http://www.zerohedge.com/contributed/2012-13-30/greece-now-they%E2%80%99re-not-even-trying-anymore
Submitted by testosteronepit on 03/30/2012 19:51 -0400
MarketWatch reports Spain Announces €27 Billion Deficit-Cutting Plan
NPR reports Austerity Measures Prompt Spanish Workers To Strike
March 29, 2012
People attend a demonstration in Valencia, Spain, during a national strike.
Jose Jordan / AFP/Getty Images
Labor reforms are badly needed but electricity price hikes of 7%, higher corporate taxes, increased VAT and other tax hikes are not. Spain needs more time not more tax hikes. With unemployment rate already at 23.3% austerity measures are guaranteed to make matter worse, and tax hikes on top of it all will be the nail in the coffin.
Prime Minister Rajoy forecasts the Spanish economy will contract 1.7% and government GDP targets and budgets are based on that. I bet that 3% contraction minimum is in the works if Rajoy enacts the tax hikes and austerity measures as planned.
Things will be much worse if the violence and strikes stay in an elevated state. Unlike the protests a year ago, these strikes have more serious overtones.
Spain Headed for Bond Revolt and Bailouts
The idea that Rajoy will cut the deficit to 5.3% this year and 3% next year are purely Fantasyland proposals.
For now, the bond market has given Rajoy the benefit of the doubt, assuming you call 5.35% on the 10-year bond any kind of "benefit". With the suspension of the LTRO, and a budget targets that cannot possibly be met, look for a substantial move up in Spanish bond yields.
That will also punish any Spanish banks foolish enough to load up on bonds in a misguided carry-trade play. With Spain, nearly everything is worse than the government reports, and the reports are awful.A bond market revolt and bailout are in the cards this year. Ultimately, Spain sill not survive in the Eurozone.
Greece: Now They’re Not Even Trying Anymore
Wolf Richter www.testosteronepit.com
Italian Prime Minister Mario Monti, while visiting Japan, summarizedit eloquently when he said, "The financial aspect of the crisis is over." The ECB, despite any apparently fake German reservations, has jumped with both feet on the money printing bandwagon where it happily joins the Fed, the Bank of Japan, and other central banks around the world. The endless flow of money has started in the Eurozone, and Greek politicians, it turns out, have figured this out.
Among them, Prime Minister Lucas Papademos who didn't wait long to put the need for a third bailout package on the table. And the difficult reforms are falling off the table one by one. The new priority is the general election on May 6—the flood of euros having been secured for the time being. Politicians are jostling for position to grab whatever votes they can. They're no longer paying attention to their legislative work, the tough reforms that party leaders and the government had promised the bailout Troika. Some of which would have to be completed before the elections. Promises made solely to obtain the second bailout package.
And they’re altering what little reform legislation does move forward, such as liberalizing the taxi industry, to curry favors with their supporters—to the utter frustration of their unelected technocrat Prime Minister who implored his ministers to focus on their jobs and stop the political quibbling. Apparently with little impact.
“It is the prime minister’s decision that this government should continue working right up to the last day,” spokesperson Pantelis Kapsis said lamely but admitted that much of the work would be left to the next government. So, the interim government only accomplished part of its job: the bond swap, a default that blew up over €100 billion in Greek bonds held by private sector investors. “We owed it to our children and grandchildren to rid them of the burden of this debt,” mused Evangelos Venizelos, at the time Finance Minister, after having whacked private sector investors with a 72% loss, while the drumbeat of Greece’s economic horror show continues. For that unrelenting debacle and its consequences, read.... “A harder Default To Come.”
The interim government also accomplished another part of its job: it opened the Troika money spigot and got the bailout billions flowing again. But many of the reforms that it promised to implement would remain up in the air.
With one exception. Under pressure from the bailout Troika, Parliament is moving on a bill that would set in motion the creationof an escrow account for a big portion of the bailout billions, a condition imposed by the Troika who no longer trust Greece on anything. They want to make sure the money doesn’t evaporate. It will be used to repay Greece’s foreign creditors—their backdoor bailout being the purpose of the whole scheme. The Greek people, however, will see little of it.
And Papademos, who was supposed to oversee the implemention the reforms, and who has been shunted aside, darkened his outlook for the next government.
Further wage cuts might be necessary, he said on Friday. And “joblessness will probably increase and the recession will probably continue,” through “most of 2013”—a downward revision from his assessment of only a few weeks ago when he pegged the end of the recession at mid-2013. With the bailout billions, the government would likely have enough money to fund pensions till 2015, he said, but that would be it. And his government was working on a proposal to cut another €12 billion from the budget, as promised to the Troika, he said, but the nearly impossible job of implementing those cuts: “The next government and the next parliament will decide.”
The writing is on the wall. Little will get done before the election. And after the new government takes over, it’s back to square one. More promises, more strikes, more disappointments, and the extortion racket to get more bailout billions will start all over again.
Meanwhile, across the border, deficit-plagued and inflation-infested Turkey floated a plan to get its people to turn in their huge stash of physical gold in exchange for paper “certificates,” a first step in what may become a process of gold confiscation. And this, just as the world's major central bankers met in Washington. For that load of ironies, doublespeak, and red flags, read.... Gold Confiscation, Inflation, And Suddenly Virtuous Central Bankers.
and....
Violence, Firebombings Erupt as Spain Announces €27 Billion Deficit-Cutting Plan; Spanish Economy Will Implode; Spain Headed for Bond Revolt and Bailouts
My friend Bran who lives in Spain writes ...
Hello Mish
Here are thoughts from the last couple of days on the strikes, protests, and violence in the wake of more austerity plans by Prime Minister Mariano Rajoy.
Pro-government news played down the strike to a virtual non-event, giving much criticism of the unions methods and exaggerations. Reality however, is that there is enough support by strikers to shape future politics, especially as austerity starts to bite.
The unions have promised to step up protests. The Indignado 15 Million Movement also protested, but separately from the unions.
One comment stuck out - German Chancellor Angela Merkel said the protests did not represent Spain. Maybe she was trying to be reassuring, but she is taking sides against maybe a million or so people of a foreign population, not very wise at best and otherwise agitating.Spain Announces €27 Billion Deficit-Cutting Plan
MarketWatch reports Spain Announces €27 Billion Deficit-Cutting Plan
The Spanish government on Friday delivered what it called the biggest fiscal adjustment in the country’s democratic history, unveiling a 27 billion euro ($36 billion) deficit-reduction plan that includes sharp spending cuts across government ministries and higher taxes for corporations.
With images of nationwide demonstrations and strikes against labor reforms still fresh, the weight of the budget appeared to fall on big companies and government spending. Labor unions said nearly 1 million took part in Madrid’s rally alone Thursday evening.
Corporations will be asked to pay higher taxes this year, and their tax breaks will be reduced while the government said value-added-taxes would not rise. It said tax receipts for VAT would fall 2.6% as a result of weak growth in Spain.
Budget Minister Cristobal Montoro said all ministries would need to reduce their budgets by around 17% this year, which was slightly higher than expected, saving a total of up to €65.8 billion. Salaries for public workers will not be reduced, but will be frozen this year.Austerity Measures Prompt Spanish Workers To Strike
Electricity prices will rise 7%, to pay off a €24 billion electricity-tariff deficit that accumulated due to the difference between consumer prices set by the state and producer’s costs. Tariffs paid by electricity companies will rise 5%.
NPR reports Austerity Measures Prompt Spanish Workers To Strike
Workers walked off the job in Spain on Thursday, halting public transport, closing schools and leaving hospitals with emergency staff only. The general strike was called by unions in response to the conservative government's labor reforms, which let companies opt out of collective bargaining agreements and fire workers more cheaply. But more punishing austerity could still be to come, as Spain tries to whittle down its budget deficit under pressure from Brussels.
Violence Erupts in Spanish Strikes
The Washington Post has a nice 19-image slideshow Violence Erupts in Spanish Strikes. Here are a few images.
March 29, 2012
A demonstrator throws stones next to a burning Starbucks, which was stormed by demonstrators during clashes with police at the general strike in Barcelona. Spanish workers livid over labor reforms they see as flagrantly pro-business staged a nationwide strike Thursday and tried to bring the country to a halt by blocking traffic, closing factories and clashing with police in rowdy demonstrations.Emilio Morenatti / AP
The Washington Post has a nice 19-image slideshow Violence Erupts in Spanish Strikes. Here are a few images.
March 29, 2012
A demonstrator throws stones next to a burning Starbucks, which was stormed by demonstrators during clashes with police at the general strike in Barcelona. Spanish workers livid over labor reforms they see as flagrantly pro-business staged a nationwide strike Thursday and tried to bring the country to a halt by blocking traffic, closing factories and clashing with police in rowdy demonstrations.Emilio Morenatti / AP
March 29, 2012
People attend a demonstration in Valencia, Spain, during a national strike.
Jose Jordan / AFP/Getty Images
March 29, 2012
A woman cries after demonstrators smashed a shop window during heavy clashes with police during a 24-hour strike in Barcelona.
David Ramos / Getty Images
Eurozone crisis live: Violence in Barcelona Amid Spanish General Strike
The Guardian has numerous images and videos in its report Eurozone crisis live: Violence in Barcelona Amid Spanish General Strike
Protesters crowd in Madrid's landmark Puerta del Sol square for a closing rally tonight. Photograph: Paul Hanna/Reuters
As many as 900,000 people took part in the march to Madrid's centre square, Puerta del So.Spanish Economy Will Implode
A woman cries after demonstrators smashed a shop window during heavy clashes with police during a 24-hour strike in Barcelona.
David Ramos / Getty Images
Eurozone crisis live: Violence in Barcelona Amid Spanish General Strike
The Guardian has numerous images and videos in its report Eurozone crisis live: Violence in Barcelona Amid Spanish General Strike
Protesters crowd in Madrid's landmark Puerta del Sol square for a closing rally tonight. Photograph: Paul Hanna/Reuters
As many as 900,000 people took part in the march to Madrid's centre square, Puerta del So.Spanish Economy Will Implode
Labor reforms are badly needed but electricity price hikes of 7%, higher corporate taxes, increased VAT and other tax hikes are not. Spain needs more time not more tax hikes. With unemployment rate already at 23.3% austerity measures are guaranteed to make matter worse, and tax hikes on top of it all will be the nail in the coffin.
Prime Minister Rajoy forecasts the Spanish economy will contract 1.7% and government GDP targets and budgets are based on that. I bet that 3% contraction minimum is in the works if Rajoy enacts the tax hikes and austerity measures as planned.
Things will be much worse if the violence and strikes stay in an elevated state. Unlike the protests a year ago, these strikes have more serious overtones.
Spain Headed for Bond Revolt and Bailouts
The idea that Rajoy will cut the deficit to 5.3% this year and 3% next year are purely Fantasyland proposals.
For now, the bond market has given Rajoy the benefit of the doubt, assuming you call 5.35% on the 10-year bond any kind of "benefit". With the suspension of the LTRO, and a budget targets that cannot possibly be met, look for a substantial move up in Spanish bond yields.
That will also punish any Spanish banks foolish enough to load up on bonds in a misguided carry-trade play. With Spain, nearly everything is worse than the government reports, and the reports are awful.A bond market revolt and bailout are in the cards this year. Ultimately, Spain sill not survive in the Eurozone.
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