Showing posts with label Crisis. Show all posts
Ireland officially back in recession - report
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| A woman helps out a beggar sitting next to a political poster stuck to a telephone box in Dublin.(Reuters / Darren Staples) |
Economic growth in Ireland shrank by 0.6 percent, making its third successive quarter of contraction, and it’s official re-entrance into recession, Central Statistics Office reports.
The island nation’s gross domestic product contracted by 0.6 percent on a seasonally adjusted rate for a third successive quarter, meaning the economy is back in recession for the first time since 2009, the data shows.
Similarly, the statistics office has revised its GDP contraction in Q3 2012 to 1.0 percent, down from the 0.4 figure delivered three months ago, and five times the number originally forecast last winter.
Similarly, the statistics office has revised its GDP contraction in Q3 2012 to 1.0 percent, down from the 0.4 figure delivered three months ago, and five times the number originally forecast last winter.
Overall, the economy grew by 0.2 percent in 2012, missing the 0.9 predicted by economists.
Ireland lost out big on capital investment, which decreased by 19.8 percent from the previous quarter.
Gross national product performed better, as preliminary estimates for first quarter of 2013 increased by 2.9 percent, seasonally adjusted.
The recently bailed out euro member’s recovery from the financial crisis has been slow, and today’s data indicates it may be slower than originally anticipated. Ireland has one of the highest budget deficits, and will continue to cut spending and increase taxes in austerity measures.
The budget deficit is astronomical largely due to the burden inflicted by the failure of six banks and recapitalization of the main three - Bank of Ireland, Allied Irish Bank and Anglo Irish Bank. The total cost of the bailout is nearing 64 billion euros, of which 40 percent was paid by taxpayer contributions.
Prime Minister Enda Kenny is hoping to wrap up her country’s three-year international bailout plan by the end of 2013.
Economies across Europe are slipping back into recession. France’s economy shrank by 0.2 percent in Q1, and with the exception of Austria and Germany, all euro member states have been sluggish in their growth due to the general economic slowdown of the continent.
Bond market returns in Ireland had some investors optimistic that it was moving towards growth, and not contraction.
Bonds dropped Tuesday after European Central Bank President Mario Draghi delivered a negative regional economic outlook, which he said will continue to necessitate monetary policy.
Overall the economy grew by just 0.2 percent last year, rather than the 0.9 percent initially thought, and the export-led recovery stalled in the second half of 2012 due to the slowdown in much of the rest of the eurozone.
Investors to pay for bank failures – EU
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| Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem talks to journalists during a joint news conference with Portuguese Finance Minister Vitor Gaspar in Lisbon May 27, 2013.(Reuters / Jose Manuel Ribeiro) |
European Union finance chiefs agreed Thursday investors and wealthy depositors will foot the bill for bank bailouts, in a break with the past convention of burdening taxpayers. If pursued, bailout strategy, shareholders, bondholders and depositors with more than 100,000 euro will share the financial strain of saving a bank. Deposits under 100,000 will be protected. Under the new protocol, which would come into effect in 2018, countries would be obliged to absorb 8 percent of a bank’s liabilities, with some leeway thereafter. The next time a big bank fails, governments will make sure “that shareholders and creditors are liable first and foremost,” German Finance Minister Wolfgang Schaeuble told reporters. Rescuing banks will not be less painful for political leaders and institutions, who can now just take bank deposits instead of hiking taxes.
French Finance Minister Pierre Moscovici said France got “what we wanted” from the blueprint, and Danish Economy Minister Margrethe Vestager called the deal a “balanced compromise.” The Irish, whose taxpayers paid nearly $40 billion to bail out Anglo Irish Bank, are happy that the new status quo will be bail-ins, not bail-outs. Banks will have to bail themselves out. Other ministers were happy to have a universal strategy to address dealing with troubled banks.
"If a bank gets in trouble we will now, throughout Europe, have one set of rules on who pays the bill," Dutch Finance Minister Jeroen Dijsselbloem said.
Germany has previously indicated it disagrees with a universal plan to deal with bailouts across the continent, and has warned having such a strong central banking authority goes against standing treaties.
“It took a long time and it was arduous and it was intense,” German Finance Minister Wolfgang Schaeuble said, without publicly voicing Germany’s previous qualms over the structure. It is highly unlikely Chancellor Merkel will agree to such a banking union before the election in September.
The European Central Bank will officially take over supervision of eurozone banks next year. Last year it provided 1 trillion euros of cheap three-year loans to struggling banks.Under the new umbrella, banks will be able to receive direct loans from the European Stability Mechanism, a eurozone bailout fund. The European Banking Authority was set up in 2011 to integrate rules across the EU and has secured a new supervisory function. All 17 currency member states support the motion, but some fear an all-too-powerful central bank. By next week, the 27 member states need to choose a governing body, or executor, to carry out the task.
The legislature’s text grants nations a clear right to nationalize failing banks, if the step is seen as essential to preserve financial stability. Switzerland, Norway, and other non-EU countries within Europe will still have jurisprudence over how to deal with bank failures.
Just like Cyprus
The precedent was set after Cyprus requested an EU bailout and aid was dependent on the country’s agreement to levee account holders with more than 100,000 euro, which will likely result in a loss of 30 percent in savings. The Cyprus scenario marked the first time depositors were forced to contribute to the bank’s bailout and now it is set to become the norm. Many analysts had pointed to Cyprus as an isolated case, as their debt was heavily a result of bad Greek bonds, and a hyper-inflated banking sector, almost eight times as large as the country’s GDP. Tax-payer funded bailouts have been the source of public discontent, and the accord is seen as a move to ameliorate political relations in the EU.
UK austerity: ‘Diverting money from poor to rich under guise of economic crisis’
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| Lawyers and demonstrators listen to speakers during a protest against proposed cuts to legal aid outside the Houses of Parliament, in London May 22, 2013. (Reuters) |
The UK’s austerity policy is ideologically driven and is aimed at diverting finance from the poor to the rich under the pretext of the economic crisis, writer John Wight told RT.
Britain's Chancellor of the Exchequer George Osborne is announcing billions more in the government spending cuts while austerity measures are already biting for many people across the UK.
Osborne claimed that British economy is “out of intensive care.” RT asked Wight if he thinks that is really the case.
John Wight: Only in a fine world of the Tory party would that be the case. The country’s seen 1.1 percent growth in the last three years – the worst level of growth in this country’s economy over the last 100 years. That can by no means be considered a success.
RT: Who's going to be the most affected by these latest cuts?
JW: Clearly the poor are going to be hit harder as a continuation of the mass experiment in human despair, which this coalition government has cheated to describe as an economic policy. It is ideologically driven and we see economics of the madhouse. And it is done with the objective of affecting the transference of wealth from the poor to the rich under the pretext of an economic crisis – not reason, it’s a pre-text. The economic crisis which hit this country in 2007 was their economic 9/11.
RT: Official figures show the deficit has been growing last year, despite previous cuts. So is there any point to them?
JW: Well, that’s what I’ve just said: this is ideologically driven. If you are considering these policies on the basis of economics, then clearly it is completely irrational. The US economist Paul Krugman lately described it as “a medieval doctor draining a patient’s blood,” and when that doesn’t work, draining more blood from the patient. This is entirely appropriate to describe this economic policy, this austerity. Austerity historically has been discredited. It doesn’t work in times of recession. At a time of recession the government needs to spend more to reintroduce the man which is contracted as profits stumble. And you must place this along the fact that the Office of Financial Statistics, the government’s own body set up to monitor these things, came up with a figure in April which stated that in the final quarter of last year UK businesses, excluding banks, were sitting on 318 billion pounds of surplus. And that money is money we need in the economy. They are not investing, they spend all the inducements from the government by the way of tax subsidies and tax cuts for the rich that the government has given to the rich over the last three years.
RT: What do you think is the best way that the government can fight the deficit?
JW: It has to start investing in the real economy. It has to start directing banks to lend rather than pleading with banks, especially banks in which we own a majority share, such as RBS. The government should take over RBS’s operations and start lending in the interest of the real economy. The economy needs it. We have a housing crisis in the country, it’s the worst in the world, it’s a scandal. And we need to start investing in affordable homes. Rather than punishing the poor for being poor we should start actually diverting money from the rich to the poor, as befitting a civilized society.
RT: Osborne announced cuts to the police budget. Do you think that will affect the crime rate?
JW: Well, not really, because based on what we know now a lot of criminals are actually in the police. They are also sitting in the boardrooms and in the House of Lords. It may have an effect. But I think they’ve consolidated the police and taken away the regional power from the police. It is yet to be seen. But as I say the cuts in the police budget are minimal compared to the cuts for the poor in terms of benefit cuts and so on.
