Tag Archives: Italy

EU – Summit on the Titanic’s board

European leaders delayed the Friday’s Summit, two days after the EU Finance ministers reunion did not reach any result on Greece. In addition, the German chancellor, Angela Merkel, was crucial in resisting pressure for a meeting on Friday, arguing that it would be too early to deliver the comprehensive package of measures needed to restore stability to the euro zone, one official briefed on the discussion said. Under discussion is a proposal from the Institute of International Finance, a Washington-based organization grouping more than 400 financial institutions world-wide. Herman Van Rompuy, the president of the European Council, hoped to organize the meeting for next Monday or Tuesday, said the official, who was not authorized to speak publicly.

As already I anticipated some time ago, at the recent meeting the EU Finance ministers agreed, for the first time, that they could reach a selective bankruptcy for Athens. These actions and an unraveling uncertainty followed the Euro zone’s failure Monday to come up with a comprehensive second bailout deal for Greece, worth $120 billion. Holland Finance Minister Jan Kees Dutch Jager said at the end of the meeting that the European Central Bank still rejects the idea of bankruptcy for Greece. However, the 17 euro zone countries do not exclude default because need to have more options, due to drastic tightening perceptions of Italy and Spain for fear of contagion. Agency Moody’s changed the credit rating of Ireland, from “Baa3” to “Ba1” with a negative outlook, retrograde rated in “junk” and warning that the state will need a new package of bailout from the international financial institutions (previously Moody’s downgraded Portugal, citing similar reasons.). The Irish were upset. They were very angry. Just as was Greece in early May. An unnecessary and inefficient reaction. Ireland has implemented, of course, like other countries, according to IMF, austerity policies quite drastic. But, despite the austerity policies reduce the budget expenditures also have fatal flaw to further reduce budget revenues by contracting economy, the inevitable consequence of tax increases included in the policies of austerity and declining purchasing power driven by some cuts revenue. So the budget imbalance is not resolved. So just weakens the economy of that country. Also, Moody’s gave us a seemingly good news. Good to calm a little the capital markets. Italy is a solvent country. “Most of the titles have a long-term maturity, even though spreads rise, debt is sustainable” said Moody’s analyst Alexander Kockerbeck in an interview with Italian daily Il Messaggero. However the cost of insuring debt against the entry of Italian state in default exceeded the calculated cost for Bulgaria and Romania, according to Wall Street Journal Europe. The situation shows how little matter the official credit rating of a state. Both Eastern European countries are assessed by Fitch to BBB-, it means six levels below that of Italy.

But reduce rating Ireland affected the capital shares and the euro traded in Asian markets. Euro depreciated to the minimum the last four months against the dollar. Dollar that, also, does not feels very well due to bad news that are coming from the United States. President Obama, despite the strong appeal to Congress to find a balanced approach to deficit reduction, seems unable to avoid an “economic Armageddon”. Wednesday, Credit rating agencies moved closer to an unprecedented downgrade of the U.S.’s debt amid deteriorating talks in Washington, with president Obama abruptly walking out of a key meeting with Republicans seeking a deal to raise the federal borrowing limit. Minnesota State has already declared bankruptcy on July 1. In the first three months of 2011, 500 wealthy Americans have given up their citizenship. Now they are happy: no taxes ! As U.S. firms, they have a much easier solution – simply move their business in more profitable countries, where not must to pay for social protection and where the wages are lower: China, Malaysia, Hong Kong, India … even Russia and Poland.

Approximately this is the general picture sketched more or less apocalyptic, in which the humanity is evolving at this time.

“Give me control of a nation’s money and I care not who makes it’s laws” — Mayer Amschel Bauer Rothschild

This year, on August 15, marks 40 years since the U.S. unilaterally abandoned the gold standard, ie full convertibility of the U.S. dollar in gold. On August 15, 1970 to put an end to the Bretton Woods system established in 1945 and President Richard Nixon unilaterally decided to freeze the dollar’s convertibility into gold, which turned the U.S. currency in cash changeover (fiat currency).

Austrian school economists say that no gold standard has enabled central banks to issue currency without restrictions, prerogative that they have abused, which led, ultimately, the formation of speculative bubbles in decades. On the other hand, fans of British economist John Maynard Keynes theory held that gold norm is a “barbarous relic” that not allow the state to use monetary policy to adjust the economy. In fact, we had 40 years of hidden inflation and financial turmoil. An unrealistic world financial system, protected by a global political system depended and blind to the greed of fat cats from Wall Street and other places where the money never sleeps. And the result could not be other than what we see today.

 An honest bankruptcy is healthier than a long illness !

 It speaks more often of some euro area’s exit, it takes into account the return to gold standard. The analysts on both sides of the Atlantic are singing funeral of the welfare state. Public finance crisis intensified in recent time increased the likelihood of a scenario of “hard landing” for the world economy. The expected reunion of the European leaders seems to be a session of commandment on board of the Titanic. The ship is adrift and the insidious water is gathering in the engines room. And miraculous solutions aren’t. Importantly, however, is to recognize the gravity of the situation. Hypocritical promises have no meaning. Some citizens have already noticed and begin to create panic. And that’s not convenient. The world’s leadership still hasn’t finished loading boats for themselves and their friends. Also, there are simple guys who were tired of the false sound of orchestra and they begin to understand how the things run. Most are scared. Between the euro and dollar, the choice is useless. The journalists began to scream about shipwrecks, diving, sharks financial, apocalypse and other ones. Luckily, the world still largely considered them batty and stupid. But their voices begin to multiply. Some desperate people were thrown overboard. And others have resigned and turned back to listen the orchestra. Most intelligent people made ​​rafts and put aside the reserves they could find and now paddled to the nearest island. Some of them scream from a distance trying to convince others that the ship is sinking. But the orchestra plays and it is difficult to understand what they say.

There are some alternatives. Even if these cannot to deliver results overnight. And the suffering of population is unavoidable. It is advisable to stop the political music, to get off the boats and save what can be saved. Because the world debts clock alarming ticking, the ship is more difficult to control and time is running…

Published – Oriental Review, 14 July 2011

Update: 21 July 2011

European leaders agreed on Thursday to provide a second bailout package for Greece and drastically expand rescue funds to prevent financial crisis spreading through the eurozone.

According AFP, European Union president Herman Van Rompuy said the rescue deal would be financed by both the EU and the International Monetary Fund. European governments and the IMF will contribute a total of 109 billion euros. The private sector’s share will amount to 49.6 billion euros.

Attack against Libya – Political Realism or just a filthy and disgusting way of doing politics ?

Faced with a serious drop in the eyes of French, President Nicholas Sarkozy felt the need to pretend to be the leader of anti-Gadhafi coalition. Of course, it will not restore the population’s sympathy.

But, I don′t understand how is possible as high  world leaders to not realize that are sad pathetic and ridiculous

French President Nicolas Sarkozy, left, welcomes United Arab Emirates' Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan for a crisis summit on Libya at the Elysee Palace in Paris, Saturday, March, 19, 2011. World leaders met Saturday in a summit in Paris that could be the final step before immediate international military action against Moammar Gadhafi's forces in Libya.

with a coalition leader who became president on Gadhafi‘s money. Also who was charged of leading nuclear business with the same dictator, on the issue of Bulgarian nurses. More, I don′t even bother to explain why juridic an interference with glitter of democracy is still illegal.

But I would like to mention some questions to which Mr Sarkozy has not responded, even if he was quick to recognize, wrongly again, a gang  by rebels as political interlocutor. Who are these rebels ? How are they ? What percentage of the population of Libya are they ? How many international observers in Libya last month ? What future strategy supporting these rebels ? It seems to me that the rebels aren′t some geniuses worthy of the  Peace Nobel Prize or some top leaders of human rights…

Let us be clear: Gadhafi is a dictator. But is a dictator who was  tolerated as long as it was useful. Functional hypocrisy… Some call it Political Realism. I think it’s just filthy and disgusting way of doing politics. We see that in the forefront of anti-Gadhafi coalition are  leaders (US, UK, France, Italy) who have just spoked «Gadhafi must go» at the beginning of the uprising Libyan. For they, Gadhafi’s staying in power means Goodbye to Libyan oil. For they is an urgent need the tyrant Gadhafi to emerge from the world political picture. What price ? The price paid by the public ? Or oil prices ? We’ll see. 😀 As we have already seen what happiness  was and is in Iraq after Saddam‘s removal from the scene !!