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The austerity plan that prime minister Belusconi of Italy set before parliament on August 29th was quite different to the plan he agreed to in negotiations with the European central bank. The negotiations led to support by the ECB with purchase of $30 billion of Italian bonds. Berlusconi left out a surtax on top incomes in the private sector. It also left out savings to be made at the local government level by mayors and governors. Berlusconi proposed a new pension calculation which would postpone the retirement of Italians by excluding military and university service. Also being prosposed by Berlusconi and opposed by unions is the extension of the retirement age for women. Unions say this will make it harder for Italian women to care for their grandchildren in a country without an adequate system of daycare. Slowly the whole package of austerity measures seems to be coming apart and this alarms ECB President Claude Trichet and his successor Mario Draghi.

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European banks borrowed 529 billion euros from the ECB in Feb. 2012 at interest rate of 1% for three years.This follows the lending by the ECB of 489 billion euros to European banks in December 2011. The total lending now exceeds $1 trillion under the European Central Bank's Long Term Financing Operation. It is designed to inject additional liquidity into the European banking system and shore up confidence in the economy. This time 800 banks applied for loans compared to the 523 banks in December. The actual amount of money going to banks is about 520 billion euros as many banks moved money from shorter term ECB loans to the three year loans under the Long Term Refinancing Operation. The operation helped bring down the borrowing rates on Italian and Spanish bonds- the rate on Italian 10 year bonds is down to 5.2% as of Feb. 28, 2012. Spanish and Italian banks were able to borrow at 1% from the ECB and buy Italian and Spanish bonds paying 5%. Intessa Sanpaolo bank in Italy doubled its borrowing to 24 billion euros. Smaller banks, including banks in Germany, participated in the February 2012 ECB lending, moving the number of banks up to 800 this time. VW's financing arm also borrowed under this operation so that it could provide credit to customers....

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Moody's downgrades the credit ratings of 26 Italian banks in May 2012. Italy's largest retail bank Intesa Sanpaolo SpA, showed net profit of 804 million euros, up 22% from the prior year. Of this 183 million euros was from capital gains made using the ECB low cost loans under special ECB financing to buy government debt. The ECB financing was through the Long Term Refinancing Operation launched by the ECB in December 2011, which benefitted Italian and Spanish banks.

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Call from around the world for international agreements for proper supervision of financial markets and their products and vendors bercause much of the pain of the USA mortgage securities sold abroad has to be borne by countries from Australia, to Germany and Japan. A German call for nationalizing the ratings agencies which improperly certified these securities for profit.

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ECB president Mario Draghi tells a newsconference on April 14, 2015, that the bond buying program is "proceeding smoothly." He said that he does not see scarcity in the bond market. The ECB plans to continue its purchases of government bonds and other debt at a rate of 60 billion euros a month through September 2016. He said the program of very low interest rates for a very long time "is fertile terrain for financial instability imbalances," but he did not see evidence of systemically large financial imbalances at this time. The ECB approach would be to tackle the risks by using its power as a bank regulator, not by changing monetary policy, said Draghi. He was optimistic about the initial results, saying "more accomodative monetary policy is being translated into better credit conditions, which is something we have not seen before." The euro is down to $1.06 and low oil prices have helped improve economic conditions, as well as ongoing structural reforms pushed by the EU and ECB. Draghi's forecast for economic growth in the eurozone is now up from 1% to 1.5% for 2015....

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The Netherlands government of prime minister Mark Rutte collapsed on April 22, 2012, after the Freedom party of Geert Wilders said it would not support futher budget cuts. Mr. Wilders said: "We don't want our pensioners to bleed just to meet the dictates coming from Brussels." Government forecasts had predicted the Netherlands deficit at 4.6% of GDP in 2012, above the 3% goal set by the European Union. And negotiations that collapsed were about making $18 billion in budget cuts to help meet the deficit goal. Rutte will now lead a caretaker government till elections in September or October 2012. Credit agencies may lower the Netherlands credit ratings from AAA and this would raise Netherlands borrowing costs in coming months. The result would be to increase the deficit even further. The Netherlands government was a strong supporter of Germany to introduce strict austerity measures and budget cuts in the eurozone during the debt crisis in EU countries in 2010-2011. With the elections in France and the defeat of French president Sarkozy in the first phase of elections by Socialist candidate Francois Hollande, the austerity programs in Europe appear to be unravelling. The deeper Europe goes into a recession in 2012-2013, the more likely new measures will be needed to address competitiveness, growth, interest rates and overvalued currencies as opposed to largely fiscal and budget measures alone....

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The opposition of parties from the far-right in the Netherlands and France, and other parts of Europe, to austerity measures imposed by the EU under the leadership of Germany's Angela Merkel. Geert Wilders, leads this far right opposition in the Netherlands and Marie Le Pen in France. The far right parties are gaining influence with high unemployment and economic recession in Europe, making spending cuts painful for pensioners, and the middle class.

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Faiola points to public opinion in Ireland that shows the recovery in Ireland looks better on paper than it really is. Opinion polls show a large gap between the views of the government and of people in Ireland. EU estimates of growth in GDP of about 1% is inflated by profits of multinational companies such as eBay, Facebook and Google, a large part of which is repatriated. The multinational companies employ only 7% of the workforce. In reality consumer spending, retail sales and bank lending have suffered, and unemployment is at 14%. The feeling in Ireland is that the austerity cuts alone- spending cuts, higher sales and property taxes- with no effort to support growth, will leave the country in this situation for many years. A ruling by Ireland's attorney general that a referendum is required for approval of the new EU agreement on fiscal discipline, means that a referendum wll be held in June 2012. In 2001 and 2008 Ireland rejected EU treaties, only to obtain concessions and approve the treaty in second referendums. This time the referendum is expected to be seen as a vote on the three year agreement reached by Ireland with the EU, the IMF, and ECB in 2010, as its banks were on the verge of collapse in a property bubble. That agreement imposed strict austerity measures. Under the treaty terms only 12 of 17 EU countries have to ratify the treaty. The Socialist candidate in upcoming French presidential elections, Mr. Hollande, has called for renegotiation of the fiscal treaty to include measures to promote growth. For young people in particular, immigration- to Australia, New Zealand, Canada- is looking like an attractive option. For new graduates jobs are scarce, and cuts in university subsidies mean additional out of pocket costs of over $8000 a year with no student loan options....

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The Italian government sold 5 billion euros of three year bonds in Jan 2013 at an interest rate of 1.85%, the lowest since 2010. This is a remarkable change from 2012.