The wheels are coming off the whole of southern
Europe - (www.telegraph.co.uk) Europe’s debt-crisis strategy is near collapse.
The long-awaited recovery has failed to take wing. Debt ratios across southern
Europe are rising at an accelerating pace. Political consent for extreme
austerity is breaking down in almost every EMU crisis state. And now the US
Federal Reserve has inflicted a full-blown credit shock for good measure. None
of Euroland’s key actors seems willing to admit that the current strategy is
untenable. They hope to paper over the cracks until the German elections in
September, as if that is going to make any difference. A leaked report from the
European Commission confirms that Greece will miss its austerity targets yet
again by a wide margin. It alleges that Greece lacks the “willingness and
capacity” to collect taxes. In fact, Athens is missing targets because the
economy is still in freefall and that is because of austerity overkill. The
Greek think-tank IOBE expects GDP to fall 5pc this year. It has told
journalists privately that the final figure may be -7pc. The Greek
stabilisation is a mirage. Italy’s slow crisis is again flaring up. Its debt
trajectory has punched through the danger line over the past two years. The
country’s €2.1 trillion (£1.8 trillion) debt – 129pc of GDP – may already be
beyond the point of no return for a country without its own currency.
As Detroit teeters on bankruptcy, creditors are
left holding the bag - (www.washingtonpost.com) After
decades of sad and spectacular decline, it has come to this for Detroit: The
city is $19 billion in debt and on the edge of becoming the nation’s
largest municipal bankruptcy. An emergency manager says the city can make good
on only a sliver of what it owes — in many cases just pennies on the dollar. A
decision about whether to file for bankruptcy is widely expected this month. Detroit’s dire fiscal condition is sending ripples of concern through the
normally placid capital markets that all state and local government rely on to
raise cash for everything from road improvements and school roofs to libraries
and parks. Holders of Detroit’s municipal bonds — always touted as among the
safest investment vehicles — are being asked to take on staggering losses. It
also has worried the city’s 9,500 employees and nearly 20,000 retirees, who
have much to lose. Under the plan put forward by emergency manager Kevyn D.
Orr, a former D.C. bankruptcy lawyer, retirees will have to absorb significant
reductions in pension and health benefits. The choice before bondholders and
retirees is stark, given that both groups would inevitably face steep cuts in a
bankruptcy.
10
Boomer 'entitlements' today's youth won't have - (www.telegraph.co.uk) HSBC
chief economist Stephen King claims rich Baby Boomers (those born between 1946
and 1964) are behaving like the nobility in the Peasants’ Revolt and risk an
uprising by the younger generation. We look at 10 'entitlements' they have
enjoyed:
• House price boom. Property has been
a staggeringly good investment for Baby Boomers. They own 40pc of the £2.5trn
tied up in property. Even the recession of the late 80s did little to halt the
stellar rise in house prices. It meant Baby Boomers were able to raise
mortgages easily on three times one salary and have seen the wealth in their
homes soar. They were also able to borrow against the equity in their homes to
spend on cars and holidays. One in five Boomers owns a second home.
• Final salary schemes. Many Baby
Boomers had final salary schemes that paid such handsome pensions that
retirement was billed as "the holiday of a lifetime". The expense of
these schemes were so heavy for some businesses that they have increasingly
been closed to new members. The retirement age was also lower.
Bonuses
Given to Bank of America Employees for Home Foreclosures - (www.infowars.com) According to Salon, BOA
employees in the mortgage servicing unit “systematically lied to homeowners,
fraudulently denied loan modifications, and paid staff bonuses” for foreclosing
on peoples’ homes. On June 1, 2012 Obama expanded the Home Affordable Modification
Program (HAMP)
to help struggling homeowners. HAMP was supposed to lower homeowners’ monthly
payments so that they could afford their payments and sustain their home for
the long-term. Instead of providing homeowners with the modifications to their
loans, former employees say BOA used it as a tool, attempting to squeeze out as
much money as possible from the struggling borrowers before eventually
foreclosing on them. Under the program’s guidelines, borrowers were
supposed make “three trial payments before the loan modification became
permanent.” Instead, the borrowers were left making trial payments for up to
one year and were then rejected for “permanent modification.” Homeowners
were left owing the difference between the trial modification and the original
payment.
Portugal
political crisis deepens - (www.reuters.com) Portugal's
president threw the bailed-out euro zone country into disarray on Thursday after
rejecting a plan to heal a government rift, igniting what critics called a
"time bomb" by calling for early elections next year. President
Anibal Cavaco Silva proposed a cross-party agreement between the ruling coalition
and opposition Socialists to guarantee wide support for austerity measures
needed for Portugal to exit its bailout next year, followed
by elections. The surprise move came just when conservative Prime Minister
Paolo Passos Coelho thought he had overcome a cabinet crisis by reaching a deal
to keep his center-right coalition together.
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