Report on the European Financials for July 6, 2011
World stocks, ACWI, and VT, traded lower and the European Financials, EUFN, fell through a broadening top pattern today, entering into an Elliott Wave 3 sell off as ZeroHedge reports "the much ridiculed MLEC-type bailout proposal of Greece, which contemplates the rolling of existing debt into a guaranteed SPV, and which was the European rescue deux ex machina for exactly two weeks, appears to have been pulled off the table.”
Financial Times reports Moody’s downgraded Portugal to junk citing the politics of eurozone rescue as the main reason for its pessimistic outlook, and related the need for further seigniorage aid for Portugal. And Moodys related that the “evolving” approach to providing further support “implies a rising risk that private sector participation could become a precondition for additional rounds of official lending to Portugal in the future as well.”
According to Tagesspiegel Mrs Merkel reacted furiously to the rating agencies, saying she will not listen to them anymore. Surprisingly it was Mrs Merkel who called for a default mechanism in November 2010, which was the major reason for the last severe downturn in the European Financials that lasted all of November 2010.
In today’s sovereignty news
Open Europe reports that The Mail reports that the EU has imposed £500,000 worth of fines on various UK public bodies for not flying the EU flags and symbols in return for grant money. PA reports that a museum telling the history of the Labour Party has been fined £7,233 for failing to display the logo of the European Regional Development Fund, through which the project was financed.
WSWS.org relates “the head of the euro zone finance ministers, Jean-Claude Juncker. He told the German news magazine Focus that it was necessary to take the process of privatization out of Greek hands. He called for the setting up of an agency, modelled after the German Treuhand, to sell off Greek assets.
The plan would involve the dispatch of economic experts from Europe to organise the most effective (i.e., profitable) program of privatisation. As a result, Juncker said, “The sovereignty of Greece will be massively limited.” In other words, the public assets of Greece would be surrendered to Euorpean stakeholders as part of an emergency financial management plan. WSWS.org continues: “A dictatorship of the banks is being established in Greece, which is to be a model for all of Europe and beyond.”