Free Republic

Ireland Seizes $7 Billion From Its Pension Fund To Boost Employment Hugh O'Connell, thejournal.ie Jun. 12, 2011, 7:57 AM THE GOVERNMENT WILL use the last €5 billion in the National Pensions Reserve Fund (NPRF) to help create employment although it will need approval from the International Monetary Fund (IMF) and Europe before doing so. The Sunday Times reports today that the money will be used by the government to create as many as 80,000 jobs in Ireland. The paper cites government sources in reporting that the use of the money would be seen as more viable then the proposed sale...

MADRID, Spain (AP) -- Spain's prime minister has hit out at the European Commission and Germany on Thursday for singling out the country's produce as a possible source of a deadly bacterial outbreak in Europe, and said the government would demand explanations and reparations. Jose Luis Rodriguez Zapatero said the EU commission "was slow because from the moment the minister in Hamburg had ruled it (E. coli outbreak) was not caused by Spanish cucumbers it should have reacted more decisively and faster." The bacteria outbreak has killed 17 people, most in Germany, over the past week. The crisis paralyzed Spanish...

Friday's warning shot from S&P to Italy sent the Milan Stock Market plunging on Monday, and got everyone freaking out that this economic giant could find itself in the same mess as the rest of the PIIGS. So how bad, really, the Italian economy? Well, on the surface, it's no Greece or Spain, but it's pretty mediocre. Some key headline statistics grabbed from Bloomberg: Q1 GDP: 1.0%. April CPI: 2.6% April PPI: 6.1% March unemployment: 8.3% Retail sales have been flat. One big red flag: Government debt-to-GDP 119%, which is usually seen as a big danger era. Meanwhile, just for...

Obviously the bailouts of Europe have not been popular among the Germans, and it seems Angela Merkel's party, the Christian Democrats, are suffering the consequences. They were, apparently, crushed in regional elections. NYT reports that the CDU took 21% of the vote in Hamburg, down from 42% last time around. Bear in mind that this was just a regional election -- like a state election in the US -- and the CDU insists that it's only a local matter, not reflective of any national or international issues. That seems somewhat doubtful.

EU Aims to Seal Deal With Beijing By MARCUS WALKER in Berlin and JASON DEAN in Beijing Chinese leaders are stepping up their courtship of cash-strapped European countries such as Spain, pledging to buy their bonds and expand business ties. Yet China watchers caution that despite the warm diplomacy, Beijing won't save the euro zone. Chinese Vice Premier Li Keqiang arrived in Berlin on Thursday on the latest stage of a European tour that began in Madrid. While in Spain, Mr. Li, who is widely expected to become China's next premier, signed a string of trade and investment deals. He...

Some analysts are warning that the U.S. dollar is in danger of collapse because of the exploding U.S. government debt, the horrific U.S. trade deficit and the new round of quantitative easing recently announced by the Federal Reserve. Other analysts are warning the the euro is in danger of collapse because of the very serious sovereign debt crisis that is affecting nations such as Greece, Portugal, Ireland, Italy, Belgium and Spain. So what happens if the dollar and the euro both collapse? Well, it would certainly throw the current world financial order into a state of chaos, but what would...

The weight of bank debt needing refinancing next year could threaten Spain's solvency and force it to become the next European country to seek a bail-out. After Ireland was finally forced this week to ask for financial help from the European Union and International Monetary Fund, Barclays analysts now say it is possible that a similar fate could await Spain. In the first four months of 2011, the Spanish government and the country's banks must raise about €70bn (£59.2bn) in the bond market, which Barclays said would be a "big test for investor appetite", adding that it was concerned with...

The Irish banking system is melting down right in front of our eyes. Ireland, Portugal, Greece and Spain are all drowning in debt. It is becoming extremely expensive for all of those nations to issue new debt. Officials all over Europe are begging Ireland to accept a bailout. Portugal has already indicated that they will probably be next in line. Most economists are now acknowledging that without a new round of bailouts the dominoes could start to fall and we could see a wave of debt defaults by European governments. All of this is pushing the monetary union in...

Germany has had enough. Any eurozone state that spends its way into a debt crisis or cannot adapt to a monetary union set for Northern rhythms will face “orderly” bankruptcy. Bondholders will discover burden-sharing. Debt relief will be enforced, either by interest holidays or haircuts on the value of the bonds. Investors will pay the price for failing to grasp the mechanical and obvious point that currency unions do not eliminate risk: they switch it from exchange risk to default risk. What were investors thinking when they bought Greek 10-year bonds at 26 basis points over Bunds in 2007, below...

Just hours after Greece erupted into bond-widening chaos yet again, Portugal has joined the fray. Negotiations on the country's budget have collapsed when the opposition party, needed because the governing Socialists do not have an outright majority, backed out, according to Reuters. The disagreement: how to cut spending. The spread between the German bund and 10-year Portuguese sovereign debt has widened to 332, up 20 bps on the day. CDS on the country's sovereign debt has spiked up 20 bps to 355 bps

Spain's prime minister has made the bold call that his nation's debt crisis is over, and austerity measures are well on track according to the WSJ: "I believe that the debt crisis affecting Spain, and the euro zone in general, has passed," Mr. Zapatero said in an interview with The Wall Street Journal on Tuesday." ... Mr. Zapatero reiterated his government's commitment to economic reform and fiscal austerity, including plans to cut the country's budget gap to 6% next year and to 3% in 2011. The gap is forecast to be 9.3% in 2010. His statement is part of a...

Euro Shoots Straight Down, Anglo Irish Bank Set To Report Gigantic Loss Joe Weisenthal Aug. 30, 2010, 8:43 PM In addition to the selling in the Nikkei, the other big "risk off" move this evening is the straight negative action in the euro. Look. Meanwhile, investors are bracing for the release of some very ugly numbers from Irish zombie Anglo Irish Bank. The Irish Times: STATE-OWNED ANGLO Irish Bank is expected today to report a loss for the first half of this year well in excess of the previous six-month deficit of €4.1 billion posted last year. This would lead...

European regulators said the vast majority of banks passed stress tests, boosting U.S. stocks in the afternoon. But analysts wondered if the tests papered over key risks, notably financials' holdings of government bonds. Seven of 91 banks — five Spanish as well as one German and one Greek — failed the stress test. Regulators assessed the banks' ability to survive a double-dip recession based on how much sovereign debt they hold on trading books, not hold-to-maturity bonds. The problem, analysts say, is that banks hold much more long-term bonds and the stress test didn't take into account possible government defaults...

To paraphrase a Wall Street adage: bulls make money, bears make money, and PIIGS get slaughtered. Of course I'm referring to Portugal, Ireland, Italy, Greece, and Spain. Germany won't bail them out again. Germans work. The country's unemployment rate stands at 7.5%, against an average of 13% for Europe's so-called PIIGS. Those are heavily massaged estimates from the Organization for Economic Cooperation and Development (OECD). More revealing is a comparison of youth unemployment, now at 10% in Germany. By contrast, as Doug Saunders observed in the July 16 Globe and Mail, "The under-30 unemployment rate in Spain has just hit...

Moody's Investors Service on Monday downgraded Greece government bond ratings into junk territory, citing the risks in the euro zone/IMF rescue package for the debt-laden country. The agency downgraded the rating by four notches to Ba1, placing it one notch into junk status. The outlook is stable. Moody's also downgraded Greece's short-term issuer rating to not-prime from Prime-1.

The markets are in turmoil because of worry about the so-called PIIGS (Portugal, Ireland, Italy, Greece, and Spain) debts. In Fiscal Crises: The Next Shoe, I opined that Greece is just the canary in the coal mine and that when we look homeward, we have our own huge debt issues, which aren't significantly different from those of the PIIGS countries. I believe that the only reason the European contagion hasn't yet spread to America is because of the dollar’s status as the world’s reserve currency. That era is coming to an end, and it would behoove America to get its...

(ANSA) - Busan, June 4 - The Italian government intends to present a constitutional amendment to ease restrictions on small and medium-sized enterprises (SMEs), artisanal activities and research, Economy Minister Giulio Tremonti said on Friday. Speaking on the sidelines of a G20 meeting, Tremonti added that he would illustrate this proposal to his colleagues here on Saturday and at Monday's session of the European Union's council of ministers for the economy and finance (ECOFIN) in Brussels. "Changing the system from the inside through privatization and selective deregulation has not worked. What is needed is a liberal revolution which will make...

Paradigm Lost: The Euro in Crisis Uri Dadush Paradigm Lost: The Euro in Crisis, June 02, 2010 Paradigm Lost: The Euro in Crisis The acute phase of the global financial crisis was short, lasting from the collapse of Lehman Brothers on September 15, 2008, to the day the Dow hit a trough on March 9, 2009. But, like a violent heart attack, the interruption of credit—the economy’s life blood—lasted long enough to permanently damage the industrial countries at the center of the crisis. The damage took three main forms, each of which poses a major risk to the stability of...

Euro-damage: How the union made Europe's weaklings even weaker by Shawn Tully, senior editor at largeJune 4, 2010: 6:27 AM ET FORTUNE -- In the late 1990s, as the European Union touted its grand plan for a single currency, I called Milton Friedman at the Hoover Institution to ask the 20th century's most influential monetarist for his view of how the euro would transform Europe. It was no surprise that the frugal Friedman called me back collect. He always did. But I was amazed when his answer seemed to deny the inevitable. After the operator chirped, "Will you accept the...

The PIGS’ external debt problem Ricardo Cabral 8 May 2010 Markets are increasingly concerned that the Greek debt crisis could spread to other Eurozone countries including Portugal, Ireland, and Spain. This column notes that much of these countries' debt is held by non-residents meaning that the governments do not receive tax revenue on the interest paid, nor does the interest payment itself remain in the country. The solution lies with debt restructuring and rescheduling. Financial markets are focused on the public finances of Portugal, Ireland, Greece, and Spain (the “PIGS”). The PIGS´ public profligacy is partly to blame for their...