Sunday, May 30, 2010
Saturday, May 29, 2010
Friday, May 28, 2010
The bill was only saved when 10 deputies from center-right Catalan nationalists CiU abstained after criticizing the bill, saying they did not want Spain to be plunged into a Greek-style crisis.Damn right. I had never seen Zapatero more beaten as I saw him yesterday. He was getting big punches from all parties, both at his right and at his left. Take a look at how he, and other cabinet members, looked during the debate (click to enlarge)
But CiU said they would not support the 2011 budget bill, Spanish news agencies reported, raising doubts over how Prime Minister Jose Luis Rodriguez Zapatero will be able to continue to steer his country through a time of crisis.
CiU leader Josep Antoni Duran i Lleida told parliament Zapatero should call early elections next year.
"The problem is you and your government," he told Zapatero.
Ain't that a group of happy, shiny people, or what?
Looks like Spain is heading for a snap election at the beginning of 2011, if not earlier.
UPDATE. More at the NYT:
The tight vote in Spain, coupled with the prospect of greater labor unrest after a warning on Thursday from the main unions that they might call a general strike, suggested that Mr. Zapatero was unlikely to maintain enough political support to push through next year’s budget, some analysts said.
Mr. Zapatero, whose second term is to end in 2012, already requires support from some smaller parties to pass legislation because his Socialist Party does not have a majority.
One smaller party, Convergence and Union, a regional Catalan party, abstained from the vote on Thursday and demanded that Mr. Zapatero call early elections, warning that it would not support the government’s 2011 budget.
“The government is now like a boxer who is stuck in the corner and getting punched from all sides, and I believe that the knockout is very near,” said Sandalio Gómez, a professor of economics and labor relations at the IESE Business School, University of Navarra.
“The beating that it received today,” he added, “is a huge demonstration of its loss of authority.”
Josep Antoni Duran i Lleida, who spoke on behalf of lawmakers from the regional Catalan party in Thursday’s parliamentary debate, told Mr. Zapatero that his time in office was “finished.” The spokesman said his party had decided to abstain from the vote only because “I don’t want Spain to be intervened like Greece.”
The Popular Party, meanwhile, justified its opposition because of what its leader, Mariano Rajoy Brey, said was an austerity package that would “fall upon the weakest layers of our society.”
[...] Investors, however, may not wish for further uncertainty linked to possible elections and a resulting change in government at a time when Spain is already struggling to meet its euro commitments.
Furthermore, “early elections may very well dampen the momentum for reform because a Socialist government has at least a better chance of getting union support for changing labor market rules than a center-right government would,” said Luis Arenzana, managing partner of Shelter Island Capital Management in Madrid. “This is all about aiming for what is possible rather than what is desirable.”
“And I don’t think anybody in financial markets sees Rajoy as the next Margaret Thatcher,” he added, referring to her campaign against British labor unions in pushing through reforms after her election as prime minister in 1979.
Thursday, May 27, 2010
IF YOU'RE scared of heights, don't watch this video.
Just weeks after the failed car bombing of New York's Times Square, the Department of Homeland Security says "the number and pace of attempted attacks against the United States over the past nine months have surpassed the number of attempts during any other previous one-year period."(my emphasis)
That grim assessment is contained in an unclassified DHS intelligence memo prepared for various law enforcement groups, which says terror groups are expected to try attacks inside the United States with "increased frequency."
Support for the Socialist party fell to 33.7 per cent from 37.5 per cent two weeks earlier, while backing for the conservative PP rose to 42.8 per cent from 41.7 per cent. The gap between the two rose to 9.1 per cent, the biggest lead for the opposition since Mr Zapatero came to power in 2004.And that was a poll in a Socialist-friendly newspaper (albeit not so much now; they're more in the grownups field that Zapatero put aside). Other polls show an even bigger gap, up to 12 points.
UPDATE. More: "Spain Takes the Spotlight From Greece in Europe's Debt Crisis"
UPDATE II. And more: "Greece, Portugal and Spain €2,000 bn Combined Debt Is Systemically Important for Global Financial Institutions" .
Also: "Ex-IMF Board Member Sees Risk Of Euro-Zone Breakup From Contagion"
UPDATE III. David Ignatius on the disconnect behind Europe's financial free fall.
Wednesday, May 26, 2010
Spain has replaced Greece as the epicenter of the ballooning European sovereign debt crisis, with the country's smaller banks coming under pressure and a new short-term debt issue meeting with poor demand.UPDATE. More:
News over the weekend that a Spanish bank had failed, followed by the revelation that four similar outfits had also merged, has created a picture of broad-based weakness in the whole country's financial institutions.
And on Tuesday, Spain had to sharply raise the yield on a new issue of short-term debt in an effort to attract new investors.
In theory, the collapse of a small Spanish savings bank shouldn't fuel a global stock-market sell-off. CajaSur, seized by the Bank of Spain over the weekend, accounts for just 0.6% of the country's banking assets, and its difficulties were well-known. The €500 million ($619 million) to be injected into CajaSur from the government's Fund for Orderly Bank Restructuring will barely dent the fund's potential €90 billion capacity. But CajaSur's demise has raised fresh doubts over Spain's ability to address the problems in its banking sector—a vital test of its credibility with investors.Also,
In the rush to fix its struggling savings banks, Spain risks leaving the job half finished.
Case in point: Caja de Ahorros del Mediterraneo’s proposal to merge with three smaller savings banks, creating a lender with 135 billion euros ($167 billion) in assets. The combination would let them keep separate branches and workforces.
“It’s a halfway house that creates some savings but not enough,” said Inigo Lecubarri, who manages about $170 million at Abaco Financials Fund in London. “If you’re going to do these mergers, you should aim to cut costs.”
Spain is pushing for mergers between “cajas,” lenders run as foundations that helped fund the country’s property boom and account for about half of its loans. By melding ailing lenders with stronger partners, the central bank aims to purge bad loans and lay the groundwork for economic recovery as the government tackles its budget deficit. Lumping lenders together without reducing staff and closing branches isn’t likely to accomplish those aims, Lecubarri said.
Tuesday, May 25, 2010
The International Monetary Fund on Monday urged Spain to push forward with a major restructuring of its economy, including an overhaul of union-dominated labor markets and progress on cutting government budget deficits.
[...] Spanish labor markets are "dysfunctional," the IMF said, using a set of collective bargaining agreements that "hamstrings" companies' ability to hire and fire and set wages.
The situation "is ill-suited to membership of a currency union," the IMF said, because it allows other nations in the eurozone with more flexible wage and work arrangements, such as Germany, to produce more cheaply and attract more investment.
Although Spain's still-stagnant economy should begin growing again, the country's recovery will be "weak and fragile" without efforts to restructure, the fund said.
The IMF also demanded a clearer accounting of the Spanish banks that are at risk of failure. Banks are still plagued by the collapse of a real estate bubble and uncertainty about the real value of assets they hold, the IMF said. The country's banks overall have "robust" levels of capital, it said, but "the risks remain elevated and unevenly distributed" in different institutions.
Monday, May 24, 2010
UPDATE. "The euro crisis is a judgment on the great lie of 'Europe'"
The U.S., Spain and Greece are among developed nations whose borrowings put them in a “ring of fire” amid sovereign debt concerns, said Pacific Investment Management Co., which runs the world’s biggest bond fund.
The company is investing in emerging markets that will benefit from high savings rates, the absence of debt bubbles and a greater capacity for government spending, said John Wilson, head of the Australian unit of Newport Beach, California-based Pimco, in an e-mailed statement today. The fund manager is targeting bonds including those in Brazil, Mexico and Russia and retaining holdings of inflation-linked Australian debt, he said.
“While the support declared by European leaders and the International Monetary Fund quelled concerns of sovereign risk spreading, Greece’s ability to refinance near-term debt remains a risk,” said Wilson. “Other developed countries in this ‘ring of fire’ are Ireland, Spain, France, U.S., U.K., Italy, Portugal and Japan.”
Saturday, May 22, 2010
The Nazi regime was brought to an end after a brutal war that totally crushed it; there were many remaining Nazi rulers that had to be dealt with afterwards. In contrast, the Francoist regime finished when the dictator died in his bed peacefully, with only a handful of people actively figting against it (as in post-WW2 France, where it seems no one was supporting Vichy, in Spain it's as if everybody were fighting against Franco. Only a few did). Many key figures in the Franco regime had been working on a democratization scenario for many years, realizing that it wouldn't survive Franco (many of them were parents of prominent Socialist figures, by the way; the same figures who are now pushing for indicting the regime). If those figures hadn't been demolishing the regime from within, Spain's transition to democracy wouldn't have been as easy, as fast, or as exemplary as it was. Nor it would have been, conversely, if figures outside the regime, in the then-outlawed opposition (particularly the Communist Party led by Santiago Carrillo) hadn't pushed for reconciliation and for putting the bad things behind in order to make a fresh start. The amnesty was what gave form to that reconciliation. Getting rid of it is a way of refighting a war that ended more than 70 years ago. Of trying to retroactively win a war they say they lost -- even though, as I wrote above, many are the children or grandchildren of powerful officials of the Franco regime.
Spain on Thursday raised euro3.52 billion ($4.47 billion) in an auction of 10-year bonds that analysts deemed encouraging amid concerns about the country's debt load.If only it hadn't been raised after discrete phone calls from the government to Spanish banks to pitch in, buy bonds, and then pass them to the ECB for purchase... (link in Spanish)
The Finance Ministry said bids totaled euro7.16 billion, more than double treasury expectations. It also said it was happy with the sale although the interest rate of 4.07 percent was up from 3.86 percent in the last auction in March.
"The auction results were reassuring," said Unicredit analyst Chiara Cremonesi in a statement.
Friday, May 21, 2010
AS POLITICAL U-turns go, José Luis Rodríguez Zapatero’s on May 12th was spectacular. Spain’s Socialist prime minister announced spending cuts of €15 billion ($18 billion) over two years. His vision of an expanding welfare state was dumped. With it may have gone Mr Zapatero’s political future. As he set out cuts in civil-service pay, social programmes and pensions, Mr Zapatero had the look of a man who has seen the writing on the wall. Yet his political death will take time. The next election is not due until 2012, and a fractious opposition seems unable to topple his minority government. He will call the shots for almost two more years.At least he passed the measures without cutting the cuts, as I suspected. Still, the measures still need to be passed by parliament, where he enjoys a plurallity of votes only. He needs support from other parties, and at both his right and his left, for different reasons, are against the cuts.
Slicing the budget is a short-term fix that does nothing for growth. The budget deficit of around 10% of GDP is no longer cyclical; part has become structural. Mr Zapatero’s budget cuts will not take Spain out of crisis, says Pablo Vázquez of the Foundation for the Study of Applied Economics. It is even more urgent to reform the labour market and pensions.
Mr Zapatero is skilled at sounding as if he means business, but his record is of painful slowness to deliver.
Author/filmmaker, J. Neil Schulman, today announced his intention to file a lawsuit for copyright infringement of his 1979 novel, Alongside Night, which tells the story of the collapse of the American economy due to massive government overspending and the issuing of unbacked money and credit to pay the interest on the national debt.He plans to sue for plagiarism both the executive and legislative branches of the US government, the courts, plus the Federal Reserve Bank, the European Union, the International Monetary Fund, and General Motors. Oh, and Greece.
“Just look at TV news or read a newspaper,” Schulman said. “Plot point after plot point is identical. In my 1979 novel I have General Motors go bankrupt — General Motors then files for bankruptcy. I have Europe issue a common currency in my novel called the ‘eurofranc’ — the European Union then goes and issues the ‘euro.’ In my novel I have a European Chancellor, based in France, accuse the U.S. President of having the monetary policies of a banana republic — then the President of the European Union — also based in France — slams U.S. plans to spend its way out of recession as ‘a road to hell’ and says President Barack Obama’s massive stimulus package and banking bailout ‘will undermine the liquidity of the global financial market.’ The copycat nature of all these plot points and dialogue” — says Schulman — “could not be more obvious!”You can download the novel here if you're fast (he's giving away 100,000 copies, and so far 87,000 have been taken).
Thursday, May 20, 2010
Spain says the suspected leader of the Basque separatist group ETA's commando units has been arrested in France along with four other people.Something that's no good, though: the English-language media insist on calling ETA a "separatist group", avoiding the word "terrorist". How many times do I need to say that it's stupid?
The Interior Ministry identified the suspect as Mikel Kabikoitz Carrera Sarobe.
This marks the sixth time in the past two years that a senior ETA leader has been arrested, either in Spain or France.
Wednesday, May 19, 2010
Italian prosecutors believe pizza in the southern city of Naples may be baked in ovens lit with wood from coffins dug up in the local cemetery, Italian daily Il Giornale reported on Monday.This is just macabrely gross.
Tuesday, May 18, 2010
South Korea will formally blame North Korea on Thursday for launching a torpedo at one of its warships in March, causing an explosion that killed 46 sailors and heightened tensions in one of the world's most perilous regions, U.S. and East Asian officials said.
South Korea reached its conclusion that North Korea was responsible for the attack after investigators from Australia, Britain, Sweden and the United States pieced together portions of the ship at the port of Pyongtaek, 40 miles southwest of Seoul. The Cheonan sank on March 26, following an explosion that rocked the vessel as it sailed in the Yellow Sea off South Korea's west coast.
Monday, May 17, 2010
Saturday, May 15, 2010
VIRTUALLY ALL the coverage of judge Garzón's suspension in the English-language media lacks a basic understanding of recent events at best, or outright distortion at worst (yeah, I know, big surprise), on the nature of the accusation against him, the circumstances that surround it, and Spain's recent history.
First, quite a few reports fail to mention that Garzón is in hot water not just for this case but also for other two, which involve very serious accusations: no less than bribery, and illegally tapping the conversations between detainees and their lawyers in a corruption case (Spanish laws only allow to do so in terrorism investigation). Breaking the attorney / client privilege, one of the fundamental tenets of a system under the rule of law, would make civil libertarians raise in anger if it was someone else. He's also a notoriously bad judge (unlike the US, in Spain it's the judge who investigates and builds the accusation). He takes on very high-profile cases but, after the televised perp walks and the media exposure, the courts end up finding the accused not guilty for insufficient evidence. It happened with the al-Qaeda terrorists who plotted to bomb the Madrid courts building, or the Operation Necora against drug lords in Galicia, among many others. And yes, even with Pinochet (just remember: where did the Chilean dictator ended up after the crusading judge went after him? At home. Some success.) Garzón has also often used more than questionable methods against detainees, such as calling the media to cover the actual arrests, long interrogations that prevented the accused from food intake. Or even calling detainees for questioning at midnight and keeping them up all night. Garzón is a night owl, but if it was Guantanamo instead of Madrid, Garzón would issue an arrest warrant against the interrogators. Of course if the reports mentioned all this many people would perhaps, just perhaps, realize that Garzón may not be the superhero he and his apologists claim he is.
Second, Garzón is not being judged by a far-right group: only the judges, well, judge. He's been unanimously ordered to stand trial by the Supreme Court, after several appeals that were resolved against him with not even one dissenting opinion by any of the justices. Judge Varela, who is conducting the case, is not a right-winger either: he apparently declined an offer to join the Felipe González administration in the 90s because the Socialists where too conservative. Friday's decision was not a guilty sentence, but a separation pending trial, also adopted unanimously. In Spain's legal system (as in other democratic countries) if there's a reasonable case that someone has broken the law that person has to be indicted, precisely because it's during the trial when the judge will decide whether that person is guilty or not (if he's not, he'll be acquitted and will rejoin the judiciary). Judges, no matter how crusading, popular and cool they may be, are no exception. And in a system with legal guarantees, it's irrelevant whether the groups that denounced Garzón at the courts are far right, far left, Raelians, or believers in the healing power of the virgins' menstrual blood. Just like anyone else, the groups who denounced Garzón (they are indeed right wingers, and not the Tea Party-are-fascists kind of right; those guys are the Falange and ultra groups, which are residual but nevertheless exist) still have the right of taking someone to courts, no matter how repugnant we think their positions are. If the courts failed to prosecute they could be accused of judicial breach of duty.
Third, Garzón is not being indicted for investigating the Franco-era crimes, but for allegedly doing it with judicial misconduct under the excuse of helping the families of Francoist crimes to unbury their dead. But Spanish lawmakers had passed a 2007 Historic Memory law actually allowing the opening of mass graves under the supervision of local courts across the country. Garzón -a magistrate of the Audiencia Nacional, a special jurisdiction dealing with terrorism, corruption, crimes against humanity, and other high-profile cases- had to allege, in order to take the case from the lower courts, that the Franco regime had committed crimes against humanity (duh). He had to indict the whole Franco regime in order to have a reason to open the mass graves, otherwise it would stay in the lower courts. The Supreme Court repeatedly told him that he couldn't do it because it wasn't his jurisdiction according to the Historic Memory law; it was being taken care of by the local courts. There was also the small detail that Generalissimo Franco was still dead, as well as his top men (another duh). And finally, Garzón was voiding the 1977 amnesty, which he had used a few years earlier to repeatedly dismiss the case against Santiago Carrillo, a Communist leader who directly oversaw the extrajudicial murders of thousands of civilians during the Civil War (95-year-old Carrillo is still alive and paradoxically could be one of the main losers if Spain strikes down that law, by the way). Garzón proceeded anyway, against direct orders from a higher courts, hence the accusation of judicial misconduct. And oddly, because of this jurisdictional disputes most of the local courts inhibited themselves from the opening of mass graves until they were resolved. Which means that as a result of him mingling in somebody else's case, Garzón not only didn't help, but paradoxically stopped the opening o the mass graves that he said he was trying to help.
Fourth, the 1977 amnesty approved by the Spanish parliament at the beginning of the democratic transition after Franco's death did not clear "atrocities linked to Gen. Francisco Franco's four-decade-long dictatorship," as the Wall Street Journal states (it's not the only one doing so). The amnesty had been a rallying cry even before the transition, but not by the right seeking to absolve themselves for their crimes but by the left, in order to being able to start from scratch and being able to participate openly in the political process. It was also a demand from Basque and Catalan nationalists who at the time often took the streets with slogans like "Libertad, amnistía, estatuto de autonomía" (Freedom, Amnesty, and Statute of Autonomy). The 1977 amnesty was not aimed at the 'heirs of Franco' because those guys at the time still enjoyed strong links to the military. The army's tanks and guns were enough protection against any temptation to go after them (the situation completely changed after the 1981 coup attempt: the modernization and cleanup of reactionary elements in the army was thorough and masterly done, with impeccable democratic methods by the Socialist government of Felipe Gonzalez; but we're talking about an earlier time now). The amnesty benefited not just leftist parties and politicians, which were illegal until then, but also political prisoners and most notably, also those convicted for terrorism and other crimes. It was passed by a big majority of leftist, centrist and right-of-center parties. The only ones against it were a handful of right-wing lawmakers who opposed it precisely because the amnesty set free all Basque ETA terrorists with blood crimes, including those who had killed scores law enforcement officers, servicemen, civilians, even those who killed Admiral Carrero Blanco, whom Franco had appointed as his successor, in 1973. To summarize: the 1977 amnesty was a law to benefit the left which was still outside the institutions, not the right who had inherited them from Franco.
And finally, I have yet to see any report clearly explaining that Garzón has as many enemies among the Socialists than among the right, if not more, because of what happened a decade and a half ago. In the mid-90s, Garzón joined the Felipe Gonzalez administration; he left just a few months after, apparently feeling betrayed for not being appointed to a cabinet-level position he allegedly had been promised. Whatever may be the reason, the fact is that as soon as he rejoined the judiciary, Garzon started investigating the González administration's death squads and dirty war against ETA, which killed and maimed several terrorists. He prosecuted and convicted a bunch of then ministers and underministers, and was a breath away of prosecuting González himself. That's something that the Socialists had never forgiven him for... until now, when it's politically convenient to support him. Hypocritically, of course, but still. Clearly behind in the polls and blamed with the country's economy crumbling down, what's better for the Socialists than being able to agitate the straw man that the fascists are coming, the fascist are coming?, implying "Vote for us, or they will come back!". As an evidence of how politically motivated the support for Garzón is, just think about what happened Friday afternoon, the day he was suspended. Hundreds of people took to the streets in protest for the court's decision. And where do you think they went to display their indignation, banners and bullhorns and all? To the court's building? To the headquarters of the residual right-wing groups who started the accusation? No, of course not. They demontrated at the headquarters of the opposition Popular Party, who had nothing to do with the case other than to defend the Supreme Court's independence from the attacks and the fact that no one, not even a media-darling judge, is above the law. (The attacks on the Supreme Court in recent weeks have been amazing, with speeches by retired judges who served 15 years as public prosecutors under Franco without dismay now defending Garzón and calling the Supreme Court justices "Francoists.")
In any case, the whole situation seems to have had a very positive effect, at least: judging from today's cover pages at all Spanish newspapers, one would say that the economic crisis has simply vanished.
Talk about superheros: if I was Zapatero, I'd appoint Garzon as economy minister.
UPDATE. There's an analogy by Santiago González, a Spanish writer, which I can't resist translating:
Historian Juan Pablo Fusi wrote some time ago that, since the death of Franco, 19,000 books have been written on his regime, the Civil War and the dictatorship. How can it be than not one historian has been in trouble for investigating the same that Garzón did? Let's ask ourselves: if a historian had lifted 60 pages of, let's say, Paul Preston's biography of Franco, and had been sentenced for plagiarism, would Garzón's defenders take him under his wing saying that he's "yet another victim of the Franco regime"?
UDPATE II. The Los Angeles Times is proving my point again today: see how its editorial repeats the same misconceptions all over the piece.
UPDATE III. And it's not the English-language press who gets it wrong: if you can read French, take a look at Le Monde's editorial today.
Matt is probably thinking on the announcements made by PM Zapatero last Wednesday, pledging to pretty drastic budget cuts in order to reduce the deficit. But he should know that Zapatero is a serial backpedaller, especially when he gets contested by the unions and fellow liberals. He's well known for announcing something and withdrawing the proposal sometimes just a few hours later (it happened notoriously a few months ago with an austerity plan submitted to the European Union that included raising the retirement age to 67; he sent the plan in the morning one day, and when it was reported in the media, the unions threatened him. He send a second amended plan that same afternoon with the retirement age back to 65).
And boy he's getting a rap: since he's now planning to cut subsidies, public workers' salaries, retirement payments, and not raising taxes at all (at least for now) the unions are all but plotting a general strike, and the left side of the political aisle is accusing him to be a soldout to big business and the powerful. Or something.
That's why Zapatero is now in dear-in-headlights mode: during Wednesday announcement, he said the measures would be approved during yesterday's cabinet meeting, but so far he's put it all off at least until next Thursday. And there's already one big measure dropped: the 5% cut in public workers salaries won't affect public-owned companies (link in Spanish). More cuts are likely to come, if you see the freaked out look in the ministers' eyes as they try to explain the measures in a sort of PR campaign.
So, Matt, it's not that austerity isn't working so well in Spain. It's that virtually no austerity measure has been approved by the government -- other than a reduction in some ministries that will cut costs by a paltry €16 million.
UPDATE. Not so fast, Glenn; not so fast. I'll believe Zapatero's cuts when I see them.
Friday, May 14, 2010
Spain's crusading judge Baltasar Garzon was suspended from his post Friday ahead of his trial on charges of abuse of power linked to a probe of Franco-era crimes, judicial sources said.It's just one of the three cases he's been investigated for.
They said the body that oversees the judiciary, the General Council of the Judiciary (CGPJ), decided unanimously to suspend Garzon, two days after the Supreme Court cleared the way for his trial.
UPDATE. Lo and behold: I just heard on the radio that, even though Zapatero said the government would pass those measures in today's weekly cabinet meeting, it won't. He's called for a special cabinet meeting on Thursday next week [ADDED: link in Spanish]. We'll see if it gets pushed back again.
Wednesday, May 12, 2010
Tuesday, May 11, 2010
NOURIEL ROUBINI believes that there are four reasons why even $1 trillion won't save the euro from disaster.
UPDATE. According to the NYT, the rescue package took a nudge from Obama. How imperialistic of him!
The French legislators who seek to repudiate the wearing of the veil or the burqa—whether the garment covers "only" the face or the entire female body—are often described as seeking to impose a "ban." To the contrary, they are attempting to lift a ban: a ban on the right of women to choose their own dress, a ban on the right of women to disagree with male and clerical authority, and a ban on the right of all citizens to look one another in the face. The proposed law is in the best traditions of the French republic, which declares all citizens equal before the law and—no less important—equal in the face of one another.Exactly, mon ami.
Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman's presidency, a USA TODAY analysis of federal data found.Maybe because the Tea Party criticizes... the deficit, buddy.
Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.
Where do they teach logic to these guys?
Fannie Mae said yesterday it would need an additional $8.4bn in aid, as the US government-controlled mortgage finance company continued to suffer heavy losses on its bad loans.
The company lost $13.1bn, or $2.29 a share, in the first quarter, including a $1.5bn dividend paid to the Treasury on senior preferred stock issued as part of the government-led bail-out. That compares with a loss of $23.2bn in the same quarter a year ago and $16.3bn in the 2009 fourth quarter.
Fannie Mae's appeal for help comes on the heels of a similar plea last week by smaller rival Freddie Mac, which asked for an additional $10.6bn cash infusion. The latest requests for aid bring the total amount of taxpayer dollars drawn down by these companies to $148bn since the 2008 government-led bail-out.
Monday, May 10, 2010
Marek Belka, the International Monetary Fund's chief representative for Europe, said the 27-nation bloc ought to seek long-term solutions to ensure financial stability.
"What has happened last night gives a little bit of relief for the Europeans. It has potential for calming down markets," Belka, who took part in the ministers' meeting, told a World Economic Forum conference in Brussels.
"Don't treat it as a long-term solution. It is a kind of morphine that stabilises the patient. Real treatment has yet to come.
Saturday, May 08, 2010
Friday, May 07, 2010
Just three days after a 110 billion euro ($134 billion) bailout of Greece was presented as the latest step to stabilize European markets, the opposite has transpired. Fears have spread through the financial markets that a larger epidemic would infect Spain, Portugal and perhaps other indebted countries outside the euro zone, like Britain and the United States.
In response, analysts are calling for a shock and awe option — some rescue of the largest of the peripheral euro zone economies suffering from stagnation and high levels of debt, not unlike the Troubled Asset Relief Program that was created to restore confidence in the American financial system.
They suggest that the European Central Bank buy back billions of euros of unwanted Greek, Portuguese and Spanish debt and that the I.M.F. offer a large bailout for Spain.
Such a broad stroke would surely cost more than the $700 billion that the United States pledged to back up its failing banks in late 2008. Therein lies the rub: not only is it an enormous sum, but it requires a degree of flexibility, political courage and teamwork that the European Union and the I.M.F. have not yet begun to show.
[...] Representative Mark Steven Kirk, Republican of Illinois, a member of the House Appropriations Committee, which oversees financing to the I.M.F., estimates that a bailout of Spain could cost as much as $600 billion. Citing research from the Congressional Research Service, he says the fund has only $268 billion to lend.
Thursday, May 06, 2010
Pimco’s bond guru Bill Gross (pictured) has slammed rating agencies blasting their ‘timidity and lack of commonsense’.So the markets, which at the end of the day it's what counts, are trading Spain's bonds much, much lower than the 'official' ratings. That's the grim truth.
His ire was raised after Standard & Poor’s downgraded Spain one notch from AA+ to AA last week with the threat of a further downgrade if the Spanish government did not act soon to stabilise its finances.
‘Oooh so tough and believe it or not Moody’s and Fitch still have them as AAAs,’ he says. ‘Here’s a country with 20% unemployment, a recent current account deficit of 10%, that has defaulted 13 times in the past two centuries, whose bonds are already trading at Baa levels whose fate is increasingly dependent on the kindness of the EU and IMF to bail them out. Some AAA!’
UPDATE. Here's Gross' letter in full.
Wednesday, May 05, 2010
Tuesday, May 04, 2010
On the other, this number comes without seasonal adjustment. Buried in the government report itself is the fact that with that adjustment -- it's the start of the tourism season --, jobless claims would have risen by almost 62,800 (pdf, page 7, in Spanish). There's also almost half a million (link in Spanish) who are not listed as jobless because they're taking a course, or who are listed by the Labor department as "unemployed with limited availability" or as people who are currently working but enroll at the unemployment agency because they want to find a better job (of course, the notion that anyone would try to get a promotion via the unemployment office is difficult to believe).
UPDATE. I mistakenly wrote that the jobless claims number announced by the government this morning was with seasonal adjustment and that without it the figures look much worse. It's the opposite; I fixed it. Sorry for the mistake.
UPDATE II. Uh-oh:
Spanish prime minister José Luis Rodríguez Zapatero was forced to deny market rumours his country would ask for €280bn from the European Union, something he described as "complete madness".
But Spain's stock market has lost nearly 5% today, while Germany's DAX is down more than 2% and France's CAC is around 3% lower. Portugal's PSI 20 is also down around 4%, while the cost of protecting the debt of a number of European countries has also jumped."
Saturday, May 01, 2010