Right Pundits

Banks on the island nation of Cyprus reopened today after being closed for some two weeks. As part of the European Union bailout plan, the Cypriot Parliament passed some heavy restrictions on banking to prevent a chaotic run on the banks. Most customers will only be able to withdraw 300 Euros per day from their savings accounts. No check cashing is allowed and use of credit cards outside Cyprus is limited to 5,000 Euros per month. This is part of the European Commission requirements allowing for the European Central Bank and the International Monetary Fund to bailout the tiny country. The two largest banks, the Bank of Cyprus and the Cyprus Popular Bank, also known as Laiki, have tougher limits, allowing only withdrawals of 100 Euros per day. They will also be forced to merge as the Bank of Cyprus, as both financial institutions were the worst hit by the Greek bond debacle of last year.

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The International Monetary Fund, IMF, has proposed a plan to bailout the island nation of Cyprus by levying a tax on the bank accounts of citizens. This bailout plan has caused a bank run as depositors empty their savings accounts. The original deal was to impose a 9.9% tax on accounts with more than 100,000 Euros and a 6.75% tax on those with less. Another proposal calls for those with less than 100,000 Euros to pay a 3% tax on their savings. Those with 100,000 to 500,000 Euros would be taxed at a 10% rate and those with more than 500,000 at a 15% tax rate. Cyprus has attracted much foreign investments, particularly from Russia. Needless to say nobody likes either plan and one can only imagine how Obama and the Democrats are drooling over doing a similar tax here in the USA.

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The recently dramatic Spain suicides caused by evictions and foreclosures have led to a new law preventing banks from acting on bad mortgages for at least two years. A woman named Amaia Egana, an active member of Spain′s Socialist Party, leaped from her 6th floor balcony when officials came to evict her and change the locks on her apartment. While she survived the fall, paramedics were unable to keep her alive as they sped her to a hospital. The economy in Spain is in horrendous condition after decades of Progressive policies. With a national unemployment rate of about 25%, and more than 400,000 already evicted from their homes and dwellings for failure to pay, the situation is dire and growing more desperate. Spanish Prime Minister Mariano Rajoy has been working with the European Union seeking more bailout money. But now with the new law, The EU′s Court of Justice advocate general, Juliane Kokott, claims that the new anti-eviction law violates some of the EU′s consumer protection laws which Spain must comply with.

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Today, the Greece election results may determine the fate of the Euro Zone crisis. The outcome of the Greek elections will decide whether or not the troubled nation remains as part of the European Union, or breaks off and ends it participation in using the Euro as its currency? Whether Greece will abide by the multi-national agreements to set its fiscal house in order, or just bail out itself printing drachmas? The best polling data for now seems to be a toss-up, with Europe, and the World, awaiting the results. The debt crisis in the Euro Zone is complicated enough, as Spain and Italy teeter on the edge of financial disaster. With the G-20 Summit coming up at the end of June, the battle over austerity and stimulus is reaching a critical mass.

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This weekends meeting at Camp David of the G-8 national leaders ended on a flat note yesterday. Barack Obama entertained his guests but no real solutions for improving the economy resulted during the discussions. Of course, Obama claims that an ′emerging consensus′ has begun to take shape. But the reality is that France′s new president, Francois Hollande, and German Chancellor Angela Merkel are still miles apart on the subject of what is best for the European Union and its economy. Obama is more largely concerned with how the Euro-Zone will effect the United States economy and his own reelection bid this November. The news, however, is quite grim.

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The results are in for the 2012 French and Greek Elections with Socialism being the big winner. In the French Presidential Election, French President Nicolas Sarkozy lost to Francois Hollande in a close race, 51.9% to 48.1%. The polls had been much worse for Sarkozy in the days leading up to the vote as the French media did its best to smear him. In the Greece elections, the pro-bailout New Democracy, Communist and Pasok parties fell short of winning a majority of seats, earning only 150, an even half of the Parliament. Perhaps they will be able to sway one member from another party to join them in forming a new government. Either way, it was very clear now that both France and Greece will be much more difficult in efforts to go along with austerity measures as part of any German-bank led bailout program.

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Its Official! Europe is now in a double-dip recession! The European Commission revised its estimate for the rate of growth for the 1st Quarter of 2012, downgrading it to a negative 0.1%. The rate was -0.4% for the 4th Quarter of 2011. So technically, the European Union now has two consecutive fiscal quarters of negative GDP growth, which spells recession. Now, the downgrade for now specifically targets eastern nations, like Poland, Hungary and the Czech Republic, which are not full EU members, using the Euro as their national currency. The recent agreement to give Greece an additional 170 Billion Euros through the European Central Bank and the International Monetary Fund has not created much confidence, either. Other Euro countries, like Italy, Spain and Portugal are still facing their day of reckoning. The financial health of banks in the UK and France are also still very shaky.

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The scene in Athens of riots, violence, fires as clashes in six Greek cities rage on due to austerity measures approved by the Parliament. The Greek riots were a response to more draconian cuts which passed by a vote of 199 to 74, with 27 abstentions, the Greek government may now move forward with its latest plan to cut spending. Some 15,000 government workers will be let go this year with a total of 150,000 jobs cut by the end of 2015. The minimum wage is slashed by 22% as the nation faces an unemployment rate of 21%. These measures and more are part of the latest bailout agreement between Greece and the banks of the European Union. The Dow Jones, Forex Trading and other markets are responding well to the news, but the specter still lingers as many see today′s actions as at best, a six-month reprieve. Many analysts are still worried that Greece will not resolve its Debt Crisis.

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