as many weeks.
Lenders agreed on a package of measures to reduce Greek debt by $50bn, cutting it to 124 per cent of gross domestic product by 2020.
In a significant new pledge, ministers committed themselves to take further steps to lower Greece's debt to "significantly below 110 percent" in 2022.

This is the most explicit recognition so far that some write-off of loans may be necessary from 2016, the point when Greece is forecast to reach a primary budget surplus, according to Reuters.
"When Greece has achieved, or is about to achieve, a primary surplus and fulfilled all of its conditions, we will, if need be, consider further measures for the reduction of the total debt," Wolfgang Schaeuble, Germany's finance minister, said.
Jean-Claude Juncker, Eurogroup chairman, said ministers would formally approve the release of a major aid instalment needed to recapitalise Greece's ailing banks and enable the government to pay wages, pensions and suppliers on December 13.

Eurozone unemployment hits record 11.6 percent

Unemployment in the eurozone hit a record high of 11.6 percent in September, official Eurostat figures revealed Wednesday, with more than 18 million people out of work. The new figures showed a rise of 146,000 unemployed over the previous month.

German police said on Tuesday that they had arrested a 37-year-old Frenchman wanted by Moroccan authorities in connection with the 2003 bombings in Casablanca, which left a total of 45 people dead. The suspect was detained at a Munich airport.