Spain formally asks Eurogroup for bank aid

Because of the huge news day we had yesterday, Spain asking for bailout got lost amongst the chaos.  Make no mistake:  This is a big story.  CNN Money via The Extinction Protocol.  Post:

June 25, 2012 – SPAIN - The Spanish government made a formal request to the Eurogroup on Monday for up to €62 billion ($77 billion) in financial aid for its troubled banking sector. “I have the honor to write to you, in the name of the Spanish government, to formally request financial assistance for the recapitalization of the Spanish banks that require it,” wrote Economy Minister Luis de Guindos, in a letter to Eurogroup president Jean-Claude Juncker. In a worst case scenario, Wyman found that Spanish banks would need between €51 billion and €62 billion in additional capital. Berger estimated the banks would need €51.8 billion. The auditors used stress tests similar to those conducted by the International Monetary Fund, which said last month that banks need to raise €40 billion. The Spanish government did not specify the exact amount it would need. The uncertainty around Spanish banks has raised speculation that Spain will need a bailout similar to those given to Greece, Ireland and Portugal. Investors are also worried about how Spain’s problems will impact Italy. The fear is that bailing out Spain would drain the euro area’s crisis resources and leave Italy without a safety net. The leaders of the four biggest eurozone economies agreed Friday on a plan to boost economic growth in the troubled currency union. Without going into detail, the leaders said they agreed on a set of growth-enhancing policies equal to about €125 billion, or 1% of eurozone gross domestic product.

Spain's GDP is bigger than Greece, Ireland, and Portugal together.  Spain very well could be the Eurozone's Tipping Point into collapse. 

Greek Bank Run Update: €100-€500 Million Per Day

From Zero Hedge.  Emphasis from post itself.  Excerpts:

Five days ahead of the Greek parliamentary re-vote, the media propaganda machine has gone mute due to the moratorium on the RAND() known as popular polling: forgotten are the days when Syriza' popularity rating would swing from -100 to +100 in the span of hours, Diebold notwithstanding. Which leaves the media machine just one tactic: updates on the economic collapse as a tacit suggestion of what may happen if situation is not fixed. And while at this point it is nearly impossible to distinguish propaganda from fact, the latest numbers out of Kathimerini are just stunning. As Bloomberg's Marcus Bensasson reports, citing Kathimerini, the Greek banking system has continued to hemorrhage deposits this month, amid uncertainty over the outcome of elections on June 17.
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"Deposits are leaving the banking system at a rate of 100 million to 500 million euros ($125 million to $625 million) a day, Kathimerini said, without specifying over how long a period that rate of outflow has continued."

And:
Putting this in the US context, which has over $8 trillion in various forms of deposits, this would be equivalents to about $25 billion getting withdrawn. Every day.


It all happens/accelerates next week!

Germany Walks Away From Greece

This is going to be a nasty break up.  Zero Hedge.  Excerpts:

Preparing for Greece’s exit from the Eurozone has been picking up momentum and has reached critical mass—on the way to a fait accompli. Still unspeakable in public discussion last year, it has become a routine topic at all levels of government. While everyone at the very top still hues to the line that Greece should stay in the Eurozone, out of the other side of the mouth comes the but—especially since the focus is on Spain, the real problem, the one problem that the Eurozone will have trouble digesting.


Even if it could digest bailing out Spain or losing Spain, the next step up, Italy, due to its size, is beyond bailout and would cause the Eurozone to fracture into its component pieces—unless the ECB decides against all treaty limitations and stiff German opposition to monetize directly and without qualms any sovereign debt that needs to be monetized. And even that would tear up the Eurozone because Germany and a handful of other countries would refuse to be tied to that kind of loosey-goosey management of their currency.

There are political realities in Germany, where Chancellor Angela Merkel, slipping in the polls, is trying to decipher the scribbles on the wall. Her people, who vacation in Greece more than any other people, have handed her some clues: 60% said they wanted Greece out of the Eurozone, a jump from November when an already shocking 49% had wanted them out, according to a ZDF Politbarometer poll released Friday. Only 31% wanted Greece to remain in the Eurozone, down from 41% in November, with 9% not giving a hoot.
And:
But the next big battle may actually revolve around keeping Germany in the Eurozone: 50% of the respondents saw more disadvantages than advantages, up from 43% in February; only 45% saw more advantages, down from 51% in February. The more costs and risks rise for Germany, the more this number is going to skew away from the euro. A scary trend for Eurozone bailout freaks. And suddenly Germans woke up to the headline, "Greeks Pay less Taxes"—taxes being a sore subject for Germans who pay out of their noses to get their welfare-state budget into balance. For a debacle without equal, read.... The Confiscation Conundrum in Europe.



"The notoriously tax-sinning Greeks paid their government even less than before," the article began unnervingly. Turns out, Reuters had gotten two anonymous “senior” finance ministry officials to talk: Greeks were refusing to pay their taxes in euros in anticipation that they could soon pay them in drachmas, albeit with minor penalties. And lacking a government, they wanted to wait for the outcome of the next election on June 17, which hopefully would produce a government, any government. And so tax revenues in May were on track to drop 10%. Outside of Athens and Thessaloniki, tax revenues would fall between 15% and 30%. First capital flight then quiet bank runs, and now a refusal to pay taxes to a government they don’t have, in a currency they might not have much longer.... The Greeks are preparing for a reversion to the drachma, and they're trying, very understandably, and very smartly, to protect whatever they can—which, of course, simply speeds up the process of reverting to the drachma.

Forced to answer, I'd say that by July 1st, Greece's Eurozone exit will be the foregone conclusion.  Momentum in Greece's June 17th election is swinging towards anti-austerity Syriza, and they won't hesitate to drop the hammer on all prior agreements. Bank runs have already begun, and will most likely intensify.  Greece's collapse will also effect non-E.U. countries like Romania and Bulgaria.  Greece's exit also hastens Spain and Italy's demise.  Further chaos in Greece really could get this whole party started.  Yeah.  By July 1st, things should be coming to a boil. 

Buy canned goods and water!

Global Economic Collapse: Validation and Better Perception Edition

Revealed – the capitalist network that runs the world  New Scientist.  Excerpts:

AS PROTESTS against financial power sweep the world this week, science may have confirmed the protesters' worst fears. An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy.

The study's assumptions have attracted some criticism, but complex systems analysts contacted by New Scientist say it is a unique effort to untangle control in the global economy. Pushing the analysis further, they say, could help to identify ways of making global capitalism more stable.



The idea that a few bankers control a large chunk of the global economy might not seem like news to New York's Occupy Wall Street movement and protesters elsewhere. But the study, by a trio of complex systems theorists at the Swiss Federal Institute of Technology in Zurich, is the first to go beyond ideology to empirically identify such a network of power. It combines the mathematics long used to model natural systems with comprehensive corporate data to map ownership among the world's transnational corporations (TNCs).


"Reality is so complex, we must move away from dogma, whether it's conspiracy theories or free-market," says James Glattfelder. "Our analysis is reality-based."


Previous studies have found that a few TNCs own large chunks of the world's economy, but they included only a limited number of companies and omitted indirect ownerships, so could not say how this affected the global economy - whether it made it more or less stable, for instance.


The Zurich team can. From Orbis 2007, a database listing 37 million companies and investors worldwide, they pulled out all 43,060 TNCs and the share ownerships linking them. Then they constructed a model of which companies controlled others through shareholding networks, coupled with each company's operating revenues, to map the structure of economic power.


The work, to be published in PloS One, revealed a core of 1318 companies with interlocking ownerships (see image). Each of the 1318 had ties to two or more other companies, and on average they were connected to 20. What's more, although they represented 20 per cent of global operating revenues, the 1318 appeared to collectively own through their shares the majority of the world's large blue chip and manufacturing firms - the "real" economy - representing a further 60 per cent of global revenues.


When the team further untangled the web of ownership, it found much of it tracked back to a "super-entity" of 147 even more tightly knit companies - all of their ownership was held by other members of the super-entity - that controlled 40 per cent of the total wealth in the network. "In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network," says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.

Marketwatch warns EU banks will crash Wall Street  The Extinction Protocol.  Excerpts:

..the raging European monetary collapse will ripple through America’s banking system, completing the 2008 meltdown that never ended because Wall Street fought all reforms. But now, a bigger meltdown as history repeats a dangerous cycle like the 1929 Crash and Great Depression. History will also deal a fatal blow to Wall Street.
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Weiss’s worst-case scenario highlights everything we’ve both been warning investors about for a long time. The 2008 meltdown never ended, lessons never learned. But now the end game is accelerating. Listen closely: Weiss final warning to all investors: “Get all or most of your money out of danger immediately … above all, stay safe!” Prepare for the coming bank collapse. And discover how this historic scenario will empower the Occupiers message to get money out of elections: “One citizen. One dollar. One vote.”

This crisis continues to gather strength and speed at a truly astonishing pace.  Critical Mass hasn't occurred, but simple observation assumes that status could change at any moment, or for a few more days, weeks, maybe months.  In what form will the Global Economic Body Blow take?

The Big Picture becomes a bit more clear, and a lot more fearsome.  It's coming.. 

The beginning of the Fourth night of the Ninth Wave

Written back on July 13th, Calleman's analysis predicted the Fifth Day of the Mayan Ninth Wave would produce a global economic collapse.  I'm not saying anything more will happen from now until August 17th, when the Fifth Night begins, but don't be surprised if this does indeed happen, as momentum around the world continues to build.  First, excerpts from Calleman's article:

A couple of months ago I expressed my expectation that the Fifth day, beginning on July 31, 2011, will bring a global economic collapse, which would be the start of this end time scenario. What is going on now in this regard is that the European banks is still trying to find a solution for the Greek debt crisis by the end of July and a few days later, August 2, the decision will be made in the US whether to raise the lending ceiling or not. Meanwhile, increasing focus is placed on Italy, whose national debt in relationship to its GDP is almost as high (120%) as that of Greece (140%), but whose economy is seven times larger with correspondingly much larger potential consequences of a default on debt payments. A very delicate situation is thus already arising at the beginning of the fifth day and it remains to be seen if more money can be printed to avert a collapse.

Because it could be so painful a global financial collapse would seem to many to be a destructive event and hence not likely to occur in a period of light, a day. The economic system of the world is however probably the greatest obstacle to the development of unity consciousness that exists on our planet. I think it can even be said that a collapse of the world’s financial structure is a pre-requisite for us to be able to craft relationships of oneness between ourselves. For this reason it is not unlikely that such a collapse would occur in a day and then especially in the fifth day, which is the particular day that in the waves brings the breakthrough energy to the new frame of consciousness. Unity consciousness is thus likely to be perceived as a threat to many persons in economically dominant positions and this is part of the reason that so powerful media interests have sought to delude people about the Mayan calendar and postpone its true end date, October 28, 2011.

Around the world..

Asia markets plunge amid recession fears

From Thursday:  World stock markets in turmoil

European hijinx..  European Central Bank paralysis sparks global chaos

Crisis Exposes Rift Between ECB and Euro-Zone Governments

Stocks: Worst week since financial crisis

It's Friday night now, USA/CST.  We'll check back Sunday night when the Asian markets re-open.  Have a great weekend, and ride the Ninth Wave, babies..

Greece Is Now "On.."

Greece passes steep cuts as riots seize capital  AOL News.  Day One of Everything's Different Now.  Excerpts:

The cuts and tax increases passed 155-138, with five voting "present" and backing neither side. During the vote, stun grenades echoed across a square outside Parliament. Acrid clouds of tear gas and orange and green smoke-bomb mist hung in the air.

Several banks and storefronts were smashed, while a Socialist dissenter who backed the government at the last minute, Alexandros Athanassiadis, was briefly assaulted by protesters after leaving Parliament on foot.
Violence continued throughout the afternoon, and smoke billowed from a post office beneath the finance ministry before a fire was put out. Rioters set up burning barricades along Syntagma Square, where demonstrators have staged a sit-in for the past month. Nearby streets were littered with chunks of smashed marble and ripped-up paving stones that had been thrown at police.
A general strike that began Tuesday paralyzed the country, grounding planes, leaving ferries docked and stranding tourists during the busy summer season.

Greece Implodes and War Declared…over 5,000 Police overwhelmed  This was the day before the Austerity Budget was approved.  The Ante is now Upped.

Violent Scenes In Athens As Bloody Greek Riots Keep On Raging  Video from the 29th courtesy of Russia Today, the most trusted name for American News..

And yeah Riot Dog IS Fucking Awesome.  Riot Dog stands with The People.  Riot Dog is coming for ya..

That Loud Boom You'll Hear Is Greece Exploding..

The Real Deal begins later today.  My gut says Austerity measures pass, and Athens begins to ROCK shortly afterward..  If Austerity fails..  The Greek economy goes into collapse, and Athens begins to ROCK shortly afterward.  Maybe, maybe not.  But the Greeks do like to riot, and they're really good at it..  (By no means is this an insult, either.  The No Bullshit political will of the Greek people is inspiring to others living in more complacent regions of the world.  It's good to see that spirit alive and well..  Somewhere..)

Greece and Europe brace for austerity measures vote  The Sofia Echo.  Excerpts:

Greek lawmakers, under the watchful eyes of the rest of the world, are due to vote on a second round of austerity measures that sparked nationwide strikes and violent riots on June 28.

The vote will be held later on June 29.
The outcome of the vote will be vital for the stability of the European economy and for the future stability of Greece which is facing bankruptcy. Resembling a typical Greek drama, the voting process itself has become rife with accusations of betrayal and treachery following revelations in Greek media that there are mavericks in both camps who could sway the result unexpectedly.
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If the government fails to pass the austerity measures, Greece will go bankrupt. The proposed measures will affect the public sector and will consist of the sale of assets as well as higher taxes and more spending cuts.

Massive protests are expected on the streets of central Athens and outside Syntagma Square in front of the parliament building, protests which have the potential to turn violent judging from the past.

WRAPUP 2-Greek lawmakers seen backing austerity, future unsure  Reuters.

Greece's parliament looked increasingly likely to approve unpopular austerity measures on Wednesday, despite violent protests, to secure international funds to prevent the euro zone's first sovereign default.

But with the country on the brink of bankruptcy, it remains uncertain whether a weakened Socialist government can push through laws to implement structural reforms and privatisations in a second series of votes on Thursday, and then stick to a tight EU/IMF-imposed schedule for implementation.
Many economists and investors still expect Greece to default in the medium-term.

Greek leader 'dead man walking', Greek bailout 'collective punishment'  Video courtesy Russia Today, via You Tube.

And Now, To Greece..

Greece: Prime Minister George Papandreou survives by just 12 votes

GREECE'S prime minister survived a key confidence vote, keeping alive a government bid to avert a debt default that could spark a financial maelstrom around the world.

MPs voted 155 to 143 along party lines last night to back George Papandreou, who now faces a critical vote next week on a massive austerity package that Greece's international creditors have said must pass by the end of June.

He is seeking 28 billion euro (s24.8bn) in budget cuts and new taxes and 50 billion euro (s44.3bn) worth of privatisation of public assets. Unless the new measures pass, Greece will not receive the next batch of bailout funds worth 12 billion euro (s10.6bn), and will face a disastrous default in July, when it runs out of money.

A default by Greece could drag down Greek and European banks and renew fears over the finances of other eurozone countries such as Portugal, Ireland and Spain.
And:
As deputies voted, several thousand protesters gathered outside parliament chanting "Thieves! thieves!", shining green laser lights at the parliament building and into the eyes of riot police. Continuing strikes by electricity company workers objecting to privatisation caused a second day of rolling power cuts.

This anger doesn't seem to be factored as a tangible power.  But it is, and it's just begun to fester.

In Related EU Meltdown Madness..

Spanish economy again showing cracks  Americablog.  Excerpts:

This sounds like another "not if, but when" problem for the Spanish economy. The immediate focus today is on Greece but if this bond sale is any indication, Spain may be the next concern. The problems in Greece, Ireland and Portugal will be minor compared to Spain due to the size of the economy.

Greenspan: The 'almost certain' Greece default could cause US double-dip  And he oughta know, considering the major part he's played creating this global financial Apocalypse.  Excerpts:

Some of the most important debate over responsibility for the economic and financial market mess we now find ourselves in comes in the treatment of former Fed chief Alan Greenspan who, surprisingly, keeps popping up in the news after offering opinions to captive audiences as part of a quite lucrative post-Fed career as a public speaker.



What is most surprising about these accounts is that they no longer routinely carry the disclaimers that once adorned nearly every story about the former Fed chairman back in 2007 and 2008 - about how Alan Greenspan is thought to be largely responsible for our current predicament.

Typical of the lot is this report in Bloomberg by Joshua Zumbrun that treats yesterday's speech before a gathering of Credit Union representatives in Washington as the observations of an interested bystander rather than someone who was controlling the most important interest rate levers and directing the nation's regulatory bodies during the gestation period of the monstrous bubble.
And:
By a fairly wide margin, Alan Greenspan was judged "the economist most responsible for causing the Global Financial Crisis" with Milton Friedman and Larry Summers finishing a distant second and third, respectively.

I wonder if Greenspan ever wonders if he'll live long enough to stand trial.

What is this; Day 2?  Video of the Riots in Athens.

The entire Eurozone is under pressure.  How will that intensity manifest?

Greece is fast approaching the point of no return

From The Guardian UK via Rense.  Excerpts:

An uncontrolled debt default by Athens is suddenly starting to seem a horrible possibility.
..
A unity administration in Athens might allow bailout talks to resume, but by then investors might have zero faith that the next package of loans could succeed where the last one failed. More austerity, even if the Greeks could be coerced into accepting more pay cuts and more state sell-offs, might simply damage the economy further.

Default, then, seems to be looming one way or another. The best policy would be to try control the damage by ensuring the impact of the rest of the eurozone banking system is as soft as possible. That assumes, of course, that damage-control is still an option. The point of no return is fast approaching.

Greenspan Tells Charlie Rose Default by Greece 'Almost Certain'

Alan Greenspan, former Federal Reserve chairman, said a default by Greece is "almost certain" and could help drive the U.S. economy into recession.

"The problem you have is that it's extremely unlikely the political system will work" in a way that solves Greece's crisis, Greenspan, 85, said in an interview today with Charlie Rose in New York. "The chances of Greece not defaulting are very small."

Journalist:"It Is A War In Greece"  Video from Russia Today via Before It's News/  Watch this.
Greece riots: RT film crew get caught in Athens street protests  More from Russia Today via Metro/UK

This is barely The Beginning.  It's going to be a long, hot summer.

Gonzalo Lira Provides Background On Europe's Upcoming Euro Crisis..

Europhrenia  Excerpts:

According to the dictionary, schizophrenia is “a long-term mental disorder of a type involving a breakdown in the relation between thought, emotion, and behavior, leading to faulty perception, inappropriate actions and feelings, withdrawal from reality and personal relationships into fantasy and delusion, and a sense of mental fragmentation.”

In Europe, they’re having the same thing—only writ large: It’s not that the political/financial leadership of Europe is at odds with the people—it’s that they’re two minds locked in a single body, struggling for control.

In the one hemisphere of this divided brain, the political/financial leadership is convinced the European union is something devoutly to be wished—no matter what the costs, no matter what fortune and the people throw up in opposition.

In the other hemisphere of the europhrenic brain, the people of Europe overwhelmingly do not want integration “at all costs”. In some parts (a lot of parts) of Europe, they don’t want integration at all.
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No country ever voted for monetary union—ever. European monetary integration only ever happened by either government diktat or the legislature overriding the will of the people.
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The people of Europe never wanted total European integration, not even in the best of times—whereas the European leadership adamantly insisted upon it.
And:
The basic problem of the current crisis is, countries of the European periphery—Greece, Ireland, Portugal, Spain, Italy—took on too much cheap debt from banks in the core eurozone countries—France, Germany and Holland—and now are unable to pay for it. It’s not more complicated than that.

(One could argue that the reason the European nations overspent was that the leaders were basically bribing the people with a false sense of affluence, bought and paid for via debt, so that they would acquiesce to the European Union and the eurozone. But that’s for another post.)

And remember:  The real crisis has yet to begin!  The unrest so far is in response to the first wave of official responses towards keeping the Euro solvent and restarting the economy.  The real pain hasn't even started yet.  In Greece, they're protesting, and Portugal just threw out their government.  How long will it be before alienation and anger at the new government's inability to correct begins to rise?

The immediate question:  How quickly (and to what scale) will this crisis bloom? 

No One Expects the Spanish Revolution?

From The Daily Kos.  Forget about Greece or Portugal or Ireland:  It looks like Spain's gonna blow first.

You wouldn't know it from the sub-rosa treatment being given to it in America, but Spain is currently experiencing something like the Arab Spring. As one Spanish author put it:

Madrid isn't Tahrir, but the "virus" is the same: an abundance of youth without hope, doomed to a declining market modernized by cutting social rights and jobs, with the only prospect long-term trash contracts. There are thousands of stories of men and women who can't find a position, who suffer. No one speaks of them. The party line prevails, that of the others, of bureaucratese, of press conferences without questions, of the untouchables.

From the coverage that Spain does receive in American media, you would think that the government is one of the more deeply indebted in the EU.  However, this is simply false. Eurostat data (see below) shows that Spain has a moderately high current government deficit, but has an actual sovereign debt substantially lower than France, Germany, or the UK.

Spain doesn't have a government debt problem.  It does have an enormous private debt problem. Household debt is part of the problem, but is far overshadowed by business debt.  The reason that the Spanish government faces such a premium when financing debt is that the banks doing the lending expect the government to be called upon to assume this private debt in the near future.

Now that we know the truth about where the debt lies, we need to ask who holds it.  Yes, there is a great deal of domestic exposure here: Spanish banks holding Spanish debt.  But, when you look about the Merkel-Sarkozy axis of austerity, the pattern of Spanish debt holdings becomes all the more suspect.

French and German banks are heavily exposed to Spanish private debt.  The Spanish government is being called upon to assuming this debt, and implement austerity measures to pay the bill, as a means for Merkel and Sarkozy to protect their nation's haute finance. It's the banksters stupid!

But it's the Spanish public paying the bill.
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Unemployment is a peculiar Spanish bane. The country regularly has a rate higher than the rest of the continent. The overall rate stands at more than 20%. The collapse of the real estate market and declines in tourism help explain this in part.  More serious is the fact that much of the country has a business class intent on competing on low labor costs, even though this is out of step with the reality of modern Spain. As bad as this has been for country as a whole, the burden on young workers has been hardest.  Youth unemployment in the country lies at nearly 50%

Angry, unemployed youth are the fuel that lit the Arab Spring. And, Spain has them in spades. That shit is going sideways now doesn't seem like it should be a surprise.

Spain's descent into chaos will be presented as astonishingly fast, but the contributing elements have been percolating for some time now.  The first European domino is rocking..

Breaking: Greece Threatens To Leave Eurozone, Reintroduce Own Currency

If this is true?  Then, Wow..  Here it comes.  From Zero Hedge.  Excerpts:

The debt crisis in Greece has taken on a dramatic new twist. Sources with information about the government's actions have informed SPIEGEL ONLINE that Athens is considering withdrawing from the euro zone. The common currency area's finance ministers and representatives of the European Commission are holding a secret crisis meeting in Luxembourg on Friday night.

Greece's economic problems are massive, with protests against the government being held almost daily. Now Prime Minister George Papandreou apparently feels he has no other option: SPIEGEL ONLINE has obtained information from German government sources knowledgeable of the situation in Athens indicating that Papandreou's government is considering abandoning the euro and reintroducing its own currency.

Alarmed by Athens' intentions, the European Commission has called a crisis meeting in Luxembourg on Friday night. In addition to Greece's possible exit from the currency union, a speedy restructuring of the country's debt also features on the agenda. One year after the Greek crisis broke out, the development represents a potentially existential turning point for the European monetary union -- regardless which variant is ultimately decided upon for dealing with Greece's massive troubles.

Will Greece indeed be the first to leave?  The Euro Zone crisis is already in motion - The question is:  Who topples the domino, how disastrous and complicated is the resulting chain reaction, and how and where will it end?  But the free fall hasn't even started yet, and wondering about the future is pointless when the near term present will be crazy enough.

A failing nation state attempting to decouple from a failing Union.  Again, if true:  This is a big deal.

This Week In EU Implosion News..

True Finns set for government, see EU bailout changes

The True Finns, the anti-euro party voted into a powerful role in the Helsinki parliament at the weekend, expect the European Union to change plans for a bailout of Portugal, its leader said on Monday.
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"This is a big, big bang in Finnish politics. This is a big, big change. This will change the content of Finnish politics," Jan Sundberg, professor at the University of Helsinki, said.

Finland's parliament, unlike others in the euro zone, has the right to vote on EU requests for bailout funds, meaning it could hold up costly plans to shore up Portugal and bring stability to debt markets.

The strong showing for the populist True Finns reflects growing public frustration in some EU states about footing the bill for weaker economies such as Greece, Ireland and Portugal.

Portugal's bailout threatened by veto from Finland 

The next phase of Portugal's bailout negotiations start today, but already face trouble from an unlikely source - a strong election performance from an anti-euro party in Finland, which has pledged to vote against financial aid.

Ireland’s banks downgraded to junk status  From Business ETC.  Excerpts:
IRELAND’S GOVERNMENT BACKED banks are now officially junk following a downgrading of the long-term deposit ratings of the four surviving banks by the ratings agency Moody’s.

The decision to downgrade Bank of Ireland (BoI), Allied Irish Banks (AIB), EBS Building Society and Irish Life & Permanent (IL&P) follows the move to cut Ireland’s own ratings status to one level above junk status last week.

Debt restructuring on Greece's path

The International Monetary fund's opinion is that a Greek debt restructuring is inescapable at this point and will have to take place by next year. This does not mean private bond holders will receive haircuts, but rather the global financial organization sees rescheduling loan repayments as a form of restructuring.

After a tense week that saw EU officials giving in, for the first time, and admitting that Greece might be forced to restructure its debt, Ireland's sovereign debt downgraded yet again by Moody's and Portugal's bailout put in check, the weekend wasn't better. Restructuring fears grew on reports that top IMf officials were convinced Greece would be unable to service its debt.

The Greek debt to GDP ratio is over 10% and accumulated debt will be 160% of GDP by 2013, coupled with a contracting economy and soaring borrowing costs make escaping restructuring a severely uphill road.
And:
The Greek situation is bound to be a handful for the European Union, one they will not be able to put all their strength into. Finland's right-wing party True Finns became the third political force in the Nordic country after Sunday's elections. The re-shaped parliament in that country has the right to decide on Finland's position in terms of a bailout for another European country. True Finns are set against paying for Portugal and could block the much needed aid.

And the Greeks begin to riot again.  As a country, they really do own their anger..

Global Banks Face 'Wall Of Maturing Debt'  Awesome.  Excerpts:

DEBT-LADEN banks are the biggest threat to global financial stability and they must refinance a $US3.6 trillion ($3.4 trillion) ''wall of maturing debt'' that becomes due in the next two years, the International Monetary Fund says.

With the $3.6 trillion that matures in two years the rollover requirements are most acute for Irish and German banks, the report said.

''These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources.''

Portugal Rejects Budget: Government Collapses, Prime Minister Resigns. Europe Gasps Simultaneously..

Portuguese Premier Resigns After Austerity Is Rejected. 

Portuguese Prime Minister Jose Socrates submitted his resignation Wednesday after parliament rejected his minority Socialist government's latest austerity measures.

The rejection "had taken away from the government all conditions to govern," Socrates said in a televised statement. He said his government would remain in power in a caretaker capacity.

The parliament's rejection of austerity measures—as well as Socrates' resignation—comes just a day before a European summit.

Socrates has said rejection of the austerity plan would force the debt-laden country to follow Greece and Ireland and seek an international bailout, which he opposes.

Brendan Keenan: Kenny will have to pull new plan out of bag as chaos descends  From The Independent.ie..

ENDA Kenny packed his bags for one EU summit in Brussels, but it looks as though he will be attending a very different one.


As the old political saying has it, events have taken over. The plans of EU leaders have been thrown into disarray by even more bad news from Ireland's banks; the imminent collapse of Portugal's government; and stern resistance to bigger bailouts from those flinty Finns.

Mr Kenny's stated purpose at the meeting -- to secure a reduction in the interest rate on the €80bn EU/IMF rescue fund -- now looks irrelevant. Instead, according to reports in Brussels, there may be a special summit as early as next week just to deal with Ireland's difficulties.

The reason seems to be that new estimates for losses at the Irish banks are going to be worse than even the €35bn allowed for in the EU-IMF loan package could cover. These "stress test" figures are not due until next week, but it may be that they will render the original plan unworkable.

EU leaders to delay eurozone rescue deal  From Euractiv.com.  Excerpts:

A government collapse in Portugal and political tensions in other member states means EU leaders are set to postpone until June a decision to reform the euro zone and boost the bloc's bailout facility as they meet for a crucial economic summit in Brussels today and tomorrow (24-25 March).

Today's summit has long been sold as a deadline for leaders to sign off on a swathe of economic reforms including boosting guarantees for its temporary bailout fund, the European Financial Stability Facility (EFSF), which has already been used for Greece and Ireland.

It was also branded as the summit that will finalise a permanent rescue fund after 2013 - the European Stability Mechanism.

But in light of recent political developments in Portugal, Finland and Germany, both of these goals have been put in jeopardy, EU diplomats say.
And:
Adding to the euro zone's woes, Germany put the brakes on a deal for the ESM on Wednesday as it revealed it could not foot payments it had committed to make in 2013. And Finland said it would resist raising the EFSF's ceiling before elections scheduled on 17 April.

"Those providing the guarantees cannot, and those who may soon need a bailout may not be able to request one," an EU diplomat said yesterday, alluding to Finnish resistance to the EFSF and a political meltdown in Portugal preventing it from requesting a bailout.

There will be many more headlines regarding Europe's economy--soon.

Meanwhile In European Financial Crisis News..

Protests continue in Croatia   From World Socialist Web Site.  Excerpts: 

Since late February, continual protests involving thousands of people have been waged in many cities and towns throughout Croatia. Young people, in particular, are demanding the resignation of the right-wing government led by Prime Minister Jadranka Kosor. Workers and farmers are protesting against low wages, horrific working conditions and the precarious situation in the former Yugoslav autonomous republic.

Underlying the protests is the deteriorating social situation. Croatia was hit hard by the financial crisis, which the Kosor government met with a brutal austerity programme involving a drastic reduction in wages and benefits. The economy shrank by 1.4 percent in 2010, and the unemployment rate reached 19.6 percent. The unions say the wages of 70,000 employees are not being paid.

Demonstrations were held in several Croatian cities on Saturday, March 5. About 1,500 participants assembled in the northern Croatian town of Varazdin, according to the Hina news agency. The co-organiser of the protest, Denis Mladenovic, said, “We do not want a state in which the workers work without getting paid, in which they end up on the street after working for their firm for 20 years, and in which young people are left with no perspective.”

Lisbon bail-out talk agitates eurozone debt  From Financial Times.  Excerpts:

A vote on the Portuguese minority government’s austerity package is expected on Wednesday. The main opposition says it won’t back the measures and this could lead to prime minister José Sócrates’s resignation.


Euro zone finance ministers have agreed the terms of a permanent EU rescue fund.

Euro zone finance ministers have agreed the terms of a permanent EU rescue fund which increases the effective lending capacity of the current arrangements.

In the wake of the Greek debt crisis, Europe produced a huge rescue mechanism designed to shore up the single currency and to convince the markets that the euro would be defended.

But almost one year on, the markets have not been reassured and the €750 billion fund has already been tapped by Ireland, with Portugal looking increasingly vulnerable.

Portugal faces deadlock over debt crisis  From Boston.com.  Excerpts:

Just as Portugal appeared to have dodged a bailout like those taken by Greece and Ireland, a domestic political spat yesterday was set to worsen its financial troubles and possibly spoil Europe’s efforts to put the sovereign debt crisis behind it.

Portugal’s main opposition parties told the beleaguered minority government they will not budge from their refusal to endorse a new set of austerity measures designed to ease a huge debt burden that is crippling the economy.

The new steps are likely to be rejected in a parliamentary vote expected tomorrow and the timing could not be worse. A defeat in the vote, Prime Minister José Sócrates warned, would trigger his government’s resignation, plunging Portugal into at least two months of political limbo just as officials were hoping to boost investor confidence in the country’s future.

Global employment crisis will stir social unrest, warns UN agency

From The Telegraph  Excerpts:

The United Nations work agency said it was putting back by two years from 2013 its previous assessment of the time needed to create the 22 million jobs still needed to regain the pre-crisis level - 14 million in rich countries and 8 million in developing states.
And:
In 35 countries for which data exists, nearly 40 per cent of job seekers have been without work for more than one year, running risks of demoralisation and mental health problems, and young people were disproportionately hit by unemployment.

It noted that social unrest related to the crisis has been reported in at least 25 countries, including some recovering emerging economies.

This week riot police were on the streets as protesters in Spain, Belgium, Italy and Greece demonstrated against tough austerity measures.


On a metaphysical note:
Uranus re-enters Aries on March 12  Another perspective.

Greece As 6 Million Dollar Man..

"She's breaking up! She's breaking up!"(heh..) The question remains: Can we rebuild him?? Suddeutsche Zeitung: EU prepares for Greece to declare bankruptcy Short, and not sweet excerpts:

According to EU sources in the European capitals it is already running the preparation on Greece to declare bankruptcy, German newspaper Suddeutsche Zeitung announced.
..
Meanwhile, the Ministry of Finance denied preparing an emergency plan for Greece.

Not that Greece isn't going bankrupt, mind you, it's just that France doesn't have an emergency plan in place. Already gone (and probably not ever coming back) is Greece's refugee/asylum system, at least from the German perspective.. Excerpts:

Berlin announced this week that it is halting deportations to Greece for a year, despite European Union rules stating that the first country a refugee arrives in is responsible for processing any asylum request.

Germany's Interior Ministry announced on Wednesday that the new measure is aimed at reducing the burden on Greek authorities, who are struggling to deal with the volume of refugees reaching the country's shores and borders.
And:
Humanitarian organizations, including the United Nations Refugee Agency (UNHCR), have voiced concern about the conditions that asylum seekers and illegal immigrants are forced to endure in Greece, with overcrowded detention facilities and a dysfunctional and overstretched system of assessing asylum claims.

Kind of like their banking system! Speaking of which, the Finance Minister says that Greece won't try debt re-structuring(read; anything new) as it might worsen the country's financial situation. Instead, they'll continue to follow the EU/IMF approved directives for their bailout. Although they wouldn't mind to(unofficially) stretch those payments out a little..

Hell, it's worked really well so far!

The Lull Before The Storm: What’s Coming in 2011

Artfully phrased economic Dooooooom!  From Gonzalo Lira.  Excerpts:

To be sure, there were other important stories in 2010—the Mortgage Mess, Wikileaks, Wayne Rooney. But these three issues—auguries of EMU collapse, successful Fed monetization, and commodity price rises—are the ones that mattered on a macro-economic level this past year.

In 2011, every other financial story will be either a cause or consequence of one of these three issues: Guaranteed.
Europe..
Europe is in deep shit—there’s really no polite way to say it.

All of the EU, really(Germany and France also.  Indirectly, at the moment, but they are not insulated from events.) but specifically, Spain..

Not “Spain is in trouble”—that’s obvious, but that’s not my point: Spain is trouble. Trouble for the German banks that own so much of the Spanish debt. Trouble for Germany, which is propping up its insolvent banks (What, you think German politicians are any less craven than American politicians?). Spain is trouble for the European Union, for what a German banking crisis might mean for the EU as a whole and as an institution.

More than anything, Spain is trouble for the European Financial Stability Facility, because Spain is too big to be saved—and there’s really no way to finesse that hard fact.
..
How the EU and the ECB handle an eventual Spanish sovereign debt crisis will determine the very future of the European Union.

Because there will be a Spanish sovereign debt crisis—it’s inevitable. The Spanish balance sheet is not improving fast enough, even with so-called “austerity” measures, because even though the Spanish government might be cutting spending, the comunidades autónomas—roughly analogous to states or regions—are expanding their budgets in order to take up the slack, and thereby increasing the Spanish deficit.
..
So when Spain goes into crisis—which should take place no later than August 2011, and perhaps as early as this coming March—the European Union’s collective and institutional reaction to this crisis event will determine whether a smaller, healthier European Monetary Union continues to exist, or whether the whole concept of EMU is ripped to shreds by events.

Which brings us to the United States..

There is a limit to sympathy: You can feel sorry for someone—but only up to a point. Insofar as the United States’ fiscal situation is concerned, that point has been reached, at least for me: I can no longer feel sorry for the American people.

Americans want more services and entitlements, but with less taxes—and then they’re all surprised when their local, state and Federal governments cross the edge of insolvency, and into the nightmare land of feverishly staving off bankruptcy.

During 2010, the Federal government debt finally crossed the 100% of GDP mark—and continued rising non-stop. Actually, the debt’s growth accelerated. Why? Because the Bush tax cuts of 2001—implemented when there was an expectation of surplus, with clear sunset provisions, and no massive war expenditures—were extended by the mindless Republican Congress and the spineless President, Barack Obama.
And:
In late 2010, we finally started to notice something which has been festering for years, like one of those yucky worms that winds up eating your brains and driving you mad: The financial condition of the U.S. States and municipalities—they’re bankrupt.

For fiscal year 2010, the states’ combined budget shortfall is $191 billion. Of that figure, $68 billion is offset by the Recovery Act—Obama’s stimulus. Currently, the 2011 combined deficit of the States will be in the neighborhood of $160 billion—but that doesn’t seem credible, considering the ongoing unemployment. Regardless, $59 billion of those will be offset by the Recovery Act—which still leaves at least $100 billion up in the air.

However you look at it, the States have a huge collective hole in their budgets. And this hole is going to get worse, before it gets any better—just like the Federal government’s massive yearly deficit.

Which brings us to Commodities:

Commodities rose drastically all throughout 2010: Every single commodity class, every single one of them rising by double digit percentage points—at least.
..
I know I have the reputation for being the crazed hyperinflationista—but you don’t have to buy any of my dollar-hyperinflation arguments to acknowledge the fact that, a., commodity prices have experienced a sustained and enormous rise in their prices, and b., this sustained rise in the prices of commodities will inevitably hit consumers at all levels of the economy.

Therefore, I would expect food, heating oil and gas prices to rise considerably over the winter of 2011—that is, now. This will be a knee to the ‘nads of the American economy—indeed, to the world economies.

There’s really not much more to say, about the issue: A sharp rise in consumer spending on essentials would shove the American and world economies firmly back into recession, this time potentially with negative growth.

What happens after that? It depends on the fools at the helm of the good ship S.S. Depression II.

Lira's bottom line?

So bottom line: It’s looking like 2011 is gonna suck. But hey! At least two of these three story-lines are gonna come to their respective climaxes this year—so 2011 might well suck, but at least it’ll be exciting!

I'm wondering how each of these huge economic phenomenons will effect each other.  Any one of these three in stronger economic times would influence, drag, or overlap into the other sets of events.  With each of these world engines at critical and vulnerable points, what will happen if they all seize up close to the same time?  Could the overall effects be so much more than the sum of its monetary parts?  The cynic in me says "Of course."