ECB decided not to make any changes to the policy and all rates remained unchanged. Mario Draghi said that ECB sees 0.6 % decline in GDP within Eurozone in 2013 and some downside risks persist in the economic outlook. On the other hand, he reconfirmed that ECB policy will remain accommodative as long as needed. ECB is also preparing a big external audit of 140 banks across the EU which represent 80 % of Europe’s banking assets. It seems the ECB appears to be questioning the reliability of the banks own figures, because the project should have two basic aims: to find out which banks inhibit lending and which of them could have some troubles to be solved by member states or ESM bailout fund. Allegedly, France and Italy are strongly against this ambitious plan. Who knows why?

If you are desperate what to do, impose trade tariffs on some products. On Tuesday the European Commission announced it was imposing tariffs on Chinese solar panels because of “price dumping.” The commission is first introducing a two-month period of low-level tariffs at a level of 11.8 %. In August, however, the penalties will skyrocket — to between 32.2 % and 67.9 %. It took just one day for the Chinese side to react. The Chinese ministry said the government had begun the probe into EU wines at the request of Chinese wine makers. “The Commerce Ministry has already received an application from the domestic wine industry which accuses wines imported from Europe of entering China’s market by use of unfair trade tactics such as dumping and subsidies,” it said in a statement. As you can see, not only currency wars will be popular in the future but also trade wars. But there are no winners at the end of this process. There are only losers from the consumers’ side.

Plik François Hollande (Journées de Nantes 2012).jpg znajduje się w Wikimedia Commons – repozytorium wolnych zasobów.

It is interesting as, on the one hand, there is France calling for more centralization and more common policies on the EU level, and on the other hand, President Francois Hollande is able to say: “The European Commission cannot dictate us what we have to do.” The reactions came after the Commission published recommendations for 23 member states, including France, which the Commission called for reforms in 6 areas including the pension system. But we are quite accustomed to the fact that big EU countries just bully the Commission, while smaller members including Slovakia, will have to obey. Nothing has changed for hundreds of years. The recent data from France showed continuing problems. New car registrations in France dropped sharply in May. A total of 148,554 new cars were registered in France last month, which means a 10.3-percent drop compared to the same period in 2012. The biggest losers was Renault, which plunged by 16.5 %, and Citroen, which also dropped sharply, by 14.5 percent.

IMF has quarrelled with the European Commission this week about rescue plans over Greece. First IMF stated that that it made “notable failures” on rescue package for Greece, setting overly optimistic expectations for the country’s economy and underestimating the effects of the austerity measures it imposed. The following day, the European Commission has hit back at the criticism over its handling of the Greek debt crisis and stated that “We fundamentally disagree that not enough was done to promote growth; this is plainly wrong and unfounded”. The fact is that Greece has been six consecutive years in recession and it does not seem that anything could help the country apart from drastic reforms of public administration, labour code and lowering taxes.

According to some sources, China is prepared to tolerate lower growth before triggering fresh stimulus to lift activity. New China leadership has allegedly set out new objectives for growth (7%), compared to their predictors (7.5% to 8%). Talks come in the times when weak data in April and signs of sluggish factory activity in May have raised concerns that the economy could further slow down in the current quarter.

How the bankruptcy looks like? You can experience within Detroit. On average, Detroit has spent $100 million more a year than it collected in taxes and other revenue. Detroit´ cash flow was $64 million in April, but the city owed $226 million in payments on pensions and other obligations, which forced it to delay paying its bills to stay afloat. The total liabilities of the city are over 17 billion. Bankruptcy is therefore imminent.

Consumer spending in the U.S. unexpectedly declined in April. Purchases fell 0.2 % after a 0.1 % gain in March. As we wrote last week, other reports showed consumer confidence and business activity jumped up in May. So you can choose. The biggest expectations were connected with waiting for the US non-farm payroll data on Friday (+175 k, expectations +165). The unemployment rate was 7.6 % higher than the expected 7.5 %. The number of unemployed workers in the U.S. increased from 11.659 million to 11.76 million – the highest increase since February. It means that the FED will continue with the $85 billion in monthly bond purchases program. According to some analysts, we will see the continuation of the program till job growth averaging at least 200,000.