Tag Archives: politics

Dec 29 2012

What happens to Americas global image if it defaults on the debt?


The US debt and how defaulting will change the world

The obvious answer is…Everything will change and the USA will never have the same image again

A default would have some “pretty serious ramifications” for the US economy and, because the US is still 20 per cent of world GDP, it would be terrible for a  lot of other countries as well. With Europe in the middle of a huge crisis the knock on effect could be disastrous. The UK is struggling along with many other nations but the biggest economy in the world hitting the wall again….Disaster or just longer pain?

We will see higher interest rates and potential destabilization in financial markets, higher taxes, lower incomes, less money in the economy, market crashes, job losses, families suffering and much much more.

The question is what will happen to the relationships with the creditors that the US government owes so much to. China, Saudi Arabia and others are owed trillions of dollars by the American government.

What will happen if the debts and interest are not paid?

What happens if a country like the USA defaults on the bills and payments they owe to others?

We all know the consequences for  the individual. For more information on this view the previous article I wrote.

How much is the debt?

$16,000,000,000,000 and growing!

Who does the USA owe money to?

A default will change the way the world looks at the once safe US economy. It will make Treasury bills more expensive over time and interest rates higher.

Many US  businesses would  face downgrades and that would lead to higher costs of capital. This would lead to less job creation and less investments in American companies and the economy as a whole.

The Federal reserve will serve notice on the government that the account they have is in overdraft and this is a violation of the Federal Reserve Act.

With  Congress not allowing the government  to borrow more,  usual payments like social security could not be made. Social meltdown is on the way.

Even if the  issue is resolved, most government services, programs and benefits will take a devastating  hit.

Potentially the first assets to be affected after a default would be money-market funds that hold government securities.

Banks that buy bonds directly from the Reserve and resell them to consumers, including pension and mutual funds.

Foreign investors, which holds nearly half of all Treasury securities(China hold 50%of all US Treasury securities) could start dumping them.

The US dollar would be hit and the currency regarded by most as the reserve currency of the world, would  no longer be the safe investment it once was. If other central banks start selling off the green backs , the value keeps dropping but what is the alternative some ask…The Euro? Will gold go higher?

If the dollar is worth less it will mean the cost of buying American goods becomes cheaper. The reverse side is it will cost an awful lot more for Americans to buy goods. Commodity prices are sure to take a hit.

China could become the real world leader and other currencies will become the new reserve currency of the world.

China and other countries will have an even stronger hold on the US government and even today they could cause a crash by dumping treasuries. Russia is also a player in this game and the Us government needs to be very careful as certain scenarios are too horrific to think about.

The answer to the question is difficult to know. What is known the image of America will change forever more. The greatest economy in the world is run on debt and the people will be the ones that suffer the most.

Creditors will negotiate new deals and will take haircuts in order to gain anything. If you owe a bank money and cannot pay, they will take what they can get and then kick you to the curb…will the United States of America be thrown away…No, but it will take the hit and in time ( along time) through a lot of pain rise again. The reason I believe this is simple…The citizens of the US have fought all of time and were formed through revolution. This is a new chapter, a new revolution is about to start but this we hope will end up with a positive outcome.

Apocalyptic ideas are not even worth talking about as these will affect every person on the planet. Many economists will always tell you that wars are  a great diversion and a means to solve many economic problems. From war comes rebuilding and the chance to eradicate certain issues…this is a doomsday scenario but history shows huge growth after terrible events. Now I am not an expert on any of these fiscal issues and no single person can really answer what will happen if debts are not paid but we all know it will not be good for anyone. The world is global and every country is interlinked in some way. A hiccup in a small country these days can affect many other countries. Therefore the thought of this hiccup being in the USA paints a terrible picture in most people’s minds. Raising the debt ceiling does not fix the problem but it blocks that terrible outcomes that might happen worldwide.

As we near the New Year we can only hope for a positive outcome even though this affects every American. Business will continue and life will go on. We will keep building our business and hope to launch a company that can create jobs and help other businesses worldwide.

 

Did you know China owes America?

 

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Dec 3 2012

Spain Budget deficit-Bailout, rescue, help, currency, fiscal cliff and more


Countries using the Euro de jure Countries and...

Countries using the Euro de jure Countries and territories using the Euro de facto Countries in the EU not using the Euro (Photo credit: Wikipedia)

Spain Requests 37bn Euro Bank Bailout

Spain’s banking sector suffered heavy losses on loans to home buyers and property developers when its property bubble burst.

Spain has officially requested an EU bailout worth 37bn euro for four of its struggling banks.

The European Commission approved plans to use the capital to restructure Bankia, Catalunya Banc, NCG Banco and Banco de Valencia.

Spain’s banking sector suffered heavy losses on loans to home buyers and property developers when its property bubble burst.

In September official figures from the Bank of Spain showed that 10.7% of total banks’ balance sheets were made up of “doubtful debtors”, those whose loans may not be repaid.

Earlier Articles from around the world:

Speculation that Madrid could soon seek a formal bailout has been fuelled after Spanish leader Mariano Rajoy signalled that the country could fail to meet its budget targets for this year.

Although Madrid has promised to reduce its budget deficit to 6.3 per cent of GDP from 8.9 per cent in 2011, Rajoy appeared to be warning his euro-zone colleagues that this is unlikely to be achieved.

“Spain was asked to make a very difficult effort … in only one year”, he said in an interview with the Spanish newspaper La Razon on Sunday. “It’s very complicated to reduce the deficit by 2.6 percentage points of GDP in the context of recession”.

Brussels has already agreed to relax Spain’s deficit targets for this year. After initially setting a target of 5.3 per cent, it agreed on a 6.3 per cent target. But with the Spanish economy set to shrink by 1.4 per cent this year, and with the jobless rate already above 25 per cent, Spain’s long-suffering population appears to be losing patience with austerity.

All the same, the Spanish government is continuing to push ahead with budget-cutting measures. Last week, it went back on its pledge to preserve Spanish pensions by announcing that from January 2013, pension payments would only rise by 1 per cent (or 2 per cent for those on lower rates), which is well below the country’s 3 per cent inflation rate. This will not only hit Spanish pensioners, but also the young people they care for.

A recent Spanish government survey found that nearly half of Spanish grandparents look after their grandchildren daily, and that 70 per cent of them take charge of their grandchildren during school holidays.

For many observers, Rajoy’s comments signalled that Spain, which about to get €37 billion ($US48.3 billion) to rescue its banks, could be about to seek a general bailout.

The comments came ahead of a meeting of euro-zone finance ministers in Brussels to discuss the release of the next €44 billion aid payment to Greece. Athens will only be able to receive the money if its plans to trim its massive debt burden by buying back bonds at a hefty discount are successful.

Overnight, Athens offered up to €10 billion to buy back as much as half of the €62 billion of bonds held by private creditors, offering a maximum price of 32.2 to 40.1 European cents on the face value of the debt.

Greece is hoping that with its €10 billion it can attract offers of as much as €30 billion of bonds, shaving €20 billion off its debt pile. The International Monetary Fund has signalled that it will refuse to release Greece’s next aid payment unless the debt buyback reduces the country’s debt burden.

Euro-zone finance ministers also preparing for the imminent rescue of Cyprus, which is estimated to require a bailout of more than €15 billion, of which €10 billion will go to recapitalising the country’s stricken banks.

This is a huge amount for a country whose entire GDP is only €18 billion. Indeed, the bailout will push country’s debt level to more than 180 per cent of GDP, which is considered unsustainable. As a result, there is an increasing likelihood that Cyprus’s debt will also be restructured, with private sector lenders again forced to accept hefty losses.

KAREN MALEY

On Sunday

MADRID — Spanish Prime Minister Mariano Rajoy admitted Sunday it would be difficult for the government to meet its deficit-reduction targets despite a raft of austerity measures, as thousands of disabled people staged a noisy protest over cuts to their benefits.

“It is very complicated to reduce the deficit by 2.6 points in a context of recession, with as many problems with revenue and such high financing costs,” Rajoy said in an interview published in La Razon newspaper.

“Spain was asked to make a very difficult effort, to go from 8.9% to 6.3% in only one year,” said Rajoy, who has until now pledged to respect the public deficit target called for by the European Union.

“Our goal is to do things well and we will see what will happen at the end of the year,” he said.

Spain, the fourth-largest economy in the eurozone, is engaged in a deep austerity program and is seeking to recover 150 billion euros ($195 billion) between 2012 and 2014, through both tax increases and budget cuts.

The task is all the harder as Spain slid back into recession at the end of 2011, less than two months after re- emerging from the previous one.

In the latest anti-austerity demonstration in Spain, thousands of handicapped people and their families joined a protest in Madrid against budget cuts in the health sector affecting their benefits.

Blowing whistles, beating drums and waving small white flags symbolizing an SOS call, they shouted slogans such as ” You’ll do us in with so many cuts.”

The demonstrators, some of them wheelchair-bound, others blind and accompanied by their guide dogs, included Paralympic athletes.

More than four million of Spain’s 47 million people are handicapped, according to disability campaign group CERMI.

“They’ve taken away the right of people who cannot fend for themselves to receive aid and be independent, like everyone else, which is a vital right for us,” said one demonstrator, Lola Valverde, 65.

Valverde, who is confined to a wheelchair, said that after having her benefits cut in half this summer, she could now only afford home help once a week instead of daily, as she had in the past.

Since sweeping to power in the November 2011 election, Rajoy has introduced a series of tough spending cuts and tax hikes to slash the deficit and stabilize Spain’s public finances.

In the health sector alone, his government is trying to make cuts of seven billion euros a year, a target that will hit the budgets of regional governments.

Even though market pressure has eased since a peak in the summer, Spain still faces punishing borrowing costs, with interest rates exceeding 5%.

Under its draconian austerity drive, the government broke a key election commitment on Friday when it said it would not raise pensions in line with inflation in 2013.

Rajoy said Sunday that the decision was “imposed by reality,” adding: “It’s probably one of the hardest decisions I’ve had to make.”

The disabled people’s protest came a day after about 1,000 people who say banks cheated them of their savings took to the streets demanding that the bailed-out lenders give them their money back.

“Thieves! Where is our money?” they bellowed outside the central bank in Madrid before marching on the offices of Bankia, the ruined finance giant.

Spanish banks were brought low by the collapse of a construction boom in 2008 that threw millions into unemployment and poverty. Spain is deep in recession, with one in four workers unemployed.

http://www.nasdaq.com/article/spain-warns-on-deficit-goal-amid-new-protests-20121203-00007#.UL0jx6Usf2M

AND IF AMERICA GOES ????

FISCAL CLIFF RISKS…..The Euro currency

Despite the euro recovering from falls after ratings agency Moody’s downgraded the euro zone rescue funds late on Friday , the single currency looked vulnerable to continuing concerns about how the euro zone will deal with its debt crisis and worries about the U.S. “fiscal cliff.”

If Congress and Washington cannot reach a deficit reduction deal by the end of the year, massive U.S. government spending cuts and tax rises will be unleashed in early 2013. Many economists believe this “fiscal cliff” has the potential to tip the U.S. economy back into a recession.

Signs policymakers are struggling to reach an agreement to avert that scenario could boost demand for the highly liquid dollar, which is considered a safe-haven currency.

“Resolution of the U.S. fiscal cliff still seems some way off, and it is increasingly likely that a comprehensive agreement will be delayed into the new year, meaning the economy may go over the cliff in January only to be hauled back up again soon after,” said Simon Hayes, analyst at Barclays Capital.

The yen has been under pressure on expectations that a likely change in Japan‘s government later this month would lead to aggressive monetary easing.

The dollar last traded down 0.3 percent against the yen at 82.25.

Manufacturing UK news

(Reuters) – British manufacturing activity shrank less than expected in November but remains fragile, surveys showed on Monday, just two days before finance minister George Osborne presents a half-yearly budget statement.

Weak growth means public borrowing is not falling as Osborne planned earlier this year, and initial figures from a flagship Bank of England scheme to boost lending also released on Monday suggest any big benefit from this source is several months away.

 

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Nov 27 2012

What future do we have – Education, employment and years of recession


Jobs are not being created, employment figures are negative.

The government of the UK is under attack. Recent figures show the flagship job scheme is not working. The flagship scheme was to have 5.5 billion poured into it.Targets were to be 5.5% into long term employment. The results of job creation on a long term basis were 3.35%.Opposition parties are stating that if they had done nothing the figures would have been the same , so the money being wasted is incredible.The government want at least another year to prove the scheme is working. Is this another example of failed policies and kicking the “can” down the road?

However, the question of the effects on the future of unemployed and future job seekers needs to be addressed.

 

The question of long term unemployment has to be covered.

This week George Osbourne had stated that the UK could be in recession for another 5 years.

Mervyn King has warned the new governor that he has years of trouble ahead of him.

If this is the case and growth does not happen, what will be the lasting affects on those already out of work and those that will join them.

The consequences of long term unemployment are disastrous on individuals and communities.

With a massive  lack of finance and no inward investment into new business creation, the situation seems doomed to many. Recent polls show that the majority  of the population are highly negative about the future. The situation is the same in many other countries with 77% of Americans concerned about the consequences off the “fiscal cliff”.Barack Obama has a huge job on his hands. The infighting between republicans and democrats needs to be settled for the future of the USA.

Now add this to the equation..

Reports today that over 2 million children are not receiving a proper education and the costs of further education are rising…the picture is grim.

If you take a society that has few opportunities, children not gaining the education they need and schemes in place not working….where will we be in 12 months time.

Children leaving schools without skills leaves a society that not only has no jobs but the unemployed are not able to fill the jobs that are there.

Will it be a case of foreigners coming to the UK to fill skilled positions. Will that lead to money leaving the UK and supporting the growth of other economies.

The questions and possible outcomes are endless but the situation needs action and drastic action at that.

I could go on with other factors like Greece not having to pay back all the loans they received. What happens to the loans that the UK has given to others? Is this going to be less revenue for the Treasury? Tax avoidance from individuals and companies operating in the UK..less revenue???

We need action and what that is I do not know.

The situation is desperate and people need to react and put pressure on the politicians who are not fixing this recession and economical nightmare. Our future is in our hands but only if we voice our opinions. So start SHOUTING!!!

 

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Nov 26 2012

America needs to resolve the “fiscal Cliff” syndrome ….NOW!


Politicians under pressure from businesses.

American businesses are sitting on huge amounts of cash but are unwilling to spend this due to the political uncertainty.

Can congress come up with a solution to the fiscal cliff crisis.

Is it not peculiar that after the USA voted to return Obama to power, this debate continues. The problem has to be resolved and the people of America voted to give President Barack Obama another chance.

Recent polls are showing 77% of Americans believe this economic situation is having a negative effect on them and are very concerned about the near future.They believe the fiscal cliff issue is a big problem and concern is growing.

If businesses have confidence they will invest in growth and therefore job creation but this is about politics and the elected need to deal with this NOW1

‘Fiscal cliff’ and where to raise taxes, breaking the Taxpayer Protection Pledge and more

Posted by…. Allen McDuffee

‘Fiscal cliff’: Consensus on increasing tax revenue, a wide gulf on how to do it: “For the first time in decades, a bipartisan consensus has emerged in Washington to raise taxes. But negotiators working to avert the year-end fiscal cliff remain far apart on crucial details, including how taxes should go up and who should pay more. . .Neither side gave ground in an opening round of staff-level talks last week at the Capitol. As President Obama and congressional leaders prepare for a second face-to-face meeting as soon as this week, the divide over taxes presents the biggest obstacle to replacing the heap of abrupt tax hikes and spending cuts, set to hit in January, with a less-traumatic debt-reduction plan.”….read more… (Washington Post)

NBC NEWS

Good news, bad news in averting the fiscal cliff… A potential compromise?… More GOPers say they’re willing to break Norquist’s tax pledge… Team Obama gets its cease fire in Gaza… McCain softens his criticism of Susan Rice… And Shelley Moore Capito and the potential 2014 retirees.

By Chuck Todd, Mark Murray, Domenico Montanaro, and Brooke Brower

*** Good news, bad news in averting the fiscal cliff: With Congress returning from its Thanksgiving break, here’s the good news for those looking to avoid the upcoming so-called “fiscal cliff”: Members of both parties do agree on one LARGE point — taxes for the wealthy should go up. “It’s fair to ask my party to put revenue on the table. We’re below historic averages,” Sen. Lindsey Graham (R) said on ABC yesterday, adding: “But to do this, I just don’t want to promise the spending cuts. I want entitlement reforms.” And, as it turns out, some Democrats are willing to look at some entitlement reform. “We can make meaningful reforms in Medicare and Medicaid without compromising the integrity of the program, making sure that the beneficiaries are not paying the price for it, except perhaps the high-income beneficiaries. That to me is a reasonable approach,” Sen. Dick Durbin explained on ABC… But here’s the bad news: The two sides can’t agree on how to raise the taxes on the wealthiest. Democrats are adamant that the Bush tax cuts must expire for them (which would raise their tax rate), while Republicans insist that rates can’t increase….read more…http://firstread.nbcnews.com/_news/2012/11/26/15454203-first-thoughts-good-news-bad-news-in-averting-the-fiscal-cliff?lite

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Nov 26 2012

Madrid will block vote on Independence – Spain divided,Spanish news,Headlines


Breaking news…Madrid will not allow the people to vote.

Markets in Europe are down as concerns about Spain grow.

Economic turmoil, rising unemployment, sovereign debt, Bailouts and a property market destroyed.

Who is helping the people? The situations grow the topics of concern rise and now the people will not be allowed to vote on their own future!

HOWEVER

Earlier in the week many newspapers ant the Economist had reported that the moves the government were making were good and even a threat to the economies of other Euro countries. If Spain was to pull this off and turn around the economic situation would be amazing. A situation that the people deserve to be resolved.
However other papers reported these remarks, ‘Not all the doubts over the banks have been made clear’.
Prime Minister, Mariano Rajoy, agrees with the European papers, and says ‘The Spanish Banking System is on the way to sorting itself out’.

The path is long and much work needs to be done but any positive news is welcomed.

Madrid (CNN) – Before Sunday’s elections in Catalonia, Artur Mas, president of the region’s parliament, promised a referendum on independence for one of Spain’s most important regions if he won re-election.

But after the election, Mas has a more difficult task because his center-right Convergence and Union coalition lost 12 of its 62 seats, a strong setback for a party that was hoping to gain a simple majority in the 135-seat legislative body.

The Catalan Republican Left party was the big winner in the elections, winning 21 seats, according to the Catalonia elections web site, which reported 98% of the votes had been counted.

The Catalan Republican Left party also backs independence, and the two parties could form a majority in parliament on the independence issue.

They, however, differ on most other issues, especially economic policy.

 

Earlier this week:

Spain asks for LatAm help at Iberoamerican summit

 

CADIZ, Spain — Spain’s prime minister on Saturday joined its king in asking former Latin American colonies to help the EU nation overcome a deep financial crisis by channeling investments its way.

Prime Minister Mariano Rajoy said Spain had invested heavily in Latin America when it suffered a crisis 10 years ago, and now that the roles were reversed, he called upon those nations to increase their participation in his country’s economy.

“Spain receives Latin American investment with open arms,” he said.

http://www.huffingtonpost.com/huff-wires/20121117/eu-spain-iberoamerican-summit/?utm_hp_ref=business&ir=business

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Nov 21 2012

Greece-When will this tragedy be resolved?


Once again talks go on about the economic crisis in Greece. AS politicians debate what to do, nothing ever gets resolved. The downturn continues, the hope of a “fix”  disappears and the people keep suffering. I do not understand why the Greeks do not cut themselves free from this situation.

What does Europe really do for them except grow the debt. The argument that Greece has to stay in the Euro does not wash with me. How can I say this..well I lived there for 12 years, pre Europe and until 2011.

I travelled all over Europe and as a “european”, I cannot think of any obvious benefit. Life years ago was better in Greece and I cannot remember the Greeks complaining that much about it then.

The last 5 years all I heard was complaints. Whilst borrowing money it was obviously a huge party in Greece as this pot of gold was never emptying. This is not the situation now and yes they should pay back what they owe but HOW????

Is Greece not better to cut free and suffer the consequences considering they are suffering anyway. Let them go through the pain and then come out of it. This to me is the shorter path .Both roads are difficult but this current path is not working and I cannot see it ever working.

 

NEWS FROM around the Globe on Greece…

(Reuters) - Greece‘s international lenders failed for the second week running to agree how to get the country’s debt down to a sustainable level and will have a third go at resolving their most intractable problem in six days’ time.

After nearly 12 hours of talks through the night during which myriad options were discussed, euro zone finance ministers, the International Monetary Fund and the European Central Bank failed to reach a consensus, without which emergency aid cannot be disbursed to Athens.

 

A document prepared for the meeting and seen by Reuters declared that Greece’s debt cannot be cut to 120 percent of GDP by 2020, the level deemed sustainable by the IMF, unless euro zone member states write off a portion of their loans to Greece.

The 15-page document, circulated among ministers, set out in black-and-white how far off-track Greece is in reducing its debt to the IMF-imposed target, from a level of around 170 percent of GDP now.

The document set out various ways Greece’s debt could be reduced between now and 2020, but concluded they would not be enough without euro zone creditors taking a hit on their own holdings — something Germany and others have said would be illegal.

The document did say Greek debt could fall to 120 percent of GDP two years later — in 2022 — without having to impose any losses on euro zone member states or forcing through a buy-back of Greek debt from private-sector bondholders.

But International Monetary Fund chief Christine Lagarde rejected such an extension at similar talks last week.

Without any corrective measures the document said Greek debt would be 144 percent in 2020 and 133 percent in 2022, figures first reported exclusively by Reuters last week.

The document appeared designed in part to convince the IMF that Greek debt could be made sustainable just two years behind schedule if only it would soften its stance.

It remains possible that Lagarde could provide further wiggle room, but she is believed to favour the idea of euro zone member states taking a writedown on some of the loans extended to Greece in order to stick to the 120 percent in 2020 goal.

DEBT BUYBACK

Among the main measures under consideration to bring Greece’s debt burden down as rapidly as possible is a debt buy-back under which Greece would offer to purchase bonds from private investors at a discount to their nominal value.

Several options are under consideration, officials have said and the document makes clear, including using about 10 billion euros to buy back bonds at between 30 and 35 cents in the euro.

There are also proposals to reduce the interest rate on loans already extended by euro zone countries to Greece, to impose a moratorium on interest payments and lengthen the maturities on loans, all of which would cut the debt burden.

 

Greek Prime Minister Antonis Samaras on Wednesday said the lack of a debt deal between the country’s lenders over technical reasons did not justify holding up aid to Athens.

“Greece did what it had committed it would do. Our partners, together with the IMF, also have to do what they have taken on to do,” Samaras said in a statement.

“Any technical difficulties in finding a technical solution do not justify any negligence or delays.”

 

A senior lawmaker from Chancellor Angela Merkel‘s conservatives warned on Wednesday against any writedown of public holdings of Greek debt, saying it would send a fatal signal to other bailout countries and fail to address the roots of Greece‘s woes.

Greece’s international lenders, who met in Brussels late on Tuesday, failed for the second week running to agree how to get the country’s debt down to a sustainable level and will have a third go at resolving their most intractable problem in six days’ time.

Norbert Barthle, budget spokesman for Merkel’s Christian Democrats (CDU), told German radio it was not surprising that no agreement had been reached given opposing views over how to plug Greece’s funding gap.

Related articles

 

Nov 20 2012

Spains unemployment to rise-Iberia cuts jobs..Zynkin Euro news updates


Spanish airline Iberia said on Tuesday it needed to reduce its labour costs by 450 million euros ($577 million) . This is a yearly figure and it paints a very gloomy picture for the future employment opportunities from the airline.

Iberia has already stated it will be cutting a third of its workforce.

Spanish PM is more upbeat….is he sick in the head or trying the most unbelievable spin…

‘Worst is over’ for euro, says Spanish PM Rajoy

The worst of the euro crisis has passed as fears over the shared currency’s future ease, according to Spain’s prime minister Mariano Rajoy.

 Spain is however still needing a sovereign bailout, having already received a rescue for its banking sector.

The question of paying all this back needs to be then approached and how many years will this take and at what cost to the people?

GREECE AND ITALY:::::::

At the same time politicians are not sure of how the greek deal will span out…

Eurogroup leader Jean-Claude Juncker and Finland raise doubts about reaching a deal on Greek aid as eurozone finance minister prepare to meet in Brussels later today.

In Italy….

Italy’s austerity may have saved the euro, says Mario Monti

Mario Monti, the Italian prime minister, says the country’s austerity effort may have prevented a eurozone break-up, as the problem of Greece stokes international tensions.

the question is …Do we want a Europe?

Why is the push to keep the Euro dream alive so important to politicians…what am I missing???

 

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Nov 20 2012

in or out- What will happen in Europe?


Why does the UK want to be inEurope?

What does it do for the people?

Do you believe the UK has to be in Europe for trade or will that suddenly stop??????

Is the European model working as unemployment rises, social unrest grows and debt mountains augment…Spain, Italy, Greece  and others are crippled…What can Britain gain?

Is it all about the millions to be made or is it about the millions that need help?

(Reuters) – Battling rebels baying for Britain to leave the European Union, David Cameron faces the near impossible task this week of finding an EU budget deal acceptable to mutinous party members and to exasperated fellow EU leaders.

The prime minister’s threat to veto the union’s long-term budget at a Brussels summit starting on Thursday appealed to the anti-EU wing of his Conservative Party, emboldened after defeating him in a parliamentary vote calling for European spending cuts.

Blocking a deal might tap into a hardening Eurosceptical mood at home, but it would not bury an issue that felled his predecessor Margaret Thatcher, fomented civil war in his party in the 1990s and helped keep it in opposition for 13 years.

A veto would anger fellow European leaders, further isolate Britain in the 27-nation bloc, its biggest trading partner, and could lead to London paying more into Brussels coffers through alternative, annual budget deals.

The negotiations have reopened decades-long divisions over Britain’s often fraught EU membership, bringing talk of a possible British exit, sometimes dubbed “Brixit” or “Brexit”, to the centre of political debate from the fringes.

Business leaders warned that burning bridges with Europe would damage the fragile $2.5 trillioneconomy and the broadly pro-European opposition Labour Party said Britain risked “sleepwalking” out of the EU.

“It would be a betrayal of our national interest,” Labour leader Ed Miliband said in a speech on Monday.

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Nov 14 2012

Riots, Protests, Austerity,Inflation, Recession and a huge cliff…The people rise up!


People have had enough..Spanish Riots

Police and protestors clashed in Spain on Wednesday as millions of workers went on strike across Europe to protest spending cuts they say have made the economic crisis worse.

Hundreds of flights were cancelled, car factories and ports were at a standstill and trains barely ran in Spain and Portugal where unions held their first ever coordinated general strike.

Spain, where the crisis has pushed millions into poverty, has seen some of the biggest protests. Prime Minister Mariano Rajoy is trying to put off asking for European aid that could require even more budget cuts.

Passion was inflamed when a Spanish woman jumped to her death last week as bailiffs tried to evict her from her home. Spaniards are furious at banks being rescued with public cash while ordinary people suffer.

In Portugal, which accepted an EU bailout last year, the streets have been quieter but public and political opposition to austerity is mounting, threatening to derail new measures sought by Prime Minister Pedro Passos Coelho.

His centre-right government was forced by protests to abandon a planned increase in employee payroll charges, but replaced it by higher taxes.

Read more at Reuters

Some 5 million people, or 22 percent of the workforce, are union members in Spain. In Portugal about a quarter of the 5.5 million strong workforce is unionised.

Major demonstrations were planned for the evening in Madrid, Lisbon, Barcelona and other cities.

FLIGHTS, FERRIES CANCELLED

Italy’s biggest union, CGIL, also called for a work stoppage of several hours across the country. The transport ministry expected trains and ferries to stop for four hours. Students and teachers were expected to march.

In Greece….People openly are holding banners reading “Enough is Enough” state workers started rallying on several squares in central Athens on Wednesday morning.

Spain’s economy, the euro zone’s fourth biggest, will shrink by some 1.5 percent this year, four years after the crash of a decade-long building boom left airports, highways and high-rise buildings disused across the country. Portugal’s economy is expected to contract by 3 percent.

Spanish unions have never held two general strikes in one year before. The previous one in March brought factories and ports to a standstill and ignited flashes of street violence.

Unemployment stands at 25 percent and every week brings fresh job cuts. Spain’s flagship airline Iberia, owned by UK-based International Airlines Group, said last week it will cut 4,500 jobs. The prestigious El Pais newspaper just laid off almost a quarter of its staff.

Add this news from the UK and it paints a worse picture

Inflation is likely to be significantly higher over the next 18 months than expected in August, Bank of England forecasts showed on Wednesday, posing a barrier to further policy stimulus.

In its quarterly Inflation Report, the central bank’s projections showed it would take until the third quarter of 2014 before inflation fell below its 2 percent target, nine months later than predicted in August, despite sluggish growth.

The Bank forecasts come a day after official data showed the biggest jump in inflation in more than a year, to 2.7 percent in October, after a rise in university tuition fees. Higher utility bills are likely to push inflation higher, with the Bank seeing a peak in the middle of next year.

Britain exited recession in the third quarter helped by one-off factors, but underlying growth remains weak, as the European debt crisis, government austerity measures and banks’ reluctance to lend weigh on the economy.

“Strains in the euro area (are) posing the greatest risk to a sustained recovery. The strength of the recovery will also depend on the vigor of any revival in productivity growth,” the Bank said.

Now in America, we have this debate…Financial cliff is coming closer

Both sides in the U.S. “fiscal cliff” debate stood their ground on Tuesday as they gathered in Washington for the first time since the elections, with a fundamental tax dispute preventing a broader compromise on deficit reduction.

The White House made clear it was ready to negotiate with Republicans on taxes and spending, but a spokesman for Democratic President Barrack Obama said he will not budge on insisting that tax rates for the wealthy must rise in 2013.

Corporate America is raising the volume of its plea that the US government avert a year-end “fiscal cliff” that could send the nation back into recession, but chief executives aren’t pushing the panic button just yet.

With a heated election season in the rear-view mirror, executives are calling on the White House and congressional leaders to head off a self-imposed deadline that could bring $600 billion in spending cuts and higher taxes early in 2013 if they are unable to reach a deal on cutting the federal budget deficit.

The Federal Reserve cannot do much more to shelter the US  economy if the country goes over a year-end fiscal cliff of tax hikes and government spending cuts, a senior U.S. central bank official said on Tuesday.

“It would be nice to have the fiscal authorities get their act together so we wouldn’t be dependent on monetary policy. There is a limit to what we can do,” Dallas Federal Reserve President Richard Fisher told CNBC television. “I do not see us as that safety net.”

The administration of President Barack Obama and his Republican opponents in Congress have 48 days left to figure out how to approach curbing the country’s deficit, or risk massive tax hikes and spending cuts that could cause another recession.

 

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Nov 13 2012

Zynkin news- European Debt Crisis, Greek debate and not solutions


Will this ever end? Euro crisis is a war of opinions and little actio.

A public clash between Greece‘s international lenders over how Athens can bring its debts down to a sustainable level has reignited fears that the crisis could flare up anew.

Euro zone finance ministers suggested that Greece, where the euro zone debt crisis began, should be given until 2022 to lower its debt to GDP ratio to 120 percent but International Monetary Fund chief Christine Lagarde insisted the existing target of 2020 should remain.

We clearly have different views. What matters at the end of the day is the sustainability of Greek debt so that country can be back on its feet,” Lagarde said late on Monday, in an unusually public airing of a disagreement that has rumbled for weeks behind closed doors.

Beneath her sharp exchange with Eurogroup chairman Jean-Claude Juncker lies a rift over whether euro zone governments need to write off some of Greece’s debt to them to make it manageable. IMF officials have pressed for such a “haircut” while Germany, the biggest contributor to euro zone bailout funds, has vehemently rejected it as illegal.

German Finance Minister Wolfgang Schaeuble told reporters on Tuesday that the 2020 deadline was “a little too ambitious”.

“There’s a debate about a haircut for official creditors. On that I will say and most countries have said so in the past few weeks that that’s legally not possible,” he added.

Chancellor Angela Merkel has signalled she wants to keep Greece in the euro zone but is determined to avoid losses for German taxpayers before a general election in September 2013.

With so much stake, diplomats remain confident that a deal will be done to release a 31.5 billion euros tranche of bailout money which Athens urgently requires to avert bankruptcy.

But it is a way off yet.

Financial markets, which have been calmed by the European Central Bank‘s pledge to buy euro zone government bonds to shore up the currency bloc, took a dim view of the failure to agree.

The euro dipped to a two-month low against the dollar and safe-haven German Bund futures rose to two-month highs.

Story courtesy of reuters news

The next question to come up will be the problems in Spain and Italy. At present it is all about Greece but the other economies are in serious trouble as well. What about America and how will Obama and his new presidential term fix the debt there.

At the same time we must not forget other countries and how they are struggling and what will be the effect on them if situations worsen in Europe. How will trade in China and the Far East be influenced by this?

What is the social impact going to be on people and business. These are drastic times that never seem to be bettering themselves…Time for more direct action is needed!

 

 

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