In Greece, Restlessness Amid a Push for Cuts

The following is an excerpt from an article in:


The New York Times
Tuesday, September 18, 2012

In Greece, Restlessness Amid a Push for Cuts

By LIZ ALDERMAN

ATHENS — Public opposition to austerity budgets deepened in Greece on Monday, with judges stopping work, doctors going on strike and public transport staff and schoolteachers planning action for later this week. The moves are a prelude to a general strike called by the country’s main labor unions for Sept. 26.

The protests are gaining steam even as Europe’s fears of a Greek exit from the euro zone seem to be subsiding. On Monday, Chancellor Angela Merkel of Germany said she wanted Greece to stay in the euro union, reiterating what appears now to be her steadfast position after months of hesitating on the issue. “I think that everyone who is politically sensible will want that, too,” she said during a news conference in Berlin.

The Greek prime minister, Antonis Samaras, renewed efforts on Monday to come up with a tough new 11.5 billion euro ($15 billion) austerity package. The additional cuts are needed to meet the terms of Greece’s 130 billion euro bailout and to unlock a 31.5 billion euro loan installment that Athens hopes to receive in October to stay solvent.

Faced with rising discontent, Mr. Samaras has been asking Greece’s international creditors for more time to impose any new cuts, lest the economy, which contracted by 6.2 percent in the second quarter, sink further.

For more, visit www.nytimes.com.

European Central Bank May Get an Enforcement Role

The following is an excerpt from an article in:


The New York Times
Thursday, September 13, 2012

European Central Bank May Get an Enforcement Role

By JACK EWING

FRANKFURT — To the European Central Bank’s existing duties — bulwark against inflation, lender of last resort, ultimate guardian of the euro — add another task: top cop for the euro zone’s banking system.

If the European Parliament and euro zone member states approve a plan presented on Wednesday by the European Commission, at the beginning of next year the central bank will become chief regulator of all banks in the euro zone, with the power to impose fines, remove top executives and even revoke banking licenses.

The central bank would supersede national regulators, which have been accused of being overly protective of the banks they oversee and reluctant to require the lenders to grapple with their problems.

But before the central bank can begin to tackle the task of regulating the more than 6,000 credit institutions in the euro zone, new staff members must be hired, money must be allocated and a clear structure must be developed to coordinate its work with the national regulators that will continue to handle most of the day-to-day tasks. No one yet has even rough estimates of how many people or how much money the central bank will need to perform the new role.

Even though the European Commission’s proposal for a banking union is a big leap, it does not grant the central bank powers on a par with those of United States banking authorities like the Federal Deposit Insurance Corporation. Under the current plan, the central bank would not have the resources needed to prevent bank runs or the authority to arrange a decent burial for a terminally ill institution.

The plan for a banking union is a work in progress, assembled in the midst of a fast-moving crisis. It is doubtful whether the central bank’s supervision of banks will do much to ease tension in the euro zone, though it might help in the future.

“They need to develop their specific operational expertise,” said Jörg Rocholl, president of the European School of Management and Technology in Berlin. “I think of this as a long-term project that can prevent the next crisis from happening, to break this nexus between banks and states.”

The plan outlined by the European Commission would, if ratified, give the central bank new supervisory powers on Jan. 1. But it is likely to take six months from that date for the central bank to build up the capacity to regulate just the biggest, cross-border banks in the euro zone. It could be a year before it is able to supervise all the banks.

For more, visit www.nytimes.com.

Central Banker Facing a Test

The following is an excerpt from an article in 

The New York Times
Wednesday, August 29, 2012

Central Banker Facing a Test

By LANDON THOMAS Jr.

LONDON — Mario Draghi, the president of the European Central Bank, has helped the euro zone survive August. But can he save September?

This month, Mr. Draghi stared down bearish international traders who were convinced that Europe’s common currency project would collapse.

“It is pointless to bet against the euro — it is pointless to go short on the euro,” Mr. Draghi said at a news conference on Aug. 2, a week after telling the world that the central bank would do “whatever it takes” to save the euro union.

Investors, or at least the ones venturing into the lightly traded markets this month, have taken heed.

Since Aug. 2, the euro is up 3.1 percent against the dollar. More notably, battered stocks and bonds in Spain and Italy have soared. The euro bears have rushed to close out their negative bets, and even some risk-averse traders have piled into assets they previously scorned.

But it will be September and not the lazy days of August that will truly test Mr. Draghi’s market-moving mettle. He will face severe pressure to provide specific details of his plan to shore up the euro zone’s weaker members by buying their bonds.

The first big test could come next week, on Sept. 6, when the bank’s governing council meets. Afterward, Mr. Draghi will again hold a news conference to try to explain whatever the central bank has or has not done. Bearish traders will be poised to pounce yet again on any signs of waffling.

Worries are also swirling that Germany will refuse to grant Greece the time and resources it is seeking to reduce its debt, something that could push it out of the euro currency bloc. Looming as well is the possibility that a decision from Germany’s Constitutional Court, expected on Sept. 12, will rule out German involvement in the region’s new bailout fund, the European Stability Mechanism.

The schism within German policy circles has been revealed in recent days. In an interview with the magazine Der Spiegel on Sunday, the head of the German central bank, Jens Weidmann, who is also on the European Central Bank Governing Council, fiercely criticized any intervention by the European bank in bond markets.

But on Monday, Jörg Asmussen, a German on the E.C.B.’s executive board who was a colleague of Mr. Weidmann in the government of Chancellor Angela Merkel, said during a speech in Hamburg that the bank had to buy bonds to stabilize European debt markets.

For more, visit www.nytimes.com.

In Euro Crisis, Fingers Can Point in All Directions

The following is an excerpt from an article in 

The New York Times
Saturday, August 25, 2012

In Euro Crisis, Fingers Can Point in All Directions

By JACK EWING

FRANKFURT — The debate about how to distribute the cost of preserving the euro often centers on a fundamental question that is unspoken but implicit: Who caused this crisis anyway?

A hint: It wasn’t just the Greeks.

In Germany, however, the prevailing stereotype is that the dissolute Greeks squandered the privileges of euro zone membership. There is a palpable resentment among German taxpayers who feel they are being asked to pay for the sins of the Greeks as well as the Spaniards and Italians.

It is, of course, not that simple. While it is true that a series of Greek governments bears a large share of the guilt for the euro crisis, for mismanaging their economy and finances, there are plenty of other culprits. They include the German and French banks that lent Greece money and fueled the Spanish housing bubble, and the European political leaders who, more than a decade ago, introduced the euro even though they knew it had basic flaws.

The circle of perpetrators could also include the fickle bond investors who underpriced the risk of Greek debt before 2010 and whose volatile reaction to even minor events has lately been wreaking havoc with Spanish and Italian borrowing costs and, by extension, those countries’ economies. It could include the bank regulators and national governments that created incentives for European banks to load up on European government bonds.

The popular debate, though, seems to revolve around cultural stereotypes. The southerners are dolce vita spendthrifts, while the Germans — and sometimes the Finns, Austrians and Dutch — are Scrooges with no sense of European solidarity. Some of the stereotypes are more offensive: the German chancellor, Angela Merkel, has even been portrayed in the Greek and Italian media as a latter-day Hitler.

“The blaming game that dominates the political debate in Europe is a clear indicator that cross-border policy cooperation in Europe has ground to a halt,” said Giancarlo Corsetti, a professor of macroeconomics at the University of Cambridge.

The question of blame was in the air this week as Ms. Merkel, along with the French president, François Hollande, and other euro zone leaders confronted the likelihood that Greece will need more help than it has already received to avoid a chaotic exit from the currency union.

For more, visit www.nytimes.com.

Europeans to Debate Another Bailout for Greece

The following is an excerpt from an article in 

The New York Times
Friday, August 24, 2012

Europeans to Debate Another Bailout for Greece

By STEVEN ERLANGER

PARIS — Vacation is over early this year in the euro zone, with Greece and its shaky future back on the table and Spain waiting in the wings to ask for help from European bailout funds.

The political debate in Germany over the euro has resumed at a heated level, Italy is preparing for a spring election and the new Socialist government of France must come to grips with how it will meet its own deficit targets for next year when growth is close to zero.

“September promises to be pretty dramatic in the euro zone,” said Megan Greene, director of European research at Roubini Global Economics.

The first problem for euro zone leaders is Greece. After two rounds of legislative elections, the Greeks finally gave the center-right leader Antonis Samaras enough votes to form a coalition without the leftist party Syriza, and he has spent the summer trying to find another $14.5 billion in spending cuts and new revenue over 2013 and 2014 to qualify for the next round of bailout money it needs to stay solvent.

Mr. Samaras, citing an ever-deeper recession, is asking for two years more to get the economy growing and increase revenue before hitting deficit targets. Germany’s chancellor, Angela Merkel, seems willing to consider it because she is committed to keeping Greece in the euro zone.

But with German elections next year, there are strong voices in her coalition warning against yet another bailout — a third, for a Greece that never seems to meet its deficit targets — and who suggest that a Greek departure from the euro is no longer out of the question.

To coordinate a response to Mr. Samaras, Ms. Merkel met President François Hollande of France in Berlin on Thursday night for a private, working dinner. Mr. Hollande is a firm supporter of Greece’s remaining with the euro and a vocal opponent of a steady diet of austerity for the suffering countries of the European periphery, not to speak of his own.

In a brief news conference before the dinner, Ms. Merkel said that Greece must stick to its commitments and that she was waiting for a report from the international lenders known as the troika on how Greece was performing. “We will, and I will, encourage Greece to continue on its path to reform, which has demanded a lot of the Greek people,” she said.

For more, visit www.nytimes.com.

Referendum on Europe Gains Support in Germany

The following is an excerpt from an article in 

The New York Times
Sunday, August 19, 2012

Referendum on Europe Gains Support in Germany

By MELISSA EDDY BERLIN — It has become the buzzword of the summer in Berlin: referendum. The foreign and finance ministers as well as opposition leaders have all come out in favor of allowing Germans to have a direct say in whether to give up more power to European Union institutions.

Although the idea of a referendum is for the moment more notional than concrete, it is gaining currency in Germany’s political debate. Approving it would amount to the exceptional step of a national vote to change the Constitution to allow Germans to relinquish some executive authority to Brussels.

Proponents say that if such a referendum were approved, it would send a strong signal of Germany’s commitment to the euro. It would also streamline the steps needed to save the common European currency, they argue, and appease mounting complaints by Germans that even as they are being asked to pay more to bolster or bail out their troubled euro zone partners, they have no say in where their taxes are flowing or how they are being spent.

Such a referendum comes with the built-in risk that Germans could vote against Europe, with potentially damning consequences for the common currency and the future of the European Union.

Chancellor Angela Merkel has consistently promoted a vision of “more Europe” as the answer to the euro crisis, meaning tighter integration but also stricter oversight of European fiscal policy. Currently, steps in that direction have ended up in Germany’s highest court, facing legal challenges from opponents who say that handing over more money and authority to the European Union violates the country’s Constitution.

On Sept. 12, the high court is poised to rule on the constitutionality of the fiscal pact arduously negotiated among European Union members that is the cornerstone of Ms. Merkel’s plans. It will also rule on the legality of Germany’s $27 billion commitment to back up a permanent bailout fund for the union.

Should the challenge prevail, and German support be withdrawn, it would almost certainly doom the project of greater integration and send a potentially calamitous signal to financial markets looking for urgent steps to buttress troubled euro zone economies. Both measures passed the German Parliament by a clear two-thirds majority on June 29, but they were immediately challenged in court by dissenting lawmakers, delaying them from taking effect as envisioned on July 1.

Proponents of a referendum argue that changing the Constitution would avoid such delays, and the frustrations that accompany them.

For more, visit www.nytimes.com.

For Europe’s Economy, a Lost Decade Looms

The following is an excerpt from an article in 

The New York Times
Friday, August 17, 2012

For Europe’s Economy, a Lost Decade Looms

By JACK EWING

FRANKFURT — The euro zone is hurtling back into recession, economists declared after official figures this week portrayed a shrinking economy. But by some measures the downturn has been under way for years.

With the exception of Germany, none of Europe’s biggest economies have returned to the level of economic output they had at the beginning of 2008, before the subprime mortgage crisis in the United States spread across the Atlantic, according to calculations by two U.S. economists, Peter Rupert and Thomas F. Cooley.

The figures suggest that Europe is already well into what could become a lost decade — a period of pernicious stagnation and wasted potential that could have lasting effects on ordinary citizens.

Economic growth not realized represents investments in education that were never made, research that was never financed, businesses that failed and careers that ended too early or never got off the ground.

“There are larger implications that people don’t think about,” said Mr. Rupert, a professor of economics at the University of California, Santa Barbara. “There is a huge decline in human capital.”

Just what marks the beginning and end of a recession is not always easy to define. One common definition is two consecutive quarters of falling output. By that standard, the euro zone is technically not yet in a recession.

Most economists agree, though, that a recession is also defined by other indicators like unemployment, industrial production and investment. The closest thing Europe has to an arbiter on the question is a committee of prominent economists convened by the Center for Economic Policy Research, a research organization in London.

By the committee’s reckoning, the euro zone’s last recession ended after the second quarter of 2009, the point at which the region hit bottom and began to grow again. The economists’ panel, known as the Euro Area Business Cycle Dating Committee, has not yet begun to consider whether the euro zone is in recession again. But few people would argue that Europe, stricken by a self-inflicted debt crisis that began in 2010, has basked in prosperity recently.

For more, visit www.nytimes.com.

Man Indicted for Hurricane Katrina Fraud

News release from the FBI, Honolulu Division:

Kailua Man Indicted for Hurricane Katrina Fraud

U.S. Attorney’s Office January 25, 2012

District of Hawaii (808) 541-2850

— filed under: Fraud, Honolulu Top Stories, Press Release

HONOLULU—A federal grand jury returned a 28-count indictment today against Kailua (Oahu) resident Dan Doyle, age 54, for an investment fraud scheme marketed primarily on AM radio financial shows airing in California. Florence T. Nakakuni, United States Attorney for the District of Hawaii, and Frank Montoya, Jr., Honolulu FBI Special Agent in Charge, announced the indictment of Doyle on 27 counts of wire fraud and one count of mail fraud relating to real estate projects designed to rebuild affected areas of Mississippi following the destruction of Hurricane Katrina.

The indictment describes a program known as the “Gulf Opportunity Zone” (“GO Zone”) implemented by the federal government to provide tax incentives to real estate investors and developers seeking to build affordable housing in the Gulf region following the August 2005 devastation of Hurricane Katrina.The indictment also alleges:

• Doyle owned and operated a business in Kailua using names including Investment Real Estate Network and Investment Radio Network. From late 2007 through December 2009, DOYLE allegedly purchased air-time on California talk radio stations to broadcast “radio infomercials” that he hosted and produced touting the benefits of Mississippi “GO Zone” real estate investments. Listeners to the programs were encouraged to call DOYLE’s office in Kailua for investment information.
• When potential investors called Doyle’s Kailua office, they were allegedly encouraged to wire transfer a refundable deposit to Doyle’s business bank account in Hawaii.
• Seventeen individuals wire transferred or mailed over $890,000 to DOYLE in Hawaii as deposits for “GO Zone” investments that were never built.
• Instead of preserving the money for potential refunding, DOYLE spent investor money on unrelated personal and business obligations including mortgage payments on his Kailua home and yachting expenses, according to the indictment.

For each of the wire and mail fraud counts, DOYLE faces a maximum period of imprisonment of 20 years, plus possible fines of up to $250,000 and terms of supervised release of up to three years. The court issued a penal summons for DOYLE to appear in federal court for arraignment An indictment is only an accusation and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.