Italy's new government and update on Euro crisis

Italy's new government was sworn in today:  http://online.wsj.com/article/SB10001424127887323528404578450350631741768.html?mod=wsj_streaming_stream

President Obama welcomed the new government: http://www.google.com/hostednews/afp/article/ALeqM5gvRIr68QdJr0R03qeh1vnn1eLSng?docId=CNG.a0ad01103ec843ac5108c51e2761e287.321

However, a shooting incident marred the swearing in of the grand coalition: http://www.ft.com/intl/cms/s/0/2005ef0e-b020-11e2-8d07-00144feabdc0.html#axzz2Rn5XR0TJ

Recent polling shows trust in the European Union at an all-time low: http://www.dw.de/trust-in-european-union-hits-record-low/a-16775428

Recent development also indicate a shift away from austerity by member state governments: http://www.businessweek.com/news/2013-04-28/europe-softening-on-austerity-may-accelerate-amid-course-change

The EU, foreign policy and shrinking defense budgets

Catherine Ashton criticized in new report: http://www.spiegel.de/international/europe/report-criticizes-eu-foreign-policy-chief-catherine-ashton-a-895933.html

NATO Secretary General raises concerns about cuts to defense budgets in Europe: http://www.nytimes.com/2013/04/23/world/europe/europes-shrinking-military-spending-under-scrutiny.html?ref=world

EU Defense ministers met this week to discuss the situation in Mali and to prepare for a donor conference: http://www.euractiv.com/development-policy/eu-ministers-prepare-mali-donor-news-519242

German Defense Minister says UK would jeopardize military standing if it leaves the EU  http://www.guardian.co.uk/world/2013/apr/22/uk-military-eu-german-minister

Serbia and Kosovo came to an agreement on a normalization of relations this past week which will allow the two countries to move forward in consideration for EU membership: http://www.eeas.europa.eu/top_stories/2013/190413__eu-facilitated_dialogue_fr.htm

Some context from Bloomberg: http://www.bloomberg.com/news/2013-04-23/kosovo-deal-shows-the-eu-deserved-its-nobel-prize.html

The Euro Crisis, Populism and Disparities

An article in Public Service Europe argues that populism is making the Euro Crisis "more combustible": http://www.publicserviceeurope.com/article/3363/populism-making-euro-crisis-more-combustible

Meanwhile, a study on wealth in the EU came to the very surprising conclusion that Germans are some of the poorest in the EU: http://www.nytimes.com/2013/04/16/business/global/study-on-wealth-fuels-euro-crisis-debate-in-germany.html?pagewanted=all&_r=0


The Poverty Lie from Der Spiegel : http://www.spiegel.de/international/europe/poor-germany-it-is-time-for-a-debate-on-euro-crisis-burden-sharing-a-894398.html

German Chancellor Angela Merkel argued that the figures cited in the article were distorted: http://www.bloomberg.com/news/2013-04-19/merkel-says-german-wealth-gap-with-southern-europe-is-distorted.html

Meanwhile, the spring meetings of the IMF and World Bank led to calls for Europe to do more to spur growth in the flagging EU economies: http://www.nytimes.com/2013/04/22/business/global/europe-heeding-international-call-to-do-more-to-spur-growth.html

Death of Margaret Thatcher brings tributes and jeers

Margaret Thatcher passed away Monday, April 8th, after a stroke.  The tributes began pouring in immediately after her passing was announced:
http://www.washingtonpost.com/blogs/post-politics/wp/2013/04/08/obama-and-others-mourn-margaret-thatcher/

The song "Ding Dong the Wicked Witch is Dead" from the movie "The Wizard of Oz" has flown off the shelves since her passing, creating a dilemma for BBC radio on whether they should play the song if it gets to the top of charts - this has led to a variety of responses:

http://www.huffingtonpost.co.uk/2013/04/12/ding-dong-thatcher-row-nigel-farage_n_3067496.html?utm_hp_ref=uk-politics

Meanwhile, the New York Times Editorial Board critiqued the current approach to the Euro crisis:
http://www.nytimes.com/2013/04/15/opinion/europes-bitter-medicine-of-austerity.html?_r=0

And to illustrate the point...a new Euro-skeptic party held its first party conference in Germany: http://www.telegraph.co.uk/news/worldnews/europe/germany/9993551/German-equivalent-to-Ukip-angry-at-Nazi-jibes-from-southern-Europe.html

Cyprus to Portugal to Slovenia - from one crisis to another

The Portuguese high court has annulled several components of the Portuguese governments austerity budget, leading to a new crisis:
http://www.dw.de/constitutional-court-rejects-parts-of-portugals-budget/a-16724591

As a result the prime minister, Pedro Passos Coehlo, has proposed deep cuts in social security, health, education and public enterprises:
http://www.bbc.co.uk/news/world-europe-22058461

The European Commission issued a statement regarding the situation on Sunday:
http://www.businessinsider.com/europe-issues-sunday-night-statement-amid-new-situation-in-portugal-2013-4

Capitol controls continue in Cyprus, and there are ongoing concerns that they may still end up leaving the Euro zone: http://www.bbc.co.uk/news/business-22002153 

Meanwhile, Slovenia may be the next country needing a bailout, with the small country being compared to Cyprus: http://www.bloomberg.com/news/2013-04-07/slovenia-bailout-signaled-by-worsening-debt-swaps-euro-credit.html

It is a gloomy end to the weekend, and it will likely show in the markets this week: http://www.businessinsider.com/portugal-and-growth-cause-euro-gloom-2013-4

Treasury Secretary Jack Lew heads to Europe to push for growth policy: http://www.nytimes.com/2013/04/08/business/economy/in-europe-lew-will-press-for-more-growth-less-austerity.html 
 and more on Lew's trip:
http://www.cnbc.com/id/100621964

More on Cyprus and other blogs...

Yanis Varoufakis will be speaking to my European Politics class in April and I highly recommend his blog:  http://yanisvaroufakis.eu/

Another blog post on Cyprus lays out the good, the bad and the ugly:  http://finance.fortune.cnn.com/2013/03/26/cyprus-the-worst-is-yet-to-come/



Sony Kapoor looks at the positive side of the Cyprus deal:
http://www.guardian.co.uk/commentisfree/2013/mar/26/cyprus-bailout-eurozone?CMP=twt_gu

In the meantime -- Italian parties are still trying to form a government after last month's election:
http://blogs.wsj.com/eurocrisis/2013/03/26/italian-election-fallout-qa-continued/

Update on Cyprus

Cyprus has made a last-ditch deal with the EU and IMF:

A report from Sunday night/Monday morning from CNN Money: http://money.cnn.com/2013/03/24/news/economy/cyprus-bailout-eu/index.html

The Guardian UK has updated coverage:
http://www.guardian.co.uk/business/2013/mar/24/eurozone-crisis-cyprus-bailout-eurogroup-meeting?CMP=twt_gu



Analysis is limited at this point, but the deal was made in such a way that it won't need approval from the parliament in Cyprus.  The deal focuses the "haircut" on deposits above 100,000 Euros, but the percentage is not yet know. Earlier on Sunday, ATM withdrawals were limited to 100 Euros per day, and it's not clear when banks will reopen. The new deal reportedly imposes capitol controls in order to avoid runs on banks.

Russia has many deposit holders in Cyprus, and the government may continue to play a role in the overall negotiations.  Meanwhile, Russians are looking to other options for their offshore holdings, as reported in the FT: http://www.ft.com/intl/cms/s/0/de24fb32-94a1-11e2-9487-00144feabdc0.html#axzz2OWE1ipQZ

Some commentary:

The Wall Street Journal's Simon Nixon:  http://online.wsj.com/article/SB10001424127887324789504578380473415855386.html

A Euro-skeptic perspective from the FT: " A eurozone that compromises countries as diverse as Germany and Cyprus is not sustainable, even if the EU and Cyprus manage to find a last-minute compromise."
http://www.ft.com/intl/cms/s/0/1c481838-92e3-11e2-b3be-00144feabdc0.html#axzz2OZ4Xsn7n

From the Guardian UK:
Will this be the end of Cyprus's problems?
'No. In fact, analysts say it is only the beginning. Cyprus has benefited for years from attracting the deposits of wealthy individuals from around the eurozone. That business model is now broken and the country has nothing to replace it with. Tellingly, the EU gave no economic projections for Cyprus in its statement.

Gary Jenkins of Swordfish Research said: "The economy is crushed for the next god knows how many years. As soon as people can take their money out the banks, they will take it out. Confidence has disappeared. Who's going to want to do business with Cypriot corporates right now?"'
http://www.guardian.co.uk/business/2013/mar/25/cyprus-bailout-deal-at-a-glance