Financial Market Report for the week ending February 3, 2012
1) … Introduction: Stocks trade up on jobs report and ECB LTRO credit liqudity, yet the perfect storm of crises, and the great deflation, await.
Mathew Craft of AP reports Stocks Soar After Strong Jobs Report.
Today's rise and the recent strong rally in stocks comes via neo liberal finance from the ECB's LTRO facility. Some of the credit liquidity provided from the ECB to prevent bank runs on European Financial Institutions became carry trade lending that boosted stocks, VT, VSS; and now some commodities, DBC, USCI, such as CUT, DBB, JJN, JJT, JJU, JJC, LD, rose as well.
Raw Story relates Greenpeace Chief Warns Of Perfect Storm Of Crises. Speaking for the first time at the Munich Security Conference, Kumi Naidoo presented an apocalyptic version of the state of the world."The moment of history we are in can be described as a boiling point or a perfect storm," he told the assembled gathering of world leaders, ministers, top brass and defence policy experts at the annual Munich gathering. We are seeing a convergence of multiple crises happening at the same time. A food crisis, climate crisis, poverty crisis … and then of course the financial crisis and a demographic crisis and a global governance democratic crisis," he added.
Doug Noland relates some of history's most notorious bubbles developed in an atypical environment comprising loose monetary policy and well-anchored consumer price inflation. One can look to the seemingly sanguine pricing backdrops in the U.S. during the "Roaring Twenties" and Japan in the eighties as cases in point. There are reasons why speculative Bubbles tend to end with destabilizing "blow-off" tops.
Zero Hedge provides some perfect storm of crises news. Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30-Year Low. And Greece Draws The Line As Unity Government Leaders Refuse To Cede To Further Troika Austerity Demands. (Hat Tip to Between The Hedges)
The great deflation is inevitable, it cannot be restrained, it will likely be triggered by fears of EU debt contagion and fears of Greek default.
2) … Stocks rally as jobless rate falls, being fueled higher by ECB LTRO funding.
The Dow Jones industrial average, DIA, closed at its highest level ever. I comment that the rally in the Dow, DIA, is simply part of a great rally in US based infrastructure, PKB, as well as home building, ITB, biotechnology, XBI, steel, SLX, Small Cap Industrial, PSCI, and small cap pure value, RZV, as is seen in the chart of TAN, PKB, RZV, ITB, XBI, EWZS, ERUS, SCIF, CHII. This rally has come via financing via the ECB's LTRO money printing operation. And the rally represents a call higher in the Brazilian Real, BZF, the Russian Ruble, FXRU, the India Rupe ICN, and Emerging Market Currencies, CEW.
Gary of Between The Hedges relates Shanghai Copper Inventories are up +471.0% ytd to the highest level since March of last year and approaching their April 2010 record. In as much as stockpiles of copper in China reflect ponzi loan financing activity, this build-up likely represent a collateral call on such lending.
Coal Mining, KOL, and Copper Mining, COPX, led S&P Mining, MXI, higher.
Infrastructure, PKB, EMIF, CHXX, INXX, BRXX, GRID, rose
E.I. du Pont de Nemours and Company, and a number of US chemical manufacturers, have been at the forefront of the safe haven from EU debt contagion and now ECB LTRO funded rally as is seen in the chart of DD, DOW, ALB, ASH, FMC, RPM, The chart of FMC shows an ascending wedge, and exemplifies the overextended nature of the current rally.
FMC is one of fifty stocks seen in this Finviz Screener which shows the overextended debt contagion rally funded by the ECB's LTRO ponzi credit. Intuitive Surgical, ISRG, also has the same ascending wedge pattern; prices usually fall from such patterns. It's rise is now complete and represents a short selling opportunity. The US Federal Reserve and ECB's monetary policies are extreme forms ponzi credit that exceed that of sub prime lending and HELOC lending. An implosion of stock values, known as the Great Deleveraging is imminent, all that is needed is a pivotal event like fears of Greek default.
CNBC reports Moody's Sees Negative Ratings Trend for Asian Firms. Such a report is a negative for both International corporate Bonds, PICB, and the Asian Shares, EPP.
The Morgan Stanley Cyclical Index, ^CYC, rose.
Currency carry trade investing, called Steel Manufacturers,SLX, higher. These included Brazil, SID, Russia, MTL, India, TTM. Currency carry trade investing called Copper Miners, COPX, in India, SLT, in China, LIWA, and in Peru, SCCO, higher. The charts of Brazil, EWZ, Russia, RSX, India, INP, and China, FXI, show a parabolic rise in value. That which goes parabolically higher, soon goes quickly lower.
The ECB LTRO carry trade lending is stimulating Neoliberalism death rattle rally. Major World Currencies, DBV, and Emerging Market Currencies, CEW, fell lower in July 2011, on fears that a debt union had formed. Yet these have been getting the ECB's cool aid to the glee of FX currency traders. investors. Currencies trading higher today included the following, causing countries to move higher.
Mexico Peso, FXM, … Latin America Small Caps LATM,
India Rupe, ICN, … India Small Caps, SCIF,
South Africa Rand, SZR, … South Africa, EZA,
Brazilian Real, BZF, … Brazil Small Caps, EWZS,
Australian Dollar, FXA, … Australian Small Caps, KROO,
Russian Ruble, FXRU, … Russia Small Caps, ERUS,
Emerging Markets, CEW, … Emerging Market Leaders,EWX,
The chart of Apple, AAPL, shows that it is reaching its zenith.
The world awaits another pivotal event, such as the default of Greece, for competitive currency devaluation, to recommence, and begin the Great Deflation. The monthly chart of the S&P, SPY, shows a rise to a double top Elliott Wave 2 high. And the monthly chart of the Dow, DIA, shows an rise to a Elliott Wave 5 of 5 high as And the monthly chart of the Small Cap Pure Value, RZV, shows an rise to a double top high. The Nasdaq100, QTEC, closed at the highest level since early 2001.
Greece, GREK, was the only country trading lower today.
The chart of ZROZ, EDV, TLT, communicates that bond vigilantes have gained control of both the 10 Year US Treasury Note Rate, ^TNX, which traded up from a low on January 31, 2012. and the 30 Year US Government Bond, ^TYX. This is confirmed in the chart of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, manifesting bullish engulfing and the Flattner ETF, FLAT, turning down, and the Steepner ETF, STPP, turning up.
Matt Phillips of the WSJ relates Investors have piled into mortgage bonds, MBB, guaranteed by U.S. housing agencies, in a bet that the Federal Reserve will launch a third round of stimulus aimed at the housing market. That buying has sent yields for securities backed by newly originated 30-year mortgages to record lows this week. And Doug Noland reports Freddie Mac 30-year fixed mortgage rates dropped 11 bps to 3.87% (down 94bps y-o-y). Fifteen-year fixed rates fell 10 bps to 3.14% (down 94bps y-o-y). One-year ARMs were up 2 bps to 2.76% (down 50bps y-o-y). Bankrate's survey of jumbo mortgage borrowing costs had 30-yr fixed rates up 14 bps to 4.60% (down 77bps y-o-y).
Doug Noland relates Tracy Alloway of Financial Times reports "The use of lower-rated debt in a key US funding market has returned to pre-crisis levels, fuelling fears that the so-called shadow banking system is becoming riskier. The repo market is an important part of the shadow banking sector, which consists of unregulated financial institutions and activities. When the US housing bubble burst, the banks' trading partners refused to accept such securities as collateral and the repo market rapidly contracted. However, a study by Fitch Ratings says the proportion of bundled debt being used as security in repo transactions has returned to pre-crisis levels. 'These are less liquid, longer-tenor assets that are funded short-term by highly risk-averse lenders,' said Robert Grossman, head of macro credit research at Fitch. 'In a period of market turbulence, all of the parties to a repo would be affected,' he added, meaning that both banks and funds could be hit."
And Doug Noland relates Nicole Bullock and Robin Wigglesworth of Financial Times report "Junk bonds, JNK, until last year one of the favoured post-crisis asset classes for many investors, are enjoying a vigorous rally that has drawn comparisons with the credit boom. US corporate debt rated below investment grade, or junk, has notched up a 3% return this year, according to Barclays Capital… Issuance has reached $19.5bn, Dealogic says. European junk bonds have returned 5.3% to investors and issuance has rebounded to almost $6bn. 'We've seen nothing like it [in Europe] since the halcyon days before the subprime crisis,' Suki Mann, a strategist at Société Générale said. 'This is effectively a massive rally in credit. The message isn't hidden or subtle: buy corporate bonds, simple. Rather add risk, any risk and there's no point in being measured about it."
The Telegraph reports deleveraging out of speculative trades in oil, as neoliberal credit from the US Central Bank monetary policies exhausts. Oil Price Could Fall to $70 in 2012 Amid Volatility Shell Warns. Oil prices could fall to $70 a barrel during 2012, from current levels above $110, as high volatility in the economy and energy markets becomes "a fact of life", Royal Dutch Shell execs said.
3) …. The Great Deflation Is Held In Abeyance, It Cannot Be Avoided
The great deflation has not been abated, it is only being held in abeyance. In July 2011, investors became alarmed that a debt union had formed in the EU and sold the world major currencies, DBV, and the world emerging market currencies, as well as stocks, ACWI, and VSS. But their has been a recovery which has been fueled by investment capital from the LTRO facility. Nevertheless deflationism has replaced inflationism. Greece's is in a deflationary spiral, a tsunami of European sovereign debt need replenishing, and a EU bank deflationary lending cycle will cause disinvesting out of stocks and deleveraging out of commodities.
Greece is in a deflationary spiral. Greece is experiencing economic imploding. Bloomberg reports Greece Aiming to Close Swap in Second Bailout Faces Fight to Stay in Euro. Greece's fight to win its second international bailout may only open a new chapter in its struggle to remain in the euro area. The rescue plan, which European officials and Greek creditors say may be wrapped up in coming days, includes a loss of more than 70 percent for bondholders in a voluntary exchange and loans likely to exceed the 130 billion euros ($171 billion) now on the table. That won't stanch the bleeding, say economists including Holger Schmieding of Berenberg Bank in London. Greece will be saddled with too much debt, too little growth and too large a budget hole to do without even more money that euro nations led by Germany are increasingly reluctant to offer, they say. "Greece is in deep trouble," Schmieding said in a Jan. 30 report. "The current Greek adjustment program is failing. Excessive austerity, a lack of supply-side reforms, administrative incompetence and political deadlock have pushed the Greek economy into an apparent death spiral. More of the same will not work." As Greek officials negotiate with representatives of the so-called troika -- the European Commission, European Central Bank and International Monetary Fund -- Deutsche Bank AG Chief Executive Officer Josef Ackermann may travel to Athens this weekend for talks over a swap involving Greek debt with a face value of about 200 billion euros.
Louise Armitstead of the Telegraph reports Eurozone Bail-Out Funds Not Enough, Warns OECD. International debt inspectors believe they have found another €15bn (£12.5bn) black hole in Greece's public finances caused by the deepening recession, delivering the crippled nation another devastating blow. With pressure growing over talks with private investors about the terms of a €100bn debt write-off, officials calculated that to bring the country's debts to a sustainable level at 120pc of GDP the international community would need to find an extra €15bn, raising the prospect of a Greek default. Sources told news organisations in Brussels that weak growth will make it even more difficult for Greece to resolve its debt problem, leaving the eurozone and the International Monetary Fund with the prospect of an even larger bail-out than the €130bn planned. The warning came as the Organisation for Economic Co-operation and Development (OECD) said the emergency bail-out funds are not big enough. The international think-tank said the EFSF €440bn (£366bn) firepower "is not enough" to support the lending requirements of indebted countries, particularly given that it "has not found it easy to raise funds with low yields". Greece, Portugal, Italy, Ireland and Spain need to repay a total of €700bn this year and €400bn next year.
A deleveraging cycle out of corporate and other loans at the European Financial Institutions will deplete bank capital. Tyler Durden writes in Europe's "Great Deleveraging" Has Only Just Begun. While Europe's financial services sector equity prices have retraced almost half of their May11 to Oct11 losses as we are told incessantly not to underestimate the impact of the LTRO, Morgan Stanley points out the other side of the balance sheet will continue to sag. While short-term liquidity (at least EUR-based liquidity as USD FX Swap lines are back at record highs this week) may have seen some of its risk culled, the real tail risk of the Great Deleveraging has only just begun. As MS notes, we may have avoided a credit crunch but European banks could delever between EUR1.5 and EUR2 Trillion over the next 18 months as the unwind is far from over. As we discussed last night relating Vicious Cycles Persist As Global Lending Standards Tighten, this deleveraging will inevitably lead to continued contraction in European lending to the real economy (no matter how much liquidity is force-fed to the banking system) which will most explicitly impact Southern and Peripheral Europe and the Emerging Markets of Central and Eastern Europe. In the meantime, we assume the Central Banks of the world will do the only thing they know, print and funnel liquidity to these increasingly zombified financial institutions; and while Dicky Fisher was calming us all down this evening on our QE3 expectations (given Gold and Silver's recent price action), it seems perhaps even the Fed is getting nervous at just how little surprise factor they have left given such a ravenously hungry deleveraging and insatiable need to maintain the market/economy's nominally positive appearances.
Mike Mish Shedlock reports The Impossible Clean Up Of Spain's Banks. EU Business reports Spain Unveils EUR 50bn Bank Sector Clean-Up. Spain's government unveiled reforms Thursday that will oblige banks to clean up their bad loans by building up provisions and capital reserves totalling 50 billion euros ($65 billion). The banking sector is weighed down by a mountain of soured loans and property assets that are losing their value after the collapse of the Spanish property market in 2008. According to the Bank of Spain, the sector had 176 billion euros in problem loans and seized real estate in June 2011 -- a figure which has probably increased since, as the economy has weakened. The sector has undergone a major restructuring since 2008 but the government considers it still to be at risk despite banks putting aside a third of this amount to cushion the blow when they sell off the bad assets. The new reform aims to "generate mergers to form viable entities" out of struggling ones so that "the clean-up will be quick and deep", De Guindos said. The Impossible Dream. There was 176 billion euros in problem loans last summer. What is total now, 250 billion? Banks are somehow supposed to come up with $50 billion in capital (when? how?) after which they merge struggling banks and via some undisclosed magic process "the clean-up will be quick and deep" forming viable banks. This is an easy call, especially in light of employment trends: That plan is doomed and Spain is in deep trouble.
The dynamos of profit and growth that empowered capitalism have been exhausted through US Central Bank and ECB monetary policy. Creative Destruction is powering up the dynamos of regional security and stability. Public private partnerships led by monetary cardinals will provide credit, and oversee natural resources and production, under the authority of the monetary pope, Mario Draghi. Also, budget commissioners will oversee government budgets implementing strategic reforms and austerity measures. These new sovereign authorities will work together to mature regional global governance; their efforts will described as regionalization. In the new economy, diktat will replace both fiat money and credit. Choice is an epitaph on the tombstone of a bygone era. Freedom, free enterprise, and a free monetary system, are Libertarian principles seen in the Ron Paul agenda; yet they are mirages on the Neoauthoritarian Desert of the Real. The sovereign, junk, personal, and corporate credit boom that produced the debt economy, is history; the debt servitude experience will commence soon.
The old economy of capitalism was based upon the Milton Friedman Free To Choose script of floating currencies for growth, jobs, and profit. Fears of debt contagion, most likely from a Greek default will resurface soon, causing derisking out of stocks, and deleveraging out of commodities. Through creative destruction, leaders' framework agreements will provide diktat for regional security and stability.
The collapse of Greece, GREK, and the National Bank of Greece, NBG, together with the bursting of the global government fiance bubble bubble, BWX, will be the genesis that transforms democracy into diktat.
Bloomberg reports Greece Talks Enter 'Final Phase' on Second Bailout to Secure Place in Euro. Greece may conclude a seven month effort to wrap up its second bailout in the coming days with the country's stability hanging in the balance. A plan that's been in the works since July may emerge from parallel talks among caretaker Prime Minister Lucas Papademos's coalition members; international monitors and Greek officials; and Greece's government and its creditors, as well as tussles involving European central bankers and political leaders. "We are in the final phase of this very critical process to shape a new financing program for Greece and to complete the loan agreement which will lighten the burden of public debt and ensure funding for years to come," Papademos said in a statement today in Athens. The plan will help "restore fiscal stability, improve competitiveness, revive the economy and increase employment." The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange and loans likely to exceed the 130 billion euros ($171 billion) now on the table. Open questions involve how much more aid Greece needs, how much more austerity is required, and how to involve the European Central Bank in the debt swap.
G-Pap's statements are pure guano, and are doublespeak. Greece is an insolvent nation, and its sovereign insolvency, poses global systemic risk. Greece has lost its debt sovereignty, and it cannot handle any sovereign debt burden, it can be assured that there will be no sovereign funding. The only funding it might receive is seigniorage aid from the EU ECB and IMF Troika. Greece is a fiscally instable nation, which has no competitiveness, and its economy can not be revived, it can expect to have massive unemployment like that of Egypt.
Greece is going to default. Greece is the poster nation for European Socialism that came via the Eurozone debt trade, that is the sovereign credit, and bank lending credit experience of the last twelve years, that provided for the right to state employment to be written into the constitution, high labor rates, a lack of exports, the failure of infrastructure improvement at Hellenic Railroads, and an excessive trade imbalance with Germany.
There are some options for Greece. It may be kicked out of the EU, as an example of being a millstone around the Germany. Or Germany goes back to the D-Mark and form a Nordic Union with Denmark, Norway, Sweden, and other industrialized nation, not likely. Or Greece becomes ground zero for more technocratic government, featuring structural reforms and austerity, and becomes part of a EU Super State, that is a Federal Union, featuring a Fiscal Union, and the ECB or Bundesbank chartered as the Euro's Bank, very possible.
When Greece defaults, banks and the ECB will have to take losses, and credit default swaps will have to be paid. This will be the genesis for Financial Armageddon, that is a credit bust and global financial breakdown.
Fate is operating to establish true socialism, that is totalitarian collectivism; this will rise to terminate all forms of economic and political life. The sovereign debt to GDP ratio is going to plummet fast, causing quick and fast deleveraging out of stocks and bonds, as the seigniorage, that is the moneyness, that came via national sovereignty, fails. The seigniorage of capitalism will be replaced by the seigniorage of diktat.
Capitalism, also known as the Banker regime of Neoliberalism, which came via the Free To Choose script of Milton Friedman, is history. The 1974 Clarion Call of the Club of Rome is rising up the Beast Regime, out of the profligate Mediterranean Sea countries of Italy, EWI, and Greece,GREK, to occupy in mankind's seven institutions, and rule in the world's ten regions. The Beast regime showed its teeth in demanding that Greece submit to a list of demands for structural reforms, and abdicate its fiscal sovereignty, and thus its national sovereignty, in order to receive yet another bailout package.
The rise of the beast regime, known as Neoauthoritarianism, from the Mediterranean Sea, is causing not only financial upheaval but cultural tumult as well. Economic, political and cultural waves of disorder, are fate's order of the day. We will see breakdown of law and order, and the evaporation of civility. Tyler Durden writes What Lies In Store For The "Cradle That Rocks The World As Coxe says: "Today, the Mediterranean is two civilizations in simultaneous, rapidly unfolding crises. To date, those crises have been largely unrelated. That may well be about to change." Coxe bases part of his argument on the same Thermidorian reaction which we have warned about since early 2011, namely the power, social and economic vacuum that is unleashed in the aftermath of great social change. But there is much more to his argument, which looks much more intently at the feedback loops formed by the divergent collapsing economies that once were the cradle of civilization, and this time could eventually serve as the opposite. To wit: "The eurocrisis has been front and center for nearly two years, during which time the economic and financial fundamentals have continued to deteriorate. "The Arab Spring" came suddenly, in a series of outbursts of optimism. It may have come at the worst possible time for the beleaguered nations of the North Shore. The Mediterranean has entered one of the stormiest periods in recorded history. It is the major contributor to risk in global equity markets. It is too soon to predict how these crises will end. The Cradle of Civilization is rocking amid an array of winds and storms. "The Arab Spring" ...may have come at the worst possible time for the beleaguered nations of the North Shore."
Commodity trading and processing firms, such as Archer Daniel Midland will experience significant transformation as they become partners in regionalization. ADM will participate in regional public private partnerships to provide commodities to regional stakeholders as they work to provide food security and infrasturcture stability. In as much as major world currencies, DBV, and emerging market currencies, CEW, traded lower in July, 2011, yet have recovered, inflationism has turned to destructionism and growth has turned to contraction this being seen in Reuters report Volatile Commodity Market Hurts Profit At Archer Daniel Midland. ADM has experienced sharply lower quarterly earnings and cut its capital spending plans. Commodity trading firms like ADM are experiencing increased risks and costs. We are prioritizing capital projects, said CEO Patricia A Woertz. ADM said in January that it will cut about 1,000 workers.
Mike Mish Shedlock reports German Central Bank Spent 228 Billion Euros In Debt Rescuing Europe. And Sober Look in TARGET2 Imbalances And The Money Supply Disparity reports TARGET2 imbalances provide "credit support" to the central banks of the eurozone periphery. Clearly this is different from providing credit support to periphery governments or privately held banks. Nevertheless some have called it a "backdoor" support that can not be achieved directly under the current EU platform. Being on the hook for that much money to the periphery central banks is clearly another source of unease for Germany and the Bundesbank.
Peter Coy of Bloomberg relates Germany's Hidden Risk. The Bundesbank has quietly lent half a trillion euros to the European Central Bank. Could that determine the fate of the euro? After the financial crisis of 2007-08. Europe's peripheral nations began to suffer capital flight. Until then their chronic trade deficits were completely offset by inflows of private capital, both loans and investments. Afterward, lenders and investors grew leery of putting more and more money into those countries. Euros began to flow from the periphery into Germany and to a lesser extent Luxembourg, the Netherlands, and Finland. The Target2 imbalances are an accounting reflection of those outflows. From 2008 to 2010, Sinn estimated in his paper, "Target credits financed almost the entire current-account deficits of Portugal and Greece and a quarter of the Spanish one." That makes it sound like a central-bank policy decision, which it wasn't. On the micro scale it was nothing but routine transaction-processing. The most powerful forces are the unguided ones, like the wind and the tides.
I comment that the banking imbalances reflected in TARGET2 will be a factor for a future EU leaders' agreement for chartering the Bundesbank or the ECB as the Eurozone's bank. All European Financial institutions will be nationalized, better said regionalized, and called the Government Bank or Gov Bank for short.
In the days of the Beast Regime, all of mankind's seven institutions will be fully integrated into regional panopticons. Wikipedia relates Jeremy Bentham in the late eighteenth century used the term panopticon to communicate an institutional edifice. The concept of the design is to allow an observer to observe (-opticon) all (pan-) inmates of an institution without them being able to tell whether or not they are being watched. The design consists of a circular structure with an "inspection house" at its centre, from which the managers or staff of the institution are able to watch the inmates, who are stationed around the perimeter. Bentham conceived the basic plan as being equally applicable to hospitals, schools, poorhouses, and madhouses, but he devoted most of his efforts to developing a design for a Panopticon prison, and it is his prison which is most widely understood by the term. Bentham himself described the Panopticon as "a new mode of obtaining power of mind over mind, in a quantity hitherto without example."
With the fiat money and neoliberal credit of the Banker regime gone, people will place the trust in the diktat of sovereign leaders, which serves both as currency and credit in the new economy of regional global governance that replaces the old economy of capitalism. People will give allegiance to the word, will and way of the new sovereigns.
Regional global governance will emerge in each of the world's ten regions, thus forming a ten toed kingdom of regional global governance, as called for by the Club of Rome in 1974. A global empire of regional global government is coming to rule all of mankind.
Germany rules sovereignly over other Eurozone countries as lead partner in the EU ECB IMF Troika and has laid the groundwork for a Federal Europe. The groundwork of a debt brake, will be followed by the foundation and structure of a European Super State. WSWS recently reported EU Summit Agrees To German Plan For Austerity Straitjacket. And now WSWS reports Europe Placed Under The Dictatorship Of The Banks. The EU has already succeeded in imposing two unelected governments in Greece and Italy, whose sole purpose is to loyally implement the demands of the financial oligarchy against the express wishes of the electorate. The summit has now agreed to a fiscal compact further curtailing the ability of national governments to frame economic policy. The pact forces the 25 signatory states to enact a "golden rule" legally requiring a balanced budget. Countries failing to pay their debts on time will be subject to punitive sanctions imposed by the European Court of Justice. Germany, Austria, Italy, Spain, Poland and Estonia have already implemented such balanced budget requirements. The two governments that did not sign, Britain and the Czech Republic, did so out of tactical political considerations, while agreeing fully with the drive for austerity. There is no intention to put such measures, which will impact massively on the lives of millions, to a popular vote. Indeed, these measures are intended precisely to remove critical financial decisions from any oversight or influence by the population. Merkel boasted, "The debt brakes will be binding and valid forever. Never will you be able to change them through a parliamentary majority."
Euroland will become a type of revived Roman Empire. A New Charlemagne, a seemingly Little Authority, will rise to power through the scheme of regional framework agreements,.
Tyler Durden reports Rumor of G-Pap Resignation. Greek PM Papademos may resign today throwing the entire Greek bailout out of the window, if his talks for further austerity fail. From Kathimerini: "Papademos is expected to meet PASOK's George Papandreou, New Democracy's Antonis Samaras and Giorgos Karatzaferis of the Popular Orthodox Rally (LAOS) on Saturday. The three politicians will have to agree on measures that will satisfy Greece's lenders and pave the way for a new bailout. Sources told Kathimerini that the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced and that labor costs in the private sector drop by 25 percent in a bid to help Greece regain competitiveness. Skai TV and radio reported on Friday that should the leaders fail to agree a deal, he will tender his resignation on Monday."
Tyler Durden writes Germany Refuses Greek Demands For Public Sector Debt Cuts As It Is Shouldering Everything Anyway communicating that Greece having lost its debt sovereignty, and being at an impasse for implement more structural reforms and imposing austerity, is demanding fiscal sovereignty over Greece. As OpenEurope notes, Die Welt reports that Greek Finance Minister Evangelos Venizelos has called for Greece's official creditors, such as the ECB and national central banks, to take part in the restructuring of Greek debt, something German Economy Minister Philip Rösler insisted was "not currently on the agenda". It gets better. According to Goldman, German Finance Minister Wolfgang Schäuble said that "no additional contributions from the public sector are necessary." German finance minister against public sector participation in Greek debt restructuring. Speaking to news channel n-tv finance minister Schäuble said that "Greece needs a reduction in private sector claims of 50% … It does not need an additional contribution from the public sector because we're shouldering everything anyway". When asked whether he thinks that the composition of the Euro area would be the same at the end of the year as today, Schäuble replied: "I hope so". So there you have it: Greece needs further concessions, which Germany will give, if and only if Greece concedes to previous German demands of abdicating fiscal independence. The only question is how badly Greece needs German help. Everything else is smoke and mirrors
EU News reports European Stability Mechanism Treaty Signed Herman Van Rompuy, President of the European Council, welcomed the signing of the treaty, saying that this permanent crisis mechanism would contribute to raising confidence and ensuring solidarity and financial stability in the euro area.
4) … Open Europe reports the following:
Chris Kelly MP joins campaign to end "outrageous EU money-go round" Conservative MP for Dudley South, Chris Kelly, has joined the cross-party campaign for EU regional policy to be devolved back to richer member states like the UK. Mr Kelly cited figures from Open Europe's report on EU regional spending published last week which showed that the West Midlands, which has the lowest disposable income per capita in the UK, paid £3.55 into the EU's structural funds for every £1 it received back in grants. Mr Kelly argued that if the savings from Open Europe's proposed reform "invested into UK regions, the West Midlands would benefit from an additional £137 million". The report was also covered by the Southern Daily Echo.
In an op-ed in yesterday's Yorkshire Post, Conservative MEP Timothy Kirkhope wrote that "Much has been made of the recent Open Europe [report] on regional funding and, in particular, its conclusion that we, in Yorkshire and the Humber, would be better-off without a European funding mechanism at all. I do not agree with that contention… I am quite clear that the funding process, though flawed, is a vital ingredient in building future prosperity for our region."
Open Europe research Southern Daily Echo Yorkshire Post: Kirkhope.
Polish EU Commissioner: Poland was pressured to join fiscal treaty
Speaking to Polskie Radio yesterday, EU Budget Commissioner Janusz Lewandowski said that Poland had come under pressure to sign up to the inter-governmental fiscal treaty, and that he had "enormous doubts as to the point of the enterprise, but it has come to pass because alongside the attempted repair of public finances there was a disgraceful strike on the current form of the EU, it was an evident attempt to divide the EU, even to exclude certain countries, as if to turn back the tide of enlargement."
Meanwhile, the Irish Times quotes Trinity College Professor Gerry Whyte, according to whom the debt brake "of binding force and permanent character" envisaged by the new European fiscal pact could be unconstitutional in Ireland.
Separately, an article in the Economist runs with the headline, "The veto that wasn't", and notes that David Cameron "sometimes neglects strategy and long-term planning…It is an approach that works much of the time. But in areas of profound importance and complexity, such as European diplomacy, it can be inadequate to the task."
Polskie Radio Open Europe research Economist Irish Times Economist Irish Independent Irish Independent: Coleman
On Conservative Home, Lord Flight argues, "It looks as if the coming major row between the UK and the EU will be about the EU's attempts to damage Britain's major industry - financial services…It is self-evident that no UK Government can afford to see this industry materially damaged by EU initiatives. This was the real significance of the Prime Minister's veto - he was putting down an extremely important marker."
Open Europe research Open Europe blog Conservative Home: Lord Flight
The Economist's Charlemagne notes, "The EU's decision-making is unintelligible to most people…Citizens are thus left feeling impotent. Their governments are eviscerated at home, yet voters lack the means to throw the bums out of Brussels. This is dangerous. Bringing debt under control and, more importantly, promoting reforms to boost growth will take years of sacrifice and suffering. It can be sustained only with a strong national mandate."
Economist Economist: Charlemagne Express: Forsyth Telegraph: Warner WSJ: Fidler FT Editorial
A poll for ARD and Die Welt has found that 69% of respondents believe that Angela Merkel is performing well as Chancellor, while 61% believe she has taken correct and decisive action during the eurozone crisis, an increase of 11% compared with last month's poll.
EurActiv reports that, in a letter to EU Agriculture Commissioner Dacian Ciolos, the House of Lords' EU Committee has argued that, in the 2014-2020 EU budget, direct payments to farmers under the Common Agricultural Policy (CAP) should be cut and the money re-directed towards the CAP's 'second pillar' - which provides support for rural development.
A new study published on Thursday by environmental NGOs Friends of the Earth and Bankwatch, argues that 33 EU regionally funded projects in Central and Eastern Europe are "environmentally harmful," reports EUobserver.
EUobserver reports that EU Foreign Minister Baroness Catherine Ashton has predicted that a big pro-democracy rally in Moscow this weekend is likely to have a strong anti-Putin message.
EurActiv reports that Connie Hedegaard, EU Climate Action Commissioner, has rejected calls to introduce a price floor in the Commission's Trading Scheme, saying she does not want a "politically regulated system."
MEPs are divided over whether the European Parliament should continue to handle requests for public hearings via committee filtering, or on a case-by-case basis, when the European Citizen's Initiative comes into force on 1 April, European Voice reports.
MEPs yesterday backed a report calling for national sports teams to wear the EU flag on their shirts. The document also proposes that the EU flag be flown at big international sporting events across Europe, although neither of the measures would be compulsory, reports the BBC.
The European Space Agency has signed contracts to purchase and launch eight satellites that will use the satellite navigation system company Galileo, which intends to become an alternative to the US GPS system.
European Voice Open Europe Research
Another exposure which could sink Greek banks?
Open Europe blog
Euro Intelligence reports Mario Monti's government is determined to force labour market reforms against the will of the trade unions; at stake is a reform of an article which forces companies to rehire workers deemed to have been unfairly dismissed. La Repubblica quotes Italian labour minister Elsa Fornero as saying that the Italian government will go ahead with labour market reforms even without the consent of the social parts. The issue is Art. 18 of the Italian labour code, which forces an employer with more than 15 staff to rehire workers subsequently deemed to have been unfairly dismissed. The employers are saying that they want to restrict Art. 18 only of cases of discrimination. Fornero says the government would present legislation in two to three weeks. Reuters reports that Mario Monti recently mocked the idea of a permanent job, provoking a row with Pier Luigi Bersani, the leader of the Democratic Party, who said a permanent job was desirable for someone outside the labour market
And Euro Intelligence reports AAA-rated finance ministers meet in Berlin (without France and Austria). So much for the protestations that the French and Austrian ratings downgrade would have no effect. Reuters reports of a conspirative meeting among the finance ministers of the four remaining AAA-rated countries to take place in Berlin today - Germany, Luxembourg, the Netherlands and Finland, and yes without France and Austria. The article suggests that it won't be the first time, which means that the French and Austrian ministers must have participated in such meetings before, but not no longer.
5) … In Today's News
Yahoo Real Estate reports America's Most Miserable Cities.