Monday, March 01, 2010

The Financial Crisis in Europe

The Protest Movement. Financial Fraud in Iceland
By Rady Ananda
Global Research, October 5, 2010
As proceedings begin against Iceland’s former Prime Minister, Geir Haarde, for the banking crisis of 2008, at least two thousand Icelanders took to the streets in two days of protest this weekend. Iceland joins over a dozen other nations protesting economic measures taken out on the public while banks and large corporations receive bailouts. Class war is on, and it’s gone global.
Mass protests were also held in Greece, Portugal, Spain, Ireland, Germany, Italy, France, Slovenia, Lithuania, Latvia, Czech Republic, Cyprus, Serbia, Romania, Poland, and the U.S., according to reports from several sources. Folks around the world reject corrupt banking practices and bailouts, while social services are cut and tens of millions have been forced into joblessness and homelessness.
Dori Sigurdsson, an Icelandic blogger, reports that when Parliament returned from recess on October 1st, they were met by a loud, angry crowd who tossed eggs, bread, dairy products and keys at them. People slept outside the Parliament building the night before its return session. He’s posted videos and several images.
Dori notes, “because of the lack of help from the Government for the public, many are now losing their houses and cars.” In a nation of only 317,000, 12 percent (or 40,000) have lost or are about to lose their homes, he says. Icelanders condemn the injustice of large companies and their CEOs having had their debts forgiven by government, while theirs are not.
Three other officials were charged with “misconduct in the lead up to, during and following the banking crisis,” reports Ice News. Parliament voted to prosecute only Haarde for negligence, under a 100-year-old law that has never before been used.
Icelanders are also angry that only the former PM is being charged. One commenter on the Ice News article noted, “Is this not a total betrayal of the people?” And criminal, to reasonable minds.
Eggs hit Prime Minister, Jóhanna Sigurðardóttir, who rode into power as Iceland’s most beloved political leader with a 75% approval rating. She was installed in January 2009 after a coalition of Social Democrats and Left-Greens formed to replace the Independence Party-led coalition government, headed by Haarde, which was terminated. Should other nations terminate their corrupt governments?
The Guardian notes widespread protest across Europe “amid growing fury at austerity measures being imposed... Disruption in more than a dozen countries this week included a national strike in Spain and a cement truck driven into the Irish parliament’s gates.” Press TV also reported on protests planned in several nations last week. (See cement truck video here.)
Even in the US, thousands recently protested in Washington, D.C. for jobs instead of wars.
Coalition’s Brian Becker told reporters that the US spends a billion dollars every two days for its military invasions. That’s much lower than the trillion dollars a year that Robert Higgs of the Independent Institute calculates. We do know that Congress spends 58 percent of its discretionary budget on the military.
Many economists note that unemployment in the US is two to three times higher than what the Labor Dept. reports. In July, economists put the number at 28 percent, compared to the 9.5 percent rate reported by the feds. For September, the Christian Science Monitor showed unemployment at 16.7 percent, while the feds reported 9.6 percent.
In the US where 95% of the public rejected both Wall Street bailouts (under Bush and under Obama), we learned that banksters then rewarded themselves with million dollar bonuses. The boldness of their depravity is sure to have its rebound effect. Is it time to terminate this government, too?
The Guardian also reported that a “UN agency has warned of growing social unrest because of a long ‘labour market recession’ that could last until 2015.” 2015!
Thank goodness mortgage squatters are growing in number in the US. This is even before it was discovered that “foreclosure mills” fabricated documents to seize peoples’ homes. Some of those mills do not even hold legal title, Ellen Brown reports.
In Iceland, the Guardian noted, “Birgitta Jónsdóttir, one of three MPs to join the protesters, said: ‘There is a realisation that the IMF is going to wipe out our middle classes.’” That’s true of every nation sucked into the greed of banksters, the US included.
Protesters are out again right now, Monday night, Dori told me (6 pm Eastern, 10 pm Iceland time). “The protest is still on, and it is peaceful – but with lots of noise that can be heard in the Parliament building.”
UK Credit Crisis Worsens
Greece Today – USA Tomorrow - Under Obama
Greek protests are led by government employee labor unions, Labor unions have destroyed manufacturing in America
By JB Williams
Friday, May 7, 2010
As Rasmussen reports – “New Jersey and California are just two of the states that are wrestling with high numbers of well-compensated unionized public employees as they try to reduce growing budget deficits. But a new Rasmussen Reports national telephone survey finds that Americans are generally favorable toward these unions…”
Dow Jones Newswire reports – “Greek Police Clash With Protesters As March Turns Violent - police have fired tear gas and stun grenades as groups of angry youths rampaged through the city center smashing shop windows, overturning garbage bins, and setting fire to at least two businesses.”
The Greek protests are led by government employee labor unions. In the states, we know SEIU (Service Employees International Union) under the AFL-CIO. And as the New York Times reported back in January, most U.S. union members now work for the government.
“The clashes come as tens of thousands of protesters gathered to protest the government’s recently announced austerity measures in one of the largest protests in recent years, and coinciding with a nationwide general strike that has paralyzed the country.”
Overtaxed and still over spent, Greece’s public sector labor unions are revolting against government cutbacks. Obama and SEIU have the good ole USA poised to follow that utopian trail into national bankruptcy. In both countries, the majority of union employees now hold taxpayer funded government jobs, the only kind of jobs that government can create.
The labor union protests in the streets of bankrupt Greece are in opposition to forced cutbacks in government spending and related services, all necessary to securing additional bailout funds from the EU and IMF in excess of $100 billion to keep Greece from sinking into complete anarchy.
Protesters who have already bled the nation dry of resources in their endless demand for socialist government handouts, are angry over the fact that it is government jobs, protected by public employee labor unions and paid for by Greek taxpayers, that must be cut in order to stop the excessive deficit spending that left Greece the first of many nations to collapse under the weight of socialized economics.
California and New Jersey are the first to follow in the economic-suicide footsteps of Greece and if it weren’t for ongoing multiple federal bailouts of these two states, all at U.S. taxpayer expense, streets in the U.S. would look just like the streets of Athens.
To no surprise, states with the most labor union influence are first to belly up in America
To no surprise, states with the most labor union influence are first to belly up in America. So-called “right to work” states (aka, states where workers can reject labor unions) seem to be faring much better, even in the economic downturn.
Still, according to Rasmussen, 53% of U.S. citizens support labor unions for public employees, without connecting the dots between labor union demands for ever shrinking worker productivity and ever increasing pay and benefits, and the fact that the U.S. economy is only months behind Greece, Iceland and much of the EU, at best…
Americans Had Better Connect the Dots Soon!
Labor unions have destroyed manufacturing in America. They made U.S. students the most under-educated lot on earth. Now they are driving the cost of government through the roof, just like in Greece and there is NO way for this to end well.
When labor unions demand every increasing wages and benefits for government employees, the taxpayer takes a direct hit every time. When the economy stumbles, and tax revenues shrink, the cost of government and welfare services in particular, become unsustainable.
Protesters in Greece are right about one thing - it is the lowest people in the economic pecking order which will get hurt the most when oversized government has no choice but to shrink in size and scope. Said another way, government dependents don’t know what to do when the public trough runs dry.
But they fail to make the connection between lack of productivity, increasing cost and shrinking resources. The end is inevitable for any government that tries to become all things to all people, while robbing the most productive members of society of their rightful earnings to keep it all afloat.
In the end, no nation has access to a bottomless well of resources.
For the record, Greece was already one of the highest taxed nations on earth, with 33.5% of GDP burned up in taxes. The United States is not far behind with 28.2% of GDP swallowed up in taxes, while red ink still runs all over the page in unfunded promises as far as the eye can see, with more unfunded promises made daily.
Only a handful of communist/socialist nations have a higher tax rate than Greece, yet Greece was unable to sustain its government no matter how much money they robbed from their productive members of society.
Yet many Americans don’t seem to have the critical thinking skills to connect these dots and predict their own demise, even as other nations begin to collapse under the weight of excessive government and related taxation without real representation for taxpayers.
No FREE Lunch
The FREE-LUNCH mentality of the “entitlement generation” in America is driving the United States right off the same cliff that Greece just fell off.
However, Americans, unlike any other people on earth, have an equal birthright NOT to big screen TV’s, fancy cars and homes they can’t afford, but to thrive, survive or fail of their own choosing. To live FREE, making their own life choices, be they good, bad or indifferent.
The effort to trade freedom for a free-lunch will always fail in the end, no matter the momentary euphoria from a utopian campaign promise to destroy “the rich” in favor of “the poor.”
The Unites States was once the most prosperous and powerful nation on earth, largely because it was the only nation on earth that didn’t fall for the false promise of equal free stuff. But today, our “entitlement generation” has fallen for the lie and they won’t be set free until they are once again able to separate fact from fiction.
Bottom line… if we don’t do away with public sector labor unions, we cannot reel in our runaway government or the high cost of bailing out the unions while the nation goes under.
Just ask the folks in Greece!
What’s the Greek for ‘Aarrrgh!’?
By Katie Martin
April 8, 2010
Left: Greeks line up outside a bank for their pension checks, but is a run on the banks in the offing? Getty Images
We may find out soon enough.
Nerves over the solvency of the country’s banks and the ability of the under-fire euro state to raise much-needed funds are hitting new heights today.
Greek bonds are selling off fast, and the cost of insuring those bonds against default has hit new records. Sadly for those Greek banks and would-be state borrowers, that makes it even tougher to get new funding. And that, in turn, pushes down Greek bonds. You get the picture.
It doesn’t even matter how well-founded these concerns over Greek banks really are. Fear is in control right now, both in the bond markets and for some Greeks.
Christoforos Lazos, a 48-year-old lawyer based in Athens, told Dow Jones Newswires reporter Costas Paris:
Yesterday I went to the bank and took out our family savings. It’s better to have cash in your hands these days because you never know what could happen.
You can’t make sense of the local news. It’s madness. One day they say we may go bankrupt, the other it’s going to be OK… I didn’t see long lines at the bank but it’s a common secret that people are taking their money out.
If something really bad happens everyone will run at the banks. I don’t want to be caught in the panic.
And it’s not just Greek bonds that are feeling the pain. The euro is on the edge of a potentially nasty drop too.
It has dropped slowly and steadily throughout this week, in line with the drip, drip of dismal news coming out of Greece in recent days. This morning, though, it sank to $1.3282 against the dollar. That’s within shouting distance of $1.3270.
Now this may not mean much to most people, but in the currencies markets, it’s a big deal, because $1.3270 is near-as-damn-it the low point seen last month, just before the European Union and International Monetary Fund agreed to offer a financial safety net to Greece.
Many currency traders are long-term investors who shift their funds around every now and then, depending on broad shifts in the global economy.
Many others are short-term profit hunters who take their triggers from these so-called technical factors. Once a certain level breaks, they pile in. Or, in the euro’s case, they pile out.
Nerves are fragile right now. Any fresh, nasty headline on Greece could easily prompt a slump in the euro towards that magic level. After that, there’s little to stop the currency dropping below $1.32. Even that is relatively strong on a historical basis. Pessimists say that without the support of the long-term investors, chiefly central bank reserve managers, the currency would trade at around $1.20.
Market moves could get really jerky from here. Be warned.
Greece's financial crisis puts the future of the euro in question
Larry Elliott: The Observer
Sunday, 7 February 2010
As the country plunges into the red again, the IMF is itching to march into the eurozone and intervene. Without closer fiscal union, how long can Brussels hold the currency together?
Jean-Claude Trichet: the ECB president praises Greece's 'steps in the right direction', but the eurozone's problems are far from over. Photograph: Uwe Anspach/EPA
Leave Greece to us. It's a family affair. That was the message from Brussels as shares plunged in Athens, customs officials walked off the job in protest at swingeing budget cuts, the financial contagion spread westwards across the Mediterranean and the International Monetary Fund started to cast a long shadow across the soft underbelly of the eurozone.
As far as the European commission was concerned, matters were simple. By a mixture of incompetence and deceit, the Greeks had allowed their deficit to balloon out of control, putting the credibility of monetary union at risk. They now had to put their own house in order, which they could do with the help of some tough love from the rest of Europe – likewise, the financially incontinent governments of Spain and Portugal.
European Central Bank president Jean-Claude Trichet said last week it was vital that Greece met its stated goals for cutting its budget deficit and that the steps announced by the government were encouraging. "The ECB governing council approves the medium-term goal ... we expect and are confident that the government will take all the decisions that will permit it to reach that goal," he added. "The measures taken last Tuesday – tax rises, the freezing of wages in the public sector, and the pension reform – are steps in the right direction."
But the reality is more complex. A ­crisis that began with the previous ­government in Athens cooking the books developed into three interlocking themes – the reluctance of the Greeks to swallow the nasty budgetary medicine prescribed for them, the medium-term outlook for the single currency and Europe's long-term role in a rapidly changing global economy.
Despite the hands-off warning from Brussels, the IMF has been itching to send a hit squad across the Atlantic to help sort out Greece's acute budgetary crisis. "We are there to help," says the managing director of the IMF, Dominique Strauss-Kahn. "I have a mission on the ground to provide technical advice requested by the Greek government. And if we're asked to intervene, we will." But he adds: "I understand that the Europ­eans don't want this for the moment."
They certainly don't, but a mission may still be sent, if only to prevent the contagion spreading. Nouriel Roubini, economics professor at the Stern School of Business at New York university, said in Davos last month: "If Greece goes under, that's a problem for the eurozone. If Spain goes under, it's a disaster."
He has been strongly advising the beleaguered socialist government of George Papandreou to seek help from Washington, a view shared by Harvard professor Kenneth Rogoff, former chief economist at the fund: "Greece is going to end up with an IMF programme of some sort in order to get credibility."
Rogoff, who has just published a book on eight centuries of financial crises, said that Greece was "a serial defaulter". Since the modern Greek state was founded in 1830, the country has, on average, been in sovereign default every other year and had been through five big defaults in less than 200 years. "Greece has been worse than any Latin American country," he adds.
The risk of another default or – the doomsday scenario – of Greece deciding to leave the single currency has spooked investors, who are demanding a high price for holding risky Greek debt. The gap between the interest rates on rock-solid German bunds and Greek bonds has widened sharply.
The IMF would probably already be involved were Greece outside the eurozone. But according to Charles Grant, director of the Centre for European Reform, the commission wants to keep the fund at arm's length because it would give the Americans a say in single currency affairs, a blow to European pride.
Grant says this is regrettable: "The IMF is very experienced in these matters; it is professional and is not subject to political pressure. There is a political point as well. If the commission sets conditions that lead to hospitals being closed, there will be demos against Brussels. If the IMF does it, the demos will be against the fund."
For the Greek public last week, it barely mattered whether the harsh measures were coming from their own government, the commission, the fund or a mixture of all three. All they knew was that they did not fancy higher taxes on fuel, working longer to get their pensions and, if they were civil servants, taking a 10% pay cut.
Similarly, trade unions in Spain ­bridled at plans announced by Prime Minister José Luis Rodriguez Zapatero to increase the number of years workers would have to make contributions before receiving state pensions. Still reeling from the effects of the global recession of the past two years, Greece, Spain and Portugal now face a prolonged period of weak growth and high unemployment.
Some argue that the cuts being inflicted on the eurozone's weaker economies highlight a fundamental weakness in the single currency – its lack of a centralised budgetary mechanism, such as exists in the US, to move resources from rich parts of the union to poor parts.
Gerard Lyons, chief economist at Standard Chartered, says there have been several examples of monetary unions that have collapsed because they were not accompanied by fiscal union: "For monetary union to survive, it has to become a political union. If it doesn't there is likely to be some sort of implosion and a move towards a two-speed Europe."
Roubini agrees: "The eurozone could drift … with a strong centre and a weaker periphery, and eventually some countries might exit the monetary union."
Mats Persson, research director of the Open Europe thinktank, believes Greece should not have been allowed to join the euro in the first place, and that there comes a point during an extreme crisis when countries can see the desirability of having their own currencies, so that they can adjust through devaluation: "The question is whether Greece can ever compete as a middle-rank eurozone country without some proper structural reform, and whether that is possible without its own monetary policy."
In the short term, leaving the single currency is not on the policy agenda in Greece, Spain or Portugal. Nick Parsons, head of markets strategy for NAB Capital, the wholesale markets division of National Australia Bank, says: "Has the euro been a disaster for Greece? No. You have to think about where they would have been without it. Arguably, the financial crisis would have been greater outside the eurozone."
Grant at the Centre for European Reform notes that Portugal, Spain and Greece had all been dictatorships until the final third of the 20th century and saw membership of the EU and the single currency as a sign of growing up politically: "That's why Europe is very popular in these countries."
But even the most ardent europhiles admit that the chances of constructing a fully fledged political union in order to make monetary union work better are remote. Instead, they say, countries will have to make themselves leaner and ­fitter through structural reforms of their economies and accept some centralised control over their budgets from the eurozone's big two, Germany and France.
Parsons says: "What will happen is that there will be the emergence of a strong bloc which will ensure that never again will countries be allowed to go off and do what they want. Instead, they will have to do as they are told. There will be a stripping-away of fiscal powers from those that don't behave."
Determination to make the single currency work has been driven by two seemingly contradictory forces. On the one hand there is a sense that the financial crisis has been a failure of the Anglo-Saxon model, and hence a shot in the arm for European social democracy; Nicolas Sarkozy used his keynote speech in Davos to call for a different form of capitalism. On the other hand, there is a sense that economic and political power is shifting inexorably to Asia.
It is accepted that the structural reform to meet the challenge of China will be long and arduous. The Germans have shown a willingness to grind out productivity gains by accepting cuts in real wages, and the Irish are currently doing the same. But the hopes of the Lisbon agenda – agreed a decade ago with the aim of making Europe "the most dynamic and competitive knowledge-based economy in the world … by 2010" – remain unfulfilled.
Countries such as Spain and Greece are emblematic of the problem. They lack both the physical and human infrastructure needed to make themselves more competitive, yet it is in those areas – spending on roads, universities and skills – that the axe will fall. This presents a problem not just now but for the future, as the ageing baby boomer generation presents Europe with a steady decline in its working-age population.
Writing in the current edition of Foreign Affairs magazine, Jack Goldstone, professor at George Mason University's school of public policy in the US, says that Europe is expected to lose 24% of its prime working-age population (about 120 million workers) by 2050, while those aged 60-plus will increase by 47%: "It is essential, despite European concerns about the potential effects on immigration, to take steps such as admitting Turkey into the European Union," he writes. "This would add youth and dynamism to the EU – and prove that Muslims are welcome to join Europeans as equals in shaping a free and prosperous future."
Russell Jones at RBC Capital Markets says: "Within 10 years, European populations will be in decline and dependency ratios [the ratio of the population aged 0-16 and 65-plus to those aged between 16 and 65] will really start to take off."
Between now and 2050, the OECD estimates that the cost of healthcare and pensions will rise by 7.5 percentage points of GDP in Germany, 7.3 points in France, 13.5 points in Spain and 16.8 points in Greece.
"In such circumstances, the willingness of those populations at the core of Europe to subsidise those in the periphery is likely to be a lot less than it is now – and it is already in short supply," says Jones. "Governments will have their hands more than full at home."
Europe’s financial crisis intensifies
Problems in Portugal, Greece and Spain weigh heavily on global economy
Associated Press
Feb. 5, 2010
BRUSSELS - Fears of another crisis spiral for the world economy deepened Friday after the Portuguese parliament defeated a government austerity plan, triggering renewed concern that the financial crisis in that country and in Greece could spread through the eurozone and spill across its borders.
Spooked investors worldwide were fleeing risky assets like stocks. And from Shanghai to Sao Paolo, people were awakening to the reality that what is happening in these European minnow states has vast implications for the fate of the fragile global economic recovery.
Stocks fell in Asia and Europe as governments in Portugal and Greece pushed against fierce political resistance at home to cutbacks aimed at getting their deficits under control.
Markets fear Greece may default or require a costly bailout from already strapped European governments, and those concerns are spreading to other financially troubled governments such as Portugal and Spain.
Portugal's position looked even weaker Friday after opposition parties defeated a government plan for austerity measures that the country needed to pass to soothe markets and reduce the soaring cost of insuring its debt, a measure of investor fear.
"Portugal is next in line with ... what is now a very timid attempt" to bring its deficit down, said Marco Annunziata, chief economist at UniCredit.
Top EU officials, the economy commissioner Joaqin Almunia and European Central Bank head Jean-Claude Trichet, tried Wednesday and Thursday to reassure markets of the strength of the eurozone and Greece's determination to bring down spending. But markets haven't listened.
The reason is a growing reassessment of government finances worldwide, and knowledge that a Greek default would tear new holes in banks' already battered finances if they hold Greek bonds, most of which were sold to west European investors outside Greece.
The Athens government has outstanding securities of euro290 billion, more than twice those of the U.S. investment bank Lehman Brothers, whose bankruptcy brought the world financial system to its knees.
Those fears have pounded stock markets in recent days, with German, French and British stocks closing down 1.8, 3.4, and 1.5 percent down Friday. What would have been a bounce on Wall Street from positive jobs figures remained flat.
On Friday, the Portuguese opposition passed their own bill, which the government says will punch a euro400 million ($550 million) hole in its budget over the next four years. The government says it is "irresponsible" and that it will try to annul it, risking new political friction.
"The risk of contagion now is very very serious. By the end of next week, if things haven't calmed down or if they have actually intensified further, then it will be a matter of a short while before some steps are being taken," Simon Tilford, chief economist at the Centre for European Reform, said.
European officials have said there is no need for a bailout for Greece and that it will be able to borrow the euro54 billion it needs to plug its budget gap this year.
They say Greece must climb out of the crisis by itself, warning against a financial rescue that would reward Athens' decades-old failure to make its sluggish economy more competitive.
But Tilford said those worries are now swamped by worries of contagion within the eurozone.
"We could get into the position where we have a serious crisis in Spain which might not be containable because Spain's a bigger economy," he said. "It's possible for the eurozone to cope with a bailout in Portugal or Greece but Spain would present a problem of a whole different order."
Governments around the world are going to issue huge amounts of debt this year, making it hard even for countries with good prospects to attract investors who can pick and choose bonds to buy.
That environment will also hike the cost of borrowing for other debt-laden EU members that don't use the euro — such as Britain and Hungary, and making their debt troubles harder to climb out of. However, Greece and Portugal "are right at the bottom of the developed country pile," says Tilford.
Together, Greece and Portugal make up less than 5 percent of economic output in the 16-nation eurozone and would be far less expensive to bail out than Spain, where the economy is a much larger 11.7 percent of eurozone GDP.
Spain has tried to shrug off a comparison with Greece and Portugal — but markets were dubious following comments by EU Economy Commissioner Joaquin Almunia who said Wednesday that high wages and low productivity in all three make them less competitive against other European nations.
Changing that would mean wide economic reforms — such as making labor conditions more flexible and opening up markets for goods and services. Greece is promising to do this but markets doubt that it can in time to generate growth.
In the meantime, hefty public spending cuts could wreck any chance of economic recovery.
"The reason why investors are so scared is that they find it difficult to see how these economies are going to return to reasonably robust growth or any growth," said Tilford, adding that a devaluation usually accompanies such cuts.
Euro countries no longer have their own currency to devalue, which boosts exports and makes them more attractive manufacturing destinations. So instead they have to force wages down by other means, in part by cutting them for public sector workers.
They also have to work toward getting back below the strict EU limits on debt and deficits that the financial crisis has forced them to break, as they spent billions to rescue banks and boost economic growth with extra spending and welfare payments.
Ireland has been widely praised for a harsh budget program to curb its deficit — which, unlike the Greek plan, contains big public sector pay cuts. But Greece faces problems that Ireland doesn't — an aging population, few foreign exports and a credibility problem after it falsified economy statistics last year to make its deficit look smaller.
Greece has pledged to bring its deficit down to the EU limit by 2013 — but there are serious doubts about whether it can, given the huge economic reforms that the EU says are needed and growing public opposition to an austerity program that aims to slash public spending.
Greek tax and customs officials were on strike for a second day Friday while civil servants will walk off the job next Wednesday. However, the government had some relief on Friday as farmers scaled down highway blockades despite not winning the extra subsidies they want.
Tilford said the eurozone also needs to think about the divide between northern export-led countries and its southern big spenders. Germany and the Netherlands "need to consume more" to lead the demand needed to propel Europe out of a long period of stagnant growth.
Portugal near political crisis over debt
By Peter Wise in Lisbon
Published: February 4 2010 22:24
Portugal moved towards a political crisis on Thursday night as its finance minister appealed to opposition parties not to defeat the minority Socialist government over a regional finance bill that he said would undermine the country’s international credibility.
In a televised address, Fernando Teixeira dos Santos said opposition proposals to allow the Portuguese islands of Madeira and the Azores to increase their debt would have “grave consequences for Portugal’s public accounts” and send “the worst possible message” to financial markets.
Fernando Teixeira dos Santos said opposition proposals to allow the Portuguese islands of Madeira and the Azores to increase their debt would send 'the worst possible message' to financial markets
His warning came as Portuguese bonds and shares came under fire for the second day running as concerns over sovereign debt spread from Greece to other high-deficit countries in the eurozone.
The Lisbon stock market fell almost 5 per cent on Thursday, the biggest daily fall since November 2008, and bond yields rose to new highs amid doubts over the ability of Portugal to consolidate its public accounts.
The cost of insuring Portuguese debt against default also rose to a record high.
Mr Teixeira dos Santos said approval of the bill would involve an increase of €50m (£45m, $70m) in funding for the islands this year, rising to an increase of €83m in 2013. This would make it impossible for the government to meet its commitment to the European Commission to cut the budget deficit from 9.3 per cent of GDP in 2009 to less than 3 per cent in 2013.
The centre-right Socialists were re-elected to a second four-year term in September, but lost their overall majority in parliament. The contested bill is supported by opposition parties on the left and right who together have enough votes to defeat the government.
Opposition parties accused the government of “irresponsibility” and deliberately creating a crisis to ensure the bill was defeated.
Earlier on Thursday, Mr Teixeira dos Santos said “strong and credible” measures to be presented the European Commission this month would be “no less ambitious” than the Greek plan to consolidate public finances endorsed by Brussels on Tuesday.
He said Portugal had taken over from Greece as the main victim of the “animal spirits” of financial markets that were often “irrational”. The concern in the case of Portugal, he said, was not justified.
Mafia makes most of Italy's financial woes to push profits up 8%
By Stephen Brown and Paolo Biondi in Rome
Published Date: 28 January 2010
ITALY'S mafia crime syndicates bucked the recession in 2009 to raise "profits" by almost 8 per cent, with the financial crisis making companies and even the stock market more vulnerable to cash-flush mobsters.
"Mafia Inc is reinforcing its position as the number one Italian company," said a report published by a body whose members bear the brunt of mafia extortion, the small business and shopkeepers' association Confesercenti.
It estimated the mafia's impact on business equalled about 7 per cent of Italy's economic output, in a year when the Italian economy shrank by almost 5 per cent.
Experts had predicted when the crisis began that Calabria's 'Ndrangheta, with its huge slice of the global drugs trade, Sicily's Cosa Nostra, Naples' violent Camorra and Puglia's Sacra Corona Unita would see more demand for loan-sharking.
But the report said mobsters had also been able to launder their earnings by buying up cheap assets and had found a low-cost and willing workforce among the newly unemployed. "In times of crisis, the mafia's money, even though it is dirty, makes people's mouth water," it added.
Confesercenti's research arm, SOS Impresa, citing data from police, mob informants, magistrates, government agencies and its own network, said the boom had been so strong organised crime might target the stock market to launder its money. "There is a risk the mafia could take advantage of the difficulties of some large business groups who are undergoing a liquidity crisis to attempt to get into the stock market behind the scenes in a big way," its report said.
It estimated the mob's joint turnover last year at 135 billion (£117bn), topped by trafficking in drugs, people, weapons and contraband, which raised just under 68bn. Second came "business" interests such as public contracts, gambling, forgeries and supplying illegal labour at 25bn, then extortion and loan sharking, on 25bn.
Robbery and fraud represented 1bn and prostitution brought in 600 million, said SOS Impresa. The mob laid out 1.17bn in wages and 2.75bn on corrupting officials, invested 26bn and laundered an estimated 19.5bn, the researchers said. Total "profits" ran to an estimated 78bn.
SOS Impresa said there was a risk that, with the prices of property, stocks and bonds and companies themselves brought down by the crisis, mobsters could use profits from recession-proof activities such as drugs to "go on a financial shopping spree".
It portrayed an increasingly sophisticated mafia business environment.
While the mob is still essentially clan-based, in Sicily there was "a sort of criminal career" where a bodyguard could become a godfather, and in the slums of Naples child drug runners grow up in gangs where "pushing is considered a real job giving them independent economic status"
Iceland Goes Bankrupt - Is the U.S. Next?
By Kimberly Amadeo
Iceland Financial Crisis Causes Government to Collapse:
Iceland's nearly bankrupt economy caused the government to collapse in January. The collapse occurred because Prime Minister Geir Haarde resigned due to cancer, and the minority party insisted that one of its members fill the position. Haarde insisted that his party's member, Foreign Minister Ingibjorg Gialadottir, take the post. Commerce Secretary Bjorgvin Sigurdsson resigned due to bankruptcy-related stress .
Protesters have taken to the streets in response to soaring unemployment and rising prices caused by the bankruptcy. (Source: AP, Iceland's government topples amid financial mess, January 26, 2009)
What Caused Iceland's Bankruptcy?:
In early October, Iceland nationalized its three largest banks - Kaupthing Bank, Landsbanki and Glitner Bank - which were defaulting on $62 billion of foreign debt. As a result of the banks' collapse, foreign investors fled Iceland, prompting the value of its currency, the krona, to drop 50% in one week.
Iceland's banks used $100 billion in debt to finance foreign acquisitions, dwarfing Iceland's GDP of $14 billion. When the global credit crisis shut down lending, these banks' financial collapse brought down the country's economy. (Source: AP, Iceland teeters on the brink of bankruptcy, October 7, 2008)
Haarde and Gialadottir negotiated a $10 billion bailout from the IMF to insure Iceland's bank deposits. Iceland asked its neighbors Luxembourg, Belgium, and the UK to insure bank deposits of the branches in their countries. (Source: Guardian, Iceland sees IMF decision with a week, October 16, 2008)
Iceland's Bankruptcy Aggravated the Global Financial Crisis:
Iceland's economic collapse affected the rest of Europe, since Iceland's banks both expanded their retail services in Europe and heavily invested in foreign companies. Iceland's Baugur is the largest private company in Great Britain. Icesave, the online arm of Landsbanki, froze withdrawals during the crisis, affecting depositors throughout Europe.
Since the government has been unable to maintain the value of the krona, many have suggested Iceland join the EU and adopt the euro as its currency. Iceland is already a member of the European Economic Area, a trade association that follows many EU rules. However, Iceland's fishing industry is opposed, since it has clashed with European countries over fishing rights.
Why Iceland's Homeowners are Protesting:
Before the crisis, both inflation and interest rates were in the double digits. This caused many Icelanders to add second mortgages using foreign currencies, since interest rates were lower. Now that the krona has dropped, they are suddenly facing mortgage costs that are double the price in krona at the same time housing prices are falling. (Source: IHT, Iceland is all but officially bankrupt, October 9, 2008)
Could Iceland's Bankrutpcy Happen in the U.S.?:
The U.S. government has invested a total of $5.1 trillion in stemming the banking crisis. This is more than one-third of annual production and, if left unfunded, would substantially raise the U.S. debt, currently over $10 trillion. Furthermore, it is still unclear if the amount invested will be enough.
Although this is not as bad as Iceland's situation, it will have similar effects on the U.S. economy - a declining dollar, less trust in U.S. financial markets, and a much slower-growing economy for decades to come. (Source: IHT, U.S. consolidates financial risk-taking in Washington, October 18, 2008)
Is it possible for the U.S. economic situation to create a collapse in government like Iceland's? Probably not, since our economy is larger and more resilient.
However, much of the outcome depends on the resiliency of the American people. Will we take to the streets if unemployment skyrockets? Or will we show our true nature as a people, and cut our personal spending, take on an extra job, and help each other? This economic crisis is a wake-up call for each of us to decide who we are, and whether we will accept responsibility for our own economic situation.
Another Greek Lesson: As Always Hard But Inspiring
by Carlo Bastasin
Posted in Global Financial Crisis
December 16th, 2009
Greece faces the most difficult situation that has ever confronted a eurozone country since the birth of the common currency in 1999. Without draconian measures by the Athens government the fiscal situation of the country will soon become unsustainable. A failure to pay off its debt, though remote, cannot be completely ruled out with risks of contagion for the rest of the euro area.
For all its difficulties the Greek lesson, as at gymnasiums, is hard but inspiring. Everybody in the European Union seems to be scared and is learning fast—both within and outside the euro area. Ireland and Lithuania—like Greece, threatened by the crisis—are taking the right course. The perception of a common problem is growing. What is still missing is the courage to set up a new institutional arrangement for the euro area.
The main problem for Greece is to restore its credibility. It will not be easy. Since its bid to enter the euro area, Athens has been responsible of cooking the figures of its economy. Since its adoption of the euro in 2001 it has never, even during years of robust growth, managed to comply with the deficit threshold mandated by the Stability and Growth Pact of the European Union Treaty.
Greece’s governments have been misleading the world and especially their European partners in the financial area. In March the European Commission forecasted that the Greek public deficit would be more than 3 percent in 2009 and more than 4 percent in 2010. Nobody was prepared for the shock unveiled by the new government elected in October: according to the latest Commission projections, the deficit is around 12.7 percent this year and 12.2 percent next year. The final figures could be higher. Furthermore, and in contrast to those of most other EU countries, Greece’s deficits are due in only small part to the financial crisis. They are structural and they have had a long period of incubation.
Unfortunately, Greece’s main economic problems require a strong—and credible—political will. They are all politically costly to be tackled: pension reform is unavoidable; wages have to be reduced—having soared 33 percent more than German wages since 1998 (see graph); and the required budget primary surplus (i.e., the budget that does not include interest rate payments on the debt) will have to come close to 10 percent of GDP. Without such credibility, even steps in the right direction will not help the country to finance its debt. One aspect is particularly relevant in this regard: when the current account deficit is at 15 percent of GDP (in 2008), credibility must be established far beyond the country’s borders.
But even this is not enough. It is not only Greece’s credibility that is on the line. Also at stake is the credibility of a European mechanism unable to defend itself from felonious behavior by its country members. The lack of credibility of Greece undermines the credibility of Europe. And the two must be restored together.
Greece has been monitored by the European Union for years. The Economic and Financial Affairs Council (Ecofin) must make a determination that Greece has failed to implement the measures called for by the European Union to correct its deficit. Such a finding would then enable further steps to be taken in the “excessive deficit procedure,” as the mechanism of enforcing fiscal discipline in the European Union is called. If Greece does not comply with the Commission’s recommendations by February 2010 it could be “given notice” by the Ecofin. If once again no effective corrective measures are taken, sanctions could be imposed four months later (June 2010): Greece would then have to lodge a noninterest-bearing “deposit” equal to at least 0.2 percent of its GDP for two years—and this would ultimately be retained as a fine by the Commission after two years of further inaction.
But in the past this sanctioning procedure has been marred by discretionary application and politics. Indeed it has never been enacted. Even so, it is doubtful that sanctions—or the threat of sanctions—can function as discipline once the damage is done on such a large scale. The same is true for another kind of sanction that has been evoked recently: the conditional support coming from the EU Cohesion Fund. The EU Council could decide in the next months to freeze €3.7 billion that Greece expects to receive from the European Union between 2007 and 2013. But, again, does such a punitive measure make any sense? The process of fiscal re-equilibrium will be painful enough and protracted by itself. It will have to cut deep into the structure of the Greek economy and society. This is not a matter of a one year U-turn, but of a five-year-long political strategy, at the least. For reform to occur over such a long span there has to be credibility conferred from outside the normal national political time horizon.
The common wisdom holds that the Stability and Growth Pact rules—together with the market pressure on interest rates (both direct and via rating agencies)—serve to discipline national politics. But if that is so, why did Greece not act before now? Why could the Greek bubble be permitted to inflate until a crisis struck? Weren’t the Pact monitors and market forces paying attention? Let’s admit it: they were not because they could not. They too seldom are until it is too late because their powers are limited when confronted with national fiscal authorities.
The German Chancellor, Angela Merkel, acknowledged on December 10 that the Greek situation and those of other indebted countries call for a much closer coordination of fiscal surveillance in the European Union or at least in the euro area. This is a great step forward. But still it is only one half of the truth. Surveillance, in order to be effective, must mean conditional aid requiring approval of the budget by the European Union, along with transparency and a public acceptance of responsibility. There is no escaping the political nature of the process. And in order to be acceptable the process must apply to all countries in the euro area. The fiscal and budget rules must be met by surplus countries as well deficit countries: toward Germany as well as Greece.
And unfortunately there is only one way to establish such a complex mechanism: to form a fiscal authority at the euro level in a new European federalist structure.
Is it too early for such an institutional leap? The prospect for public debts in Europe in the next ten years will likely force the euro area to cope with instability for decades. When this awareness becomes public, the leap could well come too late.
Unit labor costs in Greece and Germany (1998 = 100)
Spain's economic crisis takes heavy toll on youth
Young people in Spain suffer the highest unemployment rate in the EU. And the financial downturn has only served to widen the gaps between the have and the have-nots in an increasingly two-tier labor market.
Hazel Healy, Madrid
11 Oct, 2009
Nothing divides Spain quite like the labor market. And the effects of the current economic crisis vary according to age, geographic location and sector.
Young people are one group that is disproportionately affected by soaring unemployment, which stands at double the eurozone average. The national rate is 18.5 percent, but among Spaniards aged between 15 and 24 years old, this figure climbs as high as 37 percent, according to Eurostat.
Job losses are concentrated in construction and the service industry - the same sectors that once drove the country's exponential growth. Figures from Spain's Youth Employment Observatory show the majority of workers laid off were recruited on temporary contracts , which account for a quarter of the nation's jobs, and half the jobs held by people under the age of 30.
First in, first out
When the global financial crisis forced Spanish businesses to downsize, young employees were the first to go, leaving one in three workers under the age of 25 to face a prolonged period of unemployment.
Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Spanish dole queues are full of university graduates"The crisis has caused social exclusion and unemployment for young people," confirmed Alex Martin from the youth branch of UGT, one of Spain's largest unions. He said many young people are moving back home to live with their parents and are attempting go back to their studies.
Martin denounced the fact that more than half of the 3.7 million Spaniards out of work are under 35. It's a fact that gives Spain by far the highest youth unemployment rate of any EU member state, with current figures reading 13.5 percentage points higher than in on 2008, according to the European Commission.
High skills, few openings
A lack of mobility in the labor market makes it very hard for young people to get a foothold in their chosen profession and to find pathways into employment. The UGT union states that only one out of every seven young Spaniards works in their desired field, and that it has taken them an average of nine jobs to get there.
This was the experience of Virginia Fernandez, who has been unemployed for eight months. An undergraduate degree and two Masters in the field of arts administration has resulted in paid posts in insurance, call centers and, most recently, as an archivist.
"It's really a lot harder now than it has been in the past. The only work around seems to be as a receptionist or as a telephone operator – not much more," she said.
Now more than ever, employers prefer to keep newcomers on easy-come easy-go, temporary contracts. September 2009 saw around 33 percent fewer permanent employees recruited compared to 2008.
Notoriously poor working conditions
Raul Garcia, a 30-year-old journalist, works in his chosen field but has yet to bag a permanent position. In the last six months he has been employed on no less than four separate temporary contracts, the last of which ends in 10 days' time. He knows many others in the same, precarious situation and said the insecurity is beginning to take its toll.
"You never know what's going to happen to you," Garcia said. "You know when your contract finishes but you don't know if you're going to be fired or have your contract renewed."
"I have to pay the rent, it's getting hard to bear it,” he said, adding that he was considering moving abroad to seek opportunities in other European countries.
The battleground for labor market reform
Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Spanish trade unions want the government to do more to fight unemployment. Business leaders insist that Spain's labor market is too rigid and propose measures aimed at increasing flexibility - a view backed by the IMF and Spain's Central Bank.
But unions and, for now, the ruling Socialist government reject this view. Prime Minister Jose Luis Rodriguez Zapatero has categorically refused to implement any measures that will accelerate job losses.
Economist and former minister Valeriano Gomez said Spain's labor laws offer similar protection to most other European countries.
"Spain is one of the least protective against mass redundancies, on a par with the UK, and offers less guarantees than the Swedes, Germans or Dutch for individuals," Gomez said.
“It's not about the differential cost of sacking. In 2007, we happily fired nearly a million people out of a working population of 20 million," he added.
Management and unions have yet to renew a round of social dialogue that broke off in July without having reached consensus.
Structural economic change
Santos Ruesga, an economics professor at the Madrid Autonoma University, believes the problem of youth unemployment lies with the structure of the Spanish economy.
"The challenge is not how to reform the labor market but how to reform the economy," he said.
"We need a different kind of productive model - one with much higher capital investment, a more intensive use of technology - that is much less anchored in low-skilled professions like construction."
In Ruesga's view, a restructured economy that creates jobs requiring higher qualifications will succeed in slowly absorb young people.
Government intervention
For now, the government has rolled out costly and significant emergency welfare measures. This includes a 100-million-euro per month scheme that provides Spaniards who have exhausted their social security coverage with payments of 420 euros a month.
Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Prime Minister Zapatero says he doesn't want labor reforms to result in job lossesThe state has also pledged ambitious moves towards a new sustainable economic model based on innovation and technology, and set aside stimulus for the creation of quality employment.
But, the public deficit stands at eight percent, and the IMF has predicted it will reach double figures by 2010. The government has therefore announced concurrent cutbacks in the Department of Investment, Development and Research, which was touted as key growth driver in Spain's new economic model.
Financial crisis hits Irish middle class
Government raising income taxes, cutting pay for civil servants
Associated Press
Sat., March. 7, 2009
DUBLIN - As a veteran nurse, Margaret Horan is used to feeling overworked and underpaid. A steady flow of coughing, moaning and bleeding Dubliners must wait hours to be seen because of staff shortages at her hospital in the working-class heart of the capital.
As if that wasn't enough, Horan now can scarcely believe that the government plans to cut her pay by 10 percent or more — a sacrifice to be shared by hundreds of thousands of middle-class families across Ireland's unraveling economy.
A government that long profited from a property boom is now raising income taxes and pension charges to combat a sudden, gaping hole in the public finances that means borrowing one euro for every three spent. Its emergency approach is fueling rebellion throughout the bedrock of Irish society — teachers, bus drivers, police officers and nurses — who feel they are being asked to surrender too much in defense of a wealthy, discredited elite.
"Our genius government blew the boom. On their friends in the banks, on property madmen who made the whole country insane with greed. We had a once-in-a-lifetime chance to pull this country out of the muck. All that money wasted," rued Horan, dragging deeply from a cigarette outside her crowded emergency room on an icy March night.
"They can find billions for the banks, and we're getting our salaries and budgets slashed. It's a sick, sick joke."
Prime Minister Brian Cowen and his finance minister, Brian Lenihan, stress that everyone — not just the bankers who lost billions on Ireland's lust for real estate — must pay their share in a national battle for financial survival. They say Ireland could collect less than euro35 billion ($44 billion) this year in taxes against euro55 billion ($69 billion) in spending — and so everything, and everyone, has to give.
Polls show support for Cowen's 9-month-old government dissolving to a record-low 10 percent.
"It's absolutely essential we restrict the sum of our borrowings. We must show the wider world there's a credible path out of our present difficulties," Lenihan said in an interview.
New taxes on paychecks
Lenihan has already imposed new taxes on paychecks, ranging from 1 percent to 3 percent. And he has begun deducting a further 7.5 percent on average from the wages of 350,000 state-paid workers, including nurses, teachers and police, to increase their contribution to state-subsidized pensions. He plans to unveil an emergency wave of even bigger tax hikes and spending cuts by the end of this month. Opposition leaders have already dubbed it "the April Fool's Budget."
The government is simultaneously raiding the National Pensions Reserve Fund for euro7 billion ($8.8 billion) to support the country's two biggest banks and has taken over a scandal-stricken third, Anglo Irish, after its directors were discovered hiding their own loans and losses.
More than 100,000 workers marched last month on the parliament to demand that the nation's tax-exile elite — and even its billionaire rock icons, U2 — be forced to pay far more to keep their country from drowning in red ink.
Unions representing 700,000 workers in this country of 4 million are balloting members to strike, among them the Irish Nursing Organization. It argues that the government should be seizing the assets of bankers and property developers who helped bring one of Europe's most vibrant economies to its knees, not squeezing life-and-death services.
Among those most aggrieved at the government's paycheck cuts are its own civil servants. About 13,000 workers in government offices were first to mount a one-day strike last week, arguing they could lose their homes if their salaries are pruned.
Homeowners in trouble
Derek Hollingsworth, 37, who works as a low-level manager in the prime minister's office, says his family is running up monthly debts of euro200 ($251) a month, partly because his wife — due to give birth in a few weeks — was fired from her private-sector secretary's job last September.
Hollingsworth is a victim of Ireland's property obsession, during which the cost of housing tripled from 1997 to 2007. He stretched to buy a house that December, as prices peaked, on the western edge of Dublin for euro406,000 ($509,700) with monthly payments of euro1,800 ($2,260) due for the next 35 years.
He, like tens of thousands of first-time buyers, were reassured by leading economists that prices would rise no matter what. The global credit crisis shattered that presumption, and the value of unsold homes beside Hollingsworth's dropped euro60,000 ($75,000) within three months.
"Some people say first-time buyers like me were stupid and greedy, that we lied about our own salary figures and incomes to get on the property ladder, and ended up with a house we couldn't afford," Hollingsworth said. "But we were deceived by people who should have known better. The simple reality is we had a dream of owning our own home and we kept getting told: Do it now or you'll never get on the ladder."
Jobless rate at 10.4 percent
Unemployment has already doubled within the past year, reaching a 12-year high of 10.4 percent in the latest figures published Wednesday. Taxpayers are transforming into state-benefit claimants at the rate of almost 1,000 a day; the latest budget figures, published Tuesday, showed welfare costs up 8 percent over the past year and income tax collections down 7.4 percent.
Alan McQuaid, senior economist at Bloxham Stockbrokers in Dublin, said surging unemployment should "be a wake-up call to public servants, who continue to feel sorry for themselves because of the introduction of a pension levy and pay freeze."
"The vast majority of them at least have the security of guaranteed employment," he said. "The way things are going, they will be the only ones left working in the economy."
A hot topic of conversation is which country offers the best jobs for emigrants. Out-of-work stockbrokers and computer specialists are taking out their frustrations at a white-collar boxing club. An unbuilt McDonald's has already stopped taking applications for its 50 positions — after receiving 500 resumes.
"We have had them from bankers, accountants and architects," said the franchise owner, Kieran McDermott. "I had to do a double take on the CVs (resumes). It's no joke."
Impact of Financial Crisis Different for Five Largest European Countries and the U.S.
Publication: Business Wire
Date: Wednesday, March 19 2008
Italians Most Impacted While British Least Impacted
ROCHESTER, N.Y. -- While much of the focus may be on the United States, the recent financial crisis has impacted countries around the world, some worse than others. One sees varying degrees of impact when looking at on the crisis in the five largest European countries and the U.S. Italy appears to be the hardest hit with three in ten (29%) saying the financial crisis has had a major impact and an additional one-third (33%) saying it has had a moderate impact on their personal financial situation. Spain and France are the next hardest hit as one in six in France (15%) and Spain (14%) say the impact on their personal financial situation has been major and three in ten French (30%) and Spanish (31%) adults saying the impact has been moderate.
Looking at the U.S, one in six Americans (14%) say the crisis has had a major impact while 28 percent say the impact on their personal financial situation has been moderate. One in five Americans (21%) say there has been no impact. British and German adults are the ones who appear to be the least impacted as pluralities in both countries (47% and 44% respectively) say there has been no impact to their financial situation.
These are some of the results of a Financial Times/Harris Poll conducted online by Harris Interactive([R]) among a total of 6,478 adults aged 16 to 64 within France; Germany, Great Britain, Spain, the United States, and adults aged 18 to 64 in Italy, between February 27 and March 6, 2008.
Sense of Worry
Six months ago, the financial situation did not appear to be that bad - at least people were not that worried about it. A plurality of Italians (46%) and majorities in the other five countries (between 54% in Spain and 77% in Great Britain) say they were only somewhat or not at all worried six months ago about their personal financial situation. One in five in both Italy (21%) and Spain (21%) were extremely or very worried. In Italy, things may have been worse as an additional 33 percent of adults say they were fairly worried six months ago.
Looking six months into the future, however, is another story - at least in some countries. First, things in Germany and Great Britain seem to be the best as just 15 percent of Germans and 13 percent of British adults are extremely or very worried about their personal financial situation looking ahead to the next six months. And, one-quarter of Germans (26%) and one-third of British adults (33%) say they are not at all worried, the highest among the six countries. One-third of French (34%) and Italian (33%) adults are extremely or very worried about their personal financial situation looking ahead six months as are 28 percent of Spaniards and one-quarter (24%) of Americans.
The Role of the Government
One thing people do agree on is that their country's government is not doing a very good job in handling the economy today. But, it's not all terrible either. A plurality of Italians (44%) and just over one-quarter of Americans (28%) and French adults (27%) say their government is doing a terrible job. With the exception of the Italians, majorities in each country feel that their government is doing a fair job of handling the economy.
Disagreement exists on whether the government has the responsibility to intervene and save struggling financial institutions, such as banks. Just over half of adults in France (53%) and the U.S (51%) agree that it is the responsibility of the government to intervene and save these failing or struggling institutions. Three in five adults in Italy (62%), Great Britain (60%) and Germany (60%) do not agree that it is the government's responsibility to intervene. Spaniards are clearly divided as 50 percent think governments should intervene and 50 percent believe they should not.
This FT/Harris Poll was conducted online by Harris Interactive among a total of 6,478 adults (aged 16-64) within France (1,122), Germany (1,125), Great Britain (1,109), Spain (1,054) and the United States (1,057) and adults (aged 18-64) in Italy (1,011) between 27 February and 6 March 2008. Figures for age, sex, education, region and Internet usage were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents' propensity to be online. Because the sample is based on those who agreed to participate in the Harris Interactive panel, no estimates of theoretical sampling error can be calculated. A full methodology and data tables for the U.S. and Europe are available.
These statements conform to the principles of disclosure of the National Council on Public Polls and of the British Polling Council.
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