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Posts tagged ‘Der Spiegel’

The Unfolding Economic Crisis in Europe

By: Christopher M. Quigley

B.Sc. (Maj. Accounting), M.I.I. (Grad.), M.A. www.wealthbuilder.ie

Since October 24th, the German newspaper Der Spiegel has been running a fascinating series of essays on the unfolding economic crisis in Europe.

The scope and detail of the series has caused a bit of an online stir since this bastion of German mainstream journalism painted a very negative view of the future; accordingly, many are wondering whether the German elite are finally beginning to question the sustainability of the current monetary paradigm.

The main issues addressed in the articles were the lack of economic inclusion, the instability of contemporary European economic policy and the increasing wealth disparity among European social groups. One example with regards to the latter outlined how, in the Swiss Canton of Zürich, the 10 richest residents own as much as the poorest 500,000.

Surprisingly, Der Spiegel was very critical of the European Central Bank. The paper went to pains to point out that despite years of easy monetary policy the Euro was still very much a vulnerable project and highlighted the fact that while many problems still remained there was “no more ammunition” left in the ECB’s arsenal of “weapons”.

[Read: ECB Policy Misstep Poses Biggest Risk to Markets]

This “conclusion” perturbed a number of Irish politicians because vary rarely has such a negative German spin been placed on European monetary policy. Upon reading the four articles, one is left with the distinct impression that Euroland is a failing entity exhausted from years of fighting ongoing crises ready to finally roll over and die when the next recession hits.

Thus, despite the glam and glitter surrounding the memorial celebrations for the fall of the Berlin wall, things are not so rosy in the European garden. Next year the British go to the polls to pick a new parliament. The English Prime Minister David Cameron has publically stated that if he wins he will hold a referendum to take Britain out of the European Union. Many believe that such an event might just be the catalyst to push the EU over the edge. 2015 could prove to be a momentous year for Europe and it is my view that Der Spiegel is beginning to see the writing on the wall.

European Deflation Raises Its Ugly Head

Apart from the issue of economic, social and political exclusion, Europe’s other major problem is that of deflation.

To combat a serious collapse in the circulation of money the ECB has embarked on the drastic policy of negative interest rates. Here is what Simon Black of Sovereign Man had say on this matter:

It Begins: German Bank ‘Charging’ Negative Interest To Its Retail Customers

Central bankers today have a delusional view of the world. Just three months ago, Mario Draghi (President of the European Central Bank) embarked on his own folly by taking certain interest rates into NEGATIVE territory. Draghi convinced himself that he was saving Europe from disaster. And like Don Quixote of Spanish lore, everyone else has had to pay the price for his delusions.

On November 1st, the first European bank has passed along these negative interest rates to its retail customers. So if you maintain a balance of more than 500,000 euros at Deutsche Skatbank of Germany, you now have the privilege of paying 0.25% per year… to the bank.

We’ve already seen this at the institutional level: commercial banks in Europe are paying the ECB negative interest on certain balances. And large investors are paying European governments’ negative interest on certain bonds. Now we’re seeing this effect bleed over into retail banking. It almost seems like an episode from the Twilight Zone… or some bizarre parallel universe. That’s the investment environment we’re in now.

In my opinion the main reason why this deflationary banking policy is spreading throughout Europe is the fact that stratospheric structural unemployment rates exist among European youth in Cyprus, Greece, Portugal, Spain and Italy. Seven years and no strategic initiative has emerged from Brussels to tackle this serious human catastrophe. How long it can continue without social breakdown is anyone’s guess but it is this factor which is behind regions such as Catalonia and Scotland seeking to “go it alone”.

Many believe that the only long-term solution to Europe’s economic malaise is reversion back to a union of sovereign states within an economic union rather than a political and monetary one. Such a move would allow the inefficient southern European states devalue their currencies and thus achieve economic competitiveness. However, it would appear the powers that be will not countenance such a move. Sometimes it requires fate to take a hand. I am sure in 1989 the politburo of the Soviet Union did not wish to see their hegemony diminish but their Empire collapsed, not due to desire but due to the sovereign power of economic truth.

Is the Market Preparing to Go Hyperbolic?

Despite the recent run up in the markets since the 17th of October, when you look at the S&P 500, the Dow Industrials, and the NASDAQ, there is no evidence to be seen of real momentum breakdown.

Yes the market advance has lost some power over the last week but this looks to me like the market is merely catching its breath in preparation for a strong rally into the New Year.

Such price action allows the main indices to wear down their overbought positions through time rather than through price retraction.

Thus while, ideally, I would like a nice pullback to give some technical support to new long positions entered into I do not think it is going to happen. Thus, any major moves up should be taken advantage of as I believe the market has a higher probability of going hyperbolic in early 2015 than contracting.

Chart: S&P 500: Daily
sp500 nov 13

Chart: Dow Industrials: Daily
dj30 13 nov

Chart: QQQ ETF: Daily
qqq 13 nov

Charts Courtesy Of Worden Bros.

Sources: Der Spiegel “The Zombie System”, Michael Sauga, October 24th 2014.

Sovereign Man blog, Simon Black, 4th. November 2014.

© Christopher M. Quigley 14th. November 2014

Education Minister: I didn’t copy my thesis (German News)

Deutsch: Bundesministerin Dr. Annette Schavan ...

Deutsch: Bundesministerin Dr. Annette Schavan am DFKI 2008 (Photo credit: Wikipedia)

Education Minister Annette Schavan has reacted angrily to accusations from the University of Düsseldorf that she plagiarised her doctoral thesis, which she wrote in 1980. “I won’t accept that,” she said.

Schavan said she would make a statement on the accusations soon, after having kept a “determined silence” as they gathered momentum over the past five months.

“I at no time attempted to deceive while working on my dissertation,” she told the Rheinische Post newspaper.

She said that she “couldn’t remember details” after 30 years, but she never consciously gave a wrong source in the work.

Accusations of plagiarism were first published anonymously on the blog schavanplag.wordpress at the beginning of May, when the university announced it would be carrying out an investigation.

Reports in the Süddeutsche Zeitung newspaper and Der Spiegel magazine published over the weekend said the university’s appraisal found “characteristic signs of a plagiaristic method” in Schavan’s work. Altogether, passages on 60 of the dissertation’s 351 pages were found to be questionable………………………

full article at source: http://www.thelocal.de/national/20121015-45559.html

Euro-zone Disaster Zone, Breaking Up is Hard to Do, Who do You Trust?

By:John_Mauldin

I have contended for some time that Europe is faced with two   choices: Disaster A, which is the break-up of the eurozone, or Disaster   B, which is the creation of a fiscal union, which keeps the euro more or   less intact. Over the last few months I have come to realize that there   is indeed a third option, which now looks increasingly possible. This   is rather sad, as the third option is just an even worse Disaster C.   Each choice carries with it its own unique set of problems, but the   outcome of any of the choices will be that the people of Europe face a   serious recession, if not a depression. This will impact global growth   for more than a short time and, depending on the choice, could plunge   the world into a crisis as bad as or worse than the recent credit   crisis. In today’s letter we look at all three choices, meanwhile musing   on how we arrived at the bottom of such a deep hole, shovels flailing.“Breaking Up is Hard to Do” was written and sung by Neil Sedaka.   It was a #1 hit exactly 50 years ago this week. And while that song was   written for a different era, it could be the theme song for much of   Europe today.

“Don’t say that this is the end. Instead of breaking up, I wish that we were making up again.”

And indeed Europe is quite the dysfunctional family, seemingly   always on the verge of breaking up, but somehow managing to patch up the   differences. We all have a family member (or two or three) who cause   that sort of trouble. We watch the incessant squabbling with unease,   wishing they would just settle things and move on. They never deal with   the real issues, as that would mean facing too much personal angst and   maybe even lead to an admission that the problem is not just with the   other party. The euphoria of the initial relationship has been lost in   the reality of day-to-day existence. Now, they either sort it out or   break up.

These sorts of relationships devolve into co-dependency, where no   one is happy. And the rest of us are liable to get sucked in. Even   though it’s uncomfortable to be around these people, we still have to   interact. But don’t you wish they would get some serious therapy?

And Europe was again acting out this week. First, Italian Prime Minister Mario Monti gave an interview to Der Spiegel, in which he warned of the disintegration of Europe if the European   Union

Full article at source: http://www.marketoracle.co.uk/Article36015.html

Merkozy continuing to ignore Greek realities

Today’s meeting between Sarkozy and Merkel is being framed in the context of continued pressures across the euro area (see report on the meeting here). More ominously – within the context of the euro area leadership duet ignoring the latests warning signs for Greece.
Per Der Spiegel report, IMF has changed its analysis of the Greek rescue package agreed in July 2011 in-line with IMF changes in forecasts for Greek economy in the latest programme review in December 2011. Specifically, IMF lowered its forecast for growth from -3% to -6% GDP.
Der Spiegel cites IMF internal memo in claiming that the Fund is viewing existent Greek programme (including to 50% ‘voluntary’ haircut on Greek bonds currently under negotiations) as insufficient to stabilize the Greek economy and fiscal situation

full article at source:http://trueeconomics.blogspot.com/2012/01/912012-week-opener-merkozy-continuing.html

Goodbye Euro, Hello Drachma

by Tyler Durden of  zerohedge

A few months ago, when Zero Hedge first broke the news that the Drachma is
trading at several major banks on a “when issued” basis at the client’s request,
it was promptly dismissed. Alas, it may be time to dismiss the dismissal, after
Spiegel reports that as one of the scenarios considered for a Greek default,
Germany anticipates the reintroduction of the drachma by the pathological liars
at the Greek parliament. Yes: the currency that Greece was so happy to jettison
10 years ago when after the assistance of Goldman to hide its bloated debt, to
much pomp and circumstance it entered the soon to be defunct Eurozone, is coming
baaaaack.

full article at source : http://www.zerohedge.com/news/goodbye-euro-hello-drachma

Comment:

How long will we have to wait for the return of the Irish Punt? Rumour has it  the Irish Government is currently  running the printing presses!

Athens Mulls Plans for New Currency

sent in to us by Chris :

Greece Considers Exit from Euro Zone

By Christian Reiermann

 

A protest against austerity measures in Athens. Greece is considering leaving the euro zone, according to sources in the German government.

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

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

Alarmed by Athens’ intentions, the European Commission has called a crisis meeting in Luxembourg on Friday night. The meeting is taking place at Château de Senningen, a site used by the Luxembourg government for official meetings. In addition to Greece’s possible exit from the currency union, a speedy restructuring of the country’s debt also features on the agenda. One year after the Greek crisis broke out, the development represents a potentially existential turning point for the European monetary union — regardless which variant is ultimately decided upon for dealing with Greece’s massive troubles.

Given the tense situation, the meeting in Luxembourg has been declared highly confidential, with only the euro-zone finance ministers and senior staff members permitted to attend. Finance Minister Wolfgang Schäuble of Chancellor Angela Merkel’s conservative Christian Democratic Union (CDU) and Jörg Asmussen, an influential state secretary in the Finance Ministry, are attending on Germany’s behalf.

‘Considerable Devaluation’

Sources told SPIEGEL ONLINE that Schäuble intends to seek to prevent Greece from leaving the euro zone if at all possible. He will take with him to the meeting in Luxembourg an internal paper prepared by the experts at his ministry warning of the possible dire consequences if Athens were to drop the euro.

“It would lead to a considerable devaluation of the new (Greek) domestic currency against the euro,” the paper states. According to German Finance Ministry estimates, the currency could lose as much as 50 percent of its value, leading to a drastic increase in Greek national debt. Schäuble’s staff have calculated that Greece’s national deficit would rise to 200 percent of gross domestic product after such a devaluation. “A debt restructuring would be inevitable,” his experts warn in the paper. In other words: Greece would go bankrupt.

It remains unclear whether it would even be legally possible for Greece to depart from the euro zone. Legal experts believe it would also be necessary for the country to split from the European Union entirely in order to abandon the common currency. At the same time, it is questionable whether other members of the currency union would actually refuse to accept a unilateral exit from the euro zone by the government in Athens.

What is certain, according to the assessment of the German Finance Ministry, is that the measure would have a disastrous impact on the European economy.

“The currency conversion would lead to capital flight,” they write. And Greece might see itself as forced to implement controls on the transfer of capital to stop the flight of funds out of the country. “This could not be reconciled with the fundamental freedoms instilled in the European internal market,” the paper states. In addition, the country would also be cut off from capital markets for years to come.

In addition, the withdrawal of a country from the common currency union would “seriously damage faith in the functioning of the euro zone,” the document continues. International investors would be forced to consider the possibility that further euro-zone members could withdraw in the future. “That would lead to contagion in the euro zone,” the paper continues.

Banks at Risk

Moreover, should Athens turn its back on the common currency zone, it would have serious implications for the already wobbly banking sector, particularly in Greece itself. The change in currency “would consume the entire capital base of the banking system and the country’s banks would be abruptly insolvent.” Banks outside of Greece would suffer as well. “Credit institutions in Germany and elsewhere would be confronted with considerable losses on their outstanding debts,” the paper reads.

The European Central Bank (ECB) would also feel the effects. The Frankfurt-based institution would be forced to “write down a significant portion of its claims as irrecoverable.” In addition to its exposure to the banks, the ECB also owns large amounts of Greek state bonds, which it has purchased in recent months. Officials at the Finance Ministry estimate the total to be worth at least €40 billion ($58 billion) “Given its 27 percent share of ECB capital, Germany would bear the majority of the losses,” the paper reads.

In short, a Greek withdrawal from the euro zone and an ensuing national default would be expensive for euro-zone countries and their taxpayers. Together with the International Monetary Fund, the EU member states have already pledged €110 billion ($159.5 billion) in aid to Athens — half of which has already been paid out.

“Should the country become insolvent,” the paper reads, “euro-zone countries would have to renounce a portion of their claims.”

reuters

“The Kill Team” A platoon of U.S. soldiers in Afghanistan

All this has happened on Obama’s watch and I for one do not welcome him to our country. Murder is murder no matter who is committing it whether it’s Gaddafi in Libya or Obama in Afghanistan we must stand up to evil. The US solders responsible must be brought to justice Obama is due to visit Ireland in May and I now think this invitation should be withdrawn he is no better than Gadaffi.I will be writing to our government and I will be asking them to withdraw his invitation. This is sickening, how can human beings do this sort of thing to each other ?God help us !

Follow link to view photos 

 http://www.rollingstone.com/politics/photos/the-kill-team-photos-20110327/0602176

Warning these photos are extremely graphic and disturbing

source: http://www.rollingstone.com/politics/photos/the-kill-team-photos-20110327/0602176

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