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Posts Tagged ‘European Union’

Rise to the top of government are a number of technocrats from international agencies.

A number of political leaders in Europe continued to fall. And it’s because of the economic crisis that swept the region. After bouncing from chair George Papandreou Greek prime minister, Silvio Berlusconi this time must be willing to lose the premiership of Italy.

Berlusconi resigned as Prime Minister shortly after meeting with Italian President, Giorgio Napolitano, in Rome. The resignation was reported by the media crowded around the world, Sunday, November 13, 2011. The new government is expected to save the country from the storm.

Domestic producer of wine grapes was being intoxicated by the economic crisis. And the trigger is a mountain of debt. Italy has a debt of 1.9 trillion euros. Approximately U.S. $ 2.6 trillion. With such a high amount, the debt has become 120 percent of gross domestic product (GDP) state spaghetti.

Italian debt securities with a maturity period of 10 years has also touched the interest rate that exceeds 7.6 percent on Wednesday last week. With interest rates like that, the economy had entered the emergency department. Take a look at a number of other countries in crisis swept the region. With only 7 percent interest rate, Greece, Ireland, and Portugal, was forced to ask for bailout loans.

Italian crisis will be more widespread effect on the European crisis than Greece, Portugal and Ireland. For Italy the top three economies in the euro zone. Italy’s debt concerns, if not handled properly, will hit the European economy as a whole. Treat this country as soon as possible can reduce the domino effect of the crisis.

That’s why, shortly after saying good-bye Berlusconi, Italian President Giorgio Napolitano began holding talks with the parliament about the new government. And former European Commissioner, Mario Monti, seems to be the favorite to replace Berlusconi, Italy and led through the storm crisis.

Last week, Monti had indeed been appointed as a Senator for Life by President Napolitano, as a precaution and give peace to the financial markets, after Berlusconi pledged to resign.

Prior to officially withdraw Berlusconi, Monti had indeed made a number of measures, among others, met the European Central Bank President Mario Draghi. Monti also has met with a number of parties in Italy, in anticipation of the transition Berlusconi’s resignation.

Mario Monti therefore expected to form a government composed of technocrats, before the market opens on Monday. Today, Monti has received support from the opposition, and accepted by Berlusconi’s party, the People’s Freedom Party. At least, there are a number of tasks to be done Monti: control debt and maintain high levels of borrowing, as well as distancing Europe from the financial crisis is more widespread today.

Papandreou Create Anxiety

Before Italy, the impact of the debt crisis to befall the Greek national leadership. Former Vice President of the European Central Bank, Lucas Papademos, was appointed to replace the Greek Prime Minister George Papandreou.

Greece Papandreou urged the opposition to resign, because his plan to hold a referendum related to the bailout (bailout) from the European Union. The idea of ??this referendum will determine whether even initially Greek remained in the euro zone and use the euro currency.

The referendum was not completed. But the discourse that emerged Papandreou incensed a number of major European leaders, notably German Chancellor Angela Merkel and French President Nicolas Sarkozy. The reason Germany and France last week was desperately fighting for Greece in order to cut its debt to the private sector 50 percent. In addition, the EU has also agreed to provide new debt to Greece.

In lieu of Papandreou, Papademos known as a respected figure among financial markets and European politics. Papademos also promised to do their best to take Greece out of the crisis with minimum impact to the interests of the people and the fate of European economies.

“The choices we make will be decisive for the Greek people. The road will not be easy but I believe the problem will be solved faster and with less cost when there is unity, understanding, and prudence,” said Papademos.

Papademos assess the urgent task now is to formulate the implementation of emergency debt relief (bailout) which has prepared the EU with a total value of 130 billion euros (U.S. $ 177 billion) as well as preparing for elections next year.

EU awaits Solutions

In addition to Greece and Italy, at least four other countries which are also threatened crisis. Four countries are Ireland, Portugal, Cyprus and Spain.

Observers from the United States economy, Nouriel Roubini, argued, in the last decade PIIGS countries (Portugal, Ireland, Italy, Greece or Greek, and Spanish), is countries in the euro zone that promotes consumption, spending more than opinion, and has a deficit high budget.

Conversely, countries that became the core of the euro zone (Germany, Netherlands, Austria and France) to state that promotes the production, lower expenses than revenue, and budget surpluses.

Level of spending was out of control, especially during the bubble in the property, the budget deficit, the fiscal gap. All of these problems ambulancemen economic stagnation and those countries unable to compete.

To overcome some of the economic crisis, the EU has also agreed a number of steps rescue the debt crisis. One important decision was to agree the addition of idle funds for the bailout, from 440 billion euros to around 1 trillion euros (U.S. $ 1.4 trillion). This funding is expected to be a step in anticipation of facing debt crisis, including those currently facing Italy.

Another agreement is related to reduction in payments to private Greek bonds. Banks and insurers agreed to reduce their receivables to Greece by 50 percent.

EU leaders also agreed on recapitalizing the banking system. In June 2012, the minimum capital of banks increased to around 106 billion euros and open the possibility the government could intervene in addressing the problem at the bank concerned.

EU leaders hope that these steps will protect Europe from potential default on the debt crisis-stricken countries, while preventing countries with larger economies – such as Italy and Spain – from the brink of crisis.

China Worried European Debt Crisis will Affect Trade

China’s Ministry of Commerce expressed their concern that Europe’s debt crisis could lead to trade friction and hinder exports from China. The comments came after European countries are being hit by the debt crisis to blame Beijing for alleged trade barriers. Meanwhile, China also urged the EU to give China a chance to compete in global markets under world trade rules that can eliminate barriers to trade.

EU current crisis is feared to sharpen the occurrence of bilateral trade friction, thereby potentially adverse economic and trade relations between China-EU. “Of course, we believe there is always opportunity in crisis. Each person can work hard together to turn crisis into opportunity,” said the minister of trade.

Beijing is also under pressure from Washington and other trading partners to stop fixing the exchange rate that makes the value of the yuan undervalued and encourage China’s trade surplus. China’s government has allowed its currency to strengthen, but not as fast as observers.

U.S. Trade Representative Ron Kirk is also planning a “major trade pressure” against China. The Chinese government was disappointed that his country has not been recognized as a market economy country by the European Union, despite its rapid economic transformation.

“After 30 years of reform and opening up, China has made a major transformation of guided economy to a market economy, but the EU still does not provide a full market economy status. That’s why the government feels very disappointed,

Financial Risk Rises in the U.S. and Europe

The International Monetary Fund said that the current global financial system becomes more vulnerable than the crisis of 2008. The risk of banking and financial markets have increased in recent months.

The IMF said European leaders should quickly implement the agreement reached in July to provide a more flexible bailouts, while the United States and Japan should prepare measures to reduce the deficit.

The IMF also cut its forecast of global economic growth, the United States and Europe for this year and 2012. IMF’s European region continues to urge the government to solve the financial problems that could become a major threat for the global economy.

Political feud between the leaders of Europe have hampered the EU in achieving sustainable solutions. IMF to contribute U.S. $ 41 billion of bailout funds Greek total of U.S. $ 150 billion sought by European leaders in May 2010.

While the big European banks that hold large amounts of Greek bonds and other troubled countries are encouraged to increase their capital reserves from the market in order to avoid greater losses. But if the funds were not available, the government should provide bailout.

In the United States, policy makers are also urged to take measures to improve the financial condition of U.S. households. One way is by pressing the mortgage debt for customers who do not “bankable” to spur consumer demand and support growth.

The IMF says that restoring confidence in the stability of the U.S. housing market is key to strengthening the performance of U.S. banks in the future

The Prime Minister, José Luis Rodríguez Zapatero, said today that “there are no plans on the horizon of having to make new adjustment measures, although he has made ??clear that Spain has regained market confidence “will not lower our guard.”

At a press conference in Beijing at the end of a meeting with Chinese investors, Zapatero has stressed that “Spain has done its homework” with its fiscal consolidation and reforms, has ensured that will meet the forecast deficit and noted that its economy will grow gradually, but “will cost more” regain employment.

Stressing that the confidence shown by Chinese investors in Spain coincides with the view of most analysts, has considered the request for assistance made by Portugal to the EU “has put an end to the risks” of sovereign debt euro area.

In his view, the results of the “efforts” made by Spain have generated increasingly widespread view at the IMF, the European Commission, OECD and among the major investment funds, “Spain generates enough confidence to to say that we will meet the deficit. “

In so far as to achieve more confidence in Spain, pointed out, will advance the recovery and growth and speed recovery when there will be “more slack in fiscal policies.”

In fact, as stated, the Government’s intention is to adopt “incentive measures”, whether or not fiscal stimulus.

In this context, he recalled that the country has to implement all the reforms adopted in the framework of the EU, the euro pact with measures to increase competitiveness.

Zapatero intended to send a “message of hope” to Portugal, Ireland and Greece, which faces a “difficult task” and has insisted that Spain will not relax but now enjoy an atmosphere of confidence in the markets.

“We will not let our guard down, Spain still needs to complete reforms” and should remain “firm” in austerity, said recalling, for example, that collective bargaining should be reformed, increasing export capacity in the country and attract investment.

Zapatero has stressed the confidence shown by the Chinese authorities and investment funds in Spain and China has ensured that is based on a “thorough knowledge” of the situation in the country, its economic, reforms approved Treasury’s ability and potential for growth.

The Spanish chief executive has given the press conference after meeting with the Spanish ambassador’s residence in Beijing with officials of the Bank of China, the People’s Bank of China, the State Administration of Foreign Exchange, the Citic Bank, Investment Corporation Banking Regulatory Commission.