Death throes of the Troika - But what next?

El Pais last evening,reported the coming end of the Troika of the EU, IMF and ECB linked here.

The austerity overseeing grouping which solely exists to pointlessly try to save the always doomed EU Common Currency, the now detested Euro, is still busily about its business as may be seen from these reports of this morning, on Portugal here, Greece here and Ireland last weekend, here.

Throughout May 2010 it was obvious to most thinking people that the Euro was doomed, read the multiple posts from the archives of this blog by clicking for that month on this blog's side bar or from here.

So what should be done with those utter incompetents, so negligently responsible. That is for each sovereign nation, bankrupted by these wildly irresponsible errors, to decide in my opinion. All EU Member States are now effectively bankrupt as a consequence of these nincompoops stupidity!

In Britain's case, as a change of Government occurred in the midst of the relevant Ecofin meetings which to remind readers delivered the EFSM among subsequent woes, all three main political party leaders and financial bigwigs were directly involved, so hopefully we can rid ourselves of the lot of them!

Are Greece, Ireland and Portugal prepared to default to the EFSF?

The posting beneath this links to the "Lenihan Letter" which supposedly legitimises "RULE BY TROIKA" in Ireland. It appears to have been constructed on some very shifting sands.

One presumes that as ever amounts advanced by the IMF are secured, but can the same be said for sums advanced and due to the EFSF and the ECB. Can even money advanced by the EFSM, to which the UK is party, also really be considered as being of any worth, if not what percentage still is?

Should the three countries now barely surviving under the boot of the Troika decide that the game is no longer worth the candle, which given the comment below is quite clearly the case for Ireland, the EFSF commitments will then become due from the Sovereign State Guarantors.

Such a default would be particularly nasty timing for France, which has just pledged billions for Peugeot to continue making cars few wish to purchase!

ESM ratification progress towards tyranny!

There was no new firewall, no new funding nor was there any substantive progress on solving the EU's existentialist crisis during the 19th summit held to discuss this ever growing disaster held in Brussels at the dog end of this week.

Progress towards ratification of the "agreements" that will become the chosen instruments of the tyranny now being drawn up by the EU for the soon to be completely crushed and impoverished peoples of Europe, may be seen from page 10 of the EU document linked here. Germany, signed up last night, even though the version agreed had already been changed that day in Brussels, what hope for legality?

The true extent of this week's failure may be seen in this graphic from Zero Hedge, linked here.

IIF estimates Spanish bank losses €216 to €260 Billion

The report from Fox Business News is linked here. Ginormous and humungus financial losses, such as these in Spain and those of the clearly already crippled banks in Greece, to be presumably eventually covered from elsewhere in Euroland, are presently being funded by the ECB, but who is providing any guarantees for such ECB spending of these mind-boggling sums?  That seems to remain a bit of a mystery shrouded in the Scotch Mist of TARGET2.

The EFSF emergency funding and that of the EFSM, the only two so far actually agreed, can provide nothing like sufficient sums, with or without the IMF.

Why is this plain fact not being discussed in the constant and ongoing mulilateral meetings or at least raised in the press conferences that follow them! The math is perfectly obvious!

The terrible toll of the treachery of our politicians.

The figures for the UK’s total European liability, are contained and published in a new report commissioned by the Bruges Group think tank released today:

Titled The UK’s risks and exposure to the European Investment Bank and other European financial mechanisms, Bob Lyddon’s report for the Bruges Group reveals the true extent of the UK’s obligations in respect of the present and future debts of EU institutions including:

• How the Government’s defined position is questionable in law and therefore has led it to underestimate its full potential exposure to EU debt
• That the true extent of the UK’s potential exposure to the EIB, ECB and EFSM (European Financial Stability Mechanism) the debt is €149.2 billion because:
• The ECB is entitled to call upon the Bank of England for up to €50 billion of the UK’s currency reserves. Under Council Regulation 1010/2000 of 8th May 2000, the ECB has the legal right to call on individual member countries’ national reserves (€50 bn in the case of the UK) should the viability of the ECB be at risk.
• The EIB can call upon up to €35.7 billion^[1] from the UK, should it lose money on the loans that it has made to Govts and banks in vulnerable economies such as Greece, Portugal, Spain, Italy and Ireland.^[2]
• The UK currently has a €60 billion liability to the European Financial Stabilisation Mechanism (EFSM). This figure could increase if one or more member countries defaults, because the remaining solvent members are required jointly to take on the insolvent member’s debt.
• The UK’s €1.9 billion of paid-in capital to the EIB and a further €1.6 billion to the European Central Bank (lodged to pay the UK’s share of its costs) is also at risk.

The Bruges Group Report may be read here.

This is merely the financial cost and disregards the social costs and absolute betrayal of all that of which our country once held dear and honoured. That treachery may be noted today in France and demonstrated by the fact that their new President, immediately following his being sworn into office, will travel to Berlin to receive his orders from the German Chancellor.

All this while the former independent democratic smaller natiuons right across Europe struggle for their very financial and independent survival, their economies destroyed by the lies and illusions made necessary for the EU to have gained such powers on behalf of its one controlling nation - Germany.

German Constitutional Court bolsters German Parliament

The Chicago Tribune reports as follows:

The German constitutional court ruled that parliament may not delegate most decisions on disbursing bailout funds to a special committee meeting in secret, as Merkel had planned after a previous ruling bolstered lawmakers' oversight powers....

In a case brought by two opposition lawmakers, the court said a nine-member sub-committee created to approve urgent action by the bailout fund was "in large part" unconstitutional because it infringed on the rights of other deputies.

The judges said the panel may approve price-sensitive debt purchases on the secondary market by the EFSF bailout fund, since confidentiality was essential in such operations.

But they denied it the power to authorize loans or preventive credit lines to troubled states or for the recapitalization of banks.

While not a show-stopper, the decision means parliamentary deliberations on future rescue operations could be slower and more cumbersome, since the full 41-member budget committee or the entire 620-member lower house will have to decide.

S&P downgrades outlook for the EU's EFSF Bailout fund to Negative!

The announcement is linked here. The rationale is stated as follows:

Rationale
Following the lowering of the ratings on France and Austria on Jan. 13, 2012,
the rated long-term debt instruments already issued by the EFSF are no longer exclusively supported by guarantees from the EFSF guarantor members rated 'AAA' by Standard & Poor's or 'AAA' rated liquid securities.....

Outlook
The negative outlook on the long-term rating on the EFSF mirrors the negative outlooks of France and Austria.

Have Ecofin Finance Ministers more cash to waste on Greece?

The Finance Ministers of the Euro Group, who have been collectively regularly gathering since May 2009, with their own agent now assisting at the head of the IMF acrossd the pond, meet today to witter about the waste they have already caused and attempt to defer proper action even further. One report is here.

Other problems than Greece also loom as this quote from the linked report makes clear:

Greek debt is not the only tough issue EU officials need to tackle with at the meeting. The Lloyds Bank Corporate Markets Research team outline the difficulties connected with the revised blueprint of the fiscal pact: “While the new fiscal proposals seek to avoid potential problems, it cannot address the current financing needs of some of the euro area’s most fiscally vulnerable countries” as well as with the ESM fund: “Standard & Poor’s downgraded the EFSF last week from AAA to AA+, which raises concerns around the potential credit rating that will be associated with the new fund and the capacity to increase its size if needed.”

Monti & Draghi propose lumping unused EFSF funds with ESM

The two Italians, whose country of birth faces a debt mountain of indescribable proportions and a system of economic governance akin to some of the worst economies of the third world, have this afternoon come up with a new cracking idea to get their hands on outside cash, according to the Telegraph, linked here. A quote:

Doubling the European Stability Mechanism's (ESM) firepower would reassure markets while driving down borrowing costs for the debt-wracked countries of the eurozone, Mr Monti is said to have argued.

Mr Monti had won backing for the proposal from European Central Bank President Mario Draghi, who proposed using unused money from the EFSF to boost the size of the new fund to about €750bn, according to reports in German weekly Der Spiegel, which cited unnamed sources.

Euro's emergency fund now downgraded!

"The EFSF's obligations are no longer fully supported either by guarantees from EFSF members rated AAA by S&P, or by AAA rated securities," the company said. "Credit enhancements sufficient to offset what we view as the reduced creditworthiness of guarantors are currently not in place."

S&P removed the ratings on the facility from CreditWatch with negative implications, it also said.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/01/16/bloomberg_articlesLXWLSO6KLVR401-LXWM3.DTL#ixzz1jeUyuf4C

WSJ says French Government notified of a I notch credit downgrade by S&P

This cut will affect the funds available to the EFSF, but more significantly for the euro in the longer term, the funding for the ESM which is now supposed to begin on 1st July, see here.

EFSF fund seeking a boost to 30% in state gurantees.

Reuters report taken from the German Sunday press is here. The key quote:

Providing insurance on more than the first 20 percent of euro zone bonds in the case of default would eat up the 250 billion euros the EFSF has left -- after lending to Ireland and Portugal -- and aims to multiply.

In addition of course it will also affect the (sometimes precarious state) of the credit ratings of some of the still AAA rated guarantors, with further obligations to the ESM now looming at the end of this year, or possibly even this summer.

More interesting food for thought from here.

G&S Pact, The Non-EU Treaty & EFSF Presentation

Article 14, Paragraph 2, of the draft of the "International Agreement on a Reinforced Economic Union", linked here, states the following:

This Agreement shall enter into force on the first day of the month following the deposit of the ninth instrument of ratification by a Contracting Party whose currency is the euro.

EUobserver reports in an article, linked here,that the majority of French people are opposed to this Treaty. The Upper House of the French Parliament have stated they will never pass the so-called "Golden Rule". The front-running socialist candidate for next years Presidential election in France has stated he does not agree with the terms of the draft Treaty and will seek to renegotiate them.

It threfore appears likely that France will not be among the nine countries initially ratifying this Treaty, nor most probably will it ever do so!

Last evening, I posted on this blog, see here, an image of an exchange touching upon the Growth and Stability pact, that took place nine years ago. Back then I wrote, in a submission to a discussion forum run by the Financial Times, as follows:

"Events are already proving that brute force will be the only way of enforcing the terms of the Growth and Stability pact on the EU's smaller members. These latter, as can already be seen, will be the only ones to be held to the letter of the agreement."

It appears that my earlier warnings, to the effect that France and Germany, if convenient only to them, will similarly find ways around their commitments under the new Treaty, might prove unnecessary, as it now seems that they may not even have to bother to ratify it, if they play their cards craftily enough!

For more laughs (as our source Acting Man points out) during your weekend, a new version of the EFSF terms are available in a fancy presentation format linked here. Note Italy is now standing behind this fund to the extent of 19.18% of the total funding, while Spain, whose banks finally seem to be about to face the real losses of the property price collapse, read here, will meet 12.75%

Anybody else wondering how Spain and Italy can sign up to the "Fiscal Compact" by March 2012 and still meet all these commitments and obligations? Maybe they too are planning not to be among the initial nine signatories?

How the EFSF and ESM will be hit by the coming European rating downgrades.

There is much on this topic already posted on this blog but the update from FT Alphaville is more than timely, linked here.

EFSF is now threatened by S & P Downgrade

One report is from the Wall Street Journal, linked here.

On 6th August of this year, even after the agreed July changes to the EFSF, I spelt out quite clearly on this blog why both the EFSF and the ESM could not function, see here.

No details on EFSF funding/leveraging until end November!

EurActiv carries the best report on the latest Ecofin non-event, linked here, that I have so far seen.

Bloomberg TV states Merkel announces no G20 deal on IMF Resources

Bloomberg TV has made public the above very important news this lunchtime. The 27th October EU, EFSF package could never save the euro. Pouring more IMF cash towards the EU bonfire, would merely have impoverished other taxpayers across the globe and sped the day they would have had a similar non-democratic package imposed upon them, courtesy of the G20, via Global Governance, the skeleton plan for which was outlined by the British PM today, at Cannes, see my posting immediately beneath this!

Update 1335 GMT Merkel's statement is confirmed here  although other reports have EU Council President Von Rompuy stating extra resources have been agreed for the IMF, see here confirming the ususal EU confusion. Elsewher there are reports that Finance Ministers have been charged to discuss this topic in February of next year! Global Non-Governance who needs it? The smaller the simpler and the more democratic! National Sovereignty should rule - OK!

EFSF delays €3 Billion Euro Bond Sale

Bloomberg carries the report of this latest humiliation for the floundering leader of the Euro Group countries, linked here.

The next looming fiasco is the outcome of an Italian Cabinet meeting set for 8 pm this evening.

German court blocks parliamentary committee from approving EFSF disbursements

Der Spiegel has a rather shattering report which may be read in full from here.

There were mixed versions of what authority the German parliamentary lower house had in fact given Merkel even before Wednesday's meeting, this latest news must sew even more confusion into already heavily muddied waters.

The article concludes with these very worrying paragraphs seen from a democratic standpoint:

'The Bundestag Cannot Be Replaced'

But the SPD members are contesting the law. "The Bundestag cannot be replaced by a nine-member committee on such important issues," Schulz told SPIEGEL ONLINE. Schulz argues that, at a minimum, the Bundestag's budget committee should be included in all decisions.

The politicians have based their complaint on expertise provided by the Bundestag's own research service, which advised that the special panel transfers responsibility to a few and hinders the participation and shaping of policy by all members of parliament.

On Wednesday, the Bundestag tasked the committee, whose meetings are closed to the public and confidential, with a supervisory role for the billions of euros in German taxpayer money that are being deployed by the EFSF. It includes members of all of the German political parties represented in parliament and includes an equal number of politicians representing the parties in government and those in the opposition.

Fixing the Euro with Sub-Prime Mark II

Today, the problems of the EU are set to be solved in a complex package, jointly agreed, between France and Germany! Fat chance!


Der Spiegel highlights some of the huge flaws in the presently planned EU rescue package, linked here. Yet those difficulties merely scratch the surface of the real problems. Effectively it argues the leverage is nothing more than a new sub-prime crisis in waiting!

The EFSF has quite astoundingly been made the centrepiece of saving Italy and possibly later Spain. That too, when it has not, alongside the IMF, the ECB, the EFSM AND loans from the EU budget itself, even been able to stave off or treat the problems of Greece, Portugal or the coming housing crunch for Ireland!

The EFSF cannot fill any useful role as it is a self-assurance scheme! Can Italy and Spain now lend themselves sufficient funds to finance a return to growth in economies where all the wealth must go against interest payments on earlier loans that also did not stimulate growth!

Even were the new EFSF able to do so, who will thereafter then be left to lend to France?

Everything that the men and women meeting in Brussels today, the 27 neutered leaders of the EU's former member states, hav done, while acting in concert regarding the euro crisis, since their disastrous meetings in May 2010, has failed.

ALL THE MONEY SPENT SINCE MAY 2010 HAS BEEN WASTED!