Euro in turmoil

[Ach-F]

Could Greece be expelled from the eurozone?


The European Commission has approved Greek government plans for getting on top of its budget deficit. A huge relief in Athens, no doubt. But the worries won't be dispelled just yet. The pressing concern is will Greece default on its debts And if that seems likely will the rest of Europe, or the IMF come to the rescue. But beyond that there are some even bigger questions about the Euro. In particular, will Greece quit the euro or even be expelled from the eurozone. It is certainly not an imminent prospect. But the question is being asked and was recently put to the European Central Bank President Jean-Claude Trichet. His reply. "I don't comment on absurd speculation," he said. But it seems one of Mr Trichet's in-house lawyers has been engaging in speculation along precisely those lines, whether it's absurd or not.

'Next to absurd'

In a working paper published on the European Central Bank's website, Phoebus Athanassiou writes about the possibility of secession from the European Union and from Economic and Monetary Union - the process which created the euro. Such talk, he acknowledges, would until recently have been "next to absurd". But not now. "Recent developments have, perhaps, increased the risk of secession, however modestly, as well as the urgency of addressing it as a possible scenario," he says. The paper doesn't mention Greece by name, but those 'recent developments' must be the fiscal crisis that has engulfed Greece and to some extent other EU countries as well. Why might one country want to quit - or others to expel. A messy default would be disruptive for other euro countries. Those also considered by the financial markets to be under similar strain might well find it more difficult and expensive to borrow.

Several countries are potential candidates now for such financial contagion - including Spain, Ireland and Portugal. And if the problems spread far enough, even those at the core, such as Germany and France, could find European export markets adversely affected.

Expulsion

The appeal of a voluntary departure is that a country would then be free to devalue its currency to improve competitiveness and to set its own interest rates. That's not to say either expulsion or withdrawal is an easy way out. Mr Athanassiou concludes that expulsion is legally almost impossible. The nearest thing possible, he argues, is creating some new community minus the state others want to exclude. A voluntary departure, however, especially if agreed with the other members, is possible. But leaving the euro institutions would only be possible if the country left the European Union altogether. Another possible scenario he mentions is that a country that has left the EU might still be able to use the euro, as a few non-EU countries already do. These are the views of a lawyer and, of course, political considerations would intervene. Nor is this an immediate issue for today. The focus now in the financial markets, and throughout the EU, is on whether Greece can sort its problems out and, if not, whether there will be some sort of international rescue. In Athens and in Brussels the hope is that this talk about departure will remain speculation.

Walisema huu ndio mfano wa kuiga. Watanzania bado tunafikiri wenzetu nchi jirani kama Kenya, Uganda, Rwanda na Burundi wana nafuu. Ukweli wa mambo hawa ni papa ambao wanangojea kitoewo.

Reliable sources have confirmed that three (3) more euro zone countries face the same problem, and in today’s meeting of the EU are in wrangle with Germany refusing to aid Greece.

[Ach-F]

http://newsimg.bbc.co.uk/media/images/46891000/gif/_46891454_govts_in_debt02_466gr.gif

[Dua]

Collapse of the euro is 'inevitable': Bailing out the Greek economy futile, says FRENCH banking chief
　

http://i.dailymail.co.uk/i/pix/2010/02/12/article-1250433-084428F8000005DC-792_468x286.jpg
The bailout of Greece will only act as a 'sticking plaster'
for the Euro crisis, the bank warned yesterday


The European single currency is facing an 'inevitable break-up' a leading French bank claimed yesterday. Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide 'sticking plasters' to cover the deep- seated flaws in the eurozone bloc. The stark warning came as the euro slipped further on the currency markets and dire growth figures raised the prospect of a 'double-dip' recession in the embattled zone. Claims that the euro could be headed for total collapse are particularly striking when they come from one of the oldest and largest banks in France - a core founder-member.

In a note to investors, SocGen strategist Albert Edwards said: 'My own view is that there is little "help" that can be offered by the other eurozone nations other than temporary, confidence-giving "sticking plasters" before the ultimate denouement: the break-up of the eurozone.' He added: 'Any "help" given to Greece merely delays the inevitable break-up of the eurozone.' The alarming claim came a day after European Union leaders promised 'determined and co-ordinated' action to shore up Greece's tattered public finances, but disappointed traders by failing to provide specifics. Further details are expected early next week, but markets were in high anxiety yesterday amid fears political divisions among rich eurozone members could derail any rescue.
　
http://i.dailymail.co.uk/i/pix/2010/02/12/article-1250433-08400E4F000005DC-59_233x360.jpg

'The euro's a success': Peter Mandelson
at Downing Street on Thursday

The euro slid almost 1 per cent to $1.357 yesterday, meaning it has lost 10 per cent of its value since November. The pound rose to 1.14 euros. Earlier this week Business Secretary Lord Mandelson's claimed that the single currency had been a 'remarkable success' and that it remained in Britain's interests to join. David Cameron ridiculed that claim yesterday. He told the Tories' Scottish conference: 'Are this Government the only people in the country who still think that would be a good idea? Our deficit and debt are bad enough without the straightjacket of the euro.

'If I am elected for as long as I am prime minister the United Kingdom will never join the euro.' The French bank's warning was echoed by Mats Persson, Director of the Open Europe think-tank, which campaigns for reforms in Brussels. He said: 'The eurozone is facing a fully-fledged crisis. The Greece episode has made it painfully clear how flawed the euro project was from the very beginning. 'Even if Greece receives a one-off bailout it would not solve the real problem, which is the huge differences in competitiveness between the eurozone's richest and poorest members.
　
http://i.dailymail.co.uk/i/pix/2010/02/12/article-1250433-07E46959000005DC-142_468x286.jpg
　
Tory leader David Cameron said
if he is elected, the UK will not adopt the euro

'If these differences are to be evened out, the EU would need a single budget and common taxes so it can redistribute resources. One thing is clear, Britain made the right choice in staying out.' Mr Edwards argued that Portugal, Ireland, Greece and Spain are too economically weak to withstand the rigours of eurozone membership. Countries that are highly uncompetitive are normally able to slash interest rates and devalue their currencies to prop up their economies. But this is not possible within the euro, given its one-size-fits-all economic governance. The implication is that weak, peripheral eurozone members will have to suffer years of painful deflation and tumbling living standards, as well as draconian budget cuts, in order to adjust. Harvard University Professor Martin Feldstein, a long-standing sceptic on the euro, yesterday said the single currency 'isn't working' because member governments have no incentive to keep their public debts under control. 'There's too much incentive for countries to run up big deficits as there's no feedback until a crisis,' he said.

Germany drags EU back towards recession


The eurozone faces the danger of a 'doubledip' recession after Germany's economy retreated into stagnation. Figures published yesterday revealed that the countries who have joined the euro collectively grew a mere 0.1 per cent in the fourth quarter of last year - equal to Britain's own faltering performance. Germany was the biggest drag, recording zero growth in the final three months of 2009 after emerging from recession earlier in the year. Axel Weber, President of Germany's Bundesbank, warned this week there is a chance his nation's economy will contract in the first quarter of 2010, in part because of the severe winter, in a major blow to recovery hopes. The figures from the European Commission are a blow to Britain's embattled manufacturers, which count the eurozone as their biggest export market.
France provided a bright spot in the report, expanding by 0.6 per cent in the fourth quarter-But Italy, Spain and Greece all registered contractions in their gross domestic product.
　
http://i.dailymail.co.uk/i/pix/2010/02/12/article-1250433-00EFEE6B1000044C-152_233x423.jpg

Axel Weber, President of Germany's Bundesbank,
warned the German economy will contract this year


　
　
Economist Martin van Vliet of ING Bank said: 'The paltry pace of fourth quarter growth makes crystal clear that the eurozone economy cannot yet stand on its own feet. 'The disappointing eurozone growth data are a sobering reminder that recovery from financial crisis led recessions tends to be slow and protracted, and might not prove very supportive in calming markets' fears about the region.'

[Ach-F]

Maldelson the troublesome secretary who resigned twice during Tony Blair’s era was sent to the EU headquarters to salvage his career, of recent as three years ago he was jobless he will be the last person to advice the British public to accept the Euro.

Perhaps us in Tanzania should even act more cautiously with the EAC.

[Ach-F]

The euro is crumbling?


http://www.bbc.co.uk/news/business-13991135

[Dua]

Fears for Italy in eurozone crisis




Italy's borrowing costs have risen above Spain's for the first time in more than a year, pushing European leaders to interrupt their holidays and look for a response to deepening fears about the health of the eurozone's third-largest economy. At the start of Europe's debt crisis 21 months ago, Italy was rarely grouped with the weaker members of the single currency zone, such as Greece, Ireland and Portugal. Many in the markets thought Spain, with its 20% unemployment rate, was vulnerable.

But the emergence of Italy as a potential victim over the past few weeks has highlighted just how vulnerable the eurozone is and how insufficient its anti-crisis measures are. The yield on Italy's 10-year bond stands at 6.09%, ahead of Spain's equivalent of 6.04% - though both are lower than the euro-era highs earlier in the week and markedly below where they were at the start of the day, they are still not far from the levels that forced Greece, Ireland and Portugal to seek international financial help. Worries that Italy and Spain may be next in line led German Chancellor Angela Merkel, holidaying in the Italian Alps, and French President Nicholas Sarkozy, on the French Riviera, to take time out for a phone conference on the eurozone crisis. Spain's Prime Minister Jose Luis Rodriguez Zapatero is also set to have talks with Mr Sarkozy.

Their options to what a leading EU policymaker described as "incomprehensible" movements in the markets appear limited. Even a better-than-expected US jobs report failed to ease the pessimism that has gripped investors over the past few weeks. It has only been two weeks since eurozone leaders agreed to expand the powers of its 440 billion euro (£383 billion) rescue fund that helped bail out Greece, Ireland and Portugal. The fund will be able to buy governments bonds and bail out banks, but the new powers will not be in place until parliaments approve the changes in September. Analysts also warn that the fund is not currently big enough to rescue Italy, whose debt amounts to 120% of economic output, around double that of Spain. Only Greece has a bigger proportion to service in the eurozone. Markets have put increasing pressure on Italy because of its chronically weak growth and a general lack of confidence in Prime Minister Silvio Berlusconi's ability or willingness to push through politically difficult measures to make the economy more productive.

But still our friends in Kenya would like us to believe that the EU is working.

[Dua]

Traders 'starting to feel the fear' as FTSE suffers 120 point fall



http://i.thisislondon.co.uk/i/pix/2008/09/london-stock-exchange-change-415x275.jpg



London (http://www.thisislondon.co.uk/standard/related-94056-london-england.do)'s blue chip share index suffered another beating today as better than expected US (http://www.thisislondon.co.uk/standard/related-229-united-states.do) employment figures failed to halt the global stockmarket meltdown. The FTSE 100 Index (http://www.thisislondon.co.uk/standard/related-104290-ftse-100-index.do) fell 120 points, or more than 2 per cent, to 5273 today amid continued panic that America will lead the global economy back into recession and the eurozone (http://www.thisislondon.co.uk/standard/related-111614-euro-zone.do) will be crushed by the weight of its debts.

London's top flight share index nearly clawed back its earlier losses after a key report showed 117,000 jobs were created in the US last month, an increase on the past two months, which helped the unemployment rate dip slightly. But the bounce lasted less than an hour, as the index fell further into the red in a volatile day of trading amid rumours that the US could lose its cherished AAA credit rating. It leaves the FTSE 100 Index on course to end down more than 10 per cent this week, which would see £140 billion wiped from its value. Meanwhile, Foreign Secretary William Hague (http://www.thisislondon.co.uk/standard/related-17013-william-hague.do) said the Government was "fully functioning" despite the Prime Minister, his deputy and the chancellor all being on holiday as stock markets plunge around the globe.

David Cameron (http://www.thisislondon.co.uk/standard/related-152-david-cameron.do) spoke by telephone earlier today with Bank of England (http://www.thisislondon.co.uk/standard/related-831-bank-of-england.do) governor Mervyn King (http://www.thisislondon.co.uk/standard/related-37185-mervyn-king.do) - who is also due to speak with Chancellor George Osborne (http://www.thisislondon.co.uk/standard/related-10117-george-osborne.do) later. Mr Hague is due to hold a meeting with senior officials from the Treasury, Downing Street (http://www.thisislondon.co.uk/standard/related-1765-downing-street.do) and the Foreign Office. The top flight registered its biggest fall of the year yesterday - shattering pensions and savings funds in the process - while New York (http://www.thisislondon.co.uk/standard/related-231-new-york.do)'s Dow Jones Industrial Average (http://www.thisislondon.co.uk/standard/related-104795-dow-jones-industrial-average.do) plunged 4.3 per cent as Wall Street (http://www.thisislondon.co.uk/standard/related-8737-wall-street.do) suffered its worst day for nearly three years. The panic spread to Asia (http://www.thisislondon.co.uk/standard/related-1343-asia.do) where Japan (http://www.thisislondon.co.uk/standard/related-1118-japan.do)'s Nikkei 225 (http://www.thisislondon.co.uk/standard/related-110264-nikkei-225-index.do) and Hong Kong (http://www.thisislondon.co.uk/standard/related-452-hong-kong.do)'s Hang Seng dropped 4 per cent overnight. There are rising fears that Italy (http://www.thisislondon.co.uk/standard/related-215-italy.do) and Spain (http://www.thisislondon.co.uk/standard/related-348-spain.do), the eurozone's third and fourth largest economies, could default on their debt repayments and require EU (http://www.thisislondon.co.uk/standard/related-4316-european-union.do)-funded bailouts.

Worries are also mounting over the strength of the US economy following a raft of gloomy data, suggesting its recovery is running out of steam. Louise Cooper (http://www.thisislondon.co.uk/standard/related-152362-louise-cooper.do), an analyst at BGC Partners (http://www.thisislondon.co.uk/standard/related-36918-bgc-partners-inc.do), said traders are "starting to feel the fear". She added: "The banking industry is yet again facing a crisis - we are not yet at the post-Lehman days, but the system is creaking loudly. "The horrible reality is that those leaders in charge of our economy have no answers." Investors have been switching their cash from risky assets, such as shares, to safe havens like gold, which recently hit fresh highs. Royal Bank of Scotland (http://www.thisislondon.co.uk/standard/related-35407-the-royal-bank-of-scotland-group-plc.do) saw its shares drop 6 per cent after it published half-year results revealing a £794 million loss.





The market is acting very nervously following the Americans debt problems and now the Italians. I bet there will be some changes in the whole scenario as business is getting tougher by the day. What are we doing in Africa? Waiting for the Messiah?

[Ach-F]

http://img.thesun.co.uk/multimedia/archive/01351/Madridprotest_1351956a.jpg



Maandamano - Spain ... ....

[Dua]

http://i.dailymail.co.uk/i/pix/2011/10/26/article-2053456-0E75AFEB00000578-667_634x439.jpg




Euro in turmoil and the calibar of Angela, Sarkozy and Cameroon
can not solve the Euro ..... ...

[Dua]

Greece has opened the lid. Europeans were living beyond their means and now the buck stops here. The Germans and French leaders are angry after pleading more than 80 billions and a 50% debt written off in order to serve the Euro, but still nobody is interested in Greece. Hard lessons which we as Africans need to learn ... .... .... they had been enjoying the toil of mother Africa for years.

Time for change ... ... all change!

[Dua]

http://i.dailymail.co.uk/i/pix/2011/10/26/article-2053456-0E89974900000578-797_634x341.jpg



Debt delay: Sir Mervyn King said the 'grand plan' to solve the crisis
was only a temporary solution

[Dua]

http://i.dailymail.co.uk/i/pix/2011/10/26/article-2053456-0E89818600000578-504_634x774.jpg

[Ach-F]

http://img.thesun.co.uk/multimedia/archive/01348/SNN2208CUT--1980-_1348376a.jpg


Pressure .. .. Anger Merkel



PM and Obama tell


German Chancellor:


Get a grip on the euro


FURIOUS David Cameron and Barack Obama told Germany's Angela Merkel yesterday: Stop dithering and save the euro. The PM and US President want the Germans to stump up the cash for a 1TRILLION euro bailout fund.

Their call comes as fears grow Spain and even France could follow Italy into meltdown. Mr Obama phoned Mrs Merkel and French president Nicolas Sarkozy yesterday to tell them to get a grip. He and Mr Cameron fear the eurozone chaos will drag the global economy into a new recession. The PM said Britain is still growing but admitted: "It is clearly slowing growth and it is a difficult time for the economy.

These are very worrying times, I can't hide that from you." Number 10 and the White House are furious the Germans are stalling on the deal struck last month. It is meant to include a 1trillion euro fund to prop up countries like Italy and Greece. But a Downing Street source said Mrs Merkel "seems intent on sitting around until we're living in Apocalypse Now."

Austerity for Italy

THE Italian parliament passed a new austerity package last night which clears the way for Silvio Berlusconi to finally quit as PM. The vote came as grim figures showed Spain's economy ground to a halt with ZERO growth in the past three months In Greece the new PM Lucas Papademos was sworn in. But Slovakia's PM Iveta Radicova took a swipe at Athens, saying if they want to keep defaulting on debts they should quit the eurozone. Despite the chaos, the FTSE leapt almost 100 points on the back of Italy's budget vote.


What next?

[Dua]

http://i.dailymail.co.uk/i/pix/2011/11/13/article-0-0481433C0000044D-93_468x308.jpg



'Limited pain': Angela Merkel's economics experts have been designing
a possible exit from the eurozone for turbulent Greece



http://i.dailymail.co.uk/i/pix/2011/11/13/article-0-0EB45C3700000578-232_224x423.jpg http://i.dailymail.co.uk/i/pix/2011/11/13/article-0-0E33BC4100000578-469_224x423.jpg



British outlook: David Cameron is due to meet Mrs Merkel
and discuss her plans this week, while George Osborne
has urged eurozone countries to co-operate

[Dua]

http://i.dailymail.co.uk/i/pix/2011/11/13/article-2060936-0EC8830B00000578-224_224x340.jpg http://i.dailymail.co.uk/i/pix/2011/11/13/article-2060936-0D0FC48600000578-767_224x340.jpg



Concerned: Tony Blair, right, said that Gordon Brown, left,

had been right to block the UK from entering the eurozone


At the same time countries in Afrika are lining up for support and help rather than helping themselves by demanding the devaluation of the Euro, British pound and the US dollar.

[Dua]

France is stripped of its gold-plated AAA credit rating



http://db3.stb.s-msn.com/i/11/6688A6699D7C651E6AD9DCD5B4DD8.jpg





France, along with eight other countries have been downgraded

Germany, Holland, Finland, Luxembourg, Estonia, Ireland and Belgium remain unchanged
Italy reduced two notches to BBB+

Banks fail to reach deal for Greece to halve privately held debt burden


Analysts warn that Britain may follow .... ...


The French downgrade: what does it mean?

We look at what the announcement means to France, the eurozone and the UK.

What's French for schadenfreude?

Despite an unbecoming display of finger-pointing by various French officials over the last few months, Britain has managed to hold on to its AAA-credit rating (an increasingly rare asset), while France's has been given the chop.

Credit ratings agency Standard & Poor's has chosen to downgrade the French government's debt. France wasn't the only victim - Austria lost its AAA rating too - but France was certainly the most important.

In total, S&P put 15 eurozone countries on 'downgrade review' back in December. Now it's acting on that review. There are a number of reasons behind the French downgrade. French national debt amounts to 87% of GDP. That's the worst of any of the AAA-rated eurozone countries.

And the economy isn't growing fast enough or being reformed rapidly enough (public spending accounts for more than 55% of GDP) to get France out of this debt. With a eurozone recession now seen as practically a foregone conclusion for 2012, things aren't going to get any easier for the country.

Now if all of that rings a bell, that'll be because it sounds a lot like Britain. I'll explain why we've held onto our AAA rating in a moment. But first - beyond a bit of wounded pride (and perhaps a momentary chuckle from this side of La Manche until we remember that our finances aren't any better), what does it actually mean
A blow for Sarkozy - and for the eurozone bailout fund

The act of downgrading the country isn't in itself likely to push up the French cost of borrowing, or at least, not hugely. Markets have been treating France as a less-than-AAA nation for some time. AAA-rated Germany can borrow at a cost of 1.8% a year for 10 years. The same loan would cost France 3.1%. That's a huge gap in the world of sovereign bonds.

(Incidentally, this will also be part of the reason why S&P is acting now - if the ratings agencies have learned one lesson from the subprime mortgage debacle, it's to try not to be too far behind the markets when it comes to downgrading assets).
So from that point of view, the loss of the AAA badge is more of a problem for Nicolas Sarkozy's April re-election prospects than for France itself. Sarkozy foolishly blew it up into an election issue - until he started to make a big deal of the AAA rating, most French citizens couldn't have cared less about their country's credit rating.

A bigger problem is with the European Financial Stability Facility (EFSF). In short, this is the big bail-out fund, the one that's responsible for funding rescue packages for Portugal, Greece and Ireland. The EFSF works like this: it issues debt (in other words, borrows money) which is guaranteed by the eurozone's top-rated countries. It then uses this money to fund the rescue packages for the troubled countries.
Here's the problem. The bonds issued by the EFSF are AAA-rated. But given that France is such an important member country, the chances of the bonds being AAA-rated now that France has been written down, are low. And if they're not AAA-rated, fewer people will want to invest in them.

In practical terms, aside from making threatening noises about finding ways to ignore or charge the credit rating agencies with some form of treason, there's not a lot that Europe can do about this. More to the point, it may be the least of their worries. Discussions between Greece and its creditors over how much of its debt they will agree to write off are not going well. If they can't reach a deal soon, the chances of Greece having to leave the euro will rise sharply - which could make a much bigger mess than any downgrade.






France's credit rating: what you need to know (http://news.uk.msn.com/uk/articles.aspx?cp-documentid=160279181)
Could Britain be downgraded?
What about Britain? David Cameron would like you to think that our AAA rating is all down to George Osborne. To be fair to the coalition government, if they hadn't taken a stern line on Britain's finances when they were first elected, we may not still have the AAA rating.

But the reason we're hanging on to it now has very little to do with the government. It's primarily because we're not in the euro. Britain's national finances are little better than France's. Indeed, by some measures, if you include private sector debt, we are the most indebted nation in the world (according to a recent report by McKinsey).

The difference is that the Bank of England is in the position to print money, so there's no way we will ever default directly. This is nothing to be especially proud of - creditors would be just as annoyed to lose all their money through an explosion in inflation and a sterling collapse - but neither of those seem likely in the immediate future. So in short, we're among the best of a bad bunch.

That's no reason to rest on our laurels. For a start, we can't get too smug about the French downgrade. If Europe sinks even deeper into the mire, as looks likely, then we'll suffer too. Like it or not, we do a lot of trade with Europe, and if they're broke then they won't buy our goods, and our economy won't grow as fast as we might hope.

If growth disappoints, then that makes our debt burden look even bigger. And if we were to be downgraded by a credit rating agency, it would probably hit us harder than our eurozone peers. Investors would assume that the credit rating agencies were questioning the government's commitment and ability to put the public finances in order, which could shake confidence.

Also, if the eurozone crisis ever reaches a resolution, we should watch out. One big reason that our borrowing costs are so low, says Simon Ward of Henderson Global Investors, is because money has been fleeing the eurozone and piling into British debt. If Europe becomes 'safe' again, ironically we might find that some of that money moves away again, leaving us with higher borrowing costs.
But for now at least, that day seems a little way off.


Everybody wants to be like the USA, but they do not have a clue how was that made.