Posts tagged 'EU'

IMF Debt Sustainability Assessments of Greece (and others)

In this guest post, former IMF staffer Peter Doyle castigates the institution’s flip-flopping over Greece…

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Greece is gimped, and yet the euro rots…

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El-Erian: The Graccident, as captured by the FT’s front page

The writer is chief economic adviser to Allianz and chair of US President Barack Obama’s Global Development Council

Sensing that this could be “history in the making” for Greece and for Europe, I decided a few weeks ago to keep physical copies of the FT (yes, I still get a physical copy!). While the inside of the paper contained rich reporting and comprehensive analysis, the headlines on the front page ended up providing a great feel for what transpired in this horrific tragedy. Read more

Greece: Analyst views on capital controls, bank holidays

We’ll be slamming up the best of our collective inbox on matters Greece as and when the good stuff pours in.

Catching up on the last few hours, here’s JP Morgan’s Greg Fuzesi:

In light of the deepening crisis in Greece, a key question is how the ECB will respond to any signs of contagion to the rest of the Euro area. At the end of today’s policy statement about the ELA decision, the ECB said that “the Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area.” The ECB added that “the Governing Council is determined to use all the instruments available within its mandate.”

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Greece: bank analysts and eurowatchers on what to expect on Monday (UPDATED)

For the latest on the ECB’s liquidity position on Greece, see our post here.

Meanwhile, here’s some instant analysis by way of the FT Alphaville collective inbox:

UPDATE: Capital controls and a bank holiday now confirmed; full research pack from Buiter, Barr and others available in the usual place. Read more

On those creditor ‘red lines’ for Greece

In this guest post, former IMF staffer Peter Doyle argues that in pushing for pensions, VAT and labour reforms, creditors are only stoking the latent explosiveness of Greece…


Troika-Greek negotiations are reportedly down to the wire over early-retirement pensions, VAT, and labor reforms: the IMF says all are non-negotiable; Tsipras, perhaps inadvertently echoing Mrs. Thatcher, has, so far, responded “No! No! No!”

These three issues converge on those at the upper end of their working lives, the 50-74 year old cohort, and are reflected in its participation and unemployment behavior. So it is worth considering data on those and the associated implications for the negotiations. Doing so suggests that these creditor red lines lack foundation. Read more

Guest post: The Greek standoff is no Prisoner’s dilemma

This guest contribution, from Giles Wilkes, sprung from a fierce internal debate amongst the FT’s leader writing team on Wednesday…


The standoff between the Greeks and their European creditors has often been compared to a Prisoner’s dilemma. This foundational scenario for game theory – famously, the expert discipline of Yanis Varoufakis, the Greek finance minister – concerns two prisoners accused of a crime who are handled separately by the police. Each are given the choice either of ratting on their accomplice, or staying silent. Should just one of the prisoners choose to rat on the other, he will walk free with a reward while his mate languishes in jail. If both hold firm, they each walk free unrewarded, while if they each betray their friend, then both are thrown into jail. Read more

It seems it’s time to get un-bored again with Greece

A flurry of fresh headlines: Greek stocks pummelled; “Air of unreality” as IMF quits talks. A seemingly credible report from Germany’s Bild saying Angela has resigned herself to possible Grexit.

There was that aggressive Giavazzi op-ed in the FT.

Oh, and 10,000 Greeks have taken their own lives over the past five years of crisis, according to Theodoros Giannaros, a public hospital governor, whose own son committed suicide after losing his job.

Maybe this is the end, end game. Read more

About that “last, best offer”…

Greece’s creditors tabled their alleged take-it-or-leave-it proposals on Wednesday evening, but Greece has now also come up with its own final proposals. Thanks to leaks through the Greek press on Thursday afternoon, you can now compare the two draft proposals side-by-side.

The Troika stuff comes in two parts, policy commitments and prior actions, courtesy of Tovima. Click the images tow read: Read more

The EU versus Apple & Ireland

In the light of the foregoing considerations, the Commission’s preliminary view is that the tax ruling of 1990 (effectively agreed in 1991) and of 2007 in favour of the Apple group constitute State aid according to Article 107(1) TFEU. The Commission has doubts about the compatibility of such State aid with the internal market. The Commission has therefore decided to initiate the procedure laid down in Article 108(2) TFEU with respect to the measures in question.

Click for the full document laying out the case.

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We’d prefer to be compared with our previous attempts, thanks very much

Stress tests in Europe maybe aren’t the mugging by reality they used to be… they’re putting up a little bit more of a fight this time. Though how much?

Here’s Citi cruelly putting the European Banking Authority’s recently released methodology against the US’s CCAR:

In the EU, the proposed adverse scenario leads to an overall cumulative deviation of EU GDP from its baseline level by 7.0% over the 3-year period to end-2016, with EU unemployment deviating by 2.9% versus the baseline scenario. This would imply a cumulative real GDP decline of -2.1% over 3-years, notably less than the stress applied in the US CCAR (a -4.75% decline over 15 months) and a peak unemployment rate of 13.0% versus US CCAR 11.25%. Equity prices are expected to decline by 19% relative to the baseline (US CCAR -50% decline), residential house prices by -21% (US CCAR -25%) and commercial property prices by -15% (US CCAR -35%).

Also, no deflation in the EU adverse scenario? Read more

Crimeanomics favours the West

This guest post on the Ukraine crisis is from Jorge Mariscal and Alejo Czerwonko, emerging markets chief investment officer and emerging markets economist, respectively, at UBS Wealth Management.

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Bruegel: ‘Stop trying to muddle through’

Here’s an essay published by the Bruegel think tank, penned by Ashoka Mody, currently a visiting professor at Princeton. He argues that if Europe wants to move forward in terms of integration, it first needs to stop. Click to read.

Were Hollande and Merkel at the same summit?

Listening to the comments of the various European leaders this morning, you’d be forgiven for thinking that they were attending different summits yesterday.

Francois Hollande, as quoted by the FT (emphasis ours):

The topic of this summit is not the fiscal union but the banking union, so the only decision that will be taken is to set up a banking union by the end of the year and especially the banking supervision.

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The EU’s high level experts on banking have spoke

Here’s the Liikanen Report. Click to view.

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Moody’s: EU outlook moved to negative

The rationale here is pretty rational.  From the rating agency’s statement on Tuesday…

The negative outlook on the EU’s long-term ratings reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45% of the EU’s budget revenue. The creditworthiness of these member states is highly correlated, as they are all exposed, albeit to varying degrees, to the euro area debt crisis. Read more

Towards a Brixit

Just when you had had enough of Grexits, Greuros and Drachmageddons, here’s another irritating term to add to the eurozone crisis lexicon: Brixit. Yes, the genius fusion of the words Britain and exit to describe another gloomy scenario.

The word was coined by The Economist’s Bagehot column this week (although apparently it is also the name of a Swedish shop that sells Lego) to describe an event that it argues no British political party wants but is nevertheless likely to happen. (The story of the euro crisis, surely?) Read more

Towards a genuine economic and monetary union, or something

Click the image for the full document:

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Cyprus needs bailing, says Cyprus

This had been a long while coming… Flashes from Reuters at pixel time:


Forget about economics

It’s all political at this point.

The goal going forward is to bring Europe into a state of sustainability. Only politicians can do that. So writes Nomura analyst Jens Nordvig. Read more

Cheat sheet for Europe

What can Europe do? SocGen has a handy little chart:

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“Since the introduction of the euro…”

Click to read circa 350 pages…

EU summit: the full nothingness

Tonight’s text on Greece from the EU summit. Not much, to be honest.

(Click to image for full doc – more/less from Van Rompuy, here)

EU plans to terminate Britain, return to Dark Ages – report

Sensational “news” via the Daily Express, which for the avoidance of doubt is a British national newspaper.

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The Glenstrata glitch

Can it really be true that advisers to Glencore and Xstrata  did not envisage a referral to the competition authorities in Brussels when planning their $90bn $80bn merger?

Seems so… Read more

Required reading for Glenstrata advisers

From the FT on Friday:

Executives at Glencore, the world’s largest commodities trader, and Xstrata, the mining group, had been confident that their deal would not require a formal investigation by the European Commission. Read more

Who’s the most imbalanced of all (EU members)?

Here’s a graphic designed to give one a headache (click to embiggen)…

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EU insists on airline carbon payments

European officials are insisting that Chinese airlines will have to pay for their carbon emissions, rebuffing an attempt by Beijing on Monday to shield them from a controversial emissions trading scheme, reports the FT. While Chinese airlines had previously said they would not pay the EU carbon tax, the Civil Aviation Administration of China formally instructed them not to join the EU emissions trading scheme without government approval. The EU countered that it remains determined to include all airlines that take off or land in the 27-member bloc in the scheme, which other nations complain is a violation of their sovereignty and has stoked warnings of a trade war. The US has warned that it would “take appropriate action” if Europe does not amend the law.

Iran to halt exports to ‘some’ countries

Iran’s oil minister said on Sunday that oil sales to “some countries” would be halted soon, amid pressure from the parliament that the government should pre-empt a looming European embargo, the FT reports. “Iran has a market for its oil exports even with cuts [in sales] to Europe and will face no problem in this regard,” Rostam Ghasemi told local journalists. But the Iranian parliament failed to pass a proposed law over the weekend that would have banned oil exports to the European Union, apparently because of differences between the legislative body and the government of Mahmoud Ahmadi-Nejad. Emad Hosseini, spokesman for the Iranian parliament’s energy committee, said consultations were being held with concerned officials in the government, “to see where we stand and in what situation the contracts are”. The talk of a pre-emptive ban, even if approval of the bill has been delayed, has already affected the physical crude oil market, traders and analysts said.

EU to voice concerns about Volcker rule

The European Commission will complain to Treasury Secretary Timothy Geithner that proposed US regulations could discourage banks from trading European sovereign bonds, the WSJ says. Michel Barnier, the European commissioner for the internal market, told the newspaper he would speak to Mr Geithner next month, adding: “We can’t accept extraterritorial consequences or Europe will be tempted to do the same thing”. Mr Barnier said the UK chancellor George Osborne raised concerns at a meeting on Monday.