Category Archives: Wealth

The Subversive Summit – In These Times


The time is ripe—if not for the full-blown revolution, then at least for a transformative backlash to recenter the imperatives of social justice that have lately become so attenuated.

ZAGREB, CROATIA—What is often described in media, political and financial circles as the global “debt crisis” actually poses even more insidiously widespread dangers than the ubiquitous doom-filled reports commonly inform. “The greatest catastrophe threatening Greece and Europe is not the economic crisis,” says Costas Douzinas, professor of law at Birkbeck, University of London, “but the total destruction of the social bond, the way we see ourselves, the way we see our relation to the community. This is long-term. Economic crisis, fiscal deficits, can be restored in the medium term. But once you lose the social ethos, then there is no way back.”

That was the takeaway in May as scholars, writers, politicians and activists came together at Zagreb’s sixth annual Subversive Forum to plumb the depths of the current malaise, but also to propose remedies for the five years of European economic upheaval that has produced personal hardship, civic unrest, governmental instability and a general sense of paralysis.

For two weeks every year, Zagreb’s civic festival welcomes hordes of progressive lecturers and audiences to a program of films, debates, roundtable discussions and protest-planning sessions. Running past midnight in the city’s elegant 1920-vintage movie house Kino Europa, standing-room-only keynote speeches attract staunch partisans for advancing the interests of the public sphere against the authoritarian mediocracy that now prevails.

The cataclysm of human and social devastation in Europe is this generation’s defining moment. But calling it a debt crisis, as Greek economist Yanis Varoufakis explains, is like going to the hospital with advanced inoperable cancer and having the doctor diagnose your suffering as a pain crisis.

Yes there is pain, but the pain is symptomatic of bigger problems. The “debt crisis” is also a food crisis—people can’t afford to buy enough to eat. It’s a housing crisis, an education crisis, an unemployment crisis, an immigration crisis, a human rights crisis. In Greece, the New York Times reports, prostitution has surged 150 percent in the last two years as a direct result of social desperation, with supply-and-demand dynamics driving prices for sex work as low as five euros.

The Left rightly rejects austerity, despising it as collective punishment of citizens who had nothing to do with the financial collapse. Public health scholars David Stuckler and Sanjay Basu explain in The Body Economic: Why Austerity Kills that such spending cuts drastically lower life expectancy due to a higher prevalence of suicide, HIV, alcoholism, heart disease and depression.

Underlying all these other crises is the steady transformation of the over-bureaucratized European Union into a democracy-free zone. Voter turnout is in decline (especially for European Parliament elections, but also in national contests), as constituencies manifest apathy or disenfranchisement. Decisions that people should be able to make for themselves and that are consequential for their lives—how much society spends on healthcare, on education, on defense—emanate instead from afar by EU administrators. A “Merkiavellian” regime, some call it; a secular empire of finance.

The principles of democratic self-determination are hamstrung by the powerful Troika—the International Monetary Fund, the European Central Bank and the European Commission (the EU’s legislative and operational council)—which a disempowered citizenry increasingly views as an automaton that squelches democracy as it protects the interests of the power elite.

A teachable moment

But as many Europeans grow resigned to the “new normal,” a passionate movement of social democrats and subversive activists aims to recast a fatalistic narrative of inevitable capitulation. From the rubble of this financial catastrophe, they are extrapolating a systemic critique of how this mess came to pass and more importantly, how to use the collapse as a teachable moment. The time is ripe—if not for the full-blown revolution, then at least for a transformative backlash to recenter the imperatives of social justice that have lately become so attenuated.

The EU had been promoted as a strong “single market” (by many reckonings, the world’s largest economy) that would defuse Europe’s centuries of conflict: shared economic prosperity would generate cooperative unity. But clearly the EU has not delivered the promised transnational harmony. Capitalism is, after all, inherently a competition, which means there are winners and losers. Labor, always a weak player in this competition, loses the most in a race to attract foreign investment. Consequently, the labor movement fears a descent into what Slavoj Žižek calls a tyrannical “capitalism with Asian values.”

“Peripheral countries,” a label that has become so prevalent in the EU discourse, typifies the fault lines in the “union.” At the Subversive Forum, I noticed how keenly language highlights these tensions and fissures. Not surprisingly, people don’t like being thought of as peripheral—a lesson that might have been learned in light of the offense that the “third world” has always felt about that similarly condescending term. They also don’t appreciate being called PIIGS, the acronym that lumps together Portugal, Ireland, Italy, Greece and Spain (the extra “i” doesn’t soften the blow). The term is outdated anyhow as more countries slide into severe downturns. With France and the United Kingdom falling into recession and Cyprus imploding, we can expect even coarser acronyms in the future.

It’s not just about nomenclature. The discourse of “othering” reveals old and supposedly effaced neocolonialist prejudices at their worst. In the minds of those who oppose humane terms of support, the “pigs” are lazy and corrupt, unsophisticated and out of date. They have brought their troubles on themselves and forced austerity will do them good.

The idea of Europe and even the word itself, has become toxic, unstable; co-opted by the bureaucrats’ failed vision, nobody knows exactly what it means. Is the UK in Europe? What about other EU but non-Eurozone countries—like Poland or Sweden? Is Iceland, the canary in the coal mine for financial meltdown, European? Euro-Asiatic hybrids such as Russia and Turkey? Non-EU countries like Norway and Switzerland? Can a country be expelled from Europe?

“Europe” is uttered with a sneer or a spasm of abjection. “Euro,” which once denoted simply a strong cosmopolitan currency, is now a root that has spawned a more cynical vocabulary: Eurocritic, Euroskeptic, Europhobe. But if the establishment’s lexicon is becoming degraded, the radical retorts are more fiercely honed. “Union” and “unity” have been exposed as feckless in the face of European inability to sustain these, inspiring a more rousing synonym, “solidarity,” that resounds among those who are focused on social equality rather than financial technicalities. Paradoxically, the counter-rhetoric of the Left has expanded the context of the crisis by contracting the terminology. What was originally construed as “the global economic crisis” morphed into “the Eurozone crisis,” or “the Eurocrisis,” then became more tightly compressed into “the crisis,” and finally—stripping away everything else to convey simply a primordial vortex of personal agony and social decrepitude—the definite article dropped off, leaving just “crisis.”

“Crisis” has mobilized a radical critique of European capitalism. It’s not as simple as debating whether countries should leave the EU, or the euro—as bad as things are now, the alternative is probably catastrophic. But the Left has embarked upon a deep analysis of what sort of society has grown out of the EU’s financial autocracy. “Criminals, disguised as statesmen, were robbing us blind,” says Slovenian poet and critic Aleš Debeljak. “Crisis made us realize this truth.”

The radical mission is to uncover and expose the roots of this incompetence and institutional corruption, to question the motives and hidden agendas lurking beneath the “bankruptocracy” (another salient coinage), to educate and motivate suffering masses, and to reform the system.

“We can’t leave economic issues to the experts any longer,” says Maja Breznik, from the Slovenian Peace Institute. “It’s time for amateur investigations.”

These investigations, an end-run around the self-interested strategies of bankers and other EU cronies, begin from the premise that the vicious circle of debt is not the fault of immoderate spending by governments or households. Instead the primary goal of “recovery” has been a non sequitur: protecting the interests of private moneylenders and multinationals and refilling their coffers after their financial miscalculations and chicanery. The problem as it is being addressed bears little relation to the actual predicament, so society has plunged into deep recession.

As Europe tries to emerge from crisis, an exclusive focus on debt represents a class struggle designed by financiers to transfer losses from their books on to the taxpayers. Troubled countries are forced to sell off their economies to foreign investors. The Troika arranges bailouts under the harshest terms, with the heaviest burdens borne by agencies that support public welfare, because reducing social spending allows countries to pay more money, more quickly, back to the banks.

Privatization of the commons en- sues: everything that can be liquidated is sold, then rented back to the most disempowered classes. Much of the population is perpetually indebted and the idea of “permanent work” becomes a rarity, replaced by piece-work, part-time work and frequent lay-offs. The social contract has been broken.

We “amateur investigators” must ask questions about real value, as opposed to the merely monetary expressions of value that the Troika fetishizes. It seems reasonable to proclaim “bankrupt” (figuratively and literally) the discourse of valuation that culminated in the exotic, abstruse financial products that precipitated the crash.

It is our turn to open the discussion of what is valued from the perspective of the victims of fiscal malfeasance. (By “us” I refer to non-bankers, non-wealthy, non-functionaries and for good measure a healthy cadré of academic fellow travelers.) GDP itself is a subjective measure of value, a war-accounting mechanism that is not the only way to count. A euro is not just a euro: not every use of money is equally valuable. A different model of social accounting—one that focuses on the bottom, the workers, the poor and middle class, and starts with wages, taxes, social security—will produce a very different economic narrative than the one that has predominated for the last five years.

“We demand a new right,” argues Franco “Bifo” Berardi, a Marxist scholar from Milan’s Academy of Fine Arts, “The right to insolvency. We are not going to pay the tax. If I am insolvent, I don’t have money, so I won’t pay the debt.” Instead, there should be a moratorium on interest payments, some debt should be canceled and some repaid with a growth clause (as Germany did in the 1950s). Countries would pay as they grow, and as they can afford it.

Žižek—the Subversive Forum’s patron saint since its inception—warns that the radical Left has historically had a proclivity to sit on the sidelines: “They prefer sometimes not to take power so that when everything goes wrong they can write their books explaining in detail why everything had to go wrong. There is some deeply rooted masochism of the radical Left. Their best books are usually very convincing stories of failure.”

But today there is an especially high onus to take action, to engage in political reform. Leftist activists and politicians do have a concrete agenda for fixing the crisis. In Greece, defying the eulogies of democracy, Alexis Tsipras’ Syriza coalition has shown impressive strength in the last few elections and stands within grasp of parliamentary victory and a majority coalition in the near future. Nearly destroyed by crisis, Greece may soon emerge as the most advanced site of resistance. “The future of Greece is the future of Europe,” Tsipras proclaims, providing a heartening reverberation for the slogan that protestors chant across the continent, “Nous sommes tous des grecs”: We are all Greeks.

The Left’s challenge is to reorganize in a more cooperative, collective way: reclaiming the commons, reappropriating the wealth that is now in the hands of the state and the banks, and reconstituting the social fabric that was destroyed by economic restructuring.

Political platforms like Syriza’s draw on a wealth of theoretical foundations and strategic visions for reform.

Erik Wright, a University of Wisconsin sociologist who wrote Envisioning Real Utopias, is one of many academic subversives who offered Zagreb audiences a sophisticated array of fresh ideas for transcending the status quo of capitalism and replacing it with an emancipatory alternative, a democratic egalitarian pathway that empowers people to take control of their own destinies. Wright described a range of innovations that can be introduced “inside of capitalism” but that embody non-capitalistic principles and more fully reflect the values of democracy: worker-owned cooperatives, participatory budgeting (where citizens help determine civic priorities), freely provided public services like transportation and libraries (which we can think of as anti-capitalist ways to give people mobility and books), and unobstructed access to the commons of intellectual property. Peer-to-peer collaborations like Wikipedia illustrate how a non-capitalist means of production can flourish within capitalism and ultimately displace capitalism altogether (as evidenced by the recent demise of the print edition of that imperialist icon, the Encyclopedia Britannica).

Urban farms organized through community land trusts can support food production divorced from agribusiness. Crowd-sourcing finance like Kickstarter sidesteps the entrenched hegemonies of cultural production. The gift economy in music from the Internet allows people to download songs for free and pay whatever they want. (Wright believes these musicians actually make more income than they would in a conventional sales model because they have created a more palatable moral economy with their fans.)

The crisis of capitalism offers, as a silver lining, the opportunity for us to reconceptualize more democratic and sustainable systems of social and commercial existence. It’s a moment that is uniquely receptive to new ideas, as the old ones have proven so worthless. A subversive smorgasbord can be created in the world as it is, prefiguring things that might be in the world as it could become. Are these just utopian fantasies? A questioner at Wright’s lecture asked whether a smattering of such small-scale interventions could really inspire fundamental social change, to which the sociologist responded sublimely: “We don’t know for sure. The day before Wikipedia was invented, it was impossible.”

ABOUT THIS AUTHOR

Dr. Randy Malamud is regents’ professor and chair of the department of English at Georgia State University. He is the author of eight books, including Reading Zoos: Representations of Animals and Captivity (NYU Press, 1998) and An Introduction to Animals and Visual Culture (Palgrave Macmillan, 2012).   He can be reached at rmalamudgsuedu.

via The Subversive Summit – In These Times.

Croatia’s entry fee


Engineer Duje Kovai, who has worked in the shipyard at Split for 40 years, asks: “Why does Europe want to stop Croatia building ships?” He has no answer. The country has a long coastline and history of sailors, fishermen and shipbuilders, but EU membership will probably put an end to one of its oldest industries. The yards had to be completely privatised before Croatia officially joined the EU on 1 July.

Croatia had five shipyards, dating back to the 19th century: Uljanik in Pula, and 3-May at Rijeka, Kraljevica, Trogir and Split. They were the economic backbone of the coastal regions. Ships built in Yugoslavia used to sail the world, and for decades Dalmatia’s shipyards rivalled those of Trieste and Saint-Nazaire. Shipbuilding was key to the political imagination of the socialist years: Josip Broz Tito had worked as a mechanic at Kraljevica in the 1920s. Split’s history is linked with the shipyard: the famous Hajduk football club — which is to Croatia what Olympique de Marseille is to France — was founded by shipbuilders who joined the Communist partisans when Dalmatia was annexed by the Italian fascists in 1941.The termination of all public subsidies is stipulated in chapter 8 (Competition Policy) of the accession treaty admitting Croatia to the EU, and the European Commission has been monitoring the implementation of the “restructuring” programme. “All over the world, states help shipbuilding,” said Zvonko Šegvi, president of Split’s shipbuilders’ union. “In Italy, the Fincantieri shipyards are entirely in public hands; in France, the state is still a minority shareholder in the biggest yards such as STX-Chantiers de l’Atlantique. Even in South Korea, the world leader in naval construction, the state subsidises shipbuilding. What’s acceptable in every other country is forbidden in Croatia in the name of European integration.”

A few months before EU accession, the state put its shipyards up for sale. But this proved more difficult than expected: debts were underestimated and some potential buyers were put off by the requirement that they shoulder 40% of restructuring costs. Kraljevica didn’t find a buyer and went under. Only the privatisation of the small site at Trogir seems a comparative success: one pier will be turned into a marina and chandler’s yard, and shipbuilding will continue. It was bought by a Croatian businessman, Danko Konar. The state will contribute €60m ($80m) to its restructuring over five years, and the agreement includes cutting the workforce from 1,200 to 900. Slavko Bilota, an engineer, hopes though that as older workers retire new ones will be taken on.The yards in Split were purchased by the DIV group for the nominal sum of 500,000 kunas ($88,600). DIV, which is owned by the businessman Tomislav Debeljak, has not put forward any serious plan for getting them back in operation, and announced in June that almost all of the 3,500 workers would be laid off: 1,500 of these will be rehired on short-term contracts, but the selection criteria are unclear. DIV has also promised to recruit 500 former employees, also on temporary contracts.

Split is not going down without a fight, and DIV has brought charges against union leaders for alleged acts of violence and has had them banned from the site.The identity of Istria is likewise inextricably linked to the Uljanik shipyard at Pula. In this tiny region of 200,000 people, shipbuilding accounts for nearly 30,000 jobs, direct and indirect. Production has continued and the order book is full, despite a reduction in state aid since 2006. Uljanik even made a bid to buy the 3-May shipyard in Rijeka. But the future remains uncertain. The site is attracting attention for its touristic rather than industrial potential: the islet on which the shipyards are located is in the middle of Pula bay, visible from the promenade and the town’s Roman amphitheatre. For now, Pula’s tourist future is focused on Muzil, a former military base built in 1859 for the Austro-Hungarian fleet and used by the Yugoslav then Croatian navies until it was closed in 2007. Pula residents currently stroll, bathe, fish, and picnic on the site, which also hosts alternative festivals, but there are plans to privatise it and turn it into a tourist complex with a 2,500-bed hotel, golf course and marina.

The planned demise of the shipyards will complete Croatia’s deindustrialisation. But can the country rely on tourism? The coastal regions have the highest unemployment, with 22% officially out of work overall, and a third of those under 25. Many young people get by on casual work on the black market, earning as little as $250 a month. Zvonko Šegvi says Croatia is joining the EU “without any real preparation … our economy has been devastated, and all we can do is provide services to the rich countries in the north. In the EU, Croatia is going to be a second-rank country, like all the other states in the south.”

via Croatia’s entry fee – Le Monde diplomatique – English edition.

Obama Says “American Dream” Alive and Well in Detroit  


Somnium Americanum certum est quia impossibile est

DETROIT – USABarack Hussein Obama today addressed the nation from a city that epitomises his tenure as President of the United States.

“I’m standing in this piece of shit goddamn rubble city and saying to you Americans, I’m going to hand over the 17 Trillion dollar national debt I racked up to you and all future generations once I end my tenure as president. This was my American dream, and it’s going to be your American fu**ing nightmare. Thanks for voting for me — twice!” the jovial president said chuckling like a hyena.

The president then went on to his usual diatribe about how he is being hindered by Republicans in Congress and how none of the mess the country is currently in is his fault in any way.

A homeless army veteran onlooker to the whole sorry scene quipped: “This is what happens when Marxism mixes with Capitalism. In the Marine Corp. we used to call it a ‘clusterf*ck’.”

via Obama Says “American Dream” Alive and Well in Detroit  .

‘NO COMMENT’ SPOKESMAN REFUSES TO ANSWER QUESTIONS ON EVERYONE’S LIPS


The Sunday Independent posed the following questions to Minister of State for Small Business John Perry but he refused to comment. A spokesman said: “As this matter currently remains before the courts, Minister Perry will be making no comment.”

In relation to the loan Mr Perry agreed with Bank of Ireland to help pay his outstanding tax bill of approximately €100,000, what security – if any – was provided to the Bank of Ireland?

• Why did Mr Perry tell Danske Bank officials that he was friends with Bank of Ireland chief executive Richie Boucher? What would this have to do with any decision the bank would make on extending credit to him? Did he expect it to make a difference?

• Why did Mr Perry meet Danske officials in his Dail office? Did he not consider this to be an inappropriate use of that office? Did he think a meeting held in a minister’s office would in any way influence Danske Bank officials in their treatment of him?

• Can Mr Perry explain his remark to Danske Bank officials on January 31 last, where he accused them of being engaged in a form of bullying? Why did he go on to ask the bank’s officials if they treated all their customers in the same way? Does he consider it appropriate to have referred to the bank’s relations with other customers given his position as a government minister?

via ‘NO COMMENT’ SPOKESMAN REFUSES TO ANSWER QUESTIONS ON EVERYONE’S LIPS – Independent.ie.

How Europe’s Solution for Economic Crisis is Actually the Problem


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Europe‘s current crisis is more than economic. Between the German government advocating a dangerous austerity policy and European authorities lacking any other suggestions, it is clear that the 2008 financial crisis is no longer solely responsible for the downward spiral of Europe.

The GDP for countries in Europe has fallen by a considerable amount: 5.3% for Greece3.9% for Portugal4.1% for Cyprus2.3% for Italy, and 2% for Spain. This is without even mentioning the recession into which France is entering. In the first quarter of this year, the European Union economy contracted by 0.7%, or one percent when only taking into consideration the eurozone.

If it was only the 2008 economic crisis that was responsible for all this, Europe would not be one of the only one to suffer so much. For example, the United States, the birthplace of this crisis, registered a 1.9% increase in their economy in 2013 [fr] while their unemployment rate was at its lowest in four years.

Europe, which for a long time has aimed to maintain growth that compares favorably with  United States, now finds itself completely lost among incoherent policies and disputes between countries[fr].

One of the main reasons for this current instability in Europe is the evident failure of the European policy authorities when their proposals seem more than enigmatic. Restricting interchange fees as proposed by Michel Barnier, the European Union Commissioner for the Internal Market and Services, is a perfect example of the Commission taking measures that will not have any concrete impact.

Capping interchange fees, bank charges paid by retailers when they make a card payment, would not only increase personal bank charges [fr], as the banks would want to recuperate the money lost by this cap, but the retailers profit margin will also increase, as they rarely lower their prices just because their costs have decreased.

The other significant issue which has notably accelerated the decline of Europe is the restricted austerity policy which the majority of EU countries have undertaken. It would be more logical for Europe to take inspiration from the countries that have pulled through, i.e. the United States, in order to stimulate the market rather than only focusing on reducing the deficit.

Le taux de chômage des jeunes en Europe de 2005-13 via Les crises, domaine public

Youth unemployment rate in Europe between 2005-2013 via Les Crises – public domain

The most frustrating aspect about this issue is that the majority of the European leaders agree on this point, but no one dares to confront the life-long defenders of austerity, also know as « Sparkurs » [de] in Germany and its strict chancellor, Angela Merkel [fr]. But there are also critics of austerity on the German side. Last week, Gilles Moëc, head economist at Deutsche Bank, admitted to the news outlet Agence France-Presse that “there were some errors” [fr] in the selected strategy.

However, it’s not as if the Merkel method was fully tried and tested, in fact, it was far from it. Portugal, for example, had never been in such a terrible state until it was subjected to the European austerity policy. In two years, its unemployment rate increased by 5.3%, its budget deficit by 1.1%. As for its public debt, it’s now 123% higher than its GDP.

Julio Salazar Moreno, Secretary-General of Spanish worker’s trade union, USO, believes that the countries within the European Union need to stop with the austerity policy [pt], according to online newspaper Público:

Os países da União Europeia (UE) têm de parar “de uma vez por todas” com a aplicação de medidas recessivas, porque os cidadãos, alerta, estão a viver no limite dos sacrifícios

The countries within the European Union (EU) must refrain from enforcing austerity policies “once and for all” because the alert citizens are living at the very limits of their possible sacrifices.

The sledgehammer approach is just as inefficient for Greece, claims Gregor Gyzi, a president from a left-wing parliamentary group in Germany, Bundestag, by addressing the Greek readers [el] of news247:

οι επιβληθείσες, κυρίως από την γερμανική κυβέρνηση, περικοπές σε μισθούς και συντάξεις, οι απολύσεις και οι ιδιωτικοποιήσεις, όχι μόνο ώθησαν την Ελλάδα σε βαθιά ύφεση και κοινωνικά προβλήματα, αλλά κατέστησαν και αδύνατη την επιστροφή των δανείων στο εγγύς μέλλον

Imposed primarily by the German government, salary and retirement cuts, redundancies and privatisations, are not only going to push Greece into a major recession and cause social problems, but its also going to make loan repayments equally impossible.

Emigration figures for Europe are also far from surprising. In two years, 2.5% of the Portuguese population left the country. Who would have said ten years ago that today many Europeans would leave the continent to work in countries like Angola or Brazil?

Facing this alarming development, it is even more depressing to hear the responses of others, like that of the Prime Minister of Luxembourg, Jean-Claude Juncker, also the former minister of the Eurogroup, who recently gave his thoughts on the European crisis [fr] and concluded that what Europe needs is some “TLC”: a statement which speaks for itself.

Creative Commons License

Written by Laurent Delors · Translated by Hayley Warden

A1 close to winning landmark victory to recover logistics park from Quinn Group for Irish Govt.


Russia’s famously creaky legal system will be put to the test on July 17 with an asset recovery case – and according to A1, the specialist distressed asset firm that is part of Alfa Group, it will pass.

The case smacks of poacher turned gamekeeper: A1 is the M&A arm of Alfa Group (and as Alfa Ekho, was the first company the founders of the group, who include oligarch Mikhail Fridman, set up). Suffice to say, Alfa Group didn’t cover itself in corporate governance glory in the 1990s.

However, in April A1 went into a joint venture with the Irish Bank Resolution Corporation (IBRC), which has been trying, so far unsuccessfully, to recover 12 assets in Eastern Europe (mostly buildings and some companies) that used to belong to the bankrupt developer, Quinn Group.

Sean Quinn, the founder of the group, defaulted on loans worth €2.8bn from the Anglo Irish Bank, which went bust and its assets were taken over by IBRC, which has since been trying to convert them back into cash.

The trouble is that Quinn has not been playing ball. The ownership of most of the assets has been transferred to a number of shell companies and the IBRC has been struggling to make much headway through the Russian legal system. So earlier this year it turned to A1, which is run by one of the three original founders of Alfa Group, Alexei Kuzmichyov.

On July 17, the courts in the regional capital of Kazan will decide in a key case in A1’s campaign in a dispute involving the $60m state-of-the-art logistics park Q-Park, which the Quinn Group built in Kazan, the capital of the Republic of Tatarstan, Russia.

The problem is that the ownership of the park passed from a Quinn Group holding company called Demesne (held via a subsidiary called Logistika), which now belongs to IBRC, to several shell companies that A1 believes are still under the control of Sean Quinn, putting the park out of the reach of creditors.

A1 said in a statement: “It later turned out that on May 11, 2011 the shares of ZAO ‘Logistica’ have been sold to Sean Quinn, Jr.; on June 3, 2011 shares were resold to ZAO ‘Vneshkonsalt’ and in fall of 2011 sold to two Panama companies – Forvar Overseas S.A. and Lockerbie Investments S.A. These acts were allegedly committed in order to eliminate the [IBRC] from the corporate control of ZAO ‘Logistica’ and foreclosure on the assets of ZAO ‘Logistica’.”

Two shell companies – Vneshkonsalt and another creditor to many of the disputed assets, Stroitelnie Tekhnologii – are names that have come up again and again as the owners of almost all of the disputed assets, including Q-Park, according to A1.

A1 says that it doesn’t know who is behind them, but believes they are answering to Sean Quinn. Indeed, both Sean Quinn and his son were arrested last year in Ireland for attempts to receive rental payments for the disputed properties in Russia and Ukraine in violation of the bankruptcy proceedings. “The holdings and properties have been moving in mysterious ways,” says Andrei Polyakovsky, spokesperson for A1. “What we are certain of is that a misappropriation of funds by an unknown group is taking place”.

A1 is trying to prove that Q-Park still owes Demesne $60m from credits for construction and working capital loans, then it can take back control of the park, put its own administrator in and start preparing the company for sale.

All in all, IBRC and A1 are trying to recover 12 assets in Eastern Europe (11 in Russia and the Ukraina shopping mall in Kyiv) collectively worth some $500m. Q-Park is the second most valuable, but the most expensive is the Kutuzov Towers in central Moscow that is worth up to $200m by current estimates. Work on recovering that has already begun, but will take up some time to complete, says Polyakovsky.

And A1 is supremely confident that it will win, because it never loses a fight as a point of principle. This sounds boastful, but it is not an idle boast. Alfa Group was schooled in the ways of business during the chaos of the 1990s and emerged from that time as one of the most powerful conglomerates in the country with a reputation for playing hard and sometimes rough against its rivals. “A1 doesn’t lose in corporate standoffs,” says Polyakovsky. “It’s a principle in the company and part of our strength. Even if we end up losing money on the investment, we will fight within the legal field as long as we have to reach our goal. ”

This was why IBRC came to A1 for help in the first place. A1 contributed $18m to the joint venture as running-about money, plus it is spending about $1m a month on the work, according to Polyakovsky. IBRC contributed all the titles and deeds to all the assets. According to sources familiar with the deal, the proceeds from the recovery and sale of the initial property will be used to compensate A1 costs. After that, the proceeds will be shared with A1 one getting approximately 30% and IBRC getting the larger part.

via A1 close to winning landmark victory to recover logistics park for Irish govt – BUSINESS NEW EUROPE.

Anglo Irish Bank


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Dukes says he was briefed on Anglo tapes by lawyers
RTE.ie
Former Irish Banking Resolution Corporation chairman Alan Dukes has said he was briefed by lawyers on some of the contents of taped conversations between Anglo Irish Bank executives. Mr Dukes said it was not the job of public interest directors to 
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Coalition unease at outrage over Anglo Tapes witch-hunt

Irish Independent-
Meanwhile, in the wake of the Anglo Tapes, the Government is expected to … in which Anglo Irish Bank executives held not just the government but the Irish …

State begins witch-hunt to catch the Anglo Tape sources

Irish Independent
Mr Noonan set the tone earlier when he said that the special liquidator of the former Anglo Irish Bank was seeking to find out who leaked the tapes, and took a swipe at what he termed “mucking around in garda business”. He was asked about the fallout 
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Leaked tapes could delay Anglo trials for years

Irish Examiner
The trials of former Anglo chairman Sean FitzPatrick and other senior executives could be delayed for years due to the controversy surrounding the leak of explosive tapes from the toxic bank, theIrish Examiner has learned. By John Walsh and Shaun 
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In Ireland, Dire Echoes of a Bailout Gone Wrong

New York Times
The leak of audiotapes of phone conversations between top officials of Anglo Irish Bank, which was by far the worst of a very bad lot, has stunned Ireland and damaged its relations with Germany. It now appears that the bank lied to Irish officials 
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I aim to be objective but if you don’t like what I’m saying, just switch off

Irish Examiner
LISTENERS to The Last Word were able to hear this week what the former Anglo Irish Bank boss David Drumm thinks of me. We broadcast an extract from one of the now infamous internal recordings in which he made pointed reference to a newspaper 
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Bank’s former chief in UK living in dream lakeside home
Irish Independent
THE former boss of Anglo Irish Bank‘s British operations, currently being pursued by the bank for repayment of a chunk of his almost €6m retirement pay-off, is living in a palatial property in Co Clare.
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Vatican Watch


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Vatican scandals

The Economist
The latest scandal is less grisly, but equally bizarre. On July 1st the IOR’s director, Paolo Cipriani, and his deputy, Massimo Tulli, resigned three days after the Italian authorities arrested and jailed aVatican cleric, Monsignor Nunzio Scarano. He 
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Amid financial scandalVatican posts modest 2.2M euro surplus with donations 

Washington Post
VATICAN CITY — The Vatican posted a 2.2 million euro ($2.85 million) budget surplus for 2012, an improvement from the previous year and some good news as it struggles to cope with a scandalinvolving its embattled bank. In its annual financial 
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Catholic Church Abuse: New Documents Reveal that $57 Million Spent to Hide 

Lawyer Herald
 and deposition testimony from Cardinal and Archbishop of New York Timothy Dolan, who during his time of Milwaukee’s archbishop between 2002 and 2009 appealed to the the Vatican on numerous occasions to help address the fallout from the scandal.
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Vatican financial watchdog now part of network
Malta Independent Online
Nonetheless, the Vatican is reeling under a spate of scandals, including one in which a Vaticanaccountant is jailed in Rome while prosecutors probe an alleged plot to smuggle 20 million euros ($26 million) in cash in a private plane from Switzerland 
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Austerity Today


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Protesters, upset over school closings and austerity cuts, march to Mayor 

Chicago Sun-Times
If the mayor was home on the Fourth of July, he’d look out to see hundreds in front of his home, holding signs that read “#onetermmayor” and calling austerity a reason for some of the city’s biggest problems. Dubbed a fight against austerity, the group 
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Arbitrary austerity fuels organised crime in Europe


The Conversation
Until the 1990s, Europeans viewed themselves to be generally unaffected by the activities of organised crime, with the notable exception of Italy and, to a minor extent, Germany. But now, Europol’s recently published European Union Serious and 
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Will the age of austerity harm health?


BBC News
Sandwell, like many areas that were heavily reliant on manufacturing, was hit hard by the recession of the 1980s. Unemployment rose steeply and poverty increased. In some respects, the area has never recovered. The West Midlands borough is now the 
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End to era of austerity budgets within ‘touching distance’, claims Michael Noonan
Irish Times
Ireland is within “touching distance” of no longer having to frame annual austerity budgets, Minister of Finance Michael Noonan has told members of the financial services industry. “We have a difficult budget coming up in October,” said Mr Noonan 
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An Autogestión Alternative to Austerity: Occupy, Resist, Produce!

Truth-Out
An Autogestión Alternative to Austerity: Occupy, Resist, Produce! Austerity policies continue to deliver pain to populations the world over, but shifts toward democratic self-direction deliver much-needed hope. Home · News · Opinion · Video · Art 
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Portuguese coalition holds together

SBS
Portugal’s PM Pedro Passos Coelho says the coalition has found “a formula” that secures its survival after fears it would break up over austerity policies. Portugal’s centre-right government coalition has averted its break-up in a dispute over 
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Greek Salaries Cut Another 10%
Greek Reporter
The austerity measures have also worsened a six-year recession and created a record 27.4 percent unemployment rate and put 1.3 million people – all in the private sector – out of work. Until Samaras shut down the national broadcaster ERT on June 11 and 
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Portugal: A bitter pill too far?

Deutsche Welle
Those tensions reached a temporary climax this week when two top government officials resigned in Portugal. The architect of the country’s austerity, Finance Minister Vitor Gaspar, stepped down. He cited public backlash against his policies. Less than 
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Spanish downturn a disaster for green energy
BusinessWorld Online Edition
MADRID — Spain’s wind turbine manufacturers are laying off workers and farmers who installed solar panels are facing ruin as austerity policies afflict the long-coddled green energy sector. Wind turbines in La Veleta wind park, in Monasterio de 
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Lisbon finds formula to avert collapse
The Times (subscription)
Portugal’s centre-right coalition Government last night averted its collapse in a row over austeritypolicies after striking a deal which will reassure eurozone partners that a second financial rescue will not be needed for the bailed out nation. “A 
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Portugal Government Lives, as Does Crisis
Wall Street Journal
Mr. Portas’ resignation Tuesday in protest over the strict application of austerity demands by the country’s international bailout lenders “was a personal decision,” Mr. Passos Coelho said. He added that Mr. Portas had told him he was committed to 
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International financial news
The Daily Telegraph
LISBON – Portugal’s leaders are fighting to prevent a collapse of the coalition government in a dispute over austerity policies squeezing the bailed-out nation. LONDON – The Bank of England has hinted that it is unlikely to lift record-low borrowing 
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Ireland’s Coalition Seen Secure Despite Lawmakers’ Revolt
Wall Street Journal
The coalition is preparing to detail in October more painful spending cuts and tax increases for its 2014 austerity budget to meet the conditions of the bailout Ireland struck with the European Union and International Monetary Fund in late 2010. The 
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Portugal on brink of collapse sparking fears the country will not be able to 
Daily Mail
Portugal’s financial markets nosedived today amid fears that repayments on its £64billion bailout could soon become unsustainable as the government looked set to collapse following a spat over the country’s austerity programme. Share prices dropped by 
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Passos Coelho: I will not go
Morning Star Online
Mr Gaspar said he lacked public support for the austerity programme the PM had brought him in to carry out. Mr Portas, who has demanded greater emphasis on growth measures, said he could not accept Mr Gaspar’s replacement, former junior finance 
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Corporations Pay Lower Tax Rates Than The Middle Class
ThinkProgress
Simply put, “austerity fatigue” has the government that’s enforced steep cuts to public services on the brink of collapse. After the minister in charge of austerity plans resigned Monday, Prime Minister Pedro Passos Coelho appointed a replacement who …
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Portugal: The Price of Austerity
Council on Foreign Relations (blog)
The leader of the junior coalition partner CDS-PP resigned yesterday, complaining that the new Finance Minister (Maria Luís Albuquerque, replacing Vítor Gaspar who resigned Monday) represented a “mere continuity” of failed austerity policies. While it 
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Greece pressed on austerity
Investor’s Business Daily
The next 8.1 bil euro bailout installment may be broken into smaller payments, the top eurozone finance minister said, as lenders push Athens to meet demands for economic reforms and gov’t job cuts. Greece doesn’t need the full payment at once, and …
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Political turmoil rattles Europe’s fragile economies
Globe and Mail
 past several months. Political instability in Portugal, combined with troubles in Greece and Italy, raise the prospect of an austerity backlash, rather than the gaping budget deficits that have been a hallmark of the debt crisis in the 17-member 
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Austerity Today -Economic recovery ‘will take 20 years’


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Economic recovery ‘will take 20 years’, warns Britain’s top civil servant


Daily Mail
Cabinet Secretary Sir Jeremy Heywood said the austerity drive has not gone far enough and stressed it will continue for decades. He said there was a ‘very long way to go’ before the economy returns to the same level as before the 2007 recession. ‘This 
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Portugal’s Coalition Splinters on Austerity Fatigue: Euro Credit
Bloomberg
Portuguese borrowing costs topped 7 percent for the first time this year after two ministers quit, signaling the government will struggle to implement further budget cuts as its bailout program enters its final 12 months. Secretary of State for 
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NEWS ANALYSIS: Doubts as Portugal’s austerity plan changes hands
BDlive
THE resignation of the main architect of Portugal’s austerity policies has sparked concern over the country’s ability to complete its European Union (EU)International Monetary Fund (IMF) bail-out programme. Analysts say the departure on Monday of 
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Andrew Palmer: Austerity opens the door to new kind of regeneration
Yorkshire Post
WHEN most of us think of “regeneration”, we picture large, government-backed programmes to revitalise rundown areas – the waterfront in Hull, for example, or the Leeds riverfront. What we face now, though, is a new economic reality which means these 
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Redesigning for austerity – but politics get in the way
Public Service
And the director who saw the storm coming and had a plan jumped ship and now heads health commissioning – from which position he could be better placed to redesign for austerity. Blair McPherson is author of ‘Equipping managers for an uncertain future 
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Feeling the pinch in austerity-hit Portugal
BBC News
The resignation of two key ministers has left many questioning whether Portugal’s right-of-centre government, which has enthusiastically embraced austerity measures, can survive much longer. But in a statement to the nation on Tuesday night, Prime 
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Portuguese government at risk of collapse over austerity
EUobserver.com
Gaspar, whose replacement, Maria Luis Albuquerque starts work on Wednesday (3 July), identified increasing public disaffection with the government’s austerity drive as the reason for his resignation. But Albuquerque, who has been promoted from treasury 
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EU to ease deficit rules to allow some investments: Barroso
Hindu Business Line
The decision comes amid a wider debate over the austerity-driven policies used to tackle the EU’s economic crisis, as the worst-affected countries and left-wing parties argue that austerity is throttling growth and failing to tackle soaring unemployment.
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London midday: Stocks hit by political uncertainty, economic data
ShareCast
Resignations of both the Portuguese Finance Minister and Foreign Minister over the last few days have sparked concerns all over the Eurozone, as anti-austerity rallies gather support. Portugal’s 10-year bond yields have now surged above 8.0% for the 
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The Socialist 3 July 2013 Tories – cuts, Lib Dems – cuts, Labour – cuts
Socialist Party
And when Tory Chancellor George Osborne announced another £11.5 billion in cuts and extendingausterity past the next general election, rather than saying ‘we will tear up this spending review if we win power’, Labour promised to abide by it. These 
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European Stocks Tumble; Portugal’s Political Woes Weigh
Wall Street Journal
European stocks opened sharply lower Wednesday as a mounting political crisis in Portugal sparked worries over whether the country would be able to continue the austerity measures dictated by its acceptance of an international bailout two years ago.
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Portuguese Uncertainty Knocks The Euro
Wall Street Journal
Portugal’s government was thrown into turmoil Tuesday when Foreign Minister Paulo Portas followed Finance Minister Vitor Gaspar’s lead and resigned in protest over the country’s austerity policies, increasing the uncertainty over the future of the 
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New warehouses hit Ocado profits
Belfast Telegraph
Slashing Eurozone austerity could boost growth: report new. Cutting back on austerity across the eurozone would boost growth by 1% next year, consultants Ernst & Young has forecast. Smith brothers sell e-tee website BRS Golf new. Two brothers from 
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Portuguese markets in turmoil on gov’t confusion
Montana Standard
Portugal’s financial markets are in turmoil amid growing concerns over the future of the country’s coalition government and its ability to pursue the austerity measures demanded by creditors. While the country’s main PSI 20 stock index tumbled 5.4 
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Portuguese stocks, bonds slide amid confusion over future of government
Washington Post
Prime Minister Pedro Passos Coelho defied calls to resign late Tuesday but he was running out of options to keep his center-right coalition government together following the resignations of key ministers in a spat over austerity. A protester holds an 
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Heywood: 20-Year Battle To Fix UK Economy
Orange UK News
Britain is in a “20-year generational battle” to rescue the economy, according to the country’s most senior civil servant. Cabinet Secretary Sir Jeremy Heywood has suggested drastic austeritymeasures implemented by the coalition may have to go further.
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Portugal, oil in focus as stock futures retreat
USA TODAY
In Europe, markets moved sharply lower as Portugal’s foreign minister resigned amid a dispute over the nation’s austerity program, the Wall Street Journal reported. That follows a surprise departure for the country’s finance minister on Tuesday 
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Lenders Pressuring Greece Over Austerity Pledges
Voice of America
The lenders – Greece’s European neighbors, the European Central Bank and the International Monetary Fund – have been meeting with government officials in Athens. They are demanding that the government make progress on its austerity pledges ahead of 
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New Study Dispels Myths of European Austerity
OpenMarket.org
Cries throughout the media of “savage austerity” notwithstanding, only a handful of European countries have actually implemented austerity in the true sense of the term: reducing both public spending and taxation. On the other hand, most countries in 
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Portugal gov’t in peril as another minister quits
TheNewsTribune.com
Portugal’s government was in danger of collapse Tuesday after Foreign Minister Paulo Portas, the leader of the junior party in the center-right coalition government, resigned over the bailed-out country’s austerity policies. By BARRY HATTON; Associated 
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Rug buyers look for round rugs in austere times
PRWire (press release)
Rug buyers across Australia are looking to make their homes cosier as they hunker down for a period of relative economic austerity. That’s the view of the team at The Bespoke Rug Company (www.bespokerugs.com.au) Australia’s leading retailer of 
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Bailed-out Portugal’s finance minister resigns
Fresno Bee
Workers’ unions called a 24-hour general strike to protest the government’s austerity measures with public transport and government offices expected to be the worst-hit services. The banner reads in Portuguese: “The street is our. Nothing to lose”.
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The Tories must beware these feelings of irrational exuberance
Telegraph.co.uk (blog)
We have had enough of five years of austerity and doubt. All around there are signs that the economy is stirring, that the combination of low interest rates and high employment is beginning to encourage consumer activity. Even beyond the powerhouse of 
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There are few bright spots for them in last week’s spending review by George 
Third Sector
There are one or two other bright spots for the sector in the sixth year of austerity announced by George Osborne in last week’s spending review, which was in effect the opening salvo of the next general election campaign. The continuing expansion of 
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Portuguese Finance Minister’s Exit Elicits Few Gasps
Wall Street Journal (blog)
Yields on Portuguese government bonds ticked up a bit to 6.42% after the unexpected resignation of Mr. Gaspar–the architect of Portugal’s austerity plan–but volumes were low, and the news didn’t prompt predictions of outright default. Instead 
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Democratic Deficit Scolds Get Desperate and Weird
New York Magazine
Liberals may complain about austerity, but, they argue, “we haven’t had an austerity budget.” Cowan and Kessler’s evidence for this — that the federal government spent more, on average, during Obama’s first term than during George W. Bush’s second 
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Lapid: Deficit could cause collapse
Globes
Finance Minister: The austerity measures will stop Israel reaching the conditions in Europe with high unemployment. 2 July 13 12:42, Moshe Golan. Tweet. “The idea that we have people here whose lives are at risk because they are doing their jobs is 
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EU Rehn: New Portugal Finance Minister Must Maintain Tempo of Reform
Wall Street Journal
The former treasury secretary took the post after Vitor Gaspar, chief enforcer of austerity demands under Portugal’s EUR78 billion international bailout program, said Monday he was stepping down after two years in the job. Mr. Rehn praised Mr. Gaspar 
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The Strain in Spain Could Help Firefox OS Take Root
TechNewsWorld
Due to the extreme austerity measures in certain South American and European countries, “low-cost smartphones will be very appealing,” said Joshua Flood, a senior analyst at ABI Research. The ZTE Open — the first commercially available smartphone 
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Merkel opponent derides jobless summit as cynical ploy
Reuters
BERLIN (Reuters) – Angela Merkel’s summit on youth unemployment in Europe is an attempt to paper over the economic consequences of the austerity policies she championed in the region, a leading member of Germany’s opposition Social Democrats 
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Portugal’s austerity government feels the pinch
BBC News
The resignation in quick succession of two of Portugal’s biggest political beasts has left many questioning whether the right-of-centre government which has enthusiastically embraced austeritymeasures can survive more than a few weeks, let alone months.
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Twenty years of austerity ahead, says Sir Jeremy Heywood
Telegraph.co.uk
Sir Jeremy Heywood also suggested that the cuts made to public services to date were not sufficient and that austerity measures would have to continue for “at least” another four years. The comments from the Cabinet Secretary will have a sobering 
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Austerity Blitz: Eurozone Notes From Beyond the Grave
Truth-Out
The criminal effects of the austerity blitz strategy that the European Union (EU) conceived of on Germany’s insistence as the answer to the global financial crisis when it hit Europe’s shores with the triggering of the Greek sovereign debt crisis have 
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Portugal’s Budget Austerity May Do More Harm Than Good
KTEP
LAUREN FRAYER, BYLINE: Of all the bailed-out countries in Europe, Portugal has been the good student – taking the austerity medicine its lenders prescribe. Portuguese Finance Minister Vitor Gaspar took it even further – doubling budget cuts and tax hikes.
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Public sector austerity drive ‘hitting women the hardest’
Gulf Times
George Osborne’s revelation in his spending review that a further 144,000 jobs are to be slashed from the public sector means there is more pain to come for women, critics say. Data collated by the Guardian highlights the disproportionate blow to 
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Lapid: Without Austerity Measures, Deficit Could ‘Bury’ Israel
Algemeiner
Most Popular. Recent Posts. The BioHug vest. Photo: BioHug.com. Israeli-Developed Vest Hugs People to Health · Yair Lapid, leader of the Yesh Atid party. Lapid: Without Austerity Measures, Deficit Could ‘Bury’ Israel · Amy Winehouse. Photo: wiki commons.
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Portugal’s PM says he won’t quit despite resignations over austerity measures
Fox News
But the government’s future is hanging in the balance after the resignation earlier Tuesday of Foreign Minister Paulo Portas, the leader of the junior party in the governing center-right coalition, in protest against austerity measures. Passos Coelho 
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Trade unions call for social investment
Morning Star Online
And he said the people of Northern Ireland were suffering the same fate at the hands of the austerity-mad Westminster government. “Austerity is now no more than a mantra without meaning. The intellectual underpinning for it has been discredited,” he 
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Portugal’s finance minister resigns amid pressure for government to soften 
Malaysia Sun
Portugal’s finance minister resigns amid pressure for government to soften austerity | Malaysia Sun. Malaysia Sun. Issue 11/0183. Malaysia Sun · http://www.malaysiasun.com · Malaysia News · Southeast Asia News · Breaking International News · Asia 
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Activists climb County Hall, Westminster in anti war, anti austerity protest
Indymedia UK
The newly formed Black Katz Kollektive has within the last hour occupied County Hall on the south side of Westminster Bridge facing the Houses of Parliament, with banners unfurled down the side of the building. Their message is simple: stop the war 
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Portuguese government in peril as foreign minister, head of junior party in 
The Republic
Austerity is widely blamed for driving the jobless rate in Portugal to 17.6 percent and for what is forecast to be a third straight year of recession in 2013. Portugal needed a 78 billion euros ($102 billion) bailout two years ago after a decade of 
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Portugal PM defiant despite another resignation
Boston.com
Gaspar, a non-political economist specially selected by Passos Coelho to push the austerity drive, said he lacked the political and public support for his ongoing program of cutting public sector pay and pensions and raising taxes. Portas, the leader 
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Portuguese Finance Minister Gaspar resigns
Channel News Asia
Portuguese Finance Minister Vitor Gaspar, the architect of the country’s reforms under its EU-IMF bailout, resigned on Monday as the economy reels and social discontent mounts under the impact ofausterity measures. PHOTOS. File photo of Portuguese 
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Miss. tax receipts approach $5 billion in FY2013
WJTV
Top budget writers say they expect pressure from schools, universities and state agencies that saw budgets slashed during four years of austerity. Tax receipts have surged more strongly than jobs or Mississippi’s overall economy, leading to notes of 
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Portuguese PM adamant he will not stand down
Radio New Zealand
Austerity measures are blamed for causing Portugal’s worst economic crisis since the 1970s. Portugal has been in recession for two years and the economy is expected to contract by 2.3% this year. Unemployment is over 17.5%. A general strike was held 
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Portuguese Finance Minister Resigns
New York Times
MADRID — Portugal’s finance minister, Vítor Gaspar, unexpectedly resigned Monday amid a prolonged recession that citizens have attributed largely to austerity measures that he helped enforce in accordance with the demands of the country’s 
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Concern over Portugal bailout
Independent Online
Lisbon – The resignation of the main architect of Portugal’s austerity policies has sparked concern over the country’s ability to complete its EU-IMF bailout programme. Analysts say the departure Monday of finance minister Vitor Gaspar has weakened a 
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Portugal foreign minister steps down in second major ministerial resignation
Deutsche Welle
Former Treasury Secretary, Albuquerque was appointed on Monday following the shock resignation of Finance Minister Vitor Gaspar, the main architect of the austerity measures. ccp/kms (AFP, AP, dpa). Date 02.07.2013; Share Send Facebook Twitter 
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Eleven lessons from Cyprus’ bitter experience


Eleven lessons from Cyprus’ that could apply Anywhere

Cyprus has paid dearly, and will continue to pay a high price for several years, for the profligacy of its public sector, the recklessness of its banks, and the procrastination of its policy makers in taking corrective measures in the face of the crisis. The jury is still out on whether Cyprus has learnt its lesson, a very expensive one indeed. For other countries, Cyprus’ bitter experience holds many lessons, for which a generous tuition fee has already been paid by Cyprus.

Lesson#1: Control public finances and the size of the public sector. If you cannot trust politicians to resist the temptation of paying supporters and cronies with public sector jobs and salary raises and privileges, adopt a constitutional requirement for balanced budgets and a low ceiling on public debt. Keep the power of public-servant unions in check.

Lesson #2: Know what your bankers are doing; they may not have the country’s best interests in mind; they may not even serve their own bank’s best interests. Without effective corporate governance and strict supervision they may be gambling depositors’ money by putting all their eggs in one basket or taking unreasonable risks or expanding into markets they don’t understand. Don’t be reckless, not even careless about risk exposure. Instead, be ruthless about risk assessment and risk management. Don’t trust the central banker blindly to keep the banking sector sound and solvent, or as former President Reagan used to say “trust but verify”.

Lesson#3: Do not allow your banking sector, or any individual organisation or company to become so big that it is too big to let it fail and at the same time too big to save. You are putting yourself in a no win situation, the economy in jeopardy and sovereignty at risk. Healthy competition, diversification, and proportionality have become bywords for prudence. A banking sector eight times the size of the country’s Gross Domestic Product, as was the case in Cyprus, could neither be left to fail, yet neither could it be saved by the country.

Lesson #4: Do not give away your currency and monetary policy by joining a common currency area such as the Eurozone if you are not able to compete. Invest first in research and technology, innovation and entrepreneurship, cost control and quality management to raise productivity, cut costs, upgrade quality and produce innovative products and services that are internationally competitive. Common currency areas, especially those which do not involve transfer payments from the better performers to the laggards, ultimately benefit those who are able to compete effectively at the expense of the rest.

Lesson #5: Do not allow your labour unions to acquire such strength as to hold a chokehold on vital sectors and the economy as a whole, or destroy the flexibility of the labour market. Learn from Cyprus’ experience with the unions; don’t repeat it. The insatiable demands of the unions especially those of banking employees and civil servants have been protagonists in Cyprus’ drama. Even today, with 16 per cent unemployment and rising and the public and banking sectors buckling under the weight of wage bills and overstaffing, the unions are blocking life-or-death reforms.

Lesson #6: Do not buy the economic tale about natural monopoly, or the social tale about the need to provide affordable services to the poor, or the political tale about sectors of national or strategic importance. State enterprises such as Cyprus Airways or semi-public organisations such as CyTA and the Electricity Authority, have proved to be little more than another vehicle to tax the citizen, to allocate positions and favours, and to share the loot among the political parties, while the customer citizen is stuck with exorbitant bills due to greed and inefficiency.

Lesson #7: Beware of easy credit, bubbles and pyramid schemes. The economic history of the world is littered with stories of economic collapses and catastrophes caused by “ingenious” schemes of buying into easy and quick riches. In Cyprus, first there was the rapidly rising stock prices of the late 1990s inflated by easy credit which in the span of a few years led to collapse and the loss of fortunes by many people. It has been labelled “the stock exchange scandal” and, though nobody was punished, the stock market never recovered, despite the institutional reforms.

Then it was the real estate bubble: inflated by easy credit, property prices kept rising at 20-30 per cent a year; yet no one expected them to stop rising much less to collapse. This came to be known as the “real estate bubble” which burst a couple of years ago. Property prices are now continuing to fall steadily increasing the number of unsecured loans. Another bubble kept gathering steam since the early 2000s and accelerated since we joined the eurozone. The financial and banking bubble was built on high deposit rates of interest, poorly secured lending, attraction of “offshore” companies and reckless investments in Greek bonds and global expansion without risk assessment; it collapsed under its own weight and it is still in a coma.

Lesson # 8: Do not deviate from the iron rule that ties the growth of wages to the growth of productivity; measure public sector productivity, and assess and pay civil servants accordingly. If you earn and spend more than you produce on a long-term basis you are not building a sustainable economy. Sooner or later the economy will collapse, sooner if it is hit by a global economic crisis, as in the case of Cyprus. With the meddling of political parties, the pressure of the labour unions, and the support of parliament, wages and benefits in the wider public sector rose well above productivity, contributing to budget deficit and increased taxation on the private sector, sinking the economy into deeper recession.

Lesson #9: Save for a rainy day. Build an emergency fund, the size of your GDP, as a security against uncertainties, world economic crisis and generally the vagaries of markets and nature. Save in good years for the bad years. If you spend the unusually high revenues in good years on salary raises and overstaffing as well as marginal and unproductive show-off projects, you increase the state’s financial obligations for bad years too without having the means to meet them and you set yourself for deficit spending, escalating debt, and a need for a bailout (or a bail in).

Lesson# 10: Anticipate problems and challenges and formulate alternative strategies. Act early and proactively while you still have time and resources, while the problems are still manageable and you can still set your own terms. Always have a plan B ready. Delays and procrastination carry a heavy price: the problem becomes that much bigger and more pressing, while you lose any bargaining power you may have had to influence the terms of support when you finally resort to it. Cyprus learned this lesson the hard way.

Lesson #11: Establish strong alliances but never forget that in international politics there are no friendships, only shared interests. While this was known since ancient times and was repeated many times in modern history, Cyprus almost blindly counted on its friends and allies in the EU to show their solidarity and run to its rescue. Instead, they were quite unsympathetic administering bitter medicine or “tough love”, as some of us see it. Even our blood brothers, the Greeks, officially have shown little empathy, despite the help from our side in their moment of need. Our interest and theirs in this juncture did not coincide.

Other countries in the European south and beyond should heed the lessons of the bitter experience of Cyprus with its banking and fiscal crisis that brought down its economic edifice, like a house of cards. Avoiding Cyprus’ mistakes can make the difference between a sustainable economic model or a casino-type economy with easy riches alternating with economic collapse.

Dr Theodore Panayotou is director of the Cyprus International Institute of Management (CIIM) and ex-professor of Economics and the Environment at Harvard University. He has served as consultant to the UN and to governments in the US, China, Russia, Brazil, Mexico and Cyprus. He has published extensively and was recognised for his contribution to the work of the Intergovernmental Panel on Climate Change won the Nobel Peace Prize in 2007. Contact: theo@ciim.ac.cy

via Eleven lessons from Cyprus’ bitter experience | Cyprus Mail.

Anglo Irish Bank- Update From Home and Away


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Anglo tapes: Department of Finance records may provide answers to disturbing questions

Background: The secret paper trail may come to light as political pressure builds read full article

irishtimes.com

Irish politicians ultimately to blame for Irish property crash and burn
IrishCentral
The BBC among others gave prominent coverage to Drumm’s apology for the nasty language on the now infamous tapes and also focused on his call for a new inquiry into what happened when Ireland gave complete guarantees to Irish banks at the height of 

Irish banking tapes strengthen Merkel’s hand
MarketWatch
The leaked recordings, made shortly after the Irish authorities agreed on a blanket guarantee for sixIrish banks in September 2008 amounting to 250% of Irish gross domestic product, were published last week by the Irish independent newspaper. Reuters.

Allied Irish Banks seen as reckless as Anglo calls reveal
Financial Times
“They [Bank of Ireland] think that Allied have played fast and loose with lending money to every cowboy in town – apart from ourselves also lending money to every cowboy in town,” John Bowe, Anglo Irish’s former head of capital markets, told David 

Anglo Irish Bank’s ex-CEO David Drumm Apologises for ‘Inappropriate 

IBTimes.co.uk
Defunct Anglo Irish Bank’s former chief David Drumm apologised for ‘inappropriate language’ and tone used in secret phone call recordings between executives, which some have suggested, wilfully misled the government over the financial health of the 
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Micheál Martin: ‘There is no mystery about what happened on the night of the bank guarantee’

The Fianna Fáil leader has defended the actions of his predecessors in an interview this morning. read full article

thejournal.ie

Anglo recordings may lead to a less polite banking inquiry

Irish Times
Some money for the Irish banks is only a sideshow to the bigger debate about austerity and the role of the ECB. Paradoxically, it would seem from reports over the weekend that the Germans are turning the Anglo tapes to their advantage, putting them 
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Day one: Clip 1 – The Central Bank Meeting

Irish Independent
Comments. Email; Print; Font Size. Conversation between John Bowe, Head of Capital Markets,Anglo Irish Bank, and Peter Fitzgerald, Director of Retail Banking, Anglo Irish Bank. Download our Free iPhone App Now. Download our Free Android App Now.
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Report: Former Anglo Irish head regrets tone in bank rescue calls

Europe Online Magazine
Transcripts of the call were released last week by the Irish Independent, prompting outrage. German Chancellor Angela Merkel called the conversations “unbearable,” especially one in which a banker begins humming Germany’s World War II-era anthem 
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Lisa McInerney: We tolerate cute hoors, we end up with Anglo tape types

Our capacity for putting up with ‘charismatic’ cowboys is no longer a bad national joke – it’s our national downfall. read full article

thejournal.ie

Drumm breaks silence in US to say ‘sorry’

FORMER Anglo chief executive David Drumm has denied there was any attempt by the bank to mislead the Central Bank and the regulator about the state of its financial woes. read full article

independent.ie

Fianna Fáil told: “Come clean on Anglo Tapes” – Local

Sinn Féin finance spokesperson, Pearse Doherty TD, commenting on the latest revelations from the Irish Independent about the Anglo Irish Banks’ executives taped telephone conversations, says Fianna… read full article

donegaldemocrat.ie

‘AIB and Anglo lending to every cowboy in town’

Allied Irish Bank was viewed by its main competitor as lending money to “every cowboy in town”, senior bankers reveal in the Anglo Tapes. read full article

independent.ie

Drumm says bank guarantee not sought

Former Anglo chief executive claims Irish public being ‘misled’ by leaked tapes read full article

irishtimes.com

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