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UK + Eurozone Crisis

Discussion in 'World Economy' started by santosh, Mar 30, 2014.

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  1. santosh

    santosh Major SENIOR MEMBER

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    Debt crisis has left Germany vulnerable
    By Satyajit Das

    During her successful re-election campaign, Chancellor Angela Merkel’s message was that Germans were living in a prosperous, recession-proof economy and the eurozone problems were contained. But Germany’s economic power and financial strength is overstated.

    Germany remains dependent on its neighbours, with 69 per cent of total exports going to European countries, including 57 per cent to the member states of the European Union.

    In 2012, Germany ran a trade deficit of €27bn with Russia, Libya and Norway, mainly for energy imports. Germany also had trade deficits with Japan (€4.7bn) and China (€11.7bn). In contrast, Germany had a trade surplus with the eurozone (France, Italy, Spain, Greece, Portugal, Cyprus and Ireland) of €54.6bn. :rofl:

    Continued weakness in these troubled countries will affect German economic prospects. High energy prices and increasing stresses in emerging markets will exacerbate its problems.

    Eurozone members remain committed to avoiding the unknown risks of a default and departure of countries from the euro.

    Governments in the at-risk economies are unlikely to meet agreed budget deficit or debt level targets. Banks will face rising bad debt losses and require capital infusions. For both weaker sovereigns and banks, access to financial markets will remain restricted. Cost of commercial funding will remain above affordable levels, meaning that assistance will be needed.

    Greater reliance on ESM

    Peripheral countries will be forced to rely on the European Stability Mechanism and European Central Bank to provide financing directly or indirectly via cheap funds to banks to purchase government bonds which will be used as collateral for the central bank loans.

    National central banks will also use the “Target 2” payment system to settle cross-border funds flows between eurozone countries financing peripheral countries without access to money markets to fund trade deficits and capital flight.

    Over time, financing will become concentrated in official agencies, the ECB and national governments or central banks. Risk will shift from the peripheral countries to the core of the eurozone, especially Germany and France. :coffee:

    For example, the ESM relies primarily on the support of four countries: Germany (27.1 per cent), France (20.4 per cent), Italy (17.9 per cent) and Spain (11.9 per cent). If Spain or Italy needs assistance, then the contingent commitment of the remaining countries, especially France and Germany, would increase. :coffee:
    :)rofl:)

    This reflects the reality that the stronger countries stand behind each of the support mechanisms.

    German guarantees supporting the existing bailout fund are €211bn. The ESM will require a capital contribution from Germany. If the ESM lends its full commitment of €500bn and the recipients default, Germany’s liability could be as high as €280bn. There is also indirect exposure via the ECB and the Target 2 claims.

    The size of these exposures is large, in relation to Germany’s GDP of around €2.5tn and German household assets estimated at €4.7tn.
    Germany also has substantial levels of its own debt (over 80 per cent of GDP). German demographics, with an ageing population and deteriorating dependency ratios, compound its problems.

    If unfunded social security liabilities are taken into account, then the level of German debt increases to over 190 per cent of GDP.

    Transfer of risk

    At best, increased commitments to support its European partners will absorb German savings, crippling the economy. At worst, default of one of the weaker countries or a restructuring of the euro will result in large losses to Germany; the best estimates are in the range of €750bn to €1,500bn.

    Voters seem unaware that each step in the crisis has resulted in a transfer of risk, liability and losses to Germany. Given strong opposition to debt pooling and institutionalised structural wealth transfers, their reaction to eventual revelation of this increasing commitment and their status as the “permanent creditor” within Europe is unknown.

    Germany’s history is one of monumental reverses and extremes. Miscalculations and errors in the handling of the eurozone debt crisis have left it vulnerable to another one of these events.

    Anxious to maintain their relative prosperity and central place in Europe, Germans have sought to avoid the reality of their predicament. But as C.S. Lewis advised: “If you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth, only soft soap and wishful thinking to begin, and in the end, despair.” :rofl:

    Debt crisis has left Germany vulnerable - FT.com
     
  2. santosh

    santosh Major SENIOR MEMBER

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    Euro-area unemployment rate holds at 12.1 percent
    Jan 8, 2014

    Euro-area unemployment held at a record in November as policy makers struggled to bolster the recovery from the currency bloc’s longest recession. :coffee:

    The jobless rate remained at 12.1 percent, the European Union's statistics office in Luxembourg said on Wednesday. That's in line with the median estimate in a Bloomberg News survey of 26 economists. After several revisions of previous months data, unemployment has been stable at that level since April, Eurostat said.

    Europe's fragile labor market remains a major concern for EU leaders as they try to foster the recovery. Last month, they acknowledged that the jobless rate remains unacceptably high, especially among young people, 18 months after they unveiled a 120 billion-euro ($163 billion) package to jump-start the economy and create jobs.

    The euro-area economy isn't growing fast enough to significantly reduce unemployment, said Evelyn Herrmann, an economist at BNP Paribas SA in London. This isn't going to change anytime soon, with annual growth rates of about 1 percent this year and in 2015.

    The European Central Bank estimates that the euro-area economy will expand 1.1 percent this year after contracting 0.4 percent in 2013. Unemployment will average 12.1 percent this year and 11.8 percent in 2015, economists forecast in a separate Bloomberg survey.

    Meager growth has forced European companies to shed jobs in a bid to cut costs and remain competitive. European Aeronautic, Defence and Space Co. said last month that it would cut 5,800 jobs in Germany, France, Spain and the U.K.

    Unemployment varied widely across the euro area in November, from a low of 4.8 percent in Austria to a high of 26.7 percent in Spain. Greece, which last reported in September, had a jobless rate of 27.4 percent. Among people under the age of 25, unemployment in the then 17-nation euro zone stood at 24.2 percent.

    While unemployment remains resistant to policy makers attempts to boost the economy, positive signs are gradually accumulating, such as improving economic confidence. The European Commission will publish the results of its December survey on Thursday, with the gauge forecast to rise to 99.1, the highest reading since July 2011, according to economists surveyed by Bloomberg.

    November retail sales increased 1.4 percent from the previous month, beating analysts estimates, and 1.6 percent in the year, Eurostat said today in a separate report.

    And the ECB, after cutting its main refinancing rate to a record-low 0.25 percent in November, sees no immediate need to act further on encouraging sign that the euro area's crisis is easing, President Mario Draghi said on Dec. 28 in an interview published in Der Spiegel. The Frankfurt-based central bank will leave its key rate unchanged tomorrow, according to all 51 economists in another Bloomberg survey.

    ekathimerini.com | Euro-area unemployment rate holds at 12.1 percent; Greece reports 27.4 percent in September
     
  3. santosh

    santosh Major SENIOR MEMBER

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  4. santosh

    santosh Major SENIOR MEMBER

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    GOVERNMENT DEBT CONTINUES TO RISE IN THE EU
    October 24, 2013

    The government debt to GDP ratio in the euro area rose from 92.3% at the end of the first quarter of 2013, to 93.4% at the end of the second quarter of 2013, according to figures released yesterday by Eurostat. :coffee:

    When we look at the whole of the EU, the EU28, the figures rose from 85.9% to 86.8% over the same period.

    [​IMG]
    EU government debt levels continue to rise

    There were remarkable differences across the EU. The highest ratios of government debt to GDP at the end of the second quarter of 2013 were recorded in Greece (169%), Italy (133.3%), Portugal (131.3%) and Ireland (125.7%). The lowest figures were seen in Estonia (9.8%), Bulgaria (18.0%) and Luxembourg (23.1). :coffee:

    In fact Estonia makes a very interesting case study. According to government sources: “The sudden contraction in global economic activity and trade caused by the global credit crisis had a significant impact on Estonia’s open economy, and our economy demonstrated remarkable flexibility in coping with it. The reliability of the fiscal policy was maintained in the changed economic conditions and the support it offered to economic development allowed the state to overcome the crisis without considerable increasing its financial obligations. Increasing economic flexibility, supporting the business environment, and improving the efficiency of the labour market have become the key factors that help guarantee sustainable economic development”

    In fact the government points out that its goal is to maintain a sustainable fiscal policy, with a medium-term budgetary objective of having a general government structural surplus. They have imposed a strict fiscal policy to enable a low level of government debt to be maintained.

    According to the latest forecast of the Estonian Ministry of Finance, the Estonian economy will grow by 3% this year, and between 2014-2017 economic growth is expected to stabilise at around 3.5%, which is a very impressive success story.

    It is also revealing to look at the changes in government debt to GDP ratio in the second quarter of 2013 compared to a year earlier amongst all the EU states. This shows that compared with the second quarter of 2012, 24 EU member states saw an increase in their debt to GDP ratio at the end of the second quarter of 2013, and four a decrease. The highest increases in the ratio were recorded in Greece (+19.9 percentage points), Ireland (+15.5 pp), Cyprus (+15.2 pp), Spain (+14.7 pp), Slovenia (+14.1 pp) and Portugal (+13.1 pp). By contrast, decreases were recorded in Latvia (-3.8 pp), Germany (-2.1 pp), Denmark and Austria (both – 0.6pp).

    Government debt continues to rise in the EU | Anforme Limited
     
  5. santosh

    santosh Major SENIOR MEMBER

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    Britain's debt mountain reaches £1.39TRILLION, equivalent to 90% of the entire economy

    Gross debt at the end of 2012 stood at £1.387trillion, up 7% on 2011

    Vast sum is equivalent to 90% of GDP - up from38% a decade ago

    Figures used to compare UK to the rest of Europe

    Mounting debts reveal the devastating impact of the 2007 crash
    :coffee:

    Britain’s debt mountain has topped £1.387trillion, and is now the equivalent of 90 per cent of the entire economy. :coffee:

    The grim milestone was passed at the end of 2012, new figures from the Office for National Statistics revealed today.

    It lays bare the dire state of the nation’s finances in the wake of the 2007 financial crash, which has seen government debt double in just five years.

    [​IMG]

    The shocking figure will be used later this month to compare Britain’s finances to the rest of Europe.

    The ONS said that in December gross debt, which includes all financial liabilities of both central and local government but does not take account of liquid assets, was £1,387,436,000,000, up seven per cent on a year earlier.

    By comparison, the entire British economy was valued at £1,541,465,000,000.

    The dismal state of government borrowing has already forced Chancellor George Osborne to abandon his target to see net debt, a different measure, falling as a percentage of the economy by 2015-16. But he has refused to budge on his austerity programme.

    In last month’s Budget, Mr Osborne told MPs his chance of meeting his debt targets had ‘deteriorated’.

    He added: ‘There are those who would want to cut much more than we are planning to – and chase the debt target.

    ‘I said in December that I thought that with the current weak economic conditions across Europe that would be a mistake. We’ve got a plan to cut our structural deficit.

    ‘And our country’s credibility comes from delivering that plan, not altering it with every forecast.’

    Gross debt had been fairly level in the decade from 1992, when John Major won the general election. It rose from £238billion in 1992 to £402billion 10 years later.

    But under Labour debt levels gradually climbed before the financial crash in 2007 led to an explosion in borrowing.

    in the last five years gross debt has soared from £577billion in 2006 to £1.387trillion in 2012. :facepalm:

    It means gross debt is equivalent to 90 per cent of the entire UK economy, well above the 60 per cent threshold set by the European Union.

    The UK gross debt level is up from 85.5 per cent of GDP at the end of 2011 and just 43.3 per cent in 2006.

    Chris Leslie, Labour's shadow Treasury minister, said: 'For all David Cameron's false claims to be paying down Britain's debts, the national debt has gone up and up on his watch.

    'And far from getting the deficit down, the Office for Budget Responsibility has said it will be the same this year as it was last year and the year before. This can no longer be called a deficit reduction plan.

    'This is happening because our economy has flatlined for the last three years and unemployment is high and rising again. We should be acting to get the economy moving, not paying for the mounting costs of this government's total economic failure.'

    Under rules agreed in the Maastricht Treaty, all European countries must report every year on their finances to ‘avoid excessive budgetary deficits’.

    Under the rules countries should run a debt to GDP ratio of 60 per cent.

    In a boost to Mr Osborne, today’s figures show that government borrowing is falling.

    The gap between government spending and what it raises through taxes peaked at £161billion in 2009, falling to £150 billion in 2010, £119billion in 2011 and £98billion in 2012. :tup:

    It means net borrowing as a percentage of GDP stood at just 6.8 per cent at the end of 2012, its lowest level since 2008 and at similar levels to those seen in the mid-1990s.

    Britain's debt mountain reaches £1.39TRILLION, equivalent to 90% of the entire economy, ONS reveals | Mail Online
     
  6. santosh

    santosh Major SENIOR MEMBER

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    Soaring UK personal debt wreaking havoc with mental health
    20 November 2013

    Centre for Social Justice says poorer people 'bearing brunt of storm' as debt hits £1.4tn – almost as high as economic output :facepalm:

    [​IMG]
    Credit card debt has trebled to £55.6bn since 1998 while overall personal debt including mortgages has reached £1.4tn. :coffee:

    Personal debt in Britain has reached £1.4tn – almost the same amount as Britain's national economic output – according to a report that warns debt is wreaking havoc on people's mental health and wellbeing. :coffee:

    Poorer people are "bearing the brunt of a storm" during which average household debt has risen to £54,000 – nearly double what it was a decade ago, the report by the Centre for Social Justice thinktank warns. :tsk: :facepalm:

    The report, entitled Maxed Out, found that almost half of households in the lowest income decile spent more than a quarter of their income on debt repayments in 2011. More than 5,000 people are being made homeless every year as a result of mortgage or rent debts. :facepalm:

    Christian Guy, director of the thinktank established in opposition by the work and pensions secretary, Iain Duncan Smith, said: "Problem debt can have a corrosive impact on people and families. Our report shows how it can wreak havoc on mental health, relationships and wellbeing. Across the UK people are up until the early hours worrying about their finances and bills."

    The report, written by the former Labour work and pensions minister Chris Pond, found that:

    • Personal debt in the UK, including mortgage lending, stands at £1.4tn – an average of £54,000 per household compared with £29,000 a decade ago. :coffee:

    • Consumer debt had trebled since 1993 and now stands at £158bn;

    • More than 8m households have no savings, including half of low-income households;

    • Outstanding debt on credit cards has almost trebled since 1998 to reach £55.6bn; :coffee:

    • There were 300,000 arrears on mortgage in 2012 – with 34,000 homes repossessed. This is a reduction of 30% from the peak of the recession but a 60% overall increase since 2006.

    Pond said: "With falling real incomes and increasing costs of basic essentials, many – especially the most vulnerable – are sliding further into problem debt. The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services."

    The report found that the decision of mainstream banks to refuse credit to the less well off has led to a dramatic increase in the demand for short-term credit – from payday lenders, pawnbrokers and doorstop lenders – which is now worth £4.8bn a year. More than 1.4 million people have no access to a bank account and "are effectively excluded from the entire financial sector". This contributes to the "poverty premium", a £1,280 annual surcharge on everyday goods and services faced by low-income households.

    Payday lenders have increased their business from £900m in 2008-09 to more than £2bn – accounting for around 8m loans – in 2011-12. The number of people resorting to loan sharks has increased to 310,000 people.

    The report says: "For the most financially excluded, there is often no option but to turn to illegal moneylenders. It is estimated that over 310,000 people borrow money from these criminals each year. Illegal moneylenders extort money from their victims, often arbitrarily raising interest rates, demanding payments or charging penalties. Their use of violence and intimidation terrorises people and communities, enforcing a 'veil of silence' that allows them to escape detection. This is an inexcusable crime in modern Britain.

    Many of the side effects of problem debt can also work to drive people further into debt, creating a vicious cycle. While it is often hard to prove causation, there is a clear relationship between the following and problem debt: unemployment, family breakdown, addiction, and poor mental health. Similarly, many of these factors are interrelated, meaning problem debt can have diverse causes, requiring multidimensional support in order to fully resolve the underlying problems."

    Soaring UK personal debt wreaking havoc with mental health, report warns | Money | The Guardian
     
  7. santosh

    santosh Major SENIOR MEMBER

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    Income inequality growing faster in UK than any other rich country

    Top 10% have incomes 12 times greater than bottom 10%, up from eight times greater in 1985, thinktank's study reveals

    Income inequality among working-age people has risen faster in Britain than in any other rich nation since the mid-1970s, according to a report by the OECD.

    The thinktank says the gap has come about due to the rise of a financial services elite who, through education and marriage, have concentrated wealth into the hands of a tiny minority.

    Economists from the group, which is funded by developed-world taxpayers, say the annual average income in the UK of the top 10% in 2008 was just under £55,000, about 12 times higher than that of the bottom 10%, who had an average income of £4,700. :coffee:

    This is up from a ratio of eight to one in 1985 and significantly higher than the average income gap in developed nations of nine to one.

    However, the report makes clear that even in countries viewed as "fairer" – such as Germany, Denmark and Sweden – this pay gap between rich and poor is expanding: from five to one in the 1980s to six to one today. In the rising powers of Brazil, Russia, India and China, the ratio is an alarming 50 to one.

    The OECD warned about the rise of the top 1% in rich societies and the falling share of income going to poorer people.

    This trend is especially pronounced in Britain, where the dramatic rise in inequality has been fuelled by the creation of a super-rich class. The share of the top 1% of income earners increased from 7.1% in 1970 to 14.3% in 2005.

    Just prior to the global recession, the OECD says the very top of British society – the 0.1% of highest earners – accounted for a remarkable 5% of total pre-tax income, a level of wealth hoarding not seen since the second world war.

    At the same time as accumulating great wealth, the rich have seen tax rates fall. The top marginal income tax rate dropped from 60% in the 1980s to 40% in the 2000s, before its recent increase to 50%.

    The buildup of riches was partly economic: the higher-paid worked longer. Since the mid-1980s, annual hours of low-wage workers remained stable at around 1,050, while those of high-wage workers rose almost 10% to 2,450 hours.

    But the concentration of resources in the highest rungs of Britain's society was also a social phenomenon. Unlike in many other nations, the earnings gap between the wives of rich and poor husbands in Britain has grown from £3,900 in 1987 to £10,200 in 2004.

    Although the OECD figures stop just before the recession, experts say the trend continued into the downturn.

    Paul Johnson of the Institute for Fiscal Studies said that in the UK "2009-10 incomes went up incredibly fast (at the top end) possibly because the new top rate of tax was coming in".

    He pointed out that the growth in the City and bankers' bonuses had played a large part in creating this divide. "If you look at who is racing away, then half the top 1% of high earners work in financial services," he said.

    He cited the research of Mark Stewart, a professor of economics at Warwick University, who has shown that "almost all the increase in inequality has come from financial services" in the past 12 years.

    Such disparities, the thinktank said, could not be blamed on globalisation but a trend in labour and social policies in rich nations that had helped the wealthy.

    Although spending on public services in Britain had gone up in the past decade, at the same time benefits to the poor were worth less and taxes were less redistributive.

    The effect has been a dramatic weakening in the state's ability to spread wealth throughout society. From the mid-70s to mid-80s, the tax-benefit system offset more than 50% of the rise in income inequality. It now manages just 20%.

    The OECD warned of sweeping consequences for rich societies – and pointed to the rash of occupations and protests, especially by young people, around the world. "Youths who see no future for themselves feel increasingly disenfranchised. They have now been joined by protesters who believe they are bearing the brunt of a crisis for which they have no responsibility, while people on higher incomes appeared to be spared," the OECD said.

    It was a paradox, said the OECD, that such moves had not been grounded in popular support. Michael Förster, author of the OECD's Divided We Stand report, said: "In almost all countries apart from the US and Japan, more than 50% of people say that inequality is too high. In the UK, it is 65% so I think everyone agrees it is a problem."

    To rebalance society "for the 99%", the authors call for a series of measures focusing on job creation, "increased redistributive effects" and "freely accessible and high-quality public services in education, health and family care".

    When it was pointed out that British government plans would instead lead to public sector job cuts of 710,000, more child poverty and a hike in university fees, the OECD's authors said debt was an issue for governments but urged them "not to cut social investments".

    Monika Queisser, the head of OECD's social policy division, said: "The OECD agreed that fiscal consolidation was important. We want to governments to see social expenditures as investment so we would want to see, say, early years [funding] rising."

    Income inequality growing faster in UK than any other rich country, says OECD | Society | The Guardian
     
  8. santosh

    santosh Major SENIOR MEMBER

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    IMF: Euro-zone companies face massive debt overhang
    April 17

    Euro-zone companies face a massive debt overhang that could prolong the regions downturn and risk a return to a more acute crisis, the International Monetary Fund warned Wednesday in a sobering report on risks that may be accumulating in the world financial system.

    The IMF estimated that as much as one-fifth of the corporate bonds and loans issued by major European corporations are unsustainable and will force the firms to default or scale back, cutting capital expenditures, eliminating shareholder dividends or taking other steps to conserve cash to make debt payments.

    Either alternative could create problems with defaults damaging the banks or others who have lent money or bought corporate bonds, and capital investment cuts or other spending reductions affecting the ailing economy.

    The data were released ahead of IMF spring meetings, where the fate of the euro zone remains a central issue. The information presents a quandary. Although some corporations in Europe have taken on too much debt, small- and medium-size businesses are finding it hard to borrow, further impeding any economic rebound.

    The slump in Europe is worrisome, said IMF chief economist Olivier Blanchard, who suggested that European banks be allowed to bundle loans to small businesses into marketable securities to encourage them to lend.

    The region has been consumed for three years in a crisis revolving around debt, and it is reeling from the subsequent fiscal consolidation, as nations cut spending or raise taxes to stabilize finances. :facepalm:

    The potential corporate debt crisis could unleash the same dynamic in the private sector, whose debts sometimes dwarf the size of the surrounding economy. The IMF, which studied a sample of Europe's largest firms, said the situation is probably worse than its survey indicated, because the companies were among the regions strongest.

    Just like their government counterparts, euro-zone firms gorged on cheap money that the establishment of the currency union provided to countries such as Italy and Spain, and they are paying it back amid a recession.

    Firms in the euro area periphery have built a sizeable debt overhang during the credit boom, on the back of high profit expectations and easy credit conditions, the IMF said in its latest Global Financial Stability Report. Larger firms may skirt the problem by selling unneeded assets, but further reductions in operating costs, dividends and capital expenditures may also be required, posing additional risks to growth.

    The warning on corporate debt is only one of the problems the fund sees on the horizon for the world financial system, particularly Europe. Years into a crisis that early on identified the banking sector as a particular weakness, the euro zone has not adequately recapitalized its banks, forced them to restructure and shed weak loans, or finished work on what many consider a necessity: a banking union that would unify financial supervision and share the risks of bank failures.

    In one startling statistic, the IMF said euro-zone banks were only about halfway through a process of deleveraging or bringing their obligations more closely in line with their assets. The fund estimated that euro-zone financial institutions still need to cut $1.5 trillion from their books, an amount that may increasingly crimp local lending because some of the easier steps, such as pulling out of overseas operations, have been done.

    In many ways, worldwide financial conditions have improved in recent months. U.S. banks in particular, the fund said, have rebounded from the crisis, the euro zone has skirted the acute risk of breakup, and emerging markets have absorbed a large influx of capital without serious problems.

    But the IMF, which was criticized for not saying more in advance about the circumstances that led to the U.S. financial crisis in 2008, is now using an abundance of caution. :coffee:

    Pension funds in the United States are undertaking a gamble for resurrection by trying to overcome shortfalls with ever-riskier investments. Pension funds without enough to pay expected future benefits have placed as much as 25 percent of their money in alternative investments, such as hedge funds and other riskier but potentially higher-return vehicles, the IMF reported.

    U.S. firms have issued record levels of bonds in the low-interest-rate environment, but the money raised is increasingly geared toward less productive use,†such as buying back company stock.

    Central banks, looking at weak growth and high unemployment rates, may feel the need to keep interest rates low and money flowing. But the fund said financial regulators may have to be aggressive and perhaps start forcing financial institutions to set aside more money to cover potential losses.

    Tension is building between the ongoing need for extraordinary monetary policy accommodation and credit markets that are maturing more quickly than in typical cycles, the IMF wrote. High unemployment and low inflation may justify an accommodative monetary policy stance. But other tools need to be employed to counteract undesirable excesses in credit.

    In remarks on Wednesday at Johns Hopkins University, Treasury Secretary Jack Lew insisted that the world economy must do more to stimulate domestic spending and generate economic growth. And he said the United States cannot be the sole supporter of growth across the globe.

    There is now broad agreement that we cannot return to a pattern of global growth that is built on the U.S. being the world's importer of first and last resort,†Lew said. Looking ahead, the United States must raise national savings, and emerging and more rapidly growing parts of the world, like Asia, must increasingly rely on domestic demand.

    IMF: Euro-zone companies face a massive ?debt overhang? - The Washington Post
     
  9. santosh

    santosh Major SENIOR MEMBER

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    Almost 90% would 'consider moving abroad' for better financial prospects

    Nearly nine in 10 Britons would consider leaving the UK for a better - and wealthier - life abroad within the next five years

    The current recession combined with the perception that property is cheaper overseas and job prospects better collectively accounted for nearly a third of all reasons for emigrating, according to a survey by Skyscanner.

    Sam Baldwin, Skyscanner’s travel editor, said: “For many people the idea of ‘living the dream’ abroad is very alluring. The survey revealed that our perception of life abroad is very positive – perhaps overly so – and many people come back from a holiday enamoured with their destination. Interestingly, Spain and USA were two of the most popular places even though both countries are currently suffering from their own economic problems, which suggests that the dream of moving abroad to improve financial prospects may be just that - a dream.

    The dream may be more realistic if, rather than moving abroad to look for new work, you are sent abroad as part of an existing job. Around 750,000 British workers are being posted abroad on assignments with their existing employer, and a massive 84 per cent believe this is helping them to climb the corporate ladder, according to the NatWest International Personal Banking (IPB) Quality of Life Index.

    They also feel they benefit from an improved lifestyle, backing up the Skyscanner research results, and the increasing use of temporary global workers means that the traditional definition of ‘expat’ is now being blurred, said Dave Isley, head of NatWest International Personal Banking.

    He added: “The growth of the global worker has brought with it an opportunity to share knowledge and experience around the world. The great brain exchange is a fantastic concept of other economies temporarily sharing the strengths of British workers.

    Almost 90% would 'consider moving abroad' for better financial prospects - Telegraph
     
  10. santosh

    santosh Major SENIOR MEMBER

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    Merkel said Tuesday that full debt sharing would not occur "as long as I live."
    June 27, 2012

    On the eve of a European summit, German Chancellor Angela Merkel touts tighter budgetary controls and says debt sharing will not occur 'as long as I live.'

    BERLIN — As European leaders gather in Brussels on Thursday for a two-day summit aimed at resolving the Eurozone's debt crisis, German Chancellor Angela Merkel's response to the most aggressive proposal pushed by her neighbors is, in essence: Over my dead body.

    With borrowing costs for Spain and Italy approaching unsustainable levels, European Union leaders have stepped up their pressure on Germany to accept solutions it has long resisted. But Merkel, whose country has Europe's largest economy and probably will foot the highest share of the bill for rescuing its struggling neighbors, has dug in her heels.

    In response to the widespread call for euro bonds, which would allow European countries to issue debt jointly and could ease the cost of borrowing for highly indebted southern European countries, Merkel said Tuesday that full debt sharing would not occur "as long as I live."

    A road map issued Tuesday by four senior European officials — European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, European Central Bank President Mario Draghi andJean-Claude Juncker, head of the group of Eurozone finance ministers — laid out a range of proposals for discussion at the summit, including possible moves toward debt sharing.

    However, Merkel said Wednesday that the focus should be on tighter budgetary controls across the Eurozone, the 17 nations that share the euro currency.

    "I'm afraid that at the summit there will be much too much talk about joint liability and far too little about improved oversight and structural measures," Merkel said in an address to the Bundestag, the lower house ofGermany'sParliament. "Oversight and liability must go hand in hand. There can only be joint liability when adequate oversight is ensured."

    Merkel's deputy foreign minister, Michael Georg Link, likewise criticized the road map as a "wish list" that wouldn't win German backing.

    Germany is wary of proposals that would allow debt-ridden countries to relieve their burdens without first implementing painful cost-cutting measures, particularly when German taxpayers' money is on the line. But with fear growing that Italy and Spain — the Eurozone's third- and fourth-largest economies, respectively — are fast reaching the point where they cannot sustain their debt, critics say the Merkel administration is not acting with due haste.

    "In Germany, the feeling of urgency is still not strong enough," said Sebastian Dullien, a Berlin-based economist and senior fellow at the European Council on Foreign Relations.

    In Madrid, Prime Minister Mariano Rajoy told lawmakers that the cost of borrowing since Spain recently requested a bailout for its banks has climbed so steeply that the nation might not be able to finance itself much longer through debt.

    "We can't keep funding ourselves for too long at the prices we're currently paying," Rajoy said. The summit may yield agreement on a number of small measures to ease the continent's debt crisis, such as removing the so-called preferred creditor status of the Eurozone's permanent bailout fund in order to reassure other lenders to struggling countries that they would get their money back. Germany appears open to the idea, at least for Spain.

    But few expect progress at the summit on more decisive measures to reassure nervous investors, such as debt sharing. Dullien considers it unlikely that Germany will consent to the major controversial proposals of the road map.

    Germany leader opposes full debt sharing in Eurozone crisis - Los Angeles Times
     
  11. santosh

    santosh Major SENIOR MEMBER

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    Gexit Is Better Than Grexit :coffee:
    August 21, 2012

    There would be no domino effect if Germany leaves. Remaining in the euro entails Germany's paying indefinitely for debts made by others.

    Any reasonable person would assume it highly unlikely that Europe's leaders would have adopted the euro as their common currency if they had known 10 years ago what a mess they would be in today. The euro project, however, was not a project of reason but of political correctness. Ten years ago many economists warned that adopting a common currency for countries with such divergent economies as divergent as Germany and Spain (not to mention Finland and Greece) could not work. In spite of this, Europe's unelected political class pushed through the euro.

    Today it is clear as well that the euro in its present form cannot survive without bankrupting all the economies of Europe. Yet the Europe Union's political class still persists in its vain and costly attempts to save the common European currency -- simply because giving up on the euro would mean admitting they were wrong from the start. What's more, the EU ideology that Europe is to develop into a genuine federal state does not allow its leaders to admit that Europe is a cluster of distinctly different nation states with different interests, cultures, languages and traditions.

    The people of Europe were cheated from the start. They outspokenly did not want their nations to be submerged into a "United States of Europe." That is why, when the euro was instituted, the political class promised that no country would ever have to foot the bill of another country. However, in 2009, when Greece needed its first bailout to avoid bankruptcy, Europe's leaders at once violated the EU rules which forbid the member states to bail out other members. If the EU had played by its own book – as it should have done – Greece would have gone bankrupt and left the euro two years ago.

    Sticking to the rules, however, was out of the question: neither France nor Germany was prepared to drop Greece. France sees itself as the leader and patron of the bloc of southern EU countries; Germany fears that if it insisted on pushing a country out of the eurozone it would be accused of immoral selfishness and all the goodwill it had acquired since the Second World War would be lost. As the two major EU countries were prepared to bail out Greece, the smaller member states all went along, assuming that only one bailout (and just for Greece) would be needed.

    Meanwhile, the EU has been forced to bail out Ireland and Portugal, as well, and Greece for a second time, while Greece is now clamoring for a third bailout and Spain also needs to be bailed out.

    The EU's fatal decision to bail out Greece in early 2010 indicates that in an ideologically driven political environment such as the EU, it is easier for the political class to break the formal rules and ignore objective facts than to depart from the unwritten ideological imperative.

    Today, despite the worsened situation, it seems to be ever more difficult for the EU's political class to change course. Doing so would imply that all the money spent on bailouts so far is lost :tdown: – squandered on the fatal conceit of an ideological dream which is slowly turning out to be a nightmare. :sad:

    One day soon, however, Europe will have to face reality. Either the EU is turned into a fiscal and political union, a genuine superstate where national debts are shared. Or the euro and possibly the EU disintegrate. :meeting: The former option is what the political class wants, but what the European people loathe. Hence, the growing rift between the people and their political leaders everywhere in Europe, but especially in Germany which is acting as the paymaster for the whole EU. This course is the more dangerous as it will lead to enormous political resentment in Germany. Eighty years ago, we saw what that can lead to.

    The alternative is a disintegration of the eurozone. Here there are several scenarios. Greece may be forced to leave the euro, followed by Portugal, Ireland, Cyprus and Spain. According to last week's Economist, this will be a costly process. A Greek exit (Grexit) might cost €323 billion; an exit of Greece plus the four above mentioned countries might cost a staggering €1,155 billion.

    A more likely scenario is for Germany to leave. A recent poll indicated that 51 percent of Germans think it is time to resurrect the Deutschmark. British journalist and economist Anatole Kaletsky thinks that a German exit from the euro could be relatively easy. According to Kaletsky, German departure would be less disruptive than Grexit for three reasons.

    First, a Greek exit would lead to a domino effect with capital fleeing the next weakest country in the eurozone. There would be no domino effect if Germany leaves. Second, the eurozone would become more coherent without Germany and the remaining countries could use quantitative easing to bring down interest rates, issue jointly guaranteed Eurobonds and form a genuine fiscal union, with a public deficit of 5.3 percent of GDP and a gross debt of 90.4 percent of GDP – all comparing favorably to the deficit and debt levels in Britain, the U.S. and Japan. Third, a break-up caused by Germany withdrawing would be far less chaotic from a legal standpoint than a break-down in which the euro disintegrates as weak countries are pushed out. The euro without Germany would remain a legal currency, governed by the same treaties as before. Obviously, there would be costs for German companies, German banks and the Bundesbank, but these would all constitute local difficulties for Germany.

    The benefits of a German exit (Gexit) are clear for Germany as well. It would incur costs, but these are one-time costs, while remaining in the euro entails Germany's paying indefinitely for debts made by others. Better a miserable end than endless misery. :wave:

    A German exit would also be better for the American economy than the current situation, in which pressure is increasing on a country such as Spain. An economic collapse of Spain would inflict a severe blow to the U.S. stock exchanges. Rather than exerting pressure on German Chancellor Angela Merkel to accept a European fiscal union, which would mean political suicide for her, the United States might try to persuade her to leave the eurozone.

    Gexit Is Better Than Grexit :: Gatestone Institute
     
  12. santosh

    santosh Major SENIOR MEMBER

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    Switzerland arming in preparation for European meltdown :facepalm:
    12 October, 2012

    [​IMG]

    The Swiss Army is preparing contingency plans for violent unrest across Europe. A nation mostly famous for its banks, watches and chocolate fears it may face a massive influx of European refugees in the near future.

    One of the world’s richest nations openly expressed concerns over the possible outcome of Europe’s continuing financial troubles, and is currently conducting army exercises against the possibility of riots along its borders.


    In September, the Swiss military conducted exercises dubbed ‘Stabilo Due,’ with scenarios involving violent instability across the EU.

    Switzerland has maintained an avowedly neutral stance for decades, and refused to join the eurozone when presented with the opportunity.

    Bern’s biggest fear is likely the disorganization of neighboring nations’ armies that would follow general instability; the eurozone crisis and the severe austerity measures in the EU are forcing member-states to significantly slash their military budgets. If protest continues to spread across Europe, police and armed forces may find themselves ill-equipped to manage the unrest.

    "I will not rule out that we will need the army in the coming years,” Swiss Defense Minister Ueli Maurer said last Sunday.

    The Swiss Defense Ministry has pressed ahead to modernize the country’s army despite political opposition. With its multibillion-Franc military budget and an army of around 200,000 soldiers, the country also plans to purchase new ‘Saab Gripen’ jet fighters.

    Switzerland arming in preparation for European meltdown? — RT
     
  13. santosh

    santosh Major SENIOR MEMBER

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    Nationwide Spanish protests turn violent
    20 July, 2012

    Nationwide Spanish protests turn violent (PHOTOS, VIDEO) — RT

    Spanish police have clashed with protesters who marched against the latest batch of austerity measures. Over a million public employees, trade union members and fed-up citizens have taken to the streets in over 80 Spanish cities.

    *Violence erupted in Madrid around midnight. Police used rubber bullets and tear gas to disperse the crowd as it tried to reach the congress building. In some more urban areas, activists set garbage containers on fire and tried to block police vehicle access. No injuries or arrests have been reported.

    In Barcelona, similar scenes were reported. About a dozen protesters were arrested there, outside the local parliament building.

    *Demonstrators carried flags and banners decorated with scissors, symbolizing the country's harsh spending cuts. The streets of Madrid were paralyzed by the boundless crowds of people.

    The protests were organized by unions, who have been outraged by the government’s new measures – which include an elimination of Christmas bonuses for civil servants.

    Earlier Thursday, Spanish Parliament approved a new package of spending cuts and tax hikes aiming to save $80 billion in a bid to take a bite out of the budget deficit. Since the measure was announced last week, Spain has witnessed a series of daily demonstrations, some of which have erupted into violence.

    Europe's fourth-largest economy also has the EU's highest unemployment rate. About a quarter of working-age Spaniards are unable to find work.

    Meanwhile, Germany’s lower house approved a $122 billion rescue package for Spanish banks in a bid to help the country cope with "excessive" market fears and prevent the eurozone's debt crisis from spreading further.

    [​IMG]
    Spain, Madrid: Riot policemen remain on a street of Madrid during a protest against the Spanish government's latest austerity measures, on July 19, 2012.

    [​IMG]
    Spain, Madrid : people demonstrate against the Spanish government's latest austerity measures in the center of Madrid on July 19, 2012

    [​IMG]
    Protesters march during a demonstration against government austerity measures, in central Valencia

    [​IMG]
    Demonstrators fill Madrid's Puerta del Sol square during a protest against government austerity measures. (REUTERS / Sergio Perez)

    [​IMG]
    Firefighters pose naked in front of a banner during a demonstration against government cuts inside their fire station in Mieres (REUTERS / Eloy Alonso

    [​IMG]
    Civil servants shout slogans during a protest against government austerity measures in Madrid (REUTERS / Sergio Perez

    [​IMG]
    Firemen participate in a protest against government austerity measures in Barcelona.(REUTERS / Albert Gea)

    [​IMG]
    Spain, Madrid : Spanish actors Javier Bardem his brother Carlos Bardem and their mother Pilar Bardem demonstrate against the Spanish government's latest austerity measures in Madrid on July 19, 2012.

    Nationwide Spanish protests turn violent (PHOTOS, VIDEO) — RT
     
  14. santosh

    santosh Major SENIOR MEMBER

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    Over a quarter of US kids on food stamps, under-50s dying young
    (Reuters / Jessica Rinaldi)

    American health is in decline as new data finds that one in four US kids are on food stamps as of fiscal year 2011 and the younger generation is more prone to death and poorer health levels compared to their counterparts in other developed nations.

    Almost 20 million children out of 73.9 million under the age of 18 were in the Supplemental Nutrition Assistance Program (SNAP), or food stamps, in 2011, according to data from the United States Department of Agriculture and US Census Bureau. :tsk:

    Moreover, children accounted for 45 per cent of aid receivers.
    (because of fcuk and run culture of US, leaving these Single Mother kids on the mercy of Welfare.) :tsk:

    The number of people using the food stamp program has been on a rise, since 2009 about 15.5 million more individuals have been added to SNAP.

    Latest data released for the month of October 2012 shows the drastic increase with one in 6.5 Americans using SNAP, while in the 1970s only one in 50 were part of the program. :tsk:

    Alabama Republican Sen. Jeff Sessions argues that US is not working towards any real solutions for the problem.

    “It has become sadly clear that Agriculture Secretary Vilsack wishes to make welfare part of the normal American experience, with no regard for social or economic consequences,” Sessions told The Daily Caller.

    Americans have lowest probability of surviving till 50 :facepalm:

    Also, new evidence revealed that younger generation of US citizens (those under 50) die earlier and have poorer health than their counterparts in other developed nations, according to a new study of health and longevity in US.

    US men ranked last in life expectancy among the 17 countries in the study, and American women as second to last.

    The 378-page report by a panel of experts convened by the Institute of Medicine and the National Research Council was based on a broad review of mortality and health studies and statistics and included other countries such as, Canada, Japan, Australia, France, Germany and Spain.

    More specifically, US male deaths before the age of 50 account for two-thirds of the difference in life expectancy when compared to their counterparts in other countries and about one-third of the difference for females.

    Americans have also a higher rate of death from guns, car accidents and drug addiction. :usa:

    “Something fundamental is going wrong,” chairman of the Department of Family Medicine at Virginia Commonwealth University Steven Woolf told the New York Times. “Something at the core is causing the US to slip behind these other high-income countries. And it’s getting worse.”

    The rate of firearm homicides was 20 times higher in the US than in the other countries, according to the report.

    The US also had the second-highest death rate from the most common form of heart disease and the second-highest death rate from lung disease.
    Americans even had the lowest probability of surviving till the age of 50.

    The study attempts to explain such low results by highlighting American disjointed healthcare system with a large number of uninsured citizens and high levels of poverty in the country as possible reasons for the outcome.

    These realities have taken their toll on the US annual rankings of World’s Happiest Countries as US has slipped from 10th to 12th place for the first time in the six-year history of the Legatum Institute‘s Prosperity Index.

    The US is now behind Canada, Australia, New Zealand and the Scandinavian countries, including Norway, Denmark and Sweden, which ranked top three in the index.

    Over a quarter of US kids on food stamps, under-50s dying young – reports — RT
     
  15. santosh

    santosh Major SENIOR MEMBER

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    as in the above FT's news, in place of discussing, who fcuk whom, why don't they discuss the basics related to this issue? i mean, no matter who buy German products, who has deficit with Germany and who maintain surplus over them, and whether this means for sharing debt of each others too, to help them keep buying German products this way :rofl:..... or, lets consider the news as below too :coffee:

    Gexit Is Better Than Grexit :: Gatestone Institute
     
    Last edited: Mar 30, 2014
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