- L'OIT craint un déclin majeur du marché du travail



L'étude d?actualisation statistique conjointe OIT/OCDE précise que l'emploi devrait croître à un taux annuel d'au moins 1,3 % pour retrouver, d'ici à 2015, le niveau d'emploi d?avant la crise.

La récession de l'économie mondiale pourrait se traduire par une pénurie massive d'emplois parmi les pays membres du G20 en 2012, prévient l'Organisation internationale du Travail (OIT) dans un rapport rendu public lundi.
«Nous devons endiguer le ralentissement de la croissance de l'emploi et combler les emplois perdus. C'est maintenant qu'il faut agir», a déclaré dans un communiqué le Directeur général du Bureau international du Travail (BIT), Juan Somavia.
Cette étude a été réalisée conjointement avec l'OCDE, à la demande de la présidence du G20 pour la réunion des ministres du Travail et de l'Emploi qui a lieu à Paris les 26 et 27 septembre.
Si le taux de croissance de l'emploi se maintient à son niveau actuel de 1 %, il ne sera pas possible de récupérer les 20 millions d'emplois perdus dans les pays du G20 depuis le début de la crise en 2008, selon le rapport.
«Nous devons revenir aux promesses de Pittsburgh et de Séoul, à la nécessité de placer des emplois de qualité au coeur de la reprise» a poursuivi M. Somavia.
L'étude d'actualisation statistique conjointe OIT/OCDE précise que l'emploi devrait croître à un taux annuel d'au moins 1,3 % pour retrouver, d'ici à 2015, le niveau d'emploi d'avant la crise.
Ce taux de croissance permettrait de créer 21 millions d'emplois supplémentaires par an, de retrouver les emplois perdus depuis 2008 et d'absorber l'accroissement de la population en âge de travailler.
Cependant, l'analyse s'inquiète de l'hypothèse de voir l'emploi croître à un taux légèrement inférieur à 1 % (0,8%) jusqu'à la fin 2012, se concrétisant par un manque de 40 millions d'emplois dans les pays du G20 pour la seule année prochaine, puis un déficit bien plus important en 2015.
M. Somavia a estimé que «la création d'emplois doit devenir la première des priorités macroéconomiques».
«Il est absolument essentiel de donner la priorité au travail décent, d'investir dans l'économie réelle» et pour cela «nous avons besoin d'une coopération mondiale sans faille» a-t-il insisté.
Le rapport montre également que la protection sociale a joué un rôle significatif pendant la crise dans certains pays en protégeant les plus pauvres et les plus vulnérables.
Si le taux de chômage a reculé dans la grande majorité des pays du G20 l'an passé, ce n'est que modérément, indique le rapport, qui note que le nombre total des chômeurs est encore de 200 millions à l'échelle mondiale, près du record atteint au plus fort de la grande récession.

- La mondialisation déprime l'emploi, selon le FMI


Depuis «la grande récession» de 2008-2009, plus de 200 millions de gens sont au chômage dans le monde.

Le Fonds monétaire international reconnaît que les délocalisations pénalisent durement les classes moyennes dans les pays riches.
Le FMI de Christine Lagarde serait-il devenu altermondialiste? Longtemps, le sujet est resté tabou: que la mondialisation ne fasse pas que des heureux, qu'elle tende à aggraver les inégalités dans les pays riches, chacun le pressentait. Mais c'était un moindre mal. Les inconvénients pesaient peu dans la balance, comparés aux prouesses de la Chine, de l'Inde ou du Brésil et les centaines de millions de gens sortis de la pauvreté, grâce au libre-échange. La «globalisation», comme disent les Anglo-Américains, constituait une apothéose pour le FMI. Sa mission originelle, et toujours d'actualité, est d'éradiquer le protectionnisme et le spectre de la dépression des années 1930. Vu de Sirius, tout allait pour le mieux dans le meilleur des mondes.
Ce satisfecit n'est plus de mise. Le FMI reconnaît que depuis «la grande récession» de 2008-2009, plus de 200 millions de gens sont au chômage dans le monde. Un record. Et les trois quarts des 30 millions de chômeurs supplémentaires sont apparus dans les pays «avancés». Or, le phénomène s'annonce durable.
Le World Economic Outlook, dont les prévisions 2011-2012 ont été publiées la semaine dernière, consacre un chapitre spécial aux «marchés du travail dans les économies avancées» et à leurs mutations structurelles. Cela revient à dresser le bilan de deux décennies d'une globalisation sans faille. «Les changements technologiques et le commerce sont vieux comme la civilisation», prévient le Fonds. Mais cette fois, c'est différent. Étrange concomitance, la révolution des technologies de l'information a éclaté au moment où la Chine, l'Inde et les pays de l'ex-empire soviétique ont rejoint le marché mondial, dont ils étaient auparavant écartés. Du jour au lendemain, peu après 1990, le marché mondial de l'emploi a pratiquement doublé pour atteindre 3 milliards.
Les nouvelles technologies de communication, dont les transports par conteneurs, ont contribué à internationaliser les chaînes de production. L'un des symboles les plus éloquents est fourni par Apple: ses produits sont conçus en Californie et assemblés en Chine par Foxconn. Apple regroupe à peine une cinquantaine de milliers de salariés, chercheurs et cadres, tout en étant la deuxième plus grosse capitalisation boursière mondiale, après Exxon. Moins glamour, Foxconn fait travailler un million de gens.
25% des aux États-Unis seraient «délocalisables»
Ce sont les États-Unis dans leur ensemble qui fonctionnent sur ce modèle, se spécialisant dans les fonctions hautement rémunérées et délocalisant les emplois de production industrielle. Cette division internationale du travail a donné entière satisfaction dans un premier temps. «Jusqu'à il y a une décennie, les effets de la mondialisation sur la distribution de richesse et des emplois ont été inoffensifs», selon le professeur Michael Spence, dont le FMIcite abondamment les travaux. Ce Prix Nobel d'économie note que, de 1990 à 2008, les États-Unis sont parvenus à créer 27 millions d'emplois, maintenant le chômage très bas. Mais 98% de ces postes ont été offerts par les secteurs travaillant exclusivement pour le marché intérieur américain, dont 10 millions par des agences gouvernementales et la santé. En revanche, les industries dont les produits sont exportables, «tradable», selon le terme de Michael Spence, n'ont pas accru leurs emplois, sauf dans les métiers hautement qualifiés. Le grand perdant est la classe moyenne, qui était employée par l'industrie. Selon le professeur Alan Blinder, ancien numéro deux de la Fed, 25% de tous les emplois aux États-Unis seraient «délocalisables».
Cette reconfiguration du marché du travail n'était pas préjudiciable tant que les États-Unis croissaient au rythme de 2,5% l'an. Elle est devenue insupportable avec la crise, alors que la construction, les agences publiques et les entreprises de services embauchent de moins en moins, même à bas salaires. Le FMI note que tous les vieux pays industrialisés sont logés à la même enseigne. Pour sa part, Michael Spence souligne l'exception allemande, «qui a clairement su protéger l'emploi dans ses industries d'exportation quand elles étaient menacées». Il constate, en outre, que la désindustrialisation entraîne un appauvrissement collectif. Selon ses calculs, la valeur ajoutée par employé est passée de 72.000 à 80.000 dollars entre 1990 et 2008 outre-Atlantique dans les secteurs non exportateurs, alors qu'elle a bondi de 79.000 à 120.000 dollars dans les industries travaillant pour le marché mondial.
La mondialisation n'est certes pas un jeu à somme nulle où les économies émergentes prospéreraient aux dépens des vieilles nations. Mais, au sein de chaque pays, certaines catégories sociales en bénéficient alors que d'autres en pâtissent. Le FMI y voit non seulement un facteur d'inégalité, mais aussi un frein à la croissance globale: en laissant échapper les secteurs industriels, qui présentent des potentiels de productivité bien supérieurs aux activités de service, les États-Unis et l'Europe se condamnent au déclin. Ne souhaitant pas s'engager sur un terrain hautement politique, les experts du FMI s'abritent derrières les recommandations du professeur Spence. Elles sont de deux ordres : reconquérir les emplois industriels perdus par la classe moyenne tout en pratiquant une redistribution sociale spécifique en faveur de ces victimes de la mondialisation clairement identifiées.


- Semaine cruciale pour la Grèce


Le ministre grec des Finances Evangelos Venizelos a rencontré le FMI et la BCE ce dimanche Crédits photo : LOUISA GOULIAMAKI/AFP
C'est une course contre la montre qui se joue cette semaine pour sauver la zone euro. Le FMI se rend à Athènes pour achever l'évaluation du programme économique. La Grèce doit voter un nouveau plan d'austérité et l'Allemagne doit ratifier les nouveaux pouvoirs accordés au fonds de secours européen.
Une nouvelle semaine sous haute tension s'annonce pour la Grèce et la zone euro. De fait, dimanche, le Fonds monétaire international (FMI) a affirmé qu'une délégation se rendra cette semaine à Athènes afin de déterminer si le pays peut ou non bénéficier de la sixième tranche de huit milliards d'euros du prêt consenti en mai 2010, une aide devenue vitale pour le pays. La directrice générale de l'institution, Christine Lagarde, a en effet rencontré le ministre grec des Finances Evangelos Venizelos dimanche pour discuter des conditions du retour du FMI dans le pays afin de terminer le cinquième audit du programme économique grec. Cette mission «aura certainement lieu cette semaine» a indiqué le Fonds.
En parallèle, Evangelos Venizelos, le ministre grec des Finances, a rencontré hier Jean-Claude Trichet, patron de la BCE, afin de négocier une restructuration de la dette grecque avec une décote comprise entre 40% et 50%. Et le ministre a affirmé qu'il «n'y a pas d'alternative à la restructuration». Il a ajouté devant l'assemblée annuelle de l'Institut international de la finance (IIF), une association de 450 banques du monde: «Nous sommes prêts à prendre les initiatives nécessaires quel que soit le coût politique».
Décisions attendues sur les privatisations
Ainsi, le gouvernement grec pourrait annoncer cette semaine des accords pour renouveler les concessions de l'opérateur de paris OPAP et de l'aéroport d'Athènes, affirme ce lundi le responsable du département privatisations du ministère des Finances. «Il s'agit du renouvellement de la concession de l'aéroport d'Athènes, du renouvellement de la concession des jeux d'OPAP et de la vente de la licence pour les VLT (machines à sous vidéoludiques, NDLR)», a déclaré George Christodoulakis au micro de la radio NET.
OPAP, le monopole de paris sportif grec, s'est mis d'accord avec l'Etat sur les grandes lignes d'une extension de sa concession et de l'achat d'une nouvelle licence de jeux pour 1 milliard d'euros, soit une partie importante du programme de privatisations engagé par Athènes dans le cadre de son plan de renflouement.
En outre, Evangelos Venizelos s'est dit confiant sur l'issue du vote au parlement du nouveau plan de rigueur, condition de l'attribution du nouveau prêt de la troïka, car selon lui «quel député va prendre la responsabilité de conduire la Grèce à un défaut de paiement ?».
L'Allemagne mobilisée
Un point de vue partagé par le ministre français des Affaires européennes, Jean Leonetti, qui a affirmé dimanche que «la Grèce va éviter la faillite parce que c'est l'intérêt de l'Etat grec, du peuple grec et c'est l'intérêt de nous tous. Si la Grèce demain faisait faillite, ça nous coûterait plus cher que si elle ne faisait pas faillite», a-t-il ajouté à Radio France internationale.
Les chefs d'État et de gouvernement ont trouvé en juillet un accord pour voler au secours de la Grèce et élargir le champ d'intervention du fonds de secours de la zone (FESF), notamment en le dotant d'un instrument lui permettant de racheter sur le marché de la dette d'États en difficulté. Cet accord est en cours de ratification par les 17 Parlements nationaux de la zone. Le vote de l'Allemagne,le pays est le plus gros contributeur aux plans d'aide européens, semble en bonne voie. Lors d'une interview télévisée dimanche soir, la chancelière allemande Angela Merkel s'est en effet montrée confiante sur l'issue du vote prévu jeudi au Bundestag.
Par ailleurs, la chancelière allemande a déclaré que permettre à la Grèce de faire faillite anéantirait la confiance des investisseurs dans la zone euro et pourrait provoquer une contagion comparable à celle consécutive à la faillite de Lehman Brothers en 2008.
La grogne sociale monte en Grèce
Mais la Grèce devra sans doute attendre au-delà de la tenue d'une réunion de l'Eurogroupe le 3 octobre avant qu'une décision soit prise sur le déblocage de la prochaine tranche du plan d'aide. «Etant donné le retard pris par la mission de la troïka (FMI, BCE et Commission européenne), je ne pense pas que la prochaine réunion de l'eurogroupe, le 3 octobre, prenne une décision sur la sixième tranche», a déclaré dimanche à Washington le vice-ministre allemand des Finances, Jörg Asmussen
Par ailleurs, la grogne sociale monte en Grèce. De nouvelles grèves sont prévues la semaine prochaine avant une grève générale le 19 octobre.


- Le spectre d'une recapitalisation des banques démenti par le gouvernement


e gouvernement prépare-t-il un plan de recapitalisation des banques françaises ? C'est ce que laisse entendre le Journal du dimanche, lequel, citant des sources bancaires et proches de l'Elysée, affirme que le gouvernement a proposé à BNP Paribas, Société Générale, Crédit Agricole, BPCE et Crédit Mutuel, de les renflouerà hauteur de 10 à 15 milliards d'euros. Cette proposition leur aurait été soumise le 11 septembre, lors d'une réunion de crise à la direction du Trésor, mais aurait été refusée par BNP Paribas.
Les informations du JDD ont aussitôt été démenties par Bercy et la Banque de France. "Il n'y a aucun plan", commente le gouverneur de la Banque de France, Christian Noyer, dans un entretien au même JDD, ajoutant que les banques françaises "ont une base de capital importante, comparable à celles des autres banques européennes, et elles sont rentables".
La ministre du budget et porte-parole du gouvernement, Valérie Pécresse, a également démenti cette information. "Il n'y a pas de plan de recapitalisation des banques. L'Etat évidemment travaille la main dans la main avec les banques, parce que l'Etat est aux côtés des banques", a-t-elle confié au Grand Jury RTL-Le Figaro-LCI. Les banques concernées se sont refusées à tout commentaire.
Alors que les banques sont malmenées à la Bourse de Paris en raison de craintes des investisseurs sur leur exposition à la crise de la dette souveraine qui frappe la zone euro, les appels à une recapitalisation des banques européennes se sont multipliés, même si en France, cette option a été écartée pour les banques nationales. Le gouvernement a indiqué que le dispositif créé en 2008 pour venir en aide aux banques était toujours disponible en cas d'événement "extraordinaire".
UN PLAN CONCOCTÉ POUR LA SOCIÉTÉ GÉNÉRALE ?
Une source proche du dossier a confirmé à l'AFP la tenue d'une réunion au trésor le 11 septembre sur la capitalisation des banques, mais a démenti qu'il s'agissait d'une réunion de crise, et a également démenti que le gouvernement avait fait une telle proposition de renflouement.
Selon le JDD, les représentants de l'Etat à la réunion de 11 septembre auraient soumis aux banquiers un schéma consistant à injecter entre 10 et 15 milliards d'euros dans ces établissements pour renforcer leurs fonds propres. Plusieurs options auraient été envisagées pour procéder à ce renflouement, depuis le prêt simple jusqu'à l'émission d'actions de préférence (titres privés de droit de vote) assorties de warrants (options d'achats), ce dernier mécanisme permettant deréaliser une plus-value en cas de hausse du cours de Bourse pour celles des banques qui étaient cotées.
D'après le quotidien, ce plan aurait été concocté en priorité pour la Société Générale, la plus malmenée en Bourse. Son PDG, Frédéric Oudéa, aurait accepté le plan soumis par l'Etat, "à condition que toutes les banques soient concernées, pour éviter d'être stigmatisé". Mais les dirigeants de BNP Paribas se seraient opposés à ce projet, principalement parce que son directeur général, Baudouin Prot, "ne voulait pas trinquer à cause des difficultés de son concurrent", selon le quotidien.

- [Currency Crisis:
German Central Bank Opposed to Merkel's Euro Course->http://www.spiegel.de/international/europe/0,1518,788352,00.htm]


Jens Weidmann has gone from one of Merkel's closest advisers to one of her staunchest opponents.
The new Bundesbank president, Jens Weidmann, used to be one of Merkel's closest advisers. Now, he is one of her staunchest critics over the euro rescue. He is strictly opposed to the European Central Bank's policy of buying up bonds from debt-stricken countries -- and is winning a growing number of allies for his cause. By SPIEGEL Staff.
Info
Jens Weidmann knew what would happen, but he had to make the joke anyway. He owed it to himself and to his new position as head of the Bundesbank, Germany's central bank.
"Did you leave so much space between us on purpose?" he asked German Finance Minister Wolfgang Schäuble with a cheeky grin. Indeed, the podium that had been set up for their joint press conference on Friday in Washington really did have generous dimensions, leaving enough space for two or three people between them.
Schäuble examined the distance between them. Then he answered, with a pained smile: "We did that because of your independence."
One of Merkel's Fiercest Adversaries
Germany is marveling at a breathtaking shake-up of political roles. For five years, Weidmann served as an economic adviser to Chancellor Angela Merkel. During that period, he was loyal to her, even seeming too keen at times. But now, in his new role as president of the Bundesbank, he has become one of her fiercest adversaries.
Weidmann has criticized decisions related to the euro bailout as "inconsistent" and "highly risky." He has called on politicians in Berlin to change their course, and he has been advocating "the Bundesbank's principles regarding stability." All of those things put him at odds with top officials at the European Central Bank (ECB).
Behind the glass facade of ECB headquarters in Frankfurt, a fierce battle over fundamental beliefs has been smoldering for months. ECB President Jean-Claude Trichet and the majority of his colleagues are willing to rush to the aid of embattled EU finance ministers and to make major purchases of the sovereign bonds of debt-ridden euro-zone countries, such as Greece, Portugal and Italy.
For his part, Weidmann is strictly opposed to these measures. He believes they amount to an unacceptable means of financing states through effectively printing money. In fact, he has come to assume the mantle of the last staunch defender of monetary stability.
His views were shared by his predecessor, Axel Weber, and the ECB's former chief economist, Jürgen Stark, both of whom stepped down from their positions because it was getting lonelier and lonelier on their side of the battle.
Weidmann, on the other hand, plans to keep fighting -- and in full public view. He gives speeches and interviews, like the one he gave to SPIEGEL last week. He riled Europe's finance ministers at their most recent summit in the Polish city of Wroclaw. And he has been having serious talks with the members of the budget committee of the Bundestag, the German parliament. Indeed, in an unprecedented campaign, Weidmann is trying to rally a majority of ECB council members to re-adopt the monetary-policy principles that Germany has traditionally championed.
'I Hope Weidmann Succeeds'
Having a Bundesbank president as the leader of the opposition on monetary policies is something that has seldom happened before in the subtle and sophisticated world of central bankers, who like to cloak even their fundamental decisions in opaque hints and insinuations.
Indeed, the game that Weidmann has started is a risky one. If he gets his way, the ECB could emerge from its worst-ever crisis even stronger than before. If he fails, the Bundesbank's positions on monetary policies might be buried for good.
"I hope Weidmann succeeds," says Thomas Meyer, the chief economist at Deutsche Bank, Germany's largest bank. "But I wouldn't bet on it."
Ironically, one of the things threatening Weidmann's chances of success is his popularity among Germans, who have gotten plenty of exposure to the young Bundesbank chief in recent days. He has become the new star of the euro crisis.
On Sept. 13, for example, Weidmann swept into a packed hall in Cologne's elegant Hotel Barceló to deliver a speech at the invitation of the ASU, an association of family-owned businesses in Germany. Dozens of executives from companies based all over Germany sat on chairs with gilded frames while ASU President Lutz Goebel, the head of a motor company in Krefeld, set the tone for the event. Goebel complained that some of the teetering countries in the euro zone had "no business model" and that Germany's government was constantly throwing "good money after bad."
Weidmann's voice also grew louder as he approached the key passages in his 23-page speech. The balance sheet of the ECB is "burdened with significant risks" because it has purchased sovereign bonds, he said, adding that he would advocate against any expansion of this policy "under any circumstances."
In his closing, he stressed that "with or without others fighting by my side, this stance will remain." The speech was received with thunderous applause.
The Stereotype of a Technocrat
Weidmann is playing a role he does not necessarily look cut out for. With his Ph.D. in economics and neatly parted hair, he seems like the stereotype of the cool-headed technocrat. In his steep rise from being a division head at the Bundesbank to a senior civil servant in the Chancellery, he knew not to force himself and his opinions into the spotlight.
These days, Weidmann is the most influential critic of Merkel's bailout strategy. This change has led the chancellor to follow her former aide's campaign at a cool distance. Merkel has nothing against the fact that Weidmann's new job makes him the champion of the Bundesbank's traditional positions. But that doesn't mean she's going to support him. On the contrary, sources close to Merkel say that, at their most recent summit, European leaders expressly approved the ECB measures that she backs and Weidmann opposes.
This forces Weidmann to rely on finding allies on the ECB council who will back his position. Doing so isn't completely out of the question, however, as the most recent purchases of sovereign bonds have triggered growing unease among some people in the ECB.
In early August, after having already purchased the sovereign bonds of Greece, Portugal and Ireland, the ECB decided to also buy Italian ones for the first time. The measures were meant to help Italy scare off speculators and to apply lasting pressure to keep interest rates on Italian debt low.
Since then, the monetary watchdogs have come to fear that they are throwing their money into a bottomless pit. Indeed, despite having already purchased over €150 billion ($200 billion) in sovereign bonds, there is no success on the horizon. Every time Trichet's securities traders stop buying, the interest rates start going back up. In this way, what was originally envisioned as emergency assistance has turned into long-term subsidization.




- Euro zone damps talk of rapid debt crisis steps

Riot police stand guard in front of the parliament during a rally against the government's new austerity measures in Athens, September 25, 2011. REUTERS/John Kolesidis
By Luke Baker
BRUSSELS | Mon Sep 26, 2011 9:06am EDT
(Reuters) - Euro zone officials played down reports on Monday of emerging plans to halve Greece's debts and recapitalize European banks to cope with the fallout, stressing that no such scheme is yet on the table.
Europe came under fierce pressure from the United States and other major economies at weekend talks in Washington to take swift, decisive action to stop the Greek debt crisis engulfing bigger euro zone states and derailing world economic recovery.
But officials said media reports that planning was already in place for a 50 percent writedown in Greek debt and a vast increase in the euro zone rescue fund, the EFSF, were highly premature.
"There is no change to the framework we are working on," said a euro zone official who is involved in decision-making on financial assistance toGreece, Ireland and Portugal.
"All this talk of a specific haircut for Greece or an enlargement of the EFSF, it is all just speculation. We are not working along those lines," said the official.
German Chancellor Angela Merkel, struggling to convince her fractious center-right coalition to back a strengthening of the EFSF in a crucial vote on Thursday, said on Sunday that letting Greece default would destroy investor confidence in the euro zone.
Diplomats said any talk of a fallback plan for Greece that would raise the cost to German taxpayers could only make her task more difficult in parliament this week.
Private economists and Brussels think-tanks are forecasting a Greek debt default within months or sooner, coupled with a capital injection for European banks and a 'leveraging up' of the EFSF so that it can handle fallout in Italy and Spain.
Euro zone officials acknowledge that such policy ideas are circulating and some could constitute a longer-term response to the 20-month debt crisis. But they insist no specific plans are yet in the works.
Instead, planning continues on the basis that Greece's debt burden, which is close to 160 percent of GDP, can be sustained as long as the government fully implements austerity measures demanded by the European Commission, the European Central Bank and the IMF, the so-called troika.
U.S. Treasury Secretary Timothy Geithner highlighted global concerns about deficient European crisis management, saying on Saturday: "The threat of cascading default, bank runs and catastrophic risk must be taken off the table."
IMF Chief Christine Lagarde, the former French finance minister who until four months ago was tackling the crisis from the European side, also made it the euro zone needs to act more decisively, notably to recapitalize banks on a large scale.
Quietly, euro zone policymakers accept that a combination of a much deeper Greek debt restructuring allied to coordinated bank recapitalizations and a bolstered rescue fund would make sense and might help the euro zone get on top of the crisis.
But such a plan would require support from all 17 euro zone countries, and it takes time in the EU's decision-making structures to bring so many moving parts together at once.
"The ideas are all there, but it's not as straightforward as just sitting down and deciding it," said another euro zone financial official involved in handling the crisis.
"Many of us can agree privately that anything less than a 50 percent haircut for Greece would just be cosmetic, but getting that decided by all and implementing it is not so easy."
PROPOSAL SOUP
Instead, the next step is expected to be a decision by the EU, ECB and IMF to sign off on the next tranche of support for Greece -- the sixth payment from the original 110 billion euro emergency package agreed in May last year.
The timing will depend on when the troika completes a review of Athens' progress on implementing deeper budget cuts and tax-raising measures. Without that 8 billion euros, Greece will run out of money to pay October wages and pensions.
Olli Rehn, the EU's economic and monetary affairs commissioner, has said he hopes a decision can be taken by mid-October. It's unlikely to come any sooner.
Germany's deputy finance minister, Joerg Asmussen, said there was no chance euro zone finance ministers would be able to sign off on Greece's next aid tranche when they meet next week.
"Given the delay of the troika mission, I do not see that the upcoming Eurogroup on October 3 will decide on the sixth tranche," he said in a speech in Washington on Sunday.
Financial markets and the private sector seem to be moving more rapidly than policymakers to prepare themselves for the likelihood of a Greek default.
Safe-haven German government bonds fell on Monday and shares rallied partly due to a belief that European policymakers were working on more decisive action to tackle the debt crisis. Such hopes could be quickly dashed.
J.P. Morgan Securities said it expected euro zone governments to ease the funding crisis among European banks via a capital injection of up to 150 billion euros, an initiative that would be similar to the U.S. TARP program.
"Euro-TARP is in our view the best risk-reward medicine for opening the Eurobank funding market," J.P. Morgan analyst Kian Abouhossein write in a note to clients.
In a separate report, UBS analysts said they expected some form of intervention from the European Central Bank and a euro zone guarantee scheme for bank term debt, or a Euro-TARP initiative, to provide "sticking plasters" for the system.
But there are no signs that any such plans are formally in preparation at this stage, again underlining that policymakers may be behind the curve in tackling the crisis.
Euro zone officials acknowledge that the EFSF, which will soon have an effective capacity of 440 billion euros, is not big enough to handle a potential bailout of Italy or Spain, the region's third and fourth largest economies. But there is no clarity on how the fund could be raised without more guarantees.
One idea is for the fund to act as an insurer, guaranteeing the first portion of losses on Italian or Spanish debt. That could "leverage" its capacity four or five times, but the legality of such a scheme remains to be established and nothing has been put to euro zone finance ministers.
Another proposal would be to turn the EFSF into a bank, which would allow it to access ECB funds, meaning that it would effectively have unlimited capacity. But the ECB has raised concerns about such a step, which would politicize ECB operations and put it on the line for massive liabilities.



- Debt talks fail to agree solution

By Alan Beattie and Tom Braithwaite in Washington
Greece and the Euro
The International Monetary Fund annual meetings wrapped up in Washington on Sunday with widespread concern over the eurozone sovereign debt crisis but no immediate consensus on the solution.
Participants said they were waiting for the ratification of the action plan agreed on July 21 by the eurozone, particularly by the German Bundestag this week, before starting serious negotiations on increasing the rescue fund’s firepower or asking for a bigger writedown in private sector holdings of Greek debt.
Meanwhile, Greece continued to insist it would not default, despite widespread private pessimism among attendees at the meetings.
Josef Ackermann, chief executive of Deutsche Bank, on Sunday criticised suggestions among some G20 officials about revisiting a planned rescheduling of private bondholdings – a central part of a planned second eurozone-IMF rescue package for Greece agreed in principle on July 21.
Wolfgang Schäuble, Germany’s finance minister, on Saturday said: “One has to see whether what has been envisaged in June, July, is still sustainable in the light of more recent developments.”
But Mr Ackermann, speaking as chairman of the Institute of International Finance, a global association of banks and finance houses, rejected any suggestion of a major revision to current plans, which were based on an IIF proposal. “If we now start reopening that Pandora’s box we lose a lot of time and I’m not sure people will be willing to participate,” he told reporters. “It was not a contract, but it was a clear agreement in Brussels with the official sector.”
The IIF estimates that the reduction, which involves banks voluntarily signing up for one of four options for rescheduling sovereign bonds, will involve a 21 per cent reduction in the net present value of banks’ holdings of the debt. But other calculations show a much smaller writedown or none at all, and an insufficient reduction in Greece’s debt burden to return it to sustainability. A recent estimate by economists at Barclays Capital said the average reduction in bondholders’ net present value would be just 5 per cent.
Eurozone officials also hinted more strongly that the European financial stability facility, the €440bn ($582bn) eurozone rescue fund that will be strengthened by the July 21 deal, could leverage its size by insuring the issuance of debt and perhaps linking up with the European Central Bank.
François Baroin, France’s finance minister, on Friday told reporters that there would be no legal bar to the EFSF conducting joint operations with the ECB on the basis of the changes to the fund being ratified by the eurozone parliaments.
However, Mr Schäuble cast doubt on the likelihood of that option, saying: “There are other possibilities than going to the ECB.”
Despite many private conversations about an inevitable sovereign debt restructuring in Greece, the official line was that default was unthinkable and implementation of the July 21 deal was the only focus.
Evangelos Venizelos, Greece’s finance minister, likened the Greek crisis to a war the country must win and said the government would take the necessary steps “at any political cost”.
But he warned that for all the budget tightening Greece has undertaken, recession keeps making the targets tougher, particularly amid “noises, rumours and this famous European cacophony” about a coming default.
Calling for further assistance from the international community, he said: “It is not possible to implement sacrifice, sacrifice, sacrifice with recession, recession, recession.”


- This economic collapse is a 'crisis of bigness'

Leopold Kohr warned 50 years ago that the gigantist global system would grow until it imploded. We should have listened

Living through a collapse is a curious experience. Perhaps the most curious part is that nobody wants to admit it's a collapse. The results of half a century of debt-fuelled "growth" are becoming impossible to convincingly deny, but even as economies and certainties crumble, our appointed leaders bravely hold the line. No one wants to be the first to say the dam is cracked beyond repair.
To listen to a political leader at this moment in history is like sitting through a sermon by a priest who has lost his faith but is desperately trying not to admit it, even to himself. Watch Nick Clegg, David Cameron or Ed Miliband mouthing tough-guy platitudes to the party faithful. Listen to Angela Merkel, Nicolas Sarkozy or George Papandreou pretending that all will be well in the eurozone. Study the expressions on the faces of Barack Obama or Ben Bernanke talking about "growth" as if it were a heathen god to be appeased by tipping another cauldron's worth of fictional money into the mouth of a volcano.
In times like these, people look elsewhere for answers. A time of crisis is also a time of opening-up, when thinking that was consigned to the fringes moves to centre stage. When things fall apart, the appetite for new ways of seeing is palpable, and there are always plenty of people willing to feed it by coming forward with their pet big ideas.
But here's a thought: what if big ideas are part of the problem? What if, in fact, the problem is bigness itself?
The crisis currently playing out on the world stage is a crisis of growth. Not, as we are regularly told, a crisis caused by too little growth, but by too much of it. Banks grew so big that their collapse would have brought down the entire global economy. To prevent this, they were bailed out with huge tranches of public money, which in turn is precipitating social crises on the streets of western nations. The European Union has grown so big, and so unaccountable, that it threatens to collapse in on itself. Corporations have grown so big that they are overwhelming democracies and building a global plutocracy to serve their own interests. The human economy as a whole has grown so big that it has been able to change the atmospheric composition of the planet and precipitate a mass extinction event.
One man who would not have been surprised by this crisis of bigness, had he lived to see it, was Leopold Kohr. Kohr has a good claim to be the most important political thinker that you have never heard of. Unlike Marx, he did not found a global movement or inspire revolutions. Unlike Hayek, he did not rewrite the economic rules of the modern world. Kohr was a modest, self-deprecating man, but this was not the reason his ideas have been ignored by movers and shakers in the half century since they were produced. They have been ignored because they do not flatter the egos of the power-hungry, be they revolutionaries or plutocrats. In fact, Kohr's message is a direct challenge to them. "Wherever something is wrong," he insisted, "something is too big."
Kohr was born in 1909 in the small Austrian town of Oberndorf. This smalltown childhood, together with his critical study of economics and political theory at the LSE, his experience of anarchist city states during the Spanish civil war, which he covered as a war reporter, and the fact that he was forced to flee Austria after the Nazi invasion (Kohr was Jewish), contributed to his growing suspicion of power and its abuses.
Settling in the US, Kohr began to write the book that would define his thinking. Published in 1957, The Breakdown of Nations laid out what at the time was a radical case: that small states, small nations and small economies are more peaceful, more prosperous and more creative than great powers or superstates. It was a claim that was as unfashionable as it was possible to make. This was the dawn of the space age – a time of high confidence in the progressive, gigantist, technology-fuelled destiny of humankind. Feted political thinkers were talking in all seriousness of creating a world government as the next step towards uniting humanity. Kohr was seriously at odds with the prevailing mood. He later commented, dryly, that his critics "dismissed my ideas by referring to me as a poet".
Kohr's claim was that society's problems were not caused by particular forms of social or economic organisation, but by their size. Socialism, anarchism, capitalism, democracy, monarchy – all could work well on what he called "the human scale": a scale at which people could play a part in the systems that governed their lives. But once scaled up to the level of modern states, all systems became oppressors. Changing the system, or the ideology that it claimed inspiration from, would not prevent that oppression – as any number of revolutions have shown – because "the problem is not the thing that is big, but bigness itself".
Drawing from history, Kohr demonstrated that when people have too much power, under any system or none, they abuse it. The task, therefore, was to limit the amount of power that any individual, organisation or government could get its hands on. The solution to the world's problems was not more unity but more division. The world should be broken up into small states, roughly equivalent in size and power, which would be able to limit the growth and thus domination of any one unit. Small states and small economies were more flexible, more able to weather economic storms, less capable of waging serious wars, and more accountable to their people. Not only that, but they were more creative. On a whistlestop tour of medieval and early modern Europe, The Breakdown of Nations does a brilliant job of persuading the reader that many of the glories of western culture, from cathedrals to great art to scientific innovations, were the product of small states.
To understand the sparky, prophetic power of Kohr's vision, you need to read The Breakdown of Nations. Some if it will create shivers of recognition. Bigness, predicted Kohr, could only lead to more bigness, for "whatever outgrows certain limits begins to suffer from the irrepressible problem of unmanageable proportions". Beyond those limits it was forced to accumulate more power in order to manage the power it already had. Growth would become cancerous and unstoppable, until there was only one possible endpoint: collapse.
We have now reached the point that Kohr warned about over half a century ago: the point where "instead of growth serving life, life must now serve growth, perverting the very purpose of existence". Kohr's "crisis of bigness" is upon us and, true to form, we are scrabbling to tackle it with more of the same: closer fiscal unions, tighter global governance, geoengineering schemes, more economic growth. Big, it seems, is as beautiful as ever to those who have the unenviable task of keeping the growth machine going.
This shouldn't surprise us. It didn't surprise Kohr, who, unlike some of his utopian critics, never confused a desire for radical change with the likelihood of it actually happening. Instead, his downbeat but refreshingly honest conclusion was that, like a dying star, the gigantist global system would in the end fall in on itself, and the whole cycle of growth would begin all over again. But before it did so, "between the intellectual ice ages of great-power domination", the world would become "little and free once more".




- [In euro crisis, Merkel is replaying 1931 :
Commentary: Contagion risk may sweep away the status quo->http://www.marketwatch.com/story/in-euro-crisis-merkel-is-replaying-1931-2011-09-26 ]


By David Marsh, MarketWatch
LONDON (MarketWatch) — Eighty years ago, Britain left the gold standard. It reminds you of some of the things going on today.
Read the front page of the Financial Times of Sept. 21, 1931, for instance, a day after the move. “The step now taken is due solely to heavy withdrawals of sterling by foreigners. Their exaggerated fears have brought about the new situation.”
Well that’s all right then. Elsewhere, one reads: “Temporary step only….There is in no sense a crisis. Internally the affairs of the country will proceed along normal lines.”
In fact, Britain’s relinquishment of the gold peg, while giving much-needed stimulus to the domestic economy, piled up pressure on the main gold-adhering countries of the Continent, Germany and France, to follow suit. Nowadays we’d call it “contagion risk”. Germany stood firm. France didn’t, eventually departing the gold standard in 1936 in a hotly contested move by the Popular Front government of Léon Blum. The rest is, mainly unpleasant, history.
Scroll forward to the present, and you see some dark similarities in today’s dilemmas for European governments.
Shortly before economic and monetary union (EMU) started in 1999, German Chancellor Helmut Kohl said the single currency was a question of war and peace. He was right to set the euro in the context of an epochal struggle between binary forces perennially tearing at the German soul: instability and stability, East and West, Poland and France, America and Russia, capitalism and communism.
Yet even Kohl did not foresee that EMU, the proudest yet most vulnerable of Europe’s accomplishments, would degenerate into an issue of political life or death for his successor at the helm of the conservative Christian Democrat party, Chancellor Angela Merkel.
In a currency system riven by fractiousness between debtors and creditors, Merkel is the one European political figure who can determine the fate of the 17-member euroEURUSD -0.41% . Intriguingly, her one-time economic adviser and now the new Bundesbank President Jens Weidmann, also puts EMU in a binary framework.
In recent days, he has said publicly it has to go in one of two directions. Either it takes the path of a fiscal union in which member countries fuse together their economic and financial systems into a much more robust framework that will protect them from internal dislocation. Weidmann says, coolly, this is somewhat unlikely. Or EMU remains a looser grouping of countries that will face the discipline of the financial markets if they fail to produce economic convergence. This could lead to harsh consequences in cases where states fall out of kilter with stronger-performing economies.
The logical extension of Weidmann’s thoughts is that countries that do not make the grade might default on their debts or leave the euro. The warnings are underlined by the downward spiral of the Greek economy as it reels under ever-toughening and ultimately self-destructive austerity decreed by the lending “troika,” the European Union, the European Central Bank and the International Monetary Fund. As everyone knows, the deflation malaise makes it impossible for Athens to meet debt repayments.
Merkel, who has presided over successive coalition governments since 2005, reasons that the costs of a Greek debt restructuring, especially in view of a possible extension of attrition to Spain and Italy, would far outweigh the gains.
The difficulty is that she is beset by constraints that could sweep away her hold on power. Her pivotal position is prone to extraordinary fissures. On the one hand, she has been strengthened by the near-demise of her present junior coalition partner, the liberal Free Democratic Party. On the other hand, Merkel is hemmed in by the Bundesbank’s continued drumbeat of opposition to ECB support purchases of errant countries’ bonds — and nagging doubts that the support may be illegal.
A crucial landmark in coming weeks will be a German parliamentary decision on expanding the EMU rescue fund, the European Financial Stability Facility (EFSF), which was conceived in May 2010 and is meant to be extended in scope and scale under a European decision in July 2011.
With the Free Democrats in meltdown, and resistance to EFSF expansion hardening in her own Christian Democrat party, Merkel may have to rely on support from the opposition Social Democrats and Greens. This would grant temporary respite for EMU, but it could bring forward German elections scheduled for 2013, and hasten the Merkel government’s replacement by a “Red-Green” coalition.
Which brings us back to the gold standard. Back in 1931, the conservative Reichsbank, the forerunner of the Bundesbank, fiercely opposed Britain’s departure on the grounds of contagion risk — forebodings that proved accurate. The bank’s eight-decades-removed successor Weidmann appears to be taking a more flexible line that doesn’t rule out that the occasional EMU member may end up leaving.
Economically, this may produce a less unstable situation than the one we have today. Politically, it will be extremely tight for Merkel, given her stated wish to preserve the EMU status quo. The tussle between the chancellor and her one-time lieutenant Weidmann has some way still to run. A succession of German chancellors has seen their political careers ended over discord with the Bundesbank. Even though the Bundesbank has now been subsumed within the ECB, it still holds significant sway within German politics. Merkel could become the latest head to topple.




- Bleeding the Patient, Modern Economics and the Symbolic Economy

Modern economics is analogous to the junk-science of 17th century medicine, and it serves a symbolic economy of phantom wealth and freedom.
Back in the bad old days, the premier physicians of the age accepted and practiced the idea that the cure for illness was to bleed very ill patients, effectively weakening them. Countless patients who might have recovered if simply left "untreated" died as a result of the misguided "science of healing" of the era.
Only with the advent of a true understanding of the nature of infection, the immune system and disease did the "folk" pseudo-science of bleeding pass from accepted medical practice.
We are mired in a similar era of pseudo-science being accepted as actual science, i.e. as reflecting the underlying causal mechanisms of life and the universe, and that pseudo-science is called economics.
As I have noted here many times, we are experiencing not just a standard-issue financial crisis but the failure of the entire pseudo-science edifice of modern conventional economics.
The basis of pseudo-science is to mask unfounded, misguided and potentially disastrously dangerous ideas drawn from superstition and folk beliefs with the external trappings of real science. Thus economics presents itself as a "science" by invoking the symbolic magic of equations and quantification of data gathered from the real world.
In esence, the "understanding" of junk-science is symbolic: the body is plagued with "humors" which can be drawn out via bleeding the patient, etc. The actual workings of the body, far beyond the conceptual reach of the folk/junk symbolic "science," are conceptualized symbolically via analogies: disease is "hot" or "cold," the body functions like a clock, etc.
In the exact same fashion, conventional economics "understands" the workings of the economy symbolically, and its "cures" play out in its artificial construct, thesymbolic economy.
The symbolic economy is based on the cargo cult of "animal spirits", the magical "humors" which ignite the economic activity quantified by the pseudo-science. The witch-doctors at the Federal Reserve (the eminent, highly educated "expert" bleeders) have been busy painting radio dials on rocks for the past four years, hoping that their increasingly desperate pleas will magically reach the gods of "animal spirits."
The true nature of conventional economic's symbolic economy is best illuminated by the cargo cult's increasing dependence on managing perceptions as the "tool" to influence financial behavior. In other words, the "physicians" rely on fundamentally symbolic actions to influence the symbolic economy.
One of the folk beliefs of the cargo cult priesthood is that ruthless pursuit of self-interest to the point of worshipping self-serving pathology is the foundation of a "healthy economy." The end-state of such a quasi-religious faith is of course the purchase of the machinery of governance to the point that government at all levels is reduced to a battle between self-serving concentrations of wealth.
The cargo cult priesthood's primary goal is to preserve the symbolic wealthcreated by the symbolic economy. One way to understand symbolic wealth is that it isphantom wealth created in symbolic form.
Simply put, no economy can consume more than it generates in real surplus. Rather than face up to this constraint, the Fed creates phantom financial wealth which ends up in the hands of politically influential concentrations of wealth--in essence, a self-referential cycle of creating phantom wealth to serve the interests of current holders of phantom wealth.
Everyone with phantom wealth is of course committed to maintaining the fiction that the symbolic wealth they "own" holds sway over real wealth, i.e. minerals, water, skilled labor, productive land, etc.
There is another layer to the symbolic economy: carefully manicured totems of a vanished free market and independent government are maintained by the Status Quo that benefits from the artifice. The useful fiction that the economy is still a "free market" is heavily promoted by the Status Quo Media, and rags-to-riches stories are trumpeted ceaselessly as "proof" of the free market.
All this marketing gins up symbolisms that mask the actual mechanisms of the economy. This systemic official lip-service is also paid in China, where various useful fictions are fashioned into a symbolic economy: that the one-party rule of a command economy nurtures a true but limited form of free-market capitalism in which it is glorious to get rich.
This masks the reality of a systemic crony-capitalism married to a sclerotic command economy.
In other words, like the U.S.


- Foreign central banks' US debt holdings fall: Fed


(Reuters) - Foreign central banks' overall holdings of U.S. marketable securities at the Federal Reserve fell in the latest week, data from the U.S. central bank showed on Thursday.
The Fed said its holdings of U.S. securities kept for overseas central banks fell $6.882 billion in the week ended Sept 21, to stand at $3.456 trillion.
The breakdown of custody holdings showed overseas central banks' holdings of Treasury debt fell by $7.754 billion to stand at $2.722 trillion.
Foreign institutions' holdings of securities issued or guaranteed by the biggest U.S. mortgage financing agencies, including Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), rose $871 million to stand at $734.3 billion.
Overseas central banks, particularly those in Asia, have been huge buyers of U.S. debt in recent years, and own more than a quarter of marketable Treasuries. China and Japan are the biggest two foreign holders of Treasuries.
The full Fed report can be found on: here



- Worried Greeks Fear Collapse of Middle Class Welfare State


Boxes of papers in the tax office in the Pireaus district of Athens. The Greek government is raising taxes and slashing pensions and salaries for state workers.
By RACHEL DONADIO

ATHENS — Sitting in the modest living room of the home she shares with her parents, husband and two teenage children, Stella Firigou fretted about how the family would cope with the uncertainties of an economy crashing all around them. But she was adamant about one thing: she would not pay a new property tax that was the centerpiece of a new austerity package announced this month by the Greek government.
“I’m not going to pay it,” Ms. Firigou, 50, said matter-of-factly, as she lighted a cigarette and checked her ringing cellphone to avoid calls from her bank about late payments on a loan. “I can’t afford to pay it. They can take me to jail.”
While banks and European leaders hold abstract talks in foreign capitals about the impact of a potential Greek default on the euro and the world economy, something frighteningly concrete is under way in Greece: the dismantling of a middle-class welfare state in real time — with nothing to replace it.
Since 2010, the government has raised taxes and slashed pensions and state salaries across the board, in an effort to rein in the bloated public sector that today employs one in five Greeks. Last week, the government announced it would put 30,000 workers on reduced pay as a precursor to possible termination and would cut pensions again for nearly half a million public-sector retirees.
A clerk in her local town hall, Ms. Firigou, like all public-sector workers, took a precipitous pay cut last year — in her case to less than $1,300 a month from $2,000 a month — as the government slashed wages to meet the terms of its foreign lenders. Her husband, who sells used car parts, has seen his commissions drop. Her mother’s pension was cut to about $800 a month from around $920.
Like many families here, the Firigous cushion the impact of such cuts and the rising cost of living with property acquired in the past. Her grandfather built the two-story apartment house in this Athens suburb, Psychiko, where the six now live, starting in the 1930s and finishing it after the Second World War. And so the new tax, probably in excess of $2,000 per year for the Firigous, stings particularly hard. “The house is the only thing we have left,” she said.
There is a lot for Greeks to swallow. Beyond the public-sector wage cuts, in recent months the government has also imposed a “solidarity tax” ranging from 1 to 4 percent of income on all workers and an additional tax on self-employed workers, who make up the bulk of the economy. It has also raised its value-added tax on many goods and services, including food, to 23 percent from 13 percent.
The economy is flagging, and it is not uncommon for even private-sector workers to see pay cuts of 30 percent or more, sometimes in exchange for a reduction in working hours.
The so-called troika of foreign lenders — the European Central Bank, the European Commission and the International Monetary Fund — is increasingly playing hardball with the Greek government, insisting it meet its deficit-reduction goals before it decides whether to release the next installment of $11 billion that Greece needs to meet expenses starting in mid-October.
Many Greeks fear a vicious circle: a death spiral of more austerity measures, further economic contraction and correspondingly lower tax revenues, making it that much harder to make a dent in the debt, pushing the country toward default in spite of the austerity. Unions have called general strikes for Oct. 5 and Oct. 19, and tensions are building.
Economists say the measures are necessary to bring down debt and modernize Greece’s economy. But the cuts have come far faster than the modernization, and the social fabric is starting to fray — if not tear. The unemployment rate, already at 16 percent, and emigration are increasing; the birth rate is dropping; and the rate of suicide is rising. The education minister recently apologized that public schools lack textbooks, and the country’s morale is flagging.
“The government is increasingly at war with the citizens,” said Jens Bastian, an economist at the Hellenic Foundation for European and Foreign Policy in Athens. “It is taking decisions whose consequences are not only squeezing the middle class, but threatening its very existence.”
Some private-sector workers say they have not been paid in months. “It’s illogical and unfair,” Aphrodite Korogiannaki, 38, a speech pathologist at a center for intellectually disabled youth, said of the property tax as she participated in a peaceful demonstration in Athens last week. “If I haven’t been paid for two months, how can I pay?”
A growing number of Greeks are asking that question, and increasingly their anger is focusing on the proposed property tax, the one that Mrs. Firigou insists she cannot pay.
The government has said it expects to raise $2.7 billion through the tax, which would affect an estimated 5.5 million homeowners. (There is no precise number for Greek homeowners since the country still lacks a comprehensive land register.) According to theHellenic Property Federation, an association representing Greece’s homeowners, the tax would cost an average family between $1,200 and $2,000 extra per year.





- Europe Split Threatens Rescue Plan


WASHINGTON—Critical differences between European leaders threatened to stymie efforts to combat the euro zone's debt woes, despite mounting international pressure to contain a broadening crisis.

After a weekend of tense meetings among world finance officials here, euro-zone leaders were weighing options to maximize the size of their bailout fund by borrowing against it. The move could provide trillions of dollars of firepower to rescue governments and banks—-but only if all 17 euro-zone legislatures approve a two-month-old agreement to broaden the bailout fund.
Highly public opposition from Germany, the largest and most powerful euro-zone economy, could block the plan.
Policy makers are "focused on their own internal restraints, so that we don't have the outcome that we need," Antonio Borges, head of the International Monetary Fund's Europe department, said Sunday. While key players were understandably acting in self-interest, he said, it was generating "disastrous" collective results.
A deep sense of anxiety hung over the IMF's annual meeting. Three years ago, finance officials gathered after the failure of Lehman Brothers sent the global economy spiraling into its deepest downturn since the 1930s. This year, the risk of Europe bringing down the financial system topped everyone's minds.
The latest turmoil is "more serious than the crisis of 2008," said billionaire investor George Soros. Three years ago the institutions necessary to fight the crisis were in place, he said, but today European leaders need a continental Treasury Department and instead are working with "an embryo" in the form of a €440 billion ($594 billion) rescue fund.
The fear on everyone's minds after the market turmoil of the past week: Would investors outpace European politics and start a cascading global financial crisis? Rampant rumors about an imminent Greek default, despite denials from Greece and others, threatened to do just that.
Some European leaders acknowledged they are behind the curve in formulating a decisive response. "Time is strategic, and there's little of it left," said Italy's finance minister, Giulio Tremonti. "We've wasted too much of it."
Throughout the weekend, officials involved in the European response hinted at their options to respond with new force. Leveraging the bailout fund by borrowing against it could enable it to cover investors' first losses. That money could be used to buy debt on the market or inject capital into banks.
Officials are also discussing how to use the European Central Bank's balance sheet—with trillions of dollars of lending capacity—to protect the euro zone further by buying more debt or backing debt. Some of the options could be used to help prevent a Greek default, or even attempt to insulate the rest of the euro zone from a Greek default by pushing capital into European banks and building a firewall around larger vulnerable euro-zone nations like Spain and Italy.
But warnings from the German finance minister, Wolfgang Schäuble, suggested serious obstacles remain. "We won't come to grips with economies deleveraging by having governments and central banks throwing—literally—even more money at the problem," he told the IMF meetings.
He told reporters that the bailout fund can only work within the legal framework of the European Union's treaty, and more specifically, within the agreement governing the bailout fund. Neither of those allows the facility to be leveraged, he said.
Deutsche Bundesbank's Jens Weidmann also said leveraging the bailout fund, specifically by allowing it to borrow from the ECB, would be equivalent to the monetary financing of state budgets, which is forbidden by the EU treaty.
Other Europeans and leaders outside the euro zone maintained hope that they could finesse the problem by devising a format that Germany and the ECB could support.
European policy makers throughout the meetings consistently articulated their intent to boost the fund's firepower, a senior U.S. official said, but they are likely to be cautious about discussing details of their plans until they can secure approval from national parliaments for an expanded rescue fund.
U.S. officials, who have urged euro-zone leaders to leverage their bailout fund, continued to press for action. Treasury Secretary Timothy Geithner said on Saturday, "The threat of cascading default, bank runs, and catastrophic risk must be taken off the table, as otherwise it will undermine all other efforts, both within Europe and globally."
The days leading up to the meeting carried some hope that big emerging-market countries—which depend on Europe as a key customer for their exports—could be part of a common solution to the European crisis. Several of their leaders indicated they could help down the road, but said that first Europe would need to take action.
Chinese leaders made clear they didn't see China as having an elevated role in Europe, despite the country's $3.2 trillion in foreign reserves. "We can't just go save someone," said Gao Xiqing, president of China Investment Corp., the country's huge sovereign-wealth fund, at a panel discussion Saturday. "We're not saviors. We have to save ourselves," he said.
China, often in the crosshairs at the meetings for its foreign-exchange policies, was seen as a potential engine of growth and investment. "Many economies with external surpluses, notably China, can support domestic demand by reducing the pace of fiscal consolidation," said an IMF report issued to its members over the weekend.
Zhou Xiaochuan, China's central bank governor, said it was unrealistic to think China could boost growth much more than the 9% pace it is running now. "Some people may have an irrational hope that the higher the growth the better," he said at a Saturday news conference. Annual growth of between 8% and 10% was a "reasonable expectation," he said.
He said Chinese outward investment was growing, but cautioned against unrealistic expectations. When it comes to overseas markets, "many Chinese investors and entrepreneurs are in the learning stage," he said.





- Euro Zone Death Trip

By PAUL KRUGMAN


Is it possible to be both terrified and bored? That’s how I feel about the negotiations now under way over how to respond to Europe’s economic crisis, and I suspect other observers share the sentiment.

On one side, Europe’s situation is really, really scary: with countries that account for a third of the euro area’s economy now under speculative attack, the single currency’s very existence is being threatened — and a euro collapse could inflict vast damage on the world.
On the other side, European policy makers seem set to deliver more of the same. They’ll probably find a way to provide more credit to countries in trouble, which may or may not stave off imminent disaster. But they don’t seem at all ready to acknowledge a crucial fact — namely, that without more expansionary fiscal and monetary policies in Europe’s stronger economies, all of their rescue attempts will fail.
The story so far: The introduction of the euro in 1999 led to a vast boom in lending to Europe’s peripheral economies, because investors believed (wrongly) that the shared currency made Greek or Spanish debt just as safe as German debt. Contrary to what you often hear, this lending boom wasn’t mostly financing profligate government spending — Spain and Ireland actually ran budget surpluses on the eve of the crisis, and had low levels of debt. Instead, the inflows of money mainly fueled huge booms in private spending, especially on housing.
But when the lending boom abruptly ended, the result was both an economic and a fiscal crisis. Savage recessions drove down tax receipts, pushing budgets deep into the red; meanwhile, the cost of bank bailouts led to a sudden increase in public debt. And one result was a collapse of investor confidence in the peripheral nations’ bonds.
So now what? Europe’s answer has been to demand harsh fiscal austerity, especially sharp cuts in public spending, from troubled debtors, meanwhile providing stopgap financing until private-investor confidence returns. Can this strategy work?
Not for Greece, which actually was fiscally profligate during the good years, and owes more than it can plausibly repay. Probably not for Ireland and Portugal, which for different reasons also have heavy debt burdens. But given a favorable external environment — specifically, a strong overall European economy with moderate inflation — Spain, which even now has relatively low debt, and Italy, which has a high level of debt but surprisingly small deficits, could possibly pull it off.
Unfortunately, European policy makers seem determined to deny those debtors the environment they need.
Think of it this way: private demand in the debtor countries has plunged with the end of the debt-financed boom. Meanwhile, public-sector spending is also being sharply reduced by austerity programs. So where are jobs and growth supposed to come from? The answer has to be exports, mainly to other European countries.
But exports can’t boom if creditor countries are also implementing austerity policies, quite possibly pushing Europe as a whole back into recession.
Also, the debtor nations need to cut prices and costs relative to creditor countries like Germany, which wouldn’t be too hard if Germany had 3 or 4 percent inflation, allowing the debtors to gain ground simply by having low or zero inflation. But the European Central Bank has a deflationary bias — it made a terrible mistake by raising interest rates in 2008 just as the financial crisis was gathering strength, and showed that it has learned nothing by repeating that mistake this year.
As a result, the market now expects very low inflation in Germany — around 1 percent over the next five years — which implies significant deflation in the debtor nations. This will both deepen their slumps and increase the real burden of their debts, more or less ensuring that all rescue efforts will fail.
And I see no sign at all that European policy elites are ready to rethink their hard-money-and-austerity dogma.
Part of the problem may be that those policy elites have a selective historical memory. They love to talk about the German inflation of the early 1920s — a story that, as it happens, has no bearing on our current situation. Yet they almost never talk about a much more relevant example: the policies of Heinrich Brüning, Germany’s chancellor from 1930 to 1932, whose insistence on balancing budgets and preserving the gold standard made the Great Depression even worse in Germany than in the rest of Europe — setting the stage for you-know-what.
Now, I don’t expect anything that bad to happen in 21st-century Europe. But there is a very wide gap between what the euro needs to survive and what European leaders are willing to do, or even talk about doing. And given that gap, it’s hard to find reasons for optimism.




- A Pékin, l'or s'achète désormais comme un Coca Cola
Par
Pierre Haski | Rue89 |
Machine à pièces d'or en Chine (CFP)
Si vous voulez comprendre pourquoi le prix de l'or atteint des sommets, regardez cette machine : ce distributeur automatique de pièces ou de mini-lingots d'or fait ses débuts ce dimanche en Chine. Signe s'il en était besoin, de l'engouement des Chinois pour le métal jaune.
Les promoteurs de cette machine, le groupe chinois Gongmei, associé à la Banque commerciale rurale de Pékin (rurale ? …), expliquent qu'elle fonctionne exactement comme un distributeur de boissons gazeuses, rapporte le site WantChinaTimes.
A une différence près : le prix de la pièce d'or est réévalué toutes les dix minutes pour s'ajuster aux fluctuations du cours mondial de l'or. Le métal jaune, valeur refuge en ces temps de crise financière, a atteint le 6 septembre son record historique de 1 921 dollars l'once, pour redéscendre vendredi à 1 666 dollars, ce qui reste considérablement supérieur à ce qu'il était il y a un an. (Voir le graphique sur un an)
Graphique de Gold.fr.
La machine a la capacité de produire 320 pièces ou mini-lingots d'or par jour. Elle sera installée dans des lieux publics où la sécurité est assurée, précisent les promoteurs. On s'en serait douté !






- [Sales of new U.S. homes dip in August :
Lack of demand reflects housing-market slump, poor economy->http://www.marketwatch.com/story/sales-of-new-us-homes-dip-in-august-2011-09-26]


By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The sale of new single-family homes fell in August for the fourth month in a row, indicating that the depressed U.S. housing market shows no signs of recovery.
Sales dropped 2.3% last month to an annual rate of 295,000, the lowest level since February, the Commerce Department said Monday. After peaking in 2011 at 316,000 in April, new-home sales have gradually declined.
Economists surveyed by MarketWatch had forecast sales to drop to 292,000 on a seasonally adjusted basis. Sales for July were revised up to 302,000 from an originally reported 298,000.
Sales fell the steepest in the Northeast, down 13.6%. Sales also declined in the West (-6.3%) and South (-2.4%).
In the Midwest, sales rose 8.2%.
While total sales are 6.1% higher compared to one year ago, they still sit near historically low levels. The weak housing market has been a big drag on the economy and that’s unlikely to change until the nation’s high 9.1% unemployment rate declines. Fewer families can afford to buy a home, or they are too concerned about the security of their own jobs to take the plunge.
As a result, the number of unsold new homes on the market fell again last month to 162,000, setting yet another record low. That represented a 6.6 month supply at the August sales pace, unchanged from the prior month.
The average sales price of a new home, which is not seasonally adjusted, sank 8.7% to $246,000, the lowest level since January 2009. The decline likely reflects the willingness of potential buyers to hold off on a purchase to take advantage of further price declines.
The sale of new homes has clung to a narrow range of 275,000 to 331,000 a month over the past year, suggesting that a turnaround is nowhere to be seen.
New home sales averaged 1.05 million a month in 2006 before a housing bubble popped and the market collapsed.
The median sales price, meanwhile, also fell by 8.7%, to $228,900 last month. Economists pay more attention to the median number in tracking new-home prices since it’s less volatile month to month.



- Citi forecasts 35% downside to equities by Q2 next year

It is pretty shocking to hear a top Citi analyst telling Bloomberg’s Linzie Janis that they are forecasting a scenario with a 35 per cent downside to equities by the second quarter of 2012 in line with what happened in the dot-com crash.
This is a reminder as if we need one that the downward trend in stocks that started in earnest in August is likely to continue for some time. Of course we do not know if this will be a repeat of 2008 with a severe fall this month and next followed by a rally and then another crash into a new low next March.


- Dallas Fed Misses Expectations as Hope Turns Negative For First Time Since April 2009

The Dallas Fed Manufacturing Index joined a long and distinguished list of recently disappointing macro prints by missing expectations - coming in at -14.4 versus an expectation of -11.4 (the fifth negative print in a row). While the Production sub-index was up and will provide fodder for bulls (it is still half what it was in July 2011), it is the drop in the outlook for future business activity to a -1.5 (the first such negative print since April 2009) that should have central planners the most concerned as borrowing demand is surely bound to drop further on these weak expectations.
Which combined with the Empire and Philly Fed prints indicates a rather worrisome estimate for ISM at 46.2.





- Greece needs to default on its debt and exit the eurozone

If the current Greek government can't take the necessary steps to do this, it should give way to other political forces than can

Greek students form a human chain during a protest march in Athens
Greek students at a protest march in Athens against economic austerity and planned education reforms. Photograph: Yannis Behrakis/Reuters
The demands of the EU, European Central Bank (ECB), IMF troika and the political climate in the northern parts of the eurozone have sent a clear message to the Greek people and the government of George Papandreou: "Do as we say, regardless of the consequences for you – or even for us." The demands go well beyond those prescribed by conventional economics. They will deepen the depression and make full debt repayment even less likely than it now is. Therefore, the clear, strong nudge is for Greece to default as soon as practicable.
Given the future prospects of following the current path, Greeks should welcome this opportunity. The trick, of course, is for the Greek government to develop within a short period of time the capability to default to the maximum benefit of the people it supposedly represents.
Preparing for default involves the formation of a large number of expert teams to defend Greek interests with conviction. For the debt that is based on Greek law, Greece has the upper hand. Negotiations for other debt will be more difficult and protracted.
Since Greek banks will become insolvent, they will have to be nationalised and preparations will need to be made for that. The insurance and pension funds will need to be bailed out, too. For both banks and funds to be bailed out, the country will need its own currency. Therefore, exit from the eurozone would follow.
Eurozone exit has been a taboo topic, especially in Greece. Whenever the taboo is broken, discussion is dominated by propaganda and scaremongering, often by employees of banks that stand to lose from such an eventuality. Let us review some of the relevant issues.
First, for the countries of the eurozone it has become apparent that there are only two clear options: political integration or breakup. Anything else is politically or economically unsustainable. Since there is no appetite for political integration, exit from the eurozone can be expected later anyway, when it could be even less advantageous for Greece.
Second, there is little doubt among economists that the easiest mechanism for a country to gain competitiveness is to have its currency depreciate. Hence, Greece having its own currency is the easiest path to gaining international competitiveness. Cars and iPhones will become more expensive but food might actually become cheaper and employment will pick up within a few months after the introduction of the new drachma. By contrast, unemployment and deprivation with no end in sight are the predictable results of following the troika's policies.
Third, without its own currency the country cannot even hope to have a semblance of democracy and national sovereignty in the future. Recent experiences attest to that. The alternative is to become a 19th-century protectorate of northern Europe, which exports its young and abandons its old and infirm.
The main problem with an exit from the eurozone is the transition period. Capital controls will have to be imposed. Temporary measures to ration foreign exchange for the importation of petroleum and other essential items will have to be undertaken. How will the Bank of Greece settle with the ECB? How will debt be converted from euros to drachmas?
It is clear that a tremendous amount of preparatory work is needed both for default and for exit from the eurozone, and much of it has to be undertaken in utter secrecy. Still, it has to be done – even if one were to disagree with exit from the eurozone. The reason is that such preparations would also enhance Greece's bargaining position with the troika. Instead of laughing at empty threats of renegotiation, as has occurred twice with the current finance minister, the troika would see that the government means business.
If the current Greek government can't or doesn't want to take such necessary measures that will preserve the country and its people, it should yield the field – with or without elections – to other political forces that are willing to do so.