Wednesday, June 06, 2012

WSJ: ECB's Draghi see "heightened risks", Takes no action

by Calculated Risk on 6/06/2012 10:58:00 AM

From the WSJ: Draghi Sees Increased Risks to Economy

European Central Bank President Mario Draghi said the euro-zone economy faces "increased downside risks" and that inflation will fall below 2% early next year.
"Growth remains weak with heightened risks," the ECB chief said in his opening statement to the monthly news conference following the governing council's meeting.
Mr. Draghi noted that growth was flat in the first three months of the year and that so far indicators point to it weakening in the second quarter. However, he said the bank was sticking to its view that the economy would recover gradually in the course of the year.
"Heightened risks"? Hoocoodanode? I doubt that the Eurozone economy will gradually recover in the 2nd half ... more likely the recession will get worse.

Meanwhile in Greece: Greece Warns of Going Broke as Tax Proceeds Dry Up
Government coffers could be empty as soon as July, shortly after this month’s pivotal elections. ...

Officials, scrambling for solutions, have considered dipping into funds that are supposed to be for Greece’s troubled banks. Some are even suggesting doling out i.o.u.’s.

Greek leaders said that despite their latest bailout of 130 billion euros, or $161.7 billion, they face a shortfall of 1.7 billion euros because tax revenue and other sources of potential income are drying up. A wrenching recession and harsh budget cuts have left businesses and individuals with less and less to give for taxes — and growing incentive to avoid paying what they owe.