OECD Chief Calls on Leaders to Protect Spain and Italy

Date: 28-06-2012

Source: The Wall Street Journal

BRUSSELS—The euro area should rush to the defense of Spain and Italy in the bond markets using all the institutions it has at its disposal, Angel Gurría, the secretary general of the Organization for Economic Cooperation and Development, said in an interview Wednesday.

Spain, which has already requested a €100 billion ($125 billion) bailout to recapitalize its banks, has been facing hostile borrowing conditions, with Italy, a much better performer, trailing it dangerously. European Union leaders will be meeting in Brussels Thursday and Friday, with the situation in Spain and Italy featuring high on the agenda.

Mr. Gurría, an outspoken critic of the so-called “muddling-through” policy-making method in the euro zone, said it was time for the European Central Bank, the euro-zone rescue funds and the European Investment Bank to be fully used to stem the ever-deepening sovereign-debt and banking crises engulfing the currency bloc.

The Disastrous Consequences of a Euro Crash

Date: 25-06-2012
Source: SPIEGEL
Subject: Imagining the Unthinkable

Fears are growing in Europe again that the euro could soon collapse.

As the debt crisis worsens in Spain and Italy, financial experts are warning of the catastrophic consequences of a crash of the euro: the destruction of trillions in assets and record high unemployment levels, even in Germany.

It isn’t long ago that Mario Draghi was spreading confidence and good cheer. “The worst is over,” the head of the European Central Bank (ECB) told Germany’s Bild newspaper only a few weeks ago. The situation in the euro zone had “stabilized,” Draghi said, and “investor confidence was returning.” And because everything seemed to be on track, Draghi even accepted a Prussian spiked helmet from the reporters. Hurrah.

Mario Monti: we have a week to save the eurozone

Gott sei Dank weiss ich als erfahrener Italien-Veteran, was “una settimana”  auf italienisch bedeutet. In dem Land, wo man schon um 14 h “buona sera” sagt, wo man sich Termine für “mattina” o “pomeriggio” (Vormittag oder Nachmittag) ausmacht (hfk)

Date: 22-06-2012
Source: The Guardian

Italian prime minister warns that there is no room for failure in talks between single currency’s big four countries

Italian prime minister Mario Monti has spoken of the potentially disastrous consequences of the collapse of the eurozone. Photograph: Edgard Garrido/Reuters

Italy’s prime minister, Mario Monti, has warned of the apocalyptic consequences of failure at next week’s summit of EU leaders, outlining a potential death spiral that could threaten the political and economic future of Europe (not of Europe, but of Italy – hfk)

The Italian leader is to hold talks with Chancellor Angela Merkel of Germany, the French president, François Hollande, and Spain’s prime minister, Mariano Rajoy, in the hope that the single currency’s big four countries can pave the way for a breakthrough at next week’s meeting.

Speaking to the Guardian and a group of leading European newspapers, Monti said that, without a successful outcome at the summit, “there would be progressively greater speculative attacks on individual countries, with harassment of the weaker countries”. The attacks would be focused not only on those who had failed to respect EU guidelines, but also on those like Italy, which he said had abided by the rules “but which carry with them from the past a high debt”.

Four reasons why the euro will survive

Date: 08-06-2012
Source: Fortune

Despite the many dire predictions about the collapse of the euro zone’s common currency, there are good reasons to believe it will survive.

FORTUNE – The state of the euro looks bleaker by the day. Amid a deepening banking crisis in Spain and ahead of a pivotal June 17 Greek election that could make or break the nation’s ties with the euro zone, the idea of a euro break up has increasingly become a possibility.

The usual suspects have weighed in: Economist Nouriel Roubini, credited for having foreseen the credit crunch, has said the euro zone would collapse sometime this year, with the departure of Greece and Portugal. Nassim Taleb, author of The Black Swan, has boldly said the end of the common currency “is not a big deal.”

And many others on Wall Street have raised chances of a breakup. Last month, Morgan Stanley’s Jonathan Garner told Bloomberg the firm raised its likelihood to 35% from 25%, with the pace of a breakup accelerating over 12 to 18 months as opposed to the previously estimated three to five years. And now half of the population of Germany, which is widely viewed as the euro’s savior, believe the common currency has done more bad than good for Germany, up from 43% in February, according to The Wall Street Journal, citing a poll released late last month by public broadcaster ZDF.

Von Bankenunion bis Griechen-Exit: Vier Wege aus der Euro-Krise

Date: 05-06-2012
Source: SPIEGEL

Spanien bekommt seine Bankenkrise nicht in den Griff, europaweit wachsen die Schulden, die Aktienkurse sacken ab. Laut US-Großinvestor Soros bleiben für die Euro-Rettung nur noch drei Monate Zeit – danach drohe eine Katastrophe. Aber welchen Ausweg gibt es? Vier konkrete Lösungen.

Hamburg – Es waren einige trügerische Wochen der Ruhe für den Euro. Doch jetzt häufen sich wieder die Alarmsignale: Spanien entdeckt bei seinen Banken immer größere Milliardenlöcher, der Finanzminister in Madrid warnt: Das Land habe de facto keinen Zugang mehr zum Kapitalmarktmarkt. Weltweit schränken Geldhäuser ihre Kreditvergabe ein, Euro-Kurs und Börsenindizes sacken ab. Und nach den Neuwahlen in Griechenland Mitte Juni könnten die Reformgegner erstmals den Ministerpräsidenten stellen.

All das verunsichert Experten. Der US-Großinvestor George Soros sieht für die Rettung des Euro gar nur noch ein Zeitfenster von drei Monaten – sonst stürze die EU in ein “verlorenes Jahrzehnt”, wie Südamerika in den achtziger Jahren. Es ist, als hätten sich alle daran erinnert, dass Europa immer noch in der Krise steckt.

Felix Zulauf im Interview: „Es wird unendliches Leid über Europa gebracht“

Eine ganz wesentliche Reflexion über die Krise (hfk)

von Frank Doll

04.06.2012, 10:54 Uhr, Wirtschaftswoche

Griechenland wird nicht das einzige Land sein, das wegen der wirtschaftlichen Depression den Euro bald aufgeben muss, sagt der Finanzmarktexperte Felix Zulauf. Wie Anleger ihr Kapital in dem drohenden Chaos retten.

Zulauf, Jahrgang 1950, zählt zu den weltweit renommiertesten Vermögensmanagern. Seit 1986 nimmt er alljährlich mit anderen Investmentlegenden Platz am berühmten Börsen-Roundtable des US-Anlegermagazins Barron’s. Zulauf war der erste Ausländer, dem diese Ehre zuteil wurde. Quelle: Pressebild

Herr Zulauf, welcher europäischen Großbank geht bald die Luft aus?

Felix Zulauf: Im Prinzip sind in Europa schon mehrere Banken pleite, vermutlich auch einige in den USA. Aber die Regierungen werden keine große Bank bankrott gehen lassen.

Warum eigentlich nicht?

Der Ausfall einer großen Bank würde Ausfälle bei anderen nach sich ziehen, die der Pleitebank Kredit gegeben oder von dieser Derivate gekauft haben. Es würde also zu einer Kettenreaktion und letztlich zum Zusammenbruch des Finanzsystems kommen. Um den zu verhindern, werden im Lauf der nächsten zwei bis drei Jahre weitere Banken verstaatlicht werden, in den Peripherieländern, aber auch darüber hinaus.

Griechenland könnte nicht das einzige Land bleiben, das aus dem Euro austreten muss, meint Geldexperte Felix Zulauf. Quelle: dpa

Große Verstaatlichungen wären vor drei bis vier Jahren billiger gewesen.

Richtig. Schon während der damaligen Krise hätten alle systemrelevanten Banken sofort verstaatlicht werden müssen – zu Tiefstkursen. Danach hätte man Bonuszahlungen aussetzen und die Banken sukzessive auf eine stärkere Eigenkapitalbasis stellen können. Nach sieben bis zehn Jahren wären die überlebensfähigen Banken wieder reif für den Markt gewesen. In der jetzigen Form werden viele Banken nicht überleben.

World Bank Blasts Europe’s Euro-Crisis Management

Date: 01-06-2012
Source: SPIEGEL

Growing Concern

Is the euro entering the end game?
With Spanish banks on the brink and the Greek political situation uncertain, many senior economic leaders say that the time for drastic action is swiftly approaching. On Friday, World Bank head Robert Zoellick argued that it is almost time to “break the glass” on the emergency alarm.

Is it time for Europe to break the glass and pull the alarm? World Bank chief Robert Zoellick certainly thinks so. In an editorial for the Friday edition of the Financial Times, Zoellick wrote that “while those living in the euro-zone building, especially those on the executive floors, will not want to hear an alarm, they had best read the instructions. Events in Greece could trigger financial fright in Spain, Italy and across the euro zone, pushing Europe into a danger zone.”

Europe’s Depressing Prospects: Two Reasons Why Spain Will Leave the Euro

 

Excellent, Michael Pettis ! (hfk)

Author: Michael Pettis · May 18th, 2012 · RGE EconoMonitor

Normally I don’t like to write about European prospects in the midst of a very rough patch in the market because in that case there isn’t much I can say that isn’t already being said. I find it more useful to wait for those recurring periods in which the markets recover and optimism rises. Still, given the conjunction of political uncertainty in Beijing, low Chinese growth numbers, and another round of deteriorating circumstances in Europe, I will spend most of this issue of the newsletter trying to outline the possible paths countries like Spain must face.

For several years I have been saying that Spain would leave the euro and restructure its external debt. I should say that I specify Spain because it is the country in which I was born and grew up, and so it is also the country I know best. When I say Spain, however, I really mean all the peripheral European countries that, like Spain, are uncompetitive, have high debt levels, and suffer from low savings rates that had been forced down in the past decade to dangerous levels.

Spain had a stronger fiscal position and healthier bank balance sheets than many of its peers when the crisis began, so any argument that applies to Spain is likely to apply more forcefully to its peers. As an aside I will add that France is for me the dividing line between countries that will be forced into devaluation and restructuring and those that won’t – in my opinion France could go either way and we will get a much better sense of this in the first year of Hollande’s presidency.

Date: 23-05-2012
Source: The Wall Street Journal
Subject: Ex-Premier Says Greece Must Stick With Cuts

Greece’s former Prime Minister Lucas Papademos told the Journal that, “it cannot be excluded that preparations are being made to contain the potential consequences of a Greek euro exit.”

LONDON—Greece’s former Prime Minister Lucas Papademos on Tuesday warned that Greeks have no choice but to stick with a painful austerity program dictated by its lenders or face an exit from the euro zone that would devastate the economy, boost inflation and generate new social strains.

In his first interview since leaving office last week, Mr. Papademos told The Wall Street Journal that dropping the common currency would have “catastrophic” economic consequences for Greece and profound and far-reaching implications for the rest of the euro zone. This is why some European states and institutions are considering contingency plans for any eventuality, he said.

If Greece goes…

Date: 11-05-2012

Source: The Economist

AS WE argue in our briefing this week, a Greek exit from the euro zone would not just be chaotic for Greece itself but would also invite questions about the status of Portugal, Ireland and others. So what would policymakers have to do at the moment of a Greek exit to persuade investors and depositors that Greece really was the exception proving the rule of euro unity?

It would not be enough to spout reassuringly about togetherness when the irreversibility of euro membership had just been disproved. A credible commitment to mutualise the debts of remaining euro-zone countries would probably do the trick, but it is hard to see how such a pledge could be made credible enough in the near future. There is no consensus among Europe’s elites that this is the way to go; and the political journey to that destination would rightly require parliamentary votes and refererendums.