Eurozone bailout funds downgraded over France

[Mid]

Eurozone bailout funds downgraded over France
01.12.12


Will France ever pay back its debt? Moody's says there's a "marginal diminution in the certainty" it will do so.
(Photo: wikipedia)

BERLIN - Moody's ratings agency on Friday (30 November) downgraded the eurozone's two bailout funds following a recent similar move on France, the second-largest contributor to the rescue funds.

The European Stability Mechanism, a permanent €500 billion-strong fund established on 9 October, was downgraded to Aa1 - the second-best available rating. Its predecessor - the European Financial Stability Facility due to be phased out next year - was downgraded to a "provisional" Aa1. Further downgrades may follow, Moody's said.

Both funds have France as their second-largest contributor and Moody's on 18 November decided to strip the French state of its top rating due to its sluggish economy and worsening competitiveness compared to Germany.

"The credit risks and ratings of the ESM and the EFSF are closely aligned to those of its strongest supporters," Moody's said. France's downgrade reflects a "marginal diminution in the certainty" Paris will repay its debt and honour its commitment to pay its share to the ESM, Moody's explained.

The ratings agency kept Germany's top rating unchanged. Germany is the largest contributor to the two bailout funds, which are being used for raising money on the markets to fund the bailout programmes for Greece, Ireland, Portugal and Spain.

"Moody's rating decision is difficult to understand," Klaus Regling who chairs both funds said in a statement.

"We disagree with the rating agency's approach which does not sufficiently acknowledge ESM's exceptionally strong institutional framework, political commitment and capital structure," he added.

However, given that Aa1 is the second-best available rating, the downgrade will not "inhibit ESM or EFSF in any way" to issue bonds and borrow money, Regling said.

European Central Bank chief Mario Draghi said during a conference in Paris on Friday that the downgrade will have little effect but that it was a "signal to be taken seriously."

EU law for ratings agencies

Meanwhile, a deal by EU countries and the European Parliament sealed earlier this week seeks to limit the influence of big credit rating agencies.

Moody's, Standard&Poor's and Fitch are the world's three largest agencies and their assessments about the likelihood of whether countries and companies will pay back their debt are central their borrowing rates. If the rating is in the so-called junk category, certain banks and pension funds cannot buy them or accept them as guarantees for other banks' loans.

"Credit rating agencies will have to be more transparent when rating sovereign states, respect timing rules on sovereign ratings and justify the timing of publication of unsolicited ratings of sovereign debt," financial services commissioner Michel Barnier said in a statement.

"They will have to follow stricter rules which will make them more accountable for mistakes in case of negligence or intent."

But some MEPs remain sceptical about how much this EU bill will do in changing agencies' behaviour.

"This reform is no big breakthrough in changing the rating agency market," said German Green MEP Sven Giegold, who was involved in the negotiations.

euobserver.com

[Mid]

looks like Europe best be real polite / nice to the Germans .....................

[Mid]

The challenge of change
Lino Spiteri
Sunday, December 30, 2012

The old year exits leaving the air replete with the challenge of change. In effect, nothing stands still and the world is changing all the time. But the reference now is to particular change, particularly in the international sphere.

The unthinkable is being thought – France might be forced out of the eurozone
- Lino Spiteri

For instance, how is the world’s leading economy going to cope with change from sense to madness. If the President and the Speaker of the House of Representatives do not agree to fundamental taxing and spending change within the next few hours, the US will fall over what has become chillingly known as the fiscal cliff.

This means that taxes will rise for practically everybody while defence spending will fall. Gasping under such a double squeeze American GDP could fall by a massive five per cent.

The spirit of change also continues to haunt the eurozone and the rest of the EU. There are several critical points, all of which taken together count to the question whether the Union as we know it can survive. A gloriously mixed up challenge is taking place in Italy. The premier everybody wanted, Mario Monti, has resigned because the ex-premier nobody now wants, Silvio Berlusconi, does not want him anymore. Will Monti ride back into a glorious new dawn? Or will Italy sink?

The Italian change in the offing is frightening not least because of an outsize chance that Berlusconi might change back into his bold role as reviled Prime Minister.

A bit further up the challenge of change faces France. One of the two main pillars of the EU, along with mighty Germany, France is shivering. Hollande received a terrible inheritance, but he does not seem to be remedying it. Rather, industrialists talk of leaving France. The new President’s popularity has halved to 30 per cent.

The unthinkable is being thought – France might be forced out of the eurozone. That is really the zone’s big one. If the change happens, it would be disastrous since it is likely to be followed by total collapse. Amid all this possibility of unnerving change, the old problems of the euro peripherals seem light by comparison.

And that is before taking into account that Spain, too, is changing the nature of its particular bullfight. Cash strapped and with its back to the sharp horns in many regards, its Prime Minister insists he does not need a bailout from the EU. Well, that breeziness could change and then he and the rest of Europe will know what’s what.

Stepping out of the eurozone into the broader union, the likelihood of change is just as remarkable. One of the other heavyweights of the EU, the UK, is talking increasingly louder of leaving the bloc. Meanwhile within Great Britain there is also talk of Scotland going it on its own.

All this potential change carries myriad implications for Malta, who cannot lift a finger to stop or influence any of the changes listed, except perhaps joining the Vatican in praying for Monti to continue to serve as Prime Minister to restore his country, an important part of the EU, back to health.

Before trying to build scenario strategies for the implications, we have our own packet of change to deal with. Some of it came about already. Unexpectedly, both the Nationalist Party and the Labour Party changed deputy leaders. In both cases, there was dramatic irony involved. In both cases too, the change was presented like a change in leaders.

It wasn’t so, of course. The change is in appeal to the electorate – will the new deputy leaders seem more attractive to particular pockets of electors, starting with the business community and the so-called middle class?

The biggest looming change is the general election. Either of the two possible outcomes will usher in change. If the Nationalists win, Lawrence Gonzi will be changed from a mere mortal into a saint or, if you prefer secular terms, a wizard. He will be canonised and lionised. A statue of him will be built in his lifetime as in the case of that bigger saint, Sir Alex Ferguson.

If Labour wins, Joseph Muscat will immediately be crowned Malta’s youngest king. Canonisation will come later, should he win a second term. The startling reality is that change at the top will change nothing at the bottom. The country’s finances will remain in the same parlous state the bureaucrats at the Treasury know they are in.

The economy will still be split into the good sectors because they are fashionable (services), the bad sectors (declining manufacturing) and the ugly (construction). The remedies, to the extent that they exist, are there for both parties to dip into.

Notwithstanding that static conclusion for the first few days, the supporters of the winning party will change into Brazilian dancers whose wriggling and undulating torsos never seem to run out of steam.

So much change to think about. Except that it doesn’t make me change my own mindset. All this change is predictive and descriptive. How about, for a change, as bit of a deep exercise into prescriptive thinking. Into not waiting for change to happen, but thinking deeply of what change is needed or wanted and considering proactively how to make it happen?

We are thinking about change – the domestic part of it – like old rape. If it’s going to happen, we might as well lie back and enjoy it. Except that it may not be so enjoyable.

We should be less resigned and set about thinking what change we can bring about where it depends on us.

Impossible? No. But it would take a great change in mentality to bring it about.

timesofmalta.com

[Mid]

French Court Rejects 75% Tax Rate For Rich
Sunday 30 December 2012

The French government has vowed to resubmit plans for a 75% tax on the super-rich as it is rejected by the country's high court.


The plans to overhaul French tax rules target the country's super rich

French president Francois Hollande has suffered a fresh setback as the country's highest court threw out his plan to tax the ultra-wealthy at a 75% rate, saying it was unfair.

It had been one of the flagship campaign promises of Mr Hollande's election and the government has vowed to resubmit the measure.

But France's Constitutional Council ruled that the way the highly contentious tax was designed was unconstitutional.

The largely symbolic measure would have only affected a few thousand people who earned over €1m (£817,2350) and brought in an estimated €100m to €300m (£82m to £245m).

But it has infuriated high earners in France, prompting some such as actor Gerard Depardieu to flee abroad, and has led to accusations that Mr Hollande is 'anti-business'.

Finance minister Pierre Moscovici said the rejection of the 75% tax and other minor measures could cut up to €500m in forecast tax revenues but would not hurt efforts to slash the public deficit to below a European Union ceiling of 3% of economic output next year.

"The rejected measures represent €300m to €500m. Our deficit-cutting path will not be affected," Mr Moscovici told BFM television.


Socialist President Hollande has his sights set on the super rich

Prime Minister Jean-Marc Ayrault said in a statement that the government would resubmit the measure to take the court's concerns into account.

The court's ruling took issue not with the size of the tax, but with the way it discriminated between households depending on how incomes were distributed among its members.

A household with two earners each making just under €1m would be exempt from the tax, while one with one earner making €1.2m would have to pay.

The French government approved the tax in its most recent budget, amid criticism by some that it would do little to stem the country's mounting fiscal problems and would drive away the wealthiest citizens.

In recent weeks, Gerard Depardieu - France's most famous actor - announced his intention to turn in his French passport and move to a village in a tax-friendly Belgium.

news.sky.com

[Butterfly]

The unthinkable is being thought – France might be forced out of the eurozone

jesus, who is that fool writing such garbage ? must another euroseptic British idiot

[piwanoi]

All the European economy's have got a lot worse since this video was made

[Rural Surin]

Unfortunately, this European Union has been a mess from the start....all-around.

[piwanoi]

The unthinkable is being thought – France might be forced out of the eurozone

jesus, who is that fool writing such garbage ? must another euroseptic British idiot

I would think that if they had referendum next week in the UK with the simple question "stay in or get out" the Euro sceptic idiots would vote overwhelmingly for "get out" and this to Europe

[Butterfly]

^ and the rest of Europe would too,

enough with the British idiots, kick the fuckers out with Greece,

same same garbage

[Butterfly]

more good news on the British side, they want out, and so do we

BBC News - EU federalists: UK could be 'associate member'

[Butterfly]

5 reasons to kick out the Brits

1. They are British
2. They don't live on the mainland
3. Their head of church is not the Pope
4. They are British
5. They are the backdoor of America and therefore present an Intelligence security threat

[piwanoi]

This is "THE MAN" who says it as it really is

[larvidchr]

There is politics involved in the assessments from the rating agency's, they have been spectacular wrong often in the past, they never saw the sub-prime collapse and the following world economic crisis in 2008 for-instance.

But they have an interest in protecting the US dollar hegemony, and they are fighting the tightening nose the European nations want to put around their neck, and the demands for transparency and ultimately accountability for mistakes and negligence, there is a power struggle going on.

And the English who have lost enormous chunks of their manufacturing industry and now survive on dodgy financial services, and being the offshore tax-heaven for Russian criminals and Arab dictators, they don't want European oversight and taxes levied on same financial services, but they are in a fix because by far most of their trade is with other European nations, responsible English politicians know it would be an economic disaster for England to leave outright and are looking for a soft landing, the Euro scepticism in the English that is both historic, but also to a great extent politically created by irresponsible vote-whores is now biting them in the behind.

England is running a tightrope and is risking to be left behind as a second rate European nation, as the unstoppable Europe train that is already in motion moves on, and England is very far from the power and economic status from the past, and the "we will fight them on the beaches crowd" will get a dose of the harsh new world economic reality, the empire crumbled long ago and now you need a lot of friends to be even remotely competitive with the big new players.

[piwanoi]

There is politics involved in the assessments from the rating agency's, they have been spectacular wrong often in the past, they never saw the sub-prime collapse and the following world economic crisis in 2008 for-instance.

But they have an interest in protecting the US dollar hegemony, and they are fighting the tightening nose the European nations want to put around their neck, and the demands for transparency and ultimately accountability for mistakes and negligence, there is a power struggle going on.

And the English who have lost enormous chunks of their manufacturing industry and now survive on dodgy financial services, and being the offshore tax-heaven for Russian criminals and Arab dictators, they don't want European oversight and taxes levied on same financial services, but they are in a fix because by far most of their trade is with other European nations, responsible English politicians know it would be an economic disaster for England to leave outright and are looking for a soft landing, the Euro scepticism in the English that is both historic, but also to a great extent politically created by irresponsible vote-whores is now biting them in the behind.

England is running a tightrope and is risking to be left behind as a second rate European nation, as the unstoppable Europe train that is already in motion moves on, and England is very far from the power and economic status from the past, and the "we will fight them on the beaches crowd" will get a dose of the harsh new world economic reality, the empire crumbled long ago and now you need a lot of friends to be even remotely competitive with the big new players.

With respect is there any chance of you naming a first rate member of the EU? and just who are the "big players"? and are you saying that its only the UK electorate that is looking at the EU through a jaundiced eye? http://www.bbc.co.uk/news/world-europe-20873202 I suggest you read eurozone in crisis in red just under Merkels photo in the link

[larvidchr]

There is politics involved in the assessments from the rating agency's, they have been spectacular wrong often in the past, they never saw the sub-prime collapse and the following world economic crisis in 2008 for-instance.

But they have an interest in protecting the US dollar hegemony, and they are fighting the tightening nose the European nations want to put around their neck, and the demands for transparency and ultimately accountability for mistakes and negligence, there is a power struggle going on.

And the English who have lost enormous chunks of their manufacturing industry and now survive on dodgy financial services, and being the offshore tax-heaven for Russian criminals and Arab dictators, they don't want European oversight and taxes levied on same financial services, but they are in a fix because by far most of their trade is with other European nations, responsible English politicians know it would be an economic disaster for England to leave outright and are looking for a soft landing, the Euro scepticism in the English that is both historic, but also to a great extent politically created by irresponsible vote-whores is now biting them in the behind.

England is running a tightrope and is risking to be left behind as a second rate European nation, as the unstoppable Europe train that is already in motion moves on, and England is very far from the power and economic status from the past, and the "we will fight them on the beaches crowd" will get a dose of the harsh new world economic reality, the empire crumbled long ago and now you need a lot of friends to be even remotely competitive with the big new players.

With respect is there any chance of you naming a first rate member of the EU? and just who are the "big players"? and are you saying that its only the UK electorate that is looking at the EU through a jaundiced eye? BBC News - Merkel warns Germans of tough economic times ahead I suggest you read eurozone in crisis in red just under Merkels photo in the link

First rate members would be the ones signing on too expand the treaty and give more powers to Brussels, second tier would be countries like Denmark and UK opting out from parts of it and thus have diminished influence when deals and decisions are made.

The big new players are China, India, Brasil and other rapidly expanding big economies etc., obvious to most sane people you are much stronger in negotiations when you represent most of the whole European community rather than a single and in that context small market and economy.

And no you are right, there is other nations who's populations have, (if not so historically inclined to "stand alone" like the English), become unhappy with the EU, notably the Germans who feel they now have to pay over the top to save southern European and former eastern block economies, but I don't think those populations are going to get a say in the matter, the train as said before has left the station and there is no going back.

The Euro-zone economy will manage the crisis IMO, the bad news sensationalists makes it sound worse that it really is.

[piwanoi]

There is politics involved in the assessments from the rating agency's, they have been spectacular wrong often in the past, they never saw the sub-prime collapse and the following world economic crisis in 2008 for-instance.

But they have an interest in protecting the US dollar hegemony, and they are fighting the tightening nose the European nations want to put around their neck, and the demands for transparency and ultimately accountability for mistakes and negligence, there is a power struggle going on.

And the English who have lost enormous chunks of their manufacturing industry and now survive on dodgy financial services, and being the offshore tax-heaven for Russian criminals and Arab dictators, they don't want European oversight and taxes levied on same financial services, but they are in a fix because by far most of their trade is with other European nations, responsible English politicians know it would be an economic disaster for England to leave outright and are looking for a soft landing, the Euro scepticism in the English that is both historic, but also to a great extent politically created by irresponsible vote-whores is now biting them in the behind.

England is running a tightrope and is risking to be left behind as a second rate European nation, as the unstoppable Europe train that is already in motion moves on, and England is very far from the power and economic status from the past, and the "we will fight them on the beaches crowd" will get a dose of the harsh new world economic reality, the empire crumbled long ago and now you need a lot of friends to be even remotely competitive with the big new players.

With respect is there any chance of you naming a first rate member of the EU? and just who are the "big players"? and are you saying that its only the UK electorate that is looking at the EU through a jaundiced eye? BBC News - Merkel warns Germans of tough economic times ahead I suggest you read eurozone in crisis in red just under Merkels photo in the link

First rate members would be the ones signing on too expand the treaty and give more powers to Brussels, second tier would be countries like Denmark and UK opting out from parts of it and thus have diminished influence when deals and decisions are made.

The big new players are China, India, Brasil and other rapidly expanding big economies etc., obvious to most sane people you are much stronger in negotiations when you represent most of the whole European community rather than a single and in that context small market and economy.

And no you are right, there is other nations who's populations have, (if not so historically inclined to "stand alone" like the English), become unhappy with the EU, notably the Germans who feel they now have to pay over the top to save southern European and former eastern block economies, but I don't think those populations are going to get a say in the matter, the train as said before has left the station and there is no going back.

The Euro-zone economy will manage the crisis IMO, the bad news sensationalists makes it sound worse that it really is.

Thanks for your detailed reply ,whatever happens to the EU, the next couple of years are going to prove quite interesting eh!

[Mr Lick]

31 December 2012 Last updated at 03:18 GMT


Merkel warns Germans of tough economic times ahead




Chancellor Angela Merkel is urging Germans to be more patient
Eurozone crisis

• France next?
• Bleak outlook
• Crisis in graphics
• Q&A: Banking union

Chancellor Angela Merkel has warned that the German economic climate in 2013 will be "even more difficult".

In her new year message, she also cautioned that the eurozone debt crisis was far from over.

However, she did say that reforms designed to address the roots of the problem were beginning to bear fruit.

Her comments appeared to contradict German Finance Minister Wolfgang Schaeuble who said last week that the worst of the crisis was over.

In a taped interview to be broadcast later on Monday, Mrs Merkel urged Germans to be more patient.

"I know that many people are naturally concerned going into the new year," she said.

"The economic environment will not in fact be easier but rather more difficult next year. But we shouldn't let that get us down; rather it should spur us on."

She linked future German prosperity to a prosperous European Union.

"For our prosperity and our solidarity, we need to strike the right balance," she said.



More rhetoric from Mein Fuhrer. Not sure how one can balance a sinking ship, as in this case there may not be too many survivors. Painful journeys seem to be stretch forever when leaders are in denial but as it's merely a boost to own their bank accounts then should one really expect any less? Bravo Nigel!