English
All of the leaders of the EU say wacky things at times, but French president Nicolas Sarkozy sure takes the grand prize:
"Allowing the destruction of the Euro means accepting the risk of the destruction of Europe. Those who are destroying Europe and the Euro, will bear the blame for the reappearance of conflicts and division on our continent".
He said that one week ago, when he didn"t yet know that the EU summit, which had been postponed from October 18th to October 23rd, would be postponed even further until October 26th, when, it is rumored it will be postponed until October 30th (is this were an IQ test, you"d be asked: "What will happen on October 30th?")
Officially, the first postponement was accepted to allow the German legal advisors to study the ways of rescuing Europe, but as can be seen, they work very slowly.
"Millimeter by millimeter", Angela Merkel says.
In a typical German manner.
Or maybe they aren"t working at all.
Because they don"t have anything to work on.
In order to be able to actually work, they would have to be given a problem to tackle.
It is said that the homework they were given is "the rescue of the Euro and of Europe".
If we were to write "the euro and Europe" on "Google translate", in French, then most likely, once translated into Romanian it would say "French banks and France".
On the other hand, translated into German, the same expression would say "kein Geld" ("There isn"t no money" - of course, this can be achieved by using "Google translate" in conjunction with "Yahoo finance").
German Chancellor, Angela Merkel, and French president, Nicolas Sarkozy, have finally reached a complete consensus, and like Sarkozy wanted to, they are now speaking in a unified voice. It"s just that all they have to say is: "The talks are in a deadlock".
Because Angela and Nicolas are blaming each other.
• MERKOZY
Angela Merkel is asking Nicolas Sarkozy to choose between the default of Greece and a haircut on its debt (as much as 50-60%), which aren"t really alternatives, but rather lead to the same outcome: the collapse of the French banks (and of other banks in Europe), which would have dramatic consequences for Europe, even though they are not incalculable.
And if the French banks spiral out of control (and that"s if we only concern ourselves with them), then American banks won"t be able to avoid the collapse.
Of course Nicolas Sarkozy isn"t happy with such an idea (nor are many others), and so he is strikes back at Merkel with a fair principle - banks can"t be required to forgive Greece, exempting Greece from the repayment of its debt must be "voluntary".
Sarkozy is only right on the surface, because in reality, if the Greek debt isn"t waived, then the banks - let"s say the French ones - will have to keep its sovereign debt in their portfolios, which even their grand-grandsons may not live long enough to cash in, because it is hard to tell how many centuries it will take Greece to pay back its debts, if it even decides to pay them anymore, since Greek protesters have already begun making claims to the German debt of the Second World War, and if Greece doesn"t get ripped apart in a potential Third World War (it looks like it"s getting ready for one anyway, the way it"s buying French frigates and fighter jets, with the European bailout money), which would divide it into chunks to be fed to the banks, which will have already gone bankrupt themselves by then.
Nicolas is selling Angela the cat in the bag, saying that "everything aside, I have confidence in the Italian authorities" (in doing this, Sarkozy invalidated the French reputation of courtesy, because it wasn"t long ago that Berlusconi called Merkel "a fat cow"), trying to suggest that there is also that phantasmagoric possibility of economic growth in Europe, which would justify today"s investment in rescuing Greece with the money raised by the European Stability Fund, the European Central Bank (and pretty much everyone - the IMF, China, Russia, Japan, the FED and who knows who else, just so they can scrape together the 3 trillion Euros, which wouldn"t be enough to exit the crisis anyway).
Except economic growth should be filed under stupid ideas.
• KEIN GELD
Just as indecision is rampant, the Merkozy hybrid clamors: "Any solution must have the support of all the European institutions" (Nicolas) and "The recapitalization of banks concerns all of the 27 EU member states" (Angela) and (together) "France and Germany see the need for a global and ambitious response to the crisis".
But the ambition to strengthen the European Stability Fund with the money of the European Central Bank, quickly turned into weakness (beyond the firmness of Jean-Claude Trichet, who said that the ECB can never do the work of governments and that he can not use the money of the ECB to fix the failures of those governments, we see a bright neon sign saying: "kein Geld" - there is no money).
While the finance ministers have decided that banks need 100 billion Euros, for recapitalization, the IMF found a hole of 200 billion Euros in the European banking system, and analysts claim that the gap is far bigger - 275 billion.
KEIN GELD?!
Nothing could be easier!
We"ll just print more!
What"s the problem?!
Aren"t all Nobel Prize winners advising us to follow the lead of the USA?
They are printing money.
The Americans have caused the world crisis, follow their example.
The Americans are printing dollars, follow their example.
It"s not like the Europeans are dumb.
We"ll just print Euros!
We"ll give Greece Euros worth half what they are worth now to pay off its debts to the French banks so there is no need to grovel to Nicolas to have him accept the haircut on Greek debt.
Can you imagine?
We are going to have a 1 Euro / 1 Leu exchange rate!
If you don"t like that solution, then you have "Plan B", which you are going to like: postpone the EU reunion scheduled to take place tomorrow until October 30, and then postpone it until November 2nd - it can"t be that hard to postpone it indefinitely, every three days.
The idea is just to prevent it from actually taking place, because they would then have to say that there is no solution which would spark off a world cataclysm.
As long as it is being postponed, the markets are still hoping, and the wise guys seem to think there are still ways to escape.
There aren"t any.
• THE STRONG LEU
The time when the Europeans will be asking us to allow them to join the Romanian monetary system, and we will be imposing them harsh terms for accession, isn"t so remote, if we look at the fact that the European leaders can"t even coordinate well enough to avoid the overlap between two press conferences (Barroso/Van-Rompuy and Sarkozy/Merkel).
To say nothing of the flights of Sarkozy, from Paris, to Berlin, to have "tete-a-tete" meetings with Merkel, just as wife was giving birth (talk about passion!), in order to discuss the topic of bank recapitalization. In five days, between Friday October 15th, and Wednesday October 19th, there have been 9 (nine!) high level EU reunions: the finance ministers in the Eurozone; the finance ministers in the EU; EU foreign affairs ministers; the EU leaders; the Eurozone leaders; EU finance ministers (again); finance ministers in the Euro zone (again); EU leaders (again); Eurozone leaders (again).
This is beginning to look like a wake.
It"s just like in that joke with Yitzhak, the Jewish merchant who was lying on his death bed, and seeing that his wife Rachel and his son were both standing next to him he asked: "OK then, so who"s working in the store?!"
If all the European leaders and finance ministers and other ministers are watching Yitzhak"s bed, who"s left to mind the store?!
It"s enough to look at this feverishness and the constant postponing of making a decision from one reunion to the next, to come to the conclusion that the European leaders and its institutions can"t even come up with a plan on how to draft a plan.
All they can do is pray.
Sunday (October 23rd), was the final deadline which Sarkozy gave for rescuing Europe:
"If we don"t have any solution, then everything will collapse".
Well, Sunday has come and gone.
Failing any other solution, starting Monday the leu should begin to strengthen.
• BĂSESCU AND THE EU
Through his ultimatum-like and self-interested statements, French president Nicolas Sarkozy, has taken on a lot of responsibility, even though almost no one sees him as being capable of that anymore (according to some recent polls, the French would want Merkel as president).
"You missed a good opportunity to shut up. We are disgusted by your criticism. You said you are not interested in the Eurozone and now you are interfering in our meetings", Nicolas Sarkozy said to British PM David Cameron, at the EU reunion this weekend, which is when it was decided that the set of measures would be discussed by the representatives of all the 27 EU member states (because it affects everyone), but the final decision will be made on Wednesday by the states in the Eurozone.
Wednesday?
Perhaps.
One thing is certain, it will affect all of us, including Romania.
After a lengthy research, the revelation that Romania may be affected by the disaster in the Eurozone finally reached the mind our president, Traian Băsescu:
"Romania doesn"t have any problems in the banking sector. Unfortunately, even though the EU has not yet begun to make the payments needed to consolidate the banks, Romania is already bearing the cost of the bolstering of the European banking system. It does so through extremely high interest rates, because we have Romanian branches of the banks in the Eurozone - be them Austrian, French or Greek -, and through the interest rates for government loans and for private borrowers alike, which have already reached unacceptable levels.
Or, indirectly, Romania - a country which is outside the Eurozone, - has begun paying this capitalization of the banks in the Eurozone. One can"t shift the burden of the endless government borrowing from the highly indebted governments to those of countries that aren"t in the Eurozone. Which unfortunately, are also the poorest, which is immoral."
I like how the president thinks.
He"s thinking clearly, except it"s too late.
It won"t be long and he is going to understand that we aren"t doing as great as he thinks.
Perhaps he is still thinking.
Maybe someone should tell him that the solvency of a country can be calculated in many ways.
And that the way it is currently being calculated isn"t the accurate.
At least, not when considering the truly disastrous consequences of a Greek collapse.
Not the interest, "mon cher"... as Sarkozy would say.
That"s just small change.
The real problem is the size of the capital of the foreign banks operating in Romania.
You see?
These days, president Traian Băsescu made several statements after attending the autumn meeting of the European Council in Brussels, at the end of last week, and the meeting which he had yesterday morning with NBR governor, Mugur Isărescu, PM Emil Boc and other members of the government, at the Cotroceni Palace. Today, president Traian Băsescu will once again travel to Brussels, where he will meet with the president of the European Commission, Jose Manuel Barroso, and tomorrow he will attend an extraordinary summit of "The 27", a meeting which precedes the reunion of the countries in the Eurozone.
•
• Statements made on October 24th:
President Traian Băsescu yesterday said that during the talks held at the Cotroceni palace it was decided that the deficit target needs to be revised, and that "it would be a good thing" if it were "much lower" than 3% and that the Government needs to find solutions to lower the need for borrowing. He added: "We have all come to the conclusion that the deficit target needs to be revised. Due to the high borrowing costs, it would be wise to approach the 2012 budget with a deficit much lower than 3 percent. It will be the Government"s job to determine how much lower, to come up with solutions to lower the need to borrow from the domestic and foreign market, due to the unsatisfactory evolution of the interest rate, as well as due to the delay of the EU in making a decision on Greece.(...) The 2012 budget needs to be extremely cautious, not necessarily because we don"t have the money needed to finance the deficit, but rather because funding the deficit is < extremely expensive >".
•
"The official rate of EU funds absorption in Romania is 14.8% of the allocated amount (...) We are having major problems in invoicing the works. Missing these invoices, we are spending money from the budget and we are not absorbing European funds. We need to accelerate the billing, verification and invoice validation process. The settlement of the amounts already spent on European financing programs is a problem.
People with political responsibilities must handle this process".
•
"There will no pension cuts or additional taxes on pensions in 2012. The Government and the Ministry of Finance are still reviewing whether inflation adjustment of the pensions is possible. There is no question of lowering pensions or salaries".
•
"Romania has problems first and foremost because of Greece, the entire region has been contaminated, and I assure you what I am saying isn"t offensive to anybody".
•
"There is no country in the world that is going to finance its deficit for the current year alone. Romania also has to finance its loans taken on in the previous years".
•
"My appeal to cautiousness, responsibility and accurate information is a duty. We can only endure this moment by working together".
•
"Romania isn"t doing that bad compared to other countries, but the situation in the markets isn"t adequate for financing the debt. That is why the government, through its budget, needs to limit the degree of indebtedness".
•
"The budget shouldn"t affect investments. Romania shouldn"t abandon making investments. Public investments are what allowed us to maintain an acceptable level of unemployment, it is a safe engine for job creation. We shouldn"t lower the amounts spent on state investments".
•
"Our advantage is the fact that the political factor - the government and the NBR - are aware of the risks which might arise. What we need is the political courage to make the decisions needed and not to raise our debt, which is currently acceptable. Romania has a rate of indebtedness of 31.8% of the GDP, the maximum level set for Europe is 60%".
•
• Băsescu: We want the foreign banks to maintain their exposure to Romania
President Traian Băsescu yesterday said that the adequate conditions to encourage foreign banks to maintain their exposure to Romania must be created. According to him, the European assessment (ed. note: that banks might need an additional 100 billion Euros of capital) may not take into consideration the need to maintain exposure to non-Eurozone countries and for that reason, finance minister Gheorghe Ialomiţianu was empowered to raise this issue with the Ecofin.
Traian Băsescu said: "I have raised the issue of the recapitalization of banks on the board and during the previous meetings. I have not questioned the figure mentioned today (100 billion Euros for recapitalization or for capitalization). I had a different question: whether the amounts which the banks will receive will be enough to also cover our need to have them keep the exposure of their Romanian branches unchanged this year and next year.
I have empowered our finance minister to insist at the meeting of the Ecofin council of Wednesday morning, when the finance ministers will get together, on the introduction of a paragraph that would also create the conditions needed to maintain the exposure to Romania of the banks operating here.
The reason why I insist for this to happen at the Ecofin is the fact that after the Ecofin meeting, the European Council will meet, at 18 o"clock, on Wednesday, to review the proposals concerning the states in the Eurozone. It would definitely be easier for me if there was a document that concerns this issue. If we can"t present this kind of warning at the Ecofin, I will need to discuss it directly with the Council. But the place where the problem should really be discussed at is where all those who are present can understand it, namely at the meeting of the Finance Ministers.
The European assessment is that European banks would need a capitalization of about 100 billion Euros, and the evaluation of the IMF is that they would need 200 billion. So my analysis also included the fact that the European evaluation might not take into account the need for banks to maintain exposure to non-Eurozone countries".
Euro
Dolar SUA
Franc elveţian
Liră sterlină
Gram de aur
