Thread: Mike Shedlock: G-20 Summit in Flames Already as EC President Blames US For Financial

Monday, June 18, 2012 8:08 PM

G-20 Summit in Flames Already as EC President Blames US For Financial Crisis in Europe

The G-20 summit is off to a great start if you like fireworks, endless bickering, and finger-pointing. Otherwise these summits are totally useless.

When asked by a Canadian journalist "Why should North Americans risk their assets to help Europe?" EC President José Barroso replied "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.

The Guardian has further details in Barroso blames eurozone crisis on US banks.

The opening day of the G20 summit was threatening to deteriorate into a fractious row between eurozone countries and other non-European members of the G20, notably the US, as EU commission president José Manuel Barroso insisted the origins of the eurozone crisis lay in the unorthodox policies of American capitalism.

As Europe's leaders came under intense pressure to act decisively to cure the euro's ills, and a campaign gathered pace to relax some of the austerity programmes laying waste to countries with unsustainable debt levels, Barroso said Europe had not come to the G20 summit in Mexico to receive lessons on how to handle the economy. Asked by a Canadian journalist: "Why should North Americans risk their assets to help Europe?" he replied: "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy.

"This crisis was not originated in Europe … seeing as you mention North America, this crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices, from some sectors of the financial market."

The European council's president Herman Van Rompuy, speaking alongside Barroso, said a draft G20 communique showed "support and encouragement for the euro area countries and leaders and for the European Union as a whole to overcome this crisis".

"We are not the only ones that are so-called responsible for the current economic problems all over the world," he said.

A Few Questions Nannycrats Might Consider

1. Might I point out to nannycrats Barroso and Van Rompuy that leverage in European banks exceeded leverage in US banks?
2. How about the fact the property bubbles in Spain and Ireland were bigger than the property bubbles in the US?
3. Is the US responsible for putting together a structurally unsound euro, or is Europe?
4. Did the EU fail to do its homework in letting Greece into the EU?
5. Did nannycrats in Brussels praise property development in Spain before everything blew sky high?

I am quite certain I can ask dozens of such questions.

Let's be honest here. Yes the US caused lots of problems. So did the ECB, and so did the nannycrats. China played a part as well.

Thus, those comments by Barroso are strictly from Fantasyland if not Idiotland. Europe created the euro, not the US. Europe foolishly pledged more and more money to Greece, not the US. And eurozone rules are at the heart of Europe's mess, not anything the US did.

Mike "Mish" Shedlock
Mish's Global Economic Trend Analysis

http://globaleconomicanalysis.blogspot.com/2012/06/g-20-summit-in-flames-already-as-ec.html

Monday, June 18, 2012 11:44 AM

Another "We are Saved" Euphoria Lasts Only Moments; European Bond Market Revolts Already as Spain 10-Year Yield Hits Record High 7.28%

Following news of the victory of the "pro-bailout the French and German banks party" known in Greece as "New Democracy", the euro sailed to 1.2760 and a lovefest in the Asian equity markets began.

However, the rally in the euro did not last long. There was no rally in the European bond markets to begin with. The US stock market opened in the red.

Euro 15-Minute Chart




click on chart for sharper image

Chart from Barchart

The rally in the euro lasted about 39 candles, 585 minutes, or roughly 9.75 hours. It was essentially straight downhill once the European markets opened.

European Bond Market Revolts Already

The far more important European bond market never got going in the first place as the following charts from Bloomberg show.

Spain 10-Year Yield Hits Record High 7.28%



Chart from Bloomberg.

Italy 10-Year Yield Hits 6.17%



Chart from Bloomberg.

Greece wants to stay on the euro.
Lovely.
How long will Spain and Italy? What about France?

For further discussion, please see Greek Election Sideshow; Socialists Win Absolute Majority in France; How Long Will the Bond Market Celebrate Another Glorious Can-Kicking Exercise?

Mike "Mish" Shedlock
Mish's Global Economic Trend Analysis

http://globaleconomicanalysis.blogspot.com/2012/06/another-we-are-saved-euphoria-lasts.html

Sunday, June 17, 2012 11:08 PM

Throwing Bones to Greece; A Victory for Europe (or a Victory for French and German Banks)?

Throwing Bones to Greece

In the wake of New Democracy eking out a victory over Syriza in the Greek elections, the nannycrats are willing to toss a few bones to Greece.

For example this headline on Bloomberg says Euro Chiefs Signal Greek Austerity Softening as Summit Looms.

Only vague references in the article pertain to concessions.

"German Foreign Minister Guido Westerwelle said negotiators could consider giving Greece more time to fix its finances, telling ZDF television that the political gridlock over the past six weeks “has done damage.”

The hope of nannycrats is that vague promises to "soften stance" will lead to a coalition between New Democracy and Pasok. Perhaps it will. Pressure on Pasok will be immense.

A victory for Europe (or French and German Banks)?

The Irish Times reports New Democracy party hails 'victory for Europe'

The leader of Greece’s pro-memorandum conservative party has claimed victory in the country’s second election in as many months, describing it as a “victory for Europe”.

“The people of Greece have shown their will to stay anchored in the euro zone and honour our commitments,” said Antonis Samaras, in a victory speech delivered in Greek and English.

“They have voted for a European course and our stay in the euro. They voted for jobs, justice and safety. No more adventures.”

How is this a victory for Europe? How is it even a victory for Greece? The only victory is for the stock market and bondholders, at taxpayer expense of course.

"No more adventures" says Samaras. "Wanna Bet?" replies Mish.

Short-term Greece stays in the eurozone. The irony is, perhaps this will force Germany to come to its senses and say "you can have it".

A German exit will not happen as long as Merkel is running the show, but the moment the decision is put to voters of Germany in an official referendum, anything can happen.

I believe the German people are likely to (and should) say to hell with it all. After all, the euro project has been a spectacular failure.

Mike "Mish" Shedlock
Mish's Global Economic Trend Analysis

http://globaleconomicanalysis.blogspot.com/2012/06/throwing-bones-to-greece-victory-for.html