Posts Tagged ‘Prime Minister’
European Stocks, US Futures Fall As Greek Debt Negotiations Stall
Stock markets across Europe are are falling early in the trading session. The Euro Stoxx 50 is down 0.8%.
Britain’s FTSE 100 is down 0.5%.
Germany’s Dax 30 is up 0.5%.
France’s CAC 40 is down 1.0%.
Spain’s IBEX 35 is down 0.8%.
Italy’s FTSE MIB is down 0.6%.
Greek debt swap negotiations made little progress over the weekend and will continue today. Prime Minister Lucas Papdemos set a Monday deadline for the a final deal. Greece may lose access to future bailout funds if an agreement isn’t reached, which would put the country at risk of a default in the coming weeks and months.
Meanwhile, U.S. futures are also selling off. Dow futures are down 64 points and S&P 500 futures have dropped 8 points.
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See Also:
- REPORT: Papademos Is Considering Resigning If He Can’t Get Support For New Austerity Measures
- GREECE: WE HAVE JUST HOURS TO STRIKE A DEAL
- Here’s The Real Problem With Getting The Greek Deal Done
GREECE: Debt Deal Talks Will Continue Through Monday
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
A Special Note On The Absolute Stupidity Of The Expansionary Austerity Movement
We’ve written quite a bit here about how mind-numbingly stupid the idea of austerity is. My reasoning is simple: government spending is a component of the GDP equation (which is C+I+(X-M)+G). This equation has been around a long time, and is a basic component of macro-economics. Under the basic concepts of math, if you lower a value in an equation that involves addition, you wind up with a lower total number on the other side of the equals sign.
In addition, we have a ton of data from the existing attempts to use this idea that it really doesn’t work. Here’s a post I wrote a little bit ago titled, “this is not what socialism looks like.” In the US, government spending at the state level has been contracting for 6 of the last 8 quarters. Guess what? It’s subtracting from overall US growth. We’re not the only country to experience this first hand: we’ve also see it happen in the Baltic Statesand Ireland. And of course, China spent massively to avoid the effects of the recession and their economy has grown at a very strong pace, proving the point from the opposite side of the argument. Then of course, there was the US experience during the Great Depression when we saw growth rates of around 10% for three years straight and then 5% the following year thanks to government spending. And, as I’ve noted in my history projects, Korean War spending shifted the US economy into overdrive in the early 1950s (see here, here andhere).
Now we have more data that shows how stupid austerity is, this time coming from England. First, this outcome was projected to happen, as reported by Bloomberg on July 13, 2010:
U.K. Prime Minister David Cameron’splanned budget cuts increases the chance the economy will slipback into recession, said Geoffrey Dicks, who heads economicforecasting at Britain’s new fiscal watchdog.
Responding to questions during a parliamentary hearing inLondon today, Dicks said measures proposed in the June 22 budgetled his office to shave 0.5 percentage points from its growthforecast in the “near term.” His Office for BudgetResponsibility predicts an expansion of 1.2 percent in 2010.
“There are some budget measures which will have reduceddemand,” Dicks told the Treasury Committee, which scrutinizeseconomic policy. “The near-term outlook for GDP is not as goodas it was before the budget. I still don’t think that will meana double dip, but logically the chances of that happening haveincreased.”
Someone in the British government knows their macro and someone doesn’t. Guess who? From Professor Brad DeLong:
Yep. This many months after the start of the Great Depression, the British economy was rapidly converging back to its pre-depression level of production under Chancellor of the Exchequer Neville Chamberlain’s policy of using stimulative policies to restore the price level to its pre-Great Depression trajectory.
By contrast, the Cameron-Osborne policies of expansion-through-austerity have produced a flatline for real GDP, and the odds are high that British real GDP is headed down again.
In less than a year, if current forecasts come true, the Cameron-Osborne Depression will not be the worst depression in Britain since the Great Depression, but the worst depression in Britain… probably ever.
That is quite an accomplishment.
Reality continues to intrude rudely and sharply into the proposals of the austerity crowd. Yet, despite the overwhelming amount of data that disproves their central thesis, they continue to cry for austerity. Obviously, facts, data and logic are meaningless now, as, despite the fact that that we have an overwhelming amount of data, we continue to hear from people who argue on the other side of them. We are clearly through the looking glass in regards our public discourse.
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See Also:
- The US Has Already Lost These Eight Industries To China
- HSBC Chief Economist: Austerity ‘Does Not Deliver’
- 2011 GDP: 1.7%
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Mario Monti Had A Very Austere New Years Eve, Thanks For Asking
In an response to requests from an Italian MP, Prime Minister Mario Monti has given a delightfully detailed account of his New Year’s Eve dinner in an apparent bid to show just how austere he really is.
The account of the soiree is posted (in Italian) on the Governo.it website>
In case you’re wondering, Monti held a “simple dinner of a private nature” between 10pm and 12.15, with Monti shouldering the costs for feeding the 10 guests personally (Monti, by the way, “as the interviewer will remember, has waived the remuneration provided for the positions of Prime Minister and Minister of Economy and Finance.“)
Tortellini, lentils, and sausage were on the menu, which was cooked and served by Mrs. Monti.
Monti had previously been accused by Senator Roberto Calderoli “inappropriate and offensive to the citizens to organize a party using public facilities and personnel,” obviously something of a sore spot for Italians given their previous leader.
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See Also:
- An Italian Couple Are Set To Become The World’s Oldest Divorcees
- A Japanese Tycoon Is About To Fund The Restoration Of This Incredible Ancient Roman Pyramid
- Greece Is Kicking Off The New Year With A Labor Strike
Chancellor warns UK at risk if euro collapses
As the leaders of the European Union’s 27 member states prepare to meet over a possible new EU treaty, the UK’s chancellor George Osborne warned a House of Lords committee that a collapse of the euro would do ‘enormous damage’ to the UK economy.
Mr Osborne also stressed that the damage would be long-term.
Speaking to the House of Lords Economic Affairs Committee he said: “Those who say we would have a year or two of hardship then bounce back out of it, are maybe somewhat optimistic.
“There would be a significant drop in UK GDP if the euro were to fall apart.”
Mr Osborn said that the government is making contingency plans in case the worst happens and the euro collapses, but warned that this would only have limited effect.
The Prime Minister today said he would not hesitate to veto an EU deal at the Brussels summit if it was not in the best interest of the UK.
EU leaders will discuss France and Germany’s plans for a new treaty which would strengthen the fiscal rules for the 17 member states using the euro, including budgetary oversight and common corporation and financial transaction taxes.
Although the UK does not use the euro, the EU treaty cannot be changed without the support of all EU member states, including the UK.
In exchange for the UK’s support, Mr Cameron has pledged to secure safeguards on financial regulation and for the single market.
“So in return for the treaty that they want – to sort out the problems of the eurozone – I want to make sure we get a good deal for Britain, we keep our markets open and we have the power here in the UK to make sure that our top industries are properly promoted and enhanced,” he said.