Greece and Spain announce new austerity measures after protests

Helmut Kohl makes a rare appearance on the 30th anniversary of his first term as Chancellor:
http://in.reuters.com/article/2012/09/27/germany-merkel-kohl-idINDEE88Q0JB20120927


Following the major protests in Madrid earlier in the week, Spain's government released a new budget mainly focused on cuts http://www.msnbc.msn.com/id/49201630

Greece's coalition government also reached a deal on austerity measures in a bid to get their next round of debt funding: http://online.wsj.com/article/SB10000872396390443916104578021882943321370.html?mod=WSJ_World_MIDDLENews

Protests over austerity measures in Spain and Greece

The New York Times ran a sobering story on the reality of hunger in Spain as austerity measures hit even the middle class: http://www.nytimes.com/2012/09/25/world/europe/hunger-on-the-rise-in-spain.html?_r=1

Protests spread in Madrid and both polic officers and protesters were injured:
http://www.nytimes.com/2012/09/26/world/europe/protests-continue-in-spain.html



The two biggest unions in Greece planned a general strike for Wednesday: http://www.reuters.com/article/2012/09/25/greece-strike-idUSL5E8KP5YM20120925?type=marketsNews

Meanwhile Angela Merkel continues to face resistance to proposed bailouts which must be approved by the German Bundestag: http://online.wsj.com/article/SB10000872396390444083304578016322798744636.html

While finance ministers from Germany, Finland and the Netherlands want to reopen negotations on the banking deal agreed to at the European summit last June:
http://uk.mobile.reuters.com/article/idUSL5E8KPCS620120925?irpc=932

Squabbling and Stalemate after big move by ECB

Despite the important moves by the ECB to support Spanish and Italian bonds, Euro area finance ministers continued to squabble over details of a deeper fiscal union and oversight of banks:

"Squabbling among European governments over the next steps needed to overcome the sovereign debt crisis raised the specter of more turmoil, puncturing a rally that had sent Spanish 10-year bond yields to their lowest in five months."
http://www.bloomberg.com/news/2012-09-16/european-squabbling-on-currency-crisis-solution-may-test-rally.html

EU leaders continued their one-on-one meetings with Spanish Prime Minister Rajoy meeting with his counterpart Mario Monti in Italy, while Francois Hollande and Angela Merkel met during a commemoration ceremony of a reconciliation speech by General DeGaulle in 1962 in Ludwigsberg Germany.
http://www.bbc.co.uk/news/world-europe-19684532


It's not clear that France and Germany see eye to eye on Euro crisis issues, and agreement is still needed on many details to move forward with the ECB's plans.
http://www.businessweek.com/news/2012-09-23/euro-leaders-seek-end-to-stalemate-as-discord-mounts-on-crisis

But perhaps one of the more disturbing pieces of news out of Europe this weekend was the impact of the Euro crisis on Irish Pubs "Irish bar sales have dropped by about 25% over the past decade — 5% last year alone — and the number of pubs has fallen from more than 10,000 to 8,300. Ten years ago, 80% of alcohol sales occurred in bars; now fewer than half do. The fastest-growing beverage is wine, once ordered in a pub only by the brave or unwitting." Having spent time in Irish pubs 7 (!) years ago, I hope that they will rebound...
http://www.freep.com/usatoday/article/57832862

An eventful week in Europe

On Wednesday the German Constitutional Court ruled that Germany could take part in the European Stability Mechanism: http://www.cnn.com/2012/09/12/business/german-constitutional-court-esm/index.html?hpt=wo_c2

After the ECB announced last week that it would basically become the "lender of last resort" for Eurozone countries Jose Manuel Barroso pushed for a more federal Europe in his state of the European Union speech:
http://www.presseurop.eu/en/content/press-review/2687731-barroso-utters-dreaded-word

He defended his position in a lively interview with Richard Quest of CNN: http://www.cnn.com/2012/09/13/business/barroso-europe-federal-states/index.html?hpt=ieu_c2

The Dutch election showed that there is still support for the EU and the Euro currency:
http://www.bloomberg.com/news/2012-09-13/dutch-election-suggests-europe-hasn-t-lost-its-mind-just-yet.html

The Economist opines on whether the recent moves by the ECB and Euro Zone countries are enough to end the crisis: http://www.economist.com/node/21562915

Steven Erlanger of the New York Times provides an overview of the weeks events:
http://www.nytimes.com/2012/09/14/world/europe/european-union-celebrates-german-and-dutch-decisions.html?_r=1

Along with the debt crisis, illegal immigration continues to be a challenge for Greece: http://online.wsj.com/article/SB10000872396390444506004577617383132000476.html

Bold Move by ECB not necessarily a cure for Eurozone Ills

Boris Roessler/European Pressphoto Agency

Mario Draghi, the head of the European Central Bank. Through his efforts to save the currency, Mr. Draghi may now be the most powerful leader in Europe.

 

 

 

 

As expected, the European Central Bank (ECB) moved to shore up market support and reduce interest rates for bond sales in Italy and Spain: http://www.nytimes.com/2012/09/07/business/global/european-central-bank-leaves-interest-rates-unchanged-at-0-75-percent.html?pagewanted=all

As noted in an editorial it is now up to EU governments to take the appropriate measures to move their economies forward: http://www.nytimes.com/2012/09/07/opinion/the-latest-attempt-to-save-the-euro.html?src=recg

However, the ECB's Draghi's bold move to support shaky countries leads to criticism, as Steven Erlanger from the New York Times writes: http://www.nytimes.com/2012/09/08/world/europe/after-high-note-for-ecb-plan-some-discord-emerges.html?ref=europe

France's president who has only been in office for a few months must figure out a way to cut his deficit while keeping his promises to increase economic growth: http://www.nytimes.com/2012/09/08/world/europe/french-president-must-cut-deficit-but-how.html?ref=europe

"And, in a worrying sign for euro zone policy makers, much of the media and political reaction in Germany — the euro zone’s most important country — was negative" http://www.nytimes.com/2012/09/08/business/global/daily-euro-zone-watch.html?ref=europe

Unemployment is still trending up, with Greece at 24.4% in June and Spain at 25.1%, higher than many more recent members of the EU like Slovakia at 13.3 %, and Poland at 12.3%. (from http://247wallst.com/2012/09/07/nations-with-the-highest-unemployment-rates/2/)

The New York Times website "Tracking Europe's Debt Crisis" has the latest: http://www.nytimes.com/interactive/business/global/european-debt-crisis-tracker.html?ref=global

Also a link to a graphic display for "Understanding the European Crisis Now"

http://www.nytimes.com/interactive/2012/06/14/business/global/understanding-the-european-crisis.html?ref=global

High level meetings as tensions increase in Eurozone

With the beginning of September, the Euro Zone crisis kicks into high gear, with meetings between high level government leaders and the ECB.

From the UK Guardian's Eurozone crisis live: http://www.guardian.co.uk/business/2012/sep/04/eurozone-crisis-moodys-european-union-negative#block-5045fd7ac0e35a003915c3fb

Germany tells Greece to keep reforming

Greek finance minister Yannis Stournaras received an blunt message from the German government today: implement those economic reforms, or else.

It was delivered in Berlin, where Stournaras met German finance minister Wolfgang Schäuble. After the meeting ended up, the finance ministry issued this statement:

• 'Most important is that Greece fully implement its obligations.Finance minister Schäuble pointed this out to his colleagues once again.'

The ministry added that Germany remains determined to see the details of the Troika report into Greece's economy before taking a decision on the country's request for more time to hit its targets. That report may not be released for several weeks.

Stournaras also held talks with German foreign minister Guido Westerwelle, so here's a photo:

Guido Westerwelle (second from the left) and Yannis Stournaras (second from the right) holding talks at the the Foreign Ministry today. Photograph: John Macdougall/AFP/Getty ImagesThe Wall Street Journal reports on concerns that tensions may resurface this month, as the ECB work on conditions for bond purchases and several key meetings will be happening:
 

--Tuesday: French President Francois Hollande meets Italian prime minister Mario Monti. Greek Finance Minister Yannis Stournaras meets German finance minister Wolfgang Schaeuble. Greek T-bill auction.

--Wednesday: Euro-zone August services PMI data. German bond auction. Troika of Greece's lenders returns to Athens.

--Thursday: ECB rate decision and press conference. Revised EU second-quarter GDP data. Spanish and French bond auctions. German July manufacturing orders. German Chancellor Angela Merkel meets Spanish prime minister Mariano Rajoy.

--Friday: German July industrial production.

http://online.wsj.com/article/SB10000872396390443847404577630110932880868.html?mod=googlenews_wsj