Reuters blog archive
Ukraine continues to top the European worry list.
Monday demonstrated how quickly the financial side of the equation can spiral out of control. The hryvnia currency slumped and the cost of insuring against Ukrainian default soared, forcing the central bank to intervene and urge its citizens not to spark a bank run.
Having turned its back on the EU, Kiev must find more than $17 billion next year to meet gas bills and debt repayments. Presumably Russia will have to help out if it is not to have a basket case on its doorstep.
Has Vladimir Putin factored that into his diplomacy? He is certainly concerned, describing the protestors who blockaded government buildings on Monday of pursuing pogrom – about as loaded a term as he could choose – engineered by “outsiders”, not revolution.
His apparent victory in persuading President Viktor Yanukovich to look to Moscow rather than Brussels could prove short-lived.
from Photographers' Blog:
By Vincent Kessler
To be totally honest I didn't see Vittoria at first glance when I took pictures of her and her mother, Italian MEP Licia Ronzulli, for the first time on September 22, 2010.
The European Parliament plenary room is a giant hemicycle for the 766 MEP’s elected from the twenty-eight Member States of the enlarged European Union. It's not easy to see in detail what's going on with each lawmaker especially when seated in the back rows, and when your shooting position is on a 10-meter-high balcony.
The decision by one of Silvio Berlusconi's key allies to break from his party and back Prime Minister Enrico Letta's fragile coalition appears to have shored up the Italian government with a final vote on expelling the media magnate from public life looming large.
Berlusconi said on Saturday his rump centre-right party had split from the coalition but did not have the numbers to bring it down.
Angelino Alfano, interior minister and deputy premier, said all five of the centre-right ministers under his umbrella would stay in the government but there is still plenty of disagreement within the coalition about the 2014 budget and doubts about Letta’s ability to push through meaningful economic reforms.
New European Commission macro forecasts for the euro zone and the EU have been given added significance by an alarming drop in inflation to 0.7 percent which has heaped pressure on the European Central Bank to ward off any threat of deflation.
There are myriad other questions – Will the Commission predict that Italy will miss its deficit target? What will it say to those countries in bailout programmes – particularly Greece, where the troika returns for a bailout review today, and Portugal? And what about France’s sluggish economy? PMI surveys on Monday showed it is acting as a drag on the euro zone recovery.
The European Central Bank will announce the methodology which will underpin the stress tests of about 130 big European banks next year.
It is caught between the devil and the deep blue sea. Come up with a clean bill of health as previous discredited stress tests did and they will have no credibility. So it is likely to come down on the side of rigour but if in so doing it unearths serious financial gaps, fears about the euro zone would be rekindled and there is as yet no agreement on providing a common backstop for the financial sector.
Talks between Angela Merkel’s CDU and the centre-left SPD will resume on forming a German grand coalition but any agreement is probably weeks away yet.
With the Greens having bowed out at least we now know it will be a joint administration of the big two parties or fresh elections. The former remains odds on.
Greece will unveil its draft 2014 budget plan which is expected to forecast an end to six years of recession.
The draft will include key forecasts on unemployment, public debt and the size of the primary surplus Athens will aim for to show it is turning the corner. The government has said any further fiscal belt-tightening will not bring cuts in wages and pensions and that savings will be generated from structural measures.
Of the week’s economic data, today’s UK unemployment stands out since the Bank of England has pegged any move up in interest rates to a fall in the unemployment rate from 7.8 percent to below 7.0. The rate is forecast to have held at 7.8 percent in July.
Bank of England Governor Mark Carney has struggled to convince markets of his contention that interest rates are unlikely to rise for three years because the jobless rate will fall only very slowly. Interest rate futures – short sterling – spiked higher after last week’s policy meeting which offered no change of direction and no statement.
from Photographers' Blog:
By Peter Andrews
I remember my mother taking me to the airport on June 10, 1981. In theory, everyone knew I was leaving for three weeks, but both of us really knew that I would not be coming back. I was nineteen at the time and wanted to see a different world, a world outside the so called Iron Curtain.
My mother didn't show sadness but I could see tears in her eyes when she said good bye to me. I saw her twice in ten years. Once after four years, when she visited my new home, Canada, and later in Germany when the Berlin Wall was coming down. Our contact was scarce. In those days, it was very difficult to call out of Poland, especially after martial law was introduced. Later, when martial law was lifted, it was a bit easier, but still there were only land lines. No mobile phones, no Internet, no Skype - only written letters put inside envelopes, with a postage stamp and sent from the post office. It was only when the Soviet Union collapsed and the so-called evil empire ceased to exist that I was able to see her freely. It is only when you are not able to see your parents often that one notices how age works on people.
The European Commission will present its blueprint for a body to refloat or fold troubled banks, largely in the euro zone. As we’ve said ad nauseam, there is no chance of a great leap forward on this front ahead of Germany’s September elections. The question is whether Berlin’s line softens thereafter.
Brussels will suggest a cross-border body able to overrule national authorities. Germany is opposed and says that would require treaty change which could take many years. Beyond that the EU’s executive appears to have pulled its punches somewhat.