EUCOM Economic Analysis - Part I

[Fuchs]

Debt doesn't mean that much in macro as long as the creditors are domestic. The Euro area as a whole still has an accumulated trade surplus from '99 till today.
http://www.tradingeconomics.com/euro...lance-of-trade

Any look at Europe as if it's sick as a whole is laughable.There's no unusual problem on the whole.


Someday we will probably figure out how to tax correctly to finance the public services. To issue bonds instead of just grabbing the necessary revenue looks like a comfortable way for politicians, but it's clearly an inferior alternative.
The free capital flows to exotic countries and the international competition among labour has supposedly made it difficult to tax rigorously, but the more detailed you look at it, the more this assumption becomes implausible.

[Firn]

Originally Posted by Fuchs

Debt doesn't mean that much in macro as long as the creditors are domestic. The Euro area as a whole still has an accumulated trade surplus from '99 till today.
http://www.tradingeconomics.com/euro...lance-of-trade

Any look at Europe as if it's sick as a whole is laughable.There's no unusual problem on the whole.

I think we discussed this already, but it is well worth to repeat it. While things are bad, with so many having their life screwed up it is quite not yet Europadaemmerung...

[ganulv]

From a Spanish friend of mine:

[Firn]

Well I have already written that in Italy you can pretty much graph the the rise of public sector employees along the north-south axis. As you can for the auto blu, the absentismo, legally blind and highschool marks. The south has just more of almost everything, not only the sun light.

The Corriere run yesterday an article about the surprising increase in productivity of a harbour in the deep South which was on the verge of a collapse. In this case la "Santa Fifa" ("holy fear") seemed to do the local economy good.

There is without any shade of doubt a vast potential for productivity which has to be unlocked. Italy needs many deep political and economical reforms and may a cultural one as well. Ideally there also would be strong deficit spending and lower taxes on the work force but we have managed to gets us into a tight bind in which escape becomes very difficult.

[Surferbeetle]

...and make this week's ECB meeting fruitful?

Eurozone break-up would trigger £1 trillion of QE, see banks nationalised and deep recession, warns Fathom, By Philip Aldrick1:16PM BST 31 Jul 2012, The Telegraph, http://www.telegraph.co.uk/finance/f...ns-Fathom.html

The economy would shrink by 5.2pc in 2013 if the euro collapsed, according to Fathom Consulting – a projection that former Bank of England deputy governor Sir John Gieve described as “modest”. In 2009, the worst year of the recent recession, the economy shrank by just 4pc.

Sir John added that the Government will have prepared contingency plans “to nationalise the banking system, for example” and warned that a euro collapse would leave Britain vulnerable to an attack from the markets. Speaking about the UK at Fathom’s quarterly Monetary Policy Forum, he asked rhetorically: “If you [traders] think Europe’s going down the plughole, who’s next?”

Euro climbs, but gains seen limited before ECB, By Michael Szabo LONDON | Tue Jul 31, 2012 8:13am EDT, Reuters, http://www.reuters.com/article/2012/...86E0JJ20120731

Investors are focused on Thursday's ECB policy meeting after bank chief Mario Draghi pledged last week to do whatever was necessary to preserve the euro. That raised expectations of a bold ECB response, a move that could boost the currency.

While the U.S. Federal Reserve is likely to hold off from adopting another bond-buying program at its two-day policy meeting that starts later in the session, some players think it might adopt such monetary stimulus in coming months. Investors will also eye Chicago PMI data for July, house prices for May and personal income and spending for June.

[Firn]

To be honest reading the papers recently reminds me of the boy who cried wolf. In this case the wolf is ever present and certainly very dangerous, but it is a tiresome business to keep watch.

Why a country like the UK which can finance itself for basically nothing does not invest in such hard times is beyond me. It is obvious that the private sector has been fueled too much for too long and is, as basic macro predicts, enough unable to adjust itself smoothly. Those able to spend should spend - wisely for the own good. In this case the UK is more then Germany able to help others by helping itself.

A weak Euro would actually help the Eurozone quite a bit, sadly the internal "spread" will harldy be changed by external devaluation with the healthy & productive economies gaining most from it. But every bit helps, especially in the very cost-critical sectors in which the Italian and Spanish companies competed against countries with different currencies.

[Surferbeetle]

It is curious that 'progress towards resolution' only appears to occur when the financial hobgoblins run free and terrorize all.

It's probably quite naive on my part, but I often wonder why the big five (Germany, France, UK, Spain, and Italy) can't just sit down together, develop a coherent (and lean) plan, run it through the democratic process, and just get it done. Yes, there have been nineteen official get-togethers, numerous referendums...yet here we all are, still skipping along the edge of financial armageddon.

Stone soup: the UK has some heavy duty financial expertise, Germany has it's east/west unification experience...and everybody has engineers who love to build things

Then again, who am I to say anything...my congress (the 112th in particular) still can't get it together either......maybe it's all the lawyers and the decided lack of engineers in Washington?

[davidbfpo]

Firn,

I will try answer your questions:

Why a country like the UK which can finance itself for basically nothing does not invest in such hard times is beyond me. It is obvious that the private sector has been fueled too much for too long and is, as basic macro predicts, enough unable to adjust itself smoothly. Those able to spend should spend - wisely for the own good. In this case the UK is more then Germany able to help others by helping itself.

The Labour government spent a large fortune on the public / state sector, adding IIRC 400k to the public payroll whilst in office and using private funding for a number of capital programmes e.g. new hospitals, called PFI (Public Finance Initiative).

The coalition for reasons that elude my level of understanding have embarked on Quantitative Easing (QE), printing electronic money which is then sold to the banks who then use the cheap cash to lend - 375billion UK Pounds to date. Even with the rate of interest being 0.5% there is little sign the banks are lending.

This may explain:http://www.bbc.co.uk/news/business-15198789

The coalition continues to press for reductions in public spending, for ideological and other reasons - especially avoiding pension payment liability. It does announce major capital projects, notably railways, all of which have long lead times and are unlikely to impact the current economy / employment rates.

[Firn]

Originally Posted by davidbfpo

Firn,

I will try answer your questions:

The Labour government spent a large fortune on the public / state sector, adding IIRC 400k to the public payroll whilst in office and using private funding for a number of capital programmes e.g. new hospitals, called PFI (Public Finance Initiative).

The coalition for reasons that elude my level of understanding have embarked on Quantitative Easing (QE), printing electronic money which is then sold to the banks who then use the cheap cash to lend - 375billion UK Pounds to date. Even with the rate of interest being 0.5% there is little sign the banks are lending.

This may explain:http://www.bbc.co.uk/news/business-15198789

The coalition continues to press for reductions in public spending, for ideological and other reasons - especially avoiding pension payment liability. It does announce major capital projects, notably railways, all of which have long lead times and are unlikely to impact the current economy / employment rates.

This is a crux of the matter. There is a strong human tendency and an ingrained social/organizational imperative to do as others do around you, from following the herd in emergencies to investing into the stock market or into a country. It is just amazing how the Spanish provinces built white elephant after white elephant, be it airport or museum. As long something works and makes money people will likely buy into it, be it the private investor or the political party.

Some countries have managed to bring themselve into a very tight bind, like Italy with terrible policies, both public and private ones. The UK has had too much easy credit, possibly too much of a public sector boom with all the strings attached but it still has far more room to maneuver to a great deal thanks to that electronic printing press delivering virtual pound sterling.

It has relative high unemployment and should act on it. The big recent austerity policy is mostly about cutting into the flesh of the nation. The aim can be arguably correct but the means of getting there are terrible even in the longer term. Indeed the current crisis has been going on for an amazing amount of time with the economy going south again from a low level.

P.S: As most heavily taxed Italian I'm strongly in favoured in much more reduced Italian public sector because I know how that money gets sometimes spent even here in the more "European" north. And how Monti can call the current tax increases here and there and there again "spending review" (in neoitalian) beggars belief.

[Surferbeetle]

Spain's Rajoy Hints Bailout a Possibility, By JONATHAN HOUSE, 3 Aug 2012,
WSJ, http://online.wsj.com/article/SB1000...462042862.html

Spanish Prime Minister Mariano Rajoy opened the door—slightly—to requesting support from the euro-zone bailout fund to help ease Spain's deepening financial crisis.

In recent days, however, Spanish officials had begun to concede in private that in the absence of a more active ECB, the government could be forced to ask for aid from the bailout fund.

Mr. Rajoy's government Friday also approved the outline of draft budget plans for 2013 and 2014 that it must submit to the European Union under new fiscal monitoring procedures. They contain more than €89 billion in spending cuts and tax increases to help the government meet its target of a budget deficit equal to 2.8% of gross domestic product in 2014, down from 8.9% in 2011.

Rajoy Will Consider Bond Buying Request to Protect Spain, By Angeline Benoit and Emma Ross-Thomas - Aug 3, 2012 11:17 AM MT, Bloomberg News, http://www.bloomberg.com/news/2012-0...ect-spain.html

Spain’s Prime Minister Mariano Rajoy said he would consider asking Europe’s bailout funds to buy Spanish debt if it were for the best for the country, as he called for a crisis meeting of the region’s finance chiefs.

“I will do what I always do, act in the best interest of Spaniards,” Rajoy said at a news conference in Madrid today, when asked whether he would consider making a request. He needs to see more details on what the European Central Bank is planning in terms of bond buying and non-conventional measures before taking any decision on seeking support, he said

Still, Rajoy, who declined to say whether he would apply for help at a joint press briefing with Italian Prime Mario Monti yesterday, said he needs more details before deciding whether to trigger support. The European Financial Stability Facility can buy bonds on the market if nations ask for it, and the European Stability Mechanism, the permanent successor aid fund that is awaiting final approval, will also be able to.

The Cabinet also approved a budget plan through 2014 to be submitted to the European Commission. The document details 102.1 billion euros of spending cuts and tax increases to reduce the nation’s budget gap, the third-largest in the euro zone, to 2.8 percent of GDP by 2014 from 8.9 percent last year.

Spanien will mehr als 100 Milliarden Euro einsparen, 03.08.2012, 18:54 Uhr, aktualisiert heute, 19:39 Uhr, Handelsblatt, http://www.handelsblatt.com/politik/...n/6961152.html

Das EU-Sorgenkind Spanien erhöht die Sparanstrengungen. Bis 2014 sollen knapp 40 Milliarden Euro mehr eingespart werden. Trotz aller Bescheidenheit: Ein Hilfegesuch an die EU will Madrid nicht ausschließen.

Die EU-Kommission hatte von Madrid die Vorlage der Haushaltspläne für 2013 und 2014 verlangt und Spanien im Gegenzug beim Abbau des Budgetdefizits ein Jahr mehr Zeit gegeben.

Die in Brüssel vorgelegten Pläne gehen davon aus, dass Spaniens Wirtschaft 2013 um 0,5 Prozent schrumpft und 2014 ein Wachstum von 1,2 Prozent erzielt. Madrid will die Neuverschuldung von 8,9 Prozent des Bruttoinlandsprodukts im Jahr 2011 bis 2014 auf 2,8 Prozent senken.

Rajoy asegura que no tiene tomada 'ninguna decisión' sobre el rescate, 3/8/2012, El Mundo, http://www.elmundo.es/elmundo/2012/0...343959517.html

Devuelve la pelota a Bruselas y exige conocer, antes de solicitarlo, las medidas "no convencionales" anunciadas el jueves por Draghi.

[Surferbeetle]

European Central Bank, Monthly Bulletin, http://www.ecb.int/pub/mb/html/index.en.html/

Monthly Bulletin

With the Monthly Bulletin the ECB meets its legal requirement to publish reports on the activities of the ESCB at least every quarter (as per Article 15.1 of the Statute of the ESCB). The Bulletin is published one week after the monthly meeting in which the Governing Council of the ECB takes its monetary policy decision. It explains this decision and makes it more transparent by providing a detailed analysis of the current economic situation and risks to price stability.

Contents

The Editorial summarises the Governing Council's assessment of present data. To a large extent, the Editorial contains the same information as the Introductory Statement given at the press conference where the monetary policy decision is announced.

The part “Economic and Monetary Developments” includes information on:

• The external environment of the euro area
• Monetary and financial developments
• Prices and costs
• Output, demand and the labour market
• ECB staff macroeconomic projections for the euro area (in the March and September issues)
• Eurosystem staff macroeconomic projections for the euro area (in the June and December issues)
• Fiscal developments (in the March, June, September and December issues)

Each Monthly Bulletin also includes articles (except for the March, June, September and December issues), euro area statistics and annexes. See article and boxes by topic.

[Surferbeetle]

French Court Clears Adoption of European Fiscal Treaty, By DAVID JOLLY and JACK EWING, Published: August 10, 2012, NYT, http://www.nytimes.com/2012/08/11/bu....html?src=recg

France’s highest court has ruled that the fiscal treaty European Union leaders agreed to earlier this year does not require an amendment to the French Constitution, clearing one more hurdle to adoption of the pact.

The decision leaves a German legal challenge next month as the next major obstacle to adopting the pact, which would bind euro currency union members to stricter fiscal and financial discipline in their future budgets.

French court hands Hollande victory with EU ruling, By Catherine Bremer and Daniel Flynn, Thu Aug 9, 2012 4:37pm EDT, Reuters, http://ca.reuters.com/article/topNew...120809?sp=true

France's Constitutional Council ruled on Thursday that the EU's budget responsibility pact did not require a change to the constitution, easing its path to ratification and removing a headache for Socialist President Francois Hollande.

The ruling allows Hollande's government, which had insisted it would not write a budgetary rule into the constitution, to press ahead with implementing the pact in September using a "super-law" which it can pass with its parliamentary majority.

A constitutional reform would have required a three-fifths majority of a special joint session of parliament, forcing Hollande into an embarrassing reliance on the conservative opposition and potentially delaying ratification until December.

It would have also entailed a lengthy debate on Europe which would have exposed bitter divisions in Socialist ranks, reviving painful memories of Hollande's failure in 2005 to unify the party in support of an EU Constitution, which was later rejected in a national referendum.

Many on the French left say the new pact allows Brussels to dictate national policy by allowing it to impose sanctions on countries that fail to respect a structural deficit ceiling of 0.5 percent of gross domestic product (GDP).

In its ruling, however, the Council said the treaty impinged no further on national sovereignty than existing EU budget rules, which impose deficit limits on euro zone member states.

"The Treaty of Stability, Coordination and Governance ... limits itself to repeating, and reinforcing, existing engagements," the ruling said. "There is no transfer of powers in terms of economic or budgetary policy."

The fiscal pact, signed by EU leaders in March, must be ratified by 12 countries before it can come into force in January, with the aim of calming investors concerned at heavy public debts.

Constitutional Council of the French Republic, http://www.conseil-constitutionnel.f...mepage.14.html

Cour De Cassation, France, http://www.eurofound.europa.eu/emire...MECOURT-FR.htm

It’s hotter in Karlsruhe than you think, Posted by Masa Serdarevic on Jul 12 17:30., FT Alphaville, http://ftalphaville.ft.com/blog/2012...han-you-think/

Admittedly the words Karlsruhe and German and constitutional court lack any sex factor, but the relative lack of attention the case is getting seems a bit odd to us given what’s at stake. We’d expect the markets to be just a bit more het up about it.

So would Martin Lueck, an economist at UBS, who argues in his latest note that too many investors don’t understand the situation and are just assuming that the court will yield to the markets’/politicians’ pressure and let ratification of the ESM and fiscal compact pass:

Das ist ein schwerer Straftatbestand, NZZ, 8/12/2012, http://www.nzz.ch/aktuell/schweiz/sp...vor-1.17468607

Im Steuerstreit zwischen Deutschland und der Schweiz hat der Chef der deutschen SPD, Sigmar Gabriel, Schweizer Banken organisierte Kriminalität vorgeworfen. Den Kauf von Bankdaten verteidigte Gabriel in einer Sendung des Deutschlandfunks.

Gabriel wirft Schweizer Banken organisierte Kriminalität vor, 12.08.2012, FAZ, http://www.faz.net/aktuell/wirtschaf...-11853255.html

Im Streit das richtige Vorgehen gegen deutsche Steuerhinterzieher wirft SPD-Chef Sigmar Gabriel Schweizer Banken organisierte Kriminalität vor. Wer bandenmäßig Steuern hinterziehe, könne mit zehn Jahren Haft bestraft werden, sagte Gabriel am Sonntag im Deutschlandfunk. „Das ist ein schwerer Straftatbestand. Hier reden wir über organisierte Kriminalität in Schweizer Banken in Deutschland.“

Es ärgere ihn, dass es keine Schwerpunktstaatsanwaltschaft zur Bekämpfung solcher Vergehen gebe. Die Vereinigten Staaten hätten den Schweizer Banken schlicht und einfach mit Strafverfolgung gedroht. „Warum trauen wir uns das eigentlich nicht? Oder warum übergeben wir das nicht dem Generalbundesanwalt, damit er dagegen ermittelt?
Die werden Ruck-Zuck aufhören, da bin ich ganz sicher“, sagte der SPD-Chef.

Gabriel verteidigte so auch den Ankauf von CDs mit den Daten mutmaßlicher Steuerhinterzieher durch das Land Nordrhein-Westfalen. Das sei durch die Rechtsprechung gesichert.

[Fuchs]

It's not important what Gabriel says. Next week he'll say something very different.
The guy has no compass whatsoever and never won a public election.

[Surferbeetle]

He may also be off-message and or out of synch depending upon one's viewpoint...

SPD vor Strategiewechsel in der Euro-Debatte, Von Holger Schmale, 06.08.2012, Berliner Zeitung, http://www.berliner-zeitung.de/finan...,16809790.html

Die Euro-Staaten sollen gemeinsam fr ihre Schulden geradestehen, meint SPD-Chef Gabriel. Er will Grundgesetznderung und Volksabstimmung, um Haushaltsrechte des Bundestags auf die EU zu bertragen. Die Unionsfraktion lehnt eine solche Verfassungsdiskussion ab.

_________________________________________

Dark clouds loom over summer rally, By James Mackintosh, August 9, 2012 11:27 pm, Financial Times, www.ft.com

Summers here, and investors are dancing in the Street. The equity rally has seen US shares gain more than 10 per cent since their low at the start of June, US economic data has been better than expected and eurozone worries have receded.
The past five years have conditioned many to assume the rally cannot last, as economic gloom snuffs out hope time and again. Look back before the crisis and history is almost as negative on summer rallies.

Betting on the rally continuing once the autumn rains start shows a touching faith in politicians and policy makers.

Der Ausnahmezustand Europas, Von RAINER HANK, 12.08.2012, FAZ, http://www.faz.net/aktuell/wirtschaf...-11852316.html

Europa droht zu zerbrechen. Die Eliten sagen, jetzt msse eine politische Union her. Doch das ist nicht mehr als eine Phantasie von Dichtern. Es ist an der Zeit, Europa vor den Rettungseuropern zu retten und Alternativen stark zu machen.

Rainer Hank, http://www.faz.net/redaktion/rainer-hank-11123665.html

wurde am 24. Januar 1953 in Stuttgart geboren. In Tbingen und Fribourg (Schweiz) hat er Literaturwissenschaft, Philosophie und Katholische Theologie studiert. Promotion 1983 ber die Literatur der Wiener Moderne. Es folgen fnf Jahre beim Cusanuswerk in Bonn, einem katholischen Begabtenfrderungswerk. Parallel dazu freie Mitarbeit und Hospitanzen unter anderem bei der Sddeutschen Zeitung und der Frankfurter Allgemeinen Zeitung. Im November 1988 Eintritt in die Wirtschaftsredaktion der F.A.Z. Dort hat er ber Gewerkschaften, Verbnde und Lohnpolitik berichtet; auerdem war er fr die wchentlich erscheinende Seite Beruf und Chance zustndig. Von Mrz bis August 1997 Visiting Scholar an der Business School des MIT und am Center for European Studies der Harvard University im Rahmen eines Sabbaticals. Whrend dieser Zeit entstand die Idee zu einem Buch ber den globalen Kapitalismus: Das Ende der Gleichheit (Frankfurt 2000). Von November 1999 bis August 2001 leitete er die Wirtschaftsredaktion des Tagesspiegels (Berlin). Der Reiz, eine neue Sonntagszeitung aufzubauen, fhrte ihn zurck nach Frankfurt: als Ressortleiter Wirtschaft sowie Geld & Mehr bei der Frankfurter Allgemeinen Sonntagszeitung. Mitglied unter anderem in der Jury des Ludwig-Erhard-Preises und im Kuratorium des Max-Planck-Instituts fr Gesellschaftsordnung in Kln.

[Fuchs]

The entire opposition's position about the fiscal crisis (pro Euro bonds etc) is a miracle to me. The government is fooling around and wasting money, and the opposition proposes to stop the fooling around and step the waste up by an order of magnitude.
The amazing thing is that they're on the other side of the government than is the majority of the population. It's not populism, it's not science-driven, it's not based on old party strategies, it's simply a miracle to me.

They behave as if they were in the EU parliament and their constituents weren't Germans, but South Europeans.

[Firn]

Originally Posted by Fuchs

The entire opposition's position about the fiscal crisis (pro Euro bonds etc) is a miracle to me. The government is fooling around and wasting money, and the opposition proposes to stop the fooling around and step the waste up by an order of magnitude.

The amazing thing is that they're on the other side of the government than is the majority of the population. It's not populism, it's not science-driven, it's not based on old party strategies, it's simply a miracle to me.

They behave as if they were in the EU parliament and their constituents weren't Germans, but South Europeans.

To be honest the SPD, Greens and Linke (well this one not so much) surprise me. Of course there are political games to be played but certainly even among their voters the great majority should be against their latest plans. Likely they think that somehow voters are still to be gained that way, but I have a hard time to believe in it.

The most likely explanation may be rather simple. They are so desperate to score some political points, to attack the government and to sharpen their political profile that they are doing something stupid to do something at all.

(The "Quarto Reich" headline by Berlusconis Giornale is, in my Italian mind at least, a clear attack on Monti, mixed with some dislike on how our Silvio was treated by the foreign, in this case German press. In this case Monti was painted to be a minion of Angela. Maybe she is planning an new Repubblica di Salo' )

In general I would greatly welcome a couple of billion to reduce our public debt. Dear Finns, Germans, Austrian, Dutch & Co please do support our republic in those hard time. We know from our gigantic internal Lira and Euro flow to the mezzogiorno that it can change nothing in the long term and even make it worse but offers are always welcome.

P.S: La Guardia di Finanza has registered an ~80% increase in tax evasion at the Italian-Swiss border

La Guardia di Finanza ha registrato un aumento del 78% rispetto all'estate 2011 di evasioni di capitale. Fino a luglio sono stati sequestrati alle frontiere oltre 41 milioni di euro, 88 kg di oro e 570 kg di argento. Gli stratagemmi per nascondere le banconote o i preziosi sono dei più fantasiosi, dalla biancheria intima alle fodere delle giacche. Un'imprenditrice cinese ha nascosto 100mila euro negli assorbenti ed un italiano cercava di portare 122mila euro in Etiopia infilati nel doppiofondo del trolley. A Ponte Chiasso un cinquantenne varesino, titolare di un negozio di alimentari in viaggio con la figlia, tentava di portare via 50 chili d'oro nel doppiofondo di uno dei sedili dell'auto. Il caso più eclatante è stato registrato a Chiasso sulla frontiera svizzera: l'uomo aveva nascosto nel doppiofondo del pavimento della macchina 100mila euro, dopo il sequestro si è ripresentato nuovamente alla frontiera con 26mila euro nascosti, anche questi sequestrati.

No wonder that the Swiss national bank has to print Franken like crazy to keep the exchange below the red line.

[Fuchs]

Originally Posted by Firn

To be honest the SPD, Greens and Linke (well this one not so much) surprise me. Of course there are political games to be played but certainly even among their voters the great majority should be against their latest plans. Likely they think that somehow voters are still to be gained that way, but I have a hard time to believe in it.

The most likely explanation may be rather simple. They are so desperate to score some political points, to attack the government and to sharpen their political profile that they are doing something stupid to do something at all.

Another interpretation would be that Gabriel probably wants to warm up Schrder's recipe for getting into power; cozy up with big business. I hope we won't learn whether he copies Schrder's approach to governing, too; backstab the lower class.

[Surferbeetle]

Germany’s judgment day, By Quentin Peel, August 7, 2012 6:01 pm, Financial Times, www.ft.com

He [Christian Calliess of Berlin’s Free University] and other legal experts believe the court may use this opportunity to suggest a national referendum is held before further powers, such as budget sovereignty, are transferred to EU institutions.

Until now, the idea of such a referendum has been anathema to the political establishment. The fear has been that it would undermine parliamentary democracy, as the Nazis did in the 1930s. The same dark history shaped the creation of the constitutional court. “After the dictatorship of the Third Reich, the mothers and fathers of the Grundgesetz had to think about dealing with a situation where a majority might abuse fundamental human rights,” says Christine Hohmann-Dennhardt, a former member of the court, now on the board of German carmaker Daimler. “They decided that we needed an independent judicial authority which can have the last word to clarify such questions.”

Karlsruhe has a history of defending the rights of the individual – for example, to data protection or a minimum standard of living. “They give a voice to those parts of the population that don’t have an influence,” says Prof von Bogdandy. “It is largely successful. The court enjoys very high public reputation.”

About Italian National Institute of Statistics, http://www.istat.it/en/about-istat

The Italian National Institute of Statistics is a public research organisation. It has been present in Italy since 1926, and is the main producer of official statistics in the service of citizens and policy-makers. It operates in complete independence and continuous interaction with the academic and scientific communities.

Structure and competitiveness of industrial and services enterprises, Istat, http://www.istat.it/en/archive/5670

In 2008, enterprises in industrial and services sectors were 4,434,823. The persons employed were about 17.3 million people, of which 11.6 million employees, and the value added realized was around 714 billion euros. As regards the main economic indicators, the value added per employee was equal to 41.3 thousand euros, personnel costs per employee was equal to 32.9 thousand euros and the share of the profit on the value added was equal to 27.0 percent.

Swiss central bank keeps critics at bay, By James Shotter in Frankfurt, August 13, 2012 6:40 pm, Financial Times, www.ft.com

Last week, the central bank revealed that its foreign exchange reserves soared by more than 10 per cent in July to SFr406bn (€338bn) – up from SFr365bn the month before – as it again intervened heavily to keep the franc from breaching its target of SFr1.20 per euro.

Yet despite the SNB’s recent adventures, the news elicited barely a murmur from Switzerland’s political class.

The most immediate reason for the muted reaction is that the SNB is not currently making losses. Indeed, in the first half of this year it made profits of SFr6.5bn.

Swiss politicians are sensitive to their central bank’s profitability because Switzerland’s 26 cantons are its main shareholders. For the smaller cantons in particular, the SNB’s dividends have been an important source of funds.

The possibility of the SNB taking a loss on its mounting euro holdings, Ms Fetz suggests, is the lesser of two evils. “That is a risk you have to accept. The damage caused by not having a floor would be considerably higher.”

From the comments section on the above article...

Matthias - With all this money, the SNB could start its own little ESM. When the Europeans are not able to bail out Spain, why should the SNB not do it? A few month down the road and the SNB's reserves will hit a 1000 bn SFr. This would be enough to bail out Spain and Italy together. Certainly, Spain and Italy would be willing to discuss the interest rate with the Swiss when the SNB is buyng a 100% of their government bonds.

[davidbfpo]

Steve,

What a brilliant prospect a non-EU national bank, the SNB, being in a position to bail out Italy and Spain! Using the Swiss Franc too.

The "Gnomes of Zurich" return:http://en.wikipedia.org/wiki/Gnomes_of_Z%C3%BCrich

What conditions could be set by the SNB might be interesting.

[Surferbeetle]

Originally Posted by davidbfpo

What conditions could be set by the SNB might be interesting.

Hey David,

Having both a plan A and a plan B are probably a good idea...

...speaking of which...

The Merkel memorandum, Aug 11th 2012 | from the print edition, The Economist, http://www.economist.com/node/21560252

ANGELA MERKEL, the German chancellor—and also, in effect, the euro area’s boss—has always insisted that she wants to preserve the euro area in its current form. But as the euro crisis intensifies and the potential bills for Germany mount, she would be imprudent not to be considering a Plan B. Drafted in utmost secrecy by a few trusted officials for the chancellor’s eyes only, this is what the memorandum outlining a contingency plan might say.