Slovenia joined the Eurozone in 2007, went on a borrowing binge that blind bond buyers eagerly made possible, dousing some of its two million people with riches, creating a real estate bubble that has since burst, and driving up its external debt by 110%. And in October, it may go bankrupt, admitted its Prime Minister. Because borrowing binges can last only so long if you can’t print your own money. And in Germany, the debate itself may tear up the Eurozone.
Europe
Russia’s Gazprom Tightens Stranglehold On Europe, France Falls: Natural Gas War Gets Dirty
by Wolf Richter • • Comments Off on Russia’s Gazprom Tightens Stranglehold On Europe, France Falls: Natural Gas War Gets Dirty
Why would France suddenly prohibit shale gas exploration? Sure, there are environmental issues: flammable drinking water, earth quakes, cows that die, radioactive sludge in sewage treatment plants…. But French governments have had, let’s say, an uneasy relationship with environmentalists. Its spy service DGSE, for example, sank Greenpeace’s flagship, the Rainbow Warrior, in the port of Auckland, New Zealand, killing one person. No, there must have been another reason.
The “Pauperization of Europe”
by Wolf Richter • • 7 Comments
It started on Monday. “Poverty is returning to Europe,” said Jan Zijderveld, head of Unilever’s European operations. The third largest consumer products company in the world was adjusting its commercial strategy to this new reality, he said, by redeploying to Europe what worked in poor countries of the developing world. Other stars of the industry affirmed it. “The logic of pauperization,” L’Oréal CEO Jean-Paul Agon called it.
Counter Revolt In Germany: Gagging “Hardliners” As the Economy Tanks And Future Exports Drop Into The Red Zone
by Wolf Richter • • 6 Comments
A hullabaloo has flared up in Germany over squashing democratic discussions on whether or not taxpayers should endlessly pay to keep Greece in the Eurozone and protect bondholders—the ECB and national central banks—from having to recognize reality on the worm-eaten Greek debt in their basements. The tools: political pressure, fake moral outrage, and ridicule. Now politicians have something big to hide behind.
Tax Evasion In Switzerland By The Swiss Is “Officially Silenced To Death”
by Wolf Richter • • Comments Off on Tax Evasion In Switzerland By The Swiss Is “Officially Silenced To Death”
The arm-wrestling between the US and Switzerland over funds that US citizens have stashed away in Swiss bank accounts has been going on for years. In Germany, a similar fight has broken out, albeit with more consideration for the rich. Other governments, desperate for moolah, are also going after their own with funds in Switzerland. Now it turns out the Swiss themselves, long praised for their tax compliance, also evade taxes. But it’s “officially silenced to death.”
Letting Greece Twist In The Wind
by Wolf Richter • • 4 Comments
With impeccable timing, it seeped out that a group of experts at the German Finance Ministry is studying ways to deal with a Greek exit from the Eurozone. A spokesperson clarified helpfully on Friday, rather than denying it, that the group has been in existence for over a year. Impeccable timing because it happened as Greek Prime Minister Antonis Samaras was arriving in Berlin for his begging expedition. German Chancellor Angela Merkel must have smiled. The heat was on.
Central Banks, The Veil Of Secrecy, A Hotbed of Corruption, And Now Another One Got Ensnared
by Wolf Richter • • 3 Comments
Central banks are designed to be “independent,” and they shroud themselves in secrecy. But they have formidable and, when it comes to money, “unlimited” powers that they harness for the benefit of their clientele, banks. And hiding behind their veil of secrecy are shenanigans that rarely seep to the surface, but when they do, they just get worse and worse. The latest is a sordid bribery and kickback scandal at the Reserve Bank of Australia that appeared to be neatly contained to two subsidiaries, until now.
Euro Optimism Surges, A Greek Tax Revolt Flares Up: It’s Decision Time, Again
by Wolf Richter • • 7 Comments
Euro optimism is once again gushing through the system on the hope that the debt crisis could be wished away with a nod by German Chancellor Angela Merkel or with a wink by the Bundesbank at the European Central Bank, which is dying to print unlimited amounts of moolah to buy sovereign bonds—and old bicycles, if it has to—in order to force yields down for debt-sinner countries like the US Spain and Italy. But in Greece there has been an incident.
A Cacophony Of Discord, Default, And Visions Of Impossibility
by Wolf Richter • • 5 Comments
The Eurozone wasn’t supposed to be a house of cards. And as long as there was “confidence” that it would work, it worked: the financial markets offered cheap no-questions-asked loans to the most profligate governments that sucked up phenomenal amounts of money. But all that remains from this drunken frenzy are mountains of decomposing debt. Now taboos are violated, sacred cows are slaughtered, and the euro has been tossed on the chopping block.
The Greek Bailout Sham Is Getting Gummed Up
by Wolf Richter • • 5 Comments
“Default is not necessarily destructive,” said Panayiotis Lafazanis, a Greek politician. “It is a weapon of the weak when they reach the point of not being able to pay their debts.” Closer to the truth than anything else emanating from Greek politics. “Not necessarily destructive” for the Greeks, but highly destructive for the European Central Bank that ended up with the Greek bonds; and for banks with derivative exposure to them. Hence the bailouts. To keep the bondholders afloat, not the Greeks—no one wants to recapitalize the ECB.