Global Economic News

Will the Eurozone Exist Beyond June 30?

May 26 (EIRNS)—With the British Empire's hyperinflationary bailout strategy stopped dead in its tracks with the arrest of IMF director Dominique Strauss-Kahn, the second half of June is shaping up as a financial blowout point for Greece and Portugal's bankrupt creditors—and for the rest of Europe as well.

And that's assuming that things last even that long.

Greece risks not getting its next tranche of financial aid from the IMF, due on June 29, with little prospect that European countries can make up any shortfall, a depressed Eurogroup president Jean-Claude Juncker stated today. Last week, the head of the Greek Central Bank had warned that the country would default if it didn't get fresh money by mid-June.

In Portugal, EU3 billion in government bonds comes due on June 15 and has to be repaid or refinanced. June 5 elections in that country will choose a new government, since the outgoing one was toppled over precisely this issue.

And the explosive charge on Spain's debt is looking much greater than previously reported. The hidden debt of the autonomous regions is expected to come to light over coming weeks, and is thought to be quite large. And a study issued by the Comisiones Obreras (Workers' Committees) reports that over a third of the districts in greater Madrid are bankrupt, and in desperate need of bailouts to keep functioning—just like the United States. Over the last three years, more than 212,000 jobs were lost in Madrid alone, 102,000 of them held by youth—principally in industry and construction.

Greece Given Mission Impossible; Bailout Is Frozen

May 23 (EIRNS)—The Greek bailout is indefinitely on hold. Every European Union leader is screaming that there can be no restructuring of Greek debt or default; the representatives of the troika from the International Monetary Fund, the European Commission, and the European Central Bank are leaving Athens, having refused to sign off on their quarterly review of Greece's austerity program. Greece has been told to come up with a "credible" plan, including more austerity measures and privatizations, or it will not receive the next tranche of funds from the EU110 billion bailout fund.

Greek Prime Minister George Papandreou is expected to meet with his Cabinet and the leaders of other parties to go over plans for further cuts, at a time when a poll shows that 80% of the population would refuse to suffer any more sacrifices. The poll shows that support for the ruling PASOK party has dropped to 21.5%, a loss of more than half what it had to win the election in 2009. This puts it on the same level as the opposition New Democracy, which also lost popularity; it is just not collapsing as fast as the PASOK. The Communist Party came in third with 8.5%, and is apparently increasing incrementally. Some 45% of those polled said they did not want either the leader of PASOK or the New Democracy as prime minister.

All the leaders in Euroland are denying that any Greek restructuring is possible until Greece implements more austerity and moves more quickly on privatization of government assets. Luxembourg Prime Minister and Eurogroup head Jean-Claude Junker called on Greece to form an organization like the Treuhand, which was used to privatize East German assets after Germany's reunification, which would be monitored very closely by the EU.

None of this addresses the problem, that the Greek bailout has failed and can't be fixed within the parameters of the current system.

Big Pharma Buying What It Cannot Control

May 27 (EIRNS)—International "Big Pharma" is buying into Indian generic drug manufactures in a big way: Six Indian drug firms have been acquired since 2008. Notably, Daiichi Sankyo of Japan took over India's largest drug producer, Ranbaxy, for $4.6 billion, and U.S.-based Abbott Laboratories acquired the domestic business of Indian firm Piramal Health Care, for $3.7 billion last year.

India supplies much of the world's lower-priced generic drugs. For years there have been battles over the right to manufacture and distribute generic variants of necessary but expensive drugs, such as for HIV. A key clause of World Trade Organization rules which allows poorer countries access to vital generic drugs, even if they are still under patent, has stood up.

A condition of a number of free-trade pacts in various stages of negotiation with Asia-Pacific countries, is that they include provisions that limit, constrain, and increase the cost of generics. The big pharmaceutical companies are taking no chances, by buying what they may not be able to control.