On Thursday, rumors that Greece would have a government goosed the stock markets in Europe. While everybody was out to lunch in Frankfurt, the DAX ran up 110 points. In Athens, the ATHEX, which appears to be on a multi-year trajectory toward zero, jumped 4.2%. But on Friday, when it became clear that the rumor was just a rumor, the index resumed its downward trajectory. And Greeks went to bed without a new government.
Euro
Germany and France Kiss, Make Up, and Flip-Flop
by Wolf Richter • • Comments Off on Germany and France Kiss, Make Up, and Flip-Flop
Originally, François Hollande planned on visiting Germany on May 16, the day after becoming President of France, to meet with Chancellor Angela Merkel for some barbed-wire fence-mending. But now he pushed it up to May 15, the earliest second possible. At midnight, President Nicolas Sarkozy will hand him the keys to the Élysée Palace, while Merkel will be putting on lipstick for her dinner with him. And the flip-flopping has already started.
Collapse of the EU a “Realistic Scenario”
by Wolf Richter • • Comments Off on Collapse of the EU a “Realistic Scenario”
“Over the past months, we experienced a worrisome trend toward re-nationalization and ‘summitization,’” said Martin Schulz, President of the European Parliament. Government leaders were becoming “more arrogant” and were attempting “to create a fiscal union outside the control of parliament.” His complaints went to the heart of democracy at the European level. And so, he said, the collapse of the EU was a “realistic scenario.”
Pushing The Euro To The Brink
by Wolf Richter • • Comments Off on Pushing The Euro To The Brink
“There is no more risk that the euro will implode,” declared French President Sarkozy two days before the first round of the election. “The crisis is finished,” he said a few weeks ago. Thanks to his leadership. However, François Hollande, the socialist challenger and likely winner, has a prescription for fixing the very crisis Sarkozy declared finished—an ambitious plan that might lead to the break-up of the Eurozone.
The Big Rift Between Germany and France
by Wolf Richter • • Comments Off on The Big Rift Between Germany and France
The crowd at the Place de la Concorde in Paris on Sunday, one week before the first round of elections, had come to hear French President Nicolas Sarkozy beg for his job. And politicians were listening warily … in Germany. He’d already shocked them in March when he’d declared that he wanted to renegotiate the Schengen Treaty. Now he went after the independence of the European Central Bank. Germany’s answer was swift.
An IMF Absurdity
by Wolf Richter • • Comments Off on An IMF Absurdity
On April 20, finance chiefs and central bankers of the G-20 hold a shindig in Washington DC. At issue is money. Bailout money for the Eurozone. The IMF wants to dig deeper into its pocket, but the amounts are skyrocketing, and … “We certainly need more resources,” explained IMF Managing Director Christine Lagarde. Bankrupt countries try to bail out bankrupt countries. And taxpayers everywhere get to foot the bill.
Ironic EU Begging Expedition to China
by Wolf Richter • • Comments Off on Ironic EU Begging Expedition to China
Europe returned from its begging expedition to Beijing. Well, they called it a summit, one more in a series. They were trying to lure China into plowing part of its hard-earned foreign exchange trillions into the European bailout fund, the EFSF, and they made that dreadfully convoluted and opaque creature smell like a rose. Even a small amount would have been something. Anything really.
Firewalls In Place, Markets ready: Greece Can Go To Heck
by Wolf Richter • • Comments Off on Firewalls In Place, Markets ready: Greece Can Go To Heck
Luxembourg’s Finance Minister said it out loud: “If the Greek people or the Greek political elite do not apply all of these conditions, they exclude themselves from the Eurozone.” All of these conditions. And there are a lot of them. Then he added crucial words: “The impact on other countries now will be less important than a year ago.”
Greece at the Point of no Return
by Wolf Richter • • Comments Off on Greece at the Point of no Return
“The European Union is suffering under Germany,” said Georgios Karatzaferis, president of the right-wing LAOS party. He accused German Chancellor Angela Merkel of trying to “impose her will on Southern Europeans.” He called the Netherlands, Austria, Finland, and Luxembourg “satellite states” of Germany. And then, with a few words, he pushed Greece a step closer to bankruptcy.
Now Even Greek Politicians Are Taking Cover
by Wolf Richter • • Comments Off on Now Even Greek Politicians Are Taking Cover
Greeks yanked €65 billion out of their bank accounts since 2009, the Finance Minister told parliament. “Of that, €16 billion was legally taken abroad,” he said. The rest? Stashed under mattresses or hauled to Switzerland via the land route. A whopping 20% of GDP! Capital flight of massive proportions. They see a forced conversion of their euros to drachmas. And politicians are planning for the “afterwards.”