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EURO problemsEuro has 1-in-5 chance of lasting decade
31 Dec 2010 UK think-tank - The euro currency area has only a one-in-five chance of surviving in its current form over the next 10 years because of competitive imbalances between its members, a leading British think tank said on Friday.
The Center for Economics and Business Research said Spain and Italy would have to refinance over 400 billion euros ($530 billion) of bonds in the spring, potentially sparking a fresh crisis within the 16-nation euro area.
"The euro might break up at this point, though European politicians are normally able to respond to a crisis," said CEBR Chief Executive Douglas McWilliams in a list of 10 forecasts for 2011.
Sovereign debt crises in Greece and Ireland have rocked euro nations this year, leading some commentators to speculate that Germany could eventually lose patience with bailing out its more profligate neighbors, triggering a split in the currency bloc.
Chancellor Angela Merkel has repeatedly stressed Berlin's commitment to the euro and she said so again in her New Year message to the country on Friday.
"The euro is the foundation of our prosperity," she said. "Germany needs Europe and our common currency. For our own well-being and in order to overcome great worldwide challenges. We Germans assume our responsibility, even when it is sometimes very hard."
McWilliams argued that the deeper imbalances between the euro zone's stronger and weaker economies, which have become increasingly apparent since the 2008 financial crisis, would undermine the project in the long term.
"I suspect that what will break up the euro will be the failure of most of the countries to take the tough medicine necessary to make their economies competitive over the longer term," McWilliams said:
"We give it only a one in five chance of surviving in its present form for 10 years. If the euro doesn't break up, this could be the year when it weakens substantially toward parity with the dollar," he added.
FYI - Lindsey Williams said the Euro will collapse within the next calendar year. And when it does, the dollar will collapse 2-3 weeks afterwards. Looks like his source is likely correct on this one.
* Posted by BornAgain2
I combined several threads and locked this one. GO to
2011: Year of the bank run?
4 Jan 2011 Is a bank run about to bring Europe to its knees?
Some market watchers say yes, pointing ominously to the torrents of money pouring out of Ireland.
Irish bank deposits declined in November for the fourth straight month, the central bank said last week. Overseas deposits fled the country at their fastest pace in more than a year.
The deposit flight compounds the stress on a financial system whose massive property-lending losses already have driven the government to accept an unpopular bailout from the European Union and the International Monetary Fund.
Worse yet, it shows that the solutions policymakers slapped together in the fall of 2008 helped in some cases to create even bigger problems -- ones that are now coming due.
Unconditionally guaranteeing bank deposits is just such a policy, in a country where loan losses made the banks insolvent, job loss left many taxpayers peniless and deposits now at least double annual economic output.
And this time, given the unpopularity of bailouts and dysfunctional European politics, there is ample reason to fear the banking mess won't so easily be swept aside.
"Facing facts like these, each morning when I wake up I have to wonder, 'Why is today not a good day for a wholesale run on the Irish banking system?'" asks Scott Minerd, chief investment officer at Guggenheim Partners. "And if there is a wholesale run on the Irish banking system, then what stops the same scenario from cascading into Portugal, Greece, Italy, and most importantly, Spain?"
That is very much the question being asked in bond markets, where the cost of borrowing surged in all the so-called peripheral European countries in the second half of 2010. The yield on Irish 10-year government bonds, for instance, surged to 9% at year-end from around 5% in August.
The high cost of market borrowing ties the hands of government officials who have promised to ride to the rescue of the bubble-ridden banks. Ireland has already ponied up outlandish sums to keep the banks afloat. Officials have said at every turn they believed they had the ability to stabilize the system, but stability has remained beyond their reach.
Now, with the state locked out of the bond market and the banks losing depositors, who is going to lend in an economy that already has shrunk drastically from its bubbly size of just a few years ago?
Bank runs "will seriously undermine the prosperity of this country for a generation," Pimco's Mohammed El-Erian said in November. He said the first steps to stemming the run would include "a big external aid package and steps by the Irish government."
The IMF, the EU and the Irish government committed to those steps this fall. But there is still no sign people in Ireland or elsewhere believe the $113 billion bailout package will keep their money safe. Among many other things, there has been a rush out of the euro for the Swiss franc, not to mention the ever-present embrace of gold.
The flight from Irish banks has been most pronounced among foreigners, who presumably are less attached to their bailed-out bankers and can easily find other banks that, at least for the moment, appear less apt to go out of business.
Some 20 billion euros ($27 billion) of overseas deposits fled the country in November alone, according to the Central Bank of Ireland. The level of foreign deposits has plunged 28% in the past year and is down 42% from its bubbly peak.
But don't blame just the foreigners. Domestic deposits tumbled by 6.3 billion euros in November, in their steepest decline since August 2009.
All told, the Irish banking system's deposit base has contracted by 15% over the past year -- which isn't making it any easier for taxpayers to keep the deeply troubled banking sector afloat.
Meanwhile, the aid the Irish banks took from the eurosystem more than doubled over the past year, to 97 billion euros from 45 billion in November 2009.
The flight of deposits from troubled Irish banks is an unhappy irony because Ireland was lauded in some quarters in 2008 when it became the first state to guarantee bank deposits. That decision led to a short-lived surge of funds into the Irish banks -- not that the money stuck around for long. Since the late 2008 peak, more than 100 billion euros of overseas deposits have left the Irish banking system.
When you consider that similar trends could easily play out in the other euro countries, you have the recipe for a hangover-inducing New Year that is likely, in the view of Minerd, to see the euro plunge anew against the dollar. He expects the euro to test its decadelong low against the dollar of 85 cents before all is said and done, compared with a recent $1.33.
"As sovereign credit downgrades continue to flow in and deposits in Europe's weakened banking system flow out, a broader crisis in Europe appears to be imminent in 2011," says Minerd.
The eurozone is the currency, not the EU
The eurozone is a club of the national central banks, those that have adopted the euro currency.
Leaders want eurozone government
August 16, 2011 Germany and France have proposed a eurozone government
The leaders of France and Germany are pushing all 17 nations that use the euro to enshrine balanced budgets in their constitutions and want greater collective governance of the eurozone.
French President Nicolas Sarkozy said he and German Chancellor Angela Merkel want a "true European economic government" that would consist of the heads of state and government of all eurozone nations.
The new body would meet twice a year and be led by EU president Herman Van Rompuy.
Sarkozy and Merkel presented their proposals after meeting in Paris amid signs of economic slowdown and after an exceptionally turbulent week on financial markets prompted by concern about Europe's financial health.
Sarkozy and Merkel also pledged to harmonize their countries' corporate taxes in a move aimed at showing the eurozone's largest members are "marching in lockstep" to protect the euro.
Both leaders stressed their commitment to defending the common currency, a cornerstone of integration on the continent.
The pair suggested the new body would meet twice a year and more in times of crisis, with Rompuy leading it for a 2-year term. After that, Sarkozy suggested, it could be opened up to other heads of states and government.
The move appeared a step toward the closer long-term economic integration that many analysts have said is inevitable to make the euro experiment survive,
though it was unclear how much effect it would have in the short-term.
"There has to be a stronger coordination of financial and economic policy" to protect the euro, Merkel said. She stressed that the crisis built up over several years by the actions of several member states, and there is no solution to tackle the crisis within days.
"We will regain the lost confidence," she said. "That is why we go into a phase with a new quality of cooperation within the eurozone."
But the two leaders ruled out issuing common government debt in the form of eurobonds, at least for now, despite demand by many investors for such a bold but politically difficult move.
Euro Declines After Sarkozy, Merkel Say No Euro Region Bonds
15 August 2011 The euro weakened against a majority of its most-traded counterparts after German and French leaders refrained from introducing a mechanism for the region to jointly issue debt to contain its sovereign-debt crisis. The 17-nation currency briefly pared losses after French President Nicolas Sarkozy said after a meeting with German Chancellor Angela Merkel that France and Germany are working on “ambitious” joint proposals to defend it. The Swiss franc erased gains against the dollar and euro after U.S. industrial production climbed in July, curbing the currency’s haven appeal. The pound rose versus the dollar after data showed U.K. inflation accelerated more than forecast.
Eurobonds not dead after Sarkozy, Merkel meeting
16 August 2011 (MarketWatch)
If there’s anything to be learned from the year-and-a-half long euro-zone debt crisis, it’s that the euro-zone leaders will wait until the gun is pointed directly at their head to take decisive action, and not a moment sooner.
Merkel, Sarkozy plan tax, can euro zone bond idea - Markets react with disappointment; euro, stocks drop
German Chancellor Angela Merkel and French President Nicolas Sarkozy on Tuesday pledged to bolster the governance of the euro zone and proposed a new council as part of their commitment to defend the shared currency, according to media reports.
PRESSURE ON MERKEL TO LEAD EUROPE
Sep 13, 2011 As Europe struggles to reverse a plunge in financial confidence, the world waits for Germany’s chancellor, Angela Merkel, to make a fundamental choice. She, more than any other European politician, will have to either summon the leadership to rescue the euro or concede that the political will is not there.
Mrs. Merkel, 57, faces far-reaching decisions about how to deal definitively with the debt crisis in Europe and, more immediately, whether to allow Greece to default or even to leave the currency union. American officials fear that if she does not act more decisively, bank lending could freeze up and the result would be another sharp financial downturn on both sides of the Atlantic.
Fitch says any EU plan won't solve ratings woes
21 October 2011 Any new deal to shore up the euro-zone likely won't be enough to relieve pressure on the region's sovereign ratings, though France's AAA stamp is safe, a top executive at Fitch Ratings said.
--Euro zone ratings set to remain under pressure, even if a deal is agreed
--France's AAA is safe, no plans to change
--US lawmakers need to cut spending to avoid a negative outlook
France Likely to Lose Top Rating in Stressed Economic Scenario, S&P Says
21 October 2011 France is among euro-region sovereigns likely to be downgraded in a stressed economic scenario, according to Standard & Poor’s.
The sovereign ratings of Spain, Italy, Ireland and Portugal would also be reduced by another one or two levels in either of New York-based S&P’s two stress scenarios, the ratings firm said in a report dated today. These assume low economic growth and a double-dip recession in the first set of circumstances, and add an interest-rate shock to the recession in the second.
“Ballooning budget deficits and bank recapitalization costs would likely send government borrowings significantly higher under both scenarios,” S&P analysts led by Chief Credit Officer Blaise Ganguin in Paris wrote in the report. “Credit metrics would deteriorate sharply as a result.”
S&P is seeking to take account of the economic slowdown that hit Europe in the second quarter and which has led the ratings company to trim 2012 growth forecasts to an average of between 1% and 1.5%. France would follow the so- called peripheral euro-region nations that have already been downgraded, with Moody’s Investors Service saying earlier this week that its top rating was under threat.
The single currency is close to collapse
With Europe on the brink of a disaster, the euro must be reconstituted as an entity based on economic reality, not ideological folly.
Yet again, Europe stands on the brink of abject disaster, apparently unable to resolve its differences. A monetary union that was meant to bring former enemies together, binding them to each other via irreversible economic integration, is succeeding only in tearing them apart. It is a crisis that this newspaper has consistently warned of since the single currency’s creation; it gives no pleasure to see our predictions come true.
With a meltdown in the sovereign debt markets fast metastasising into an all-embracing economic and political calamity, the Continent’s position has rarely seemed quite so imperilled since the days of the Second World War. Most worrying is that the Franco-German partnership which lies at the heart of the European project is fracturing as never before, with deep divisions over almost every aspect of the grand rescue plan.
It has already been conceded that this weekend’s meeting of EU leaders in Brussels – billed as the summit to end all summits – will be unable to agree anything of importance. Few have any confidence that a separate meeting on Wednesday will do much better. Whatever is agreed is almost guaranteed to fall short of expectations. Solutions that might have worked if enacted at an earlier stage are being rendered progressively obsolete by fast-deteriorating economic conditions and debt dynamics. Even Germany now seems to be slipping back into recession.
No longer is it possible to rely on the post-war assumption that, while Europe’s leaders may quarrel and disagree, they will always – in extremis – find a way through. Continental solidarity is being tested to its very limits, and the differences could be intractable.
The detail of the disputes over bank bail-outs and the scale of the European rescue fund is tortuous and convoluted. But the underlying problem is simple enough. Europe’s political elites know that for the euro to survive in its present form, it must move – with speed – towards full fiscal and political integration. Yet national leaders, and the voters they answer to, are as yet unwilling to accept the loss of sovereignty, and indeed the shared liabilities, that such a revolution demands.
Vatican to call for global financial authority
October 21, 2011 VATICAN CITY
The Vatican is preparing a series of proposals for reforming the global financial system that would include the creation of a “public authority with universal competence.”
A document entitled “For a reform of the financial system through the perspective of a public authority with universal competence”
will be presented on Monday by the Vatican’s Pontifical Council for Justice and Peace.
The council’s head, Ghanaian cardinal Peter Kodwo Appiah Turkson, will present it, the Vatican press office said without adding further details.
Pope Benedict XVI has repeatedly called for an “intervention” by governments to tame financial markets and has emphasized the need to restore a fragile global economic system that is hurting poorest people the hardest.
“The global financial crisis showed the fragility of the current economic system and of the institutions associated with it,” the pope said in April.
He said the crisis had also demonstrated “the mistake of continuing to think that the market is able to regulate itself without public intervention.”
I cant say I understand this, but it appears rather serious.
October 24, 2011
Its the wrong question at the wrong time.
William Hague compared calls by Conservative MPs for a referendum on the UK's membership of the European Union to a piece of graffiti.
All 3 parties were told to vote against a motion calling for a public vote on the UK's place in the EU.
However, nearly 70 are likely to defy this.
This is a challenge to PM David Cameron's authority. He opposes a public vote on Britain's EU membership and has sought to shift attention onto helping to solve the eurozone crisis. Any who vote against the government will be expected to resign from government jobs.
Cameron had a row with French President Sarkozy.
Apparantly Cameron wants Britain to reclaim powers from Brussels.
EU rebellion October 25, 2011
Brit media are so confusing. It appears PM got his way, won the vote but lost his own party.
PM David Cameron has said Britain's membership of the European Union is vital for millions of jobs.
He appealed to his backbench MPs not to support a motion which calls for a plebiscite on the UK's relationship with Brussels.
Nearly 70 Conservative MPs have signalled their intention to defy the three line whip and support the motion.
Members who defied the whip face internal disciplinary action.
EU reform needed but poll not the means.
Britain national interest is to be in the EU
This rebellion is politically significant, tho the vote was never legally binding.
66% of Britons back a referendum on European Union membership.
David Cameron suffered his largest parliamentary rebellion as 80 lawmakers defied him to vote in favour of holding a referendum on Britain's EU membership.
Germany and France disagree over eurozone crisis
The EU summit is meant to save heavily indebted eurozone countries. But hope for a lasting solution at this summit is very slim.
German Chancellor Angela Merkel believes the crisis can only be overcome by taking small steps.
Merkel is often rebuked for her hesitancy in setting a firm course, but she knows that she will be responsible for tough decisions that will affect Europe for years.
Germany and France still aren't in agreement how the banking crisis.
Merkel is not prepared to throw more German money at Greece and other countries. She is not prepared to solve the crisis by raising funds through the European Central Bank (ECB) because the fear of inflation is too high in Germany. French President Nicolas Sarkozy says France can no longer afford to keep rescuing its own banks while also bailing out other countries.
Eurozone debt crisis
October 25, 2011
Talks break down as Angela Merkel rejects rescue deal.
Rows between Europe’s leaders threatened to undermine attempts to rescue the eurozone as it emerged that a make-or-break summit will not address key aspects of the deepening crisis.
As Germany raised fresh objections to the proposed rescue deal for indebted eurozone countries, the International Monetary Fund signalled it was considering stepping in - a move that could lead to British taxpayers paying to support the single currency.
Amid mounting Coalition tensions over Europe between the Conservatives and Liberal Democrats, David Cameron will today travel to Brussels, where European Union leaders have promised to hammer out a deal to resolve Europe’s debt crisis.
But officials admitted last night that many of the details of any deal will not be resolved tonight and will have to wait for another meeting of EU finance ministers at the weekend.
The gloomy outlook worried financial markets. The FTSE 100 index closed down at 5525, and shares in Germany, France and the US all fell. The single currency rescue effort was left hanging in the balance last night as Germany and Italy both challenged aspects of the likely deal.
EU leaders have said a summit tonight will outline plans to cut Greece’s crippling debt burden and expand a bail-out fund meant to support larger EU economies such as Italy and Spain.
Yet leaders last night appeared to be little closer to settling their long-standing differences on those issues.
The biggest row centres on the role of the European Central Bank in bailing out struggling eurozone economies.
A draft agreement circulated among leaders yesterday suggested that the ECB should go on buying the bonds of troubled members, effectively lending money to them directly. The ECB’s bond-buying programme is unpopular in Germany, where critics fear it will compromise the central bank’s independence and its ability to control inflation.
Angela Merkel, the German chancellor who is facing fierce domestic opposition to the rescue deal, yesterday publicly rejected the draft as “not acceptable to Germany”.
The German parliament will today vote on a motion that would tell the ECB to stop its bond-buying programme.
Meanwhile, there were fears that the Italian government of Silvio Berlusconi could collapse over a dispute about austerity measures demanded by other EU governments.
In exchange for supporting Italy’s bonds, the EU has told Italy to increase its retirement age.
The Northern League, Mr Berlusconi’s junior coalition partners, oppose the plan. The party’s leader, Umberto Bossi, yesterday suggested the government could fall over issue and said he was “pessimistic” about its survival.
In Brussels, the European Commission insisted that Mr Berlusconi must do more to balance his country’s budget. Italy still needs to back up Mr Berlusconi’s promises with “specific actions” taken with “clear timing,” the commission said.
The summit tonight is also intended to agree on ways to boost the financial power of bail-out funds meant to underwrite governments in Italy and Spain if they struggle to raise money on international markets. One option is a Special Investment Vehicle, a fund that raises money from investors including wealthy governments and the IMF. Eurozone attempts to cut the Greek debt burden also appeared to be making little progress, though the Greek government expressed hopes that the summit will announce that bond-holders will lose 50 per cent of their stakes.
Sir Mervyn King, the Governor of the Bank of England, suggested the EU leaders’ emergency measures can buy time but cannot resolve the fundamental threats to European economic stability.
EU leaders hope to reach debt plan
October 26, 2011
European Union leaders are gathering for an emergency summit in Brussels to try to finalise details of a plan to tackle the eurozone debt crisis.
There are growing doubts the leaders will reach a comprehensive deal at the summit.
France had hoped that the European Central Bank (ECB) would support the EFSF by providing it with loans that could increase the fund's total capacity to 2tn-3tn euros.
But this idea was blocked by Chancellor Merkel.
There are fears that the Greek debt crisis could spread to Italy and Spain.
German Chancellor Angela Merkel faces a vote in parliament on increasing the bailout fund firepower without involving more German taxpayer money.
The measure is expected to pass but the key question is whether Merkel will need to rely on opposition support. (Like britain's Cameron)
Berlusconi of Italy was asked to provide details of plans for tackling its huge public debt.
Italy may increase the pension age.
Euro Zone to Quadruple Bailout Fund
France seeks bailout from China
French President Nicolas Sarkozy will speak with Chinese President Hu Jintao about boosting the EFSF.
Euro zone leaders intend to scale up their emergency fund, the European Financial Stability Facility, to around 1.0 trillion euros.
Euros are set aside for aid to Greece, Ireland and Portugal and for the recapitalizing their banks.
Part of the problem is agreeing on credit enhancements for the private sector. More credit enhancement will reduce the amount of funds in the EFSF for leveraging.
French President Nicolas Sarkozy plans to call Chinese leader Hu Jintao to discuss China contributing to a fund European leaders may set up to bolster its debt-crisis fight.
We Have A Deal!
26 October 2011 Zero Hedge
We just may have a deal:
EU OFFICIAL SAYS DEAL REACHED ON GREEK DEBT-CUTTING PLAN: AP
'PRIVATE CREDITORS TO TAKE 50% CUT ON GREEK BONDS, AP SAYS
EU official, who wished to remain anonymous, tells Bloomberg that euro-area leaders are set to approve accord for 50% writedown on Greek bonds.
If true, this means that Portugal, Ireland, Spain and Italy will promptly commence sabotaging their economies (just like Greece) simply to get the same debt Blue Light special as Greece.
It also means that, at least according to Barclays, we have a CDS credit event, although we are certain that Europe would never announce this deal unless ISDA (complete determinations committee list here) was onboard, and corrupt as always.
In addition, Greece was unable to generate a 90% acceptance for a 21% haircut tender offer. And we are somehow supposed to believe they can do it with 50%?
Lastly, as a reminder, on September 14, Moody's put SocGen, BNP and Credit Agricole on downgrade review. This will be the trigger
Leaders agree on eurozone deal
27 October 2011 Brussels
Europe agree to rescue Greece. Banks agree to take big loss
German chancellor Merkel wants permanent supervision of Greece
Peace should not be taken for granted if the euro fails.
Germanys own state assets could be taken as collateral.
European Union leaders announced an agreement on debt crisis measures, including a deal with private sector investors to take a 50% loss on Greek bonds.
The deal will reduce Greek debt to 120 percent of its GDP in 2020.
Banks must also raise more capital to protect them against losses resulting from any future government defaults.
The deal is aimed at preventing the crisis spreading to larger eurozone economies like Italy.
Greek default is just a matter of time
Banks agree to take big loss
Guess Who’s Even More Leveraged Than the European Banks?
October 26, 2011 Zero Hedge
USA More Leveraged than Europe
While the world is awash in liquidity, no one seems to notice that it’s actually in the form of leverage or cheap debt, NOT real capital or equity.
The US banking system as a whole is leveraged at 13-to-1. While this is not horrible relative to Europe’s banking system (more on this in a moment),
these levels still mean that an 8% drop in asset values wipes out ALL equity.
Then you have Europe’s banking system, which is leveraged at 26-to-1. Anecdotally, this is borderline Lehman Brothers (30 to 1).
At these levels, even a 4% drop in asset prices wipes out ALL equity.
Japan’s banks are leveraged at 23 to 1. France’s are 26 to 1. Germany is 32 to 1.
You get the idea.
However, worse than any of these the US Federal Reserve.
With $2.8 trillion in assets and only $52 billion in capital, the Fed is leveraged at 53 to 1. Yes, 53 to 1.
My question is: if the Fed prints money for itself… is it “raising capital?”
More to the point… if that was true why doesn’t the Fed do it? Why maintain these leverage levels?
Only Bernanke can know, but the rest of us should feel a very serious shudder when we consider that THE bank that’s supposed to bailout the world,
fix the problems plaguing the financial system, is in fact even more leveraged that most of the institutions it’s helping.
Yes, stocks are rallying now based on the view that more QE 3 or monetary easing is on the way, but they’re missing the BIG picture here.
" ..., the Fed is leveraged at 53 to 1. Yes, 53 to 1."
Wall Street soars 3 percent as Europe deal draws buyers
This is a HUGE Red Flag!
Be ye not deceived..
October 27, 2011 Thursday NEW YORK
Stocks surged 3 percent on Thursday as an agreement by European leaders to help contain the region's two-year debt crisis lifted a cloud hovering over markets.
Optimism that a deal would be struck to prevent widespread financial distress fueled the market's rebound in October. The S&P 500 is up more than 13 percent this month, on pace for its biggest monthly gain since October 1974.
But some traders said implementing the agreement will present major challenges, observing that the devil is in the details.
After more than eight hours of talks, European heads of state, the International Monetary Fund and bankers sealed a deal that also
foresees a recapitalization of hard-hit European lenders and a leveraging of the bloc's rescue fund to give it firepower of $1.4 trillion.
The agreement includes provisions for write-downs on Greek bonds, though decisions on how to recapitalize hard-hit European banks and boost the EU's rescue fund have not been finalized.
"People had limited expectations for the leadership to do something decisive, and if the market is correct, this is a game changer that will prove bullish for the market down the road,"
said Robert Schaeffer, a money manager at Becker Capital Management in Portland, Oregon.
The Dow Jones industrial average was up 339.51 points, or 2.86 percent, at 12,208.55.
The Standard & Poor's 500 Index was up 42.59 points, or 3.43 percent, at 1,284.59.
The Nasdaq Composite Index was up 87.96 points, or 3.32 percent, at 2,738.63.
The day's gains lifted the S&P 500 above its 200-day moving average for the first time since the beginning of August, a sign of an improving trend for stocks after five straight months of losses.
It was the strongest day for volume since October 4, and the rise above the 200-day moving average may pull more long-term buyers into the market in coming days. About 11.95 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well over last year's daily average of 8.47 billion.
"We are rallying today because the active players, mostly hedge fund managers and tactical investors, have been very neutral to even short until now. The market is up a lot, but they are rushing into getting long because they are capitulating," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
Financials were the best performers, with JPMorgan Chase & Co up 8.3 percent to $37.02 and Citigroup Inc jumping 9.7 percent to $34.17. The KBW Bank index shot up 6 percent while the S&P financial index soared 6.2 percent.
Analysts see the European developments removing risk to the U.S. economy and tamping down fears of the crisis spilling over into the global financial system. The CBOE Volatility index shed 14 percent.
All 10 S&P sectors rose by more than 1 percent. Materials and energy shares were among the top gainers as the resolution in Europe allayed fears about how weak growth might impact demand. Crude oil rose 4.3 percent.
In a positive sign for the U.S. economy, the government's estimate of third-quarter growth expanded at the fastest pace in a year.
Between the deal in Europe and the GDP data, "there's clearly a scenario where strength in equities can continue into 2012, and in that case stocks look cheap," said David Smith, chief investment officer at Rockland Trust Investment Management Group in Rockland, Mass.
After regular trading, insurer MetLife Inc reported third-quarter earnings that topped analysts' forecasts, sending its shares 2.6 percent higher to $36.60. Baidu Inc climbed 8.2 percent after the bell on the Nasdaq after its results.
Exxon Mobil Corp rose 1 percent to $81.88 after the Dow component said profit rose 41 percent in the third quarter, helped by higher crude oil prices and refining margins.
Dow Chemical Co's quarterly profit narrowly missed expectations. Still, the stock rose 8.2 percent to $29.10, along with the broader market.
Of 262 companies in the S&P 500 that have reported quarterly earnings, 72 percent topped Wall Street expectations, according to Thomson Reuters data.
About 87 percent of stocks on the New York Stock Exchange closed higher while 81 percent of Nasdaq issues ended in positive territory.
Euro Bailout Cracks Emerge; Greece Just Says No
27 October 2011 zero Hedge
He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds."
Does that mean that the "ironclad firewall" is neither "ironclad" nor walls off any fire?
Especially since neither the object (Germany) of the bailout nor the subject (Greece) appear to have any desire to go along with the deus ex?
So the lazy Greeks believe other nations should pay THEIR bills?
Thats WRONG! Greece does not deserve any bailout.
They need to minimize their expensies.
Portugal, Spain urge G20 members to help ease crisis
October 31, 2011 Monday ASUNCION
Spain and Portugal said on Saturday the euro zone's debt crisis is a global problem, calling on the United States and other G20 powers to help contain the fallout.
Spanish Prime Minister Jose Luis Rodriguez Zapatero urged the G20 countries least affected by the crisis to provide "urgent stimulus plans" to shield the global economy.
Europe's debt crisis looks set to dominate the summit of Group of 20 leading economies in France from November 3-4.
The gathering in Cannes will take place a week after euro zone leaders reached a deal to recapitalize their banks, boost the firepower of a euro zone rescue fund and impose hefty losses on holders of Greek debt.
"We hope these deals, together with those made by the G20 next weekend ... restore the confidence needed to keep the economy moving," Zapatero told leaders at the Ibero-American summit in Paraguay.
I hope they will rise to the challenge next week. The United States has a role, the Federal Reserve has a role, all the central banks of big countries have their role -
of course, China, India, Brazil, the Europeans and Japan," he said during a news conference.
"The G20's response has two key elements. Firstly, those of us who have been working to consolidate our fiscal position cannot change course. But those countries that have the margin to incentivize economic activity have to adopt urgent stimulus plans. If not, the global economy will be affected."
In the last 18 months, Zapatero has made cuts and implemented reforms to show Spain is serious about fiscal discipline and to avoid a sell-off in its debt on concerns it would need a Greek-style bailout.
Portuguese Prime Minister Pedro Passos Coelho told leaders gathered in Asuncion the "crisis was not just European."
"This is a global crisis," said. "It's a crisis that calls on all of us, whether in Europe, in Latin America or any other continent."
A source from the Portuguese delegation said Passos Coelho asked Mexican President Felipe Calderon to tell fellow G20 members that Washington should help resolve the crisis "by boosting trade and also with financial help."
"The European Union has already responded to the crisis. It hopes to find in the G20 setting a global response to a crisis that is systemic and global," the source added, speaking on condition of anonymity.
Financial markets rallied strongly this week after European leaders hammered out the crisis deal, although analysts quickly warned that details of the rescue could still take weeks or even months to work out.
Did the Brussels accord save the euro or sell out to China?
THAT is MY QUESTION ALSO!
October 30, 2011
Whether you thought it was a “global solution” or a sellout to China depended entirely on your political party.
The political right saluted Wednesday’s solution to the European debt crisis.
On the other side of the political ballot, Socialist Party candidate François Hollande released a statement noting “the worst was avoided” with the agreement. Still, he said that the participation of countries outside of Europe, like China, in the decision-making process was “profoundly troubling” and showed a “de facto dependency.”
“An agreement, even in the middle of the night, was necessary… taking the position that the worst was avoided. But many different points in the financial and economic plans seemed insufficient to me,” he said.
For Martine Aubry, the leader of the French Socialist Party, “Europe must successfully put in place financial reforms of the appropriate scale—reforms that end dangerous practices.”
Aubry enumerated the steps to be taken in such a measure: “We must ban the financial instruments that allow us to speculate in a state’s debt, limit the income of traders, supervise credit rating agencies (CRA), separate banks in the private and business sectors, and create an independent European CRA.”
Daniel Cohn-Bendit, European deputy and member of the Ecologist Party, deplored the “tiny step” represented by the Brussels agreement. He called a solution to the debt crisis that asks for aid from emerging economies—notably China— “politically dangerous.”
China not a savior for Europe
Sun, Oct 30 2011 BEIJING (Reuters)
Europe should not expect China to ride to the rescue as its "savior" from the debt crisis, though Beijing will do what it can to help a friend in need, state-run news agency Xinhua said in a commentary on Sunday.
The head of Europe's rescue fund sought to entice China on Saturday to invest in the facility by saying investors may be protected against a fifth of initial losses and that bonds could eventually be sold in yuan if Beijing desires.
Though China has expressed confidence that Europe can survive its crisis, it has made no public offer to buy more European government debt.
Xinhua, in an English-language commentary, said China could not stand by while its largest trading partner foundered.
"Beijing's good-will gesture is a good response to those who see China as a threatening rival to Europe. Despite differences in politics, economy and culture, China and the EU are still good friends and partners," it wrote.
"However, amid such an unprecedented crisis in Europe, China can neither take up the role as a savior to the Europeans, nor provide a 'cure' for the European malaise," Xinhua added.
"Obviously, it is up to the European countries themselves to tackle their financial problems. But China can do within its capacity to help as a friend."
Such commentaries offer an insight into government thinking, even if they do not reflect official policy.
Stocks slump on worries about US broker, Europe
October 30, 2011 NEW YORK
Stocks ended October with steep losses. Investors were worried about the collapse of the brokerage MF Global and missing details in Europe's plan to contain the Greek debt crisis.
The Dow Jones industrial average lost 276 points Monday but still had its best month since October 2002.
The Standard & Poor's 500 index had its best month since December 1991. The main reason for the rally was progress in Europe toward containing that region's debt crisis.
The big breakthrough came early Thursday of last week, when European leaders reached an agreement aimed at shoring up the region's banks and preventing a debt crunch in Greece from bringing down Europe's financial system.
But a lack of many key details in the plan has made investors uneasy again. And Monday, fresh reminders of how the Europe crisis can affect U.S. financial institutions helped bring the market lower.
Bank stocks fell sharply after the brokerage MF Global filed for bankruptcy protection. Last week, the company's debt was downgraded to junk status by ratings agencies concerned about its large holdings of European government debt. The company is headed by former New Jersey Gov. and Goldman Sachs chairman Jon Corzine. Morgan Stanley slumped 8.7 percent, Citigroup Inc. fell 7.5 percent.
The Dow fell 276.10 points, or 2.3 percent, to close at 11,955.01. The Dow closed above 12,000 last Thursday and Friday but prior to that it hadn't close above 12,000 since Aug. 1.
The S&P 500 index fell 32, or 2.5 percent, to 1,253.30. Materials and energy companies fell the most. The Nasdaq composite index fell 53, or 1.9 percent, to 2,684.
The Organization for Economic Cooperation and Development warned Monday that European economies will see a "marked slowdown" next year. The organization called on the European Union to provide more information on how it plans to stem the debt crisis.
October has earned a reputation as a famously bad month for stocks. The October 1929 crash divided the roaring 1920s from the Great Depression of the 1930s. It's the month that has given the market two black eyes: Black Tuesday in 1929 and Black Monday in 1987.
This October started off on a sour note when the Dow and S&P 500 hit their low point for the year Oct. 3. But the market has soared since then, largely on hopes that Europe was finally taking decisive steps to prevent Greece's debt crisis from bringing down European banks that hold Greek government bonds. The Dow rose 9.5 percent for the month, the S&P 10.8 percent.
"It's a rally off what was a very pessimistic view of the global economy," said Todd Henry, an emerging-market equity specialist at T. Rowe Price. "Does it have legs? I think that's yet to be seen."
Investors were relieved when European leaders made progress in tackling the region's debt crisis in recent weeks. Worries that the U.S. might slip into a recession have faded, and many big U.S. companies like McDonald's Corp. have reported stronger profits for the third quarter. More than three-quarters of U.S. companies in the S&P 500 that have reported results so far had earnings that beat analysts' expectations, according to the financial data provider FactSet.
The European debt crisis is still far from fixed. One troubling sign is that borrowing costs for Italy and Spain have increased, a signal that traders remain worried about their ability to pay their debts.
Five stocks fell for every one that rose on the New York Stock Exchange. Volume was average at 4.2 billion shares.
Europe shocked by Greek referendum on bailout deal
November 1, 2011 Tuesday
George Papandreou speaks to reporters
Papandreou called the vote a 'supreme act of democracy'
Greek Prime Minister George Papandreou has offered voters a referendum on the latest EU deal to rescue the country from bankruptcy, which could lead to Greece's exit from the eurozone and new parliamentary elections.
European leaders reacted with surprise on Tuesday at Greek Prime Minister George Papandreou's announcement of a referendum on the country's unpopular new bailout deal.
Papandreou told parliament on Monday that it would be "a supreme act of democracy and of patriotism" for voters to decide on the fate of their own country.
"We have a duty to promote the role and the responsibility of the citizen," he said.
Greek Finance Minister Evangelos Venizelos echoed Papandreou's words, telling lawmakers: "Citizens will have to answer the question: Are we for Europe, the eurozone and the euro?"
But leaders of the European partner countries who have agreed to contribute to the new 130-billion-euro bailout fund saw the announcement with skepticism, as just the week before Papandreou had pleaded for them to continue supporting Greece in its financial troubles. French President Nicolas Sarkozy and German Chancellor Angela Merkel were to speak on the phone on Tuesday about the referendum.
Markets pummeled by Greek vote uncertainty
Greek call for referendum on rescue plan causes sharp drop in stock markets and the euro
November 1, 2011 Tuesday LONDON (AP)
Markets plunged Tuesday on fears that Europe's plan to save the euro was unraveling after Greece's leader unexpectedly called a referendum on the country's latest rescue package.
Markets are worried Greek Prime Minister George Papandreou wouldn't be able to pull off a victory -- assuming that his government holds together.
Papandreou saw his parliamentary majority cut to 2 seats on Tuesday after one lawmaker quit the ruling party, while another two called for him to resign. At least five other Socialist lawmakers last month called for the formation of a cross-party, national unity government.
The implications for Greece and Europe of a "no" vote in a referendum are massive -- it would imperil Greece's membership of the euro and could cause a messy debt default, which would hurt banks and roil global markets.
"Talk about your all-time bonehead moves," said Benjamin Reitzes, an analyst at BMO Capital Markets. "It would reintroduce the risk that Greece could face a disorderly default and potentially be forced to leave the euro."
Papandreou stunned markets and even his own citizens and fellow eurozone partners by announcing late Monday that a vote will be held. A confidence vote in the Socialist government will also take place at the end of this week.
The news dealt a huge blow to the European debt deal, in which confidence had already been fading.
On Monday, sentiment was already turning sour after U.S. brokerage firm MF Global filed for bankruptcy amid reports that it had bought too much bad European debt and fears over the public finances of Italy, the eurozone's third-largest economy. Italy's debts dwarf the euro1 trillion ($1.4 trillion) that Europe's bailout fund will have at its disposal if last week's commitments are delivered.
"The 6-8 percent falls over two days have now effectively given back all the gains from the post Brussels meeting rally," said Louise Cooper, markets analyst at BGC Partners.
The plan presented last week by eurozone leaders was intended to be Europe's comprehensive solution to a debt crisis that's already seen three countries, including Greece, bailed out.
The three-pronged strategy of boosting the bailout fund, getting private creditors to take a bigger hit on their Greek debt holdings and forcing the banks to raise more capital was largely viewed favorably by the markets, although details need to be ironed out.
In Europe, the FTSE 100 index of leading British shares fell to close 2.2 percent lower at 5,421.57, while Germany's DAX slid 5 percent to 5,834.51. The CAC-40 in France ended 5.4 percent lower at 3,068.33. Unsurprisingly, Greek shares led the retreat with the main exchange in Athens down 6.9 percent.
Italy's stock market fared almost as badly, closing 6.8 percent lower as its borrowing costs spiked in the bond markets. The yield on Italy's 10-year bonds was up another 0.21 of a percentage point to 6.20 percent, having earlier risen to 6.30 percent. Despite the modest retracement from earlier highs, Italy's yield is not far below the 7 percent level many investors think is unsustainable.
The euro fell 1.2 percent lower to $1.3692.
Wall Street suffered a big retreat, too -- the Dow Jones industrial average was down 2.4 percent at 11,665.07 while the broader Standard & Poor's 500 index slid 2.8 percent to 1,218.67.
As well as the events in Europe, investors have a raft of economic news to digest this week, culminating in Friday's monthly U.S. jobs report.
A weak U.S. manufacturing survey from the Institute for Supply Management added to market fears over the state of the U.S. economy. Its main index fell to 50.8 in October from the previous month's 51.6, meaning it's only just above the 50 threshold that indicates expansion.
Alan Ruskin, an analyst at Deutsche Bank, said the survey was consistent with "the slow growth scenario, rather than a recession outlook, but all of this goes with the proviso that there is not a larger external shock."
The Federal Reserve and the European Central Bank also meet to decide on their monetary policies this week. The new ECB chief, Mario Draghi, will hold his first meeting and press conference Thursday. Investors will be looking for signs that the ECB is considering cutting interest rates and that it will continue its program of buying the bonds of troubled eurozone nations, especially Italy and Spain.
Earlier in Asia, stocks fell sharply.
Japan's Nikkei 225 index retreated 1.7 percent to close at 8,835.53. Hong Kong's Hang Seng lost 2.5 percent to 19,369.96 and Australia's S&P/ASX 200 shed 1.5 percent to 4,232.90. Benchmarks in Singapore, India, Indonesia and Thailand were also down.
South Korea's Kospi gained marginally to 1,909.63 and China's Shanghai Composite Index added 0.1 percent to 2,470.02.
Oil prices tracked equities sharply lower. Benchmark crude for December delivery was down $2.68 at $90.51 a barrel in electronic trading on the New York Mercantile Exchange.
November 1, 2011 Tuesday Russia Halted - Stock market shuts down
The global capital market shutdown begins, right on schedule:
MICEX EXCHANGE HALTS STOCK TRADING
MICEX EXCHANGE COMMENTS IN STATEMENT ON WEBSITE
G20 summit and Greece
November 2, 2011 Wednesday
G20 summit begins Nov. 3
The G20 gather in Cannes amid global financial crisis.
After 2008 the G20 worked with China and India, now leaders find it much harder to find common ground over economic and trade adjustments.
So what are the key issues this time round?
The eurozone and the global economy.
Greece is in political turmoil and PM Papandreou said that the latest bailout deal should be put to a national referendum.
But the Greek public is very angry. If they vote no or if the Greek government collapses first, Greece may end up choosing to stop repaying its debts, or by leaving the euro.
Why should the G20 care about Greece?
What happens in Greece raises big questions about the eurozone as a whole.
Lenders are getting nervous about lending to Italy, which also has a lot of debt, but which is a lot bigger than Greece.
Greece cabinet has given unanimous backing to a referendum on a EU debt rescue package.
A referendum, possibly in December, would offer a clear mandate for austerity measures demanded by eurozone partners.
Greeks have already shown they will NOT accept austerity.
There is no doubt they will reject it. They favor a free ride on the backs of others.
They dont want to repay their debts or give anything up.
Greece is likely to default on its debt.
Why China wont save the world
Can China rescue the Eurozone? Some think China holds the key to Europe recovery.
Of all the G20 leaders President Hu may seem the answer.
China economy is growing but is not about to save Europe. Why should they?
Greece is unrepentant of their greed and sinking deeper, putting the Eurozone in trouble.
China economy accounts for less than 10% of global GDP, Europe and America make over 50%.
Chinese exporters have been hit by the world economy, hurting China exporters.
China is cautious. China is trying to slow its own economy, to control inflation.
Wall Street down on European Setbacks
Growing concerns that European leaders may struggle to contain the debt crisis, bankrupt derivatives.
Blue chips close to 600 points down over 2 day.
The Greek public has vehemently, and sometimes violently, protested austerity measures.
Nikkei fell in Japan. USA Dow fell nearly 300, NASDAQ 77
Greek DefMin Replaced Military Leadership in a Surprising Move
Amid a major political turmoil, a severe economic crisis and the Greek government to allegedly count its last hours, Defense Minister Panos Beglitis decided to replace the leadership of the Greek Armed Forces, in a move that puzzled and left quite some questions unanswered. The Chief of General Staff, and the Chiefs of Navy, Air Force and Land Forces were replaced today in a move condemned by all opposition parties that demand explanations, describe it as “undemocratic” and some even request from the President not to sign the assignment of the new Chiefs.
Greek media report that Beglitis convened an unscheduled meeting of the Government Council for Foreign Affairs and Defense, half an hour after PM George Papandreou called for an extraordinary cabinet meeting. To the old military leadership Beglitis apparently said:
“Thank you for your cooperation, but I think it’s time for your replacement. I wanted to do so since last August but due to the problems with Turkey I couldn’t. Now I feel it’s the right time for your replacement.”
The four Army chiefs – Ioannis Yangos (General Staff), Fragkoulis Fragkos (Land Forces), Vasilis Klokoza (Air Force) and Dimitris Eleysiniotis (Navy) – go into retirement.
Chief of General Staff/Defense is now Michalis Kostarakos, Land Forces Konstantinos Zazias, Navy Kosmas Christidis and Air Force Antonis Tsantirakis.
It looks as if Beglitis , Defense Minister since last government reshuffle in June 2011 and since 2009 elections alternate DefMin had problems to cooperate with the Army Chiefs. Sources claim that Beglitis was angry about the Armed Forces in general and how they dealt with the Parade of October 28th in Thessaloniki in particular, as some Armed forces groups insisting on parading although the President had already gone and the parade was officially cancelled. Another incident that bugged Beglitis was the break in by retired offices in the Defense Ministry last month (sorry, not able to find the KTG-article link, right now). The Army had also raised objections in letting soldiers pick up the garbage during the municipality strike.
Other sources speak of replacement of the Four by members of the Armed Forces who are supporters of the loan-agreements.
The term of the old army leadership was due to finish in March 2012. The fourwere holding offices after a similar move in 2009 by then Defense Minister Vaggelis Meimarakis (Nea Dimokratia) short before the 2009 elections. An unexplained move as well. Now conservative Nea Dimokratia stresses it will not accept the replacement and will call back the four Army Chiefs when ND comes to power.
Beglitis decision caused a major discontent within the Armed Forces, who have also seen cuts in their salaries and pensions in times of strict austerity. But the modern (after the military junta 1967-1974) Greek Armed Forces have been trained to be obedient to the laws and the Constitution.
Or, Does Belgitis know more than we do?
Commerzbank backs off euro zone as Q3 hit by Greece
4 November 2011
Germany's second-largest lender Commerzbank will refuse loans which don't help Germany or Poland, as the euro zone crisis makes European banks more protectionist in choosing between writing new business and meeting stringent capital requirements.
"We are not doing business which is not to the benefit of Germany or Poland," Chief Financial Officer Eric Strutz told analysts on a conference call discussing third-quarter earnings on Friday. "We have to focus on supporting the German economy as other banks pull out."
Commerzbank is accelerating the pullback from euro zone nations and cutting risky assets to avoid another state bailout after a 798 million euros (686.4 million pounds) impairment on Greek assets pushed it to a third-quarter operating loss.
The lender, which is 25% owned by the State, was forced to abandon its profit target for next year, as it struggles to meet more stringent capital requirements to help withstand euro zone market jitters.
"We continue to be committed to our original operating profit target of 4 billion euros for the group but, on account of the market environment, we will be unable to reach this target next year," Chief Executive Martin Blessing said on Friday.
"The outlook for the current year and 2012 is subdued," the company said in its report, citing the risk of escalation of the European sovereign debt crisis and stricter capital requirement for the industry.
G-20 leaders fail to agree on IMF help for Europe
November 4, 2011 CANNES, France (AP)
Leaders of the world's 20 most powerful economies failed to agree on how to increase the firepower of the International Monetary Fund
so that it can help stem the European debt crisis, though they acknowledged its resources should be boosted.
The leaders struggled to reach concrete resolutions at their summit in the French resort of Cannes that has been was overshadowed by Greece's political turmoil and worries about Italy, which accepted IMF supervision of its reform efforts — a highly unusual gesture toward one of the world's leading economies.
"It's important that the IMF sees its resources reinforced," Jose Manuel Barroso, the president of the European Commission, told reporters. However, any decisions on how to reinforce the IMF were left until February.
The lack of detail disappointed markets, with stocks, bonds and the euro falling. Italy's borrowing rates, in particular, hit worrying new highs.
Barroso said the IMF's increased resources would be there to help countries around the world, not just the eurozone, indicating Europe is struggling to attract help from its global partners to fight its debt crisis.
German Chancellor Angela Merkel said no countries outside the eurozone had committed any money to the region's bailout fund.
Barroso said several countries had indicated they would provide bilateral loans to the IMF — which would give it more resources without collecting money from reluctant members like the United States.
The G-20 final statement said the IMF should work in the next three months on a special account that could be earmarked for the eurozone.
That way countries like the United States, which think Europe should pay for its own financial problems, wouldn't have to put any money in. And countries like Russia and Brazil, which have expressed interested in helping the eurozone, could.
The statement also said the IMF should work out a way to issue more special drawing rights, or SDRs, the fund's own reserve currency that can be exchanged for cash with central banks around the world.
SDRs can just be created and do not require new commitments from IMF member states.
Finance ministers will now have to work out the details of these measures. French President Nicolas Sarkozy said the G-20 would next deal with the topic in February.
With their own finances already stretched from bailing out Greece, Ireland and Portugal — and traditional allies like the United States wrestling with their own problems — eurozone countries were looking to the IMF to use its resources and rescue experience to help prevent the debt crisis from spreading to large economies like Italy and Spain.
Every day that the eurozone crisis continues, every day it isn't resolved, is a day that has a chilling effect on the rest of the world economy," British Prime Minister David Cameron said.
"The rest of the world outside the eurozone is saying, We are ready to do our part to help stabilize the world economy. ...
But you can't ask the IMF or other countries to substitute for the action that needs to be taken within the eurozone itself."
The G-20 announcements show how dramatically the powers have shifted within the IMF
Until two years ago, the IMF — dominated by the traditional powers in Europe and the U.S. — mostly applied the painful adjustment programs that are attached to its financial lifelines to poor and emerging economies in Asia, Latin America and Africa.
Now, it's growing powers like China, Brazil and South Africa that have to decide whether helping Europe is a worthy investment.
Last week, eurozone leaders decided to boost the firepower of their bailout fund, the €440 billion ($606 billion) European Financial Stability Facility, by seeking financing from outside investors. Those additional resources could then be used to buy up bonds from wobbly countries like Italy and Spain and help them and others recapitalize banks hit by the turmoil on the markets.
Yet cash-rich countries like China, Russia and Brazil quickly made clear that any investment from their side would have to be channeled through the IMF. That would ensure that their loans come linked to strict economic conditions and could also give them more influence within the fund.
German Chancellor Angela Merkel said the promised increase in the resources of the IMF was positive, adding that she was optimistic that they will also be used to help out the eurozone, once the currency union has worked out the details of the EFSF increase.
"We will now accelerate our work on the guidelines of the EFSF and then all IMF member states are called on to contribute to the EFSF," Merkel said.
Separately, Barroso that Italy had asked the IMF for help monitoring its budgetary and structural reforms on a quarterly basis.
The country's borrowing rates have risen sharply this week — and jumped further on Friday — on fears that Minister Silvio Berlusconi does not have the political strength to implement promised reform measures meant to revive lackluster economic growth and bring down debt.
Berlusconi said Italy had turned down an IMF offer for financial aid, asking it instead to simply monitor the implementation of the reforms. The step is highly unusual for such a large economy — the third-largest in the eurozone.
European leaders are ‘lifting the lid on Pandora’s box
November 6, 2011 Greece’s finance minister, Evangelos Venizelos, will lead the Greek delegation to Brussels, where he is expected to outline the national consensus platform on implementing the bail-out deal.
Olli Rehn, the EU Economic and Monetary Affairs Commissioner, told Reuters that they needed a “convincing” report from Mr Venizelos.
Calling on Greece to establish a national unity government, he added that Athens’ European partners “faced last week a breach of confidence by Greece which meant that Greece took itself on a course that would lead it outside the euro zone.
“We do not want that but we must be prepared for every scenario, including that one, for the sake of safeguarding financial stability and saving the euro,” he said.
EU warns of deep, prolonged recession
November 10, 2011 The European Union Thursday slashed its growth forecast for the 27-nation bloc in the coming year and said it can't exclude the possibility of a deep, prolonged recession.
The European Commission, the EU's executive arm, said in its semiannual forecast the economy is struggling with weak confidence, financial turmoil,
government austerity packages and a slowdown in Europe's main trading partners.
It said the EU's gross domestic product in 2012, adjusted for inflation, would grow just 0.6% sharply down from its forecast only six months ago of 1.8%.
Since then, the euro-zone sovereign debt crisis has intensified, undermining investment and consumer confidence, the commission said. Government austerity packages have suppressed growth across the bloc. Domestic demand, which economists had hoped would be able to drive the recovery, has failed to pick up the slack.
"The probability of a more protracted period of stagnation is high," said Marco Buti, head of the EU's economics division. "And, given the unusually high uncertainty around key policy decisions, a deep and prolonged recession complemented by continued market turmoil cannot be excluded."
DEATH OF THE EURO
11/11/11 PREPARATIONS were under way last night for the break-up of the euro as Europe’s debt crisis spiralled out of control.
As Treasury officials worked through the night to soften the impact on Britain, David Cameron warned that the single European currency was facing its “moment of truth”.
Business Secretary Vince Cable went further and spoke about “Armageddon” while Brussels officials warned that the chaos threatened to plunge us all into a new recession.
Ministers are understood to be deeply concerned that French President Nicolas Sarkozy and Germany’s Chancellor Angela Merkel are
secretly plotting to build a new, slimmed down eurozone without Greece, Italy and other debt-ridden southern Euro- pean nations.
Well-placed Brussels sources say Germany and France have already held private discussions on preparing for the disintegration of the eurozone.
Certainly it affects our trade and potentially, in this Armageddon narrative, it affects the banking system, but we’re not there yet.
Business Secretary Vince Cable
At the same time, City insiders yesterday speculated that the “death warrant” for the euro had already been written, with a new economic bloc dominated by Germany and France almost certain to emerge in its place.
Howard Wheeldon, senior strategist at BGC Partners, said the single currency experiment had failed.
“Undoubtedly it has failed. We know the concept of a single currency was flawed right from the start. There were too many big differences, in language, in culture and in the economies. There is absolutely no chance of the euro surviving in its current form. It cannot happen.
“There are limits to what the markets, the people and the voters will accept. That doesn’t mean the euro won’t carry on with fewer members, but it has been a failure.”
French and Germans explore idea of smaller euro zone
November 9, 2011 (Reuters)
German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller euro zone, EU sources say.
"France and Germany have had intense consultations on this issue over the last months, at all levels," a senior EU official in Brussels told Reuters.
"We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don't want to be part of the club and those who simply cannot be part," the official said.
French President Nicolas Sarkozy gave some flavor of his thinking during an address to students in the eastern French city of Strasbourg on Tuesday,
when he said a two-speed Europe -- the euro zone moving ahead more rapidly than all 27 countries in the EU -- was the only model for the future.
The discussions among senior policymakers in Paris, Berlin and Brussels raised the possibility of one or more countries leaving the euro zone while the remaining core pushes on toward deeper economic integration, including on tax and fiscal policy.
The change has been discussed on an "intellectual" level but had not moved to operational or technical discussions, the EU official said.
A French finance ministry spokesman denied there was any project in the works to reduce the currency bloc's membership.
"There have been no conversations between French and German authorities at any level on decreasing the size of the euro zone," the spokesman said .
A radical overhaul of the European Union would be opposed by many members.
"This will unravel everything our forebears have painstakingly built up and repudiate all that they stood for in the past sixty years," one EU diplomat told Reuters."This will redraw the map geopolitically and give rise to new tensions. It could truly be the end of Europe as we know it."
In Berlin, European Commission President Jose Manuel Barroso warned about the economic costs of any splits in the euro zone. Germany's gross domestic product could contract and its economy would shed one million jobs, he said in a speech.
Barroso said any push toward deeper economic policy integration should not come at the price of creating new divisions among EU members.
"There cannot be peace and prosperity in the North or in the West of Europe, if there is no peace and prosperity in the South or in the East," he said.
To an extent the taboo on a country leaving the 17-member currency bloc was already broken at the G20 summit in Cannes last week, when German Chancellor Angela Merkel and Sarkozy both effectively said that Greece might have to drop out if the euro zone's long-term stability was to be maintained.
But the latest discussions among European officials point to a more fundamental re-evaluation of the 12-year-old currency project -- including which countries and what policies are needed to keep it strong and stable -- before Europe's debt crisis manages to break it apart.
In large part the aim is to reshape the currency bloc along the lines it was originally intended; strong, economically integrated countries sharing a currency, before nations such as Greece managed to get in.
"In doing this exercise, we will be very serious on the criteria that will be used as a benchmark to integrate and share our economic policies," the senior EU official said.
One senior German government official said it was a case of pruning the euro zone to make it stronger.
"You'll still call it the euro, but it will be fewer countries," he said, without identifying those that would have to drop out.
"We won't be able to speak with one voice and make the tough decisions in the euro zone as it is today. You can't have one country, one vote," he said, referring to rules that have made decision-making complex and slow, exacerbating the crisis.
Speaking in Berlin, Merkel reiterated a call for changes to be made to the EU treaty -- the laws which govern the European Union -- saying the situation was now so unpleasant that a rapid breakthrough was needed.
From Germany's point of view, altering the EU treaty would be an opportunity to reinforce euro zone integration and could potentially open a window to make the mooted changes to its make-up.
EU officials have told Reuters treaty change will be formally discussed at a summit in Brussels on December 9, with an 'intergovernmental conference', the process required to make alterations, potentially being convened in the new year, although multiple obstacles remain before such a step is taken.
While the two-speed Europe referred to by Sarkozy is already reality in many respects -- and a frustration for the likes of Poland, which hopes to join the euro zone -- the officials interviewed by Reuters spoke of a more formal process to create a two-tier structure and allow the smaller group to push on.
"This is something that has been in the air for some time, at least in high-level talks," said one EU diplomat. "The difference now is that some countries are moving forward very quickly ... The risk of a split, of a two-speed Europe, has never been so real."
In Sarkozy's vision, the euro zone would rapidly deepen its integration, including in sensitive areas such as corporate and personal taxation, while the remainder of the EU would be left as a "confederation", possibly expanding from 27 to 35 in the coming decade, with enlargement to the Balkans and beyond.
Within the euro zone, the critical need would be for core countries to coordinate their economic policies quickly so that defenses could be erected against the sovereign debt crisis.
"Intellectually speaking, I can see it happening in two movements: some technical arrangements in the next weeks to strengthen the euro zone governance, and some more fundamental changes in the coming months," the senior EU official said.
But he cautioned: "Practically speaking, we all know that the crisis may deepen and that the picture can change radically from one day to another."
France and Germany see themselves as the backbone of the euro zone and frequently promote initiatives that other euro zone countries reject. The idea of a core, pared-down euro zone is likely to be strongly opposed by the Netherlands and possibly Austria, although both would be potential members.
"This sort of thinking is not the direction we want to go in. We want to keep the euro zone as it is," said a non Franco-German euro zone diplomat.
Britain, which is adamantly outside the euro zone, is also opposed to any moves that would create a two-speed Europe, or institutionalize a process even if it is already under way.
"We must move together. The greatest danger we face is division," Britain's deputy prime minister, Nick Clegg, said during a visit to Brussels on Wednesday.
Europe Warns EFSF Will Not Reach €1 Trillion, EFSF Yields Remain At Record Wides
11 November 2011 Zero Hedge
With the buying frenzy resuming on the lack of "headlines" out of Europe, it bears reminding that while risk on and off will be the theme of the day for a while, the entire Eurozone rescue,
with the ECB refusing to participate directly, continues to be predicated on the EFSF and its ability to purchase the hundreds of billions of bonds rolling in the next 12 months from PIIGS, but mostly Italy, and now France.
Which is why we are surprised that the news that the EFSF has now officially been "haircut" has not been quite noted.
As Reuters reports, "political turmoil in Italy and Greece is complicating efforts to increase the firepower of the euro zone's bailout vehicle to 1 trillion euros, an official at the European Financial Stability Facility said on Friday.
Euro zone countries had hoped to increase the EFSF's lending capacity by December, combining bond insurance with investment vehicles.
But after the government in Athens fell and bond markets pushed Rome to the brink of a bailout that the euro zone cannot afford to give, the Luxembourg-based EFSF thinks it may be more realistic to aim for less leverage."
In other words: kiss the full capacity bailout goodbye.
And as the chart below shows, kiss any hope that the EFSF will be able to participate meaningfully in any European "renaissance" - while BTPs and OATs have seen some modest tightening on this "risk on" day, the yield on the EFSF has done absolutely nothing and remaind glued to record wides.
Euro-Collapse, New Europe, the Rise of the Fourth ReichEurozone Debt Crisis Reveals China's Economic Weakness
November 12, 2011 stratfor intel
Europe debt crisis exposed the vulnerabilities inherent in the Chinese economic model.
As China's largest export market, Europe has a major impact on the Chinese economy.
The ongoing crisis shows China the need to restructure its entire economy.
I saw a beast coming up out of the sea
The PHOENIX is a mythical bird said to arise up out of the ashes.
This perfectly fits the Evil NWO, New World Order, globalists motto to bring order out of chaos.
They create the chaos to bring their evil order, a world dictator.
What is the phoenix, dead bird? The revived Holy Roman Empire. Nero.
OUT of CHAOS - ORDER
New Europe, the Rise of the Fourth Reich
Out of the ashes of the collapse of the Eurozone a United States of Europe to arise.
The Beasts from the sea in Revelation 13 - the sea could mean sea of debt, chaos.
Globalists are being put into place all over Europe.
In Italy, Silvio Berlusconi is out, and will be replaced by super Globalist Mario Monti.
Monti is chairman of the Trilateral Commission and a member of the Bilderberg Group.
In Greece, George Papandreou is out, replaced by Lucas Papademos, a member of the Trilateral Commission.
The eurozone is on the verge of collapse. Many people falsely assume a return to national currencies.
Instead, the elite will attempt to bring order out of chaos.
Some newspapers are warning that a financial armageddon is coming.
Eurozone split would destroy single market
German chancellor Angela Merkel expected to back proposals to change European treaties to allow countries to leave the euro,
or be forced out if they refuse to cut public spending and borrowing.
With the threat of Greece default, the euro may not survive.
Ousting Silvio Berlusconi wont help Italy fiscal mess, its debt is impossible, and Italy is headed for default.
Italy's problems are fundamentally different than some other troubled countries, such as Greece, it is simply too late.
What would happen to world currencies if they were valued only in relation to one another.
The U.S. dollar, euro, and yen are all engaged in wholesale inflation, they are in almost free fall together.
In 8 years the U.S. dollar has lost 85% of its value.
moneyweek article from 2006
Europe's real problem: Lack of growth
November 14, 2011 Monday
The mood in Germany is pretty grim. Europe is facing its most severe challenge since 1945. The entire structure of Europe could unravel.
European leaders will not address Europe's core problem, a lack of growth.
Germans are trying to find some solution to this crisis that will not let countries like Greece and Italy off the hook.
The real problem Greece budget numbers look bleak is because its growth forecast looks bleak.
What can the Greek economy do to attract capital and investment? And at what wage levels?
Italy economy has not grown for 10 years.
German growth in only 1.5%.
Euro crisis opportunity for UK
14 November 2011
The current turmoil in Europe is an opportunity for the UK (Britain) to refashion its relationship with Brussels, said PM David Cameron.
He said powers should ebb back from Brussels to Westminster as part of fundamental future reform.
Although the EU is out of touch on many issues, it is not in the UK's national interest to exit.
Some want to renegotiate UK membership, other wants to leave the EU altogether.
European economy has all but stalled, report says
November 15, 2011 Tuesday LONDON (AP)
Europe appears headed for a recession — if it isn't in one already.
Economic growth has all but stopped in Europe, statistics showed Tuesday.
The stall comes just when Italy, Greece and other nations need growth to help them wriggle out of the chokehold of debt.
The European Union economy grew a paltry 0.2 percent in July, August and September compared with the three months before, the EU statistics agency said.
That is the same growth rate as the previous quarter, and far slower than the 0.7 percent before that.
And the picture is probably even worse. The statistics did not include Italy and Greece, the two countries in the most debt trouble.
And their debt crisis only got worse in October, the month after this snapshot was taken.
Besides lowering standards of living and hurting the job market in Europe, a recession would be bad news for the U.S., which sells 20 percent of its exports to Europe, and for Asia.
Taken as a whole, Europe also has the largest economy in the world, producing $16.2 trillion in goods and services last year. The United States produced $14.5 trillion last year, China $5.9 trillion.
So economic sickness in Europe has the ability to slow growth around the world.
"People are uncertain," said Ferdinand Fichtner of the German Economic Institute DIW. "That is poison for growth."
Fear that the economic slowdown will make the debt crisis worse were evident in financial markets Tuesday.
Borrowing costs rose for many nations, an indication that investors are nervous about lending to them.
In Italy, the yield on the closely watched 10-year bond rose back above 7 percent, even though a new government has replaced the dysfunctional regime of Silvio Berlusconi.
The yield rose above 7 percent for the first time last week and helped drive Berlusconi from office. And yields of 7 percent forced Greece and other European countries to seek bailouts.
The yield was at 7.04 percent late Tuesday, up 0.46 percentage points from the day before.
Spain was at 6.29 percent, up 0.22 percentage points, and France was at 3.66 percent, up 0.23 percentage points.
Higher bond yields triggered by slow — or no — growth create a vicious cycle that is difficult for a country to stop.
When the yield goes up on its debt, a country must spend more money paying interest.
If the economy isn't growing, then the deficit grows, and countries have to borrow even more. Cut services to close the gap, and the economy can slow even more.
The two largest economies in Europe, Germany and France, kept growing from July through September, but not much faster than their neighbors — 0.5 percent in Germany and 0.4 percent in France.
What happens in those countries matters in the rest of Europe. When the Germany economy booms, Germans are more likely to help, say, the Italian economy by buying Italian cars, indulging in an Italian suit or booking a vacation to an Italian villa.
The Netherlands, traditionally a competitive economy, unexpectedly saw its economy shrink in the third quarter. And countries across Europe are at risk of slowing as the debt crisis spreads to other countries and looms over all of them.
"The uncertainty caused by the sovereign debt crisis is lying like mildew upon the eurozone economy," said Christope Weil, an economist at Commerzbank, referring to the 17 nations in the EU that use the euro as their currency.
The European Commission warned recently that unemployment in that 17-nation club, already 10.2 percent, would remain high for the foreseeable future. Unemployment in the United States is 9 percent.
The 0.2 percent growth in the EU compares with 0.6 percent growth in the United States in the third quarter compared with the quarter before — not exactly sizzling, but at least better. Japan, which is making up for lost economic output after the earthquake and tsunami last March, grew 1.5 percent.
U.S. policymakers frequently cite Europe's crisis as one of the top threats facing the American economy.
"Unfortunately, we can't disassociate ourselves from Europe. The things that are happening there do affect us," Fed Chairman Ben Bernanke said earlier this month. "I hope very much that the Europeans will find a set of solutions that will allow markets to calm down and take off some of the headwinds from the U.S. economy."
Paul Dales, senior U.S. economist at Capital Economics, estimates that a recession in Europe would shave about half a percentage point off U.S. economic growth in 2012, cutting it to 1.5 percent. Others have similar estimates.
A survey last week by the Federal Reserve showed that European banks with operations in the United States are tightening lending.
Europe's troubles also hurt China, where products are assembled and shipped to European countries.
American banks have not lent much money to other banks or governments in Europe's most troubled countries. That limits the risk if European banks take a hit because they own bonds issued by countries that can't pay them off.
Dales said U.S. banks had much greater exposure to Asia during a financial crisis there in the late 1990s than they now do to Europe. And the U.S. economy "sailed through" the Asia crisis, he said.
The U.S. could be hurt, though, by a freeze in global lending, similar to what happened after Lehman Brothers investment bank collapsed in 2008. Banks were too worried to lend to each other, increasing borrowing costs for everyone.
The euro crisis will lead to compromise and decline
The crisis that has engulfed the European Union (EU) is about much more than the euro.
As government bonds, share prices and banks swoon and global recession knocks on the door, the first fear is of financial and economic collapse.
But to understand what is happening to the currency you also need to look at what is happening to Europe.
The euro will not be safe until Europe answers some fundamental questions that it has run away from for many years.
At their root is how its nations should respond to a world that is rapidly changing around them.
What will it do as globalisation strips the West of the monopoly over the technologies that have made it rich,
and an ageing Europe starts to look increasingly like the western peninsula of a resurgent Asia?
Some Europeans would like to put up carefully designed fences around the EU’s still vast and wealthy market.
Others, including a growing number of populist politicians, want to turn their nations inward and
shut out not just the world but also the elites’ project of European integration.
And a few argue that the only means of paying for Europe’s distinctive way of life is not to evade globalisation but to embrace it wholeheartedly.
This is not some abstract philosophical choice. It is a fierce struggle for Europe’s future,
being waged in Athens as George Papandreou loses power to a temporary government of national unity,
in derelict factories in France and Belgium and in the wasted lives of millions of unemployed young.
Good article, good MAP on link
U.K. unemployment hits 8.3%, highest since 1996
16 November 2011 (MarketWatch)
The number of unemployed British workers rose 129,000 to 2.62 million in the three months ending in September, pushing the unemployment rate up to 8.3% from 8.1% in the three months ending in August, the U.K. Office for National Statistics reported Wednesday.
The unemployment rate is the highest since 1996, while the total number of unemployed is the highest since 1994, the ONS said.
The number of workers claiming jobless benefits rose 5,300 in October, the ONS said. Economists had forecast a rise of 22,500.
Fitch: U.S. bank outlook could worsen over Europe
16 November 2011
Fitch Ratings said Wednesday that the credit outlook for U.S. banks can worsen if the euro-zone debt crisis is not resolved in a timely manner.
"Fitch's current outlook for the industry is stable, reflecting improved fundamentals at most banks combined with ratings lower than at pre-crisis levels.
However, risks of a negative shock are rising and could alter this outlook," the ratings agengy said.
Fitch maintained Europe's sovereign debt crisis still poses a threat to U.S. banks even though the institions have reduced their exposure to the region over the past year.
Germany seeks to stop U.K. vote on EU
17 November 2011
Germany has drawn up secret plans to prevent a British referendum on the overhaul of the European Union amid concerns it could
derail the euro-zone rescue package, according to leaked documents obtained by The Daily Telegraph of the U.K..
Angela Merkel, the German chancellor, is expected to tell Prime Minister David Cameron that Britain doesn't need a referendum on EU treaty changes,
despite demands from senior U.K. Conservatives for more powers to be repatriated to Britain.
The leaked memo, written by the German foreign office, discloses radical plans for an intrusive new European body that will be able to take over the economies of beleaguered euro-zone countries.
It discloses that the EU's largest economy is also preparing for other European countries, which are too large to be bailed out, to default on their debts - effectively going bankrupt.
It will prompt fears that German plans to deal with the euro-zone crisis involve an erosion of national sovereignty that could pave the way for a European "super state" with its own tax and spending plans set in Brussels.
Germany has drawn up secret plans to prevent a British referendum on the overhaul of the European Union amid concerns it could derail the eurozone rescue package.
Eurozone: Who owes what to whom?
The circle below shows the gross external, or foreign, debt of some of the main players in the eurozone as well as other big world economies. The arrows show how much money is owed by each country to banks in other nations. The arrows point from the debtor to the creditor and are proportional to the money owed as of the end of June 2011. The colours attributed to countries are a rough guide to how much trouble each economy is in.
Germany to kick countries out of Eurozone
November 18, 2011
Bye bye Greece, Italy, Spain, etc
The weakest point of the European bailout language was its reliance on Collective Action Clauses which imply that any resolution which does not have 100% backing of all bondholders would potentially push a country into default. In essence, this took control out of the hands of the Eurozone head, Germany, and put it to the bondholders.
However, in a new draft, Berlin says countries which are deemed to be insolvent would be allowed to declare bankruptcy and default on their bonds.
Voluntary language will likely be taken out from the final draft, effectively giving Germany the unilateral ability to kick countries out.
This explains why the market is about to plunge.
The Coming European Superstate
November 19, 2011
A German government memo entitled “The Future of the EU: Required Integration Policy Improvements for the Creation of a Stability Union
actually proposes the creation of a European Monetary Fund which would be given the power to run the economies of troubled European nations.
This stability union would be followed by a political union, a European Superstate.
National sovereignty would be a thing of the past and European bureaucrats would run everything.
Spending and tax plans would be set in Brussels.
New World Order plan: Europe, America vs Russia, China.
New global government is all setup, new currency is ready.
This NWO has been built for years and is the platform of the antichrist 666 system.
There is a World Constitution and a World Parliament. They HATE Christians and Jews
Doubts rise over euro rescue fund
20 November 2011 Economists are increasingly questioning the relevance of the eurozone rescue fund as pressure builds on the European Central Bank (ECB) to lead a lasting and massive debt crisis response.
The European Financial Stability Facility (EFSF), which uses €440 billion of government guarantees to borrow on markets for subsequent lending to bailed-out Greece, Ireland and Portugal, "has no credibility" with traders, said Belgian economics professor Paul De Grauwe.
A new "technocratic" government has taken power in Rome, with its public finances put under EU-IMF surveillance while France -- the second-largest eurozone economy -- is the latest to see its borrowing costs under pressure.
Britain, France and the United States have each urged Germany to allow the ECB to emulate the Federal Reserve or the Bank of England by funding governments and pumping liquidity into the eurozone, in effect printing new money in an effort to get the economy moving again.
"The rescue fund, to begin with, will not have sufficient resources, even with a trillion euros," said De Grauwe, who lectures at Belgium's Louvain university.
"Italy has almost two trillion in debts and soon we might be talking about Spain and France," he said.
Yet the newly souped-up EFSF "can't even get out of the (starting) blocks," with markets already adding premiums to the fund's own borrowings.
Doubts rise over euro rescue fund
20 November 2011 Economists are increasingly questioning the relevance of the eurozone rescue fund as pressure builds on the European Central Bank (ECB) to lead a lasting and massive debt crisis response.
The European Financial Stability Facility (EFSF), which uses €440 billion of government guarantees to borrow on markets for subsequent lending to bailed-out Greece, Ireland and Portugal, "has no credibility" with traders, said Belgian economics professor Paul De Grauwe.
A new "technocratic" government has taken power in Rome, with its public finances put under EU-IMF surveillance while France - the second-largest eurozone economy -- is the latest to see its borrowing costs under pressure.
Britain, France and the United States have each urged Germany to allow the ECB to emulate the Federal Reserve or the Bank of England by funding governments and pumping liquidity into the eurozone, in effect printing new money in an effort to get the economy moving again.
"The rescue fund, to begin with, will not have sufficient resources, even with a trillion euros," said De Grauwe, who lectures at Belgium's Louvain university.
"Italy has almost two trillion in debts and soon we might be talking about Spain and France," he said.
Yet the newly souped-up EFSF "can't even get out of the (starting) blocks," with markets already adding premiums to the fund's own borrowings.
Risks of global recession mount
20 November 2011 Financial contagion from Europe is pushing global economies towards the brink, and the risks of slipping into worldwide recession are rising significantly.
China's exports have plunged to half their year-ago levels.
Factory orders in Germany, Europe's economic powerhouse, are slumping as China weakens.
Australia and Indonesia have cut interest rates to ward off damage from Europe, while Japan, Britain and Brazil have slashed their growth forecasts.
From Beijing to Washington and Sao Paolo, top financial officials are worried their economies will be sucked into the maelstrom by Europe's inability to unify around a debt strategy. High yields on Italy's and Spain's sovereign debt, hovering around 7%, are putting severe funding strains on banks, infecting the global financial system, which in turn undermines confidences and upends growth.
How Big Derivatives Dealers Caused 'Contagion' In The Eurozone
21 November 2011 Did the International Swaps & Derivatives Association (ISDA) throw Europe into chaos?
Is it responsible for causing Italy and other European nations' woes, for the sudden spike in southern European interest rates?
It is an interesting question to explore.
November 26, 2011 Single currency collapse unless Germany and the ECB move quickly
Euro zone hurtles towards a crash.
The chances of the euro zone being smashed apart have risen alarmingly.
A euro break-up would cause the worlds most financially integrated region to be ripped apart by defaults, bank failures and the imposition of capital controls.
The euro zone could shatter into different pieces, or a large block in the north and a fragmented south.
Amid the recriminations and broken treaties after the failure of the euro, wild currency swings between those in the core and those in the periphery would almost certainly bring the single market to a shuddering halt. The survival of the EU itself would be in doubt.
Which Fiscal Time Bomb Will Explode First, US or Europe?
German Chancellor Angela Merkel has lowered the heat on the euro.
The USA Congressional Super Committee failed to address America’s fiscal problems, and America’s fuse is dangerously short.
Merkel has been emphatic that European politicians not be given a monetary crutch similar to America.
Much has been made of the auction of German Government bonds.
Many investors think that eventually Germany will print and stimulate like everyone else.
U.S. ignores its debt problems.
Proposed 'cuts' merely represent the expected reductions in interest payments.
The cuts are not spending reduction, spending increases.
Europe is criticized for its failure to follow America’s lead. They assume America's worked. It did not.
Banks Brace for Breakup of Euro November 27, 2011 Sunday
German Chancellor Merkel claims euro breakup will never happen.
But some banks are not so sure, especially as the sovereign debt crisis threatened to ensnare Germany.
S&P downgraded Belgium, France could lose its AAA rating, agencies lowered Portugal and Hungary to junk.
Banks draw up a Plan B.
Germany, France plan quick new Stability Pact
France and Germany are planning a quick new pact on budget discipline that might persuade the European Central Bank to ramp up its government bond purchases.
It could be similar to the Schengen Agreement which applies to EU countries that choose to take part and enables their citizens to enjoy uninhibited cross border travel. Among the countries in the Stability Pact, there would be a treaty spelling out strict deficit rules and control rights for national budgets.
Global Economic Collapse, nation by nation
New Reports Warn of Escalating Dangers From Europe's Debt Crisis
Nov, 28, 2011 Warnings that the debt crisis in Europe could cause credit to dry up across the global banking system, endangering the world economy, multiplied on Monday despite fresh efforts by European leaders to prevent the euro monetary union from fracturing.
The Organization for Economic Cooperation and Development said the euro crisis remained “a key risk to the world economy.” The Paris-based research group sharply cut its forecasts for wealthy Western countries and warned that growth in Europe could come to a standstill.
Europe’s politicians have so far moved too slowly to prevent the crisis from spreading, the organization said in a report . It warned that the problems that started in Greece almost two years ago would start to infect even rich European countries thought to have relatively solid public finances, a development that would “massively escalate economic disruption.”
Euro Zone in Mild Recession, US May Follow: OECD
Eurozone has 10 days - at most - to avoid collapse
November 29, 2011 ft.com
Germany is the only country that can act to save the European Union.
The banking sector is broken, parts of the eurozone economy are cut off from credit, and there is a quiet bank run among its citizens.
With the spectacular flop of the German bond auction and the alarming rise in short-term rates in Spain and Italy, the government bond market across the eurozone has ceased to function.
The crisis has spread to France, Belgium, the Netherlands and Austria.
It was last year when Lindsey Williams said his "sources" told him that when the Euro collapses, the USDollar will have 2 more weeks.
World Bank head sees ripple effects from euro woes
Nov 29, 2011 CAMBRIDGE, Massachusetts (Reuters) - Europe's debt crisis threatens to undermine consumer confidence and cut off credit to businesses in the rapidly emerging markets that have been bright spots in an otherwise grim global economy, the head of the World Bank warned.
"While the European and euro zone problems have to be dealt with primarily by Europe, you've got to be aware of the ripple effects of this and the ripple effects can easily become wave effects," Robert Zoellick, the institution's president, said in a talk with students at Harvard University.
Leaders of the euro zone nations have been scrambling to head off a spreading sovereign-debt crisis that has hit the Greek, Italian, Portuguese and Irish economies and threatens to engulf the rest of the 17-nation bloc.
One key risk Zoellick cited is that worries about Europe's troubles will spook consumers in emerging markets, such as China, India and Brazil, that have been far quicker to recover from the private-sector credit crunch of 2008.
"What I was most worried about and remain worried about is the fact that if the problems in consumer confidence ... and business confidence in Europe and the U.S. spread to emerging markets then the domestic demand of those economies would also wither," Zoellick said.
How to Know When the Euro Crisis Reaches a Tipping Point
Two huge financial dangers that still seemed somewhat unlikely a few months ago now appear hard to avoid. First, the common euro currency is in deep trouble, and European governments are frantically trying to save it. Second, the chances of a worldwide recession are increasing because of these attempts to stave off the euro's collapse. Although the problems have been going on for some time, they're about to get much worse. To know when the crisis is reaching a tipping point, keep your eye on global government bond yields.
Although European leaders are still behaving as though the euro can be saved, behind the scenes banks are preparing for the breakup of the Eurozone. One of the effects of what the banks are doing is that global bond yields are diverging. Where banks cut back their bond holdings, countries have to pay higher yields. By contrast, in those countries where banks are willing to park their money for safekeeping, governments don't have to pay very high yields. (MORE: How to Get Your Dream Job in a Bad Economy)
A second effect of banks hunkering down is that they become less willing to lend money. To support a loan portfolio of a given size, banks have to have a certain amount of equity. If losses on government bonds eat into that equity, banks have to raise more capital. This undermines their stock if they sell additional shares to raise cash while share prices are depressed.
November 30, 2011 Steve Quayle
The "red screen" will be the only page that comes up on my site. It will be my final posting and two week warning saying that the time has come to head to the hills or shelter in place. Once the red screen goes up I will post no more. The conditions that obviously will be apparent to everyone will be one of the following incidents or multiple incidents:
1.) Escalating nuclear tensions that are time stamped that ultimatums, such as country whatever has so many days to comply or face destruction
2.) Massive multi pronged attack on us troops in Afghanistan and Iraq on coordinated basis
3.) Massive Russian troop movements to their western border and on going military build up in Syria and Arctic region
4.) Massive earthquake on mid-Atlantic Trench and Ridge Region triggering East Coast tsunami
5.) Massive solar storm that result in multiple ongoing coronal events taking place on continual basis with increasing intensity
6.) Historic explosion of Anak Krakatau in Indonesia which will trigger simultaneous history breaking synchronized explosions of additional volcanic eruptions--think of it as the detonator
7.) Pakistan asks for red Chinese protection of their nuclear weapons and or India and Pakistan exchange nukes
8.) Bank holiday and riots breaking out on panic runs, first in Europe the spreading world wide and in the US
9.) Regional roadblocks resulting in the arrest and detention of patriots, gun owners and high profile assassinations of people critical of our new police state.
There are other factors which will facilitate its posting that I will not spell out. Consider also that an EMP attack may make the "red screen" impossible. I ask all believers who know how to pray and fast to intercede for wisdom and timing and that God will allow the two week warning to be in His time. Understand we must all look to Jesus for our individual leadings. Take this explanation to the Lord in prayer and cry out to Him with your whole heart.
Journalist Andrew Breitbard assassinated by heart attack drug
Corruption making euro debt crisis worse: NGO
Corruption is hampering efforts to tackle the eurozone debt crisis, a top anti-graft watchdog said Thursday, as Greece and Italy scored badly in a list of nations seen to be the most sleaze-ridden.
The economic dramas in the euro area have happened "partly because of public authorities' failure to tackle the bribery and tax evasion that are key drivers of the debt crisis," said the Berlin-based Transparency International (TI).
On a scale of zero (perceived to be highly corrupt) to 10 (thought to have little corruption), Italy scored 3.9 and Greece 3.4, ranking 69 and 80 respectively in the list of 182 countries.
Robin Hodess, TI's research director, said the eurozone crisis "reflects poor financial management, lack of transparency and mismanagement of public funds."
"There is a strong link between poor performance in terms of perceptions of corruption and broader issues around economic governance," added Hodess in an interview with AFP.
December 1, 2011 Quayle has warned of his red screen for about 2 years, long time anyway.
He is not a prophet of God, but you can find some things on his website. You really NEED your own discernment - everywhere.
Europe increased downside risks
Mario Draghi, president of the European Central Bank (ECB), has told the European Parliament that "downside risks" to the eurozone economic outlook have increased.
He also said that temporary measures by the ECB, such as buying up government debt, would be limited.
In doing so, he restated the bank's central role of controlling inflation.
New European treaty
December 2, 2011 This week could decide the fate of the euro.
Sarkozy and Merkel to hammer out the new eurozone blueprint in Paris.
France President Nicolas Sarkozy has called for a new European treaty to save the single currency and to revive a European Union from fragmenting.
The leaders of the 17 eurozone countries should strike political bargains among themselves.
Eurozone governments would need to forfeit their rights of veto in policy-making.
France differs from Berlin plan for control of policies.
Moody's cuts outlook on Czech banks
1 December 2011 MarketWatch
MF Global mixed funds, transferred abroad
Regulators investigating the collapse of MF Global have determined that the firm combined money between securities and futures accounts owned by customers, and transferred funds outside the country to at least one entity, a source said on Friday.
"The further we get into (the investigation) the more complex it is ... but we're making progress," the source said, adding that the commingling and transferring of money is making it harder for regulators to determine what money belongs where.
MF Global took futures segregated money and put it into the account for customer securities, essentially mixing futures and securities that were both owned by customers, said an official familiar with the matter.
Until now, it was believed that only customer futures accounts were affected.
The source also told Reuters that MF Global had been using customer funds for "several days if not weeks" rather than just a few days before the firm collapsed.
Debt funds needed in all eurozone states: Germany
Every country in the euro zone needs to set up a special national fund for sovereign debt that is more than 60 percent of gross domestic product, Germany's finance minister told a newspaper.
Wolfgang Schaeuble, detailing a proposal he will make at a European Union summit on December 9, told the Passauer Neue Presse that a total of 500 billion euros ($672 billion) would need to go into the German fund.
"We need a redemption fund in every single country of the euro zone," he told the newspaper in comments released on Saturday.
Tax revenues should be used to support the funds, Schaeuble said, adding that Germany would not need to raise taxes to implement the plan.
"Around 500 billion euros needs to be stored in the fund. This affects federal, state and municipal debt," he said.
Sarkozy: Austerity alone will lead to recession
French President Nicolas Sarkozy said Thursday that using austerity alone to solve the economic crisis afflicting France and the rest of Europe would lead to recession and possibly even depression.
He said such an approach would make the French people pay nearly the whole cost of trying to recover from the crisis.
"It would end in recession or depression," Sarkozy said in a speech in the southern French city of Toulon.
Sarkozy said that cuts and economic reform were necessary but were only part of what were needed to help Europe emerge from its sovereign debt crisis.
Europe weighs central bank loans to IMF
2 December 2011 Frankfurt MarketWatch
Euro-zone finance ministers are weighing a plan that would see the region's national central banks provide as much as 200 billion euros ($275 billion) in loans through the International Monetary Fund that could be used to battle the region's debt crisis, Bloomberg reported Friday, citing unnamed people familiar with the matter.
The plan would see national central banks recycle funds through the IMF in order to underwrite precautionary credit lines for Italy or Spain, the report said.
Bilateral loans to IMF under discussion
The International Monetary Fund on Friday said European officials are discussing potential bilateral loans to the institution that could be used to fund euro-zone bailouts.
"European authorities -- like some other IMF member countries -- are exploring bilateral loans to the IMF," as noted by Luxembourg Prime Minister Jean-Claude Juncker on Nov. 29, said IMF spokesman Gerry Rice in emailed comments.
Such loans "could indeed come from member-country central banks, and indeed these central banks are already lending to the Fund under the New Arrangements to Borrow and bilateral agreements since 2009," he said.
A news report earlier Friday said European officials are weighing a plan that would see euro-area central banks funnel as much as $275 billion in loans through the IMF.
Merkel calls for quick move to fiscal union - German leader rejects call for eurobonds, defends ECB independence
German Chancellor Angela Merkel on Friday called for quick treaty changes that would pave the way for closer fiscal union in the 17-nation euro area, while again rejecting proposals for joint eurobonds and warning that the region’s problems will take years to resolve.
Germany's Merkel fights for euro, Cameron for UK
December 4, 2011 PARIS/BERLIN (Reuters)
British Prime Minister David Cameron threatened on Friday to obstruct a Franco-German drive for swift change to the European Union's treaty, a sign of the difficulty leaders will face transforming Europe to save the euro.
France and Germany are reaching a consensus that euro zone economies need to be bound more closely together if the single currency is to survive, which could mean changing the EU treaty to give Brussels powers to punish spendthrift euro states.
Austrian Chancellor Werner Faymann said there was a danger that the euro zone bloc would split up unless it implemented new rules and stuck to them.
"When we are not able to set up and keep to more conditions and ground rules, then many countries in the euro zone will no longer be able to pay the very high rates for sovereign bonds," he told the daily Krone.
"The next effect will be that you won't find anyone to buy them. Then the euro zone has to break up because of this.... it is a very real danger."
Euro zone enters a decisive week
By Paul Taylor, PARIS (Reuters) - The euro faces a decisive week as European Union leaders, urged on anxiously by the United States, seek agreement on the definitive rescue plan that has eluded them for two years.
Despite short-term market optimism about a possible deal to tackle Europe's sovereign debt crisis and ensure the survival of the single currency, the outcome is far from certain as the EU gears up for a summit in Brussels on Thursday and Friday.
"This week, the stable future of the euro and thus the economic recovery in Europe and employment are at stake," EU Economic and Monetary Affairs Commissioner Olli Rehn told Reuters. "This calls for a convincing package of measures from the European Council (summit)."
If all goes according to plans being hatched in Berlin and Paris, the EU will have taken a step towards fiscal union by Friday night, agreeing on a treaty change to anchor coercive budget discipline for the 17-nation currency area.
The European Central Bank will have cut interest rates on Thursday to counter a looming recession and taken new measures to provide longer-term funding for Europe's teetering banks.
And new prime ministers in Italy, Greece and Spain will have demonstrated their commitment to tough austerity measures and structural economic reforms to tackle their debt problems and restore investor confidence.
Pivotal week for Europe's leaders and fate of euro
December 4, 2011 BRUSSELS (AP) — Europe's government-debt crisis, which has dragged on for more than two years, is entering a pivotal week, as leaders across the continent converge to prevent a collapse of the euro and a global financial panic that could result.
Expectations are rising that Friday's summit of leaders of the 27 countries in the European Union will yield a breakthrough. An agreement on tighter integration of the 17 EU countries that use the euro — especially on budget matters — would be seen as a crucial first step. That could trigger further emergency aid from the European Central Bank, the International Monetary Fund or some combination, analysts say.
The coming days "will decide if the euro will survive or not," Emma Marcegaglia, the head of Italy's industrial lobby, Confindustria, said Sunday.
French President Nicolas Sarkozy, German Chancellor Angela Merkel, European Central Bank Chief Mario Draghi and even U.S. Treasury Secretary Timothy Geithner will star in a 5-day financial drama leading up to the summit.
If the summit is a failure, Sarkozy warned last week, "the world will not wait for Europe."
Sarkozy and Merkel Push for Changes to Europe Treaty
The two primary leaders of the euro zone, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, issued their first joint call on Monday for amendments to Europe’s governing treaties to provide better economic governance for the 17 countries of the euro zone...
...So Mr. Sarkozy and other European leaders are working on a less elegant and more phased way to create a pool of bailout money that is large enough to convince the markets there is little chance of a default on Italian and Spanish bonds, which should drive down rates to sustainable levels, European and American officials say.
Mrs. Merkel says it is time to get the euro’s fundamentals right. She is insisting on treaty changes to promote more fiscal discipline, including a limit on budget deficits, with outside supervision and surveillance of national budgets before they become dangerous, and clear sanctions for countries that fail to adhere to the firmer rules. Berlin wants the new standards backed up by the European Court of Justice or perhaps the European Commission, with the power to reject budgets that break the rules and return them for revision.
S&P piles pressure on Franco-German EU budget plan
Dec 5, 2011 PARIS (Reuters) - The leaders of France and Germany agreed a master plan involving treaty change on Monday to impose budget discipline across the euro zone as a top rating agency piled on pressure for a rapid solution to the EU debt crisis.
Standard & Poor's said it had told 15 of the 17 euro zone countries, including Germany, France and four others with the top AAA credit rating, that it might downgrade them en masse within 90 days, depending on the outcome of a crucial EU summit on Friday.
President Nicolas Sarkozy and Chancellor Angela Merkel said their proposal included automatic penalties for governments that fail to keep their deficits under control, and an early launch of a permanent bailout fund for euro states in distress.
They said they wanted treaty change to be agreed in March and ratified after France wraps up presidential and legislative elections in June. "We need to go fast," Sarkozy said.
EU seeks to save the euro, but S&P isn't convinced
Seeking to restore confidence in the euro, the leaders of France and Germany jointly have called for changes to the European Union treaty so that countries using the euro would face automatic penalties if budget deficits ran too high.
But not everyone on Wall Street was reassured that Europe would get control of its 2-year-old debt crisis.
Stock prices rose and borrowing costs for European governments dropped sharply in response to the changes proposed on Monday by French President Nikolas Sarkozy and German Chancellor Angela Merkel. But some of the optimism faded late in the day when Standard and Poor's threatened to cut its credit ratings on 15 eurozone countries, including the likes of Germany, France and Austria which have been considered Europe's safest government debt issuers.
The announcement came only hours after Sarkozy and Merkel revealed sweeping plans to change the EU treaty in an effort to keep tighter checks on overspending nations. The proposal is set to form the basis of discussions at a summit of EU leaders on Thursday and Friday that is expected to provide a blueprint for an exit from the crisis.
New currencies to lose value in euro breakup
6 December 2011 Since people are worrying about the euro zone breaking up if leaders can’t agree on how to deal with the out-of-control debt of some countries, the next natural question is: so what’s that mean for returning to individual currencies?
Well, Nomura did some research on it, and tried to quantify a way to value new national currencies based on the current misalignment of the real exchange rate (for instance, the euro now around $1.34 is way too strong for Greece but a little weak for Germany) and future inflation risk.
“Our estimates suggest significant depreciation risk for a number of euro-zone countries,” said Jens Nordvig, global head of the G-10 foreign exchange strategy at Nomura Securities.
Fair value for a new Greek currency, whether reviving the drachma or not, would be almost a 60% depreciation, to around 57 U.S. cents, he said.
Portugal’s currency would be worth 47% less, while Ireland, Italy, Belgium and Spain would all see a depreciation of roughly 25% to 35%, according to Nomura.
And of course, Germany, which formerly used deutsche marks, would be 1.3% stronger – the only one to go up.
Downgrade threat could prove final blow to euro rescue fund
The threat of a credit downgrade to the euro zone's top economies leaves the bloc's EFSF bailout fund dangerously exposed, piling yet more pressure on the European Central Bank to step in as lender of last resort.
The fund has struggled to attract investors even with the backing of six AAA-rated governments, and on Tuesday S&P followed up a warning of possible downgrades for 15 euro economies by saying it is also reviewing the EFSF.
Expanding the lending reach of the European Financial Stability Facility (EFSF), agreed at an emergency summit in October, is central to the euro zone's plan to show investors it can stand behind its wayward sovereigns.
But much of the fund's ordinal appeal lay in the top creditworthiness of its guarantors, notable the euro's main paymaster Germany and France, the EFSF's second largest contributor.
Why S&P wields so much power in European crisis
December 6, 2011 NEW YORK
S&P, credit rating agency that downgraded US, injects itself into European debt drama.
What S&P says about the creditworthiness of European countries, or just about any other financial entity, still matters a great deal.
Until this week, the fate of Europe seemed to hang on the decisions of three power brokers — the president of France, the chancellor of Germany and the head of the European Central Bank.
Add a surprising fourth: Standard & Poor's, the credit rating agency.
S&P ripped into American politicians last summer for failing to address long-term debt and stripped the United States of its top-flight credit rating. Now it is essentially warning Europe to fix its debt problem — or else.
Critics of S&P have questioned its credibility and relevance because it failed to foresee the collapse in the U.S. subprime mortgage market, which helped trigger the financial meltdown of 2008.
Downgrade threat, Geithner push EU to agree plan
BERLIN - European nations were pressed Tuesday by a credit downgrade threat and the U.S. Treasury chief to deliver on markets' huge hopes for a solution to the 2-year-old financial crisis engulfing the continent.
Germany and France downplayed Standard & Poor's warnings to downgrade 15 eurozone nations and Europe's bailout fund. But a downgrade of their AAA ratings would complicate their efforts to restore investor confidence in Europe.
Loans from the bailout fund have rescued Ireland, Portugal and Greece, but if the fund loses its own AAA rating, it could have to charge higher rates to rescue countries in the future, making it tougher for them to recover.
That heaps more uncertainty on the fund, which many had already dismissed as too small to bail out a country like Italy. Help from abroad also seemed unlikely — U.S. Treasury Secretary Timothy Geithner said the Federal Reserve has no plans to give money to the International Monetary Fund to bolster Europe's bailout fund.
Stocks close mixed as traders await Europe news
December 7, 2011 Stocks close mixed after trading in narrow range; traders await news from meetings in Europe
Optimism about a European debt-crisis summit this week rose and fell on Wednesday, but U.S. stock indexes barely budged. The Dow Jones industrial average closed 46 points higher; the Nasdaq composite index fell a fraction of a point.
Hopes have been building that the summit, which begins Thursday, will produce a lasting solution to Europe's two-year-old debt crisis.
French and German leaders sought to downplay those expectations. Traders have been hoping that European countries will link their budgets more closely and impose greater fiscal discipline on heavily indebted nations like Greece and Spain. Officials said Wednesday that a deal this week might include only some countries, and crafting a fuller plan might take until Christmas.
"The pattern has been get your hopes up, then be disappointed by EU summits, and that pattern has been in place for a while," said Steve Van Order, fixed income strategist at Calvert Investment Management.
Wall St falls on dashed euro-zone hopes, Germany's rejection
(Reuters) - Wall Street fell on Thursday after the European Central Bank dashed hopes that policy-makers were preparing a financial "bazooka" to contain the debt crisis, and Germany rejected some proposals to add power to the euro zone's bailout fund.
U.S. markets have been on edge all week in anticipation of a summit deal that would come to grips with the euro zone's growing debt crisis, and pave the way for greater action by the ECB to hold down bond yields.
But actions from Europe - both early and late in the day - were a stark disappointment.
Before the market's open, ECB President Mario Draghi discouraged expectations that the central bank would massively increase its purchases of government bonds after a crucial Brussels summit on Friday.
Shortly before the closing bell, Germany rejected some measures in draft conclusions from the summit, including giving the European Stability Mechanism (ESM) a banking license and issuing common euro-zone debt. U.S. stocks and the euro fell sharply following the news.
EU fails to agree on treaty change among 27 states: diplomats
December 9, 2011 BRUSSELS (Reuters) - The European Union failed to secure backing from all 27 countries to change the EU treaty at a summit on Friday, meaning any deal will now likely involve the 17 euro zone countries plus any others that want to join, three EU diplomats said.
An agreement at 27 fell through after British Prime Minister David Cameron demanded concessions that Germany and France were not willing to give, one of the officials said.
During nearly 10 hours of talks that lasted into the night, EU leaders did manage to reach agreement on a ceiling for the size of the euro zone's permanent bailout fund, the ESM, saying it would be capped at 500 billion euros.
That figure will be reviewed in July next year, when the ESM is due to come into force, the diplomats said.
The leaders also agreed to explore the idea of providing bilateral loans to the International Monetary Fund totalling 200 billion euros, with 150 billion of that coming from the euro zone , to bolster IMF resources to tackle Europe's debt crisis.
US bank warns of eurozone breakup pandemonium
Citigroup economist and former central banker Willem Buiter warned Thursday that a fully blown breakup of the eurozone could spell a global depression with unemployment of 20 percent and economic pandemonium.
Sketching a stark picture of the stakes facing European leaders as they gather in Brussels to discuss how to save the single currency, Buiter said a breakup would unlikely be planned, orderly or gradual.
Buiter, a former Bank of England policy maker, predicted in a research note that a breakup would be "disruptive, destructive and without any winners."
While arguing that Greece's potential default and euro area exit is manageable, the same events in Italy and Spain would wreak broad economic pain.
"A disorderly sovereign default and (euro area) exit by Italy would bring down much of the European banking sector."
"If Spain and Italy were to exit, there would be a collapse of systemically important financial institutions throughout the European Union and North America and years of global depression."
Cameron faces MPs over EU veto
December 12, 2011 David Cameron faces MPs to explain his decision to veto EU treaty changes, after his idiot deputy said it is bad for Britain.
They claim Cameron isolates the UK.
Cameron veto was to protect London from excessive intervention by Europe.
Britain wisely DOES NOT use the euro.
Europe Sliding toward financial crisis
Dec 7, 2011 Market Is Reliving Late Stages of 1930′s Depression
The Euro Crisis and the Apocalypse
US bank warns of eurozone breakup pandemonium
Eurozone banking system on the edge of collapse
Financial Collapse and War
Maurice Sklar prophecy
Global Economic Collapse, nation by nation
Germany Gets The Debt Blues As Euro Bonds Loom
Big companies bailing out Europe's banks
Jan 9 2012 LONDON (Reuters)
Borrowers turn lenders as banks tap firms for cash
Blue-chip names like Johnson & Johnson, Pfizer and Peugeot are among firms bailing out Europe's ailing banks in a reversal of the established roles of clients and lenders.
One source with knowledge of the so-called repo deals or short-term secured lending, said the two U.S. pharmaceutical groups and Frenc
Europe's banks are struggling to secure the cash to fund their day-to-day business and have largely stopped lending to each other for fear Europe's sovereign debt crisis could land any of their peers in trouble.
As a result a group of well-known, cash-rich companies with solid cash flows has stepped in the repo market, which provides a form of lending so far almost exclusively in use between banks, and between banks and central banks.
One market participant said in one key area of lending companies now accounted for 25 percent of these deals.
Repos provide the new financiers with the strict guarantees they need before parting with their cash, answering worries that the crisis has weakened Europe's banks to the extent that they might not be able to pay the money back.
"Companies in the past were ... happy to deposit cash on an unsecured basis to a bank for an interest payment," said Frank Reiss, who oversees some of the repo business at Euroclear, the Brussels-based settlement house owned by a group of banks.
"Now following the crisis, we have seen that companies are engaging in repos secured with collateral against the cash they are lending," said Reiss. Euroclear is the largest administrator of repo trades in Europe.
At the moment the European Central Bank provides the main lifeline for banks and has pumped hundreds of billions of euros of cash into the market.
But the banks are parking most of the money they borrow back at the ECB rather than trusting to lend to each other.
They are also paying insurers and pension funds to take their illiquid bonds in exchange for better quality ones, in a desperate bid to secure much-needed cash from the ECB, which only provides cash against collateral.
In stark contrast, Europe's biggest companies are sitting on cashpiles that amount to more than $20 billion each in the case of BP Plc and Volkswagen.
According to Moody's, a sample of European companies held $872 billion cash in total at the middle of 2011.
It is typically these very large companies, with reliable cash flows, that engage in repo deals with banks, Euroclear's Reiss said, though he declined to give the names of any counterparties, because of client confidentiality.
Corporate treasurers are typically extremely wary of talking about their day-to-day cash management, and Johnson & Johnson, Pfizer declined to discuss the matter. Peugeot was not available for comment, while other large companies contacted by Reuters also declined comment.
Regulators cracking down on "shadow banking" -- closed-door deals blamed in part for the 2008 financial crisis -- have expressed worries about how opaque the repo market is, and the U.S. Federal Reserve has set up a working group to suggest reforms.
The rise in repos means more business for companies such as Euroclear and its main rival Clearstream -- owned by Deutsche Boerse -- as well as Bank of New York Mellon, JP Morgan and State Street.
In a repo trade, one party buys collateral from the other, with the obligation to sell it back at a pre-defined later date and for a slightly lower price -- the so-called haircut. That way, the seller provides cash to the buyer.
When companies rather than banks engage in repo deals they typically rely on a third party for administering the collateral, in what are known as triparty repos.
The triparty market grew at 22.3 percent in the first half of last year, a survey by the International Capital Market Association (ICMA) showed, versus only a modest rise in the overall business, further prove that companies are increasingly accessing the market.
"It shows you that triparty is growing, but ... not the banks themselves," said Richard Comotto, an academic who is involved in drawing up the survey. "I would say triparty is very growing strongly among corporate treasurers."
The European repo market was worth 6.2 trillion euros ($7.88 trillion) in the first half of 2011, according to ICMA's September survey. The vast majority of business conducted was between banks, and banks and central banks.
Other than the ICMA survey, few numbers are available.
Based on his daily practice, Euroclear's Reiss estimated that up to 25 percent of the triparty market was on behalf of companies, a massive and sudden rise from the 2 to 5 percent where it had traditionally been.
Euro Elections may signal prophetic shift toward beast empire
May 15, 2012 Bill Wilson
Many bible scholars have predicted that a revised Roman Empire will rise to power over the world and usher in the antichrist of the end times. Another theory suggests the antichrist beast empire may arise from Islamic/Arab nations. These countries are unquestionably the nations mentioned in all prophecies regarding the Day of the Lord as receiving judgment for coming against Israel. European nations are not routinely mentioned, but that does not exclude them from participating in coming against Israel. Notwithstanding, there may be a prophetic shift taking place as European election results point toward advancing debt-creating socialism that will impact nations as the end times draw near.
France’s president Nicholas Sarkozy was ousted by socialist Francois Hollande, who promises to raise taxes on the rich to over 70% and increase social programs. French voters rejected more austere measures in favor of a tax and spend socialist. Germany’s Chancellor Angela Merkel has been on the forefront of leading Europe out of economic morass created by deficit spending. Her somewhat fiscally responsible approach has been rejected by German voters as her party took the worst thrashing since World War II. Members of her Christian Democratic Party lost to a gaggle of socialists. Greece’s voters are also going socialist. Italy, Portugal, Spain and other nations continue in economic decline.
Americans face an election after socialist theories carried out by its leaders created historic debt and deficits. The candidates for the US presidency do not appear to have a plan that would drastically change the path of this debt ridden nation. Irrespective of your end time view of where the antichrist beast nation will arise, there is one thing for certain: The nations of the earth are dividing themselves. Europe and America are continuing down a track of economic and moral decay. The results of such historically would point toward a spectrum of outcomes ranging from a lesser role in world leadership to outright takeover and/or submission to another system or country.
Whether these weaknesses result in a European-style socialistic union or the rise of a new Islamic world order, or something in between, the mindset of voters appears to be shifting into alignment with end time prophecies. Theologians will argue their cases until they are proven or disproved with certainty. It is difficult, however, to deny that the world power base is shifting into the hands of centrally controlled concepts and the men that compete to rule them. Christians have a responsibility to be salt and light. Yeshua said in Matthew 24:13,14, “But he that shall endure unto the end, the same shall be saved. And this gospel of the kingdom shall be preached in all the world for a witness unto all nations; and then shall the end come.”
Lloyds of London preparing for euro collapse
27 May 2012 The chief executive of Lloyds of London publicly admitted they are prepared for a collapse in the single currency and reduced its exposure as much as possible.
Richard Ward said the London market had put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandoned the euro.
He also revealed Lloyds could have to take writedowns on its investment portfolio if the eurozone collapses.
Europe accounts for 18pc of Lloyd's £23.5bn of gross written premiums, mostly in France, Germany, Spain and Italy.
The market also has a fledgling operation in Poland.
Lloyd's move comes as a major Franco-German provider of credit insurance for eurozone trade, Euler Hermes, said it was considering reducing cover for trade with Greece because of the risk the country might leave the eurozone.
When a company goes bust, it is often sparked by withdrawal of credit insurance for suppliers wanting to trade with it.
This euro crisis is now getting extremely serious. Events are happening quickly, closing-in on policy-makers and threatening to engulf us.
Across the single currency zone, fears are rising and, even in the most moderate nations, populations are becoming more restive. History is locked on fast-forward.
Some say that seemingly arcane economic policy debate doesn't matter. In the UK, in particular, but across much of the rest of Western Europe too, the political and media classes have long displayed a tendency to roll their eyes whenever anybody with even a smattering of economic insight has had the audacity to show it.
For the bien pensants, ignorance of financial issues has been a badge of honour. Economics has been dismissed as a "trade". To hold well-researched views about commerce and asset markets has been seen to be a suspect arriviste "striver". Such is the prejudice of those cosseted from economic reality, their minds dulled by generations of inherited wealth. Well, such minds created the euro and what a disaster the euro has been. And the greatest disaster could yet be to come.
Let what is now happening in Europe serve as a reminder, a 28 million decibel wake-up call that serious economic debate matters and matters a lot. Attempts to dismiss or even suppress it, because it's "hard" or "boring", have very real human consequences.
In the run-up to the eurozone's launch, there was almost no popular discussion of its inherent technical flaws. Those of us who tried to air such concerns, to wield the lessons of history, were dismissed as "xenophobes" and "cranks". So we've ended up with a eurozone so replete with inherent contradictions that it threatens now to spark financial meltdown across Europe and serious civil unrest.
LIBOR GOLD, Bank scandals 2012
Global Economic Collapse, nation by nation, multiple pages
RUMOR * Nuke London Sept. 9, 2012? RUMOR
10 countries for a United States of Europe
20 June 2012 Ten EU foreign ministers participating in a “study group for the future of Europe” aim to exert pressure to transform the EU into a federation along the lines of the US. Together they have prepared what the front-page headline in Die Presse describes as a “Plan for transformation into a European state.” On 19 June, the ten ministers* presented an initial report to the EU officials who will likely benefit the most from the initiative: Commission President José Manuel Barroso, European Council President Herman Van Rompuy, European Central Bank President Mario Draghi and Eurogroup President Jean-Claude Juncker.
The “study group for the future” initiated by Germany's Guido Westerwelle, which does not currently include an official French representative, proposes to put an end to the dominance of national government leaders and give greater authority to the European Commission – in particular the European Commission president, who will be elected by universal suffrage and granted the right to form a “governmental team”, making him or her the most powerful politician in Europe.
The group also recommends replacing European councils of ministers and heads of state with a chamber “of states” in the European parliament. National competencies, most notably the management of borders, defence and public spending will be transferred to the federation, “making membership of the euro irreversible.”
Die Presse argues that it is not surprising to see diplomats from countries which have lost all of their influence since the Treaty of Nice, signed in 2001, and even more so since the outbreak of the crisis, make a bid to play a more important role. However, the daily concludes –
A clearly defined democratic system resembling a state would probably not be in accord with the mood of several sections of the population. But everyone who wants to safeguard the euro, the single market and political stability, while preventing a widening wealth gap between the North and the South and a reinforcement of nationalist trends will ultimately accept that it is the best way forward.
* Foreign ministers from Germany, Austria, Belgium, Denmark, Italy, Luxembourg, the Netherlands, Poland, Portugal and Spain.
Obama asks eurozone to keep Greece in until after election day
August 2012 US officials are worried that if Greece exits the eurozone, it will damage President's election hopes
The Obama administration will pressure European governments not to let Greece fall out of the eurozone before November's Presidential elections, British Government sources have suggested.
Representatives from the International Monetary Fund, the European Central Bank and the European Commission are due to arrive in Athens next month to assess Greece's reform efforts.
They are expected to report in time for an 8 October meeting of eurozone finance ministers which will decide on whether to disburse Greece's next €31bn aid tranche, promised under the terms of the bailout for the country.
American officials are understood to be worried that if they decide Greece has not done enough to meet its deficit targets and withhold the money, it would automatically trigger Greece's exit from the eurozone weeks before the Presidential election on 6 November.
18 Indications Europe Has Become An Economic Black Hole Which Is Going To Suck The Life Out Of The Global Economy
September 2012 - and millions of Europeans are returning from vacations.
During August economic conditions degenerated in Europe, now the European debt crisis takes center stage.
If there is going to be a financial panic, it typically happens in the fall.
Oct 2011 -: 2 or 3 weeks til global financial collapse
And the year before that too .. so ...
9/11/1990 - Bush I calls for a New World Order
9/11/2001 - Terrorist attacks on the WTCs in NYC and the Pentagon happen
9/11/2012 - Question
Notice the number 11, and how 11 years are elapsed b/w each time period. No, I am NOT saying anything will happen next week, but the next week and a half is something to keep an eye out on with what's going on in the global economic world, in particularly over Europe.
An equity strategist for Goldman Sachs [GS 106.41 0.69 (+0.65%) ] is predicting a September selloff that happens so rapidly he is telling clients to protect themselves before Sept. 14.
The reason: Market disappointment over key meetings of the European Central Bank and Federal Reserve—all within the next 10 days.
An ECB Governing Council meeting takes place this Thursday amid growing expectations that ECB President Mario Draghi will lay out some dramatic measures, such as bond purchases or yield caps.
The Fed, meanwhile, meets on Sept. 12 and 13 amid hopes that the central bank will decide on a third round of quantitative easing.
Euro zone enters dangerous week
The euro zone enters a dangerous week, strewn with potential landmines, in a somewhat more optimistic mood after investors welcomed a European Central Bank plan to prevent a breakup of the single currency.
German judges, Dutch voters, IMF inspectors and Brussels regulators could all spring surprises that make it harder to resolve a sovereign debt crisis which is almost three years old and weighing on the world economy.
Germany's constitutional court rules then on the legality of the euro zone's permanent financial rescue fund, the European Commission unveils detailed plans for a euro zone banking union, and the Netherlands holds a cliff hanger general election.
Then European finance ministers meet in Cyprus from Friday to try to thrash out differences over banking supervision and possible extra aid for Spain, the zone's fourth biggest economy, and Greece, the problem country that first triggered the crisis.
Decisions on Spain and Greece are not likely until October, but the talks may point to whether Madrid will apply for European assistance, at the risk of unpalatable conditions and supervision, and whether EU and IMF inspectors are leaning towards allowing a vital aid installment to keep Athens afloat.
Europe has been holding its breath for two months for the German court ruling, a potential show-stopper.
All 20 legal experts polled by Reuters expect the judges to let the European Stability Mechanism and a European fiscal discipline pact go ahead, but most expect them to add tough conditions for future bailouts.
That could potentially tie Chancellor Angela Merkel's hands or, at the least, make her backing for bailouts politically even more difficult given a public backlash against last week's ECB decision to buy the bonds of vulnerable states.
If the court were to rule against the ESM, it would have a devastating effect on bond and currency markets, pushing the 17-nation currency zone deeper into turmoil by casting doubt on future rescues of heavily-indebted southern member states.
But if as expected it gives a green light, it may set out caveats that scare investors and complicate crisis-management.
Euro crisis to worsen, Greece could exit euro: Sweden's Borg
The eurozone crisis will get worse before it gets better and Greece could exit the single currency bloc within a year, Swedish Finance Minister Anders Borg said in an interview on Saturday.
"I don't think we've seen the worst yet in countries like Spain and Greece. They have such serious problems that Europe (Chicago Options: ^REURUSD - news) is going to be in a very difficult position during the next six to 12 months," Borg told public broadcaster Swedish Radio.
The Swedish finance minister, whose country is not a member of the eurozone, said he would not be surprised if Athens had to leave the 17-member euro bloc in the foreseeable future.
He stressed that while there was "much support" for the country in Europe, "we can't rule out the possibility that Greece will end up in a situation where it in practice leaves the euro in six, nine or 12 months."
Borg said he wasn't "sure how much we should dramatise" such a scenario.
"Banks in Europe are prepared for problems with Greece," he said, all the while acknowledging that "it could get a lot messier in Europe."
He said Athens had to ensure that its reforms were implemented and noted that political will was not the problem. Instead, reforms passed by parliament were not trickling down to authorities and being implemented as they should.
Borg was also of the opinion that Spain may need a bailout, saying there was "great uncertainty about how its regions are managing their public finances."
"I don't think you can rule out that ways will have to be found to help Spain," he said of the eurozone's fourth largest economy.
'Perfect storm' warning for world economy
September 8, 2012 Experts and leaders gathered in Italy may disagree on the cure, but the malady seems clear: the world economy faces a "perfect storm" of risks that include prolonged crisis in a structurally flawed Europe.
A world of such unpredictable peril is also one in which jitters suppress the appetite for private and corporate risk, yielding meager investment and low consumption and prolonging the woes that snuck up on a booming world in the summer of 2007 as a "credit crunch", mushrooming a year later into the Great Recession.
Many attendees at the annual Ambrosetti Forum at Lake Como on Friday fretted about mounting US debt and the Europe's inability to balance electorates' apparent insistence on national sovereignty with the need for regional coherence to salvage the teetering euro.
But economist Nouriel Roubini predicted years of gloom almost regardless of what is decided.
"History suggests that whenever (there is) a crisis with too much private debt first and public debt second you have a painful process of deleveraging," said Roubini, a glowering fixture at such international talk-shops.
"That would imply many years, up to a decade, of low economic growth. And guess what? Economic recovery in the US has been unending and in the eurozone and UK there's outright economic contraction right now, and that's not going to change unfortunately in the next few years."
The grim prognosis was consistent with new figures released a day earlier by the OECD, a club of the world's richest nations. Its report found that the global economy is slowing and that the G7 economies would grow at an annualised rate of just 0.3 per cent in the third quarter of 2012. Furthermore, the OECD found, the continuing eurozone crisis "is dampening global confidence, weakening trade and employment and slowing economic growth" worldwide.
How to fix the eurozone, then? The different views are familiar.
Increasingly popular is the argument that it is fundamentally illogical to allow a country to blunder into massive debt if it doesn't have the monetary tools to diminish its debt - lacking a currency to devalue.
Roubini said that the only solution was to extend the euro's monetary union in the direction of a banking, fiscal or even political union, at least to the point of having a single eurozone finance minister empowered to veto individual countries' budgets for exceeding a given deficit limit. "Today the eurozone is disintegrating. ... either move forward or you're going to fall off a cliff."
But others noted that the offer by ECB president Mario Draghi is highly conditioned.
"The decision by the ECB is extremely important but ... the ECB is only one instrument (and) if governments do not do their part the ECB will not be able to succeed," said JPMorgan Chase International chairman Jocob Frenkel.
It was easier to find common ground on the question of the United States - with great concerns that country is headed toward another debt-ceiling crisis because regardless of the presidential election outcome Democrats and Republicans cannot agree on how to close a deficit that is digging an ever deeper debt hole.
"The largest economy of the world cannot continue this way without doing any kind of predictability about what is going to happen," said Babican. "We don't know much about the budget of 2012 and we don't know what kind of fiscal policy there will be in 2013. A fiscal cliff is coming."
Also clouding the atmosphere was the slowdown in emerging nations - including China, despite growth there that remains far higher than in the West.
"Seven per cent growth may seem high, but for China, which had double-digit growth for 20 years, it really means bad news," said Li Cheng, a China expert from the Brookings Institute.
The final element of what Roubini described as the "global perfect storm" is the possibility of an attack by Israel or the United States on Iran because "it's clear that negotiations have failed" on stopping Iran's nuclear ambitions. "The last thing the world needs given its fragility is another war in the Middle East and a spike in oil prices," Roubini said.
Germany approves bailout fund – now Barroso wants to create a federal future
Sept 13, 2012 Europe hopes it has taken a major step towards stability but EC President calls for more.
Ambitious proposals for a federal Europe were spelt out yesterday by the European Commission President, José Manuel Barroso, in a controversial speech which argued that deeper political and fiscal union were the only ways of preventing future crises in the eurozone.
In an impassioned address to the European Parliament in Strasbourg, delivered only minutes before Germany's constitutional court approved the eurozone's permanent bailout fund, Mr Barroso attempted to counter Eurosceptic criticism by insisting that he was not calling for a "European super-state".
However, the head of the EU's executive arm added that "we will need to move towards a federation of nation states. This is our political horizon. This is what must guide our work in the years to come." Although he admitted that such a shift could only be completed under a new EU treaty, Mr Barroso blamed the euro crisis on the lack of political cohesion within the European Union, which he said had served only to undermine the currency bloc's credibility among Europe's citizens and on the financial markets.
The crisis, he concluded, had revealed the need for a "leap forward" in political integration to complement current moves to harmonise EU economic and fiscal policies. Europe, he insisted, needed a "democratic federation of nation states that can tackle our common problems, through the sharing of sovereignty in a way that each country and its citizens are better equipped to control their own destiny".
At the same time Mr Barroso unveiled proposals for unified EU banking supervision of some 6,000 banks across the Continent under the auspices of the European Central Bank. He said that such a move would be a "quantum leap" towards a full banking union. Mr Barroso said he would submit ideas for the notoriously difficult process of European treaty change before the next EU elections in 2014 to enable a full and wide-ranging debate on Europe's future.
His calls for a federalist Europe were a significant policy switch for the former Portuguese Prime Minister who until yesterday had taken a cautious line on the ideological issue of how closely EU member states should integrate and how much national sovereignty they should cede to Brussels.
His speech appeared certain to provide ammunition for Eurosceptic groupings in Europe, not least the Conservative Party in the UK, which remain deeply opposed to the idea of devolving more power to Brussels. Martin Callanan, leader of the European Conservatives and Reformists, described the speech as "more of the same old tired approach" and said it was " the knee-jerk reflex of the European elite".
Guy Verhofstadt, the leader of the Alliance of Liberal Democrats, also criticised Mr Barroso, saying that the EU first needed to deepen the structures it already had. "No, no, no, no federation of nation states. That's more of the same. That's more of what we have already," he complained.
However, in a reference to the European debt crisis, Mr Barroso said: "Many will say this is too ambitious and that it is not realistic – but let me ask you this – is it realistic to go on like we have been doing?"
The Commission President was optimistic about prospects for Greece staying in the EU. The Athens government is under the scrutiny of the so-called Troika – inspectors from the International Monetary Fund, the European Commission and the ECB – who are assessing Greece's progress in implementing financial reforms.
"I truly believe that we have a chance this autumn to come to a turning point," he said.
Mr Barroso's proposals for a banking union are an attempt to tackle one of the most pressing issues in the eurozone crisis, not least in the case of Spain, where weakness in the banking sector threatens the wider economy.
"The Commission is presenting legislative proposals for a single European supervisory mechanism," he told the European Parliament. "This is a quantum leap – a stepping stone towards a banking union."
The proposed banking union is expected to involve three steps: the European Central Bank would first be empowered to monitor the activities of all eurozone banks, and others within the European Union which agree to such a process. A fund would be set up to finance the closure of failing banks, and this would be coupled with a scheme to protect deposits across the eurozone.
Italian anger over claims of City mis-selling
Several banks based in the City of London have been accused of mis-selling financial products to Italy. Nomura, UBS and Deutsche Bank are among those alleged by Italian prosecutors to have mis-sold £28bn of derivatives to the country's cities and regions.
One source of anger is that the Italians believe the UK Financial Services Authority was aware of the allegations, but failed to follow them up and indeed asked a whistleblower to stop contacting it.
In the 10 years after 1997, Italian regions borrowed about £111bn from the banks with deals that offered what seemed to be attractive rates of repayment. But the repayments were dependent on the performance of complex swap derivatives which ended up costing the Italians far more than they expected.
BBC's Newsnight claims that the FSA was aware of the mis-selling allegations.
Claudi Gatti, an investigative journalist with Il Sole 24 Ore, told the BBC: "The banks didn't provide sufficient information to local authorities on the risk they were taking."
The banks declined to comment, noting that the issue is now before the Italian courts.
Dutch poll tests austerity fears
Dutch voters went to the polls yesterday to pick a new parliament in a test of the support for stringent austerity measures which are set to influence the way Europe tackles the debt crisis.
The election has boiled down to a race between the VVD party of Prime Minister Mark Rutte, and Labour, led by Diederik Samsom.
While Mr Rutte is an ally of the German Chancellor Angela Merkel and supports her austerity agenda, Mr Samsom is closer to French President François Hollande.
Cyprus approves budget as bailout talks continue
Sept 22, 2012 NICOSIA, Cyprus (AP) — Cyprus approved next year's budget Saturday without releasing any figures because of the country's ongoing bailout talks with potential creditors.
The "tight" budget incorporates additional spending cuts, slashes an additional 1,000 positions from the bloated public sector by hiring to fill only a quarter of jobs vacated by retiring workers, while channeling funds for growth-boosting infrastructure projects, government spokesman Stefanos Stefanou said.
Budget figures were being withheld because they will change once bailout terms and conditions agreed with the European Commission, the European Central Bank and the International Monetary Fund — collectively known as the troika — are adopted, Stefanou said.
Cyprus, whose €18 billion ($23.38 billion) economy is one of the smallest in Europe, has been unable to borrow from international markets since last year after its credit rating was cut to junk mainly because of its banks' large exposure to debt-ridden Greece. In June, the country joined fellow eurozone members Ireland, Portugal and Greece in seeking international aid to support its banks.
Europe's most powerful countries call for elected EU president
Germany, France and nine other of Europe's most powerful countries have called for an elected European Union president and an end to Britain's veto over defence policy in a radical blueprint mapping out the continent's future.
In a document released on Tuesday after a meeting between 11 foreign ministers in Warsaw, the bloc, which includes all the largest European countries outside Britain, charted a vision for the "future of Europe".
As well as calling for a single, elected head of state for Europe, the bloc demanded a new defence policy, under the control of a new pan-EU foreign ministry commanded by Baroness Ashton, which "could eventually involve a European army".
In order to "prevent one single member state from being able to obstruct initiatives", a reference to British opposition to a European army, the German-led grouping demanded an end to existing national vetoes over foreign and defence policy.
This would give the EU the power to impose a decision on Britain if it is supported by a majority of other countries.
The plan, which has the backing of Germany, France, Italy, Spain, Poland, Holland, Austria, Belgium, Denmark, Luxembourg and Portugal the plan, is likely to fuel calls for a British referendum on membership of the European Union.
The document also proposed sweeping new powers for the European Parliament and further splitting of the EU by creating a new parliamentary sub chamber for the 17 countries of the eurozone.
In a joint statement, Guido Westerwelle and Radek Sikorski, the foreign ministers of Germany and Poland, called for the creation of a single EU President, running the commission and overseeing regular summits, who is directly elected by voters in a pan-European vote "on the same day in all member states".
"For Europe to be a truly strong actor and global leader it needs a strong institutional setup," said Mr Westerwelle and Mr Sikorski. "It needs a directly elected president who personally appoints the members of his "European government'."
In another major change, the 11 countries urged that changes to European treaties should in future be adopted and implemented "by a super-qualified majority of the EU member states" instead of by unanimity, meaning treaties can no longer be blocked from entering into force by No votes in popular referendums.
The document follows last week's call by Jose Manuel Barroso for the EU to become a "federation" and growing calls in Britain for a referendum on any new European treaty or constitution.
A British Government spokesman said: "This is one contribution to the debate, which is just starting. The United Kingdom will play a full and active role in that debate."
Nigel Farage, the leader of Ukip, described the proposed EU constitution, which has emerged in response to the eurozone crisis, as a "new European settlement".
"It looks and is entirely hostile to the hopes and aspirations of this country. The government wants to negotiate, so does the Continent, but they are at cross purposes," he said. "We now know what they want, we know we won't get what we want, so now is the time to offer the people a choice on our membership of the EU."
The major intervention by five of six biggest EU countries will increase calls from the Conservative backbenches in the House of Commons for a referendum on Europe.
Steve Baker, the Tory MP for Wycombe, warned that proposals to strip Britain of its veto over defence or foreign policy would be "the end of the UK as an independent country".
"The EU is emerging as a fully-fledged state that is not under democratic control," he said. "Any idea of making these changes without the overwhelming consent of the British people would be criminal."
Single euro-zone budget gains momentum ahead of summit
October 7, 2012 Debate about the idea of creating a separate budget for euro zone countries is intensifying in the run up to an EU summit later this month, with less opposition to the proposal than many officials first expected, diplomats say.
At a private dinner held last week among the EU ambassadors of several northern European countries, including Britain, Denmark, the Netherlands and Finland, those present were surprised to find a fair degree of consensus on the proposal.
"I wouldn't say that there was strong support for it, but there was certainly a feeling that this is an idea that should be explored in more detail," said one diplomat briefed on the discussion that took place at the gathering.
The single budget proposal was first sketched out by Herman Van Rompuy, the president of the European Council, in a paper circulated in September as part of an effort to stimulate debate about how Europe's monetary union should be improved.
In the paper, Van Rompuy said a "fully fledged fiscal union" among the 17 countries that share the euro could involve the creation of a single treasury office and "a central budget whose role and functions would need to be defined".
Those suggestions have since been refined into guidelines that will form the basis of discussion among EU leaders at the summit on October 18-19. The idea will also be explored among euro zone finance ministers at a meeting in Luxembourg on Monday.
There is still no clear definition of what a single, central budget would entail, but Germany strongly supports the idea and France is on board too, which in terms of euro zone decision-making means it has substantial momentum.
Britain's support, underlined by Prime Minister David Cameron on Sunday, is also significant, even if it stems more from a desire to distance Britain from the problems of the euro zone than from any solidarity with the single currency club.
"There will come a time when you need to have two European budgets, one for the single currency, because they are going to have to support each other more, and perhaps a wider budget for everybody else," Cameron told the BBC on Sunday, the first day of his Conservative Party's annual conference.
"I don't think we will achieve that this time, but it is an indicator of the way that Europe is going," he said.
Nobel Peace Prize awarded to European Union
October 12, 2012 The European Union has been awarded the Nobel Peace Prize for six decades of work in advancing peace in Europe.
The committee said the EU had helped to transform Europe "from a continent of war to a continent of peace".
The award comes as the EU faces the biggest crisis of its history, with recession and social unrest rocking many of its member states.
The last organisation to be given the prize outright was Medecins Sans Frontieres, which won in 1999.
Announcing the award, Nobel committee president Thorbjoern Jagland acknowledged the EU's current financial problems and social unrest.
But he said the committee wanted to concentrate on the EU's work over six decades of advancing "peace and reconciliation, democracy and human rights".
EU detractors slam Nobel Peace Prize decision
While some Europeans swelled with pride when the European Union won the Nobel Peace Prize, howls of derision erupted from the continent's large band of skeptics.
To many in the 27-nation bloc, the EU is an unwieldy and unloved agglomeration overseen by a top-heavy bureaucracy devoted to creating arcane regulations about everything from cheese to fishing quotas. Set up with noble goals after the devastation of World War II, the EU now appears to critics impotent amid a debt crisis that has widened north-south divisions, threatened the euro currency and plunged several members, from Greece to Ireland to Spain, into economic turmoil.
The vocal anti-EU politicians known as euroskeptics burst into a chorus of disdain.
"First Al Gore, then Obama, now this. Parody is redundant," tweeted Daniel Hannan, a euroskeptic European lawmaker — yes, such things exist — from Britain's Conservative Party. President Barack Obama won the peace prize in 2009, less than a year after he was elected, while Gore, a former U.S. vice president, was the 2007 recipient for his campaign against climate change.
Nigel Farage, head of the U.K. Independence Party — which wants Britain to withdraw from the union — called the peace prize "an absolute disgrace."
"Haven't they had their eyes open?" he said, arguing that Europe was facing "increasing violence and division," with mass protests from Madrid to Athens over tax hikes and job cuts and growing resentment of Germany, the union's rich and powerful economic anchor.
And Dutch populist lawmaker Geert Wilders scoffed: "Nobel prize for the EU. At a time (when) Brussels and all of Europe is collapsing in misery. What next?"
Eurozone Compromise Bank Dicktator
19 October 2012 EU leaders have agreed to set up a single eurozone banking supervisor, a major step towards a banking union to be in place by 1 January 2013.
He will have the power to intervene in any bank within the eurozone.
The deal appears to be a compromise between France and Germany.
Lending still weak in slack eurozone economy
Oct 2012 FRANKFURT, German (AP) — Another drop in lending to companies in the 17-country eurozone showed the economic downturn is deepening, as a brighter mood on financial markets fails to catch on with businesses.
The European Central Bank said Thursday that loans to non-bank businesses shrank 1.4 percent year on year in September, double the 0.7 percent contraction reported the month before.
The numbers show the economy is struggling despite efforts by the central bank to stimulate credit and calm financial markets fearful that the eurozone might break up. The ECB has cut its main interest rate to a record low 0.75 percent and made €1 trillion ($1.3 trillion) in cheap loans to banks that don't have to be paid back for three years.
Even so, that easy money is not making it from banks to businesses and consumers, largely because demand for credit remains weak.
Businesses see no reason to borrow to invest in expanding production. Meanwhile, banks in some countries have less to lend because they are struggling to recover from losses on real estate loans that didn't get paid back and on government bonds that have fallen in value due to fears about those governments' finances.
The eurozone economy shrank 0.2 percent in the second quarter after zero growth in the first quarter, and the outlook for the rest of the year remains poor. A drop in output in the third-quarter — for which numbers are due Nov. 15 — would put the eurozone in a technical recession, defined as two consecutive quarters of contraction.
Eurozone unemployment rises to new record
LONDON (AP) — Unemployment in the 17-country eurozone hit a record high of 11.6 percent in September, official figures showed Wednesday, a sign the economy is deteriorating as governments struggle to get a grip on their three-year debt crisis.
The rate reported by Eurostat, the EU's statistics office, was up from an upwardly-revised 11.5 percent in August. In total, 18.49 million people were out of work in the eurozone in September, up 146,000 on the previous month, the biggest increase in three months.
While the eurozone's unemployment rate has been rising steadily for the past year as the economy struggled with a financial crisis and government spending cuts, the United States has seen its equivalent rate fall to 7.8 percent. The latest U.S. figures are due this Friday.
With the eurozone economy fading, most economists think unemployment will keep increasing over the coming months and that the deteriorating economic picture will soon spook investors again after a brief hiatus.
"Financial markets have calmed somewhat, but we expect that the deteriorating economy will soon enough lead to more crisis headlines," said Tim Ohlenburg, senior economist at the Centre for Economics and Business Research
Five countries in the eurozone are already in recession — Greece, Spain, Italy, Portugal, and Cyprus — and others are expected to join them soon.
Italian Newspapers Report Secret Bilderberg Meeting in Rome
Nov. 21, 2012 Various newspapers and online articles in Italy are suggesting that a good portion of the Bilderberg group, at least 80 of them, have been called to Rome this week for a secret meeting regarding the engineered Euro financial crisis and the unrest that has come as a result.
This meeting is particularly unusual because it is so small and informal, but it is possible that they may have switched up their tactics after the massive turnout for this year’s Bilderberg protest. It is also possible that these smaller meetings happen all the time, but were always able to slide under the radar.
This meeting is also unusual because they aren’t renting out an entire hotel, in fact, they are using a hotel that is hosting a massive event at the same time. The hotel they have chosen is “the De Russi”, which is the site of this year’s International Film Festival, so that was either a major scheduling error or an attempt to hide in plain sight.
Despite all of the commotion surrounding the hotel this week, local publications were able to publish detailed lists of those who are attending the event. Most of the publications to cover the meeting are suggesting that the topic of discussion will be the new commissioner for Spain, Greece, Italy and other areas of the European Union that are in dire economic crisis.
Eurozone back in recession in Q3
Eurozone back in recession as official figures show 0.1 percent quarterly contraction in Q3
The 17-country eurozone has bowed to the inevitable and fallen back into recession for the first time in three years as a sprawling debt crisis took its toll on the region's stronger economies.
And with surveys pointing to increasingly depressed conditions across the eurozone at a time of high unemployment in many countries, there are fears that the recession will deepen, and make the debt crisis even more difficult to handle.
Official figures Thursday showed that the eurozone contracted by 0.1 percent in the July to September period from the quarter before as economies including Germany and the Netherlands suffer from falling demand.
The decline reported by Eurostat, the EU's statistics office, was in line with market expectations and follows on from the 0.2 percent fall recorded in the second quarter. As a result, the eurozone is officially in recession, commonly defined as two straight quarters of falling output.
New Euro Currency Shows Woman Riding The Beast
Nov. 9, 2012 New euro notes to show tragic princess
In Greek mythology, the Phoenician princess Europa was abducted and raped by the king of the gods, Zeus.
But her image will from next year replace pictures of windows and doors on euro banknotes as a security and deocrative feature.
"Portraits have long been used in banknotes around the world and research has shown that people tend to remember faces. Is there any better figure than Europa to serve as the new face of the euro?" the chief of the European Central Bank (ECB), Mario Draghi, said on Thursday (8 November) according to Bloomberg.
She will first appear on the €5 note in May, with other notes introduced in ascending order in the next few years.
Europa's face will be shown as a watermark and as a hologram. Until now, euro notes carried pictures of windows and doors in various architectural styles in a symbol of openness designed not to offend national sensibilities.
The new notes will also carry an emerald-coloured number.
The first series of banknotes will circulate alongside the old ones. But the old notes, first introduced 10 years ago, will eventually cease to be legal tender.
"The date when this occurs will be announced well in advance," the ECB said.
The old notes will retain their face value and will be exchangeable at any national central bank in the eurozone even when they are no longer valid in shops.
Meanwhile, counterfeiting euro notes has kept international law enforcement authorities busy.
In April, an international police sting in Bogota, Colombia dismantled a counterfeit print shop and depot manufacturing €50 and €100 bills.
Europol, the EU’s police agency, based in The Hague, said authorities seized over €19 million in counterfeit money in Columbia alone since 2006.
Well, this is pretty big b/c in previous times over the last couple of years, they've seem to have no problems in "reaching agreements" to give Greece whatever "aid" they need. Who knows if they "reach an agreement" ultimately(even though it won't be good for anyone either way). But nonetheless you have this in Greece, Spain, the entire Europe and here in the States, what's really escalating in the Middle East now...someone please pass us the popcorn...
Eurozone fails to reach deal on Greece aid
BRUSSELS (AP) — European Union officials failed Wednesday to reach a deal on giving Greece more aid, prolonging uncertainty over the future of the debt-hobbled country and the 17-member eurozone.
Jean-Claude Juncker, chairman of the meeting of finance ministers from the 17 countries that use the euro, said the talks, which lasted nearly 12 hours, will reconvene on Monday. It was the second consecutive meeting at which the ministers failed to agree on a deal, highlighting the depth of their divisions over how to handle Greece's huge debt problem without reaching more deeply into the pockets of their own taxpayers.
Juncker, however, said he was optimistic that a deal could be reached.
"We are very close to a result. We see no major stumbling block," he said. There are technical issues and calculations to be made in coming days, he said.
But Christine Lagarde, the managing director of the International Monetary Fund, which gives Greece bailout loans alongside the eurozone, sounded a more cautious note, saying only "we have narrowed the positions."
Cyprus close to a bailout deal with EU/IMF
Nov 22, 2012 NICOSIA (Reuters) - Cyprus is close to agreeing a bailout package with the European Union and IMF, President Demetris Christofias said on Thursday after the latest round of talks with the international lenders.
Two EU sources said the agreement was nearly done but would be completed only on Friday, when inspectors from the European Commission, European Central Bank and International Monetary Fund - together known as the troika - are likely to give their approval.
The Commission, asked about reports that a deal had been agreed, said it would only issue a statement on Cyprus on Friday.
"We will communicate on the outcome of the mission to Cyprus tomorrow," Commission spokesman for economic and monetary affairs Simon O'Connor said.
Tony Blair - It's Time for the Direct Election of a European President
Nov 22, 2012 [/b] BERLIN - From crisis can come opportunity. Out of this European crisis can come the opportunity, finally, to achieve a model of European integration that is sustainable. But right now this opportunity is heavily disguised. There is an old joke told about the stranger who asks the Irishman the way to his destination and is told "Well, I wouldn't have started from here."
We might be tempted to say the same about the way to resolve this crisis, and it would be equally futile. So I shall resist the irritating temptation of being the Brit outside the euro trying to tell everyone inside why it was a bad idea. First, because I don't think it is a bad idea. In principle, in the right political and economic context, a single currency along with a single market makes sense for Europe. Second, because in any event, we are where we are.
There is relevance, however, in understanding why this crisis is so acute. It is because monetary union was, in many ways, an idea motivated by politics but expressed in economics. So politics and economics had to be aligned. They weren't. So now, in the midst of crisis, they have to be. Countries whose economies are divergent have to converge. Since this requires a huge degree of integration in decision making, the politics will then have to shift to catch up to the economics. True economic union will imply a large measure of political union. This is the post-crisis challenge.
US, EU considering world's biggest free trade pact
US, EU looking at world's biggest free trade pact for much-needed economic boost
WASHINGTON (AP) -- After years of battling each other on trade issues, U.S. and European officials are contemplating a dramatic change in direction: joining together in what could be the world's largest free trade pact in an attempt to boost their struggling economies.
Discussions are in the most preliminary of stages and there would be significant obstacles to overcome, including sharp differences on agriculture, food safety and climate change legislation. Still, top EU and U.S. officials have said they want to see it happen. And America's main labor group, often the biggest opponent of U.S. trade pacts, says it wouldn't stand in the way.
Last month, Secretary of State Hillary Rodham Clinton signaled the Obama administration's interest during a speech on trans-Atlantic relations.
"If we get this right, an agreement that opens markets and liberalizes trade would shore up our global competitiveness for the next century, creating jobs and generating hundreds of billions of dollars for our economies," Clinton said.
Financial Collapse in 2013
The whole game is rigged. It’s ready to go down
Dec 23, 2012 Gerald Celente
Gerald Celente believes 2013 will see a massive financial collapse. (I have been hearing this for 3 years.)
The bond bomb is ready to explode.
Everyone knows that the whole game is rigged.
Its ready to go down.
Financials are Greek to me! But the things I am seeing are puzzle pieces of a Great Evil Puzzle I call the Beast system.
LIBOR, bank scandals
Global Economic Collapse
Euro-Collapse, 666, beast empire
World on the Prophetic Brink
If US govt expects panic due to financial collapse, thats why martial law
20 Facts About The Collapse Of Europe That Everyone Should Know
The economic implosion of Europe is accelerating. Even while the mainstream media continues to proclaim that the financial crisis in Europe has been "averted", the economic statistics that are coming out of Europe just continue to get worse. Manufacturing activity in Europe has been contracting month after month, the unemployment rate in the eurozone has hit yet another brand new record high, and the official unemployment rates in both Greece and Spain are now much higher than the peak unemployment rate in the United States during the Great Depression of the 1930s. The economic situation in Europe is far worse than it was a year ago, and it is going to continue to get worse as austerity continues to take a huge toll on the economies of the eurozone. It would be hard to understate how bad things have gotten - particularly in southern Europe. The truth is that most of southern Europe is experiencing a full-blown economic depression right now. Sadly, most Americans are paying very little attention to what is going on across the Atlantic. But they should be watching, because this is what happens when nations accumulate too much debt. The United States has the biggest debt burden of all, and eventually what is happening over in Spain, France, Italy, Portugal and Greece is going to happen over here as well.
The following are 20 facts about the collapse of Europe that everyone should know...
#1 10 Months: Manufacturing activity in both France and Germany has contracted for 10 months in a row.
#2 11.8 Percent: The unemployment rate in the eurozone has now risen to 11.8 percent - a brand new all-time high.
#3 17 Months: In November, Italy experienced the sharpest decline in retail sales that it had experienced in 17 months.
#4 20 Months: Manufacturing activity in Spain has contracted for 20 months in a row.
#5 20 Percent: It is estimated that bad loans now make up approximately 20 percent of all domestic loans in the Greek banking system at this point.
#6 22 Percent: A whopping 22 percent of the entire population of Ireland lives in jobless households.
#7 26 Percent: The unemployment rate in Greece is now 26 percent. A year ago it was only 18.9 percent.
#8 26.6 Percent: The unemployment rate in Spain has risen to an astounding 26.6 percent.
#9 27.0 Percent: The unemployment rate for workers under the age of 25 in Cyprus. Back in 2008, this number was well below 10 percent.
#10 28 Percent: Sales of French-made vehicles in November were down 28 percent compared to a year earlier.
#11 36 Percent: Today, the poverty rate in Greece is 36 percent. Back in 2009 it was only about 20 percent.
#12 37.1 Percent: The unemployment rate for workers under the age of 25 in Italy - a brand new all-time high.
#13 44 Percent: An astounding 44 percent of the entire population of Bulgaria is facing "severe material deprivation".
#14 56.5 Percent: The unemployment rate for workers under the age of 25 in Spain - a brand new all-time high.
#15 57.6 Percent: The unemployment rate for workers under the age of 25 in Greece - a brand new all-time high.
#16 60 Percent: Citigroup is projecting that there is a 60 percent probability that Greece will leave the eurozone within the next 12 to 18 months.
#17 70 Percent: It has been reported that some homes in Spain are being sold at a 70% discount from where they were at during the peak of the housing bubble back in 2006. At this point there are approximately 2 million unsold homes in Spain.
#18 200 Percent: The debt to GDP ratio in Greece is rapidly approaching 200 percent.
#19 1997: According to the Committee of French Automobile Producers, 2012 was the worst year for the French automobile industry since 1997.
#20 2 Million: Back in 2005, the French auto industry produced about 3.5 million vehicles. In 2012, that number dropped to about 2 million vehicles.
One thing that these shocking numbers cannot convey is the tremendous amount of pain that many average Europeans are living through on a daily basis at this point. To get a peek into what life is like in Greece these days, check out this short excerpt from a recent Bloomberg article...
Anastasia Karagaitanaki, 57, is a former model and cafe owner in Thessaloniki, Greece. After losing her business to the financial crisis, she now sleeps on a daybed next to the refrigerator in her mother’s kitchen and depends on charity for food and insulin for her diabetes.
“I feel like my life has slipped through my hands,” said Karagaitanaki, whose brother also shares the one-bedroom apartment. “I feel like I’m dead.”
For thousands of Greeks like Karagaitanaki, the fabric of middle-class life is unraveling. Teachers, salaries slashed by a third, are stealing electricity. Families in once-stable neighborhoods are afraid to leave their homes because of rising street crime.
All over Europe, people that have lost all hope are actually setting themselves on fire in a desperate attempt to draw attention. Millions of formerly middle class Europeans have lost everything and are becoming increasingly desperate. Suicide and crime are skyrocketing all over southern Europe and massive street riots are erupting on a regular basis.
Unfortunately, this is just the beginning. Things are going to get even worse for Europe.
Meanwhile, those of us living in the United States smugly look down our noses at Europe because we are still living in a false bubble of debt-fueled prosperity.
But eventually we will feel the sting of austerity as well. The recent fiscal cliff deal was an indication of that. Taxes are going up and government spending is at least going to slow down. It won't be too long before the effects of that are felt in the economy.
And of course the reality of the situation is that the U.S. economy really did not perform very well at all during 2012 when you take a look at the numbers. The cold, hard truth is that the U.S. economy has been declining for a very long time, and there are a whole bunch of reasons to expect that our decline will accelerate even further in 2013.
So if you are an American, don't laugh at what is happening over in Europe at the moment. We are headed down the exact same path that they have gone, and we are going to experience the same kind of suffering that they are going through right now.
Use these last few "bubble months" to prepare for what is ahead. At some point this "hope bubble" will disappear and then the time for preparation will be over.
Russia Says World Is Nearing Currency War as Europe Joins
16 January 2012 The world is on the brink of a fresh “currency war,” Russia warned, as European policy makers joined Japan in bemoaning the economic cost of rising exchange rates.
“Japan is weakening the yen and other countries may follow,” Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said at a conference today in Moscow.
The alert from the country that chairs the Group of 20 came as Luxembourg Prime Minister Jean-Claude Juncker complained of a “dangerously high” euro and officials in Norway and Sweden expressed exchange-rate concern.
The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room.
The risk is as each country tries to boost exports, it hurts the competitiveness of other economies and provokes retaliation.
Yesterday “will go down as the first day European policy makers fired a shot in the 2013 currency war,” said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London.
Euro at 10-Month High Poses Economic Threat
16 January 2013 The euro’s 8% gain against the U.S. dollar in the past six months is posing a fresh threat to the European economy just as it shows signs of escaping the debt crisis, said Jean-Claude Juncker, who leads the group of euro-area finance ministers.
Echoing policy makers from Switzerland to Japan in bemoaning strong exchange rates, Juncker late yesterday called the euro’s value “dangerously high” after the 17-nation currency this week traded above $1.34 against the dollar for the first time since February last year.
Watch The Financial Markets In Europe
Is the financial system of Europe on the verge of a meltdown? I have always maintained that the next wave of the economic crisis would begin in Europe, and right now the situation in Europe is unraveling at a frightening pace. On Monday, European stocks had their worst day in over six months, and over the past four days we have seen the EUR/USD decline by the most that it has in nearly seven months. Meanwhile, scandals are erupting all over the continent. A political scandal in Spain, a derivatives scandal in Italy and banking scandals all over the eurozone are seriously shaking confidence in the system. If things move much farther in a negative direction, we could be facing a full-blown financial crisis in Europe very rapidly. So watch the financial markets in Europe very carefully. Yes, most Americans tend to ignore Europe because they are convinced that the U.S. is "the center of the universe", but the truth is that Europe actually has a bigger population than we do, they have a bigger economy then we do, and they have a much larger banking system than we do. The global financial system is more integrated today than it ever has been before, and if there is a major stock market crash in Europe it is going to deeply affect the United States and the rest of the globe as well. So pay close attention to what is going on in Europe, because events over there could spark a chain reaction that would have very serious implications for every man, woman and child on the planet.
As I noted above, European markets started off the week very badly and things have certainly not improved since then. The following is how Zero Hedge summarized what happened on Thursday...
EuroStoxx (Europe's Dow) closed today -1% for 2013. France, Germany, and Spain are all lower on the year now. Italy, following ENI's CEO fraud, collapsed almost 3% from the US day-session open, leaving it up less than 1% for the year. Just as we argued, credit markets have been warning that all is not well and today's afternoon free-fall begins the catch-down.
In addition, the euro has been dropping like a rock all of a sudden. Just check out this chart which shows what happened to the euro on Thursday. It is very rare to see the euro move that dramatically.
So what is causing all of this?
Well, we already know that the economic fundamentals in Europe are absolutely horrible. Unemployment in the eurozone is at a record high, and the unemployment rates in both Greece and Spain are over 26 percent. Those are depression-level numbers.
But up until now there had still been a tremendous amount of confidence in the European financial system. But now that confidence is being shaken by a whole host of scandals.
In recent days, a number of major banking scandals have begun to emerge all over Europe. Just check out this article which summarizes many of them.
One of the worst banking scandals is in Italy. A horrible derivatives scandal has pushed the third largest bank in Italy to the verge of collapse...
Monte dei Paschi di Siena (BMPS.MI), Italy's third biggest lender, said on Wednesday losses linked to three problematic derivative trades totaled 730 million euros ($988.3 million) as it sought to draw a line under a scandal over risky financial transactions.
There is that word "derivative" that I keep telling people to watch for. Of course this is not the big "derivatives panic" that I have been talking about, but it is an example of how these toxic financial instruments can bring down even the biggest banks. Monte dei Paschi is the oldest bank in the world, and now the only way it is able to survive is with government bailouts.
Another big scandal that is shaking up Europe right now is happening over in Spain. It is being alleged that Spanish Prime Minister Mariano Rajoy and other members of his party have been receiving illegal cash payments. The following summary of the scandal comes from a recent Bloomberg article...
On Jan. 31, the Spanish newspaper El Pais published copies of what it said were ledgers from secret accounts held by Luis Barcenas, the former treasurer of the ruling People’s Party, which revealed the existence of a party slush fund. The newspaper said 7.5 million euros in corporate donations were channeled into the fund and allegedly doled out from 1997 to 2009 to senior party members, including Rajoy.
That doesn't sound good at all.
So what is the truth?
Could Rajoy actually be innocent?
Well, at this point most of the population of Spain does not believe that is the case. Just check out the following poll numbers from the Bloomberg article quoted above...
According to the Metroscopia poll, 76 percent of Spaniards don’t believe the People’s Party’s denials of the slush-fund allegations. Even more damning, 58 percent of the party’s supporters think it’s lying. All of the Spanish businessmen with whom I discussed the latest scandal expect it to get worse before it gets better. Their assumption that there are more skeletons in the government’s closet indicates what little trust they have in their leaders.
Meanwhile, the underlying economic fundamentals in Europe just continue to get worse. One of the biggest concerns right now is France. Just check out this excerpt from a recent report by Phoenix Capital Research...
The house of cards that is Europe is close to collapsing as those widely held responsible for solving the Crisis (Prime Ministers, Treasurers and ECB head Mario Draghi) have all been recently implicated in corruption scandals.
Those EU leaders who have yet to be implicated in scandals are not faring much better than their more corrupt counterparts. In France, socialist Prime Minister Francois Hollande, has proven yet again that socialism doesn’t work by chasing after the wealthy and trying to grow France’s public sector… when the public sector already accounts for 56% of French employment.
France was already suffering from a lack of competitiveness. Now that wealthy businesspeople are fleeing the country (meaning investment will dry up), the economy has begun to positively implode.
As the report goes on to mention, over the past few months the economic numbers coming out of France have been absolutely frightful...
Auto sales for 2012 fell 13% from those of 2011. Sales of existing homes outside of Paris fell 20% year over year for the third quarter of 2012. New home sales fell 25%. Even the high-end real estate markets are collapsing with sales for apartments in Paris that cost over €2 million collapsing an incredible 42% in 2012.
Today, the jobless rate in France is at a 15-year high, and industrial production is headed into the toilet. The wealthy are fleeing France in droves because of the recent tax increases, and the nation is absolutely drowning in debt. Even the French jobs minister recently admitted that France is essentially "bankrupt" at this point...
France's government was plunged into an embarrassing row yesterday after a minister said the country was ‘totally bankrupt’.
Employment secretary Michel Sapin said cuts were needed to put the damaged economy back on track.
‘There is a state but it is a totally bankrupt state,’ he said.
So what does all of this mean?
It means that the crisis in Europe is just beginning. Things are going to be getting a lot worse.
Perhaps that is one reason why corporate insiders are dumping so much stock right now as I noted in my article yesterday entitled "Do Wall Street Insiders Expect Something Really BIG To Happen Very Soon?" There are a whole host of signs that both the United States and Europe are heading for recession, and a lot of financial experts are warning that stocks are way overdue for a "correction".
For example, Blackstone's Byron Wien told CNBC the other day that he expects the S&P 500 to drop by 200 points during the first half of 2013.
Seabreeze Partners portfolio manager Doug Kass recently told CNBC that what is happening right now in the financial markets very much reminds him of the stock market crash of 1987...
"I'm getting the 'summer of 1987 feeling' in the U.S. equity market," Kass told CNBC, "which means we're headed for a sharp fall."
Toward the end of 2012 and at the very beginning of 2013 we saw markets both in the U.S. and in Europe move up steadily even though the underlying economic fundamentals did not justify such a move.
In many ways, that move up reminded me of the "head fakes" that we have seen prior to many of the largest "market corrections" of the past. Often financial markets are at their most "euphoric" just before a crash hits.
So get ready.
Even if you don't have a penny in the financial markets, now is the time to prepare for what is ahead.
We all need to learn from what Europe is going through right now. In Greece, formerly middle class citizens are now trampling one another for food. We all need to prepare financially, mentally, emotionally, spiritually and physically so that we can weather the economic storm that is coming.
Most Americans are accustomed to living paycheck to paycheck and being constantly up to their eyeballs in debt, but that is incredibly foolish. Even in the animal kingdom, animals work hard during the warm months to prepare for the winter months. Even so, we should all be working very hard to prepare during prosperous times so that we will have something stored up for the lean years that are coming.
Unfortunately, if events in Europe are any indication, we may be rapidly running out of time.
EU, U.S. fire starting gun for free trade talks
BRUSSELS (Reuters) - The United States and the European Union agreed on Wednesday to push for the launch by the end of June of talks to create the world's biggest free trade alliance, which could be a benchmark for global competitors to follow.
Such a deal would be most ambitious attempted since the founding of the World Trade Organisation (WTO) in 1995, encompassing half the world's economic output and a third of global trade flows.
"These negotiations will set a standard, not only for our future bilateral trade and investment, including regulatory issues, but also for the development of global trade rules," European Commission President Jose Manuel Barroso told a news conference.
Speaking after the release of a joint U.S./EU report recommending the start of talks, Barroso said the two were expected to launch negotiations in the first half of the year.
Currency Wars are Real—Yra Harris:What do I think is the most explosive event for gold? It is the day Draghi (President of the ECB) can no longer jawbone quantitative easing and when he actually has to step up to the plate.
Eurozone recession deepens as Germany falters
BERLIN (AP) — It was only a matter of time. With many of its debt-ridden euro partners in recession, Germany could only swim against the tide for so long.
Figures Thursday showed that output in Germany, Europe's largest economy, contracted by more than anticipated in the last three months of 2012. And it was the German drop that lay behind a deepening of the recession across the economy of the 17 European Union countries that use the euro.
Eurostat, the EU's statistics office, said the eurozone's economic output shrank by 0.6 percent in the final quarter of 2012 from the previous three-month period. The decline was bigger than the 0.4 percent drop expected in markets and the steepest fall since 2009, when the global economy was in its deepest recession since World War II.
There are hopes, though, that the fourth quarter of 2012 will mark the low point for the eurozone, and Germany in particular. Many economists are predicting that the eurozone recession may end in the first half of the year.
Nevertheless, Thursday's figures highlight the scale of the problems that have afflicted the single currency zone over the past year. Fears of a break-up, if not a collapse, of the currency dented confidence at a time when many governments were embarked on fairly severe debt-reduction programs.
Mat 24:32 Now learn a parable of the fig tree; When his branch is yet tender, and putteth forth leaves, ye know that summer is nigh:
Mat 24:33 So likewise ye, when ye shall see all these things, know that it is near, even at the doors.
Mat 24:34 Verily I say unto you, This generation shall not pass, till all these things be fulfilled.
Mat 24:35 Heaven and earth shall pass away, but my words shall not pass away.
Austerity's children becoming Europe's "lost generation"
2/14/13 BRUSSELS (Reuters) - Children across Europe are being driven into poverty by harsh government austerity and youth unemployment is soaring, threatening to create "lost generations" that could fire up a new continental crisis.
Global charity Caritas said on Thursday that around three out of every 10 children in Greece, Ireland, Portugal, Italy and Spain are in or have been pushed to the brink of poverty.
Greece said its youth unemployment had now exceeded 60 percent. Spain's is above 50 percent and Portugal has just topped 40 percent.
Think tank Bruegel said the problem extended well beyond the debt-laden peripheral euro zone economies and could come back to reverse Europe's slow recovery from financial crisis.
In a report, Caritas said euro zone countries that have received international loans - plus Italy, which hasn't - are creating a huge class of poorly-educated and poorly-fed young people with low morale and few job prospects.
"This could be a recipe not just for one lost generation in Europe but for several lost generations," Caritas said, citing the European Union's own statistics.
While these countries' future workers may suffer a loss of morale, qualifications and prospects, those that struggle through are likely to take their talents elsewhere.
Those with qualifications are already leaving in droves to seek work elsewhere, particularly in Germany where the number of Spanish and Greek jobseekers almost doubled during the first half of 2012.
Bruegel economist Zsolt Darvas said the relentless rise in youth unemployment not only destroyed morale at an important age of development but also threatened to reignite an economic crisis that appeared to be easing.
"This is not just a problem for these (peripheral) countries. This is a European problem," he said. Thirteen of the European Union's 27 member states have youth unemployment above 25 percent.
Since 2010, Greece, Ireland, and Portugal have received billions of euros in loans from the EU and the International Monetary Fund in return for spending cutbacks and tax rises. Spain has had its banks bailed out.
In all four and Italy, the increasing rate of children close to poverty coincides with the height of the crisis in 2008 and then rises.
Caritas say children are becoming more impoverished due to cuts to welfare, unemployment benefits, rising value-added tax and increased fuel costs.
"It has become an established fact that children are more at risk of poverty than any other demographic," Deirdre de Burca from Caritas said.
Figures from the European Commission show that in 2011 over 30 percent of those aged 17 years or under in Spain and Greece were at risk of poverty or exclusion, a four percentage point rise since 2005.
In Portugal that figure was 28.6 percent in 2011. In 2005 Portugal had a similar number of underprivileged children but that figure had dropped to 25.5 percent in 2006. It was linked by the charity to the change there to the growing number of families evicted for not paying mortgages.
More broadly, Caritas reported a growing number of children coming to school hungry in Spain, Portugal and Greece.
In 2010, 37.6 percent of children were at risk of poverty or exclusion in Ireland and 28.9 percent in Italy. Figures for 2011 are not available
Children are defined as nearing poverty and exclusion if they live in families with 60 percent or less the median income or have parents with little or no employment or lack basic essentials such as protein-rich foods, heating and clothes.
Caritas said governments must ask themselves what these trends will mean for children in the long run.
Studies show children from poor households are more likely to underperform at school and to struggle to find or keep a job.
"They are looking at a future where the prospect of unemployment is stretching out ahead of them," de Burca said.
Analysis: Core problem for Europe as France, Germany drift apart
LONDON (Reuters)- Even as the euro zone periphery starts to spy some glimmers of hope, concern is mounting that Germany is drifting apart from other countries at the core of the single currency bloc, notably France.
Economically, the worry is that insistence on fiscal austerity by an out-performing Germany will delay an upturn in France, which has been steadily losing competitiveness to its larger neighbor.
Politically, the risk is that already uneasy relations between French President Francois Hollande and German Chancellor Angela Merkel could come under further strain when the euro zone needs strong, cohesive leadership to create a new institutional framework for the euro.
Philippe Waechter, chief economist at Natixis Asset Management in Paris, said signs of a solid recovery in Germany's economy were bolstering Merkel's position on economic policy going into September's general election.
Hollande, by contrast, was forced to acknowledge on Tuesday that growth would fall short of his government's 0.8 percent forecast. His government has already admitted it will miss its deficit target this year.
"The issue is how the balance of power evolves between Francois Hollande and Angela Merkel, knowing that France and Germany are extremely important in the political construction of the euro zone," Waechter said.
Not that I take everything this article says at face value, but nonetheless we're hearing alot about "currency wars" in the MSM lately. This seems to be a big buzzword now.
Rev 13:15 And he had power to give life unto the image of the beast, that the image of the beast should both speak, and cause that as many as would not worship the image of the beast should be killed.
Rev 13:16 And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:
Rev 13:17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
We're All Currency Manipulators These Days
The G20 twenty meeting had the world’s FX traders holding their breath. Would currency manipulators be called out for their awful currency war attacks? Would there be censure of Japan and its yen weakening campaign?
Currency manipulation is considered an economic crime because the old orthodoxy says currencies should float and the markets decide. In the original old, old, orthodoxy it was believed currencies should be fixed. Countries were proud of their strong currencies. Exchange rates were fixed and were defended like a national treasure. A drop in a currency’s value was considered to be like a defeat in battle.
In the long term, fixed currency rates were a recipe for trouble because when economic times changed currencies, conversion rates needed to change as well to keep the economy in equilibrium. If your currency can’t change with shifting economic realities, bad things happen.
However, governments love to govern and show off their power, so they loved fixed exchange rates. The people who managed them were raised by this artifice to the role of national champions and defenders of the national economic faith.
Bulgarian government resigns amid growing protests
SOFIA (Reuters) - Bulgaria's government resigned on Wednesday after mass protests against high power prices and falling living standards, joining a long list of European administrations felled by austerity during four years of debt crisis.
Prime Minister Boiko Borisov, an ex-bodyguard who took power in 2009 on pledges to root out graft and raise incomes in the European Union's poorest member, faces a tough task of propping up eroding support ahead of an expected early election.
Wage and pension freezes and tax hikes have bitten deep in a country where earnings are less than half the EU average and tens of thousands of Bulgarians have rallied in protests that have turned violent, chanting "Mafia" and "Resign".
Moves by Borisov on Tuesday to blame foreign utility companies for the rise in the cost of heating homes was to no avail and an eleventh day of marches saw 15 people hospitalized and 25 arrested in clashes with police.
Moody's cuts UK credit rating one notch to Aa1
Feb 22 (Reuters) - Moody's Investors Service on Friday cut the United Kingdom's credit rating to Aa1 from Aaa, citing weakness in the nation's medium-term growth outlook that it now expects to extend for a number of years.
The outlook on the credit is stable, the firm said in a statement.
Moody's said that despite considerable structural economic strengths, growth is expected to be sluggish due to a combination of weaker global economic activity and the drag on the UK economy "from the ongoing domestic public- and private-sector deleveraging process."
'Catastrophe for euro' - Europe frets over Italy
Italy’s electoral earthquake is ‘‘a catastrophe for the euro and the European Union’’, according to Luxembourg’s foreign minister, Jean Asselborn.
Italy is big enough to bring down the eurozone if mishandled.
The verdict was much the same in chancelleries across the eurozone, especially in those countries already starting to feel the first wave of contagion.
‘‘The result touches us all,’’ said Spain’s foreign minister, Jose Manuel Garcia-Margallo. ‘‘It is a jump into the void that bodes well for nobody, neither for Italy, nor for the rest of Europe.’’
2/28/13 Van Rompuy tells Britain: leaving EU "not free"
LONDON (Reuters) - One of Europe's most powerful officials cautioned Prime Minister David Cameron on Thursday that leaving the European Union could cost Britain dear and that the bloc's other leaders do not want to renegotiate Europe's founding treaties.
European Council President Herman Van Rompuy said Britain had a chance to play a leading role in building the European economy now the euro zone had the "artillery" of economic tools to get itself out of the worst crisis in its history.
But Van Rompuy laced his speech in London's financial district with a clear warning to Cameron: Europe will not countenance any attempt by Britain to win an a-la-carte membership, picking and choosing which of the European Union's rules it will follow and which to reject.
"Leaving the club altogether, as a few advocate, is legally possible," he said. "We have an 'exit clause'.
"But it's not a matter of just walking out. It would be legally and politically a most complicated and unpractical affair. Just think of a divorce after 40 years of marriage."
A Bad Week For The Euro
3/1/13 So much for the big support in the euro versus the USD at 1.30. The high was made on Monday and the market reversed and has since plunged lower. The catalyst for this week's sell off of course was the Italian election of candidates who do not want to take orders from Frankfurt or Brussels. In fact, the ex-comedian, Beppe Grillo, leader of the populist Five Star Movement, does not want to form an alliance with anyone.
Over 55% of the voters cast their ballot for those voicing opposition to the austerity policies imposed by the by the technocrat Monti. Grillo's refusal to compromise and form a government with other parties has created a political stalemate, with chaos resulting. Should there be a quick resolution, this would give us a rally in the euro, but this seems unlikely.
The evolving political vacuum in Italy has hurt both the Italian equity and bond markets. Despite the political uncertainty Italy was successful selling €6.5B of debt though at higher prices. The Italian ten year bond sold to yield 4.83%, a big premium to the German ten year rate of about 1.45%. Italy is the world's third largest issuer of debt. This year the total borrowing needs of the Italian government to cover the deficit, and the refinance maturing debt will be about 25% of the GDP, or about €390B.
Today the unemployment numbers were announced for Europe. Total EU unemployment is now at a record of 11.9%, or about 19M people. For the four largest economies the rates are Germany 6.9%, France 10.6%, Italy, 11.7%, and Spain at 16.2%. Clearly, the austerity policies as recommended by the Northern Europeans, is causing harm for many. This coming Wednesday the EU GDP numbers will be announced, estimated to be -0.6 for the most recent quarter and -0.9 for last year.
BERLIN (Reuters) - Deep reservations in some European states could ultimately stop the euro zone's bailout fund being used for bank recapitalisation, the head of the fund said.
Klaus Regling, the head of the European Stability Mechanism (ESM), told Wirtschafts Woche magazine he was not able to say with certainty that the ESM would be used for this purpose.
"There are several states where enthusiasm for direct bank recapitalisations is very limited," he said, noting it needed unanimous backing. "I can therefore not say with 100 percent certainty that we will have this instrument."
WRAPUP 1-Europe's economic fractures widen in February
* France, Spain and Italy behind deeper euro zone downturn
* Germany still prospering, UK services PMI brighter
* Euro zone retail sales better than expected
* Economists warn outlook poor from here
By Andy Bruce
LONDON, March 5 (Reuters) - France, Spain and Italy dragged the euro zone into a deeper downturn in February, according to business surveys that showed the chasm between these countries and prosperous Germany widening yet again.
While British services companies had a slightly better month than expected, Tuesday's purchasing managers' indexes (PMIs) showed deepening fractures running through the European economy.
The divide between Germany and France, the euro zone's two biggest economies, grew to its widest since the currency union's inception in 1999.
The PMIs reflected how euro zone businesses were faring mostly before the inconclusive outcome of Italy's general election, which unsettled international financial markets.
"Two months into 2013, we've been somewhat disappointed with the euro zone economy's progress. The PMIs again reaffirm that," said Victoria Clarke, economist at Investec in London.
"Germany's doing a bit better than the rest of the pack, but in general, there's no real sign there of stabilisation, or of the contraction at least bottoming out."
Emboldened parliament ready to veto EU budget deal
BRUSSELS (Reuters) - The European Parliament is prepared to block agreement on the European Union's hard-fought budget deal last month unless governments agree to increase spending on boosting growth, the president of the assembly said on Thursday.
Victory last week in imposing a cap on bankers' bonuses has fired the parliament's self-confidence, which it is now ready to use to change or block legislation, including the 2014-2020 budget, German Socialist Martin Schulz said.
"We are a very influential and powerful parliament," he said, adding that it wasn't about flexing muscles.
"Why would we refuse the (budget) deal? Not to show our power, but because we think with an overwhelming majority that the priorities are wrong."
Last month, after all-night talks, EU leaders struck a deal on a seven-year plan that included a first real-terms decrease in future spending, while protecting traditional areas such as farm subsidies and public infrastructure.
While the parliament is unlikely to challenge the overall spending ceiling of 960 billion euros agreed by EU leaders, Schulz said they could demand changes to how the money is spent, potentially throwing the entire deal into doubt.
EU worried by Hungary's changes to constitution
BRUSSELS (Reuters) - Changes to Hungary's constitution adopted on Monday are a concern, the European Union said and called on Budapest to work with Brussels to overcome any conflicts with EU law.
Parliament, dominated by Prime Minister Viktor Orban's party, voted for a set of government-backed constitutional amendments, despite warnings from the EU, the U.S. government and human rights groups that the changes could undermine Hungary's democracy.
"These amendments raise concerns with respect to the principle of the rule of law, EU law and Council of Europe standards," European Commission President Jose Manuel Barroso said in a joint statement with the secretary general of the Council of Europe, Thorbjorn Jagland.
Barroso and Jagland said they expected Hungarian authorities to be open to talks "to address any concerns raised as to the compatibility of these amendments with European principles and EU law."
(Reporting by Robin Emmott; Editing by Ruth Pitchford)
Banks saved, but Europe risks "losing a generation"
BRUSSELS (Reuters) - Europe has spent hundreds of billions of euros rescuing its banks but may have lost an entire generation of young people in the process, the president of the European Parliament said.
Since the region's debt crisis erupted in Greece in late 2009, the European Union has created complex rescue mechanisms to prop up distressed countries and their shaky banking sectors, setting aside a total of 700 billion euros.
But little has been done to tackle the devastating social impact of the crisis, with more than 26 million people unemployed across the EU, including one in every two young people in Greece, Spain and parts of Italy and Portugal.
That crippling level of unemployment has led to protests and outbreaks of violence across southern Europe, raising the threat of full-scale social breakdown, including rising crime and anti-immigrant attacks that can further rattle unstable governments.
"We saved the banks but are running the risk of losing a generation," said Martin Schulz, a German socialist who has led the European Parliament, the EU's only directly elected institution, since January last year.
"One of the biggest threats to the European Union is that people entirely lose their confidence in the capacity of the EU to solve their problems. And if the younger generation is losing trust, then in my eyes the European Union is in real danger," he told Reuters in an interview.
Figures released last week showed 57 percent of Greeks aged 15 to 24 are out of work, and a similar scourge is tearing apart the fabric of Spain, where some university graduates in their 30s have never had a job. ( link.reuters.com/dab48s )
Hungary to insert rejected laws into constitution
BUDAPEST, Hungary (AP) — Hungary's prime minister can't take "no" for an answer, even when he is being instructed by the country's highest court.
Over the past 18 months, the Constitutional Court has struck down several of the government's policies, including fining or jailing the homeless for living in public spaces, banning political campaign ads on commercial radio and TV stations and forcing university students who accepted state scholarships to work in Hungary for years after they graduate.
On Monday, however, lawmakers from Prime Minister Viktor Orban's Fidesz party are preparing to pass a lengthy amendment to the constitution that will entrench all those discredited policies and many others, ensuring that the government gets its way no matter what anyone says.
The amendment has alarmed the European Union, which over the past several months has forced Orban to dilute some of the laws meant to expand his control over everything from the central bank and the economy to the arts and the media.
The current argument is only the latest example of international criticism over government policies seen to be concentrating power in Orban's hands, paying lip service to democratic principles and expanding the state's role to the detriment of private enterprise.
On Friday, European Commission President Jose Manuel Barroso spoke by telephone with Orban and sent him a letter expressing his concerns about possible conflicts between the planned amendment and EU laws.
"We trust that these contacts will ensure that our concerns are taken into account," commission spokeswoman Pia Ahrenkilde Hansen told The Associated Press, adding that the intention was to avoid facing "any vote that would result in incompatibility with EU law ... and would make the time ahead more difficult."
In a written response to Barroso after their call, Orban confirmed "the full commitment" of Hungary's government and parliament to European norms, but gave no direct indication that Monday's vote on the amendment, which has more than 20 articles, would be delayed.
With most domestic challengers neutralized — Orban allies run the media council, the state audit office, the central bank and other key institutions — the prime minister has taken to lashing out at EU bureaucrats in Brussels.
Although 97 percent of Hungary's development funds over the past years have been provided by the EU, Orban has said Hungary won't allow itself "to be dictated to by anyone from Brussels or anywhere else" and that Hungary does not need "unsolicited comradely assistance" from people in "finely-tailored suits" to write its constitution.
The U.S. has also voiced concerns about the amendment. State Department spokeswoman Victoria Nuland said it "could threaten the principles of institutional independence and checks and balances that are the hallmark of democratic governance."
The 49-year-old Orban's repeated attempts to concentrate power and carry out his "revolution in a voting booth," as he dubbed his party's landslide win in 2010, seem at odds with his past. Once a determined anti-communist dissident, he entered the political stage in 1989 by publicly calling for the withdrawal of Soviet troops from Hungary and the end of the communist dictatorship.
To rebuild an economy deeply damaged by eight years of Socialist Party rule, Orban and his "right hand," Gyorgy Matolcsy, until last week economy minister but now president of the National Bank of Hungary, have applied unorthodox policies.
Since 2010, the government, for example, has nationalized about $14 billion in assets earlier administered by private pension funds, introduced the EU's highest bank tax and value added tax rates as well as levies on financial transactions and phone calls. Hungary also has a flat income tax rate of 16 percent and, to help counter a rapidly aging population, substantial tax breaks for families with children.
Orban says the institutional overhaul is needed to break the influence of former communists. The new constitution replaces one based on a Stalin-era constitution that was rewritten in 1989, when the country threw off communist rule.
By including legislation in the constitution which earlier had been struck down as unconstitutional, the new amendment — the fourth since the constitution, or Fundamental Law, as it is called, took effect in January 2012 — makes it clear that Orban will accept no setbacks and that the decisions of his parliamentary majority should not be questioned.
That attitude is also expressed in one of the key articles of the amendment, which says the country's president, who signs all legislation into law, and the Constitutional Court can review whether the procedures to pass the amendment were lawful, but can't examine its contents.
"Instead of defending citizens from the will of the state," the new articles "defend the will of the government from constitutionality," said Mate Daniel Szabo, a legal expert with the pro-democracy Eotvos Karoly Policy Institute.
The proposal also bans courts from referring to legal precedents set under the previous constitution.
"This means stepping back to where we were in 1990," said Szabo. "We'll be starting everything over, which is very dangerous."
The new constitution was met with large street protests in 2012, with some calling Orban a dictator or a "Viktator." Recently, however, most of the domestic complaints about the amendment have come from legal scholars, though there have been some signs of public anger.
A few dozen activists staged a sit-down protest at Fidesz headquarters Thursday, while around 2,500 people marched Saturday to the Constitutional Court to protest the amendment.
For the government, the amendment is just business as usual.
Justice Minister Tibor Navracsics said the proposal "is, to a great extent, merely a technical amendment," while Foreign Minister Janos Martonyi said criticism was being "fueled by misunderstandings and inadequate information."
A year before the next parliamentary elections, Hungary's opposition parties are in disarray and a new electoral law makes it even harder to seriously challenge Fidesz, so the effects of Orban's constitutional amendments could be enduring.
EU lawmakers reject $1.3tn budget proposal
3/13/13 Empowered European Parliament rejects $1.3 trillion EU budget proposal.
The European Parliament overwhelmingly rejected a proposal for the European Union's €960 billion ($1.3 trillion) budget Wednesday, in the latest example of the lawmakers' newfound resolve to stand up to the bloc's national leaders.
"This is an important step for the European democracy," said European Parliament President Martin Schulz.
The seven-year plan — brokered at a summit of the 27 heads of state and government last month after two days of nearly round-the-clock negotiations — didn't address Parliament's main demands that more be spent to foster economic growth and that there be flexibility to move money within the budget. For that reason, Schulz said, it had to be rejected.
The leaders' proposal involved spending cuts for the first time in the EU's history and would cement the bloc's budget through 2020.
U.K. Downgraded, Stripped of AAA Rating
19 Apr 2013 Credit ratings agency Fitch on Friday announced its decision to revise the U.K.’s credit rating AA+, down from its previous AAA rating.
Merkel To Europe: "Prepare To Cede Sovereignty"
The liquidity tsunami that started in September of 2012 in the Marriner Eccles building and continued with the BOJ's own epic QEasing expansion three weeks ago, has so far provided the impetus for Europe to kick the can of its inevitable dissolution for a few more months, yet slowly but surely the market is starting to read through the artificial levels implied by Italian and Spanish bonds, driven by recycled ECB funding via bank and repo conduits and of course Japanese carry cash, and rumblings of a return to crisis conditions are back.
And as always happens, once the crisis talk is back, so is discussion of a fiscal union. Sure enough, earlier today Germany's Angela Merkel once again reminded everyone just what the stakes are in order to achieve a truly stable, and sustainable European union: nothing short of ceding sovereignty to Germany. And with that we are back to square one, because that has always been the trade off - want a unified, fiscally and monetarily, Europe? You can get it: just bow down to Merkel.
German Chancellor Angela Merkel said on Monday that euro zone members must be prepared to cede control over certain policy domains to European institutions if the bloc is truly to overcome its debt crisis and win back foreign investors. Speaking at an event hosted by Deutsche Bank in Berlin alongside Polish Prime Minister Donald Tusk, Merkel also defended her approach to the crisis against critics who argue she has put too much emphasis on austerity, saying Europe must find a way to deliver both growth and solid finances. The comments came two months before European leaders are due to gather in Brussels to discuss moving towards a so-called "fiscal union".
"We seem to find common solutions when we are staring over the abyss," Merkel said. "But as soon as the pressure eases, people say they want to go their own way. "We need to be ready to accept that Europe has the last word in certain areas. Otherwise we won't be able to continue to build Europe," she added. Two conclusions here: Europe will be "staring over the abyss" very soon once again, and where Merkel says "Europe" she means Germany.
EU Leader: Federal Europe to Become 'a Reality'
Jose Manuel Barroso, the most powerful leader in the European Union, says Europe will become a united political federation within the next few years.
The European Commission president is laying out plans for an "intensified political union" that matches the economic cooperation in the EU. That includes plans for an elected "president of Europe."
"This is about the economic and monetary union but for the EU as a whole," The London Telegraph quoted Barroso as saying. "The commission will, therefore, set out its views and explicit ideas for treaty change in order for them to be debated before the European elections."
"We want to put all the elements on the table, in a clear and consistent way, even if some of them may sound like political science fiction today. They will be reality in a few years' time," he vowed.
The Telegraph reports Barroso will call for efforts to create a "European federation" before the next EU parliamentary elections in 2014.
18 Signs That Massive Economic Problems Are Erupting All Over The Planet
This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have "kicked the can down the road" by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the "sugar high" produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world - it is just a matter of time.
But for the moment, there are a lot of skeptics out there.
For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.
Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.
The following are 18 signs that massive economic problems are erupting all over the planet...
#1 The eurozone is now in the midst of its longest recession ever. Economic activity in the eurozone has declined for six quarters in a row.
#2 Italy's economy has now been contracting for seven quarters in a row.
#3 Industrial production in Italy has fallen for 15 months in a row. It has now fallen to its lowest level in about 25 years.
#4 The number of people that are considered to be "seriously deprived" in Italy has doubled over the past two years.
#5 Consumer confidence in France has just hit a new all-time low.
#6 The number of unemployed workers seeking a job in France has hit a brand new all-time record high. Many unemployed workers in France are utterly frustrated at this point...
"I've sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there's never anything," said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.
#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent.
#8 Youth unemployment continues to soar to unprecedented heights in Europe. The following is from an article that was recently posted on the website of the Guardian that detailed how bad things are getting in some of the worst countries...
In Greece, 62.5% of young people are out of work, in Spain it's 56.4%, then Portugal with 42.5%, and then Italy with 40.5%.
#9 Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years. The following is how the Daily Mail described the riots...
Sweden is reeling after a third night of rioting in largely run-down immigrant areas of the capital Stockholm.
In the last 48 hours violence has spread to at least ten suburbs with mobs of youths torching hundreds of cars and clashing with police.
It is Sweden's worst disorder in years and has shocked the country and provoked a debate on how Sweden is coping with youth unemployment and an influx of immigrants.
#10 An astounding 10 percent of all banking deposits were pulled out of banks in Cyprus during the month of April alone.
#11 Economic growth in India is the slowest that it has been in an entire decade.
#12 Suddenly Australia is experiencing some tremendous economic challenges. The following quotes are from a recent Zero Hedge article...
-“We’re seeing a much sharper contraction in the Australian economy than we’d anticipated four or five months ago”. Coffey MD, John Douglas. The engineering group has seen its shares, which traded above $4 in 2007, hit 10c last week.
-“By 10am, the Fitness First gym in the city is packed full of brokers who’ve had a gutful of sitting at their desk doing nothing – salary cuts are starting and next it will be jobs” Perth broker
-“Oh mate, the funding market is dead. You are now seeing a few deeply discounted rights issues for those that are reaching desperate levels ….. liquidity has completely disappeared” Perth broker
#13 The financial system in Japan is beginning to spin wildly out of control. The Japanese stock market has now declined about 15 percent from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly.
#14 Global cash flow is declining at a rate not seen since the last recession. This indicates that we could be headed for a global credit crunch.
#15 Real wages continue to decline in the United States. Even though we are being told that the U.S. is experiencing an "economy recovery", real weekly earnings have declined from $297.79 in 2010 to $295.49 in 2011 to $294.83 in 2012. (The preceding calculation is based on 1982-1984 dollars)
#16 Wall Street is buzzing about the fact that "the Hindenburg Omen" appeared at the end of last week. So exactly what is "the Hindenburg Omen"? The following are the criteria that are used to determine whether it has appeared or not...
1. The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2. The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator ( a market breadth indicator used to evaluate the rate of money entering or leaving the market and interpretively indicate overbought or oversold conditions of the market)is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs).
When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days.
#17 As I wrote about the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years. That means that lots of "smart money" has been getting out of the market and lots of "dumb money" has been pouring in.
#18 Margin debt on the New York Stock Exchange has set a new all-time high. The following is from a recent Market Oracle article...
Margin debt—that’s the amount of money borrowed to purchase stocks—on the New York Stock Exchange (NYSE) reached its all-time high in April. Margin debt on the NYSE registered at $384.3 billion as the key stock indices hit new record-highs. (Source: New York Stock Exchange web site, last accessed May 29, 2013.) The highest margin debt ever reached prior to this was in July of 2007, when it stood just above $381.0 billion. At that time, just like today, the key stock indices were near their peaks and “buy now before it’s too late” was the prominent theme of the day
Whenever margin debt spikes like this, a stock market crash almost always follows. If you doubt this, just check out the chart in this article.
Wall Street has had a good couple of years, but it has been a "false prosperity" that has been pumped up by reckless money printing by the Federal Reserve. Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too. And as Marc Faber recently pointed out, this bubble has been particularly beneficial to the wealthy...
The Fed has been flooding the system with money. The problem is the money doesn't flow into the system evenly. It doesn't increase economic activity and asset prices in concert. Instead, it creates dangerous excesses in countries and asset classes. Money-printing fueled the colossal stock-market bubble of 1999-2000, when the Nasdaq more than doubled, becoming disconnected from economic reality. It fueled the housing bubble, which burst in 2008, and the commodities bubble. Now money is flowing into the high-end asset market - things like stocks, bonds, art, wine, jewelry, and luxury real estate.
Money-printing boosts the economy of the people closest to the money flow. But it doesn't help the worker in Detroit, or the vast majority of the middle class. It leads to a widening wealth gap. The majority loses, and the minority wins.
The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little. At this point, the stock market has become completely divorced from economic reality. When this current bubble bursts, the adjustment is going to be very painful. Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time.
Much of the rest of the world is already experiencing the next major wave of the economic collapse. Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse.
There was one piece of advice that Ben Bernanke included in his commencement speech to students at Princeton recently that I thought was particularly ironic...
"Don't be afraid to let the drama play out."
Will he take his own advice when the next great financial crisis strikes the United States?
That seems very unlikely.
Unfortunately, things are not going to be so easy to fix this next time.
What happened back in 2008 was just a preview.
What is coming next is going to absolutely shock the world.
EU and US 'in biggest trade deal'
UK Prime Minister David Cameron has announced plans for what could be "the biggest bilateral trade deal in history" between the EU and the US.
He announced the start of formal negotiations on a trade deal worth hundreds of billions of pounds, aimed at boosting exports and driving growth.
Mr Cameron said a successful agreement would have a greater impact than all other world trade deals put together.
The talks were announced ahead of the G8 summit in Northern Ireland.
US President Barack Obama said the first round of negotiations would take place in Washington in July. They aim to conclude by the end of 2014.
Mr Obama said he was confident of reaching an agreement.
"There are going to be sensitivities on both sides... but if we can look beyond the narrow concerns to stay focused on the big picture... I'm hopeful we can achieve [a deal]."
'Once in a generation'
Mr Cameron said the deal could be worth £100bn to the EU economy, £80bn to the US and £85bn to the rest of the world.
He said the pact could create two million jobs, and lead to more choice and lower prices in shops.
"This is a once-in-a-generation prize and we are determined to seize it," said Mr Cameron.
European Commission President, Jose Manuel Barroso. who will lead the negotiations with President Obama, said that integrating the EU and US economies would not be easy but "we will find convincing answers to legitimate concerns".
"We'll find solutions to thorny issues, we'll keep our eyes on the prize and we will succeed," he said.
Herman Van Rompuy, the president of the European Council, said: "Together Europe and the United States are the backbone of the world economy. Opening up that space further for opportunities for business and consumers is simply common sense."
The trade talks had been under threat from a potential veto from France, but on Friday EU ministers agreed to French demands to exclude the film and television industry from the talks.
Some had argued that omitting the media business from the trade talks even before they had begun could prompt the US to seek exemptions for other sectors.
EU Redraws Israel Borders to 1949 Lines
For the first time, the EU formally forbids trade with bodies located beyond 1949 Armistice lines, including Golan.
By Gil Ronen
First Publish: 7/16/2013, 11:05 AM
The European Union has issued orders forbidding its member states from cooperating, transferring funds, giving scholarships or research grants to bodies in Judea and Samaria, eastern Jerusalem , and even the Golan Heights, Haaretz wrote Tuesday.
The new instruction, promulgated by the European Commission, which is the operative arm of the EU, sets parameters for cooperation between the EU and its members states, on the one hand, and Israeli governmental and private elements on the other. The instructions are for the years 2014 – 2020 and will go into force on Friday, July 18.
The decision also states that any future agreement signed with Israel must include a section that says the “settlements” are not part of sovereign Israel and therefore not included in the agreement.
A senior source in the Foreign Ministry said Tuesday that the new EU decision is dramatic, and can be called “a true earthquake.”
"This is the first time in which a explicit and formal instruction like this is issued. Until now, there were silent understandings and agreements that the EU does not work beyond the Green Line” – as the 1949 Armistice Line is known – “but this is an official and binding prohibition.”
Deputy Foreign Minister Ze'ev Elkin said that the EU decision is “very worrisome” and will make it difficult for the state of Israel to conduct contacts with the EU regarding cooperation agreements.
The EU declares Israel as occupier
For more than thirty years the European Union (EU) has issued statements critical of Israel, and has been supportive of the Palestinian cause. The EU Venice Declaration of 1980, the first statement it issued on foreign policy, supported the right of the Palestinian people to self-determination; asserted the unacceptability of any unilateral initiative to alter the status of Jerusalem; proclaimed the need for Israel to end its territorial occupation since 1967; and declared that Israeli settlements were an obstacle to peace.
Since the 1990s the EU has been a major aid contributor to Palestinians, though its monetary assistance did not substantially improve the Palestinian economy. This economy suffered from corruption, lack of a satisfactory legal framework and competent administration, absence of democratic practices, and the incompetence of Yasser Arafat, the PLO and the Palestinian Authority leader who instigated the disastrous second Intifada in 2000.
The EU has been critical of many of the activities of Israel, including the alleged treatment of the Arab minority and of the Bedouins, but particularly and unrelentingly about Israeli settlements. On December 10, 2012 the EU issued a statement, “all agreements between the State of Israel and the European Union must unequivocally and explicitly indicate their inapplicability to the territories occupied by Israel in 1967, namely the Golan Heights, the West Bank including East Jerusalem, and the Gaza Strip.
The EU discouraged companies from trading with and investing in settlements and suggested banning imports of settlement products. At the same time Catherine Ashton, the head of EU foreign policy, pressed Israel to cancel the building of 3,000 new settler homes that, in accordance with EU policy, she considered “an obstacle to peace.” That EU policy had been made clear even before the European Commission poll taken in 2003 that the “country posing the greatest threat to world peace was Israel.” It was unclear whether the particular homes to which Ashton was referring are an obstacle to peace in Syria, Egypt, Lebanon, or Iraq, issues with which she seems somewhat unconcerned.
Whatever the answer, this did not prevent the EU decision to implement the December 10 statement by issuing a directive approved on June 28, 2013 and made known on July 16, 2013. This was a decision by the EU to ban all funding, collaboration, scholarships, research grants, and awards to “Israeli entities” in the West Bank and East Jerusalem. All future EU agreements with Israel must have a clause stating that the settlements are not part of the State of Israel.
By its declaration the EU was unilaterally deciding that the borders of Israel did not embrace East Jerusalem, the West Bank, the Gaza Strip, or the Golan Heights. It was making a distinction between the State of Israel and the “occupied territories” to which the ban on relations on factors such as economics, science, culture, sports, and academia will apply.
This is an extraordinary unwise and unhelpful decision at a time when Secretary of State John Kerry is making his sixth visit in four months to the region in his hope to revive peace talks between Israel and Palestinians. He must be troubled that the EU decision on the borders of the State of Israel may make the Palestinians unwilling to enter into direct negotiations. That unwillingness has been rewarded by the constant EU argument, one that was repeated on the very day that the EU was awarded the Nobel Peace Prize, that Israeli settlements are illegal under international law and constitute an obstacle to peace. The EU argument is belied by the reality that facts and the history of the area prove the opposite; Israeli settlement has never constituted an obstacle to peace. Nevertheless, Ashton persists in saying that “settlement activity is detrimental to current peace efforts.”
The EU position makes it more likely that the Palestinian will reject negotiations. If they do agree to enter into direct negotiations, they will certainly continue to insist on a number of pre-conditions, including freezing all settlement construction and acceptance of the ceasefire lines of 1949 as the borders of a Palestinian state.
There are two issues involved in this. One is the bypassing of all international and bilateral agreements on the need for negotiations to decide on the final status of the disputed territories. The Israeli-Palestinian Interim Agreement of September 28, 1995 is clear on this point. Article XXXI states, “Neither side shall initiate or take any step that will change the status of the West Bank or the Gaza Strip pending the outcome of the permanent status negotiations.” Legally, the demarcation lines between the parties of 1949 are not permanent boundaries; they do not purport to establish definitive boundaries between the parties. All issues are to be negotiated between the parties.
The other is the misapplication of EU activity that should more properly be focused on the development of the Palestinian economy and the introduction of human freedoms, rather on than the disputed settlements. The EU, after all, could be a major player in the Middle East with its own economy accounting for almost 20 percent of world trade and including a considerable number of real democracies among its 27 members. It could be playing a role in helping deal with current problems: Iran’s nuclear proliferation; Islamist extremism in general; the development of terrorist networks; the recognition of Hezbollah as a terrorist organization; equality for women in the Middle East; and encouragement of human rights and democracy in the Arab countries.
It serves no useful purpose to insist that the Israeli-Palestinian conflict is the main security problem in the Middle East. It is one thing to propose two states as the only feasible solution to the conflict, even if there is disagreement on the issue. It is another to attempt to resolve the conflict by putting direct economic and political pressure on Israel. The EU has done a great disservice to the peace process between Israel and the Palestinians, and indeed has been counterproductive by making it less likely to come into effect.
The Coming Global Wealth Tax
Indebted governments may soon consider a big one-time levy on capital assets.
Between ObamaCare, Iran and last quarter's uptick in U.S. economic growth, taxpayers these days may be distracted from several dangers to come. But households from the United States to Europe and Japan may soon face fiscal shocks worse than any market crash. The White House and New York Mayor-elect Bill de Blasio aren't the only ones calling for higher taxes (especially on the wealthy), as voices from the International Monetary Fund to billionaire investor Bill Gross increasingly make the case too.
In his November investment commentary for bond giant Pimco, Mr. Gross asks the "Scrooge McDucks of the world" to accept higher personal income taxes and to stop expecting capital to be taxed at lower rates than labor. As for the IMF, its latest Fiscal Monitor report argues that taxing the wealthy offers "significant revenue potential at relatively low efficiency costs." The context for this argument is the IMF's expectation that in advanced economies the ratio of public debt to gross domestic product will reach a historic peak of 110% next year, 35 percentage points above its 2007 level.
Between 2008 and 2012, several of the developed world's most fiscally challenged nations (including the United Kingdom, Ireland and Spain) increased top personal income tax rates by an average of 8%. In the United States, the expiration of the Bush tax cuts pushed the highest federal income tax bracket to 39.6% from 35%.
What the IMF calls "revenue-maximizing top income tax rates" may be a good indication of how much further those rates could rise: As the IMF calculates, the average revenue-maximizing rate for the main Organization of Economic Cooperation and Development countries is around 60%, way above existing levels.
We want a United States of Europe says top EU official
Voters must decide for or against a United States of Europe during EU elections this spring, says vice president of the European Commission
campaign for the European Union to become a "United States of Europe" will be the "best weapon against the Eurosceptics", one of Brussels' most senior officials has said.
Viviane Reding, vice president of the European Commission and the longest serving Brussels commissioner, has called for "a true political union" to be put on the agenda for EU elections this spring.
"We need to build a United States of Europe with the Commission as government and two chambers – the European Parliament and a "Senate" of Member States," she said.
Mrs Reding's vision, which is shared by many in the European institutions, would transform the EU into superstate relegating national governments and parliaments to a minor political role equivalent to that played by local councils in Britain.
Under her plan, the commission would have supremacy over governments and MEPs in the European Parliament would supersede the sovereignty of MPs in the House of Commons.
National leaders, meeting as the European Council, would be reduced to consultative, second chamber role similar to the House of Lords.
Nigel Farage, the leader of Ukip, said that Mrs Reding had revealed the true choice for British voters to make at polling stations.
"For people in power in Brussels that is the only choice on offer, no reform just a United States of Europe. On 22 May the British people must ask themselves if they want this and vote accordingly," he said.
"I am sure people will say no to this centralist fanaticism."
Mrs Reding's comments illustrate the growing gulf between a Europe committed to "ever closer union" and Britain, which is pushing to reduce the EU's powers.
"We assume Britain's leaving the EU so we don't even bother thinking about British sensitivities at the moment," said an official.
While Britain may have been written off, concern is mounting because hostility has reached unprecedented levels across continental Europe and anti-EU parties are leading the polls in France, the Netherlands and Greece.
Senior EU figures, such as Mrs Reding, want the European elections in May to move beyond debates over eurozone austerity by embracing a grand vision of Europe.
"This debate is moving into the decisive phase now. In a little more than four months' time, citizens across Europe will be able to choose the Europe they want to live in," she said.
"There is a lot at stake. The outcome of these elections will shape Europe for the years to come. That is why voting at these elections is crucial.
This will be our best weapon against the Eurosceptics: to explain to our citizens that their vote really matters."
In the run up to the springtime pan-European vote, the EU is gearing up to mount an unprecedented campaign for the hearts and minds of voters.
Speaking in Athens, José Manuel Barroso, the commission president, signalled that the EU would use the centenary of World War One to warn that Euroscepticism, far-Right and populist anti-European parties could bring war back to Europe.
"No other political construction to date has proven to be a better way of organising life to lessen the barbarity in this world," he said.
"It is especially important to recall this as we will commemorate this year the start of the First World War. We must never take peace, democracy or freedom for granted. It is also especially important to remind this as in May the peoples of Europe will be called to participate in European elections."
The attempt by Mr Barroso and Mrs Reding to raise the stakes in the EU elections have not been well received by all governments.
"Federalist hyperbole about a United States is the opposite of helpful to the majority of countries who want a reformed EU to work better," said a European diplomat.