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Posts Tagged ‘coalition Government’

ATHENS, Greece (AP) — Leaders of parties supporting Greece’s coalition government say crisis talks for huge new debt deals will continue Monday.

Coalition backers held a five-hour meeting late Sunday with Prime Minister Lucas Papademos to hammer out a deal with debt inspectors representing eurozone countries and the International Monetary Fund — but again failed to reach an agreement.

Greece is racing to finalize austerity reforms needed for a new euro130 billion ($171 billion) without which it would face bankruptcy in late March.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

ATHENS, Greece (AP) — Leaders of parties supporting the Greece’s coalition government say crisis talks for massive new debt deals will continue Monday.

Coalition backers held a five-hour meeting late Sunday with Prime Minister Lucas Papademos to hammer out a deal with debt inspectors representing eurozone countries and the International Monetary Fund — but again failed to reach an agreement.

Greece is racing to finalize austerity reforms needed for a new euro130 billion ($171 billion) without which it would face bankruptcy in late March.

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See Also:

• Here’s The Real Problem With Getting The Greek Deal Done
• Emergency Meeting Called In Greece, New Sign Bailout May Be In Trouble
• REPORT: ECB Involvement Is Now Make Or Break Condition Of Greece Debt Deal

After a record-breaking stint, financial turmoil and debt has finally pushed Belgium’s politicians into forming a fragile and diverse coalition government.

Out of this bizarre agreement the country’s hero has emerged — Elio Di Rupo.

Born to poor Italian immigrants, openly gay and with a poor handling of Dutch (spoken by most of Belgium) he’s an unlikely figure to lead a nation in need of direction.

Opinion on Di Rupo varies, some saying that he’ll be lucky to last until the next general elections and others saying that he may be the man to steady the ship. Whether he can unify a country and command a coalition full of different opinions and cultures is anyone’s guess.

Di Rupo had a tough childhood

The son of poor Italian immigrants, to say Di Rupo had a tough childhood may actually be an understatement.

When he was just a one-year-old toddler his father was crushed to death in a road accident, leaving him to be raised by his mother. Such was the size of Di Rupo’s family, that some of his brothers and sisters were given away, his mother unable to cope with the burden.

It was a life of poverty.

There are reports that during his youth, Di Rupo owned only one pair of pants and few other clothes.

Still, the new leader refuses to say that he was hard done by in his youth, sighting the love of his mother as the thing that got him through rough times.

Luckily, he found politics.

Despite graduating from university with a PhD in chemistry, studying at University of Mons-Hainaut and at Leeds University in the UK, Di Rupo had already been drawn to politics and joined the socialist party as a 17-year-old.

His political career apparently got its wings in the town of Mons where he became an MP and the mayor during the 1980s.

See the rest of the story at Business Insider

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Russia will conduct important Parliamentary elections this weekend. Yes, elections – with all the dangers and opportunities that elections hold for incumbent parties, including Prime Minister Vladimir Putin’s.

Anyone who thinks that Mr. Putin’s United Russia Party will cruise to power as the first step in his inevitable rise to dictatorship (after a projected easy victory in the 2012 presidential elections) had better think again. Nothing could be further from the truth.

Putin’s party and his new Popular Front initiative (a coalition of his ruling political party, trade groups, and nongovernmental organizations) have sizable support. But his United Russia party does not have a majority and certainly not the constitutional majority of two-thirds of the State Duma, according to public opinion surveys.

Two opposition parties taken together – the Communists and Liberal Democrats – are favored by nearly a quarter of the electorate, and there are other parties vying for voters, too.

Putin will have to forge a coalition government among disparate factions to have any chance of governing effectively if he retakes the presidency next March after a separate election. That won’t be easy, and the messy process is sure to disprove the Myth of Putin – that the former and likely future president plans to reconstitute the Soviet Union as his own, personal plaything.

Putin stepped down as Russia’s president in 2008, became prime minister, and remains the country’s most popular politician. He is widely seen as a man of the people, a veteran leader with a populist touch. His image is that of a fighter for the common man who can also stand toe-to-toe with other heads of state and negotiate successfully on Russia’s behalf.

His political party, however, has not fared so well. Critics have labeled the United Russia Party the “Party of Crooks and Thieves.”  Its missteps, mismanagement, and stultification have caused it to fall in the polls. To remain a leading voice, it was in need of a serious overhaul.

And that’s what Putin has done. Without much notice in the West, Putin reached out last May to allies, including civic groups and nongovernmental organizations, to form the Popular Front. His goal was to motivate the increasingly disillusioned electorate to back a refreshed and more unified ruling party.

The switch has helped. Opponents complain that the organization puts a new gloss on the old names and old faces of the past. But close examination reveals otherwise.

The Popular Front has turned out to be, well, popular. It has energized the fading United Russia Party by bringing new ideas and lots of new candidates – roughly half of the old guard has been replaced with newcomers. The party’s decline in the polls appears to have finally been reversed.

Putin is also not the same person he was when he left the presidency nearly four years ago. He is eager for a new start with a broader – and different – set of advocates and proposals, some of which will not be welcomed by everyone. In particular, like every other major government, Russia will have to adopt some painful retrenchments of its public pension plans in order to stay fiscally sound. Putin has been unafraid to say so despite a likely public backlash.

In any case, the simple-minded notion that Russia will soon be subject once again to one-man rule is ridiculous.  In fact, a good case can be made that Putin will have to deal with more democracy than Russia has had to cope with in its history.

He will probably have to compromise with several minority parties before he will even know who his governing coalition is. In addition, significant opposition parties will also remain in place to heckle his every move.

Putin is a strong man, but that does not mean that he will be Russia’s strongman in a despotic sense. In fact, he couldn’t even if he wanted. There have been bumps in the road and ongoing issues, but Russia has been on a course toward open markets and democracy for more than 20 years. Putin not only knows that, but he will face the situation head on when Russians go to the polls next month and speak for themselves.

This post originally appeared at The Christian Science Monitor.

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You know you messed up when the person who succeeds you is your exact opposite. 

This is exactly what happened to the tale of Silvio Berluscioni’s fall from grace only to find the quintessential un-Berlusconi figure waiting to take his place: Mario Monti will lead Italy in a new technocratic government.

And it seems he already has the support — Italian debt markets showed a slight rebound last Thursday as news circulated “Super Mario” is the front-runner for PM.

With ties to every major business in Italy, it’s no surprise Monti was able to gather a huge support system in such a short period of time. The Italians have decided that the new PM would have to be the exact opposite of Berlusconi in order to deal with Europe’s 1.9 trillion in euro debt — and save themselves a fate similar to Greece.

Monti is also very well connected to international organizations and corporations, like Goldman Sachs, whom he once advised.

It began on Wednesday when President Napolitano appointed him as a senator-for-life after a “courtesy visit,” reported NPR. The next day, Berlusconi wished Monti success “in working in the interests of the country.”

“[Wednesday's] events confirmed our view that the most likely outcome of the political crisis will be a bipartisan coalition government, headed by Mario Monti,” wrote economists at UniCredit Bank in Milan. “This is the option we and the markets would prefer.”

After the Italian parliament met over the weekend to approve the 2012 budget program with new growth measures, Berlusconi handed over his resignation. As predicted by a UniCredit analysts on Thursday, Monti was the new PM by Sunday. 

A Monti government would “definitely have the ability to attract a broad political consensus and to push ahead a reform agenda more in line with the requests coming from the international institutions and the ECB,” a UniCredit analysts told Market News International.  

Along with different strategic management innovations, we hope Monti also tries to stay out of scandals that’s plagued Berlusconi the past three years.

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Bull

+ The Greek saga ends with the inauguration of a new coalition government; positioned to swiftly ratify the EU bailout package.  Italy’s Senate approves economic reforms needed to bring back confidence into markets.  Berlusconi will be out and Monti in.  The bears never thought it could happen.  Officials came through in the clutch.  They will not let the Euro fail.  Italian yields collapse to 6.4-6.5% and well away from the danger zone of 7%.  Slowly but surely the largest headwind for the global economy is weakening on the back of strong and decisive policy actions.  With the Eurozone contagion contained, “we’ll have a slowdown in the world economy, but a manageable one.”   

+ Chinese inflation is in a lucid downtrend and sets the stage for additional easing from officials.   The Year over Year (YoY) change in CPI for October prints inline with expectations at +5.5% vs. +6.1% in September and +6.2% in August.  The good news is reinforced by the PPI reading, sinking to +5.0% YoY vs. +5.7% expected.  The soft-landing is materializing before our eyes.  There are absolutely no signs of a hard-landing.  While domestic investment growth may slow, consumption is charging to take its place.  The bears are in for a shock and the bull market will reignite, running shorts over.  Chanos will have egg on his face.  

+ October shows clear improvement in manufacturing as per the American Association of Railroads.  UPS CEO Kurt Kuehn states that he believes the holiday shopping season “will be solid”.  University of Michigan reports that consumer sentiment has recovered to highs last seen in June with a reading of 64.2 in November, vs. 60.9 in October and 61.5 expected.  Momentum in consumer spending has led to increased demand to restock inventories.  Jobless Claims fall under 400K and to the lowest in 7 months.  Finally, exports hit an all-time high in September.  Obama’s pledge to double exports by 2015 is proving prophetic.  The U.S. economy is resistent to recession in Europe.

+ The time to buy for the longer-term is now, due to fundamental, valuation, technical, and sentiment factors. Problems around the world are obviously recognized and have been priced in.  Furthermore, leaders will do everything to avoid an outcome that would put the global recovery at risk.  Besides, events in Europe really don’t affect earnings or cash flow growth of domestic companies.  The market is trading on sentiment/psychology, not fundamentals.  The U.S. economy has proven that it’s resistent to a Eurozone slowdown.  A Santa Claus rally is coming as Europe headwinds weaken.

+ ”On a four quarter trailing basis, earnings for the S&P 500 are set to total $94.77 (Operating Earnings), which would eclipse the old record of $91.47 set in Q2 2007.”  Folks, the S&P 500 is now trading at only 11.6 times next years earnings of $108.01 and at 13.7 times trailing twelve month earnings.  Should normalcy in PE ratios return (15), the S&P 500 would rally roughly 14 and 30% respectively from 1,250.  For the bears, does the graphic below look like a V-shape recovery to you?  With a Eurozone resolution slowly but surely coming and a China soft landing, 2012 will be another record year for U.S. corporate profits.  The time to buy is now as this realization begins to hit in early 2012.  

Bear

- Political risk continues to grow.  Eurozone governments are becoming sclerotic and ineffable sell-offs in financial markets are boarding on panic.  This time German citizens are asking for a referendum.  Merkozy lays the first hints of a restructured Eurozone (ie the Euro in its current form would be finished) —only to fervidly deny it less than 48 hrs later (what is this high school?).  Slovakia openly ponders a Eurozone split as well.  Italy’s 10-yr yield surpasses the 7% level, while the entire Italian bond yield curve inverts.  100% of the time a country’s 10-yr yield has surpassed this level, they’ve requested a bailout.  But Italy is too big to save.  The ECB would need to print with reckless abandon.  However, Germany has said no to the idea (can you blame them after Weimar?).  Besides, inflation is already running hot in the country.  The first EFSF bond-issue receives tepid demand and officials now warn that the EFSF will probably be reduced in size (no longer €1 Trillion in firepower).  An odd sequence of events culminates with S&P maintaining France’s AAA rating with a stable outlook; the market gainsays that distinction with OAT/Bund spreads hitting Euro-era highs.  Let’s not forget the Bonos/Bunds spread; it just hit an Euro-era high as well.

- European economic data disappoints and signals that the region is plunging into recession.  German industrial production falls 2.7%, while Eurozone retail sales fall 0.7%.  Both indicators post their 2nd consecutive decline.  France is entering recession, yet officials are implementing austerity.  Good luck with that.  Italian industrial production falls in September; a “national unity” government, which has the bulls all giddy, is about to make it worse.  Spain’s feeble recovery stalls.  Bulls are hoping (there’s that word again) for a mild recession in the region.  Really?.        

-  U.S economic data refutes bullish hopium…again.  Corelogic reports a second consecutive decline in home prices and they expect the trend to continue.  Delinquencies and foreclosures are back on the rise.  Fannie Mae requests aaaaaaaanother bailout, this time $7.8 billion (a few days after Freddy Mac requested its pound of taxpayer flesh).  1/3 of all mortgaged homes are underwater.  The NFIB Small Business Optimism index remains in recessionary territory, coming in at 90.2 for the month of October vs. 88.9 the prior month.  To put this reading in perspective, the average recessionary reading is 92, while the average expansion reading is 100.  The ECRI sticks to its guns.  Recession is a “fait accompli” according to them.

- Chinese data confirms a “synchronized global slowdown” taking place with exports plunging 7.1% MoM.  The YoY growth rate falls to 15.9% YoY in October vs. 17.1% YoY in September, the lowest in almost 2 years.  Weakness will continue.  Lets not forget that exports account for roughly 30% of their economic structure.  Auto sales for October implode 7+% and shows that the consumer is weakening.  Consumption makes up roughly 35% of China’s economy.  Furthermore, a property bubble is in the process of popping and will precipitate a collapse in fixed-investment, which accounts for roughly 50% (source IMF) of Chinese economic growth.  If the U.S. and Europe go into recession (Europe’s already in one), China will undergo a hard-landing, plain and simple.      

- The QE printing train continues in earnest with Swiss National Bank’s chief Phillip Hildenbrand reaffirming his commitment to defend the 1.20 level.  Remember how the UK did its own QE?  Well, it’s not working.  The bulls are in for a rude awaking when Bernanke unleashes QE3 only to have the U.S. economy go into recession anyways.

- The Wall of Worry has crumbled and has given away to a Slope of Hope.  Investors are enthusiastically awaiting the famed Santa rally.  The margin of error for Eurozone officials is very thin.  There better not be any “unexpected” bad news in the coming weeks.

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