There were strikes and anti-austerity rallies across Europe on Wednesday. General Strikes were called in Spain and Italy. Rallies were also held in France and Greece. The protests in Spain ended as police fired rubber bullets, in violent clashes between protesters and police. In Italy at least 17 police officers were injured as protests in Rome, Milan and Turin turned violent.
Tag Archives: Spain
EU Summit: Europe Moves Towards a Banking Union
This week leaders from across Europe have been meeting to discuss the continued crisis across the eurozone. The talks have centred around increasing integration of the eurozone banking sector. The talks have been hailed as a success by French President Francois Hollande, and other European leaders, after agreement was reached as to increasing integration of the banking system. The Single Supervisory Mechanism (SSM) will be put it place by January 1st 2013, and will make it possible for the new European Stability Mechanism to be used recapitalise European banks, without increasing sovereign debt. The SSM is thought to be the first step towards a full banking union across the eurozone.
This is particularly important for Spain, who’s banks are still a major cause for concern, and many hope they will be able to hold out until the SSM is in place.
Germany has voiced concerns over the speed of banking integration, warning that the road map for the setting up of the SSM may not be long enough, due to the complex legal issues that have to be worked through.
The UK is also uneasy about the prospect of a full banking union within the eurozone. Although Britain are not part of the euro, the City of London by far has the largest banking sector in Europe, and it is feared that in any future decisions about financial regulation the UK will be outvoted.
However, the Summit was overshadowed by the continuing chaos in Greece, with fresh anti-austerity protests, in which a man died. Greece could run out of money by the end of November. The EU are awaiting a key report from the “troika” of international lenders – the ECB, European Commission and International Monetary Fund. The findings of the report will be key in deciding whether or not to give Greece any more money.
Angela Merkel recoils from Greek showdown on Spain contagion fears – Telegraph
Angela Merkel recoils from Greek showdown on Spain contagion fears – Telegraph.
The German Chancellor Angela Merkel has been visiting Athens today, for the first time in three years. She comes at a time when Greece is looking for the next €31.5bn tranche of aid. Without the aid Greece will run out of money by the end of November. Recent figures show Greece has been in recession for 5 years, it’s economy has shrunk by 22%, and youth unemployment is currently at 55%.
Mrs Merkel was met with angry protestors and required 6,000 police officers to protect her. Greeks, and the Greek media, greeted her with Nazi insults.
Both the EU and IMF have been insistent that Greece steps up austerity measures in order to receive the money. However, Mrs Merkel came to Athens with a softer tone than Athens has previously heard.
There has been mounting pressure on Germany not to allow Greece to default, thus forcing her out of the eurozone. If Greece were to exit, then Spain would likely follow, and the euro would break up. Also tougher austerity measures could result in the collapse of the pro-Europe ruling coalition. If the Greek government collapses it would likely be replaced by either a far-right or far-left alternative. That could destabilise the entire region, affecting the Balkan region and Turkey, something no one wants to see.
It is likely Greece will receive the next instalment of money, however the €31.5bn will only keep Greece afloat a few more months. And as time passes both Spain and Portugal are edging closer to requiring more bailouts.
Debt crisis: Spain ‘will need extra bail-out’ – Telegraph
It is thought Spain’s banking sector will require another bailout of more than more than €100bn.
Spanish banks face a record number of bad debts with 1 in 10 loans in arrears.
Spain already received €100bn in June to recapitalise it’s banks, but at the time many economists warned the amount was not sufficient and it would only be a matter of time before Spain required more cash.
The political mood in Spain is also deteriorating with the Catalonian region threatening to break away from the rest of Spain because of the financial crisis and the austerity measures.
via Debt crisis: Spain ‘will need extra bail-out’ – Telegraph.
Euro climbs to four-month high vs US dollar after German Court ruling
The Euro, sitting at $1.2936 against the US dollar, is the highest it has been in four months. This follows a German Constitutional Court approval of German rescue and maintenance of the Euro.
The conditional approval has lowered fears for the region’s debt problem.
This new perspective has lifted global stock values and has also reduced Italy and Spain’s costs to borrow.
Source Euro advances to four-month highs vs. dollar on German ruling | Reuters.
George Soros: Germany should back growth or leave euro – Telegraph
George Soros: Germany should back growth or leave euro – Telegraph.
As the debt crisis continues in Europe, many of the same arguments are being made within the eurozone countries as to the best way forward. Italy and Spain are both edging closer to needing a bailout; and it will not be long before Greece will be requiring another bailout package.
However, the arguments between growth and austerity continue. Germany are reluctant to continue to pay the bills, without the proper checks in place. But will Spain and Italy be prepared to sign away political autonomy?
Now George Soros has said “Germany must back growth or leave the euro”. To back growth means Germany continues to bailout and lend more money – increasing indebtedness. Germany has made it clear it desires growth, but not by creating more debt.
However, if Germany were to leave the euro it would enable the Euro to devalue and ease the economic pain in the struggling nations.
Markets crumble as Draghi bond plan deemed too vague – Telegraph
Markets crumble as Draghi bond plan deemed too vague – Telegraph.
The President of the European Central Bank, Mario Draghi, had promised that the ECB would do “whatever it takes” to save the Euro.
However, after the latest round of talks his promises sound rather shallow.
Instead of a firm plan of action, yet again difficult decisions have been postponed. Draghi has hinted that the ECB will buy up Spanish and Italian bonds on a scale not yet seen, though no concrete plans have been announced. Draghi’s “whatever possible” at present is three teams of ECB experts looking at what can be done.
In the meantime: Spain, Greece and Italy are quickly running out of time.
Spanish bail-out impossible’, experts warn – Telegraph
Spanish bail-out impossible’, experts warn – Telegraph.
As the economic situation in Spain worsens by the day, many think it is only a matter of time before Spain will need a full bail-out.
However, economists looking at Spain’s borrowing needs, their crippled banking sector, and their ailing economy now believe the required bail-out would be more than the eurozone could manage.
Head of economic research at Open Europe, believe Spain will require around €650bn.
The situation may force Germany into finally deciding whether to work towards the break up of the eurozone, or the pooling of all the eurozone sovereign debt. The pooling of the debt would lead to a full economic union, and inevitably to much stronger political ties. With Greece likely to require yet another bailout before the end of the year, and the fall out from the current situation nudging Italy ever closer to the economic death spiral, it is only a matter of time before Germany will have to make some very difficult choices. The question is will the people of Europe accept the outcome, whatever that may be?
DOW DROPS 250 POINTS-
Dow loses 250 points…
…Spain would need to borrow up to $78bn …
…Moody’s expected to start downgrading global banks… Barclays, Deutsche Bank, Citigroup and Goldman Sachs…
Moody’s warned in February that the ratings of 17 banks and securities firms under review because they face increased funding costs and regulatory scrutiny.
…German economy, the safest in Europe, weakening.
German support has so far saved the eurozone from meltdown, Germany’s private sector shrank for the second month running in June, manufacturing, a three-year low.
via Markets fall amid gloomy US forecast and global slowdown
Markets fall amid gloomy US forecast and global slowdown | Business | guardian.co.uk.
Spain and Italy to be Bailed Out
At the G20 summit in Mexico European leaders have agreed on a deal which will see Spain and Italy being bailed out using a €750 billion bail out fund. In the deal European governments will buy up Italian and Spanish debt, in effect transferring the debt to other countries within the eurozone; instead of bailing out the individual governments.
This is a step towards the issuing of eurobonds, which would in effect be under written by Germany
For further information: The Telegraph
Market initially rally, but Slump Amid Spanish Debt Fears
After the conservative victory in the Greek election the markets rallied at the opening of trading. However, they soon began to fall again- worries about Spain’s economic position dominating trading.
Spain’s borrowing costs are now so high they are finding themselves locked out of the debt markets. This is despite a bailout of their banking system.
Read more at The Telegraph
Could France Need a Bail-Out?
The former UK Prime Minister Gordon Brown has spoken ahead of next week’s G20 summit in Mexico, about the prospect of a required bailout for Italy and France. Gordon Brown has called for the G20 to begin to draw up a “concerted global action plan” to deal with the crisis.
This comes after German Chancellor Angela Merkel, attacked the French President Francois Hollande for allowing the French economy to stall. She also echoed Mr Brown’s comments, warning that Hollande’s socialist policies could lead to France being enveloped by the debt crisis.
Last year, when officials began to speak of the contagion spreading to Italy and Spain, no solid measures were put in place, and now we are on the brink of Spain requiring a full bail-out (the bailout currently under consideration is only to bailout their struggling banking system). Spain and Italy were both labelled at the time as “too big to fail”. At that time the thought of a French bailout was unthinkable.
However, it is expected that the summit in Los Cabos, Mexico, will see world leaders continuing to pressure Chancellor Angela Merkel to agree to Eurobonds. Mrs Merkel has left Germany for the summit, remaining steadfast in her tough austerity stance – in the face of French opposition from Francois Hollande, and with President Obama also backing the new French President.
The Sinking of the Euro Ship or a Step Towards a “German Empire”
With the Spanish banks now in line for a bail-out of €100 billion you would think the markets would be delighted. That faith and confidence would return, that Spain’s salvation from economic oblivion has been averted… hip hip hooray!
Not so fast… the markets have not reacted with joy and happiness. The markets may know more about the present deal than the politicians would like them to.
The fact is Spain’s economic woes require much more than €100 billion. If Nigel Farage of the UK Independence Party (UKIP), and Member of the European Parliament, is to be believed, Spain requires € 400 billion. Watch the part of Farage’s speech to the European Parliament, he explains the problem of the Spanish bailout perfectly.
What is more, the bailout may have averted the bankruptcy of Spain’s banking sector in the short term, but it still has not solved the fundamental problems of the Eurozone. Sadly for the countries of the Eurozone, the only way out of their problems is for a polling of sovereign debt and far greater economic and political ties. This would mean a common economic policy, and loss of national sovereignty.
As George Soros warned last week the solution to the problems will very probably see Europe looking like a German Empire, Mr Soros said in his speech in Italy, “It would be a German empire with the periphery as the hinterland,” Well if Germany is to shoulder the debt of it’s neighbours, she will want to call the shots, and determine the economic path of the Eurozone.
The sad irony is that the EU was established in the wake of the second world war , for the precise reason of stopping German might from taking control of Europe- something which tore Europe apart twice in the 20th century. An important lesson from history that Brussels would do well to remember: attempts in Europe’s history to unite the continent under one rule of government has caused wars throughout the centuries: from Hitler to Napolian Bonaparte.
Euro Zone to lend Spain $125 Billion
Euro zone finance ministers agree to lend spain 100 billion euros Madrid said it’s enough. Spanish government requested European financing to recapitalize Spanish banks.