Europe in a Financial Crisis

[The Virginian]

MADRID (AP) — Spain's governing Popular Party announced Saturday that it will investigate the financial activities of a former treasurer whom a court said had amassed an unexplained €22 million ($29 million) in Swiss bank accounts.

After three days of intense public and media pressure, which saw party leaders try to distance themselves from any alleged corruption, party spokeswoman Maria Dolores de Cospedal said a scandal had to be averted.

"Information that is appearing these days can cause a scandal and is so serious that our party has to be exemplary and has to react," she said. "Therefore, we will have to go over everything we have done to prove to all Spaniards that our hands are clean."

Earlier, Prime Minister Mariano Rajoy had said his hand "would not tremble" if revelations of alleged corruption in his party proved to be true. "There are matters before the courts, and those courts are acting," he said, referring to a court investigation that revealed ex-treasurer Luis Barcenas' Swiss accounts.

The case comes as Spain tries to emerge from its second recession in three years and has an unemployment rate of 25 percent, the highest in the European Union.

On Friday, Deputy Prime Minister Soraya Saenz de Santamaria denied knowing anything about the money or newspaper reports that Barcenas also gave Popular Party members large sums in under-the-table payments.

The same day, Cospedal denied that the party had distributed "black cash bonuses" from the construction industry to some of its top leaders.

The Spanish press has been scathing about the party's apparent inaction, and the normally supportive newspaper El Mundo said on its front page Saturday that the impression the Popular Party is giving is that it is "debating whether to cover up the secret payments or investigate them."

Barcenas resigned as party treasurer in 2009, some months after the investigation began, and he has not been charged with any crime. Barcenas' lawyer, Alfonso Trallero, has denied the money was illegally obtained or linked to the Popular Party.

While still in opposition, before taking office in November, Rajoy often showed public support for Barcenas.

The court revelations led to impromptu street protests in Madrid and Barcelona on Friday and Saturday.

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[The Virginian]

MADRID (AP) — Spain's recession deepened in the fourth quarter of 2012, when the economy shrank by 0.6 percent compared with the previous three-month period, according to preliminary estimates from the Bank of Spain on Wednesday.

It was the sixth consecutive quarterly contraction. The economy contracted by 0.4 percent in the third quarter.

The bank said economic activity was down 1.7 percent in the fourth quarter from the year-earlier period. And it estimates the economy shrank 1.3 percent for the whole of 2012.

The National Statistics Institute is to announce the official economic growth figures on Jan. 30, while Europe's main statistics office Eurostat unveils its estimate on Feb. 14.

Spain, with 25 percent unemployment, is in its second recession in three years following the collapse of its once key real estate sector in 2008.

Also Wednesday, Finance Minister Cristobal Montoro told a parliamentary commission that a tax evasion amnesty aimed at boosting revenue for the country had put some €40 billion ($53.3 billion) back into circulation in the Spanish economy, representing some 4 percent of the country's annual gross domestic product.

Montoro recently said the amnesty had reaped €1.2 billion in taxes — short of the government's €2.5 billion target.

The amnesty, which came into effect last June and ended in November, has been much criticized as it was seen as helping tax evaders while Spaniards suffered cuts in wages and services because of the country's economic crisis.

Opposition politicians pointed out that the figure released Wednesday meant the tax rate paid by those availing of the amnesty was three percent, and not 10 percent as originally announced by the government.

hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2013-01-23-Spain-Financial%20Crisis%201st%20Ld-Writethru/id-7151b4a5f55243d49cf284915dd3e4e8

[The Virginian]

Spain and Greece Compete for Worst Youth Unemployment in EU (Wait Until You See the Numbers)

As German Chancellor Angela Merkel addresses world leaders at the World Economic Forum, Spain and Greece continue to compete for the title of “Worst Youth Unemployment in the EU.”

Spain’s unemployment rate jumped to a record 26 percent in the fourth quarter of 2012, with youth unemployment peaking at 59.8 percent, the country’s National Statiscs Institute said Thursday.

Contunued on link below:


www.theblaze.com/stories/2013/01/25/spain-and-greece-compete-for-worst-youth-unemployment-in-eu-wait-until-you-see-the-numbers/

[The Virginian]

LISBON, Portugal (AP) — Thousands of teachers from around Portugal are marching in downtown Lisbon to protest proposed spending cuts they say will slash €1 billion ($1.3 billion) from the education budget.

Unions say the government plans to privatize many public schools and cut around 50,000 sector jobs.

Union spokesman Mario Nogueira says the plans revealed in a recent document from the International Monetary Fund would "mean the end of a free and inclusive public school system."

Portugal, which is headed for a third straight year of recession, needed a €78 billion lifeline in May 2011 to avert bankruptcy and has a jobless rate of 16.3 percent. Austerity measures have triggered many strikes and protests.

It was the third country that uses the euro to require an international bailout to deal with its debts.

[The Virginian]

Feb. 1, 2013 9:04 AM ET
Rare good news for eurozone economy
LONDON (AP) — Mention it quietly, but there were rare hopeful signs for Europe's struggling economy on Friday.

Three pieces of economic news for the 17 European Union countries that use the euro were all slightly better than hoped — in sharp contrast to some of the grim days the eurozone has witnessed over the last three years of its crisis over too much debt.

Unemployment was lower than feared in December, though still high at 11.7 percent; a survey raised hopes of some growth in the manufacturing sector; and inflation unexpectedly fell, easing the headwinds on hard-pressed consumers and raising speculation of more help from the European Central Bank.

No one is in any doubt though that the eurozone's economy, which is currently stuck in recession, has a long way to go before it can even get out of intensive care let alone on the road to full recovery. Debt levels remain high, governments continue to cut services and raise taxes and communities across the region are suffering as the region struggles to solve the crisis that's threatened the euro's very survival.

In that context, any bit of good news is welcomed with open arms and potentially could give the eurozone some breathing space as it tries to fix its myriad of problems.

The euro and European stock markets tracked higher after the figures' release.

"It's not as bad as it was and that's probably the best one can say, which is a good thing, but it doesn't mean happy days are near," said Marc Ostwald, market strategist at Monument Securities.

One of the eurozone's problems remains sky-high unemployment, with 18.7 million out of work, according to Friday figures from Eurostat, the EU's statistics office. In 2012 as a whole, eurozone unemployment rose by nearly 1.8 million.

Though the 11.7 percent unemployment rate for December was below market expectations for a rise to 11.9 percent, it still remains the highest level since the euro was launched 14 years ago, as November's original estimate of 11.8 percent was revised down.

James Ashley, senior European economist at RBC Capital Markets, said the figures are "notably better than the consensus" and noted that the 16,000 monthly increase was the smallest since unemployment started rising again in May 2011.

Worthy of note, according to Ashley, is the 0.1 percentage point drop in the Spanish unemployment rate to 26.1 percent, the first monthly decline since the "pre-crisis halcyon days" of early 2007.

"It is still premature to call a turning point in the labor market cycle — both for the euro area and for Spain — but recent weeks do lend support to our forecast that conditions should begin to stabilize in the first half of 2013," said Ashley.

The unemployment numbers vary widely across the eurozone. While Greece's level in October was 26.8 percent (the country's statistics are compiled on a different timeframe), Austria enjoys under near full-employment levels with a 4.3 percent rate in December.

And while Greece's youth unemployment rate — for those of working age but under 25 — stands at a staggering 57.6 percent, Germany's is just 8 percent.

Unemployment across the broader 27-country EU also remained steady at 10.7 percent. This, according to Eurostat, compares with 7.8 percent in the U.S. and 4.1 percent in Japan.

The best way to get unemployment down is economic growth and there has been little sign of that over the last few months. Even Germany, Europe's largest economy, has been slowing down sharply. Figures later this month are expected to show that the eurozone economy remained in recession in the final three months of 2012.

However, a closely-watched survey of current conditions in the manufacturing sector, suggested that there was reason for optimism.

The monthly purchasing managers index — a gauge of business activity — from financial information firm Markit rose to an 11-month high of 47.9 in January from December's 46.1. Though the measure remains below the 50 threshold that divides expansion from contraction, the index's trend points to the sector growing again over the coming months.

"Manufacturers appear to be benefiting increasingly from a sustained easing of sovereign debt tensions, reducing uncertainty and lifting business confidence," said Howard Archer, chief European economist at IHS Global Insight. "If this continues, businesses should become increasingly more prepared to place manufacturing orders that have been delayed or cancelled."

Further good news emerged with Eurostat reporting that inflation in the eurozone fell to 2 percent in the year to January, well below expectations for a modest increase from the previous month's 2.2 percent. As a result, prices are rising more or less in line with the European Central Bank's mandate of "close to, but below 2 percent."

The figures may prompt speculation that the ECB could cut borrowing costs further at its next rate-setting meeting on Thursday. Currently, its benchmark rate is at its record low of 0.75 percent and many economists argue that it should be cut further to help stimulate the ailing economy of the eurozone.

hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2013-02-01-Europe-Economy/id-31ee4de0e9a84fe5babc8c4cc46a749d

[The Virginian]

EU Plunges Deeper Into Recession As Germany Stumbles

BERLIN (TheBlaze/AP) — It was only a matter of time. With many of its debt-ridden euro partners in recession, Germany could only swim against the tide for so long.

Figures Thursday showed that output in Germany, Europe’s largest economy, contracted by more than anticipated in the last three months of 2012. And it was the German drop that lay behind a deepening of the recession across the economy of the 17 European Union countries that use the euro.

Eurostat, the EU’s statistics office, said the eurozone’s economic output shrank by 0.6 percent in the final quarter of 2012 from the previous three-month period. The decline was bigger than the 0.4 percent drop expected in markets and the steepest fall since 2009, when the global economy was in its deepest recession since World War II.

Thursday’s figures highlight the scale of the problems that have afflicted the single currency zone over the past year. Fears of a break-up, if not a collapse, of the currency dented confidence at a time when many governments were embarked on fairly severe debt-reduction programs.

Getty Images

In 2012 as a whole, the eurozone economy shrank by 0.5 percent, a stark contrast from the 2.2 percent growth recorded in the U.S. and the 1.9 percent in Japan.

The eurozone has contracted for three straight quarters (a recession is officially defined as two quarters of negative growth). The eurozone is not alone in finding it increasingly tough as the year progressed but the fourth quarter figures confirm the region is struggling worse than others.

If the quarterly rate is annualized, the eurozone would be contracting by around 2.5 percent, much worse than 0.1 percent drop in the U.S. and Japan’s 0.4 percent fall. Eurostat does not provide annualized comparisons.

The worry for European policymakers is that output is declining not just in the weaker, debt-laden economies such as Greece and Spain, where governments have been aggressively increasing taxes and cutting spending in order to get a grip on their public finances and relieve the pressure inflicted on them by skeptical investors.

The standout from the quarterly figures was Germany. Its economy shrank by a quarterly rate of 0.6 percent in the fourth quarter, more than the 0.4 percent expected, as demand for its exports from its European neighbors were dragged down by the underlying economic malaise.

France, Europe’s second-biggest economy, also saw output drop by 0.3 percent. Both economies are now one quarter away from recession.

The Eurostat figures showed that seven eurozone countries were in recession at the end of 2012 – Greece, Spain, Italy, Cyprus, Portugal, The Netherlands and Finland. If upcoming figures for Slovenia show it contracted for the third quarter running in the final three months of the year, than that number rises to eight, almost half the eurozone.

French President Francois Hollande. (Getty Images).

France remains a greater cause for concern as its economy faces a number of problems that don’t trouble Germany as much. The French government has to keep a tight leash on its finances, unemployment is around 10 percent and its exporters are struggling, not least in the auto sector, with both Peugeot-Citroen and Renault struggling.

Though many analysts think France’s recent structural reforms will help make the economy more competitive, any tangible gains will not be seen for a while.

www.theblaze.com/stories/2013/02/14/eu-plunges-deeper-into-recession-as-germany-stumbles/

[The Virginian]

Feb. 16, 2013 2:10 PM ET
Spaniards protest against evictions

Demonstrators and the Platform of People Affected by Mortgages, holding banners reading 'Stop Evictions', shout slogans to change mortgage laws and halt evictions of those unable to pay mortgages in Madrid, Saturday, Feb. 16, 2013. The government agreed to consider changes to the law on mortgages after pressure from opposition parties and a growing public outcry, including a petition that was signed by 1.4 million people – enough signatures to force Parliament to discuss alterations to the law in a special session. (AP Photo/Andres Kudacki)

 

Demonstrators and the Platform of People Affected by Mortgages, holding banners reading 'Stop Evictions', shout slogans to change mortgage laws and halt evictions of those unable to pay mortgages in Madrid, Saturday, Feb. 16, 2013. The government agreed to consider changes to the law on mortgages after pressure from opposition parties and a growing public outcry, including a petition that was signed by 1.4 million people – enough signatures to force Parliament to discuss alterations to the law in a special session. (AP Photo/Andres Kudacki)

 

A demonstrator shout slogans to change mortgage laws and halt evictions of those unable to pay mortgages in Madrid, Saturday, Feb. 16, 2013. The government agreed to consider changes to the law on mortgages after pressure from opposition parties and a growing public outcry, including a petition that was signed by 1.4 million people – enough signatures to force Parliament to discuss alterations to the law in a special session. (AP Photo/Andres Kudacki)

 

Police stand guard as demonstrators and the Platform of People Affected by Mortgages, hold banners reading 'Stop Evictions' and "Rajoy when you will kill us?" shout slogans to change mortgage laws and halt evictions of those unable to pay mortgages in Madrid, Saturday, Feb. 16, 2013. The government agreed to consider changes to the law on mortgages after pressure from opposition parties and a growing public outcry, including a petition that was signed by 1.4 million people – enough signatures to force Parliament to discuss alterations to the law in a special session.

Buy AP Photo Reprints

MADRID (AP) — Demonstrations are being held across Spain to protest harsh repossession laws that have led to hundreds of thousands of evictions during the country's deep recession.

In Madrid — one of 50 cities where such protests were planned Saturday — thousands of people marched to demand that the government amend the laws.

More than 350,000 Spaniards have received eviction orders since 2008 because they were unable to make mortgage payments.

Most of those evicted remain liable to repay the sum originally borrowed, even as the value of their homes plunges, rendering them hard to sell.

Madrid protester Carlos Gomez, 40, said Saturday that he has been warned he will be evicted in April.

On Tuesday, a retired married couple committed suicide in Spain, leaving a note saying they also were about to lose their home.

[decoy409]

Looks like some more 'rare NEWS' will be needed,and quickly,


www.thetruthaboutcars.com/2013/02/european-new-car-sales-reach-new-lows/


With a staggering unemployment rate already (and growing),doubt the sales wil be improving anytime soon.

[The Virginian]

 

Tue Feb 19, 2013 2:08pm EST

* Spanish banks past worst, but more property-linked losses likely

* Spain's banks had to take 40-50 pct writedowns on properties

* Funds want discounts beyond these to buy asset portfolios

* Spanish real estate prices seen falling further

By Sarah White

MADRID, Feb 19 (Reuters) - Banks in Spain may take bigger losses than they hoped this year on real estate repossessed from borrowers, as they compete for buyers with Sareb, the agency tasked with clearing up the weaker banks after a property crash.

Banks were left holding hundreds of thousands of houses, half-built commercial and residential developments and plots of land after borrowers and developers ran into trouble when the property boom turned to bust in 2008.

Property-related losses eventually forced the government to secure a 40 billion euro ($53 billion) bailout for its banks from Europe.

Last year, the banks wrote down foreclosed property on their books by around 40-50 percent after government decrees forced them to make provision for losses and reflect lower market values. The clean-up helped them start selling housing at discounts, mainly to individuals, but with the country in a deep recession and unemployment at 26 percent, demand for property is weak even at knockdown prices.

But now lenders face competition for buyers from Sareb, the "bad bank" set up to manage up to 60 billion euros' worth of assets from bailed-out lenders, which put its first lot of 13,000 properties up for sale at the end of January.

Since Sareb, set up at the request of Brussels, is taking over assets from rescued banks at discounts that are steeper than those forced on the sector by the government, the fear is that its disposals will push down prices and clog up the market.

Yet if Spain's healthier banks turn to private equity firms and hedge funds to help shift their assets, they might have to swallow more losses too. Four investment bankers in Madrid said funds typically demanded discounts of 60-80 percent.

"The sale of secured assets to investors would likely be done at prices below those of the Royal Decrees (the government-enforced clean-up), with big discounts," said Fernando Acuna of Taurus Iberica, which markets banks' properties and advises them on portfolio sales.

"The discounts from the decrees were more in line with the prices seen in the normal consumer market."

But what is normal once Sareb is selling in volume? Early estimates had put the properties Sareb would house at 89,000, though Sareb said that could change.

There are about 200,000 repossessed properties in Spain, on top of 1 million newly built homes for sale, rating agency Fitch estimated in December, adding that banks had on average been selling properties last year at half the price they were originally valued at.

CRUISING SPEED

Property prices have already slumped 35 percent from a 2007 peak, according to real estate valuations group Tinsa, and Fitch forecast recently they had another 15-20 percent to fall.

Banks able to take another hit could now start selling portfolios to investors to move quickly with disposals, bankers said.

Santander, which has said it wants to aggressively shed property assets this year, is setting aside 1 billion euros in its 2013 budget to cover possible portfolio sales at a "significant discount".

"If we can get in there before the Sareb starts achieving cruising speed, so much the better," Chief Executive Alfredo Saenz said in January during a results presentation. Capital gains from sales of other items would offset the hit, he said.

U.S. funds Centerbridge, Apollo, Fortress, Lone Star and Cerberus are among those actively circling the Spanish market for property assets, investment bankers said.

FORECLOSURES ON THE RISE

Not all Spanish banks will want to take more immediate pain from their property problems, with Santander and rival BBVA , the country's top two banks with large overseas operations, better able to weather writedowns than most.

Selling to individuals is slower than shifting portfolios but typically costs less, because individuals are not necessarily looking to turn a profit like funds are.

BBVA for example said it had sold 12,000 foreclosed properties last year at an average 40 percent discount, mainly by selling them piecemeal.

But asset values risk dropping the longer properties sit on banks' books, and lenders may struggle to sell anything beyond their better assets to individuals at attractive prices.

House prices have fallen more sharply on the Mediterranean coast, where developers erected kilometres of resorts that now stand empty, than in city areas, according to Tinsa.

Funds are also interested in the best real estate, such as commercial developments or upscale flats in the centre of big cities, but they might also help banks shift less attractive ones at heavily discounted rates, bankers said.

Foreclosures are also still rising - up over 18 percent in the first nine months of 2012, court data shows - adding to the pressure to sell existing stock. And developers are still collapsing, with major real estate firm Reyal Urbis filing for insolvency on Tuesday.

While banks have no firm timelines to rid themselves of properties, keeping big exposures could also hinder their funding prospects as they try to cut their reliance on central banks and turn to bond markets  instead.

"Spanish banks seeking to target international investors as a source of funding must now reduce their exposure to real estate assets to help regain investor confidence," Fitch analysts Carlos Massip and Juan David Garcia said in a December report.
www.reuters.com/article/2013/02/19/spain-banks-property-idUSL5N0BFDEP20130219?feedType=RSS&feedName=privateEquity&rpc=76

[The Virginian]

ATHENS, Greece (AP) — Tens of thousands of anti-austerity demonstrators took to the streets of Athens on Wednesday as unions staged a general strike to protest government spending cuts and tax hikes, which some predict will push unemployment to an alarming 30 percent.

Police said up to 40,000 people were participating in two separate marches in central Athens. Limited clashes broke out when hooded youths threw fire bombs and stones at riot police, who responded with tear gas. No arrests or injuries were immediately reported.

"We are protesting about (reduced) pensions, emergency taxes, the high cost of life," said retired factory worker Kyriakos Anastassiadis.

Unions are pressing for the renewal of binding collective labor contracts, instead of individual deals that allow employers greater leverage in defining salary levels. They are also asking the government to support the crumbling labor market, where roughly 1,000 jobs have been lost daily since 2010.

"The government wants to further lower our salaries and destroy unions," said unionist Vassilis Epicarithis, an aircraft engineer.

The 24-hour nationwide walkout disrupted domestic flights, kept ferries and long-distance trains idle and crippled public services. It was the first general strike of the year, renewing confrontation between labor groups and the conservative-led government that has pursued punishing austerity policies to cut debt — a key condition imposed by international bailout creditors.

State schools and tax offices closed down, public hospitals functioned on emergency staff, court cases were stalled as lawyers walked off the job, and even neighborhood street fruit and vegetable markets were cancelled. Private doctors and dentists also joined the strike.

In Athens, police said about 25,000 people were marching toward Parliament with banners such as "We won't become slaves in the 21st century," in a demonstration organized by the main public and private sector unions. Earlier, some 15,000 members of a Communist Party-affiliated labor union protested peacefully along the same route.

Previous protests have been marred by clashes between riot police and anarchists. Up to 3,000 police officers were on duty for the Athens street rallies.

In the northern city of Thessaloniki, some 17,000 protested peacefully.

Conservative Prime Minister Antonis Samaras has won praise from bailout lenders for pushing through major cost-cutting measures after forming a three party coalition last June.

But a new round of tax increases this year and a surge in unemployment to 27 percent have angered unions, as Greeks battle a rapid increase in poverty during a sixth year of recession.

In recent weeks, the Samaras government has twice used rare emergency powers to force an end to strikes by workers on ferry services and the Athens subway.

"The Greek people have no tolerance left," Ilias Iliopoulos, general secretary of the civil servants union ADEDY, told the AP in an interview ahead of the strike. "For us, the time has come for a major confrontation with the government ... and policies that are taking our country from bad to worse and leading people to poverty and desperation."

Unions are also angry at a government decision to scrap collective wage agreements across the public sector as part of an overhaul of state pay scales that will usher in further salary cuts.

Unemployment is expected to reach 30 percent this year, while national output will contract a further 4.1 percent, according to a study by a government funded research agency published last week. By the end of the year, the Greek economy is forecast to have shrunk 25 percent since 2008, a year before the crisis started.

[ModE98]

Eurozone heading for further contraction as schism widens. Eurozone flash manufacturing PMI slipped to 47.8 in February from 47.9 in January as the German reading hit a 12-month high of 50.1 while French factory activity continued to shrink. The data "suggests that the eurozone is on course to contract for a fourth consecutive quarter," Markit says, with the schisms in the bloc widening. "France’s downturn is likely to deepen," bringing it "more in line with the periphery than with the now solitary-looking German 'core'."

[The Virginian]

BERLIN (AP) — The German Parliament's upper house has voted to introduce a mandatory national minimum wage, a challenge by the country's opposition to Chancellor Angela Merkel's government ahead of elections in September.

Opposition parties gained a majority in the upper house, which represents Germany's 16 states, when the center-left Social Democrats and Greens ousted Merkel's conservative-led coalition from government in Lower Saxony state in January.

That gives them a chance to put pressure on Merkel and showcase plans for Germany, which holds national elections Sept. 22, by sending policy initiatives to the government-controlled lower house, which will likely reject them. The upper house voted Friday to introduce an across-the-board national minimum wage of €8.50 ($11.15) per hour.

Merkel's coalition is divided on whether to introduce some kind of minimum wage.

[ModE98]

news.yahoo.com/p-upgrades-portugals-credit-rating-outlook-stable-140226519--business.html

Possible indication that several of the ECU countries may start a turnaround?

[The Virginian]

Today, March 14, Germany left the eurozone.

Oh, nothing official. And I'm not holding my breath waiting for any objective confirmation, such as the reintroduction of the Deutschmark. But the new German budget marks the beginning of the effective end of the eurozone and the euro.

What exactly happened that's so momentous? How can a single national budget make such a difference?

Because any European recovery is riding on Germany.

A balanced budget, but . . .

The German budget for 2014, announced by German Finance Minister Wolfgang Schaeuble on Wednesday, the eve of a European summit, includes an additional 5 billion euros ($6.4 billion U.S.) in spending cuts. Total net new borrowing for 2014 will drop to 6.4 billion euro ($8.3 billion U.S.), a 40-year low.

And it puts the German budget on a path to balance in 2015. That's a year earlier than required by the German constitution.

 

If fiscal prudence is your goal, then this budget deserves the praise heaped upon it by Minister of the Economy Philipp Rösler, who said: "With all modesty, this is a result of historic proportions. The lesson from the sovereign debt crisis is that solid finances are essential. Thanks to this approach, Germany is in the vanguard in Europe. Our success with a policy of growth-oriented consolidation is the envy of the world."

The problem -- aside from the smugness of those comments -- is that fiscal prudence isn't the most pressing goal in Europe's other biggest economies.

Jim Jubak

Beyond Greece

Everyone knows the Greek economy is a disaster -- and that was pressed home in the latest unemployment numbers. Unemployment hit 26% in the fourth quarter, up from 24.8% in the third quarter. For workers between 15 and 24 years old, the unemployment rate is 57.8%. The percentage of the unemployed who have been looking for a job for more than a year hit 65.3%.

But the real problem isn't Greece. The real problem is that the rest of Europe -- except for Germany -- is, like Greece, facing growing unemployment with no medium-term relief in sight. Employment in the eurozone as a whole fell by 0.3% in the fourth quarter from the third quarter. Among the zone's major economies, only Germany showed an increase in jobs. The decline in fourth-quarter employment is particularly ominous because the Christmas shopping season normally generates jobs.

And the prospects for improvement? Grim. Ernst & Young, for example, projects that unemployment will continue to climb this year, and the recovery through 2014 is likely to be anemic. By the end of 2017, Ernst & Young estimates, the unemployment rate in Europe will remain stuck above 11%.


money.msn.com/investing/has-germany-killed-the-eurozone

[The Virginian]

WOW - Greece just did what amounts to a confisicastion of 6.75 - 9.9 % of all Deposits in their banks ! How would like to wake up one day and find out obama has taken  that much of your savings - with no recourse? Could it happen here or elsewhere in Europe? Stay Tuned - This is scary stuff !


PARIS (AP) — People with bank accounts in Cyprus were shocked Saturday to learn that as part of an agreement reached with international creditors the government has imposed a tax on all deposits to help bail out the nation and its banks. Here's a look at the tax, which can be as high as 9.9 percent, and the problems it may pose.

HEY, HOW CAN THEY DO THAT?

As one of 17 nations that use the euro currency, Cyprus can to raise or lower taxes whenever it wants. Early Saturday, it secured a €10 billion ($13 billion) bailout from its European partners and the International Monetary Fund to save the banking sector and avoid bankruptcy. In return, the island nation has imposed the new tax, among other moves. It isn't the first time that a eurozone nation has raised taxes to cope with mounting debt and to prop up struggling banks. Residents of Greece, Portugal and Ireland — all bailout recipients — have seen their tax bills skyrocket in recent years as those countries tried to reduce their debts. But Cyprus is charting new ground here, and there could be legal — and political — challenges.

AND HOW EXACTLY WILL IT WORK?

Banks have already acted to seal off the amount of the levy — a 6.75 percent tax on deposits under €100,000 and 9.9 percent on those above — so depositors can't access it. Bank customers still can draw on the rest of their funds via ATM machines this weekend, although banks that usually open on Saturdays had limited hours. No international transfers will be able to go through until Tuesday, since Monday is a holiday. Cyprus' parliament is expected to meet Sunday to pass the required legislation. The deal also needs the approval of several eurozone parliaments; it's unclear how fast they can act and what will happen to bank deposits in the meantime.

HAS THIS EVER HAPPENED BEFORE?

So far in the euro crisis, depositors have been protected. But European countries have taxed bank deposits before. In the 1990s, Italy levied a tax on every bank account to stave off the collapse of its lire currency. The rate, however, was miniscule — 0.06 percent — compared to what Cyprus is enacting. Iceland — another island with an outsized financial sector, although worse weather — also relied on depositors to prop up its banks. When the crisis hit there in 2008, Iceland protected its domestic deposits but reneged on deposit insurance for overseas, Internet-based accounts held by British and Dutch. Those two governments stepped in to help their citizens to the tune of $5 billion. The U.K. and the Netherlands sued Iceland unsuccessfully in a European court to get their money back, but Iceland has nevertheless started to repay some of that money.

European officials are promising this Cyprus is a unique case, and they are right in one aspect: Cypriot banks are overwhelmingly funded by deposits, not bondholders. So it wouldn't have been very fruitful to go after bondholders.

WHO IS AFFECTED?

All people with money in Cypriot banks — except those with money in Greek branches, which will be sold to Greek banks. EU and IMF creditors clearly wanted to protect struggling Greece, but perhaps also saw that Greece is the most likely place in the eurozone for a bank run. Protecting depositors there minimizes that possibility. Of the more than €68 billion on deposit in Cypriot banks, foreigners hold about 40 percent — and most of those are Russians. Cyprus could have only gone after non-EU depositors, but it may have been hard to distinguish between Cypriot and Russian savers, said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington. That is because many Russians have dual citizenship and many Russian businesses are registered on the island. Kirkegaard said Cypriots may paradoxically welcome this measure since the government just managed to widen its tax base to include a lot of Russians; the taxes levied in Greece, Portugal and Ireland were for residents alone to shoulder.

WHY DID CYPRUS NEED A BAILOUT?

Cyprus built its economy in recent years by becoming a financial center, much the way Ireland and Iceland before it did. Its banks offered Internet accounts to foreigners, were renowned for their service, provided substantial privacy to clients and had very low taxes. It worked so well that Cyprus' banking industry ballooned to nearly eight times the country's gross domestic product at the height of the boom. In December, it was still more than seven times Cyprus' €17.5 billion GDP. Russians — looking for warmer climes, lower tax rates and shared culture in the form of Orthodox Christianity — are thought to hold the majority of those accounts, with about €20 billion in the island's banks.

But Cyprus' banks held a lot of Greek debt and suffered significant losses when they took a writedown of those bonds as part of the Greek bailout. Much of Cyprus' bailout money will be used to recapitalize Cypriot banks to prevent them from collapsing. Like other eurozone countries, Cyprus has also seen its deficit and debt explode as growth has ground to a halt. And with the banking system so large, the government wouldn't have been able to bail it out even in a healthy economy.

WHAT WILL THE REACTION BE ON MONDAY?

Cyprus may be on holiday Monday, but the rest of the world will go back to work. Kirkegaard says that the decision to tax tap depositors indicates that the European Central Bank is confident that the risk of a bank run elsewhere in the eurozone is low — and by excluding Greek branches of Cypriot banks, they have reduced the possibility even further. Bond markets may react a little since bondholders were also tapped. Bank stocks will probably fall and they'll see their borrowing costs rise since this deal signals that other eurozone countries may call on bondholders if their banks run into trouble.

But Heather Conley, director of Europe program for the Center for Strategic and International Studies, says it's hard to know the far-reaching implications of this one-off deal. The "exceptions" created to solve Europe's debt crisis are adding up, she said. And some investors may look at this late-night, three-day-weekend deal and see what she saw: a dress rehearsal for a country dropping out of the euro.

___

[BeenThere...DoneThat...]

Mar 16, 2013 15:02:40 GMT -5 The Virginian said:

WOW - Greece just did what amounts to a confisicastion of 6.75 - 9.9 % of all Deposits in their banks ! How would like to wake up one day and find out obama has just that much of your savings - with no recourse? Could it happen here or elsewhere in Europe? Stay Tuned - This is scary stuff !


PARIS (AP) — People with bank accounts in Cyprus were shocked Saturday to learn that as part of an agreement reached with international creditors the government has imposed a tax on all deposits to help bail out the nation and its banks. Here's a look at the tax, which can be as high as 9.9 percent, and the problems it may pose.

HEY, HOW CAN THEY DO THAT?

As one of 17 nations that use the euro currency, Cyprus can to raise or lower taxes whenever it wants. Early Saturday, it secured a €10 billion ($13 billion) bailout from its European partners and the International Monetary Fund to save the banking sector and avoid bankruptcy. In return, the island nation has imposed the new tax, among other moves. It isn't the first time that a eurozone nation has raised taxes to cope with mounting debt and to prop up struggling banks. Residents of Greece, Portugal and Ireland — all bailout recipients — have seen their tax bills skyrocket in recent years as those countries tried to reduce their debts. But Cyprus is charting new ground here, and there could be legal — and political — challenges.

AND HOW EXACTLY WILL IT WORK?

Banks have already acted to seal off the amount of the levy — a 6.75 percent tax on deposits under €100,000 and 9.9 percent on those above — so depositors can't access it. Bank customers still can draw on the rest of their funds via ATM machines this weekend, although banks that usually open on Saturdays had limited hours. No international transfers will be able to go through until Tuesday, since Monday is a holiday. Cyprus' parliament is expected to meet Sunday to pass the required legislation. The deal also needs the approval of several eurozone parliaments; it's unclear how fast they can act and what will happen to bank deposits in the meantime.

HAS THIS EVER HAPPENED BEFORE?

So far in the euro crisis, depositors have been protected. But European countries have taxed bank deposits before. In the 1990s, Italy levied a tax on every bank account to stave off the collapse of its lire currency. The rate, however, was miniscule — 0.06 percent — compared to what Cyprus is enacting. Iceland — another island with an outsized financial sector, although worse weather — also relied on depositors to prop up its banks. When the crisis hit there in 2008, Iceland protected its domestic deposits but reneged on deposit insurance for overseas, Internet-based accounts held by British and Dutch. Those two governments stepped in to help their citizens to the tune of $5 billion. The U.K. and the Netherlands sued Iceland unsuccessfully in a European court to get their money back, but Iceland has nevertheless started to repay some of that money.

European officials are promising this Cyprus is a unique case, and they are right in one aspect: Cypriot banks are overwhelmingly funded by deposits, not bondholders. So it wouldn't have been very fruitful to go after bondholders.

WHO IS AFFECTED?

All people with money in Cypriot banks — except those with money in Greek branches, which will be sold to Greek banks. EU and IMF creditors clearly wanted to protect struggling Greece, but perhaps also saw that Greece is the most likely place in the eurozone for a bank run. Protecting depositors there minimizes that possibility. Of the more than €68 billion on deposit in Cypriot banks, foreigners hold about 40 percent — and most of those are Russians. Cyprus could have only gone after non-EU depositors, but it may have been hard to distinguish between Cypriot and Russian savers, said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics in Washington. That is because many Russians have dual citizenship and many Russian businesses are registered on the island. Kirkegaard said Cypriots may paradoxically welcome this measure since the government just managed to widen its tax base to include a lot of Russians; the taxes levied in Greece, Portugal and Ireland were for residents alone to shoulder.

WHY DID CYPRUS NEED A BAILOUT?

Cyprus built its economy in recent years by becoming a financial center, much the way Ireland and Iceland before it did. Its banks offered Internet accounts to foreigners, were renowned for their service, provided substantial privacy to clients and had very low taxes. It worked so well that Cyprus' banking industry ballooned to nearly eight times the country's gross domestic product at the height of the boom. In December, it was still more than seven times Cyprus' €17.5 billion GDP. Russians — looking for warmer climes, lower tax rates and shared culture in the form of Orthodox Christianity — are thought to hold the majority of those accounts, with about €20 billion in the island's banks.

But Cyprus' banks held a lot of Greek debt and suffered significant losses when they took a writedown of those bonds as part of the Greek bailout. Much of Cyprus' bailout money will be used to recapitalize Cypriot banks to prevent them from collapsing. Like other eurozone countries, Cyprus has also seen its deficit and debt explode as growth has ground to a halt. And with the banking system so large, the government wouldn't have been able to bail it out even in a healthy economy.

WHAT WILL THE REACTION BE ON MONDAY?

Cyprus may be on holiday Monday, but the rest of the world will go back to work. Kirkegaard says that the decision to tax tap depositors indicates that the European Central Bank is confident that the risk of a bank run elsewhere in the eurozone is low — and by excluding Greek branches of Cypriot banks, they have reduced the possibility even further. Bond markets may react a little since bondholders were also tapped. Bank stocks will probably fall and they'll see their borrowing costs rise since this deal signals that other eurozone countries may call on bondholders if their banks run into trouble.

But Heather Conley, director of Europe program for the Center for Strategic and International Studies, says it's hard to know the far-reaching implications of this one-off deal. The "exceptions" created to solve Europe's debt crisis are adding up, she said. And some investors may look at this late-night, three-day-weekend deal and see what she saw: a dress rehearsal for a country dropping out of the euro.

___

...yeah, that caught my eye...

[ModE98]

Fear not, it will not happen here.  We have a Congress and Supreme Court.  The president is not a supreme ruler and cannot do what would be unconstitutional and impeachable.  Believe it or not, Obama is not all all-out confiscator.  You can be sure of that.  I do not cringe in fear on mere suppositions.  European financial "solutions" do not apply here. 

[damnotagain]

Riots soon to follow .

[The Virginian]

There is nothing I would put past our Corrupt Government - I believe it very well could happen here !

[The Virginian]

The world learned Saturday that the small Mediterranean country of Cyprus had agreed to a deal with European Union creditors that would impose a financial transaction tax as high as 9.9 percent on all depositors.

Depending on whether the Cypriot government finalizes the deal, which is still pending, this means that every depositor will have a portion of his money confiscated by the government when the banks reopen Tuesday morning.

“Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized,” Business Insider’s Henry Blodget explains.

After these funds are seized, the EU’s emergency lending facility and the International Monetary Fund, headed by Christine LaGarde, will drop €10 billion on keeping the banks in Cyprus running.

Unsurprisingly, after Cypriots learned of the surprise deal, many rushed to empty their bank accounts. However, according to various reports, ATMs have not been functioning properly and the government has made it impossible to transfer money outside of the country’s borders.

Obviously, the EU’s bailout conditions (and the fact that Cyprus seems willing to go along with them) are unprecedented.

You see, most bank bailout efforts in the past have put the burden on bondholders — not the actual depositors. Furthermore, it has usually been the goal to protect depositors to keep them withdrawing their funds en masse, creating a “run on the bank.”

Rest of the Article : www.theblaze.com/stories/2013/03/17/thecyprus-tax-plan-what-does-this-mean-for-the-u-s-the-rest-of-the-world/

[/a][/p]

[The Virginian]

LONDON (AP) — Stocks around the world and the euro fell sharply Monday as investors fretted over a plan to tax depositors in Cypriot banks as a way to partly fund a bailout of the Mediterranean island nation.

Although Cyprus accounts for only around 0.2 percent of the economic output of the 17 European Union countries that use the common euro, the tax on depositors was a significant policy shift that has stoked fears of bank runs in other troubled European economies. Cyprus residents already emptied virtually all ATMs on the island in a weekend bank run.

"If European policymakers were looking for a way to undermine the public trust that underpins the foundation of any banking system they could not have done a better job," said Michael Hewson, senior market analyst at CMC Markets.

Since the European debt crisis began in late 2009, savers have been spared. But the bailout of Cyprus, agreed to early Saturday, foresees a 6.75 percent levy on deposits below €100,000 ($130,860), rising to 9.9 percent on those above.

The Cypriot Parliament has to back the proposal for it to pass, and lawmakers have called it an unfair blow to small savers, since deposits around the eurozone have been guaranteed up to the €100,000 level. The vote was postponed for a second time as lawmakers discuss possible changes to the tax rates, with the parliament speaker saying it will now take place Tuesday.

One new proposal would make the tax more graduated: placing a one-time 3 percent levy on deposits below €100,000, rising to 15 percent for those above €500,000.

"The bottom line is that it's very finely balanced and the success of the vote will depend on what tax breakdown goes before Parliament," said Adam Cole, an analyst at RBC Capital Markets.

The prospect of further uncertainty weighed on markets.

In Europe, the FTSE 100 index of leading British shares was down 1 percent at 6,428 while Germany's DAX fell 1.5 percent to 7,958. The CAC-40 in France was 1.5 percent lower at 7,955. Cyprus' stock exchange was closed for a bank holiday.

The euro was taking a pounding too, down 0.8 percent at $1.2950.

If it backs the levy, then Cyprus would be eligible for a €10 billion ($13 billion) financial rescue from its partners in the eurozone and the International Monetary Fund. It's the first time that deposits have been tapped to fund an EU nation's bank bailout.

German finance minister Wolfgang Schaeuble said a "no" vote by Cypriot lawmakers would have huge repercussions in the country.

"Then the Cypriot banks will no longer be solvent, and Cyprus will be in a very difficult situation," said Schaeuble, who insisted that every country involved in Europe's debt crisis is different. In the case of Cyprus, he said bank owners and investors had to participate in the rescue.

"It can't be done any other way if we want to avoid insolvency," he said.

Cyprus' banking sector is about eight times the size of the economy and has been accused of being a hub for money-laundering, particularly from Russia. That's why many European officials wanted to have the banks' depositors involved in the cost of the bailout.

In Asia, Japan's Nikkei 225 index slid 2.7 percent to 12,220.63, while Hong Kong's Hang Seng dropped 2 percent to 22,082.83.

Wall Street was headed for a retreat at the open too, with Dow futures down 0.6 percent and the broader S&P 500 futures 1 percent lower.

Oil prices were also under pressure, with the benchmark New York rate $1.20 lower at $92.25 a barrel.

hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2013-03-18-World%20Markets/id-6c15f323331d4e869b45d5e725c4e923

[The Virginian]

Breaking News !


Greek Banks have been closed until at least Thursday !

[The Virginian]

NICOSIA, Cyprus (AP) — Cyprus banks will remain closed until Thursday as lawmakers try to amend a measure to raid bank accounts in the country.

Aliki Stylianou, a spokeswoman for Cyprus' central bank, says Monday's bank holiday has been extended by two days.

The extension comes after a proposal to seize a percentage of all bank deposits in Cyprus, a move that was demanded as a condition for a €10 billion ($13.09 billion) international rescue package.

Cypriot lawmakers are now in talks to soften the blow for small savers before they approve the bailout. The parliamentary approval vote has been postponed from Monday until Tuesday evening.


I Beat AP on this one !

hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2013-03-18-Cyprus-Financial%20Crisis/id-a219c6b584c44f179269b43b1385fd52

[The Virginian]

 

Wed Mar 20, 2013 2:06pm EDT

* Head of lobby group warns only days left to act in Cyprus

* Nordea's Clausen criticises closure of island's banks

* IIF's Tran says depositor haircut risks deposit flight

By John O'Donnell

BRUSSELS, March 20 (Reuters) - A solution must be found to reopen Cypriot banks within days before it is "too late", one of Europe's top bankers warned on Wednesday, saying he feared the island's problems risked knocking confidence across the region.

"Everything needs to be solved very quickly. This is a matter of a very few days before it gets too late," Christian Clausen, president of lobby group the European Banking Federation told Reuters in an interview.

"Speed is extremely important," said Clausen, who is also chief executive of Nordea Group, the Nordic region's biggest lender.

Clausen's comments were echoed by Hung Tran, deputy managing director of the Institute of International Finance, a global bank lobby group.

"The country is small and the numbers involved are small but the symbolism is significant," Tran told Reuters. "The protection for small depositors has been violated.

"Deposits have never been haircut in five years of financial crisis," said Tran, who helped negotiate an earlier restructuring of Greek debt that handed losses to investors. "The risk is that there will be a deposit flight out of Cyprus."

The remarks underscore a growing sense of alarm in the banking community as Cyprus tries to avoid a default and bank crash having rejected the terms of a euro zone bailout.

Banks in Cyprus are set to remain closed on Thursday and Friday as the country races to find an alternative to imposing a levy on bank deposits in return for financial aid.

With Monday a public holiday, the move effectively closes lenders until Tuesday, March 26.

Describing the closure of bank branches as "a very bad thing to do" and the imposition of a levy on depositors as "unfortunate", Clausen said he feared that events in Cyprus would snuff out a gradual return of confidence.

"We are all very concerned that if it continues it may spread to some of the closer countries who do have problems with government debt," he said. "The real issue is how much this will impact confidence throughout Europe." (Reporting By John O'Donnell, editing by Mike Peacock)

[kent]

Mar 20, 2013 20:02:18 GMT -5 @wxyz said:

So now the Cyprus banks are going to stay closed till Tuesday March 26.  Big mistake.  This will allow more time for rumor, fear and panic to set in.  The longer the delay the more nervous people will get.  I predict a massive run on Cyprus banks when they eventually open, if ever.

  I'd be very surprised if there wasn't a run on the banks.

[The Virginian]

Hopefully that money will flow into US markets - We'll take good care of it for them !

[ModE98]

Deterioration at eurozone factories hits EU shares and the euro. The contraction in eurozone manufacturing has unexpectedly deepened this month, with PMI falling to 46.6 from 47.9 in February. Even German manufacturing shrank after growing in February. "The concern is that the (economic) downturn has gathered pace again," says Markit. Instead of stabilization as many have been hoping for, the slump could "intensify in the coming months." The data dragged down European shares and the euro, which was -0.25% vs the dollar at midday in Europe.

Source:  Seeking Alpha "Wall Street Breakfast"-Must Know News

[The Virginian]

Keeping an eye on Europe for a crash - and a buying opportunity - Looking for good ETF's to accomplish this !

[Value Buy]

And now the Cyprus implosion.
While small, Cyprus shows that Europe is now holding citizens hostage over the fate of the banking system.
What country in Europe is next?

[The Virginian]

Since most of the money in Cyprus was Russian - the bigger question might be what will Russia do? They just might take that little Island for their own since they paid for it !