EU mulls bank law to impose losses on depositors [Reuters]

European Union ministers will consider a proposal this week to impose losses on interbank deposits of lenders in dire financial trouble as they shape a draft EU law introducing powers that would also penalize those with big savings.

Such an idea, should ministers back it, could further rattle the confidence of lenders, already nervous about draft legislation to determine who alongside shareholders should suffer losses when a bank gets into trouble.

EU finance ministers, gathering in Dublin this Friday, will discuss how to shape this law that could take effect from 2015, covering what is known as bank recovery and resolution.

The talks follow the recent decision to impose heavy losses on some depositors in Cyprus, in return for an international bailout. That set a precedent, which is likely to be mirrored in these EU rules, making losses for large uninsured savers a permanent feature of future banking crises.

But the ministers will have to tread carefully in their discussions.

ECB President Mario Draghi recently cautioned that Cyprus’s bailout was “no template”, in a bid to ease market fears that bank deposits would in future be fair game for international lenders supporting struggling euro zone countries.

In a document prepared by government officials in Ireland, which as holder of the rotating EU presidency will chair the ministers’ gathering, they write that interbank deposits of less than one month should also be penalized.

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European Commission Announces “Full Engagement” In Agenda 21 [explosivereports]

On February 27, the European Commission published a document announcing it will take on itself the “lead role” in global environmental governance through “a unified policy framework”- in effect aligning itself with Agenda 21.

In the 30-page document titled A Descent Life For All the EC says it aspires to a “leading role” in an “overarching framework” towards global governance. The commiszars profess to care about worldwide poverty, environmental degradation and other no-brainers, carefully handpicked by an elite-class prepared to use any and every pretext behind which power is being centralized at the international level at the expense of sovereignty at the national one.

“The world has undergone enormous change over recent years”, the document reads, “including major shifts in the global economic and political balance, increased global trade, climate change and depletion of natural resources, technological change, economic and financial crises, increased consumption and price volatility of food and energy consumption, population changes and migration, violence and armed conflict and natural and man-made disasters, and increased inequalities.”

Quite some parade of calamities the EU is willing to tackle. A lead role is what they work towards, the authors state- and the EC Commiszars are perfectly willing to “debate” their plans with the European (only in name) parliament. A few exceptions aside, this parliament consists of nodding, dozing- sometimes outright sleeping individuals who are there to approve the commission’s proposals and send their lunch-bills to the European taxpayer:

“The EU needs to engage fully in the forthcoming international processes with coherent and coordinated inputs at the UN and in other relevant fora. In this respect, the adoption of this Communication should be followed by a debate with Council and Parliament during the spring of 2013 for the development of a common EU approach for the next stages of the ongoing processes (…)”

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Eurozone unemployment hits new record high of 11.8% [RT]

People wait to enter a government-run employment office in Madrid January 3, 2013. (Reuters/Susana Vera)

Eurozone’s economy continues to deteriorate at ‘alarming pace’ [Telegraph]

Europe Faces a Multi-National General Strike Against Austerity [world.time]

Austerity has spawned general strikes in individual countries across the troubled European Union. But this week may see something to add to the union’s tensions: a coordinated, multi-national mega-strike. Organized labor plans a general strike against the E.U.’s austerity policies, borderless and spanning the south of the continent. With more than 25 million people out of work, Europe’s biggest unions have vowed to lead marches and demonstrations on Nov. 14 that unite opposition parties, activist movements like Spain’s M15 and a growing sea of unemployed to challenge their national governments, banking leaders, the IMF and EU policymakers to abandon austerity cuts ahead of a high-stakes budgetmeeting in Brussels later this month.

What makes Wednesday’s strike even more threatening to Europe’s managerial elite is the strong support it is receiving from traditional labor groups that rarely send their members into the streets—foremost, among them, the European Trade Union Confederation, representing 85 labor organizations from 36 countries, and totaling some 60 million members. “We have never seen an international strike with unions across borders fighting for the same thing—it’s not just Spain, not just Portugal, it’s many countries demanding that we change our structure,” says Alberto Garzón, a Spanish congressman with the United Left party which holds 7% of seats in the Spanish Congress. “It’s important to understand this is a new form of protest.”

Read more: http://world.time.com/2012/11/13/europe-faces-a-multi-national-general-strike-against-austerity/#ixzz2CHL7zNio

Europe’s young rebels [Bild]

Million people stopped work. The European Trade Union had called for a “Solidarity Day” to the austerity measures. In Spain and Portugal was the traffic to a standstill, flights were canceled, schools and factories closed.

Young people in particular made their anger on Wednesday. You get the crisis will be felt particularly hard in Spain, youth unemployment is over 50 percent in Portugal and Italy at 35 percent.

Not all the protests were peaceful: traditional In Madrid protesters clashes with the police, the officers used a rubber bullets. In Rome, the police arrived with armored vehicles in front against rampaging students.

In Spain and Portugal in the morning nationwide, 24-hour general strike began, while the workers were called in Italy and Greece for several hours of work stoppages. In Belgium to participate railwaymen at the strike action.

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The Nobel WTF Prize [Azizonomics]

So the European Union won the Nobel Peace prize for “having over six decades contributed to the advancement of peace and reconciliation, democracy and human rights in Europe.”

Is this a joke? Nigel Farage thinks so, exclaiming that ”this goes to show that the Norwegians really do have a sense of humour.”

The Telegraph reports:

The award of the prestigious prize sparked a mixed response in Greece, where living standards have crashed as the economy has contracted 20 per cent in the last three years, despite bailouts totalling 240 billion euros (£200 billion).

With social tensions still high, more than 7,000 police had to be deployed to protect Mrs Merkel on a visit to Athens this week, when she was derided by some as a reincarnation of the Third Reich.

 

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IMF: Eurozone unemployment to exceed that of Middle East and North Africa [soberlook]

The latest IMF report (here) projects next year’s unemployment in the Eurozone to be the highest among all the major world regions – exceeding even the rising levels of unemployment in the Middle East and North Africa.

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G7: Europe will tell US to deal with ‘fiscal cliff’ [Telegraph]

In the Eurozone, the more things change the more they stay the same: structural adjustments remain elusive [SoberLook]

Back in early July we saw the post-EU-summit euphoria quickly fade as the new initiatives discussed at the meeting stalled at the implementation stage (see discussion). It certainly feels as if so much has happened since then. But has it? Other than Draghi’s backstop to support short-term sovereign paper, what has really changed in terms of the union’s structure and other summit initiatives? Here is the latest on some of these efforts.

1. Spain has not seen a cent of the €100bn bank bailout funds that were pledged by the Eurozone’s leadership so far. The funds are surely coming, but it has been almost four months (see discussion). We are seeing the best of the EU’s bureaucracy in action.

2. Pan-Eurozone bank supervision implementation has also stalled.

Reuters: - Euro zone finance ministers meeting in Cyprus last weekend failed to agree on the framework for banking union, with Germany and others concerned that deposit guarantees will put them on the hook for banks in Greece or Spain by using deposits in their local banks to fund rescues in other countries.

… The European Commission unveiled sweeping plans for the ECB to supervise all euro zone banks last week as a first step toward a banking union, though Germany immediately raised objections that the proposals risked overstretching the ECB.

… The euro zone risks disintegration unless governments can agree on a banking union underpinned by a universal deposit safety net, former European Central Bank policymaker Athanasios Orphanides said on Saturday.

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You’re Dreaming If You Think The Euro Crisis Is Resolved []

The German edition of Der Spiegel opens the new week on Monday morning with a series of articles on the European situation, which make clear, as if that were still necessary, that Europe is still an absolute mess. You know, just in case you thought it was not. That Mario Draghi’s latest unlimited whatever it is had somehow chased away the demons.

First, Der Spiegel writes that the Greek deficit is twice as high as previously thought,, at €20 billion, according to a preliminary version of the long awaited troika report. The gap has to be closed for the next tranche of bailout money to be paid.

Second, eurozone countries plan to let the ESM balloon to over €2 trillion ($2.6 trillion). Remember that the German Constitutional Court limited Berlin’s part to about €119 billion recently. Creative accounting to infinity and beyond. The efforts to keep the union together will blow it apart.

Third, former German FInance Minister Steinbrueck works on a banking plan that would split up investment and retail activities for Germany’s banks (including Deutsche), think Glass Steagall. He wants to ban commodities speculation. And he wants a bank-ESM, a fund paid for by banks that can be used to bail them out, rather than taxpayer money.

There’s lot more going on, and going wrong, in Europe, no matter what Draghi does, and no matter what plans José Manuel Barroso unveils. When I saw that the latter was seriously talking about establishing a European army, I couldn’t help thinking: will it bring all those translators to the battlefield too?

Europe is not a country, it is not a culture, and it is not a language. It is a loose union that consists of many of each. Europe can hold together in times of plenty, and it will fall apart in meagre times. The only thing Europeans have power over – to a degree – is how the process of unravelling will unfold; they can’t stop the process. The present attempts to hold the union together at all costs will be extremely costly, they have zero chance of succeeding, and they will lead to violence. The alternative, an attempt to live together as good and peaceful neighbors outside of a currency union, is not even considered. And I’m pretty sure it won’t be until it’s too late.

Hedge fund king Ray Dalio last week expressed the same fears I have been hammering on for months now, see for instance Project Europe is Over, Dear Angela, It’s Time To Do The Right Thing and A Big Bad Brick Wall. I will always be reluctant to evoke Hitler’s name, because it will inevitably be interpreted by many people as over the top fear-mongering, and because of the WWII survivor stories I grew up with, but the principle remains the same. A few weeks ago, I finally did resort to using the name, for the simple reason that in my view the threat in Europe is growing by the day:

What Makes Mario Draghi So Dangerous For Europe

Europe is creating conditions – of misery, poverty and hopelessness – in a number of its member states [..], that are not unlike those that provided the space needed by the likes of Hitler and Mussolini to rise to power in the 1920s and ’30s. And that is a grave danger.

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EADS and BAE propose EU-based merger to rival US defense giants [RT]

Europe’s top aerospace company and the continent’s biggest defense contractor are in talks over a 38 billion-euro merger that would create an EU-based giant to rival America’s Boeing.

The conglomerate would have a unified board and management structure: EADS, the parent of Airbus SAS, would control 60 percent of the company, and London-based BAE would own the rest.

The merger would be the biggest shake-up in European aerospace and defense manufacturing in more than a decade, and could lead to a major reshaping of the global defense industry.

Linda Hudson, CEO of the US division of BAE Systems, believes the proposed deal comes at an ideal time, given the slowdown in US and European defense spending and an industry-wide contraction in defense budgets. The conglomerate would be less vulnerable to the inevitable ups and down of the aerospace sector.

“It’s a win-win proposition for both companies in this environment,” Hudson told Reuters.

The move comes as part of a decade-old plan for Europe to create a pan-continental competitor to Boeing, the biggest commercial aerospace company in the US and Europe’s second-largest defense contractor.

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The “Pauperization Of Europe” [TestosteronePit]

It started on Monday. “Poverty is returning to Europe,” said Jan Zijderveld, head of Unilever’s European operations, in an interview. The British–Dutch consumer products company, third largest 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. Now the stars of the industry are affirming it. “The logic of pauperization,” L’Oréal CEO Jean-Paul Agon called it on Wednesday.

“If Spaniards are down to spending on average €17 per shopping trip, I can’t sell him detergent for half of his budget,” Zijderveld explained. “In Indonesia we sell individual packages of shampoo for 2 to 3 cents and still earn a fair amount.”

That this strategy was widespread in Asia I found out in Vietnam in 1996. I cut my finger at a table at a café in Hué as we were getting up. So, walking down the dirt street, I licked my finger to keep the blood from dripping on my clothes. The girl I was with, shocked by my barbaric behavior, took me to a street stall and bought me one singled Band-Aid, which cost as close to nothing as you could get. [My overland solo adventure from the Mekong Delta across Asia and Europe is the topic of a forthcoming book. The first in the series, Big Like: Cascade into an Odyssey—a “funny as hell non-fiction book about wanderlust and traveling abroad,” a reader tweeted—is available on Amazon.]

By looking at Europe, particularly Southern Europe, as a market with the characteristics of developing countries, Unilever has transitioned from seeing the debt crisis as a temporary event to seeing it as a trend to which it had to adjust its strategies. So now in Spain, it sells its “Surf” detergent in packages that are good for five loads. In Greece, it sells mashed potatoes and mayonnaise in small packages. And in Great Britain (!), it’s implementing the same strategy. Because people are running out of money. And it’s been successful. Since they started this in 2011, sales have stopped falling; and in the first half of the year, they edged up 1.1%. But higher input prices have exerted pressures on margins and profits.

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