In the latest brouhaha over eurozone QE, three German businessman are seeking to block the bond-buying programme, claiming it contravenes the Maastricht Treaty's prohibition of monetary financing of governments. Entrepreneurs Heinrich Weiss, Patrick Adenauer and Juergen Heraeus are seeking to challenge QE at the German Constitutional Court, having already taken the ECB to court over its Outright Monetary Transaction (OMT) scheme announced in 2012. According to one of the claimants: "QE is a quantum leap, which essentially means countries' debt is being financed via the printing press." The central bank's action (and inaction) seems to be winning it no friends among debtor and creditor countries, which means it's probably just about doing OK. Mario Draghi is also looking suitably pleased with himself having thoroughly repudiated any claims that the ECB was "blackmailing" Athens by refusing to increase its liquidity support. A stony-faced Merkel reiterated what she had said in Brussels on Friday after a late-night session with Tsipras – that a 20 February agreement with the eurozone extending Greece’s bailout until the end of June remained the yardstick. That agreement obliges Tsipras to deliver a persuasive menu of detailed fiscal and structural reforms which need to be vetted by the eurozone before any further bailout funding can be released. Asked if she had reached any agreements with Tsipras, Merkel avoided the question and stressed she was only one of 19 eurozone national leaders. Tsipras was believed to have told the German leader that Greece faced insolvency within weeks without the release of more funds, which are being held up because he has failed to produce a coherent policy package. “The medium-term liquidity problem is well known,” he said. “We inherited it.” While neither side wants Greece to leave the euro, the lack of agreement in Berlin signalled a digging in of hardline positions on both sides that could result in a major negotiating failure. Support for the Greek government remains strong at home, in inverse proportion to the lack of trust in Tsipras among his main creditors. A growing majority of Germans do not believe Greece will do what it must to stay in the euro and would prefer to see it leave. The Eurasia group risk consultancy on Monday raised its assessment of the chance of Greece having to quit the euro to 30%, up from a previous 20%.
Monday, March 30, 2015
Sunday, March 29, 2015
The Greek government will not receive €1.2bn (£883m) in European rescue funds after the bloc's officials ruled the Leftist government had no legal claims on the cash. Athens requested a return of the funds it said were erroneously handed to creditors from Greece's own bank recapitalisation fund, the Hellenic Financial Stability Facility (HFSF). The transfer was originally arranged by the previous Greek administration. But eurozone offcials have blocked the claim, saying it is "legally impossible" transfer the money back to Athens. "There was agreement that, legally, there was no over payment from the HFSF to the EFSF," said an fund spokesman. Germany's finance ministry was also reluctant to allow the release, claiming there was "no reason" to make the transfer. The decision is a further blow to the Greek government's attempts to stay afloat over the next few weeks. Athens has been scrambling to make repayments to its creditors and continue to pay wages and pensions. The government now faces another €450m cash squeeze at the beginning of April. As part of its efforts to stay solvent, the Leftist government has also requested a €1.9bn transfer of profits held by the European Central Bank, from the holdings of its Greek debt. So far, the ECB has rebuffed all Greek pleas to alleviate their cash squeeze. The central bank moved to officially bank the country's banks from increasing their holdings of short-term government debt.
Saturday, March 28, 2015
Cheap oil is great when you're filling the tank of your car or topping off fuel for your oil burner for a last-minute winter blast. But not everyone benefits from low oil prices, as Daily Finance has reported. In particular, more forms of oil production that are costlier and economic when crude tops $100 a barrel can quickly go out of favor when prices are less than half of that. Heavy layoffs had already begun in January, according to Daily Finance, hitting 31,000 by the end of the month. They were only expected to get more intense, and they have. Worldwide, layoffs have broken the 100,000 mark, as a Bloomberg story mentioned. The problem is that the oil industry interconnects with many others. Production requires equipment, which uses steel and other metals. Professionals buy and sell commodities. Refineries tend to specialize in certain qualities of oil. Slow product of something like tar sands oil and all sorts of companies that feel the pinch might start layoffs...Tens of thousands of workers of all types - drillers, commodities experts, safety inspectors, pipefitters, support staff, and many others - have pulled up their roots and headed to oil boomtowns where the pay was good. As the layoffs come, not only are they hit hard, but are likely far from friends, family, and any support network. Australia has been hit hard. So has Canada, according to the Globe and Mail, where tar sands made expensive but available oil. Multiple companies in Calgary alone have announced significant staff reductions. Cutbacks are so severe that the Organization for Economic Co-operation and Development has reduced estimates of Canadian growth in 2015. The U.S. is hardly immune. According to Forbes, there have been nearly 59,000 layoffs by oil service companies. Manufacturing companies have cut 7,100 jobs. Beyond the problems the individuals and their families face is the potential impact on the U.S. economy. Not only do the layoffs mean less consumer spending, but the oil industry has represented one source of new jobs, only with good salaries, rather than the many low-paid service industry positions that have helped expand the number of jobs, but not people with much ready cash to spend.
Friday, March 27, 2015
Nations are being controlled by the parliamentary system of the EU. Nations therefore reject being pushed around. Nations vote for their own leaders but not the leaders of the EU. Most laws that effect EU member states are made in Brussels. The national governments have lost their power to govern. The national political systems were designed to cope with the concept of the total control of their nation . Today this not the case . Big Brother Brussels dictates most laws that effect EU member nations. Thus we have too many nations with too many national politicians for the needs of nations. EU laws that may be good for Germany of the UK ,however are way out of line for Greece or Italy. The EU has relegated national governments to municipal level. A low grade position as it were. Thus too many politicians are sitting around complaining all day and have not powers of governing. France is a socialist marvel, a place to which many, many people want to go and live forever. Everything is better in France. Just ask the French. They elect socialist leaders because they know in their hearts socialism is a joy and the best way to organize an economy. In fact, France is so wonderful that they even have complete districts with sha'ri'a law that protects women from the molestations of others. The French welcome any and all who want to enjoy such bounty.
If only the rest of the proles of Europe would accept such a model, Utopia would be at hand!
Thursday, March 26, 2015
With another 350 million euros leaving Greece on Friday for a payment due to the International Monetary Fund, the state coffer looks frighteningly empty. At the same time, state revenues have dropped significantly. Greek banks face a serious liquidity problem as on Wednesday alone depositors withdrew a total 300 million euros. At the same time, they only received 400 million euros under the Emergency Liquidity Assistance scheme. The ELA limit is 69.6 billion euros.
At the same time, the Greek state withdraws available funds from security funds in order to cover financing needs. A Greek official said in Brussels that Athens has no problem paying the 350-million-euro installment to the IMF. However, by the end of April Athens will need 4.3 billion euros for public employees’ salaries, pensions and other obligations. At the same time banks should renew state bonds worth 2.4 billion euros. Another major problem for the Greek economy is non performing loans.Loan payments have been extremely low since the beginning of the year when Greece was gearing up for snap elections. Debts to the state also increased as taxpayers are uncertain over new tax laws. In the first two months in 2015, there were 57 million euros in bad checks and unpaid bills of exchange. Loan payments dropped by 1.5 billion euros while payments for debts to the state dropped by 1.7 billion euros. - "Can we all spend lots of time & loads of money at meetings into the small hours, where we can all pretend that Greece is going to compute how it is going to increase its revenues and pretend also that Greece will be able to repay its debts, and pretend at the same time that we will NOT bail Greece out but then offer some small assistance so we can get our Banks off the hook, and then pretend that Greece is suited to the Eurozone and pretend to be tough so our electors think we know how to manage, and then pretend to be tough but give yet more money to Greece, and pretend further, that Greece will remain in the Eurozone forever..................... and that the Euro concept is truly wonderful and good for all nations and ................Yours truly and lovingly, Aunty Merkel....... ad infinitum, etc. etc, Blah, bulls--t. waffle, drinks all round etc.
Wednesday, March 25, 2015
The Fed expects strong job growth to drive the unemployment rate – now 5.5% and close to the Fed's long-run goal—to 5% to 5.2% by year-end, below its previous forecast of 5.2% to 5.3%. The rate, it predicts, will fall to 4.9% to 5.1% by the end of 2016, vs. its previous estimate of 5% to 5.2%.
Fed policymakers are struggling to respond to the unusual crosscurrents of a surging labor market and anemic inflation. The economy added more than 3 million jobs in 2014 and 295,000 last month, pushing down the unemployment rate to a near-normal 5.5% from 10% in 2009.
Falling unemployment typically drives up wages and prices as employers compete for fewer workers. But low oil prices and a strong dollar that makes imports cheap for US consumers have held inflation well below the Fed's target, with its preferred measure at just 0.2% in January. That leaves the economy vulnerable to tremors that could nudge it into deflation, or falling wages and prices that can portend a recession. Yellen has said she believes the meager inflation is "transitory," with oil and gasoline prices expected to rise this year and the dollar likely to appreciate more slowly in coming months. Still, Goldman Sachs expects "core" inflation, which excludes food and energy costs, to fall further by mid-year, delaying a rate increase until September.
And while many economists expect average wage growth to pick up this year from its sluggish 2% pace, it's unclear how quickly that will happen. Businesses can still draw from an ample supply of discouraged workers who have stopped looking for jobs and part-timers who prefer full-time positions, allowing them to raise pay cautiously.
Tuesday, March 24, 2015
An Airbus A320 carrying 148 people has crashed in the Alps in southeastern France. French authorities confirmed the Germanwings plane was flying from Barcelona to Dusseldorf when it disappeared from radar. 142 passengers, two pilots and four stewards were on board. It crashed in the Massif des Trois évêchs in the valley of Haute-Bléone, in the region of Digne. Emergency services are on their way.