European Economy

10

French far-Right trounces regional elections

From the BBC: France’s far-right National Front (FN) appears to have made big gains in the first round of regional elections, estimates show. They put the FN ahead in at least six of 13 regions in mainland France. The elections are the first electoral test since last month’s Paris attacks, in which 130 people were

0

What to expect from the ECB

Via UBS: Quantifying the amount of QE/QE2 that is currently priced into the market is clearly a subjective exercise. Nevertheless we have given it our best shot. Overall, we believe that the market is currently pricing in a €8.5bn increase in monthly sovereign purchases and an extension of QE by 3-6months. Media surveys of market

25

Will ISIS break the euro?

A new risk for 2016/17 is rising. No, it’s not terrorism but it is its abominable offspring, from The Independent: Meet “le Front National”. They call their leader “our Joan of Arc”, the saintly heroine who has come to lance the Muslim peril and slay the Brussels hydra. And to her supporters, Marine Le Pen,

7

Greece deja vu

by Chris Becker Change is no change in Greece, with the return to power of Syriza, still led by Alexis Tsipras over the weekend in a snap general election. From Bloomberg: The former prime minister’s Coalition of the Radical Left, or Syriza, received 35.5 percent of the vote, according to an official projection by the

9

Draghi keeps helicopter spinning

by Chris Becker Last night the ECB had its monthly interest rate meeting and kept rates at historic lows, as expected. Further to that, ECB President Mario “whatever it takes” Draghi stated the bank was ready to “revamp” its QE program including an expansion of the stimulus as economic growth and inflation forecasts continued to

4

Greece finally gets a Grexit party

From Bloomberg: A group of Greek lawmakers opposed to the country’s bailout program abandoned the governing party, Syriza, as Prime Minister Alexis Tsipras moved to force an early election to shore up his position. The lawmakers, whose names were read out on Friday by a deputy parliament speaker on television from Athens, will be called

3

Tsipras calls snap election

From the FT: Greece is to hold a snap general election after prime minister Alexis Tsipras resigned and asked the Greek people to pass judgment on the latest bailout deal. In a televised addressed, the leader of the leftwing Syriza party said he would tender his coalition government’s resignation to Greece’s president, triggering the sixth

27

Yanis spills more in The Monthly

From The Monthly in a sccop: Let me just describe the moment after the announcement of the result. I made a statement in the Ministry of Finance and then I proceeded to the prime minister’s offices, the Maximos [also the official residency of the Greek prime minister], to meet with Aleksis Tsipras and the rest of

4

IMF pulls the plug on Greece

From France24: The International Monetary Fund said Thursday it would not join a new bailout program for Greece until conditions for debt sustainability, including debt relief and economic reforms, are clearly assured. “In order to ensure medium-term sustainability, there is a need for difficult decisions on both sides … difficult decisions in Greece regarding reforms,

9

Mirabile dictu: Greece did prepare Drachma

Yanis Varafoukis is not finished it seems, from ekathimerini: Former Finance Minister Yanis Varoufakis has claimed that he was authorized by Alexis Tsipras last December to look into a parallel payment system that would operate using wiretapped tax registration numbers (AFMs) and could eventually work as a parallel banking system, Kathimerini has learned. In a

20

What a splendid currency is the euro!

From Citi: The Euro Summit proposal does not include a clear commitment to debt restructuring, and essentially blames previous policy failures for Greece’s ‘insurmountable’ debt problems. It notes that “there are serious concerns regarding the sustainability of Greek debt. This is due to the easing of policies during the last twelve months, which resulted in

13

The Greek resolution, such as it is

Starting back in 2011 I posted rather frequently about the macroeconomic situation in Europe. My basic premise for what we would see in its future was best summed up with the following sentence. Periphery nations weakening, France in the middle, Germany outperforming, but the whole ship slowly sinking. Given recent history that seems to have

48

Greek bailout moves forward

The pillaging of Greece moved forward overnight with progress across a range of measures. The EFSM bridging loans are falling into place: The EU is tomorrow likely to approve the use of the European Financial Stabilisation Mechanism (EFSM) to provide a €7bn bridge loan to Greece to hold it over until its full bailout programme is agreed. Non-Eurozone

30

Greece deal under intense assault

The IMF raised the heat on the Greek bailout last night releasing a statement that they want out of the deal, maybe pressured by the US, unless there is debt relief. They also said they informed the EU of their position prior to negotiations with Greece and it would appear they were openly ignored. Without

50

Greek humiliation deepens

The IMF can see just how bad is Greek humiliation, from Reuters: Greece will need far bigger debt relief than euro zone partners have been prepared to envisage so far due to the devastation of its economy and banks in the last two weeks, a confidential study by the International Monetary Fund seen by Reuters

52

Greece chooses violence

The Greek deal has been struck with complete national humiliation its core principle, including the transfer of 50 billion euros in state-owned assets abroad. The deal is far worse than that rejected in the referendum ipso facto it has an ice block’s chance in Hell of surviving domestic politics. Indeed, violence is now the base case. Bloomie has

13

Greece writhes

From ekathemerini: Greek Prime Minister Alexis Tsipras is set to begin a bruising week by clearing out party rebels opposed to an austerity package that will have to go through parliament within days, people close to the government say. With Greece’s future in the eurozone in the balance and European partners demanding immediate action to

44

Greece brought a latte to a gunfight

The weekend’s European news could not be more extraordinary. A superb opinion piece by Yanis Varafoukas in The Guardian brought everything to a head: In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming

17

And now for Grexit

Not much to report on Greece today except to say that not much has changed. The Greek Government is preparing a proposal that Germany is unlikely to accept. Here are a couple of useful flow charts, first from Deutsche via Zero Hedge on negotiations: Grexit looks the more likely to me. And from Bloomie on the key dates:

11

Grexit front and centre

The US doesn’t want a Grexit, from the FT: US Treasury secretary Jack Lew has raised the pressure on European leaders to grant some debt relief to Greece to help avoid its exit from the eurozone and what Washington sees as an unnecessary hit to the global economy. Warning that a Greek meltdown would cause hundreds

7

Do not trust markets on Grexit

From the FT: Athens is to submit a new proposal to eurozone authorities for a third bailout by Wednesday morning after Greek negotiators stunned some eurozone finance ministers by arriving at their meeting without a revised economic reform proposal. Despite the apparently abortive start to what had been billed as a last-ditch effort to salvage

95

EZ gives Greece one last chance, lol

From the FT: Athens will be given a final chance to present a new reform plan to eurozone leaders on Tuesday night despite a hardening attitude to Greece in many capitals after the emphatic rejection of previous bailout terms in Sunday’s referendum. But eurozone officials said leaders were unlikely to agree to restart rescue talks

111

Yanis driven out

Fresh from the blog of Yanis Varoufakis: The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage. Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore,

121

Greece mulls printing counterfiet euros

From Ambrose Evans-Pritchard: Top Syriza officials say they are considering drastic steps to boost liquidity and shore up the banking system, should the ECB refuse to give the country enough breathing room for a fresh talks. “If necessary, we will issue parallel liquidity and California-style IOU’s, in an electronic form. We should have done it

163

Greece says “no” in landslide

With 60% of the Greek referendum vote counted it appears to be over: Who could have known that a sovereign people would tell a foreign power with whom they were previously at war to shove their blackmail demands? Here is Deutsche with where we go from here: NO, Scenario #N1. Soft deal This, in our

69

Your Greek primer

It appears the Greek referendum that begins today is too close to call: From Credit Suisse via Forexlive here’s the scenarios: 1- “Victory of the “No” camp, would immediately cast markets in uncharted territory. The vote alone might not necessarily trigger a systemic reaction, but we would expect the increase in uncertainty to weigh on

1

Markets go long Greek happiness

The FT makes the Greek situation as clear as is possible: Greece’s prime minister accused Europe’s leaders of attempting to “blackmail” Greek voters, just hours after apparently holding out an olive branch to the country’s creditors by accepting most of the terms of the economic reform plan they had tabled last weekend. Eurozone officials said they