Tag: European Central Bank

  • Turkey to EU: say goodbye to democracy and start printing money

    Turkey to EU: say goodbye to democracy and start printing money

    By Andrew Rettman

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    BRUSSELS – Eurozone countries will have to give up on normal democracy and the European Central Bank (ECB) will have to print money if the euro is to survive, Turkey’s ambassador to the EU has said on the eve of the EU summit.

    Noting that EU leaders are going in “the right direction” by proposing central control over national budgets in return for help from the ECB, Selim Kuneralp told EUobserver in an interview on Wednesday (7 December) that traditional democratic structures have no future in post-crisis Europe.

    “In an election campaign, you have one party that says ‘I’m going to reduce taxes and invest in this or that, to build nuclear power plants or spend money on renewable energy, build more schools and better hospitals.’ And the other party says ‘I’m going to do everything this guy is promising, but more.’ So you have a race on who is going to spend more. But if you have this kind of mechanism [of central control] they won’t be able to do it.”

    “That means you would have such a loss of sovereignty as to make election campaigns meaningless,” he added.

    “I don’t see any other option – either you have a single currency with fiscal union or you don’t have a single currency at all.”

    With Germany in the driving seat on EU reforms, Kuneralp said German society has set a good example over the past 10 years by keeping wages low and making sure banks lend responsibly: “They’ve been good boys. They’ve been Germans … They are responsible people. In Greece, you can go to the bank and borrow money to go on holiday. In Germany you can only borrow money for some productive purpose.”

    He noted that if EU institutions are in future to police national spending, they will have to do a better job than in the past, however.

    Looking back to the Greek statistics fiasco in 2010, when Athens admitted to lying for years about debt and GDP, Kuneralp said EU officials must share the blame: “When I talk to people in the commission, they say ‘Well, you know, the Greeks lied and that was it.’ Well, they may have lied, but your job was to find them out. The commission were not doing their job properly and you need a mechanism that makes sure they do their job properly and expose liars and fiddlers.”

    He added that Germany will have to drop its opposition to letting the ECB create money to prop up eurozone debt.

    Kuneralp pointed out that the US and the UK have done better than euro countries in the crisis by adding zeros to central bank reserves – $1.4 trillion in the case of the US, the equivalent of Turkey’s GNP for two years.

    “The Americans have added zeros to their ledgers and it has had no visible impact on inflation … The lesson is that you can do it,” he said. “In the end, the Germans will have to move in the direction of more flexibilty and allow some buyback or some other instrument that is a euphemism for printing money … You have to reduce your debt by having a little bit more inflation – you print your way out of this conundrum.”

    The ambassador noted that while Turkish banks have almost no exposure to bad eurozone debt, the Turkish economy is at grave risk if the euro goes down – 50 percent of Turkish trade is with the Union, 80 percent of foreign investment and 70 percent of its tourist income also come from the bloc.

    “We are not rejoicing. There’s no schadenfreude. We’re not saying: ‘Oh well. You deserve this for not taking us into the EU’,” he told this website.

    On a note of optimism, the veteran 60-year-old diplomat, who was Ankara’s sherpa for three G20 summits in 2008 and 2009, said the climate of panic in the media is over the top.

    “I read one comment which said ‘This is the most historic, the most crucial summit since … the summit of 26 October.’ So, all this hype, I don’t know how far to take it seriously,” Kuneralp said. “They [EU leaders] can’t allow this whole structure to collapse. I can’t believe this is going to happen, so they will take the right decisions in the end.”

    via EUobserver.com / Economic Affairs / Turkey to EU: say goodbye to democracy and start printing money.

  • Wall Street protests go global

    Wall Street protests go global

    Occupy wallDemonstrators worldwide shouted their rage on Saturday against bankers and politicians they accuse of ruining economies and condemning millions to hardship through greed and bad government.

    Galvanized by the Occupy Wall Street movement, the protests began in New Zealand, rippled round the world to Europe and were expected to return to their starting point in New York.

    Most rallies were however small and barely held up traffic. The biggest anticipated was in Rome, where organizers said they believed 100,000 would take part.

    “At the global level, we can’t carry on any more with public debt that wasn’t created by us but by thieving governments, corrupt banks and speculators who don’t give a damn about us,” said Nicla Crippa, 49, who wore a T-shirt saying “enough” as she arrived at the Rome protest.

    “They caused this international crisis and are still profiting from it, they should pay for it.”

    The Rome protesters, including the unemployed, students and pensioners, planned to march through the center, past the Colosseum and finish in Piazza San Giovanni.

    Some 2,000 police were on hand to keep the Rome demonstrators, who call themselves “the indignant ones,” peaceful and to avoid a repeat of the violence last year when students protesting over education policy clashed with police.

    “YES WE CAMP”

    As some 750 buses bearing protesters converged on the capital, students at Rome university warmed up with their own mini-demo on Saturday morning.

    The carried signs reading “Your Money is Our Money,” and “Yes We Camp,” an echo of the slogan “Yes We Can” used by U.S. President Barack Obama.

    In imitation of the occupation of Zuccotti Park near Wall Street in Manhattan, some protesters have been camped out across the street from the headquarters of the Bank of Italy for several days.

    The worldwide protests were a response in part to calls by the New York demonstrators for more people to join them. Their example has prompted calls for similar occupations in dozens of U.S. cities from Saturday.

    Demonstrators in Italy were united in their criticism of Prime Minister Silvio Berlusconi and angry at his victory in a vote of confidence in parliament on Friday.

    The government has passed a 60 billion-euro austerity package that has raised taxes and will make public health care more expensive.

    On Friday students stormed Goldman Sachs’s offices in Milan and daubed red graffiti. Others hurled eggs at the headquarters of UniCredit, Italy’s biggest bank.

    New Zealand and Australia got the ball rolling on Saturday. Several hundred people marched up the main street in Auckland, New Zealand’s biggest city, joining a rally at which 3,000 chanted and banged drums, denouncing corporate greed.

    About 200 gathered in the capital Wellington and 50 in a park in the earthquake-hit southern city of Christchurch.

    In Sydney, about 2,000 people, including representatives of Aboriginal groups, communists and trade unionists, protested outside the central Reserve Bank of Australia.

    “REAL DEMOCRACY”

    “I think people want real democracy,” said Nick Carson, a spokesman for OccupyMelbourne.Org, as about 1,000 gathered in the Australian city.

    “They don’t want corporate influence over their politicians. They want their politicians to be accountable.”

    Hundreds marched in Tokyo, including anti-nuclear protesters. In Manila, capital of the Philippines, a few dozen marched on the U.S. embassy waving banners reading: “Down with U.S. imperialism” and “Philippines not for sale.”

    More than 100 people gathered at the Taipei stock exchange, chanting “we are Taiwan’s 99 percent,” and saying economic growth had only benefited companies while middle-class salaries barely covered soaring housing, education and healthcare costs.

    They found support from a top businessman, Taiwan Semiconductor Manufacturing Corp (TSMC) Chairman Morris Chang.

    “I’ve been against the gap between rich and poor,” Chang said in the northern city of Hsinchu. “The wealth of the top one percent has increased very fast in the past 20 or 30 years. ‘Occupy Wall Street’ is a reaction to that.”

    Demonstrators aimed to converge on the City of London under the banner “Occupy the Stock Exchange.”

    “We have people from all walks of life joining us every day,” said Spyro, one of those behind a Facebook page in London which has drawn some 12,000 followers.

    The 28-year-old, who said he had a well-paid job and did not want to give his full name, said the target of the protests as “the financial system.”

    Angry at taxpayer bailouts of banks since 2008 and at big bonuses still paid to some who work in them while unemployment blights the lives of many young Britons, he said: “People all over the world, we are saying: ‘Enough is enough’.”

    Greek protesters called an anti-austerity rally for Saturday in Athens’ Syntagma Square.

    “What is happening in Greece now is the nightmare awaiting other countries in the future. Solidarity is the people’s weapon,” the Real Democracy group said in a statement calling on people to join the protest.

    In Paris protests were expected to coincide with the G20 finance chiefs’ meeting there. In Madrid, seven marches were planned to unite in Cibeles square at 1600 GMT (12 p.m. EDT) and then march to the central Puerta de Sol.

    In Germany, where sympathy for southern Europe’s debt troubles is patchy, the financial center of Frankfurt and the European Central Bank in particular are expected to be a focus of marches called by the Real Democracy Now movement.

    Reuters

  • Euro collapse ‘possible’ amid deepening divisions over bail-out

    Euro collapse ‘possible’ amid deepening divisions over bail-out

    It is feasible that the euro will not survive the current sovereign debt crisis sweeping Europe, one of the Treasury’s leading independent forecasters has said.

    Euro

    Under questioning from MPs on the Treasury Select Committee, Stephen Nickell, a member of the Office for Budget Responsibility (OBR) and a former Bank of England rate-setter, said a collapse of the single currency was “a possibility”.

    Attempting to defy Germany, the eurozone’s powerhouse and the nation that will provide the bulk of any rescue fund, Belgian Finance Minister Didier Reynders called for the €440bn bail-out fund to be expanded, while Luxembourg Finance Minister Jean-Claude Juncker and Italian counterpart Giulio Tremonti outlined proposals for a joint European government bond.

    However, Germany, the Netherlands and Austria on Monday pitched themselves against weaker member states by insisting the rescue package should not be increased. Finance ministers from the 16 member nations were debating the bail-out plans late into the night.

    Mr Juncker and Mr Tremonti’s “E-Bonds” would be sold by a European Debt Agency, created as early as this month, to finance as much as 50pc of the issuances by EU members. For troubled members, like Ireland and Portugal, it could fund the entire bond issue.

    However, Angela Merkel, the German Chancellor, quickly dashed hopes by rejecting the idea as unworkable and stating: “I see no need to expand the fund right now.”

    As market fears revived, the cost of insurance for Irish, Greek, Portuguese, Italian and Spanish sovereign debt rose. Bond yields were also higher as institutions shunned governments.

    Ireland, which faces a crucial vote on its debt reduction plans on Tuesday, offered some rare good news as the government appeared to have won sufficient parliamentary support to push the plans through and qualify for the €85bn bail-out package.

    On the euro, Mr Nickell said: “There is a possibility it will collapse but at the moment it is not something to which I subscribe a very high probability.” Asked to estimate the probability he said: “1.7pc”.

    Meanwhile, European Central Bank (ECB) Governing Council member Nout Wellink said it is not the central bank’s task to rescue euro-area countries with funding problems.

    “It’s not up to the ECB to save countries where governments run the risk of becoming insolvent,” Wellink, who also heads the Dutch central bank, said. “We are not here to take over, on our balance sheet, the risks of the national economies of Europe.”

    Ten-year bond yields

    Greece: 11.393 (+0.39)

    Ireland: 7.916 (+0.1)

    Portugal: 5.701 (-0.1)

    Spain: 5.080 (+0.9)

    Italy: 4.461 (+0.7)

    The Telegraph