Bailouts have become known for their so-called “unintended consequences”—however intended they might have been. And now, unintended consequences strike again. The ECB’s purchase of decomposing Greek debt—an under-the-radar bailout of banks and insurance companies—are making the favorite solution to the Greek crisis, namely another deep haircut, legally impossible, says Bundesbank President Jens Weidmann.
Europe
Germany’s Fear And Desperation Leak Out
by Wolf Richter • • 20 Comments
A hullabaloo erupted between France and Germany that both are trying to silence to death: it seeped out that the German Finance Minister broached an unprecedented topic with Germany’s Council of Economic Experts. Could they produce a reform concept for the troubled French economy? It revealed a threat that terrorizes the German government.
Merkel Has A Dream
by Wolf Richter • • 11 Comments
On Wednesday, German Chancellor Angela Merkel set foot in the European Parliament for the first time since 2007 and addressed the only democratically elected European institution—by design, an emasculated one. There, she laid out her plans to bring European nations together to where their budgets and other matters would become part of her “domestic policy.”
The Art Of Siphoning Off EU Money
by Wolf Richter • • 5 Comments
In pursuing its dream, the EU has created a ballooning superstructure of governance manned by 41,000 bureaucrats and mostly unelected politicians. In 2011, they spent €129 billion of taxpayer money. But now, the European Court of Auditors released its audit report for that year—a damning document that outlines how up to 4.8% of the EU budget seeped through the cracks and disappeared.
The Bailout Of Russian “Black Money” In Cyprus
by Wolf Richter • • 4 Comments
Timing couldn’t have been worse. Or more opportune. A “secret” report by the German version of the CIA, the Bundesnachrichtendienst, bubbled to the surface, asserting that the bailout of Cyprus would use money from taxpayers in other countries to bail out mostly rich Russians who have over the years deposited their “black money” in Cypriot banks that are now collapsing.
Nationalizing Companies Is Part Of The French DNA
by Wolf Richter • • 6 Comments
In France, socialism isn’t a political movement that swept the elections this year, and it isn’t an economic philosophy that moved once again to the forefront, but it’s part of the DNA of much of the population. And it produces classic knee-jerk reactions to the current economic morass—such as the nationalization of tottering automaker Peugeot.
Desperate French Government Threatens To “Requisition” Vacant Buildings
by Wolf Richter • • 7 Comments
Prime Minister Ayrault made it official: the government would requisition vacant buildings regardless of who owned them and make them available to the homeless and the “badly housed.” In a few weeks, “an inventory” of buildings should be on his desk so that he could requisition the first properties “in January and February 2013.” A desperate move to halt the collapse of his numbers. And a broadside at investors.
Jérôme Kerviel Gets Slammed, Megabank Always Wins: This Is How Justice Is Done
by Wolf Richter • • Comments Off on Jérôme Kerviel Gets Slammed, Megabank Always Wins: This Is How Justice Is Done
A French appeals court threw the book at Jérôme Kerviel who, in 2008, had been hung out to dry by his employer, French mega-bank Société Générale, for having—so alleged the bank—blown €4.9 billion in no time without its knowledge, using trick and device to conceal his gigantic trades for years. But now, Kerviel and his lawyer lambasted the proceedings as having been rigged from the outset.
Competitiveness Cacophony: Attack On France’s Sacred Cow
by Wolf Richter • • Comments Off on Competitiveness Cacophony: Attack On France’s Sacred Cow
The French government has been flailing about to counter economic trends that started while Nicolas Sarkozy was still president. And one of the most bandied-about catchwords these days is “competitiveness”—entailing the cherished and untouchable 35-hour workweek, equally untouchable wages, and sky-high employer-paid payroll taxes and social security charges. An explosive mix.
French Government Fires Off Protectionism, Hits Consumers
by Wolf Richter • • Comments Off on French Government Fires Off Protectionism, Hits Consumers
That France’s economy is hurting is an understatement. Manufacturing and service indices tested depths not seen since 2009 during the trough of the financial crisis. Cited reasons: “unfavorable business climate and lack of visibility.” In its desperation, the government deployed its big gun, a man with a vision: Industry Minister Arnaud Montebourg. Him, with his big foot in his mouth.