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USA & WORLD ECONOMY GOING SOCIALISTSpain downgraded, Europe debt crisis widens
I guess I need a U.S.A. and the WORLD ECONOMY thread.
There are many nations going socialist - and FAST!
Wednesday April 28, 2010 BERLIN
Europe's debt crisis spread its contagion to another country Wednesday when a major credit agency downgraded Spain's credit rating, even as Germany grudgingly moved closer to bailing out Greece from imminent collapse.
Chancellor Angela Merkel said Germany would speed up the approval process and could have its share of a euro45 billion joint bailout from other euro countries and the International Monetary fund for Greece rushed through parliament by next week.
That would beat a May 19 deadline when Greece has debt coming due -- debt it can't pay without the money promised.
"It's absolutely clear that the negotiations between the Greek government and the European Commission and the IMF have to be accelerated now," Merkel said ahead of a meeting with IMF head Dominique Strauss-Kahn. "We hope that they will be completed in the next days."
Merkel's remarks and a promise from Finance Minister Wolfgang Schaeuble that the package could be signed, sealed and delivered -- provided Greece promised to tough austerity measures -- helped shore up confidence in the markets that the country would not suffer a disastrous default that would make borrowing more expensive for governments across Europe.
But the downgrade for Spain and a lack of clarity about how much money Greece will really need unsettled investors again -- the IMF's managing director Dominique Strauss-Kahn would not confirm reports he had told German parliamentary deputies that Greece would need euro120 billion over several years.
A lot is at stake -- some say that the very future of the euro project hangs in the balance. At the very least, a Greek debt default that could also tear holes in the balance sheets of European banks holding Greek bonds.
A lot is at stake -- some say that the very future of the euro project hangs in the balance. At the very least, a Greek debt default that could also tear holes in the balance sheets of European banks holding Greek bonds.
More broadly, growing worries about shaky government finances in Europe could force indebted governments to pay more and more of their budgets to cover interest costs, crimping spending and stimulus for the economy and pushing them to increase taxes. That could make it harder for Europe to maintain its shaky economic recovery.
Once again though, the main actors in the Greek debt drama failed to provide complete clarity -- until that emerges the markets could well suffer further turmoil.
Royal Bank of Scotland analyst Jacques Cailloux said the statements by Merkel, Strauss-Kahn and European Central Bank president Jean-Claude Trichet "failed to provide groundbreaking information" and warned that Europe risked the "biggest coordination failure in modern history."
Until the German parliament backs the release of the funds, the markets will remain "very sceptical" that the powers that be have got a handle on the crisis, said Cailloux.
Merkel's government has balked at handing over the Germans' taxpayers money to a country that has admitted has massaged its debt figures for years -- and key regional elections in Germany on May 9 have not helped a swift resolution.
Merkel stressed that Germany was still insisting Greece commit to cutbacks.
"Germany will make its contribution but Greece has to make its contribution," she said.
Merkel would not comment on how much money Greece would need in the long run. "What is known ... is that it will be a three year program..." she said. "Let us talk about numbers when the program is finalized."
The clock is ticking -- Greece has to pay off some euro8.5 billion worth of debts by May 19, but cannot raise the money in the markets given current sky-high borrowing costs -- at one stage earlier, the yield on the two-year Greek bond spiked up to a massive 23 percent.
That means it needs its 15 partners in the eurozone and the International Monetary Fund to cough up the money promised earlier this month, including euro8.4 billion from Germany.
The downgrade for Spain was an ominous new blow, coming just as markets were recovering their poise after the double shock Tuesday of a Standard & Poor's downgrade for Greece -- to junk status -- and Portugal.
Greece and Portugal, up to now the focus of alarm, are relative economic minnows; Spain's economy is four times the size of Greece and is considered by some to be too big to rescue.
Though its overall debt burden is fairly modest at around 53 percent of national income compared to 115 percent for Greece, the country is running a high budget deficit and has done less than others to get a handle on its public finances.
The agency said it was cutting Spain's rating to AA from AA+ amid concerns about the country's growth prospects following the collapse of a construction bubble.
"We now believe that the Spanish economy's shift away from credit-fuelled economic growth is likely to result in a more protracted period of sluggish activity than we previously assumed," Standard & Poor's credit analyst Marko Mrsnik said.
Spain still has an investment grade rating but could wind up paying more to borrow and may find itself under pressure to take tougher steps to cut spending.
"Given its lack of competitiveness and the grim outlook for domestic demand the government will need to announce further fiscal measures if it is to make serious inroads into the deficit," said Ben May, European economist at Capital Economics. "Today's announcement may increase the pressure on it to do this sooner rather than later."
Speaking during a cabinet meeting Wednesday, Greek Prime Minister George Papandreou said that every EU member must "prevent the fire that intensified through the international crisis from spreading to the entire European and global economy."
Papandreou insisted Greece was determined to bring its economy into order. "We will show that we do not run away. In difficult times we can perform -- and we are performing -- miracles," he said, adding that "our government is determined to correct a course that has been followed for decades in a very short time."
Investors appeared to anticipate Athens would eventually have to default or restructure its debt payments at some point even if the bailout gets it past May 19, when it has debt coming due.
Authorities in Athens halted short-selling of stocks for two months, helping the exchange finally climb after a five-day losing streak. The ban will remain in force until June 28. It closed up 0.63 percent at 1,707.35.
Associated Press Writers Verena Schmitt-Roschmann, Melissa Eddy and David Rising in Berlin, Barry Hatton in Lisbon, Nicholas Paphitis and AP Television Producer Nathalie Rendevski Savaricas in Athens contributed to this report. Business Writer Pan Pylas contribued from London.
WATCH GREECE thread
USA and WORLD ECONOMY WATCH
Stocks, Euro Slide on Debt ConcernStocks, Euro Slide on Debt Concern
MSCI World Erases 2010 Gain
May 5, 2040 - Bloomberg
The MSCI World Index of stocks erased its 2010 gain, the euro slid to a 14-month low and Treasuries rose as concern European nations will need to restructure debt outweighed growth in U.S. jobs and service industries.
The MSCI gauge of 23 developed nations’ stocks lost 1.2 percent at 4 p.m. in New York, dragging it down 0.9 percent for the year.
The Standard & Poor’s 500 Index fell 0.7 percent to the lowest since March. Spain’s IBEX 35 Index sank 2.3 percent to an almost 10-month low.
The euro plunged more than 1 percent versus the dollar for a second day. Nickel slid 11 percent and oil fell below $80 a barrel on concern the debt crisis will slow global growth.
The 10-year Treasury yield fell 4 basis points to 3.55 percent and the German 2-year yield touched a record low 0.56 percent on demand for assets perceived as the most safe.
European Central Bank council member Axel Weber said there is a threat of “grave contagion effects,” while
Moody’s Investors Service warned it may cut Portugal’s debt rating and 3 people were killed in an Athens fire set during protests against austerity measures.
Pacific Investment Management Co.’s Bill Gross told CNBC that Greece, Spain and Portugal may need to restructure debt, while Goldman Sachs Group Inc.
Chief Economist Erik Nielsen said Greece may be forced to restructure next year.
“The reason we have to worry is, let’s face it, this is a global environment,” said Jason Pride, director of investment strategy at Glenmede in Philadelphia, which manages $18 billion. “The primary concern is the contagion risk associated with Greece and some of the other problematic nations in Europe and the follow-on effects on long-term economic growth. We may be in for more of a rough and volatile period.”
The S&P 500 added to losses from yesterday’s 2.4 percent rout, its biggest since February, as Europe’s debt crisis continues to overshadow growing evidence the U.S. economic recovery is being sustained. The Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the economy, held at an almost four-year high of 55.4 for a second month. A report from ADP Employer Services showed private employers added 32,000 jobs in April, a third straight month of gains.
American Express Co., Walt Disney Co. and General Electric Co. slid at least 2.6 percent to lead declines in the Dow Jones Industrial Average, which closed at to the lowest level since March 31.
U.S. benchmark indexes briefly erased losses in midday trading before returning lower as Nouriel Roubini, the New York University professor who forecast the U.S. recession, said the American economy will weaken in the second half of the year. He spoke at the Bloomberg Markets Hedge Fund Summit in New York.
The benchmark index for U.S. stock options rose a second day to reach the highest intraday level in three months. The VIX, as the Chicago Board Options Exchange Volatility Index is known, climbed 4.5 percent to 24.91. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from a record 80.86 in November 2008 yet above its 20 average over its 19-year history.
The euro declined as much as 1.4 percent against the dollar to $1.2804, its weakest level since March 2009, before paring losses to trade at $1.2825. The euro fell 1 percent versus the pound. Britain’s currency advanced against 14 of 16 of its most- traded peers as the U.K. entered its last day of campaigning before tomorrow’s election.
Traders are betting a Greece’s European Union-led bailout will fail to ease concern other indebted countries will need rescue packages. Investors demanded an extra 132 basis points to hold Spanish 10-year bonds instead of German bunds today, the most since the euro’s inception and up from 116 basis points yesterday. The difference for Portuguese bonds jumped to 295 basis points from 252 basis points.
Portugal may have its Aa2 credit rating cut by Moody’s Investors Service as the country struggles to reduce its budget deficit and revive economic growth, the latest sign that contagion from the Greek crisis is spreading. Global stocks plunged last week as S&P cut ratings on Greece, Portugal and Spain.
Greek 10-year yields climbed to 731 basis points above German debt, a record in Bloomberg data going back to 1998.
Greek demonstrations against government austerity measures turned deadly when three people were killed after protesters set fire to a bank in central Athens in what Prime Minister George Papandreou called a “murderous act.” Greece’s federation of banking unions called a 24-hour strike for tomorrow.
Germany’s parliamentary budget committee approved aid for Greece today at a session in Berlin, Free Democrat lawmaker Otto Fricke said in an interview.
The cost of insuring European bank debt from default rose to the highest in a year with the Markit iTraxx Financial index of credit-default swaps jumping as much as 19 basis points to 154. Swaps contracts Portugal surged 85.5 basis points to a record 429.5, according to CMA DataVision prices, and contracts on Greece, Italy and Ireland surged.
The Stoxx Europe 600 Index, which erased its 2010 gain yesterday, lost 1 percent as 15 stocks fell for every one that rose. Banco Santander SA, Spain’s biggest lender, slid 2.5 percent. Petroplus Holdings AG retreated 4.8 percent in Zurich after reporting a loss. Declines were limited as BP Plc advanced for the first time in four days, climbing 2.9 percent in London as JPMorgan Cazenove said the sell-off following the oil spill in the Gulf of Mexico was overdone.
The MSCI Asia Pacific excluding Japan Index dropped 1.9 percent. Esprit Holdings Ltd., a Hong Kong-based clothier that gets about 85 percent of its revenue in Europe, sank 5.2 percent. Australia’s Westpac Banking Corp. lost 4.2 percent in Sydney even after reporting a surge in first-half profit.
Emerging European equity markets declined, with benchmark indexes in Romania, Poland and the Czech Republic losing at least 1.7 percent. In Asia, the Philippine Stock Index tumbled 3.5 percent as faulty vote-counting machines raised concern there will be a delay in choosing a replacement for President Gloria Arroyo.
Commodities fell for a second day on concern the Greek debt crisis will spread and undermine Europe’s economic recovery.
The Reuters/Jefferies CRB Index of 19 raw materials declined 1.3 percent, adding to yesterday’s 2.3 percent retreat. Crude oil fell 3.3 percent to a seven-week low of $79.97 a barrel.
The CRB’s 3.7 percent retreat is the biggest two-day drop in three months.
But everything here in America is getting better and better, right? NBA Playoffs in full swing, football season in a couple of months, school's out for kids soon, the summer movie season starting, right? /sarcasm
Seriously - what we're witnessing now in Europe will be coming to America soon - sadly, most pastors and church elders are not warning about this.
Greek Lawmakers Approve Bailout Bill Dow PlungesGreek Lawmakers Approve Bailout Bill
May 06, 2010 Dow Plunges The rescue loans are aimed at containing the debt crisis and keeping Greece's troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain.
Greek lawmakers approved drastic austerity cuts Thursday needed to secure international rescue loans worth $140 billion and clashes briefly erupted in the streets outside parliament, forcing police to use tear gas.
In New York, the Dow Jones industrials plunged 1,000 points in less than half an hour on fears that Greece's debt problems could halt the global economic recovery. The Dow managed to recover two-thirds of its losses and close down 347 at 10,520.
There were reports that the sudden drop was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock's price was enough to trigger "sell" orders across the market.
Still, the Dow was already down more than 200 points as traders watched protests in the streets of Athens on TV.
The new clashes came a day after violent protests left three people dead after a bank was firebombed in Athens.
At least three people have been killed in a serious of violent riots in the streets of Greece. Nearly 100,000 protesters took to the streets as government officials agreed to spending cuts to help prevent the nation from declaring bankruptcy.
Greek Debt Crisis Affecting All Markets?
Biggest Closing Point Drops in Dow Jones Industrial Average History
Greek lawmakers voted 172-121 to approve the austerity measures -- worth about euro30 billion ($38.18 billion) through 2012 -- that will slash pensions and civil servants' pay and further hike consumer taxes.
The rescue loans are aimed at containing the debt crisis and keeping Greece's troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain. The money will come from the International Monetary Fund and the 15 other governments whose countries use the euro.
Fears of Greek default have undermined the euro, and while the current package should keep Greece from immediate bankruptcy, its long-term prospects are unclear. The country's growth prospects are weak, and the population's willingness to accept cutbacks may wane, leading some economists to predict an eventual debt restructuring somewhere down the road.
Opposition parties lambasted the government for imposing measures that are too harsh for the population to bear.
"The dose of the medicine you are administering is in danger of killing the patient," conservative opposition leader Antonis Samaras said.
Clashes in Athens broke out at the end of a main protest that drew tens of thousands of people as police pushed back a few thousand demonstrators outside parliament.
The violence was quickly contained with riot police firing tear gas at the protesters, who had earlier pelted them with stones, oranges and bottles.
Several small fires burned in surrounding streets. No injuries or arrests were reported.
Demonstrators banging drums and shouting anti-government slogans through bullhorns, unfurled a giant black banner outside parliament earlier Thursday.
More than 30,000 demonstrators filled downtown streets, chanting "They declared war. Now fight back."
Prime Minister George Papandreou expelled three Socialist deputies who dissented in the vote, reducing the party's number of seats to 157 in the 300-member parliament.
"We have done what was necessary, not what was easy," Finance Minister George Papaconstantinou said after the vote.
"Without these measures, we'd be thrown into the deepest recession this country has ever known."
Samaras also expelled a dissenting lawmaker, former Foreign Minister Dora Bakoyannis, reducing his share of parliamentary seats to 90.
The bulk of Thursday's protest -- organized by the Greek Communist Party -- quickly dispersed, leaving about 5,000 demonstrators outside parliament before police pushed them back.
Protester Thodoris Mougiakos said he was angry the IMF would control Greek finances.
"It's blackmail," the 32-year-old engineer said. "There is money, but they spend it on things like armaments and businesses.
The church has money too. If we had been drawing money from all these sources, we wouldn't be in this situation now,"
But the protest remained peaceful, in contrast with Wednesday's rioting that left three people dead, 59 injured and 25 people arrested.
Police said 50 stores, banks and offices were damaged and seven vehicles damaged or burned.
Papaconstantinou said Greece would default on debt payments this month unless it received the bailout loans from the International Monetary Fund
and 15 euro-zone countries that had remained divided for months on how to aid Athens.
"Today things are simple. Either we vote and implement the deal, or we condemn Greece to bankruptcy," Papandreou told parliament before the vote.
"Some people want that, and are speculating (on it), and hope that it will happen," he said, referring to speculative attacks that have been blamed for raising Greece's borrowing costs to unsustainable levels.
"We, I, will not allow that. We will not allow speculation against our country, and bankruptcy to happen."
European governments are now scrambling to get parliamentary approval for the Greek loans. European leaders will meet on the issue in Brussels on Friday.
Europe Bank Funding Crunch DeepensEurope Bank Funding Crunch Deepens
May 10, 2010 Europe’s government debt crisis is starting to infect the bank funding system, driving borrowing costs higher from Asia to the U.S. and threatening to slow the global economic recovery.
The interest rate financial companies charge each other for three-month loans in dollars rose to the highest since August, while traders are paying record amounts to hedge against losses in European bank bonds. Yields on corporate debt rose last week by the most relative to government securities since Lehman Brothers Holdings Inc.’s bankruptcy in September 2008, according to Bank of America Merrill Lynch indexes.
European Union policy makers unveiled an unprecedented loan package today worth almost $1 trillion. A statement from the region’s finance ministers highlighted “a risk of contagion which we needed to address.” The European Central Bank will intervene in secondary markets for securities, EU Economic and Monetary Affairs Commissioner Olli Rehn said in Brussels after a 14-hour emergency meeting.
“Whether the markets completely unravel depends on whether politicians can stabilize the peripheral government market,” said James Gledhill, who helps manage about 58 billion pounds ($85 billion) as head of fixed income at Henderson Global Investors Ltd. in London. “The tail risk is the stress on banks which stops them from lending to corporates and feeds through to become a real economy problem.”
Bond Sales Plummet
Global corporate bond issuance plummeted last week, with $9.4 billion sold, the least this year, following $30.1 billion in the previous five-day period and $47.9 billion in the week ended April 23, according to data compiled by Bloomberg. JPMorgan Chase & Co. said in a May 7 report it’s ending a recommendation that investors own a greater percentage of junk bonds than contained in benchmark indexes.
The sovereign debt crisis may end up costing governments more than $1 trillion, according to credit investment firm Aladdin Capital Holdings LLC in Stamford, Connecticut.
“Look for the de-risking that is underway to continue,” the New York-based bank’s fixed-income strategists including Srini Ramaswamy wrote. “Funding pressures have increased for European banks and could worsen over the near term, but are unlikely to deteriorate to the extent seen in 2008 that led to forced deleveraging.”
The three-month London interbank offered rate in dollars, the rate banks pay for loans, jumped 5.5 basis points to 0.428 percent on May 7. It climbed 8.2 basis points on the week, the biggest increase since October 2008.
The spread between three-month dollar Libor and the overnight indexed swap rate, a barometer of the reluctance of banks to lend, jumped to 18.1 basis points on May 7, three times the 6 basis-point spread on March 15 and the highest since August.
“At the moment, it feels worse than 2008,” said Geraud Charpin, a fund manager at BlueBay Asset Management in London. “There is no buyer of risk in the market.”
The five-year euro interest rate swap spread, the difference between the rate to exchange fixed- for floating- interest rates and yields on government debt, widened 18.65 basis points to 54.13 last week, the biggest gap since March 2009. Investors concerned that Greece’s budget turmoil is spreading to other nations have piled into German bunds, considered the safest among European government securities.
Swap rates are typically higher than government yields because the floating payments are based on rates, such as the euro interbank offered rate, or Euribor, that contain credit risk. Swap rates serve as benchmarks for investors in debt including mortgage-backed and auto-loan bonds.
“There is a concern the market may be ceasing to function, with government bond liquidity drying up completely as everyone looks to sell,” said Mark Austen, managing director at the Association for Financial Markets in Europe. “We need quick and decisive action from the authorities.”
The rate at which Royal Bank of Scotland Group Plc told the British Bankers Association it could borrow for three months jumped 14 basis points last week to 0.5 percentage point. Barclays reported rates that increased 11 basis points to 0.45, while Societe Generale SA, France’s second-largest bank by market value, said its climbed 8 basis points to 0.45 percentage point.
Rates being charged for short-term loans are more than 90 percent below the record levels in 2008, as banks are in better shape to weather a market seizure than when the U.S. subprime mortgage market collapsed. The Libor-OIS spread reached a record 364 basis points in October 2008.
“The price action is probably as bad as anything we saw in September ‘08, although it feels like the dealers are better positioned now than they were then,’’ said James Palmisciano, chief investment officer of the $1.7 billion Gracie Credit Fund in New York. ‘‘So it feels like customers are poorly positioned now, as opposed to both dealers and the customers being poorly positioned.’’
The extra yield investors demand to own corporate debt instead of government securities soared 28 basis points to 177 basis points, or 1.77 percentage point, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. The index, which peaked at 511 basis points in March 2009, dropped to as low as 142 on April 21.
Spreads on European bank bonds widened 48 basis points last week to 238 as of May 7, the highest since September, according to Bank of America Merrill Lynch’s EMU Financial Corporate index. The index’s 1 percent loss this month follows returns of 0.49 percent in April and 1.12 percent in March.
Concern that European leaders will need to bail out more countries than just Greece flared from New York to Sydney last week, prompting investors to shun all but gold, dollars, yen and the safest government securities. Led by Italy’s $126 billion, Greece, Spain, Portugal, Ireland and Italy have a total of $215 billion of debt coming due in the next three months, according to JPMorgan.
‘‘When we’re told something’s contained, it almost never is,” said Brian Yelvington, head of fixed-income strategy at broker-dealer Knight Libertas LLC in Greenwich, Connecticut. “There were a lot of people who didn’t realize how fully interrelated and large this is.”
Under today’s loan package, euro-area governments pledged 440 billion euros in loans or guarantees, with 60 billion euros more in loans from the EU’s budget. The International Monetary Fund may provide a further 250 billion euros, Spanish Economy Minister Elena Salgado said.
The Federal Reserve said it will restart its emergency currency-swap tool by providing as many dollars as needed to central banks in Europe, the U.K. and Switzerland.
Investors seeking to protect themselves from losses on bonds or speculate on creditworthiness by buying credit-default swaps drove up benchmark indexes in Europe and the U.S. last week by the most since December 2008, CMA DataVision prices show.
Bond risk tumbled today in Asia, with the cost of protecting Asia-Pacific bonds from default dropping the most in a year. The Markit iTraxx Asia index fell 22 basis points to 115, Deutsche Bank AG prices show. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt.
A swaps index tied to 25 European banks and insurers including Spain’s Banco Santander SA and Portugal’s Banco Espirito Santo SA rose the most on record last week. The Markit iTraxx Financial Index of credit-default swaps surged as much as 105 basis points last week to 223 on May 7, the highest on record, before ending the week at 177 basis points, according to JPMorgan prices.
Credit-default swaps on Lisbon-based Banco Espirito Santo surged 207.5 basis points last week to 613.5, the highest end- of-day level on record, CMA prices show. That would cost 613,500 euros a year to protect 10 million euros of the bank’s debt from default for five years.
Swaps on Banco Santander, the biggest Spanish bank, rose 102 basis points last week to 247, also a record, CMA prices show. In Australia, contracts on Macquarie Bank Ltd. increased 61.5 to 174, the highest since July 2009, according to CMA. Contracts on New York-based Goldman Sachs Group Inc., the most profitable Wall Street bank in history, rose 46 basis points on the week to 213, reaching the highest in a year.
Top-ranked companies are willing to pay investors some of the highest rates since at least August to borrow in the market for commercial paper, according to offer yields compiled by Bloomberg.
The average yield on 30-day commercial paper climbed to 0.31 percent on May 7, the highest since Aug. 26, up from 0.24 percent a week ago and almost double the record low reached in February. Rates for overnight loans jumped to 0.25 percent, the highest since July, from 0.2 percent 10 days earlier.
“Lenders in both the commercial paper and deposit markets have begun moving away from certain counterparties,” Joseph Abate, a money-market strategist at Barclays Plc in New York, wrote in a May 6 note to clients. “At the same time, the willingness to lend to all counterparties for terms greater than three months has declined.”
Brazilian corporate bond sales, off to the best start to a year, are being derailed by the highest borrowing costs in three months. Yields on corporate dollar bonds surged 54 basis points last week to 6.56 percent, according to JPMorgan.
Odebrecht SA, a Salvador, Brazil-based construction and engineering company, suspended its planned $200 million sale May 7, the company said in an e-mail. Banco Cruzeiro do Sul SA, a Sao Paulo-based bank, postponed a 10-year dollar bond offering until market conditions improve, said investor relations superintendent Fausto Vaz Guimaraes Neto.
EU agrees to save euro from disaster,
Bangkok Riots in ThailandThailand * Bangkok riots
May 14, 2010 US Embassy offers to evacuate family of staff in Bangkok,
Tells American citizens to stay away.
Thai troops faced off against die-hard protesters vowing to defend their fortified encampment in downtown Bangkok on Saturday,
following two days of running gunbattles that killed 16 people and wounded nearly 160.
Scattered clashes resumed Saturday morning, after encircling troops used tear gas, rubber bullets and live rounds on demonstrators on Friday and the protesters in turn set fire to tires and a police bus.
Explosions echoed overnight through streets emptied of shoppers and tourists, plumes of black smoke rose amid skyscrapers and hotels. The deteriorating security raised concerns that Thailand, a key U.S. ally with Southeast Asia's second-largest economy, was teetering toward instability because of the 2 month-long political crisis.
In a message from New York, U.N. Secretary-General Ban Ki-moon appealed to both sides to "do all within their power to avoid further violence and loss of life."
The Red Shirt protesters began their latest campaign to oust the government in March, saying it came to power illegitimately and is indifferent to the poor. In several rounds of violence since then, 43 people have been killed and more than 1,400 wounded, according to the government. The casualty toll included 16 killed and 157 wounded in the latest violence.
Protesters have urged 82-year-old King Bhumibol Adulyadej to end his long silence and intervene, but there was no word from the widely revered ailing monarch.
The latest violence erupted Thursday after the Red Shirts' military strategist — a former Thai general — was shot and seriously injured, apparently by a sharpshooter, as he spoke to foreign journalists. One protester was fatally shot later Thursday and four were killed Friday, the army said. Among the wounded were two Thai journalists and a Canadian reporter — all from gunfire.
Witnesses saw several groups of a dozen or more people detained at the scene of several clashes. No figures were released on how many were detained.
As night fell Friday, defiant Red Shirt leaders led followers in Buddhist prayers and called on volunteers to bring more tires for their barricades.
"Death cannot stop us civilians from continuing our fight," said Jatuporn Prompan, a protest leader.
The Red Shirts, mostly rural poor, began camping in the capital March 12 to try to force out Prime Minister Abhisit Vejjajiva. They claim his coalition government came to power through manipulation of the courts and the backing of the powerful military.
The military had forced Thaksin Shinawatra, the populist premier favored by the Red Shirts, from office in a 2006 coup. Two subsequent pro-Thaksin governments were disbanded by court rulings before Abhisit became prime minister.
In a Twitter message from exile, Thaksin said the "very cruel and unusual government" will "end up as war criminals" in the International Court of Justice.
About 10,000 Red Shirts have barricaded themselves in a 1-square-mile (3-square-kilometer) protest zone in Rajprasong, Bangkok's premier shopping and diplomatic enclave. They have set up a perimeter of tires and bamboo stakes, refusing to leave until Abhisit dissolves Parliament and calls new elections.
The occupation has forced luxury hotels and high-end shops to close for weeks. Major roads around the protest site were blocked to traffic Saturday, and the city's subway and elevated train shut down. The embassies of the United States, Britain and other countries were also closed.
The political uncertainty has spooked foreign investors and damaged the vital tourism industry, which accounts for 6 percent of the economy.
"Abhisit must dissolve Parliament and return power to the people immediately, and not serve as caretaker prime minister," Jatuporn said Friday from a stage in the protest zone, which is now encircled by the army in a wider perimeter.
As Jatuporn spoke, a series of gunshots rang out close by, panicking the crowd of listeners who shrieked in fear and ducked for cover.
"We are being surrounded. We are being crushed. The soldiers are closing in on us. This is not a civil war yet, but it's very, very cruel," Weng Tojirakarn, another protest leader, told The Associated Press.
The crisis appeared to be reaching a resolution last week when Abhisit offered to hold elections in November, a year early. But the hopes were dashed after Red Shirt leaders made more demands.
Jatuporn said only the king "can stop the killings of civilians by Abhisit."
The beloved monarch has in the past mediated political crises, but he has stayed away from commenting on this one.
Observers say he may be reluctant to get involved in a conflict that he may not be able to solve. Another problem is his failing health —
he has been hospitalized since September and the palace has given no updates after initially describing his ailment as a lung infection.
The Red Shirts have kept soldiers at bay by firing guns and homemade rockets, hurling rocks and commandeering government vehicles.
Some bolder protesters came close to the soldiers on motorcycles, shouted obscenities and sped away.
Army spokesman Col. Sansern Kaewkamnerd said some protesters also used grenades and other weapons, and have an estimated 500 armed fighters.
The troops have kept their distance and made little progress toward their goal of clearing the streets.
Soldiers addressed the protesters with a loudspeaker, saying: "We are the people's army. We are just doing our duty for the nation. Brothers and sisters, let's talk together."
Sansern said soldiers will tighten the perimeter around the protest site in the next few days and will conduct operations without advance warning.
"The measures we will apply will definitely be more intense than what has been done so far," he told reporters.
The government said authorities are not trying to disperse the protesters forcibly but only pressure them so that they leave voluntarily.
"Security forces have refrained from entering the rally area and the (violence) occurred because the protesters attacked them," he said, adding that authorities "needed to defend themselves."
Among the injured was Canadian freelance journalist Nelson Rand, who works for France 24 news channel. He was hit by three bullets and was recovering after surgery.
Bangkok residents found it hard to come to terms with the violence in their city, which prides itself as an exotic and welcoming gateway to the Land of Smiles, as Thailand is fondly known.
"I've never seen anything like this. I heard gunshots and explosions all day," said Kornvika Klinpraneat, a 7-Eleven employee. "This is like a civil war. The battle is being fought in the middle of the city."
The two-day clashes marked the worst violence since April 10, when 25 people were killed and more than 800 injured. Four others were killed in subsequent clashes.
Stocks tumble on EURO concern, 19 month lowStocks tumble as European worries return
EURO drops to 19-month low
May 14, 2010 Report that the global elite (PTB, NWO, Beast system) want to crash the dollar BEFORE WW3
Stocks tumbled for a second day Friday after concerns grew that the deep spending cuts under Europe's bailout plan would slow a global recovery.
The Dow Jones industrial average ended down 163 points but closed well off its lows of the day.
The Dow and other major stock indexes still posted big gains for the week after rocketing higher Monday on hopes that a bailout plan for Europe would prevent a debt crisis in Greece from spreading.
The latest drop followed a slide of more than 3% in European markets. The euro dropped to a 19-month low against the dollar.
Investors seeking safety piled into Treasurys and the dollar. Gold settled lower after hitting another record. Crude oil sank nearly 4%, and an indicator of stock market volatility jumped.
Currency traders have been moving out of the euro throughout the week because of concerns that cost-cutting measures in countries like
Greece, Spain and Portugal would slow economic activity on the continent and elsewhere.
Now stock investors are also looking at those same problems.
Shifting sentiment about the problems in Europe whipsawed the market during the week.
Major indexes posted their biggest gains in more than a year on Monday after a nearly $1 trillion rescue package from the European Union and
International Monetary Fund raised hopes that debt-strapped EU countries wouldn't be a drag on a global rebound.
But the glow from the bailout package faded during the week, pushing the euro down sharply against the dollar.
The spike in the dollar hit the prices for oil and other commodities, hurting major U.S. energy and materials companies.
"Clearly the action in the euro is reflecting the fact that at least currency investors don't think the bailout plan plus the austerity measures are sufficient,"
said Uri Landesman, president of Platinum Partners in New York.
"The euro is leading the market down."
Investors now worry that the spending cuts in Europe being called for in the bailout package will curtail the ability of weaker countries like Spain and Portugal to grow their way out of a recession.
More strikes are expected in Spain and Greece as workers protest cuts in pensions and other public spending.
The euro, which is used by 16 countries, slid as low as $1.2359 in New York, its weakest point since October 2008.
The euro has dropped more than 6% since the beginning of the month and is close to its lowest level in four years.
There were also concerns Friday about corporate profits. Shares of credit card companies tumbled after the Senate voted to force them to reduce fees for debit card transactions.
Visa fell 9.9%, while Mastercard lost 8.6%.
The Dow fell 162.79, or 1.5%, to 10,620.16. The Dow had been down nearly 246 points. It has fallen seven of the last nine days.
The Standard & Poor's 500 index lost 21.76, or 1.9%, to 1,135.68, while the Nasdaq composite index fell 47.51, or 2%, to 2,346.85.
Stocks ended off their worst levels perhaps in part becuase traders aren't sure what leaders in Europe might do over the weekend to shore up confidence in the euro and the EU over all.
The market ended off its lows but it was still a wild week for investors. After jumping 405 points on Monday, the Dow slipped Tuesday and jumped 149 points on Wednesday.
The gains helped the Dow erase its losses from late in the prior week when fears about debt woes in Greece pounded the market.
Selling resumed Thursday to send the Dow down about 114 points after more worries emerged about the cost of the Euroepan rescue.
For the week, the Dow rose 2.3%, the S&P 500 index added 2.2% and the Nasdaq gained 3.6%.
Treasurys jumped Friday, pushing down yields. The yield on the benchmark 10-year Treasury note fell to 3.43% from 3.53% late Thursday.
The Chicago Board Options Exchange's Volatility Index — known as the market's fear gauge, jumped 17.1%.
Gold hit a record of $1,249.70 an ounce before settling down $1.40 to $1,227.80.
Crude oil fell $2.79 to $71.61 per barrel on the New York Mercantile Exchange.
Investors on Friday looked past improved reports on April retail sales and industrial production.
The Commerce Department said sales rose 0.4% in April. That was double the forecast by economists polled by Thomson Reuters.
It was the seventh straight monthly rise in sales, providing hope that a consumer rebound will hold and help the economy grow.
The Federal Reserve said industrial production rose 0.8% in April, better than the 0.6% growth forecast by economists. It was the biggest jump in output from the nation's factories, mines and utilities since January.
Manufacturing growth has been steady in recent months as the sector plays a leading role in the domestic recovery.
Among stocks, Visa fell $8.47 to $77.26 and Mastercard fell $19.86 to $212.45 after the Senate vote to curb fees on debit cards.
About seven stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1.5 billion shares compared with 1.2 billion Thursday.
The Russell 200 index of smaller companies lost 15.87, or 2.2%, to 693.98.
Britain's FTSE 100 dropped 3.1%, Germany's DAX index fell 3.1%, and France's CAC-40 tumbled 4.6%.
Bangkok under siegeBangkok under siege
May 15, 2010 Following death of 17 people, Thai locals concerned violence may spread further. Israeli residing in Bangkok says all major shopping malls closed, fears shutdown of airport.
Israelis instructed to stay clear of riot centers
Clashes in Thailand show no sign of stopping while Israeli travelers feel repercussions.
"Bangkok is under siege, you can feel there are no people on the streets.
All the major malls are closed. Some fear the airport will get shutdown tonight," said an Israeli residing in the city.
Israel's Foreign Ministry is holding a consultation in light of the escalation in Bangkok, at the end of which it will be decided whether to further update the Thailand travel advisory, which was updated on Friday.
The Ministry is encouraging Israelis to seriously consider their travels to Bangkok and 14 other counties in the country.
Foreign Ministry Spokesman Yossi Levy said that the ministry will provide an update later on Saturday.
The Thai army has designated an area in central Bangkok as a "live firing zone" in a warning to protesters and local residents.
Soldiers unrolled razor wire across roads leading to the Ratchaprarop area Saturday and pinned Thai and English-language notices saying "Live Firing Zone" and "Restricted Area. No Entry."
The signs indicate soldiers may shoot protesters still hiding there.
Violence in Bangkok escalated in the last few days after a former army general who is said to have provided advice to the anti-government protestors was shot on Thursday.
On the third day of riots, soldiers opened fire at the protestors.
17 people were killed during the violent clashes, and at least 157 were injured.
The "red shirts" who are demanding the resignation of the Thai government hurled improvised explosive charges and rockets at security forces while the
army recruited reinforcements in an effort to disperse the demonstrators and restore order in the capital.
"Violence has escalated and the situation has become worse," the Israeli who wished to remain anonymous informed.
"It appears the Thai people are united together with the reds, since hurting the Thais will not be ignored. It gives them strength. "
The Israeli could not estimate what is to be expected next. "You can't tell where this will go, everything is under a cloud. There is fear the reds will be coming from the villages."
Meanwhile, Israeli travelers are instructed not to go near the riot centers or the major commercial areas. "Israelis know to avoid reaching these places and not to contact the reds," he said.
He added that those who can will opt to board connection flights in order to travel to other destinations.
US Embassy warnedMay 15, 2010
US Embassy offers to evacuate family of staff in Bangkok, tells American citizens to stay away
BANGKOK — The U.S. Embassy in Bangkok is offering to evacuate family members of its staff in the volatile Thai capital and has issued a travel warning advising American citizens to stay away.
Embassy spokeswoman Cynthia Brown says the State Department has "authorized the voluntary departure" of relatives of its employees in Bangkok and "will provide financial assistance" for their travel.
Brown says the U.S. also issued a "travel warning advising all citizens to defer travel to Bangkok."
Until Saturday, the U.S. had placed Bangkok under a "travel alert" that advised citizens to defer nonessential travel.
Thai PM defends crackdownThai PM defends crackdown
May 15, 2010 PM defends crackdown on protesters as vital for Thailand, where bodies lie in capital streets
Thailand's leader defended the deadly army crackdown on protesters besieging the capital's heart, saying Saturday the country's very future was at stake.
Protesters dragged away the bodies of three people from sidewalks — shot by army snipers, they claim — as soldiers blocked major roads and pinned up notices of a "Live Firing Zone."
"I insist that what we are doing is necessary," Prime Minister Abhisit Vejjajiva said in a defiant broadcast on national television, making it clear he would not compromise.
"The government must move forward. We cannot retreat because we are doing things that will benefit the entire country."
On Saturday, the protesters launched a steady stream of rudimentary missiles at troops who fired back with live ammunition in several areas around a key commercial district of Bangkok.
Army snipers were perched with high-powered rifles atop tall buildings, viewing the action below through telescopic sights.
Thick black smoke billowed from tires set ablaze by demonstrators as gunfire rang out.
The spiraling violence has raised concerns of sustained, widespread chaos in Thailand —
a key U.S. ally and Southeast Asia's most popular tourist destination that promotes its easygoing culture as the "Land of Smiles."
"The situation right now is getting close to a civil war each minute," Jatuporn Prompan, a protest leader, told reporters.
"Please don't ask us how we are going to end this situation, because we are the ones being killed."
Since Thursday, the once-bustling commercial and shopping district has become a war zone with Red Shirt protesters firing weapons,
throwing homemade explosives, and hurling rocks at troops firing live ammunition and rubber bullets.
The violence ignited after the army started forming a cordon around the protesters' encampment and a sniper shot and gravely wounded a rogue general reputed to be the Red Shirts' military adviser.
At least 24 people have been killed and more than 194 wounded since Thursday. Previous violence since the protest began in mid-March caused 29 deaths and injured 1,640.
This is the most prolonged and deadliest bout of political violence that Thailand has faced in decades despite having a history of coups — 18 since it became a constitutional monarchy in 1932.
The protesters have occupied a tire-and-bamboo-spike barricaded, 1-square-mile (3-square-kilometer) zone in one of the capital's ritziest areas, Rajprasong,
for about two months to push their demands for Abhisit to resign immediately, dissolve Parliament and call new elections.
The crisis had appeared to be near a resolution last week when Abhisit offered to hold elections in November, a year early. But the hopes were dashed after Red Shirt leaders made more demands.
The political uncertainty has spooked foreign investors and damaged the vital tourism industry, which accounts for 6 percent of the economy, Southeast Asia's second largest.
Abhisit, in his first comments since Thursday, said the protesters have "held the people of Bangkok hostage" and described them as "armed terrorists" who attacked security forces.
"Officers on duty have the right to defend themselves," he said.
The Red Shirts, drawn mostly from the rural and urban poor, say Abhisit's coalition government came to power through
manipulation of the courts and the backing of the powerful military, and that it symbolizes a national elite indifferent to the poor.
The fighting is taking place in the no man's land between the encampment and the army cordon, a normally bustling area with hotels, businesses, embassies, shopping malls and apartments.
Most of them are now shut and public transport is off the roads.
The army said its cordon has been effective, and the number of protesters at the encampment has dwindled by half. Water and power also were cut off to the area Thursday.
About 5,000 hard-core demonstrators held their ground under threat of military operations to oust them, down from about 10,000 days earlier, army spokesman Col. Sansern Kaewkamnerd said.
"If the protesters will not end the situation, we will have to enter the encampment," Sansern said.
The army says it is not shooting to kill, but protesters crawled along sidewalks to slowly drag away corpses of three people near the city's
Victory Monument traffic circle in the Ratchaprarop area. Demonstrators accused army snipers of shooting all three in the head.
On Saturday, soldiers unrolled razor wire across roads leading to Ratchaprarop — a commercial district north of the main protest site —
area and pinned up Thai and English-language notices saying "Live Firing Zone" and "Restricted Area. No Entry."
Ratchaprarop houses high-rise buildings, posh hotels and designer shops. It was the scene of some of the worst fighting Friday night between troops and anti-government protesters.
Amid the violence, the rest of the capital has remained largely normal with shops, restaurants and cinemas open and busy, albeit with customers and workers expressing concern about the clashes.
Rural Thailand also has not seen violence, though demonstrations and other protest-related activity has occurred in the rural home provinces of many Red Shirts and supporters.
The Red Shirts especially despise the military, which had forced Thaksin Shinawatra, the populist premier favored by the Red Shirts, from office in a 2006 coup. Two subsequent pro-Thaksin governments were disbanded by court rulings before Abhisit became prime minister.
"The reality is that this conflict also draws heavily on the frustrated political aspirations of a large numbers of rural voters," said Andrew Walker, a political scientist at The Australian National University.
"If election results are going to be overturned, people's political aspirations and frustrations will find expression in other forms," he said.
Defense Ministry spokesman Tarit Pengdit said 27 protesters have been sentenced to six months' jail for joining an illegal protest. He did not elaborate.
The U.S. Embassy said it will evacuate family members of its staff who want to leave Bangkok.
Embassy spokeswoman Cynthia Brown said the U.S. State Department also issued a "travel warning advising all citizens to defer travel to Bangkok."
As death toll rises, Thai PM defends crackdown
Government declares part of Bangkok a 'Live Firing Zone'
Thailand Imposes Curfew After Riots Kill at Least 25
May 16, 2010 This is an NWO TAKEOVER - JUST LIKE GREECE
Thailand will impose a curfew Sunday and send Red Cross workers to evacuate women and children from
Bangkok's deadly protest zone where 25 people have been killed in four days of street battles between anti-government demonstrators and troops.
A towering column of black smoke rose over the city Sunday as protesters facing off with troops set fire to tires serving as a barricade.
Elsewhere, they doused a police traffic post with gasoline and torched it as sporadic gunfire rang out.
The government said a curfew has become necessary to stop the armed members of the so-called Red Shirt protest movement.
Journalists have seen some of them carrying guns, but most have used homemade fire bombs and fireworks.
"We cannot let people with weapons in their hands walk around here and there," army spokesman Col. Sansern Kaewkamnerd said.
"Terrorist groups have tried to create a situation where shots are fired at military and police officers to instigate misunderstanding among them that officers are attacking each other," he said.
The timing and the exact locations of the curfew will be announced later, he said.
The spiraling violence has raised concerns of sustained, widespread chaos in Thailand -
a key U.S. ally and Southeast Asia's most popular tourist destination that promotes its easygoing culture as the "Land of Smiles."
Speaking on his weekly television program, Prime Minister Abhisit Vejjajiva insisted he was left with no choice but a military operation to end the country's two-month-old crisis.
"Overall, I insist the best way to prevent losses is to stop the protest. The protest creates conditions for violence to occur. We do realize at the moment that the role of armed groups is increasing each day," he said.
The Red Shirts have occupied a 1-square-mile (3-square-kilometer) zone, barricaded by tires and bamboo spikes,
in one of the capital's ritziest areas, Rajprasong, since mid-March to push their demands for Abhisit to resign immediately, dissolve Parliament and call new elections.
The Red Shirts, drawn mostly from the rural and urban poor, say Abhisit's coalition government came to power through
manipulation of the courts and the backing of the powerful military, and that it symbolizes a national elite indifferent to the poor.
Sansern said the government will send the Red Cross and voluntary organizations into the protest zone to "invite or persuade people, especially women, children and older people to leave the area."
On Sunday, hundreds of women and children moved to a sprawling Buddhist temple compound within the protest zone, fearing a crackdown.
In Thai tradition, temples are considered safe havens where no weapons are allowed.
About 5,000 people are believed camped in the zone, down from about 10,000 before fighting started Thursday after a sniper shot and seriously wounded a Red Shirt leader,
a former army general who was the Red Shirt military strategist. His condition worsened Sunday, doctors said.
After his shooting, fighting quickly spread to nearby areas, which became a no-man's land as the army set up barriers in a wider perimeter around Rajprasong.
The area already resembles a curfew zone with no public transport or private vehicles.
Most shops, hotels, supermarkets and businesses in the area are shut.
The government has shut off power, water and food supplies to the core protest zone.
Schools were ordered shut Monday in all of Bangkok. Long lines formed at supermarkets outside the protest zone as people rushed to stock up on food.
At least 54 people have been killed and more than 1,600 wounded since the protests began mid-March, according to the government. The dead include 25 killed since Thursday.
"I'm asking Abhisit not to shoot children, women and old people. Come kill us (men) instead," said a Red Shirt leader, Jatuporn Prompan. "Once the authorities stop shooting at protesters, the death toll will stop rising."
On Saturday, soldiers blocked major roads and pinned up notices of a "Live Firing Zone" in one area of Bangkok.
Demonstrators dragged away the bodies of three people from sidewalks in that area -- shot by army snipers, they claimed.
The New York-based Human Rights Watch on Saturday called on the Thai government to revoke the fire zones and negotiate an end to the fighting.
"It's a small step for soldiers to think `live fire zone' means `free fire zone,' especially as violence escalates," the rights watchdog said in a statement.
The clashes are the most prolonged and deadliest bout of political violence that Thailand has faced in decades despite having a history of coups -- 18 since it became a constitutional monarchy in 1932.
The crisis appeared to be near a resolution last week when Abhisit offered to hold elections in November, a year early. But the hopes were dashed after Red Shirt leaders made more demands.
The political uncertainty has spooked foreign investors and damaged the vital tourism industry, which accounts for 6 percent of the economy, Southeast Asia's second largest.
The Thai Red Cross said its blood supplies are running low and invited people to donate blood.
The Red Shirts especially despise the military, which forced Thaksin Shinawatra, the populist premier favored by the Red Shirts, from office in a 2006 coup.
Two subsequent pro-Thaksin governments were disbanded by court rulings before Abhisit became prime minister.
Thailand plans, then abaondons curfew planThailand to impose curfew in parts of capital
May 16, 2010 - Curfew plan abandoned
At least 24 have died in clashes between authorities, ‘Red Shirt’ protesters.
The Thai government will impose a curfew in parts of Bangkok starting Sunday after fighting over three days left at least 24 people dead and paralyzed parts of the capital city, a government source told Reuters.
"The curfew would be imposed on areas that lead to the main protest site starting Sunday evening from 11 p.m. to 5 a.m,"
said a government source close to the prime minister, adding that details would be announced at a media briefing.
The source spoke after Army spokesman Col. Sansern Kaewkamnerd said on national television that authorities would announce later Sunday which parts will come under curfew.
A curfew would allow authorities to prevent civilians from entering or leaving certain areas. A violation could result in a maximum penalty of two years in prison.
Thousands of Red Shirt protesters, meanwhile, refused to leave Bangkok's streets despite chaotic urban warfare, with both sides calling for reinforcements.
Reuters put the death toll in the past three days at 24, while The Associated Press said 25 people had died. There was no explanation for the different numbers.
A towering column of black smoke rose over the city Sunday as protesters facing off with troops set fire to tires serving as a barricade. Elsewhere, they doused a police traffic post with gasoline and torched it.
Prime Minister Abhisit Vejjajiva vowed on Saturday to restore order to the capital city of 15 million people and stop mostly rural and urban poor protesters from toppling his government,
which is backed by Thailand's royalist elite, a group the protesters accuse of subverting democracy.
'We will not retreat'
The streets were quiet but tense on Sunday a day after soldiers fired live rounds at demonstrators who fought back with petrol bombs,
rocks and crude homemade rockets in two major areas of the city, as the army tried to isolate a sprawling encampment in central Bangkok occupied by the protesters for 6 weeks.
"We will not retreat," Abhisit said in a televised statement late on Saturday. "We cannot allow the country to be in a condition in which people can establish an armed group to topple the government that they are not happy with."
Earlier, Thai authorities said they would send the Red Cross to the protest zone to evacuate women, children and the elderly.
On their part, the Red Shirt protesters accuse Abhisit and his royalist backers of meddling in the judicial system in the past to bring down elected governments and put themselves in power.
Many protest leaders now face terrorism charges that carry a maximum penalty of death, raising the confrontation's stakes.
The protesters, who have adopted red as a protest color and broadly support former premier Thaksin Shinawatra, set fire to vehicles and hurled rocks at troops who set up razor wire across across deserted roads on Saturday in the business district.
Soldiers can shoot if protesters come within 120 feet of army lines, army spokesman Sansern Kaewkamnerd said, adding that more soldiers were needed to establish control.
The crisis has paralyzed Bangkok, squeezed Southeast Asia's second-biggest economy, scared off tourists and choked investment in one of Asia's most promising emerging markets.
Witnesses describe the bloodshed as largely one-sided, as troops armed with automatic rifles easily dodge projectiles and open fire with automatic weapons. Some protesters have been killed by snipers positioned on the tops of office towers.
No soldiers have been identified in the official tolls that show 24 people killed and 198 wounded.
New protest site
Several hundred protesters gathered early on Sunday in the working-class Klong Toey district where thousands massed the night before, using a truck as a makeshift stage, in a possible move toward setting up a new protest site. Smoke billowed from walls of burning tires on a road leading to the area.
Red Shirt leader Nattawut Saikua told thousands still hunkered down in their main encampment late on Saturday that reinforcements were coming.
"We have been contacted by leaders in several provinces that they will mobilize to help us pressure the government," he said.
The U.S. Embassy has offered to evacuate families and partners of U.S. government staff based in Bangkok on a voluntary basis, and urged its citizens against travel to Bangkok.
The army is battling to set up a perimeter around the 1.2 sq-mile encampment where at least 5,000 people remain, including women and children, behind barricades made of tires, poles and concrete, topped by razor wire.
"The troops may be making some progress on sealing the area but at a great cost," said Thitinan Pongsudhirak, political scientist at Chulalongkorn University, adding rising casualties could weaken Prime Minister Abhisit Vejjajiva.
"Is the government successfully dispersing the crowd and progressing toward ending the crisis? The answer is no, not so far, and it's a long way to go."
However, there was evidence the government's strategy of starving protesters out of their encampment was beginning to have some effect.
Supplies of food, water and fuel were starting to run thin as the Red Shirt delivery trucks were being blocked, said one protest leader, Kwanchai Praipanabut. He added that they still had enough to hold out for days.
BANGKOK * Thai Red Shirt General Dies, Chaos ContinuesThai Red Shirt General Dies, Chaos Continues
May 17, 2010 BANGKOK Associated Press
Tensions were expected to rise further with the news that Maj. Gen. Khattiya Sawasdiphol, a renegade army officer accused of creating a paramilitary force for the Red Shirt protesters, died.
A rogue Thai general who helped anti-government protesters and was shot by an unidentified sniper died Monday from his wounds,
raising fears of new violence after five days of street battles that have killed 37 people in downtown Bangkok.
A luxury hotel was the scene of a heated predawn gunbattle Monday and later closed its doors, while soldiers patrolled
well-known tourist enclaves and the government set another deadline for protesters to vacate their barricaded street camps.
The political conflict is Thailand's deadliest and most prolonged in decades, and each passing day of
violence deepens divides in this nation of 65 million -- a key U.S. ally and Southeast Asia's second-largest economy.
Thailand has long been considered a democratic oasis in Southeast Asia, and the unrest has shaken faith in its ability to restore and maintain stability.
Tensions were expected to rise further with the news that Maj. Gen. Khattiya Sawasdiphol, a renegade army officer
accused of creating a paramilitary force for the Red Shirt protesters, died Monday, the Vajira Hospital reported.
His death came five days after he was shot in the head in downtown Bangkok while talking to journalists inside the perimeter of the protest zone.
The attack on Khattiya, more popularly known as Seh Daeng, triggered widespread street fighting between anti-government protesters and the army in central Bangkok.
May 16: Anti-government protesters throw homemade bombs toward Thai soldiers on in Bangkok, Thailand in fourth day of violent street battles.
The Thai government on Monday warned protesters barricaded within their "occupation zone" in the heart of the capital to leave by 3 p.m.,
saying anyone who remains there will be violating the law and will face two years in prison.
"Immediately vacate the area that is considered dangerous," the government said in a televised announcement. "Terrorists are trying to cause deaths in the area."
The announcement said buses will be provided to escort protesters out of their encampment and take them home.
The protesters paid tribute Monday to Khattiya and vowed to continue their demonstrations, which are demanding the immediate resignation of
Prime Minister Abhisit Vejjajiva, the dissolution of Parliament and new elections.
"Seh Daeng has accomplished his duty. All of us here have the duty to carry on the quest for justice," said a Red Shirt leader, Jatuporn Prompan.
He said that the only hope now to end the violence was intervention by Thailand's revered King Bhumibol Adulyadej.
The 82-year-old monarch, hospitalized since September, has remained publicly silent on the crisis unlike decades past when he stepped in to stop bloodshed.
Another protest leader, Nattawut Saikua, said Red Shirt leaders were willing to submit themselves to the courts and
"move toward peace and negotiations," but appeared to reiterate an earlier insistence that the government withdraw its troops before talks could begin.
The Red Shirts have been protesting since mid-March in Bangkok. Anti-government unrest spread Sunday to other areas of the capital.
The Thai military has defended its use of force, and the government flatly rejected protesters' demands that the United Nations intercede to end the chaos.
Rapid gunfire and explosions echoed before dawn Monday outside the luxury Dusit Thani hotel, located next to the protest zone, where the military has attempted since Thursday to seal in thousands of demonstrators camping in the downtown streets. Guests were rushed to the basement for safety, and the management Monday morning asked all guests to check out by noon.
Reporters at the scene said the gunfire came both from government forces and protesters holed up inside the encampment who appear to have stockpiled a sizable arsenal of weapons.
Early Monday, several hundred army troops and heavily armed police were spotted in the Sukhumvit area, an upscale residential neighborhood popular with Bangkok expatriates. Roads were blocked to prevent traffic from traveling toward the protest zone, and many residents -- unnerved by the uncommon sight of troops in Sukhumvit -- were making plans to evacuate.
"People are either battening down the hatches and not moving out of the area, or they're getting out of town," said Debbie Oakes of Wellington, New Zealand, a four-year resident of Bangkok. She said she and her family were packing up to leave Bangkok and heading to the beach resort of Hua Hin, a three-hour drive away.
Authorities insisted they would continue the crackdown aimed at choking off the Red Shirts, who have occupied a 1-square-mile (3-square-kilometer) protest zone -- barricaded by tires and bamboo spikes -- in one of Bangkok's ritziest areas for weeks.
Soldiers have encircled the core protest site and cut off utilities to the area. Protest leaders told women and children with them to move to a Buddhist temple compound within the zone.
The areas between the site and the military's perimeter have become a no-man's land where gunshots and blasts can regularly be heard. But some of the worst clashes Sunday were behind the military cordon -- an indication the unrest was not contained within the protest area and was spreading.
According to government figures, 66 people have died and more than 1,600 have been wounded since the Red Shirts began their protests in March. The toll includes 37 killed, most of them civilians, and 266 wounded since Thursday in fighting that has turned parts of central Bangkok into a battleground.
About 5,000 people are believed camped in the protest area, down from about 10,000 before fighting started Thursday. The violence ignited after the army started forming a cordon around the protesters' encampment and a sniper shot Khattiya, the renegade army officer who died Monday.
The Red Shirts, many who hail from the impoverished north and northeast, say Abhisit's coalition government came to power through manipulation of the courts and the backing of the powerful military, and that it symbolizes a national elite indifferent to their plight.
Days of prolonged fighting and disruption to normal city life have taken their toll on Bangkok residents.
Most shops, hotels and businesses near the protest area are shut and long lines formed at supermarkets outside the protest zone as people rushed to stock up on food.
The city's two mass transit trains remained closed Monday.
CURFEW SET BUT RIOTS CONTINUE, FIRES SETCURFEW SET BUT RIOTS CONTINUE, FIRES SET
May 19, 2010
Thai protest leaders surrender, as troops storm camp
About 40 people have been killed since last week.
Thai protest chiefs cave in but violence spreads
Leaders’ surrender fails to quell unrest after troops storm encampment
Thai government declares 8:00 pm curfew in Bangkok as rioting and violence spread.
Thai protest leaders surrender, as troops storm camp.
Thai protesters reportedly set fire to local TV station, stock exchange after Red Shirt leaders surrender.
Leaders of the anti-government protests that have paralysed the heart of Bangkok for weeks have surrendered, after troops stormed their barricades.
At least five people have been killed in the latest gun battles in the Thai capital, and the protest leaders said they did not want anyone else to die.
But some of the red-shirts vowed to fight on.
Buildings were set ablaze, including the stock exchange, a big shopping centre and, reportedly, a TV station.
The Thai defence minister said a night-time curfew would be imposed across the capital.
Meanwhile, in the north-east of the country, protesters reportedly attacked city halls in Udon and Khon Kaen.
In Bangkok, the main protest stage area was empty.
Four protest leaders were seen on TV arriving at police headquarters.
Before he was led away, Jatuporn Prompan said from the stage: "I apologise to you all, but I don't want any more losses. I am devastated too," reports news agency Reuters.
Another leader, Nattawuk Saikua, also urged supporters to give up.
Before surrendering, the leaders urged supporters not to give up the fight for political change.
Defiant protesters attacked shops and property and there were reports of looting.
Protesters started a fire at the offices of a TV station, Channel 3, with staff trapped inside, a fire department official told news agency AFP.
Central World Plaza, a huge shopping mall in the heart of Bangkok's commercial district, was among the buildings set on fire, although that blaze was now said to be dying down.
Thai government spokesman Panitan Wattanyagorn told the BBC there were still pockets of resistance from the protesters' main site at the strategic Ratchaprasong intersection.
There were still groups of protesters facing troops at a key point to the south of the main camp.
Army spokesman Col Sansern Kaewkamnerd described them as "terrorist leaders".
Another military spokesman said the operation had been halted to allow several thousand protesters to leave the rally zone.
As helicopters circled overhead, Thai soldiers with armoured vehicles stormed the bamboo-and-tyre barricades on Wednesday morning.
The military warned of the imminent operation on loudspeakers, before moving in.
An Italian photojournalist was among the dead and dozens were wounded as demonstrators and army units exchanged fire.
"This is D-Day," one soldier was quoted as saying by the Associated Press news agency.
Troops armed with M-16 rifles marched through the central business district, as thick black smoke from mountains of burning tyres billowed over skyscrapers.
They stormed the Lumpini Park area, where demonstrators fled, leaving scattered shoe, overturned chairs and hanging laundry.
The violence follows six days of clashes around the camp, triggered by a government operation to seal the area and the subsequent death of a renegade general who backed the protests.
About 40 people have been killed since last week.
The red-shirts have been protesting in Bangkok since 14 March, occupying the shopping district, forcing hotels and shops to close.
They are a loose coalition of left-wing activists, democracy campaigners and mainly rural supporters of former Prime Minister Thaksin Shinawatra.
They are demanding fresh polls because they say the government - which came to power through a parliamentary deal rather than an election - is illegitimate.
Mr Thaksin has lived overseas since he was ousted in a 2006 coup and convicted of conflict of interest.
Thai protest leaders surrender, as troops storm camp - BBC VIDEO
Thai protest chiefs cave in but violence spreads
Leaders’ surrender fails to quell unrest after troops storm encampment
THAILAND is a NWO TAKEOVER just like GreeceThis is an NWO TAKEOVER - JUST LIKE GREECE
May 20, 2010
A man who lived in Thailand called into talk radio. (AJ)
He said America has no idea what is really going on there.
The RED SHIRTS are the ELECTED GOVT. They are corrupt, but elected.
The YELLOW SHIRTS have taken over power and the people want their country back.
Its NWO, the same as GREECE.
In fact, its the same as America. A FOREIGNER came in and usurped power with help of the NWO.
THAILAND EyewitnessThailand Eyewitness
May 20, 2010 Anonymous
After living in foreign lands for over 30 years - 10 years in Thailand - and a good part of it in the employment of USG Inc.
in the law enforcement and intel areas I follow the Thailand events with academic interest and dismay.
A normally peaceful country with people who do not like direct confrontation at the personal level has changed in a small part of the population to a nation of anarchists and looters in a space of 24 hours.
The academic side of me looks at how little it took to change people from protesters to arsonists and looters.
Last night was a night of many fires being set by the protesters and so much property damage with the burning of banks, shopping centers and all - the full total is impossible to comprehend.
The dismay side of me is knowing what this group has done to the Thai economy and tourism industry -
tens of thousands have lost jobs in the shops, stores, hotels, businesses and even street vendors who depend on the international trade and tourists.
What has been interesting has been the people fighting the army with not only a few firearms and M-79's but fireworks, home made spears,
burning tires in the streets and other simple but somewhat lethal devices - even sling shots.
This shows that a determined people can use about anything to fight with.
The real people hurt in all of this are the low wage daily workers - the ones of the poor the Red Shirts are saying they are fighting for!!
The key word is determined - let your imagination look at other groups of people and would they have the will to do this.
1. have a stock of emergency supplies as food and water and electric power were out /off in the protest areas and curfew the past couple nights.
2. ATM machines were out of service.
3. Fires displaced a lot of people
4. People could NOT get into or out of some of the protest areas if their homes were there.
5. The Thai Army is not the best in the world and were forced back a couple times -
while trying to use restraint they did look weak for a while as they faced some stronger resistance than anticipated (lessons here to learn??)
6. Never forget how FAST a group can become a MOB!
7. There were agent provocateurs in the "MOB" I have learned from some personal sources and were able to "Motivate" the crowd
AFTER their leaders turned them selves into the police and keep things going and this is when the looting and arson started.
The situation and pictures scare me and I was working for a major NGO (and USG Inc) in Somalia pre,
at the time of marine arrival and post marine time and departed Vietnam 2 days before the country fell in air evac -
so I have seen cultures blow apart and how people act in such situations when all hope seems to be lost.
How easy it is for "some" to manipulate these groups at this time.
I do not wish to identify myself or draw direct parallels to other countries as I know my former place of work has a lot of ability to identify people .
Thai PM: order restored in BangkokThai PM: order restored in Bangkok
Friday, May 21, 2010
43 people were killed in related clashes.
Thailand's prime minister Friday promised an independent probe into "all events" surrounding the Red Shirt protests, and
called for reconciliation to heal deep political divisions that led to widespread violence and 83 deaths in two months.
"Fellow citizens, we all live in the same house. Now, our house has been damaged. We have to help each other," Prime Minister Abhisit Vejjajiva said in a nationally broadcast address on television.
"We can certainly repair damaged infrastructure and buildings, but the important thing is to heal the emotional wounds and restore unity among the Thai people,"
the Oxford-educated Abhisit said in an emotional speech.
Abhisit said authorities have restored order in Bangkok, where soldiers overran an encampment of Red Shirt protesters on Wednesday after a week of street fighting.
The crackdown climaxed two months of violence, which left 83 people dead and more than 1,800 injured.
He acknowledged that "huge challenges" lay ahead in overcoming the divisions, which he said can be achieved through a five-point reconciliation plan that he had announced earlier.
"That plan is based on the principle of participation, democracy and justice," he said.
The plan includes economic and media reforms and aims to reduce social an economic divisions in Thai society, which the protesters had been railing against.
No elections before stabilization and calm
But he made no mention of new elections, a key demand of the Red Shirts.
Earlier Friday, Finance Minister Korn Chatikavanij said Abhisit's earlier offer to hold elections on Nov. 14 was on hold until political passions have subsided and the security situation has stabilized nationwide.
Abhisit said the government will allow due process of law and parliamentary democracy to resolve the country's problems with the participation of all Thais.
"At the same time that plan will include an independent investigation of all the events that have taken place during the protests," he said without elaborating.
The Red Shirts streamed into Bangkok in mid-March and set up an encampment in the historic part of the city.
An army crackdown to remove them on April 10 left 25 people dead. Another 15 were killed on Wednesday when the army overran their second,
heavily barricaded encampment in Rajprasong, one of Bangkok's most fashionable neighborhoods.
43 people were killed in related clashes.
Thai PM Abhisit says country under control
The EURO as we know it is deadThe EURO as we know it is dead
20 May 2010
Whatever Germany does, the euro as we know it is dead
Angela Merkel's ban on short-selling is just a distraction from the horror to come
For Angela Merkel, leader of the eurozone's richest country, a queue is forming of high-quality adversaries. As she tips German Geld und Gut into the furnace of a rescue package for the euro, while going it alone in a misguided ban on market "manipulators", the brass-neck Chancellor has infuriated domestic voters, angered her EU partners (in particular the French) and invited the so-called wolf pack of global traders to do its worst.
In one respect, Mrs Merkel is right: "The euro is in danger… if the euro fails, then Europe fails." What she has not yet admitted publicly is that the main cause of the single currency's peril appears beyond her control and therefore her impetuous response to its crisis of confidence is doomed to fail.
The euro has many flaws, but its weakest link is Greece, whose fundamental problem is that for years it spent too much, earned too little and plugged the gap by borrowing in order to enjoy a rich man's lifestyle. It flouted EU rules on the limits to budget deficits; its national accounts were a moussaka of minced statistics, topped with a cheesy sauce of jiggery-pokery.
By any legitimate measure, Greece was unworthy of eurozone membership. That it achieved card-carrying status was down to the sleight-of-hand skills of its Brussels fixers and the acquiescence of central bank bean-counters. Now we know the truth, jet-hosing it with yet more debt makes no sense. Another dose of funny money will delay but not extinguish the need for austerity.
This is why the euro, in its current form, is finished. The game is up for a monetary union that was meant to bolt together work-and-save citizens in northern Europe with the party animals of Club Med. No amount of pit props from Berlin can save the euro Mk I from collapsing under the weight of its structural dysfunctionality. You cannot run indefinitely a single currency with one interest rate for 16 economies, when there are such huge fiscal disparities.
What was once deemed unthinkable is now, I believe, inevitable: withdrawal from the eurozone of one or more of its member countries. At the bottom end, Greece and Portugal are favourites to be forced out through weakness. At the top end, proposals are already being floated in the Frankfurt press for a new "hard currency" zone, led by Germany, Austria and the Benelux countries. Either way, rich and poor are heading in opposite directions.
When asked on Sky if, in five years' time, the euro will have the same make-up as it does today, Jeremy Stretch, a currency analyst at Rabobank, the Dutch financial services giant, told me: "I think it's pretty unlikely." The euro was a boom-time construct. In the biggest bust for 80 years, it is falling apart.
Telegraph loyalists with long memories will be shocked by none of this. In 1996, Sir Martin Jacomb, then chairman of the Prudential, set out with great prescience in two pieces for The Sunday Telegraph why a European single currency, without full political integration, would end in disaster. His prognosis of the ailments that might afflict the eurozone's sickliest constituents reads as if it was penned to sum up today's turmoil.
"A country which does not handle its public finances prudently will find its long-term borrowing costs adjusted accordingly," Sir Martin predicted. "Although theory says that default is unlikely, nevertheless, a country that spends too much public money, and allows its wage costs to become uncompetitive, will experience rising unemployment and falling economic activity. The social costs may become impossible to bear."
Welcome to the headaches of George Papandreou. The bond markets called his country's bluff. Greece is skint, but its unions don't want to admit it. There is insufficient political will to tackle incompetence and corruption, never mind unaffordable state spending. But, locked into the euro, Greece cannot devalue its way out of trouble, so it relies on the kindness of strangers.
Dishing out German largesse to profligate Athens, with little expectation of a reasonable return, is a sure way for Mrs Merkel to join Gordon Brown as a political has-been. Fully aware of the revulsion felt by Mercedes and BMW employees at the prospect of their taxes being used to pay for a Hellenic car crash, she has resorted to creating a bogeyman – The Speculator.
By announcing a ban on the activities of short-sellers (those who bet to profit from falling prices in financial markets), she is hoping her decoy will avert German attention from the small print of Berlin's support for Greece, which talks of developing processes for "an orderly state insolvency". This sounds ominously like a softening-up process for a form of default.
Greece's severe difficulties were home-made. The euro has come under pressure not from dark forces of speculation but respectable investors, many of them traditional pension funds, which, quite correctly, worked out that when the crunch came, the Brussels elite would sanction an abandonment of its no bail-out rule and cough up for a messy fudge.
In 1990, the late Lord Ridley, when still a government minister, caused a storm by telling The Spectator that Europe's planned monetary union was "a German racket designed to take over the whole of Europe". One knew what he was getting at, but it has not turned out that way.
Protecting the euro has become a project via which profligate states dip their fingers in Berlin's till. Germany is taking on nasty obligations without gaining ownership of the assets. Germany's version of The Sun, Bild Zeitung, feeds its readers a regular diet of stories about the way ordinary Germans are being taken for mugs. Trust has turned to suspicion. Next stop is divorce.
As for the United Kingdom, we must be grateful that those frightfully clever Europhiles, such as Lord Mandelson and Kenneth Clarke, did not get their way. Had they been able to scrap the pound and embrace the euro this country would be even closer to ruin. Without a flexible currency, the colossal deficit clocked up by Mr Brown would have crushed us completely. We have little to thank him for, but it would be churlish to deny that his decision to reject Tony Blair's blandishments in favour of the euro was a life-saver.
Sterling's devaluation has not been pretty, but it is helping to keep our exports competitive while the coalition Government begins rebuilding the nation's finances. Siren voices from across the Channel, calling for closer integration between Britain and the rest of the EU, can be confidently rejected. As for joining the euro, I find it impossible to imagine any circumstances under which it would be in the UK's interest to do so.
Global stock markets see sharp fallsGlobal stock markets see sharp falls
25 May 2010
Global stock markets fell heavily on Tuesday over continued fears about the debt problems in the eurozone.
In early trade in Europe the FTSE 100 in London was down by 2.60%, Germany's Dax index was 2.34% lower, while in France the Cac 40 index slid 2.74%.
It came after shares in Asia had seen sharp falls. Stocks in South Korea and Japan had been affected as North Korea reportedly went on to military alert.
Japanese stocks fell by 3.1%, and shares in South Korea fell by 2.7%.
In London, the FTSE 100 has fallen by more than 10% in little more than a month after hitting a 22-month high in April.
Earlier in Asia, Australian shares fell by 3%, Taiwanese stocks were down 3.23% and the wider MSCI measure of Asia-Pacific shares outside of Japan fell by 3.6%.
Shares in Hong Kong, Singapore, Indonesia, China, India, Thailand and Malaysia all fell too.
There were reports in South Korea that North Korea had told its military to prepare for war, but only if the South attacks it first.
Tensions in the region have been growing since international investigators blamed the North for torpedoing and sinking a South Korean warship in March, killing 46 sailors.
Other factors increasing pessimism among investors were the weekend rescue of Spanish bank Cajasur by Bank of Spain, only the second time the central bank had saved a regional lender.
"The toxic cocktail worsens," said Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers.
"Continuing fears over the European debt situation stalling the global economic recovery has been exacerbated by the potential of military tensions in Korea."
And he said there was a shortage of buyers prepared to commit to the market at the present time.
The continued weakness of the euro is a concern, with investors dumping the currency on fears that debts will cause defaults by weaker countries in the European Union.
In Tuesday trading the euro stood at $1.2237, after earlier falling as low as $1.2218 dollars.
And the euro stood at £0.8564 against the pounds, compared to £0.8587 at close on Monday.
"The euro problems are very deep-rooted as eurozone members share a common currency but fiscal policies are left to each country," Japanese Finance Minister Naoto Kan told reporters.
"I hope financial markets will calm down gradually."
The falls in Asia come after major markets in the US closed lower overnight, with the Dow Jones shedding 1.2% and the S&P 500 dropping 1.3%.
Also check WATCH CHINA thread
China raised worker salaries to stop suicides
USA and WORLD ECONOMY WATCH
Stocks close down over 3% after disappointing jobs reportStocks close down over 3% after disappointing jobs report
June 5, 2010
Stocks fell to their lowest level in four months Friday after the government said hiring remains weak and another European country warned its economy was in trouble.
The Dow Jones industrial average dropped 323 points to close below 10,000. It was the lowest finish since February and the third-worst slide of the year.
Major indexes all lost more than 3%. The drop pushed the market back into "correction" mode, meaning a decline of at least 10% from a recent high.
Interest rates slid after traders shoveled money into the safety of Treasurys and the dollar.
UNEMPLOYMENT DROPS: But government hiring accounts for most new jobs
WORLD STOCKS: European markets are reacting to U.S. job report
COMMODITIES: Oil continues to fall
EURO FALLING: Beleaguered currency hits four-year low
Retailers were among the hardest-hit stocks after investors bet that a weak job market would discourage consumers from spending. Macy's fell 6.5%. Financial stocks also fell sharply on concerns that borrowers would continue having problems paying their bills. Banks were hurt by more worries about their exposure to Europe's debt crisis. American Express lost 5.3%.
The government's May jobs report came as an unpleasant surprise for investors who had grown a little more upbeat about the domestic economy the past few days. The Labor Department said private employers hired just 41,000 workers in May, down dramatically from 218,000 in April and the lowest number since January. The news made it clear that the economic recovery isn't yet picking up the momentum that investors have been looking for.
The government said 431,000 jobs overall were created last month, but most of those them, 411,000, came from government hiring of temporary census workers. The overall number also fell short of expectations. Economists polled by Thomson Reuters had forecast employers would add 513,000 jobs.
"People are looking for one turning point," Daniel Penrod, senior industry analyst for the California Credit Union League, said of the monthly jobs report. "That's not realistic. This growth will be much slower and more gradual than in the past."
The unemployment rate fell to 9.7% from 9.9% in April. That was slightly better than the 9.8% unemployment rate economists had forecast.
The jobs report was the latest during the week to signal that the economy isn't as robust as hoped.
"It's almost as if the worst fears of the market were realized, at least in this one report," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research.
The slowdown in hiring last month cast more doubt on how much consumers will be able to pick up their spending. A day earlier, retailers reported sluggish sales for May. Stocks of clothing retailers were among the big losers after the jobs report as traders bet shoppers would stick to buying necessities.
Credit card companies and regional banks also fell sharply.
Meanwhile, the spokesman for Hungary's new prime minister described the country's economy as being in a "grave" situation. He also said his government is ready to avoid a crisis like the one being faced by Greece, which had to be bailed out by the European Union. Spain and Portugal are also struggling.
The Dow fell 323.31, or 3.2%, to 9,931.97, its steepest drop since May 20. All 30 stocks that make up the index fell.
It was the Dow's third drop of more than 300 points this year, all of which occurred in the last month. The Dow is now down 11.4% from its 2010 peak of 11,205, which it reached on April 26.
The Standard & Poor's 500 index fell 37.95, or 3.4%, to 1,064.88. The index is down 12.5% from its 2010 high.
The Nasdaq composite index dropped 83.86, or 3.6%, to 2,219.17. It's down 12.3% from its high of the year.
Fewer than 300 of the nearly 3,000 stocks that trade on the New York Stock Exchange rose. Consolidated volume came to 6.3 billion shares compared with 5 billion Thursday.
Only three of the stocks in the S&P 500 index rose: Cephalon, Frontier Communications and People's United Financial.
For the week, the Dow lost 2%, its third straight weekly drop. The S&P 500 index fell 2.3% and the Nasdaq dropped 1.7%.
Investors moved money into safe investments including Treasurys because of the weak employment report and the faltering euro. The yield on the 10-year Treasury note, which moves opposite its price, fell to 3.21% from 3.37% late Thursday. The yield on the 10-year note is often used as a benchmark for consumer loans and mortgages.
Analysts say there is little in the way of economic news that could shake the market from its funk.
"It's hard to see over the next month what will make stocks rally," said Paul Zemsky, head of asset allocation at ING Investment Management in New York. It might not be until next month's employment report that investors get the kind of positive news that could propel stocks higher, he said.
Investors are also worrying about the impact that Europe's economic problems could have on the U.S. During the past month, investors have been preoccupied with rising debts in Europe, fearing they could hobble the regional economy and eventually the U.S.
"The events in Hungary are reminding the market that the problems with sovereign debt are a lingering affair," said Nick Kalivas, vice president of financial research at MF Global in Chicago. He added that reminders of Europe's debt crisis will pop up on occasion and send stocks lower, in much the way that the market faltered early in the subprime mortgage crisis.
"Until there's a resolution, we're just going to kind of have to deal with it," Kalivas said.
A drop in the euro, the currency used by 16 countries in Europe, contributed to stocks' slide. The euro fell as low as $1.1956, a four-year low. Hungary doesn't use the euro but the drop the currency was a sign of flagging confidence in Europe's economy.
The euro has fallen more than 10% since stocks peaked six weeks ago.
Overseas, Britain's FTSE 100 fell 1.8%, Germany's DAX index fell 1.9%, and France's CAC-40 dropped 2.9%. All three indexes rose early in the day.
Among retail stocks, Macy's fell $1.46, or 6.5%, to $21.03. JCPenney Stores fell $1.59, or 5.9%, to $25.48 and Liz Claiborne slid 63 cents, or 10.2%, to $5.55.
Credit card issuers also dropped. American Express fell $2.13, or 5.3%, to $38.41. Discover Financial Services fell 66 cents, or 4.9%, to $12.86. Regional banks, considered vulnerable to failed loans, also fell sharply. Key Corp. dropped 40 cents, or 4.9%, to $7.77. Regions Financial Corp. lost 51 cents, or 6.7%, to $7.13.
Oil prices fell sharply as investors pulled out of commodities, which like stocks are seen as risky assets. Investors were also wondering whether demand might fall if the economy is weaker than expected. Benchmark crude dropped $3.10 to $71.51 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller stocks fell 33.40, or 5%, to 633.97.
World Collapse Explained in 3 MinutesWorld Collapse Explained in 3 Minutes
HUMOROUS but TRUE!
Debt Poised to Overtake GDPU.S.A. Debt Poised to Overtake GDP
June 4 Bloomberg
Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”
The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month.
The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund.
The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.
“Over the long term, interest rates on government debt will likely have to rise to attract investors,” said Hiroki Shimazu, a market economist in Tokyo at Nikko Cordial Securities Inc.,
a unit of Japan’s third-largest publicly traded bank. “That will be a big burden on the government and the people.”
Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend”
suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”
Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his
Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts.
Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s.
(WE DONT NEED B. HUSSEIN OBAMA's 'HELP')
“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?”
Germany government could collapse, Bank taxGermany government could collapse, Bank tax must go ahead
June 15, 2010, Tuesday
German chancellor Angela Merkel's government looks close to collapse today, weakened by disagreements and intense infighting over austerity cuts, policy reform and the departure of senior conservatives.
Merkel called for the government partners to bury the hatchet.
But much of the mistrust and anger is being directed at Merkel herself.
Public anger at the package spilled over at the weekend when thousands of demonstrators took to the streets. Holy Greece, Batman! Coming to AmeriKa, and may even be here now.
Merkel and French President Sarkozy renewed calls for a global bank levy and a financial transaction tax.
OECD to Meet in Jerusalem, IsraelFINANCE * OECD to Meet in Jerusalem, Israel
Isnt this interesting? Why? Is Israel's economy doing well? All other nations economies are collapsing.
ALL EYES ON ISRAEL!
Bonus for Israel: OECD to Meet in Jerusalem in October
The Organization for Economic Cooperation and Development (OECD), which recently accepted Israel as a member, has chosen Jerusalem instead of Paris as the venue for
its annual conference in October. Tourism ministers from the 31 countries in the OECD will attend the organization’s 86th meeting.
The conference carries both prestige and special importance, given the decision by OECD leaders to deviate from tradition and not hold the meeting in Paris.
“The choice of Israel, and in particular Jerusalem, is a vote of confidence in the Israeli tourism industry and its economy, " said the Israeli Ministry of Tourism.
President Shimon Peres, Prime Minister Binyamin Netanyahu and Bank of Israel Governor Stanley Fischer are scheduled to attend the conference, along with officials of the World Tourism Organization.
The 3 day conference will deal with green growth as derived from the OECD program to develop and promote a green policy as a means to economic growth.
It will discuss ways in which tourism can contribute both in developing the green tourism product, the ecological effects on tourism and identifying green business opportunities.
Bank Run in Spain Destabilizing Entire EU Bank Run in Spain Destabilizing Entire EU
Wednesday, June 16, 2010
Spanish banks are borrowing record amounts from the European Central Bank.
According to FT, Spanish banks borrowed €85.6bn ($105.7bn) from the ECB last month.
This was double the amount lent to them before the collapse of Lehman Brothers in September 2008 and 16.5 per cent of net eurozone loans offered by the central bank.
“If the suspicion that funding markets are being closed down to Spanish banks and corporations is correct,
then you can reasonably expect the share of ECB liquidity accounted for by the country to have risen further this month,” said Nick Matthews, European economist at RBS.
Bottom line: This is nothing but a sign of a run on Spanish banks.
They can't get funding in the markets and there is a steady withdrawal of funds from the banks.
For all practical purposes, the ECB is supporting the Spanish banking system with life support measures.
This means that the ECB will have to drain funds from elsewhere in the system to sterilize this rescue operation.
Without sterilization the effort becomes very inflationary, with sterilization the effort distorts the entire EU economy. It's all destabilizing.
The only reasonable alternative is to allow the Spanish banks to go into bankruptcy and restructure.
New world currency
The G 8 are meeting in 2010 in Canada June 24
Russian President Medvedev Shows Off Sample Coin of New World Currency at G-8 in July, 2009
Currency to replace the US dollar
The coin was minted in Belgium and bears the words - unity in diversity.
G8/G20 Summit Canada 2010
On the 24th and 25th of June, the G8 leaders will meet in Canada. T
Who are the G 8
Hundreds of Romanians try to storm palaceHundreds of Romanians try to storm palace
June 25, 2010 BUCHAREST, Romania
Dozens of Romanians have tried to storm the presidential palace to protest austerity measures.
Anti-riot police repelled those who tried to force their way past barricades into the 17th century palace.
Some 600 Romanians staged the protest Friday as the top court was expected to rule whether the cuts in public wages and pensions are constitutional.
Protesters are demanding that the president does not approve the sweeping cuts in public wages and pensions.
Prime Minister Emil Boc announced 25% cuts in public sector wages and a 15% drop in pensions.
Boc said the cuts must be made to meet the demands of the International Monetary Fund and to keep the budget deficit at 6.8 percent.
Michael Boldea mentions Romania troubles.
He is in his homeland of Romania now.
Friday, June 25, 2010 Life in the Valley Part 4
I have a request for all who visit this blog. In your prayer time, I would ask you to say a prayer for the people of Romania as well.
I'd heard it was getting bad from my father, my wife, and other family and friends, but until you are boots on the ground here, it's hard to get the full picture.
Besides the cuts in pensions, and the raising of basic staples, there have also been an unprecedented amount of nasty
storms, which caused the subsequent flooding in most parts of the country.
So please say a prayer for the people of Romania, and if ever you are in need of prayer, I am certain they will say a prayer for you as well.
Here is his blog. http://mikeboldea.blogspot.com
His website and newsletter - http://www.handofhelp.com/index.php
Italians strike over Berlusconi's austerity budgetItalians strike over Berlusconi's austerity budget
Jun 25, 2010 Friday ROME
The EURO is failing, global economy cant be saved, it must be - CHANGED! And no one will like the change.
Strike called by Italy's largest union
Italy's largest union staged a national general strike disrupting transport and government services in a protest against austerity measures by Prime Minister Silvio Berlusconi government.
CGIL 6 million members called rallies in nearly every major Italian city in a bid to force the government to rewrite a 25-billion-euro package of cuts,
which Berlusconi has said is an essential part of European efforts to save the euro currency.
"No one denies that we need to make cuts, but they must be cuts which are fair and look to the future, rather than just slashing spending," said Susanna Camusso, deputy leader of the CGIL, leading a march in the leftist stronghold of Bologna.
The strike was a key test of strength for Berlusconi, whose poll ratings have reached new lows as
unemployment has risen and the euro zone's third largest economy has struggled to emerge from its worst post-World War Two recession.
Several bus and metro services in Rome continuing to run and many ordinary Italians expressing their annoyance.
Some good bus drivers are not greedy, so did NOT strike.
The strike has split Italy's trade union movement, which is roughly divided along political lines. The other two main unions have asked their members to stay on the job.
While most private sector GCIL workers were due to strike for four hours, public sector members will stay off the job all day to underscore their anger.
Pilots and ground staff were due to stop work for four hours from 0800 GMT but flights at Rome's Fiumicino airport appeared to suffer little disruption.
STRIKES ACROSS EUROPE
The strike followed union protests in France and Greece this week against plans for pension reform and budget cuts.
Members of the 16-nation euro zone have rushed to approve austerity measures in a bid to restore confidence in the single currency and halt contagion from Greece's debt crisis.
After months of telling Italians they were immune to a Greek-style debt crisis, Berlusconi's cabinet in May approved an austerity plan including cuts to funds for municipalities and freezing of public sector salaries.
The Italian Treasury said this week that it expected the plans to reduce gross domestic product (GDP) growth by 0.1 percentage points this year and by 0.2 points in 2011 and 2012.
Polls say a majority of Italians believe the cuts are unfairly distributed and the government's promise of salary reductions for parliamentarians has not changed this view.
Mayors from around Italy placed hangman's nooses around their necks at a Rome demonstration this week, saying the
cuts would kill local finances to the point of denying a minimum of social assistance to children, the elderly and the disabled.
Representatives of some of Italy's 20 regions have given the government an ultimatum: change the budget or the central government will have to
take over local responsibilities such as road maintenance.
Dont think all this isnt coming to the disUnited States of AmeriKa -
IT IS - PROBABLY IN DAYS!
Yen Trades Near 2 week High Against Euro Before G-20Yen Trades Near Two-Week High Against Euro Before G-20 Meeting
G8 / G20 meet in Canada June 24-25, 2010
June 25, 2010 Friday
The yen traded near a two-week high against the euro amid speculation Group of 20 leaders meeting
this weekend will fail to agree on ways to tackle Europe’s debt crisis, boosting demand for Japan’s currency as a refuge.
The euro headed for a weekly loss against the dollar as European countries such as Germany initiated austerity plans while the U.S. called for a focus on growth.
Australia’s dollar fell for a second day against the greenback as concern the global recovery is slowing reduced demand for higher-yielding assets.
The British pound pared some of the week’s gains in the wake of the nation’s emergency budget, while the Swiss franc jumped to a record against the euro.
“Conditions remain supportive for safe-haven currencies such as the yen,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London.
“Concerns over slowing global growth are building, and sovereign-debt concerns are still very much elevated. Overall, conditions are unfavorable for risk assets.”
The yen traded at 109.97 per euro at 10:11 a.m. in London from 110.52 in New York yesterday, when it rose to 109.54, the strongest since June 10. Japan’s currency was little changed at 89.60 per dollar from 89.61 yesterday, when it climbed to 89.23, the highest since May 21. It has risen 1.2 percent this week.
The euro fell 0.5 percent to $1.2270 and is set for a 1 percent decline this week. Australia’s dollar fell 0.6 percent to 86.12 U.S. cents, extending this week’s decline to 1.2 percent.
Japan’s currency strengthened against all of its 16 major counterparts this week as investor appetite for riskier assets diminished. The MSCI World Index of shares fell 0.5 percent today, heading for its biggest weekly decline in a month.
G-20 leaders will meet in Toronto on June 26-27 to discuss policies aimed at addressing Europe’s crisis, spurring global growth and overhauling financial regulation. Germany and the U.S. have been at odds on whether to prioritize debt reduction or stimulus, with Chancellor Angela Merkel this week saying Europe’s debt levels have to be reduced because they are one of the main causes of the crisis.
The G-20 meeting is also expected to discuss proposals for a global bank levy and a tax on securities transactions to clamp down on financial speculation.
“There’ll probably be some sort of agreement on the bank tax,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “That could be poor for equity markets, so that would be good for safe-haven currencies like the dollar and the yen.”
Australia’s dollar headed for a weekly loss before reports next week forecast to show economic and consumer confidence in the U.S. and Europe is waning.
Investors should sell the Australian dollar against the yen as risk aversion is likely to increase, according to UBS AG, the world’s second-largest currency trader. UBS said investors should bet the Aussie will fall to 72 yen due to factors such as increasing financial-market regulation, a defeat for the German government’s presidential candidate on June 30, and “uncertainty” about stress tests on European banks next month.
“All point to risk aversion flaring up in the near term as it did in May,” Gareth Berry, a currency strategist at UBS in Singapore, wrote in an e-mail to Bloomberg. “This will likely hurt commodity currencies, even though the long-term outlook is positive for currencies like the Australian dollar. The yen is likely to be the main beneficiary.”
An index of executive and consumer sentiment in the 16 euro nations slipped to 98.3 this month from 98.4 in May, according to a Bloomberg survey. Over the same period, the U.S. Conference Board’s consumer confidence index declined to 62.5 from 63.3, a separate survey showed. Both reports are due June 29.
“Risk sentiment is weakening as a number of economic data points are now showing the global recovery slowing,” said Hiroshi Yanagisawa, a Tokyo-based dealer at FX Prime Corp., a foreign-exchange unit of Japanese trading house Itochu Corp. “Growth-related currencies such as the Aussie are hostage to selling pressure.”
The U.K. currency fell to $1.4882 from $1.4935 in New York yesterday, paring weekly gains against the dollar. Investors are reducing positions before the G-20 summit, according to BNP Paribas SA. Sterling reached $1.5012 yesterday, the highest level since May 12, on optimism that measures announced by Chancellor of the Exchequer George Osborne in an emergency budget on June 22 would cut the nation’s deficit and enable Britain to keep its top credit rating.
‘ The initial positive response to the budget may start to fade as the longer-term implications start to become more evident,” said Ian Stannard, a senior foreign-exchange strategist in London. “That suggests we are going to see U.K. economic growth more constrained. This weighs on sterling and the brief positive period we had is coming to an end. Some risk positions are coming off.”
Swiss Franc, Won
Sterling had risen against the dollar earlier after Morgan Stanley raised its 2010 and 2011 forecasts for the pound against the dollar and the euro, citing this week’s U.K. budget and the likelihood U.K. inflation will quicken. Morgan Stanley said the pound may trade at $1.43 by the end of 2010 and $1.52 by the end of 2011, compared with previous projections of $1.29 and $1.41.
The Swiss franc strengthened to the most against the euro since the single currency’s debut after the central bank said the risk of deflation has largely disappeared. The franc appreciated as much as 0.7 percent to 1.3508 before trading 0.5 percent stronger at 1.3527 as of 10:11 a.m. in London.
South Korea’s won weakened for a fourth day, the longest streak in three months, as overseas investors cut holdings of the nation’s stocks. Korea’s currency slid 2.2 percent to 1,215.19 per dollar. The Kospi stock index fell 0.6 percent.
“The won is reacting to the risk aversion we saw overnight,” said Moh Siong Sim, a Singapore-based foreign- exchange strategist for Bank of Singapore Ltd.
G8 meet in Canada in 2010
ROMANIA * Court rules austerity cuts unconstitutionalROMANIA * Court rules austerity cuts unconstitutional
June 25, 2010 BUCHAREST, Romania
A top Romanian court ruled Friday that sweeping austerity measures proposed by the government are unconstitutional, a move that will delay a crucial multibillion loan from the International Monetary Fund.
The ruling from the Constitutional Court came after dozens of Romanians tried unsuccessfully to storm the presidential palace to protest the measures and demand an audience with President Traian Basescu.
Riot police repelled those who tried to force their way past barricades into the 17th century palace.
The court did not publish its reasons for ruling that the 15 percent cuts to pensions and 25 percent cuts to public sector salaries were unconstitutional.
The ruling will delay the next installment of a €20 billion ($24.49 billion) loan from the IMF, the European Union and the World Bank last year, which helped pay state wages when its economy shrank by 7.1 percent.
The government will now likely hike the consumer tax and income tax rates to meet the IMF demands for the loan and to keep the budget deficit at 6.8 percent.
Romania has about 5.5 million retirees and only about 4.3 million employees — from which about 1.36 million are public sector workers.
WE SHOULD WARN THE ROMANIAN LEADERS NOT TO ALL GET ON THE SAME PLANE.
DOLLAR SLIDESDollar slides vs euro, Aussie, Kiwi on U.S. stocks, oil
June 25, 2010 The U.S. dollar fell against the euro and commodity-linked currencies such as the Australian dollar on Friday as investors felt more comfortable buying riskier assets after stocks came off lows and commodities jumped sharply.
U.S. stocks staged a comeback in the afternoon, while oil prices shot higher, fueling risk appetite and prompting buying in the euro and the Australian, Canadian and New Zealand dollars.
These last 4 currencies have become symbols of risk appetite in the developed world, moving in tandem with U.S. stocks.
"There's some tentative risk appetite in the market as we see stocks rallying and commodities up sharply," said Dean Popplewell, chief currency strategist at OANDA in Toronto.
"Fundamentally, there is no reason for the euro to rise given the euro zone debt crisis."
Funding issues in the euro zone are still an issue, as banks need to repay some 442 billion euros in one-year loans to the European Central Bank next week.
In late trading, the euro rose 0.5 percent against the dollar to $1.2387. Despite the euro's gains, however, the euro zone single currency was still down 0.4 percent on the week but up 0.7 percent for the month of June so far.
The dollar, however, fell 0.3 percent against the yen to 89.24 after sliding to a fresh one-month low at 89.21, according to electronic trading platform EBS. It was the dollar's fourth straight daily drop against the yen and, at 1.3 percent for the week, the third straight week of declines.
Dollar losses versus the Japanese currency were partly triggered by data which showed U.S. gross domestic product growth was slower than previously expected in the first quarter.
"A bit of a disappointment with this (GDP) report," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto. "It's on the softer side of expectations and with the recent slew of soft data from the U.S., it actually supports this week's FOMC cautious statement."
The Australian dollar rose 1.0 percent versus the greenback to US$0.8743 while the New Zealand currency also gained 0.8 percent to US$0.7137. The Canadian dollar was also up, pushing the U.S. dollar down 0.7 percent to C$1.0360.
Meanwhile, traders said a weekend meeting of the Group of 20 rich and developing nations is unlikely to produce any surprises.
Analysts say currency issues were unlikely to come to the fore as China took steps last week to de-peg its currency.
"On the G20, I don't expect too much, because the big announcement already happened last week with China saying it would let its currency strengthen a bit," said John Doyle, senior currency strategist at Tempus Consulting in Washington.
US DOLLAR is PRIMED to COLLAPSE by the END of JUNE
FALSE - didnt happen - however I suspect it will in the not-too-distant future.
World Collapse Explained in 3 Minutes
HUMOROUS but TRUE!
More on GLOBAL FINANCIAL COLLAPSE in conspiracy section
Ireland Credit Rating Cut on Weak GrowthIreland's Credit Rating Cut on Weak Growth
July 19, 2010
Moody's cut Ireland's credit rating, warning the country faces a slow climb out of recession as the cost of a rescue of its banking sector mounts.
The one-notch downgrade to Aa2, which came a day ahead of a scheduled sale of up to 1.5 billion euros of Irish debt, put Moody's on par with rival agency Standard and Poor's AA rating and still one notch above Fitch.
Moody's also changed its outlook to stable from negative.
The downgrade, which a minister said provided no surprises but which weakened the euro versus the dollar [EUR=X 1.2964 0.0075 (+0.58%) ] and hit European stocks, prefaced a sale of six- and 10-year bonds worth between 1 billion and 1.5 billion euros at Ireland's regular monthly auction.
"The timing isn't great, given the bond auction tomorrow and certainly this will add to the premium that will need to be paid to raise money," Alan McQuaid, chief economist at Bloxham, said.
"Today's downgrade is primarily driven by the Irish government's gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability," Dietmar Hornung, a Moody's vice president and lead analyst for Ireland, said in a statement.
Some of the euro zone's toughest spending cuts last year gave Ireland a brief respite from the market assault on peripheral euro members, but its fiscal rectitude has been all but overshadowed by fresh rounds of bad news on the banking front.
The cost of bailing out nationalised Anglo Irish Bank last year gave Ireland a budget deficit of 14 percent per gross domestic product, the highest in Europe, which could rise to 20 percent or more this year, the state-funded Economic and Social Research Institute (ESRI) said last week.
With Ireland have emerged from the euro zone's longest running recession in the first quarter, Moody's said it expected Irish medium-term economic growth of 2-3 percent per year, below the 4 percent projection built into the government's fiscal programme.
Moody's said banking and real estate — engines of growth in the years preceding the country's crisis — would not contribute meaningfully to overall growth in the coming years.
"It's really not telling us anything that we don't know already," said Martin Mansergh, Ireland's minister of state for finance. "We all know that banking and real estate are not going to be sources of growth."
The IMF last week said Dublin would not meet a European Union-agreed deadline to reduce its budget deficit to 3 percent of gross domestic product (GDP) by 2014, also citing threats to Ireland's growth target.
While the Irish public has so far grudgingly accepted fiscal tightening, a senior official in Prime Minister Brian Cowen's governing coalition said on Sunday voters might not be ready to accept all the cuts still envisaged by the government.
On the positive side, Ireland does not face any major bond redemptions this year and it has raised enough bonds to see it through to the first quarter of 2011 regardless of the outcome of upcoming monthly auctions, officials say.
Moody's action also suggested the country was close to hitting its ratings floor, said David Schnautz, a Commerzbank strategist in London.
"They ... stabilised the outlook, which might indicate that we're much closer to a bottom in ratings. ...This is something which in the end should turn out to be supportive for Irish bonds and (euro zone) peripherals as well."
The spread of Irish 10-year bonds against their German equivalent widened on Monday to 300 basis points, their highest since July 2.
Romanians rush to bank after savings go missing
August 12, 2010
About 200 Romanians have rushed to a Dutch-owned bank to check their savings after authorities reported that they received a dozen complaints from people whose accounts had been drained.
Romanian authorities have started an investigation at a branch of Credit Europe Bank in Brasov, a city in central Romania.
Police spokesman Liviu Nagy says bank employees are suspected of siphoning off money from the accounts and transferring it into other accounts.
Losses are estimated to be 1 million lei ((EURO)240,000). One person reported losses of about (EURO)120,000 (US$156,000)
OBAMA WANTS YOUR RETIREMENT FUNDS
October 11, 2010 Monday
Neal Boortz read this on air today. He said last week the US Congress discussed how to
FORCABLY TAKE EVERYONE's RETIRMENT SAVINGS!
Demoncrats in Washington are looking at ways to get their hands on the money you have in your 401K plans, your IRAs and in other retirement investments.
We're talking trillions of dollars here and this is money that the Demoncrats just can't resist.
In 2008 Argentinean president Kirchner seized private retirement accounts. It CAN happen here.
Right now in Washington congressional committees are studying a way to do the same thing here.
Americans have a right to financial security during their retirement years.
It's not fair that the fortunate few have well-funded 401K and other retirement plans while so many Americans will live at or below the poverty level after they stop working.
You deserve better. Working class Americans who built this country will be skimping on food and other necessities during their retirement,
while those who won life's lottery will be hanging around their country clubs and enjoying Caribbean cruises. A comfortable retirement is the right of every American.
To protect this right the government needs to pass laws that will create a guaranteed annual retirement income for every American, not just the fortunate few.
To achieve this we will propose legislation calling for all 401K, IRA and other retirement plans to be consolidated into a Retirement Income Security Fund managed by the federal government.
These funds will be invested into government annuities which will in turn provide a guaranteed retirement income to every American.
Annuities will be adjusted, of course, to reflect the amount of money you have contributed, with the goal being to make sure that no American has to spend their retirement years in a state of want.
Here is the meaning of the above - -
We want to strengthen our control over you. To do that we're going to seize your retirement funds and, instead of relying on your bank to distribute these funds to you
when you need them, you're going to have to come to us. Now the people out there without adequate retirement plans vastly outnumber those of you who have actually saved for your retirement.
So you can bitch and moan all you want, but the numbers are on our side. We are going to seize your retirement accounts and dump them into a government fund
that we, not you, will control.
To avoid any Constitutional problems with seizing property without just compensation, we're going to give you a guaranteed annual income during your retirement years.
It might not be as much as you would have managed to arrange by yourself, but you'll get by.
If you die before your money is spent, we will spend it on other people who didn't have all the privileges and advantages you had during your working years.
They represent many more votes than you fat cats do. If you just relax, lay back and cooperate, you might actually enjoy this!
This is NOT just a rumor! PAY ATTENTION! This is being done in several other countries and its causing RIOTS!
Look at GREECE
STOCKS, GOLD, BANKS
More financial information here, 5 pages
FRANCE FIGHTING FOR THEIR PENSIONS TOO
Were some recent incidents in France related?
13 September 2010
French in front line fight to keep pension rights
The French have never shied from the barricades in defence of workers rights.
And according to the French unions around 2.5 million people came onto the streets last week, in protest at government plans to increase the minimum retirement age, from 60 to 62.
It is the cornerstone of the government's pension reforms, change that Jean-Francois Cope, President of the ruling UMP party in the Assembly, believes is unavoidable.
"Progressively we are going to change the debate," he said. "We are now talking about 'labour for seniors'.
"If you postpone the minimum retirement age, the dialogue between employer and employee must change. From now on the employer talking to a 50 year old employee will not be discussing retirement, instead he will talking about the next step in the 50 year old's professional career. "
Before these reforms, approved by the National Assembly on Friday a Frenchman could retire and receive full pension from the age of 60, as long as he/she had worked 40 years.
It is known as a repartition system.
Broadly speaking the government distributes to the retired, the money collected each year from those in work.
But a system like that is highly susceptible to unemployment and to changing demographics.
And to students like Emilien, about to enter the workplace, the reforms are hugely unsettling.
"I am worried. My generation will work far longer than those retiring today," he says. "I might not even get a job until I am 27. I will probably have to work 10 years longer than my parents. And who can guarantee there will be a pension at the end of it."
Generally speaking though, public opinion has moved in favour of the changes, they might not like them, but the French recognise they are almost inevitable.
The unions know they are unlikely to build enough support to force the President to back down. But they have won enough concession to save face and Thierry Dedieu of the CFDT union believes they have forced a debate on the kind of working life people want.
"Can we continue to extend indefinitely the length of the working life?" he asks. "We don't talk about the model of society we want, what is reasonable, what is sustainable."
M Dedieu continues: "Is it acceptable that some will contribute to the system for 45 years while others will have contributed only 35 or 40 years? People see the unfairness in the system.
We know there is need for reform. But we think this is a debate for a presidential election. It can't be something we debate in the space of three months."
At least the unions have forced debate on 700 amendments. And concessions have already been made to those in difficult and strenuous jobs.
Jean-Francois Cope does not deny a debate is needed. "But it should also encompass," he says, "a debate on productivity and, ultimately, the level of contributions people are happy to make. "
Which brings us back to the way retirement is funded. In this country there is no tradition of privately funded pensions. The people have always depended on the state. "There is a contract of trust, which the government is expected to uphold," says French Economist Xavier Timbeau.
"There has always been more trust in the state than in financial markets, and that is even more the case after the recent crisis. To Frenchmen the state is supposed to be the fair distributor of wealth. When they tamper with that, people get upset, which perhaps explains the scale of the recent demonstrations."
No doubt there is a sneaking admiration in the rest of Europe for the way in which the French have so far defended their quality of life. But change is coming.
Mr Cope says the retirement age may need to rise to 63 by 2018. The socialists are pledging to return it to 60 if elected in 2012.
It is a debate that could well define the next Presidential campaign. It is one that will certainly define in what kind of world the French want to live and work.
Recent incidents in France
Eiffel tower bomb scare
Air France Bomb Threat
France hit by third national strike in a month
12 October 2010
Commuters wait at Paris St Lazare station Transport in Paris has been disrupted
French unions are staging a national day of strikes and demonstrations in opposition to the government's pension reforms - the third in a month.
Hundreds of thousands of people are expected to march in cities across France, with transport workers, civil servants and teachers stopping work.
Ministers want to raise the minimum retirement age from 60 to 62, and the state pension age from 65 to 67.
Meanwhile, key workers are set to vote on whether to begin open-ended strikes.
Half of all flights to and from Paris Orly airport, and one in three at Charles de Gaulle and Beauvais have been cancelled for Tuesday.
Just one in three TGV high-speed trains are expected to run. Eurostar's Paris to London route should operate normally.
Commuter trains in Paris were badly hit but the metro is less affected and buses should run as usual.
"This is one of the last chances to make the government back down," said Francois Chereque, the leader of the French Democratic Confederation of Labour (CFDT).
"The large majority of employees cannot afford to pay for repeated days of strikes."
420 banks demand 1-world currency
October 12, 2010 Jerome Corsi's Red Alert
International finance group seeks remedy to looming exchange wars.
The Institute of International Finance that represents 420 of the world's largest banks has issued another call for a one-world global currency.
A core group of the world's leading economies need to come together and hammer out an understanding, Charles Dallara told the Financial Times.
An IIF policy letter dated Oct. 4 made clear that global currency coordination was needed to prevent a looming currency war.
The narrowly focused unilateral and bilateral policy actions seen in recent months have contributed to worsening underlying macroeconomic imbalances and growing protectionist pressures as countries scramble for export markets as a source of growth.
Dallara encouraged a return to the G-20 commitment to utilize International Monetary Fund special drawing rights to create an international one-world currency alternative to the U.S. dollar as a new standard of foreign-exchange reserves.
Likewise, a July United Nations report called for the replacement of the US dollar as the standard for holding foreign-exchange reserves in international trade with a new one-world currency issued by the IMF.
The IMF is part of Evil globalists and population reduction aka kill us all off.
Fuel to Paris reduced as French protests escalate
Paris airport Charles de Gaulle running short on fuel as pension strikes in France enter fifth day.
Striking French oil refinery workers shut down a fuel pipeline supplying Paris and its airports.
Airport workers grounded some flights as protests mounted to derail an unpopular pension reform. France's airport operator played down
worries of fuel shortages, but strikes at all of the country's 12 refineries and fuel depot blockades prompted motorists to stock up on petrol.
Truck drivers may join as momentum built for a day of street rallies on Saturday.
The widening protests have become the biggest challenge facing President Nicolas Sarkozy, who is struggling with low popularity ratings
as he tries to appease financial markets by stemming a ballooning pension shortfall. Interesting how quickly GOD's judgments fall.
Obama will steal your retirement funds
Thousands rally against Italian government
October 17, 2010
Tens of thousands of people marched in Rome on Saturday at a trade union rally in defence of labour contracts and against the government, as the main protest leader called for a general strike.
"We have to continue this battle and to continue it we need to start planning a general strike," Maurizio Landini, head of the FIOM-CGIL metal workers union, told the flag-waving crowd in a square in central Rome.
Protesters at the FIOM-CGIL rally shouted: "Strike! Strike! Strike!"
"We have a government that only cares about public finances," Guglielmo Epifani, leader of the leftist CGIL union, said at the rally, listing the construction and auto sectors as some of the worst affected in Italy.
"They are taking advantage of the crisis in order to weaken labour rights," he said, adding: "The social situation is very tough. The country is going downhill, it can't recover like it should. Unemployment is rising.
"We have to fight together. We need a plan for a new country," he added.
Epifani said that a general strike would be called after another protest on November 27 unless the government took action to address workers' concerns.
There were two separate marches through the centre of the Italian capital that both ended in Piazza San Giovanni in Laterano square for the rally.
Many protesters carried red flags and wore red shirts and helmets, with some holding up placards against Berlusconi and Fiat boss Sergio Marchionne.
Organisers said earlier they were expecting 100,000 people top take part.
Interior Minister Roberto Maroni warned this week there could be clashes at the protest because of infiltration by an anarchist group but his comments were dismissed by trade unionists and opposition leaders as scaremongering.
"I can assure the inhabitants of Rome and the participants in the demonstration that the police will guarantee maximum security," Rome police chief Francesco Tagliente said ahead of the protest.
Hundreds of police officers could be seen deployed around Rome.
Global stocks, commodities sink on Irish anxiety, China
Nov 16, 2010 NEW YORK (Reuters)
World stocks fell for the seventh straight session on Tuesday as growing tensions about Europe's debt problems and expectations of tighter credit in China weighed on commodity prices and hurt investor sentiment.
The U.S. dollar remained at a seven-week high against major currencies as anxiety about the outcome of Ireland's debt crisis sent the euro below $1.35.
Ireland's bond yields rose while euro zone finance ministers discussed in Brussels a solution for the crisis. The officials were weighing a rescue package of 80 billion to 100 billion euros for the country, the Wall Street Journal reported, but Dublin resisted a state bailout, saying that only its banks may need help.
"There's a global concern that if Ireland needs aid, it could become a domino effect with other countries," said Cort Gwon, director of trading strategies and research at FBN Securities in New York.
"Especially at such a sensitive time in the economy to have a setback in Europe could mean a setback for the rest of the world, too."
The premium investors demand to hold Irish government bonds rather than German benchmarks widened to 587.5 basis points from around 562 basis points at Monday's settlement. The cost of insuring against debt default in Ireland, Portugal and Greece also crept higher.
World stocks fell 2.08 percent according to the MSCI All-Country World Index .MIWD00000PUS. The index has lost more than 4.0 percent since November 5, when it closed higher for the last time.
In Europe, the FTSEurofirst 300 .FTEU3 index of top shares ended down 2.3 percent at 1,086.61 points.
The Dow Jones industrial average .DJI was down 199.09 points, or 1.78 percent, at 11,002.88, while the Standard & Poor's 500 Index .SPX lost 20.86 points, or 1.74 percent, to 1,176.89. The Nasdaq Composite Index .IXIC declined 43.73 points, or 1.74 percent, at 2,470.09.
The euro slipped 0.77 percent to $1.3478 as anxiety about Ireland eclipsed a stronger-than-expected reading of German ZEW institute's economic sentiment index.
"What's the driving the euro is just all the sovereign risk out of Europe," said Jack Iles, a portfolio manager at MFC Global Investment Management in Boston. "That's driving sentiment across the board for risk assets and that probably will not go away in the next 48 hours."
The dollar rose 1.0 percent versus a basket of major currencies, according to the U.S. Dollar Index.
Chinese shares .SSEC sank nearly 4.0 percent to a one-month low on reports that China will unveil food price controls and crack down on commodity speculation to contain inflationary pressure.
The reports increased expectations that China will further tighten monetary policy to help fight inflation. Commodity prices fell as a result, as China is one of the world's top consumers of raw materials.
Unemployment heading for 25%
5 november 2010, (Shadow Government Statistics)
Euro under siege as now Portugal hits panic button
The euro is facing an unprecedented crisis after another country indicated on Monday night that it was at a "high risk" of requiring an international bail-out.
Portugal became the latest European nation to admit it was on the brink of seeking help from Brussels after Ireland confirmed it had begun preliminary talks over its debt problems.
Greece also disclosed that its economic problems are even worse than previously thought.
Angela Merkel, the German Chancellor, raised the spectre of the euro collapsing as she warned: "If the euro fails, then Europe fails."
European finance ministers will meet in Brussels on Tuesday to begin discussions over a new European stability plan that is expected to result in billions of pounds being offered to Ireland, Portugal and possibly even Spain.
David Cameron said he was thankful that Britain had not joined the euro, but indicated his displeasure that taxpayers in this country face a pounds 7?billion liability in any bail-out package.
The veteran Conservative MP Peter Tapsell warned that the "potential knock-on effect" of the Irish crisis "could pose as great a threat to the world economy as did Lehman Brothers, AIG and Goldman Sachs in September 2008".
Ireland has resisted growing international pressure to accept EU financial assistance amid concerns that this would lead to a surrender of political and economic sovereignty.
However, the German government is expected to signal that Ireland may have to accept a pounds 77?billion bail-out, along with a loss of economic and political independence, as the price of preserving the euro.
Mrs Merkel said that the single currency was "the glue that holds Europe together".
Her words came as fellow eurozone members Portugal and Spain rounded on Ireland. They fear that international concerns over the euro will lead to so-called market contagion spreading to them.
Fernando Teixeira dos Santos, the Portuguese finance minister, said: "There is a risk of contagion. The risk is high because we are not facing only a national problem. It is the problems of Greece, Portugal and Ireland. This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely."
Mr Teixeira dos Santos added: "I would not want to lecture the Irish government on that. I want to believe they will decide to do what is most appropriate together for Ireland and the euro. I want to believe they have the vision to take the right decision."
He later sought to clarify his comments, insisting that Portugal was not preparing to seek assistance.
Greece had earlier added to the growing uncertainty when it said it would breach the conditions for the bail-out it was granted by the EU earlier in the year. The Greek government said its debt problem was far worse than previous dire forecasts.
Eurostat, the EU statistics agency, said Greece's 2009 budget deficit reached 15.4 per cent of gross domestic product, significantly above its previous figure of 13.6 per cent.
George Papandreou, the Greek Prime Minister, said new European-wide taxes may now be needed to fund bail-outs.
"We need a mechanism which can be funded through different forms and different ways," he said. "My proposal is that taxes such as a financial tax or carbon dioxide taxes could be important revenues and resources for funding such a mechanism."
Irish ministers continued to insist publicly on Monday that they did not require a European bail-out to help meet the cost of repaying the country's debts. However, reports suggested that it may require help to shore up its banks.
Jean-Claude Juncker, the head of the Eurogroup of finance ministers, said the eurozone was indeed ready to act "as soon as possible" if Ireland sought financial assistance. But he stressed that "Ireland has not put forward their request".
Ireland suffered the worst recession of any major economy and has amassed government debts of more than euros 100?billion (pounds 84?billion). It has an unemployment rate almost twice as high as Britain at 13.2 per cent and has a record deficit equivalent to 32 per cent of its gross domestic product.
Senior figures at the European Central Bank lined up on Monday to insist that the Irish accept international help to reassure investors that the euro was secure.
Miguel Angel Fernandez Ordonez, the Bank of Spain governor and a member of the ECB's governing council, said: "The situation in the markets has been negative due in some part to the lack of a decision by Ireland. It's not up to me to make a decision. Ireland should take the decision at the right moment."
Warren Buffett praises bailout efforts
BANGALORE (Reuters) – Warren Buffett praised the U.S. government's efforts to bail out the economy during the financial crisis two years ago, preventing an economic collapse.
In a letter published by the New York Times, Buffett wrote that all corporate America's dominoes were lined up and were ready to topple at lightning speed in the aftermath of Lehman Brothers bankruptcy in September 2008.
"My own company, Berkshire Hathaway (BRKa.N), might have been the last to fall, but that distinction provided little solace," Buffett, nicknamed the Oracle of Omaha, said.
He said the U.S. government's decision to buy up assets that many investors considered to be toxic had helped pull back the economy from the brink of collapse.
Buffett commended the architects of the bailout program including Federal Reserve Chairman Ben Bernanke and praised U.S. President George W. Bush for leading the program even as Congress "postured and squabbled."
AIB customers withdraw nearly $18 billion - Irish bank says it has had to rely on central bank funding
19 November 2010, by Polya Lesova (MarketWatch)
Challenging market conditions have forced Allied Irish Banks to access a range of liquidity facilities from central banks, the lender said Friday,
adding that its customers withdrew 13 billion euros ($17.8 billion) from their accounts since the start of the year.
Customers have taken out €13 billion from their accounts year-to-date amid “current adverse international sentiment towards the Irish sovereign and banking sector,” the bank said.
General funding market conditions in recent months have become “increasingly challenging,” which has had a negative impact on AIB’s funding position.
“As a result of prevailing market conditions, AIB has also accessed a range of liquidity facilities from central banks, including certain additional market wide schemes during the period of dislocation within the funding markets,” the bank said.
Run on Allied Irish Banks
Allied Irish lost 17 percent of deposits
Customers Pull 17% of Deposits; Ghost Estates and Broken Lives: the Human Cost of the Irish Crash
November 20, 2010 Saturday
A slow steady bleed has turned into a mad dash for cash at Allied Irish Banks. Allied Irish Banks has had to rely on Central Bank funding as customers withdraw $18 billion, a stunning 17 percent of its deposit base. Without Central Bank funding, there would indeed be outright panic.
Allied Irish Banks announced Friday it has lost a staggering euro13 billion ($18 billion), or 17 percent, of its total deposit base since June in the latest evidence of cash flight from Ireland's debt-crippled banking sector.
Earlier this month two other banks, Bank of Ireland and Irish Life & Permament, reported suffering losses of more than 10 percent of deposits in recent months.
The cash flight from Irish banks has accelerated since September, when the government raised its estimated bill for bailing out five banks to at least euro45 billion ($62 billion), a figure that many analysts said was still too low.
Officials at Allied Irish said the bank had euro74 billion in customer deposits at the end of June but just euro61 billion today.
Allied Irish was once Ireland's largest business, but it has suffered a spectacular fall since 2008 in line with the collapse of a construction-dependent economy.
Property Boon Gone Bust Sinks Ireland
Read that last paragraph above once again. Note that unlike Greece which was destroyed by public unions, it was a property bubble and irresponsible bank lending that sunk Irish banks.
Inquiring minds are reading Ghost estates and broken lives: the human cost of the Irish crash
They stand empty across Ireland: 300,000 unoccupied homes, a silent reproach to those who built them believing that the country's economic boom would never end.
As Europe's finance ministers laboured in vain to reach an agreement on how to ease Ireland's economic misery last night, the so-called ghost estates were an awful reminder that the
"survival crisis" the politicians were warning was under way had already hit ordinary people.
Dave O'Hara was one of those who bought into the "Celtic Tiger" at the beginning of the decade, eschewing a seven-generation family tradition of carving headstones in favour of a piece of the country's building boom.
He founded a firm that constructed bespoke windows and doors for the thousands of upscale homes being built. The firm grew into a multimillion-euro enterprise, until the recession – and the collapse of the building industry – hit in September 2008.
Now his company is in liquidation, and Mr O'Hara, 41, who has one child, is on the dole. He owes the Bank of Scotland more than 1m Euros (£850,000).
Not far from Mr O'Hara's home, the "ghost estates" are well-known eyesores along the rugged landscape. And the crisis that created them has hit not just the people who built them, but those who might once have expected to move in, as well.
Hundreds of thousands of homeowners have already found themselves saddled with negative equity as a result of the crash, economists estimate, with as many as one in seven families affected.
Personal indebtedness is also an issue, as are redundancy and the end of easy loans, meaning around 100,000 households are struggling to make regular repayments on the money they owe. And yet, house prices continue to fall precipitously.
Together with slumping disposable incomes due to frozen wages and stubbornly high unemployment, still running at more than one in every eight adults of working age, many fear a social disaster is unfolding.
Operating Profits Down
For a bank that is clearly bankrupt and exists only because of life support from the central bank, it is interesting to see the headline Allied Irish Banks says operating profits down
Allied Irish Banks (AIB) said today that challenging economic and market conditions are reducing operating profits overall, and in each of the divisions, relative to the same period in 2009. There has been an outflow of €13bn worth of of deposits in 2010.
Excluding Poland, the loan to deposit ratio at 30th September was 159% compared to 151% at 30th June.
The bank said customer accounts have been affected by current adverse international sentiment towards the Irish sovereign and banking sector and are down by c.€13bn from the beginning of 2010 to the close of business on 16 November. This reduction was primarily due to lower institutional and corporate balances.
Operating income has declined year on year to 30th September 2010, mainly due to lower business volumes, an increase in Government guarantee costs of c.€190m and a lower net interest margin.
The bank said factors reducing its net interest margin this year include lower capital income, lower treasury income, lower income on loans pending transfer to NAMA and higher wholesale funding costs.
AIB said it is continuing to improve margins across non-NAMA loan portfolios and deposit margins, particularly in the Irish market, have stabilised in recent months.
Energy bills to soar despite reduced cost to utility companieshttp://www.guardian.co.uk/money/2...nergy-bills-soar-wholesale-prices
Consumer groups are in revolt over steep price hikes that will see households face near-record gas and electricity bills this winter, despite the fact that wholesale prices are only half the level of 2008.
Last week, British Gas surprised the energy sector when it announced it will increase its gas and electricity prices by an average of 7% – although many customers will see bills rise by as much as 10%. Earlier, Scottish & Southern Energy (SSE), the company traditionally last to raise prices, had already announced an unwelcome 9.4% addition to bills.
If past experience is anything to go by, consumers can expect further increases from the E.ON, Scottish Power, and npower. Only one of the major power firms, EDF, has ruled out increasing prices this winter. British Gas says it has been forced to hike prices because "the wholesale cost of gas for 2011 is 25% higher than for 2010".
After Ireland, spotlight on Portugal, Spain
Lisbon vulnerable to vigilantes, but Madrid may put up a fight
Any deal between the Irish government and the European Union and International Monetary Fund to resolve Ireland’s financial crisis is ultimately aimed at cutting short the turmoil in sovereign bond markets that policy makers fear could one day price Portugal or even Spain out of global credit markets.
Portugal, which like Ireland is a small economy with a relatively illiquid debt market, is seen as the next country likely to find itself in the sights of bond traders.
“If you see an Ireland package, we would hope that contagion effects would be limited,” said Ian Harnett, managing director at Absolute Strategy Research, a financial consulting firm. “But investors appear to be picking off weak countries one by one,” leaving Portugal “very much at risk.”
Irish bond yields soared in recent weeks on mounting worries about the government’s ability to meet the cost of rescuing its crippled banking sector. European officials upped the pressure on Ireland to apply for a rescue as turmoil spread to other peripheral bond markets, pushing up borrowing costs for Portugal and, to a lesser degree, Spain.
Dollar to Become World's `Weakest Currency,' Drop to 75 Yen JPMorgan Says
The dollar may fall below 75 yen next year as it becomes the world’s “weakest currency” due to the Federal Reserve’s monetary-easing program, according to JPMorgan & Chase Co.
The U.S. central bank, along with those in Japan and Europe, will keep interest rates at record lows in 2011 as they seek to boost economic growth, said Tohru Sasaki, head of Japanese rates and foreign-exchange research at the second-largest U.S. bank by assets. U.S. policy makers may take additional easing steps following the $600 billion bond-purchase program announced this month depending on inflation and the labor market, he said.
“The U.S. has the world’s largest current-account deficit but keeps interest rates at virtually zero,” Sasaki said at a forum in Tokyo yesterday. “The dollar can’t avoid the status as the weakest currency.”
The Fed said on Nov. 3 it will buy $75 billion of Treasuries a month through June to cap borrowing costs. The central bank has kept its benchmark rate in a range of zero to 0.25 percent since December 2008. The Bank of Japan on Oct. 5 cut its key rate to a range of zero to 0.1 percent and set up a 5 trillion yen ($59.9 billion) asset-purchase fund.
The dollar traded at 83.38 yen as of 12:04 p.m. in Tokyo after falling to a 15-year low of 80.22 on Nov. 1. The greenback declined to post-World War II low of 79.75 yen in April 1995. The U.S. currency has declined against 12 of its 16 most-traded counterparts this year, according to data compiled by Bloomberg.
There’s no need for any monetary tightening in the U.S. as even prolonged easing won’t heighten inflationary pressures with the balance sheets of banks and households still hurting from the fallout of the global financial crisis, Sasaki said.
Ten-year Treasury yields may decline to around 2.25 percent over the next year, and their premium over similar-maturity Japanese yields won’t widen, he said. The benchmark 10-year Treasury yielded 2.89 percent today.
The world economy is likely to expand 3 percent next year amid the extra liquidity provided by central banks, “repeating a pattern from early 2002 to the end of 2004” when improving risk appetite boosted stocks and commodities and the dollar fell 25 percent against the yen, Sasaki said.
With monetary easing in the U.S., Japan and Europe likely to bolster the global recovery and increase demand for yield, the yen is poised to weaken against other currencies beside the dollar to levels last seen in early 2007, Sasaki said.
Japan will refrain from selling the yen even if it strengthens against the dollar, following international criticism of foreign-exchange intervention, he said. The nation intervened in the currency markets for the first time in six years on Sept. 15 when the yen climbed to a 15-year high.
Irish, EU, IMF face marathon talks for loan deal
DUBLIN – As EU experts dug through the books of Ireland's debt-crippled banks, the question moved from whether Ireland will take an international bailout to under what conditions.
On the firing line was Ireland's prized low business tax, which the government says has lured 1,000 multinationals to Ireland over the past decade — but which it may have to give up to satisfy conditions of being rescued.
The Irish rescue is the latest act in Europe's yearlong drama to prevent mounting debts and deficits from overwhelming the weakest members of the 16-nation eurozone. Greece was saved from bankruptcy in May, and analysts say Portugal could be next in line after Ireland for an EU-IMF lifeboat.
Europe agrees €80bn-€90bn Irish aid
21 November 2010
The debt crisis gripping the eurozone claimed its second victim in six months on Sunday night when European finance ministers agreed to a request from Ireland for a multibillion-euro emergency rescue.
The bail-out is expected to total €80bn-€90bn and will include contributions from the UK and Sweden, according to people briefed on the discussions. But the deal may not be concluded until the end of November because the parties are still negotiating the conditions attached to the aid.
Speaking at a press conference in Dublin, prime minister Brian Cowen said: “The European authorities have agreed to our request. A formal process of negotiation will now commence that will lead to the provision of assistance on the basis of programme to be negotiated by the government with the European Commission and the International Monetary Fund in liaIson with the European Central Bank. I expect that agreement to be finalised shortly, within the next few weeks.”
The package would include a fiscal package on the national budget that would see increased taxes and reduced spending.
“Irish banks will become significantly smaller than they have been in the past, so that they can gradually be brought to stand on their own two feet once more.”
Mr Cowen insisted that the country’s corporation tax, a bone of contention with other Eurozone members, had not arisen as part of the negotiations.
Mr Lenihan, asked about the size of any package, repeated what he had earlier said that the size would not be over €100bn and said that there was no intention that Dublin would draw on the entire sum.
Speaking on Irish radio, he declined to disclose the interest rate the country would have to pay on any EU-IMF loans, but said it would be “a lot less than what we have to borrow at if we went to the world markets”.
A special cabinet meeting in Dublin was due to finalise a four-year plan to stabilise the battered economy, which would involve at least €15bn ($20bn) in spending cuts and tax increases – or about 10% of annual economic output – from 2011 to 2014.
The Irish government’s beleaguered position was underlined by a poll in the Sunday Business Post by Red C that put Fianna Fáil on 17% of first preference votes, less than half the level it achieved at the last general election in 2007.
Vigilantes Home In On Portuguese Beacon As Opposition Claims Government Understated Debt And Deficit Figures By About 25%
With Ireland now a lost cause, the next country which will see its bond yields surge to new records is Portugal. And just so vigilantes don't miss the hint, the Portuguese opposition party has stated that the country's budget deficit and public debt are "higher than those reported by the government." The claim is that Portuguese debt is about 30% higher than claimed by official statistics: instead of 82% of GDP, it is actually 112%. With bankrupt Greece having lied about virtually every aspect of its comatose economy, it is not as easy to dismiss the announcement as merely political bickering, and is sure to leads to at least a modest double digit basis point jump in Portuguese spreads. And once Portugal is rescued, just after New Year's, then it will be time for those last two countries of the peripheral block: Italy and Spain. And after them, it's the core's turn.
Irish bailout boost to markets proves short-lived
LONDON (AP) -- Ongoing worries that Europe's debt crisis is a long way from being solved despite Ireland's request for a massive bailout rescue kept investors on edge Monday and sent stocks and the euro lower.
In Europe, the FTSE 100 index of leading British shares was down 48.74 points, or 0.9 percent, at 5,684.19 while France's CAC-40 fell 24.76 points, or 0.7 percent, to 3,834.40. Germany's DAX was trading 11 points, or 0.2 percent, lower at 6,832.55.
Wall Street was poised for a modest retreat despite earlier signaling a higher opening -- Dow futures were 34 points at 11,135, while the broader Standard & Poor's 500 futures fell 4.2 points to 1,194.
Stock markets had been in far better shape earlier -- Asian markets closed mostly higher -- as investors breathed a sigh of relief that some sort of aid package for Ireland is being cobbled together, since they hate nothing more than uncertainty and prevarication. The Irish government confirmed Sunday it is formally requesting a financial aid package to shore up its debt-laden banking sector
The actual details of the package, expected to be not far short of euro100 billion ($137 billion), are not expected for a few days yet as Irish officials sit down with counterparts from both the European Union and the International Monetary Fund. The country will likely be forced to make further massive spending cuts and raise its very low rate of corporate tax.
Aside from whether another Irish austerity program will work, especially now that the Green Party in Ireland's shaky government has threatened to withdraw from the coalition unless Prime Minister Brian Cowen agrees to hold an early national election in January, the major worry in the markets is whether another highly indebted euro country starts getting the unwelcome attention of bond investors.
"Now Ireland has fallen, we suspect that the markets will quickly turn their attention to the other embattled peripheral countries, particularly Portugal and Spain," said Jeremy Batstone-Carr, head of private client research at Charles Stanley stockbrokers. "It hardly needs saying, but if Spain were to fall the eurozone crisis would have ratcheted up to such a degree that the regions continued existence as an economic area could be called into serious question."
Those concerns were clearly evident in the currency markets, where the euro gave up the advance it made in the wake of Ireland's request -- by early afternoon London time, the euro was down 0.5 percent at $1.3645. Earlier it had traded as high as $1.3786.
Even if there are no more bailouts, the scale of austerity being pursued in a number of eurozone countries will highlight the divisions in the single currency bloc. While Ireland and Greece, and possibly others, face years of retrenchment, the eurozone's No. 1 economy -- Germany -- will likely continue to prosper due to its exporting prowess.
"Even assuming the best case scenario of no further bailouts, the necessary adjustments required to rectify internal imbalances in the eurozone are deeply deflationary and will quickly become evident by the underperformance of the euro-zone economy," said Derek Halpenny, European head of global currency research at the Bank of Tokyo-Mitsubish UFJ.
Developments surrounding Ireland should dominate activity in the markets this week, not least because the U.S. will effectively be shutting down from Wednesday onwards as traders head off for the Thanksgiving break.
Earlier in Asia, investors had been cheered by Sunday's aid request from Dublin.
Japan's Nikkei 225 stock average closed 0.9 percent higher, or 92.80 points, at 10,115.19 while South Korea's Kospi rose 0.2 percent to 1,944.34. Australia's S&P/ASX 200 added 0.3 percent to 4,643.5.
But Hong Kong bucked the trend, with the Hang Seng index falling 0.4 percent to 23,524.02 amid losses in property stocks after new measures to stem speculation. Singapore's benchmark also fell.
Chinese shares closed mixed in weak trading, as investors awaited further policy moves from the government after inflation last month hit a 25-month high.
The benchmark Shanghai Composite Index slipped 0.2 percent to 2,884.37. The Shenzhen Composite Index for China's smaller, second exchange climbed 1.2 percent to 1,313.57.
In the oil markets, benchmark crude for January delivery was up 14 cents to $82.12 a barrel in electronic trading on the New York Mercantile Exchange.
Associated Press writer Pamela Sampson in Bangkok contributed to this report.
Ireland warned it will have to stump up state assets in bailout
Bord Gáis and the Electricity Supply Board, Ireland's motorways, CIE, the national oil reserves, our stake in Aer Lingus as well as the best parts of the Dublin banks and the whole of the national pension fund are likely to be pledged as security in return for the tens of billions of euro in loans the government will receive from the IMF, the European Community and the European Central Bank.
The warning, from markets sources, comes as the talks between the Irish authorities and the IMF-led troika were due to extend through today and into this week. The talks were focusing on ways of limiting the amount of the private banking debts that a generation of Irish citizens will be made to pay for.
But in an investor note this weekend, Société Générale in Paris, which helps sell Irish sovereign bonds for the government, said there were calls from around Europe for Ireland to stump up "collateral" in return for its bailout loans.
"When a developing county is given aid, we can understand why no security is required. Not so when a government has access to reserves, investments and state holdings. We see this aspect of the aid package as a litmus test of how soft on moral hazard Europe might be. We also see a tough onus placed on the government in question to implement serious austerity."
Local economists believe the total size of the open-ended bailout funds could exceed €100bn if the ECB were to demand back some or all of the loans it advanced to the Irish banks in recent weeks. Europe may, however, inch toward a tougher line than the government and burn the private bond holders in the Irish banks. In relation to the IMF?presence, a government spokesman said the "objective there is to access funds for Ireland at a much better rate", adding that currently rates of 8% plus being charged by the markets were prohibitive.
The Sunday Tribune has also learned that, in the days leading up to last weekend, ECB officials made their growing concerns known to Dublin about the open-ended amounts of cash that Frankfurt and the Irish Central Bank were pledging to Anglo Irish, AIB and Bank of Ireland. Leading central bank watcher Lorcan Roche Kelly said that funding of over €165bn had been loaned by the ECB and the Irish Central Bank to all Ireland-based banks by the end of October.
Leading European consultants who have monitored the heave by big states such as Germany and France and now Britain to neutralise Ireland's advantageous 12.5% corporate tax rate say that Ireland has suffered major damage with multinationals considering creating thousands of jobs here. "The comments by the German, French and Austrian finance ministers just cannot be swatted away," said John Hume, of Hume Brophy Consultants in Brussels. The Irish Central Bank has provided more than €34.6bn in emergency funds to lenders, believed to be Anglo, Irish Nationwide and EBS, while Frankfurt separately provided an estimated €90bn to the main lenders and €40bn to banks in the IFSC, according to estimates.
Brian Lucey, associate professor at TCD, said that the open-ended bailout loans, which Ireland may not need to tap, would be huge if the troika wanted to deliver a fund to cover the week-by-week funding of the banks, the banks' additional capital as well as the budget deficits and repay back sovereign debts for three to five years.
Why You Should Be "Extremely Scared" by China's Food Price Inflation
If you listen to the Fed, inflation is non-existent, especially when you strip out "volatile" items like food. That's fine and good, as long as you don't have to eat...
But, of course, everybody has to eat; that's why policymakers around the world were alarmed by China's recent CPI report, which showed food prices rose 10.1% in October. A separate report showed a basket of produce rose a shocking 62% on a year-over-year basis in the first 10 days of November.
Set aside for a moment questions about the accuracy of the data -- or whether inflation in China is the result of Ben Bernanke's QE2 or China's own easy money policies, and consider:
* -- An estimated 200 million migrant workers have moved from rural areas to Chinese cities in recent decades, with another 400 million predicted to follow suit in the next 20 years, according to The Independent.
* -- China had an urban population of 620 million by the end of 2009, which was 46.6 percent of the nation's total population, China Daily reports. Urban residents are expected to comprise about 52 percent of the Chinese population by 2015, and 65 percent by 2030.
That's a lot of mouths to feed and a big reason why Adrian Day of Adrian Day Asset Management is "extremely scared" about the potential for food price spikes to lead to rioting -- and even wars in the coming years.
Food is just one of myriad commodities China needs to secure in vast quantities in order to maintain its blistering growth, not to mention the legitimacy of the government. It's also the most basic, which is why Day is so concerned, as discussed in detail in the accompanying video.
Unlike some experts - notably Niall Ferguson - Day does not believe the U.S. and China are inevitably on a collision course. But it's worth noting another report that came out last week: The government's annual assessment of China's military capabilities, where there's evidence of another kind of highly disturbing "inflation."
Ireland Long-Term Sovereign Rating Lowered by Standard & Poor's
Ireland had its long-term sovereign rating cut to ‘A’ from ‘AA-’ and its short-term rating to ‘A-1’ from ‘A-1+’ by Standard & Poor’s Ratings Services, which cited concerns about additional borrowing by the government as it seeks external aid from the IMF and the European Union.
“The lower ratings reflect our view that the Irish government looks set to borrow over and above our previous projections to fund further bank capital injections into Ireland’s troubled banking system,” S&P said in a statement.
External aid will “not reduce the government’s large contingent liabilities or eliminate the negative macroeconomic pressures weighing on asset quality,” it also said.
Strike against austerity cuts brings Portugal to a halt
24 November 2010
Portuguese rail, air and other services have ground to a halt as workers strike over the Socialist government's planned cuts to ease the debt crisis.
Rail services were paralysed from the north to the south, with nearly 80% of trains not running, and the national airline TAP cancelled most flights.
The country's main unions, the UGT and CGTP, hope the 24-hour action will be the most effective in two decades.
Parliament is to vote on the austerity budget on Friday.
It aims to quell international unease over the country's public spending and deficit by cutting wages for public sector workers, freezing pensions and increasing taxes.
With the main opposition party saying it will not block the budget, analysts expect it to have an easy passage through parliament.
While the strike is unlikely to throw the government off course, it may fuel fresh concern on the markets, especially following the government's revelation this week that Portugal's budget deficit actually grew this year instead of shrinking, the BBC's Sarah Rainsford reports from Lisbon.
The unions are hoping to halt services from healthcare through to banking as part of their action:
* All of the country's ports were closed, according to the unions
* Both air traffic controllers and airport ground handling operators were on strike, meaning dozens of flights in and out of Lisbon had to be cancelled or rescheduled
* Bus and ferry links in Lisbon were disrupted, along with the metro service
* Fewer than 10% of the workforce at Volkswagen's Autoeuropa plant near Porto turned up for work, according to unions
Roads in and around the capital were choked with heavy traffic as many people chose to commute by car, Reuters news agency reports.
However, cafes and shops were open and vans delivered goods as usual, the agency adds.
In contrast to the recent protests against pension reform in France, the Portuguese strikers have not planned mass demonstrations but are confining themselves to pickets.
"The mobilisation of workers is enormous," said one CGTP leader, Manuel Carvalho da Silva.
Another trade unionist in Lisbon told AFP news agency it was unacceptable that workers should "make all the sacrifices".
"We cannot accept that the first, second and third priority of Portugal is the deficit," said Joao Proenca.
The opposition Social Democrats have said that, in order to not jeopardise the country's fragile finances, they will abstain from the vote on Friday rather than vote against the measures.
Lisbon is trying to convince international investors that Portugal will not be forced to seek a bail-out like Ireland or Greece.
The budget aims to reduce Portugal's deficit from 7.3% to 4.6% of GDP in 2011.
Portugal has failed to prosper or drive up productivity since joining the euro at what many now say was an unrealistic exchange rate, BBC Europe business correspondent Nigel Cassidy says.
The country found it especially difficult to compete with China in a previously strong sector, the manufacturing of textiles and shoes.
With 80% of its public debt held abroad, the country now finds itself at the mercy of bond traders and wants to convince the markets that it will be able to meet its commitments, our correspondent says.
China, Russia quit dollar
24 November 2010 St. Petersburg, Russia
China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.
Default Swaps Soar on `Sacrosanct' Senior Europe Bank Debt: Credit Markets
24 November 2010, by Abigail Moses (Bloomberg)
The cost of protecting against defaults on senior notes of European banks is soaring on speculation bondholders will be forced to take losses as governments try to share the burden of taxpayer-funded bailouts.
The Markit iTraxx Financial Index of credit-default swaps on senior debt rose 12.5 basis points, or 0.125 percentage point, to 163.5 basis points, the biggest increase since June. Contracts on Portugal’s Banco Espirito Santo SA are at a record, and Spain’s Banco Santander SA are at the highest level in five months.
Europe’s debt crisis has spread to Ireland from Greece, and bond investors bet that Portugal and Spain will be next in line for a bailout from the European Union and International Monetary Fund. The EU estimates a rescue for Ireland, downgraded yesterday by Standard & Poor’s, may total 85 billion euros ($113 billion).
“Senior bondholders will most likely find themselves as potential burden-sharers, which is in stark contrast with the rules of engagement of the market,” said Roberto Henriques, a fixed-income analyst at JPMorgan Chase & Co. in London. “Even at the worst point of the current crisis, it was generally a given that senior debt was sacrosanct.”
Subordinated bonds have largely borne the brunt of losses because they stop paying before senior securities in case of a default or debt restructuring. Should banks be unable to pay senior bondholders, they may find it more difficult and expensive to raise money. Anglo Irish Bank Corp. investors were forced to take 20 cents on the euro for subordinated debt this week.
China Calls Our Bluff
"The US is Insolvent and Faces Bankruptcy as a Pure Debtor Nation but [U.S.] Rating Agencies Still Give it High Rankings"
America's biggest creditor - China - has called our bluff.
As the Financial Times notes, the head of China's biggest credit rating agency has said America is insolvent and that U.S. credit ratings are a joke:
The head of China’s largest credit rating agency has slammed his western counterparts for causing the global financial crisis and said that as the world’s largest creditor nation China should have a bigger say in how governments and their debt are rated.
“The western rating agencies are politicised and highly ideological and they do not adhere to objective standards,” Guan Jianzhong, chairman of Dagong Global Credit Rating, told the Financial Times in an interview.
He specifically criticised the practice of “rating shopping” by companies who offer their business to the agency that provides the most favourable rating.
In the aftermath of the financial crisis “rating shopping” has been one of the key complaints from western regulators , who have heavily criticised the big three agencies for handing top ratings to mortgage-linked securities that turned toxic when the US housing market collapsed in 2007.
“The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests,” Mr Guan said.
Recently, the rating agencies have been criticised for being too slow to downgrade some of the heavily indebted peripheral eurozone economies, most notably Spain, which still holds triple A ratings from Moody’s.
There is also a view among many investors that the agencies would shy away from withdrawing triple A ratings to countries such as the US and UK because of the political pressure that would bear down on them in the event of such actions.
Last week, privately-owned Dagong published its own sovereign credit ranking in what it said was a first for a non-western credit rating agency.
The results were very different from those published by Moody’s, Standard & Poor’s and Fitch, with China ranking higher than the United States, Britain, Japan, France and most other major economies, reflecting Dagong’s belief that China is more politically and economically stable than all of these countries.
Mr Guan said his company’s methodology has been developed over the last five years and reflects a more objective assessment of a government’s fiscal position, ability to govern, economic power, foreign reserves, debt burden and ability to create future wealth.
“The US is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies still give it high rankings ,” Mr Guan said.
A wildly enthusiastic editorial published by Xinhua , China’s official state newswire, lauded Dagong’s report as a significant step toward breaking the monopoly of western rating agencies of which it said China has long been a “victim”.
“Compared with the US’ conquest of the world by means of force, Moody’s has controlled the world through its dominance in credit ratings,” the editorial said...
China is right. U.S. credit ratings have been less than worthless. And - in the real world - America should have been downgraded to junk. See this, this, this, this, this, this, this, this and this.
China is not shy about reminding the U.S. who's got the biggest pockets. As the Financial Times quotes Mr. Guan:
“China is the biggest creditor nation in the world and with the rise and national rejuvenation of China we should have our say in how the credit risks of states are judged.”
Might Makes Right Economic Collapse
Indeed, Guan is even dissing America's military prowess:
“Actually, the huge military expenditure of the US is not created by themselves but comes from borrowed money, which is not sustainable.”
As I've repeatedly shown, borrowing money to fund our huge military expenditures are - paradoxically - weakening our national security:
As I've previously pointed out, America's military-industrial complex is ruining our economy.
And U.S. military and intelligence leaders say that the economic crisis is the biggest national security threat to the United States. See this, this and this.
[I]t is ironic that America's huge military spending is what made us an empire ... but our huge military is what is bankrupting us ... thus destroying our status as an empire ...
Indeed, as I pointed out in 2008:
So why hasn't America's credit rating been downgraded?
Well, a report by Moody's in September states:
"In superficially similar circumstances, the ratings of Japan and some Scandinavian countries were downgraded in the 1990s.
For reasons that take their roots into the large size and wealth of the economy and, ultimately, the US military power, the US government faces very little liquidity risk — its debt remains a safe heaven. There is a large market for even a significant increase in debt issuance."
So Japan and Scandinavia have wimpy militaries, so they got downgraded, but the U.S. has lots of bombs, so we don't? In any event, American cannot remain a hyperpower if it is broke.
The fact that America spends more than the rest of the world combined on our military means that we can keep an artificially high credit rating. But ironically, all the money we're spending on our military means that we become less and less credit-worthy ... and that we'll no longer be able to fund our military.
The Scary Part
I chatted with the head of a small investment brokerage about the China credit rating story.
Because he gives his clients very bullish, status quo advice, I assumed that he would say that China was wrong.
To my surprise, he simply responded:
They're right. What's scary is that China knows it.
In other words, everyone who pays any attention knows that we're broke. What's scary is that our biggest creditor knows it.
Tricks Up Their Sleeves?
China has been threatening for many months to replace the dollar as the world's reserve currency (and see this). And China, Russia and other countries have made a lot of noises about replacing the dollar with the SDR. See this and this.
Gordon T. Long argues that the much talked about gold swaps are part and parcel of the plan to replace the dollar with the SDR. Time will tell if he's right.
China, of course, is not without its own problems. See this and this.
In related news, Germany's biggest companies are starting to shun Wall Street as too risky.
G-20 Meeting in Scotland about Dumping U.S. Dollar
Crisis of Fiat Currencies: US Dollar Surpluses Converted into Gold
China, Russia, Iran are Dumping the Dollar
Something is going on that your government does not want you to know about. Very few journalists have written about it and little or nothing has appeared in the mainstream media. The story could be one of major stories of our time.
Western powers have tried to destroy gold as a backing for currencies for many years. Presently the major media won’t touch the story and that is understandable.
Something we have been writing about for years is the Shanghai Cooperation Organization known as SCO. Few have been listening and few have been interested in what their mission is and what they have been up to.
Some of the members are large oil producers and some, like China, are large oil users. Some have very large US dollar surpluses. As well, some are large commodity and gold and silver buyers. In fact, members are in a great part responsible for driving these prices higher. It is debatable, but we believe there is a conscious effort to accumulate gold and silver, dump dollars and to back their currencies with gold.
China and Russia are both large gold producers and for a number of years have been buying up domestic gold and silver production, so that it never reaches the market and does not affect prices. If anything the absence of sales tends to push the markets higher. As a matter of fact Russia and India are visible buyers. Even Iran with its oil surplus recently announced that they had purchased 340 tons of gold. Their recent gold purchases are very significant as affiliate members, which have access to the present and ultimate direction of the group. You might say buying gold has been a protective effort to shield members and close observers from the problems generated by dollar policies. They are accumulating gold, as many have been worldwide, for the past ten years, but particularly over the past few years.
This buying, for protection, has served to thwart the efforts of US policymakers, the Treasury, other central banks in Europe and the Fed, from being able to continue the blatant suppression of both gold and silver prices. The malefactors, except for forays into derivatives and futures, which are transitory, have lost control and suppression of gold and silver prices, and it is only a matter of time before all visages of any control will be visible. Since 1988, in August when Present Reagan signed the Executive Order creating, “the President’s Group on Financial Markets” and the subsidiaries that have grown out of that policy, that the Treasury won many if not most of the battles. The SCO in part changed that and now they and the public are winning the war for a fair and free gold and silver market. The current class action lawsuits, including RICO, are a testament to the market manipulation in silver, which is finally coming to an end. HSBC and JPMorgan Chase, the latter that is the major owner of the Fed, are going to be finally prohibited from rigging these markets. Their officers all belong in jail, but elitists never go to jail; they pay fines, and keep right on robbing the public.
Other SCO members and observers are accumulating gold as well, be it in smaller amounts. We might add that other nations observing Russia and China and their gold purchases are buying as well. These participants must believe that there could be a return to sound money; otherwise they wouldn’t be gold buyers. Buying gold is certainly preferable to holding US dollars, which have consistently fallen in value versus other currencies over the past ten years. Then again all currencies have fallen versus gold over that period, some 19.6% annually. It is nice to see nations are finally waking up to the reality that fiat currencies will all over time deteriorate versus gold. The temptation is enormous to deficit spend.
The most interesting aspect of the SCO is that they do not strive for political agreement such as the European Union. They are interested in economic stability and development and security. There is no overall binding laws. Nations retain their sovereignty, which is the exact opposite of what the elitists in the US and Europe desire, and that is world government. The SCO has provided great flexibility something that is non-existent in elitist controlled countries. Another interesting facet is that the SCO probably represents half of the world’ population, far more than the US and Europe. As these nations accumulate gold so does some of their citizens, which puts strong upward pressures on gold prices on a continuing basis.
In addition some of these nations, such as China, are spending dollars by buying natural resources and other things in other nations in an attempt to relieve themselves of excess dollars earned in trade. Both Russia and China fully realize that the US dollar is in serious trouble and has been for a number of years due to fiscal debt and the unbridled creation of money and credit by the Federal Reserve. They well know the dollar is in serious trouble and what the outcome will probably be.
As the economies of the US and Europe become more deeply mired in problems the economies of SCO nations more and more resemble the free economies of old that were very successful. You might say they have found their way back to basics and sound money. As the dollar comes under further downward pressure more nations will probably join the SCO to escape the clutches of European and American imperialism and bureaucracy, which for some years has been onerous and unsuccessful. What we see is a natural path by nations to extricate themselves from the control of Wall Street and the City of London, which have dominated the world for so long. All these facts considered we believe gold will find its way substantially higher with the participation of these nations, a factor the West never figured on. These ten nations are sucking excess gold out of the market every day and that will continue indefinitely.
These SCO nations are well aware that the surge of hot dollars created by the Fed out of thin air are headed their way and with them inflation. Brazil was the first nation to attempt to stop this onslaught by imposing a 6% tariff on interest and dividend paying Brazilian securities, purchased with US dollars. Over the last two years between stimulus and the Fed $2.5 trillion has been injected into the US and world financial system. As a result commodity and gold and silver prices have exploded. This has caused the dollar to fall in value versus other currencies and gold. There is no question more and higher inflation is on the way, as the Fed gets into QE 2. You can also bet that QE2 will not be $600 billion, but more than $2 trillion. Inflation is already showing up in food, petroleum products, airline fares and in many other items that we use every day. As usual the government says there is little or no inflation. Even competent economists still use government’s bogus figures. What can they be thinking of? They know what is going on as well as we do. That means we are embarking on the highest inflation rates in US history. Thus far the undertow of deflation has been superseded by government banking and Fed aggregate creation. The Fed, in order to subdue deflation and such spending has to always overshoot the inflation they create, so that they can be sure that deflation cannot take hold. This money and credit is in the process of working its way through the economy, spreading inflation as it winds its way through.
The only investors who are being afforded protection are those who have invested in gold and silver and commodities. That is less than 2% of the American population. We predicted in mid-May that QE2 and QE3 would take place for a combined $5 trillion over the next two fiscal years. In fact, the Fed was late in starting in June and as a result 4th quarter GDP growth will probably be 1% and the 1st quarter of 2011 will probably be in the minus column, as unemployment heads to 25% and extended benefits run out. We are not seeing growth; we are seeing forced feeding.
The Fed’s promises are not worth the paper they are written on. Ben Bernanke will print money until he cannot anymore and we have hyperinflation. That is because he has no other choice. He has no way out and he knows it won’t work. Tragically, this is where we are headed and there is no way to stop what the elitists have put deliberately in motion.
As long as quantitative easing is official Fed and Wall Street policy, gold is going to continue to rise with silver, and the stronger the case is that gold is the real world reserve currency. That means all currencies will eventually have to be backed by gold. We believe that elitists have accepted this fact and that was borne out recently by World Bank President, CFR, Trilateralist and Bilderberger Robert Zoellick. We can assure you that was no slip of the tongue. That was a cleverly planted trial balloon to get public reaction.
We do not see QE2 and QE3 as incompetence or bungling. It happens to be the only option available to the powers behind government. The same errors committed during the Great Depression of the 1930s are being repeated and economists, including Mr. Bernanake know they do not work. Yes, the Fed contracted money supply and when they let it loose again, it was too late for it to be in anyway effective. Next comes tariffs as an outgrowth of: currency wars; interest and dividend penalties on the inflow of hot, inflationary dollars and retaliatory tariffs as a result of losing 8.5 million jobs and 432,000 businesses over ten years to free trade, globalization, offshoring and outsourcing. Smoot-Hawley tariffs and even dumb Fed moves were bad enough, but Hoover’s raising of taxes by 150% was a monumental piece of stupidity.
At the root of all this is that the Fed is supposed to be saving the US economic and financial structure. They are not doing that, they are saving the banking system and Wall Street instead and these are the
miscreants that caused the problem in the first place. The result of this policy of zero interest rates and easy money is that few are saving.
There you have it, planned destruction. Is it any wonder the SCO members and observers are buying gold on every dip and will not stop doing so until they run out of dollars. Our only question is; what took them so long and why are they not buying more faster?
Euro slide continues as Irish debt fears persist
25 November 2010
The euro has continued its slide against the dollar as investors digest the Irish Republic's austerity plan.
The currency fell by almost half a cent to $1.3325, and has now fallen by more than three cents this week.
The four-year Irish plan is designed to save 15bn euros ($20bn; £13bn) through spending cuts and tax rises, but investors remain unconvinced.
The government is also negotiating a bail-out package with the European Union and International Monetary Fund.
Global economies are collapsing.
the NWO fix is always ...... WAR
America's Golden Calf Is Coming Down!
America's Golden Calf Is Coming Down!
CHINA, RUSSIA DROPPED the US DOLLAR!
Dumitru Duduman vision of America attacked
G-20 Meeting in Scotland about Dumping U.S. Dollar
Belgium joins financial markets’ hit list
24 November 2010, (Guardian.UK)
Traders push cost of insuring Belgium's debts to record levels in situation made worse by broken political system
Hold the moules et frites: Belgium has joined Portugal, Spain and Italy on the hit list of countries that may be heading for financial crisis.
Like Ireland, struggling to fend off criticism of its austerity package, there are signs that international bond investors are starting to view Belgium as living on borrowed money and borrowed time.
In the febrile atmosphere of trading in government debt, any country without a coherent plan can be seen as irresponsible or with something to hide.
In short, the next Ireland.
The premium to insure Belgium's debts rose 5% today: it now costs £155,000 to insure £10m of Belgian bonds against the possibility of default. The cost for Spain and Portugal The cost of insuring Spanish and Portuguese debt also rose again, £312,000 and £510,000 respectively.
Eurozone borrowing costs hit record
25 November 2010, by David Oakley in London, Quentin Peel in Berlin and Nikki Tait in Brussels (The Financial Times)
The eurozone’s peripheral bond markets came under further pressure on Friday amid increasing worries that the debt crisis was spreading.
Spanish 10 year bond yields rose 10 basis point to 5.196%, Irish yields rose 3 basis points to 9.071% and Portuguese yields rose 3 basis points to 7.038%.
Gary Jenkins, head of fixed income at Evolution Securities, said: “The worrying trend continues in the eurozone, with bond yields rising and concerns about contagion refusing to abate.”
The yield spread between Spanish and German benchmark debt rose to a euro-era high.
On Thursday, Irish, Portuguese and Spanish bond yields surged to their highest points since the launch of the euro, as traders said even some of the bigger eurozone countries could soon be affected. Matt King, global head of credit strategy at Citigroup, said the danger was the selling could develop a momentum of its own.
“The moment you have even a flicker of a doubt about default risk, it becomes rational to reduce positions in a larger country like Spain purely on grounds of diversification,” he said.
Myles Clarke at RBS said: “Some people want to put on a just-in-case euro break-up trade and they’re looking for any way to do this. You can’t do trades in any size in the stressed peripherals like Ireland or Spain, so people are looking for what else might work.”
China Inflation `Volcano’ May Prove Too Hot for Controls After Cash Surge
23 November 2010, (Bloomberg)
“They are just not addressing the fundamental problem at all,” said Patrick Chovanec, an associate professor at Beijing’s Tsinghua University.
With the expansion of credit and cash in the economy stemming from China’s response to the global crisis, “you’re sitting on a volcano,” said Chovanec.
China also is grappling with inflows of cash sparked by monetary easing abroad, bets on yuan gains and a trade surplus that surged last month to $27 billion. Officials have faulted the U.S. Federal Reserve’s plan to buy $600 billion of Treasury securities for contributing to asset-price pressures in Asia.
“Quantitative easing in the U.S. puts China’s seat to the fire because it forces more inflationary pressure onto them,” said Diana Choyleva, a Hong Kong-based economist at Lombard Street Research Asia. “They cannot avoid what they need to do,” which is raise rates or let the yuan strengthen, she said.
While price controls may help with inflation expectations, they will either be ineffective because producers circumvent them or create shortages if suppliers suffer losses and are not compensated, said Goldman Sachs Group Inc. economists Yu Song and Helen Qiao in a Nov. 17 note.
Australia Bank leaves millions cashless
November 27, 2010
One of Australia's biggest banks is scrambling to process payments to millions of customers, who potentially face days of uncertainty about when they will be able to access their money.
A corrupted file in the National Australia Bank's computers jammed its payment system, hitting customers from a range of banks who rely on the NAB to process payments.
The bank could not say when the problem would be fixed.
Some anxious NAB customers had checked online to find their past month's transactions rubbed out and their accounts credited with nothing.
Property deals were being put on hold, car sales suspended, wages not transferred, and direct debit payments for mortgages and bills stopped.
The smaller banks Citibank and HSBC confirmed that their payments had also stalled because they use the NAB to process transactions.
NAB customers expressed anger, grief and disbelief that such a crippling problem could hit one of the big four banks.
One man said not only had his pay not gone in, but a whole month's worth of transactions appeared to have been wiped from his online account.
Coincidence this is happening right around the same time alot of this stuff in the EU(in particular) is starting to go down in Ireland, Spain, Portugal, and Russia/China dumping the dollar?
This is no "accident".
EU rescue costs start to threaten Germany itself
Credit default swaps (CDS) measuring risk on German, French and Dutch bonds have surged over recent days, rising significantly above the levels of non-EMU states in Scandinavia.
"Germany cannot keep paying for bail-outs without going bankrupt itself," said Professor Wilhelm Hankel, of Frankfurt University. "This is frightening people. You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders. People have terrible memories of 1948 and 1923 when they lost their savings."
The refrain was picked up this week by German finance minister Wolfgang Schäuble. "We're not swimming in money, we're drowning in debts," he told the Bundestag.
Europe denies need to double rescue fund
25 Nov 2010
Irish voters give damning verdict on bail-out crisis
25 Nov 2010
Irish central bank chief blames 'unsatisfactory' accounting rules
25 Nov 2010
German haircut demands fuel crisis
25 Nov 2010
Germany wallows in 'golden autumn'
24 Nov 2010
Spain and Portugal under fire as bond spreads hit record
23 Nov 2010
While Germany's public and private debt is not extreme, it is very high for a country on the cusp of an acute ageing crisis. Adjusted for demographics, Germany is already one of the most indebted nations in the world.
Reports that EU officials are hatching plans to double the size of EU's €440bn (£373bn) rescue mechanism have inevitably caused outrage in Germany. Brussels has denied the claims, but the story has refused to die precisely because markets know the European Financial Stability Facility (EFSF) cannot cope with the all too possible event of a triple bail-out for Ireland, Portugal and Spain.
EU leaders hoped this moment would never come when they launched their "shock and awe" fund last May. The pledge alone was supposed to be enough. But EU proposals in late October for creditor "haircuts" have set off capital flight, or a "buyers' strike" in the words of Klaus Regling, head of the EFSF.
Those at the coal-face of the bond markets are certain Portugal will need a rescue. Spain is in danger as yields on 10-year bonds punch to a post-EMU record of 5.2pc.
Axel Weber, Bundesbank chief, seemed to concede this week that Portugal and Spain would need bail-outs when he said that EMU governments may have to put up more money to bolster the fund. "€750bn should be enough. If not, we could increase it. The governments will do what is necessary," he said.
Whether governments will, in fact, write a fresh cheque is open to question. Chancellor Angela Merkel would risk popular fury if she had to raise fresh funds for eurozone debtors at a time of welfare cuts in Germany. She faces a string of regional elections where her Christian Democrats are struggling.
Mr Weber rowed back on Thursday saying that a "worst-case scenario" of triple bail-outs would require a €140bn top-up for the fund. This assurance is unlikely to soothe investors already wondering how Italy could avoid contagion in such circumstances.
"Italy is in a lot of pain," said Stefano di Domizio, from Lombard Street Research. "Bond yields have been going up 10 basis points a day and spreads are now the highest since the launch of EMU. We're talking about €2 trillion of debt so Rome has to tap the market often, and that is the problem."
The great question is at what point Germany concludes that it cannot bear the mounting burden any longer. "I am worried that Germany's authorities are slowly losing sight of the European common good," said Jean-Claude Juncker, chair of Eurogroup finance ministers.
Europe's fate may be decided soon by the German constitutional court as it rules on a clutch of cases challenging the legality of the Greek bail-out, the EFSF machinery, and ECB bond purchases.
"There has been a clear violation of the law and no judge can ignore that," said Prof Hankel, a co-author of one of the complaints. "I am convinced the court will forbid future payments."
If he is right – we may learn in February – the EU debt crisis will take a dramatic new turn.
"Spain has warned financial traders betting against its debt that they will lose money, in a defiant challenge to the markets which are driving Madrid’s cost of borrowing sharply higher."
“I should warn those investors who are short selling Spain that they are going to be wrong and will go against their own interests,” Mr Zapatero said in an interview with Barcelona-based broadcaster RAC1, according to Bloomberg. He “absolutely” ruled out any need for a rescue
Not All PIIGS Are Created Equal: Irish Bail Out Package To Come With 6.7% Interest Tag, 1.5% Higher Than Greece
RTE reports that the IMF/EU Irish rescue package will come with a whopping 6.7% rate for nine year money. Per the RTE article, it is unclear if that will be an APR or some multi-year blended effective annual yield: "The Government's four year plan assumes that by 2014, interest payments will have increased from €2.5 billion to €8.4 billion a year - around one fifth of all tax revenue." Regardles of how it is calculated, newspaper tomorrow will be blasting the 6.7% number, which is 150 bps wide of what Greece is paying on backstopped paper, and will only create further resentment at the fact that not only is Europe split into a core and PIIGS, but that it is now apparent that not all PIIGS are treated as equals. How Irish citizens will react once they find out that the EU believes they are less creditworthy than even the Greeks, only the IRA can predict.
Think BIIGS: There's One Euro Country Under the Radar
Belgium faces an important test Monday, when it aims to sell between 1.5 billion euros ($1.9 billion) and 2.5 billion euros worth of bonds in an auction that will indicate the level of investor confidence in the nation plagued by political turmoil and high levels of debt.
The auction of 2014, 2020 and 2035-dated bonds comes as bond vigilantes are increasingly targeting the country of 11 million people amid concerns over its high level of debt and political instability.
Politicians have been trying since the June elections to broker the formation of a government, but the talks have resulted in complete deadlock and the prospect of new elections is looming.
Belgium could be caught up in the same web as the peripheral euro zone nations of Portugal, Ireland, Italy, Greece and Spain - the so-called PIIGS - if it does not succeed in forming a government soon to reduce the budget deficit through fiscal austerity and bring down its debt, some analysts say.
“If the crisis lasts another three to six months, it will become a problem. Then the structural issues, with an ageing population, become more serious,” Philippe Ledent, economist at ING Belgium said.
Against the backdrop of the euro zone debt crisis, credit default swaps linked to Belgian debt – indicating the cost of insuring Belgian debt against default - rose to a record high this week.
Ledent expects credit default swap spreads to widen further if a government is not formed soon.
The premium investors demand to hold 10-year Belgian government bonds rather than euro zone benchmark German Bunds has also risen since September on worries about the country's political outlook.
In its latest report on Belgium, rating agency Standard & Poor’s wrote that its AA+ rating on the country’s long-term debt – the second-highest rating at the agency – could come under downward pressure if a continued political stalemate were to diminish the authorities' capacity to address the “outstanding challenges”.
With no federal government in place to draw up a new budget, S&P fears the country will not be able to reduce its deficit through a series of austerity measures and bring down its debt.
Irish Relief Fleeting as Day of Reckoning Nears
Borrowing costs for Europe’s most indebted nations are at record highs as Ireland’s capitulation in accepting a bailout of its banking industry stokes concern that other countries also will have to seek aid.
The average yield for 10-year debt from Greece, Ireland, Portugal, Spain and Italy reached 7.57 percent today, a euro- era record. The average premium investors demand to hold those securities instead of German bunds widened to as much as 492 basis points, the highest level of 2010. The average cost of insuring against default by the five nations using credit- default swaps reached a record 517 basis points on Nov. 23.
“It’s no longer taboo to speak about a restructuring,” said Johannes Jooste, a portfolio strategist at Bank of America Corp.’s Merrill Lynch Global Wealth Management in London, which oversees about $1.4 trillion for clients. “The fact that bond yields continue to rise and put pressure on countries that have to fund from the market makes investors less and less confident, and it’s bringing forward the day of reckoning.”
The Nov. 22 relief rally after Irish Prime Minister Brian Cowen conceded that the nation needed financial support proved transient. Irish 10-year bond yields fell 4 basis points, before jumping 104 basis points as of 3:13 p.m. in London today, exceeding 9 percent for the first time since 1995. The euro’s respite was more fleeting; the bailout inspired a 0.8 percent gain for the currency before it slumped to a two-month low. It fell 0.9 percent to $1.3247 today.
“When Ireland accepted help, the general feeling in the market was that this could restore some calm; that hasn’t been the case,” said Michiel de Bruin, who oversees about $35 billion as head of European government debt at F&C Netherlands in Amsterdam. “Authorities should be doing their utmost to calm the situation.”
Analysts at Morgan Stanley said in a Nov. 11 report that any move by Ireland to use the European Financial Stability Facility would boost the euro and be a “circuit breaker” for the European sovereign debt crisis. While Ireland has enough money to pay its debts until the middle of next year, it has requested a bailout from the European Union and International Monetary Fund amid concern the cost of rescuing its banks would overwhelm government finances.
Portuguese Finance Minister Fernando Teixeira dos Santos said in an interview published today that EU governments can’t impose a bailout on his country.
A majority of euro region officials and the European Central Bank are putting pressure on Portugal to accept aid that helps stop contagion spreading to Spain, the Financial Times Deutschland reported today. German government spokesman Steffen Seibert said the nation isn’t pushing Portugal to seek aid. An official at the office of Portuguese Prime Minister Jose Socrates also denied the report.
The most recent leg of the debt crisis that started a year ago in Greece kicked off after EU leaders agreed Oct. 29 to consider German Chancellor Angela Merkel’s demand for a crisis- resolution mechanism that forces bondholders to share the cost of future bailouts.
The average yield of 10-year bonds from Greece, Ireland, Portugal, Spain and Italy rose to 7.49 percent today from 5.93 percent a month ago. The Stoxx 600 Banks Index of European shares fell almost 7.8 percent in the past month.
Adding to the pressure is the ECB’s push to scale back liquidity support for banks.
“This tough stance is reigniting a euro debt crisis,” Greg Gibbs, a Sydney-based currency strategist at Royal Bank of Scotland Group Plc, wrote in a research report dated Nov. 23. “The recent problems in Europe may relate to fears that weak banks in the periphery will lose access to cheap funding from the ECB, and their deteriorating position will in turn put more pressure on the sovereigns.”
Greece agreed to a 110 billion-euro ($145 billion) rescue program in April before the creation of the 750 billion-euro European Financial Stability Facility in May as a backstop for the common currency. Cowen said this week a bailout of 85 billion euros had been discussed for Ireland.
Policy makers must head off a “spreading disaster” in the euro region, said Mohamed El-Erian, chief executive officer of Newport Beach, California-based Pacific Investment Management Co. “The comforting statements issued by European ministers in recent days must be urgently translated into meaningful actions,” he wrote earlier this week in an article for the Financial Times.
Analysts also say more needs to be done. Portugal should request preemptive steps to stem the widening yield spreads between high-deficit nations’ debt and German bunds, according to WestLB AG.
Bondholders of European banks need to accept “huge haircuts” on their assets, said currency-trading firm FXPro. Germany may pull out of the euro to allow the currency to devalue, wrote Graham Turner, chief economist at GFC Economics, a London-based consulting firm.
“Time is of the essence,” a team of London-based analysts at Nomura International Plc led by Nick Firoozye wrote in a Nov. 24 investor note. “The continued confusing political rhetoric is driving investors out of Europe. Once the euro area issuance cycle gets under way in 2011, unless many of the issues surrounding collective action clauses, crisis resolution mechanisms and their timing have been resolved, policy makers could lose the battle.”
WRAPUP 1-Deal clinched on Irish bailout, EU set to sign off
28 November 2010, by By Carmel Crimmins and Luke Baker (Reuters)
European ministers are expected to sign off on an 85 billion euro ($115 billion) rescue for Ireland on Sunday, making it the second euro zone country to receive a bailout in Europe's crippling debt crisis.
Finance ministers from the 16-nation euro zone will meet in Brussels from 1 p.m. (1200 GMT) to sign off on Ireland's emergency loan package, which they hope will help Dublin cover bank debts and bridge a massive budget deficit, while also preventing the debt contagion spreading to Portugal and Spain.
EU sources said a team of specialists from the European Commission, the European Central Bank and the International Monetary Fund had finalised a deal with Irish authorities in Dublin after 10 days of negotiations.
"The negotiations are complete and a package has been agreed on the ground," a source involved with the discussions said.
"EU finance ministers are now ready to sign off on it, but I think they will also want to discuss some of the finer details and add some political impetus to what has been agreed in Ireland," he said.
Debt-ridden regions weigh on Spain
28 November 2010, by Katell Abiven (AFP)
In May, New York-based credit rating agency Standard and Poor's forecast that Spain's regions would register their worst budget performance in recent history in 2010.
Rival agency Moody's Investors Service downgraded its assessment of the creditworthiness of seven regions, including Madrid and Catalonia, and placed three more on watch for a possible downgrade.
The freedom extended to autonomous communities complicates central government efforts to trim the deficit.
"In a country as decentralised as Spain, where the regions have powers over spending but much less over receipts, it creates a very serious problem when the state decides to control costs," Gimenez said.
The Spanish executive wants the public deficit of the regions to decline from 1.92% of total economic output in 2009 to 2.4% in 2010 and 1.3% in 2011. By that time, Spain has promised Brussels it will have a global deficit of 6.0%, compared to 11.1% in 2009.
In 2009, 14 regions failed to respect their deficit limits. Already, eight have forecast they will bust their budget limits in 2011, according a report in the El Pais daily.
Municipalities are suffering, too. Madrid, whose debt exceeds seven billion euros, tried in vain to negotiate with the central government. It has had to pass an austere budget in 2011 with no public works.
According to the Bank of Spain, the 8,000 communes have a cumulated debt of 13 billion euros. Some contractors are threatening not to collect the rubbish or clean the roads.
"For the viability of those small businesses that supply the municipalities, it is very serious," Sebastian said. Since 2008, 200,000 independent workers and very small businesses have had to shut up shop.
Markets see both debt and EU in need of restructuring
28 November 2010, by Richard Lein (AFP)
An eventual restructuring of some eurozone debt and big changes in the how the European Union and eurozone functions are now seen as probable and even inevitable, analysts say.
Cotton price surge threatens ‘cheap fashion’
28 November 2010, by Shafiq Alam (AFP)
“Ensuring cotton supply to our millers is now a national security issue,” Bangladesh's Commerce Minister Faruk Khan told AFP, a day after returning from Uzbekistan.
Zaena Miller, a London-based clothing analyst for research group Euromonitor, said calling an end to the era of cheap fashion was premature, but warned consumers already face price rises and more will come next year.
Retailers will adopt different pricing strategies depending on their business models, she said.
“There will definitely be slight price raises,” she said. “And next year they will be more noticeable.”
EU agrees on $89 billion bailout loan for Ireland
BRUSSELS – European Union nations agreed to give euro67.5 billion ($89.4 billion) in bailout loans to Ireland on Sunday to help it weather the cost of its massive banking crisis, and sketched out new rules for future emergencies in an effort to restore faith in the euro currency.
The rescue deal, approved by finance ministers at an emergency meeting in Brussels, means two of the eurozone's 16 nations have now come to depend on foreign help and underscores Europe's struggle to contain its spreading debt crisis. The fear is that with Greece and now Ireland shored up, speculative traders will target the bloc's other weak fiscal links, particularly Portugal.
In Dublin, Irish Prime Minister Brian Cowen said his country will take euro10 billion immediately to boost the capital reserves of its state-backed banks, whose bad loans were picked up by the Irish government but have become too much to handle. Another euro25 billion will remain in reserve, earmarked for the banks.
The rest of the loans will be used to cover Ireland's deficits for the coming four years. EU chiefs also gave Ireland an extra year, until 2015, to reduce its annual deficits to 3 percent of GDP, the eurozone limit. The deficit now stands at a modern European record of 32 percent because of the runaway costs of its bank-bailout program.
Cowen said the accord — reached after two weeks of tense negotiations in Brussels and Dublin to fathom the true depth of the country's cash crisis — "provides Ireland with vital time and space to successfully and conclusively address the unprecedented problems that we've been dealing with since this global economic crisis began."
However, in a surprise accounting move, European and IMF experts decided that Ireland first must run down its own cash stockpile and deploy its previously off-limits pension reserves in the bailout. Until now Irish and EU law had made it illegal for Ireland to use its pension fund to cover current expenditures. This move means Ireland will contribute euro17.5 billion to its own salvation.
The three groups offering funds to Ireland — the 16-nation eurozone, the full 27-nation EU, and the global donors of the International Monetary Fund — each have committed euro22.5 billion ($29.8 billion). Extra bilateral loans from Sweden, Denmark and Britain are included within the EU contribution totals.
Ireland's finance ministry said the interest rates on the loans would be 6.05 percent from the eurozone fund, 5.7 percent from the EU fund and 5.7 percent from the IMF. That's higher than the 5.2 percent being paid by Greece for its own May bailout.
Ajai Chopra, deputy director of the IMF's European division who oversaw the Dublin negotiations, confirmed Ireland's government would have freedom to set its own spending and tax plans.
He said Ireland will have 10 years to pay off its IMF loans, and that the first repayment won't be required until 4 1/2 years after a drawdown. Greece, in contrast, has three years to repay its loans.
Chopra said Ireland's decision to use its pension reserve fund had helped win the confidence of those who offered help. He declined to say if negotiators had demanded Dublin use its reserves under terms of the deal.
"It makes total sense to use them at this time. I think this is quite unique in this type of arrangements and it will be taken as a sign of underlying strength," he said.
Embattled Prime Minister Cowen told a press conference that Ireland had no choice but to take help, because international investors had decided that lending to Ireland was too risky and were demanding unreasonable returns. The yield on 10-year Irish bonds rose Friday to a euro-era high of 9.2 percent.
"If we didn't have this program, we would have to go back to the markets, which as you know are at prohibitive rates," Cowen said. "We would pay far more."
Still, analysts and opposition leaders in Ireland warned that the country of 4.5 million was taking on a bill it couldn't afford to repay at rates exceeding 5 percent.
Michael Noonan, finance spokesman of the main opposition Fine Gael party, said he believed that fellow EU members — particularly Germany, the eurozone's bankroller — didn't want to give money too cheaply to Ireland, for fear that Dublin would grow addicted to it.
Noonan said the loans were "pitched high to drive us back into the market," and would encourage Ireland to pursue maximum austerity measures in hopes of reassuring the bond markets.
Cowen told reporters there had been no support in talks to ask senior bondholders to lose part of their stake on loans made to Ireland's debt-crippled banks.
"There was no agreement from the European Union for such a proposal, because of the impact it could have in the relation to the stability of the entire banking system," he said.
Ireland in recent days committed to slashing euro10 billion from spending and raising euro5 billion in new taxes over the coming four years, with the harshest steps coming in the 2011 budget to be unveiled Dec. 7.
Cowen has only a two-vote majority in parliament. Last week he pledged to dissolve parliament for early elections next year — but only after the budget is fully enacted. Opposition leaders won't say if they will support the budget, leaving Cowen vulnerable to losing a key budget-related vote within the next two months.
To shore up longer-term confidence in the euro, EU finance ministers also agreed on a permanent mechanism that from 2013 would allow a country to restructure its debts once it has been deemed insolvent.
Jean-Claude Juncker, the head of the Eurogroup, which represents the 16 euro nations, said private creditors would be forced to take losses only if ministers agreed unanimously that the country had run out of money.
He said that if a country is merely facing a crisis of liquidity, it would get financial help similar to the bailout agreed for Ireland.
European Central Bank chief Jean-Claude Trichet said making senior bondholders — chiefly banks that loan to other banks — suffer losses when a nation's finances head toward bankruptcy would be "fully consistent" with existing IMF policies.
Pogatchnik contributed from Dublin. David Stringer in Dublin also contributed.
Japan October industrial output declines 1.8%
29 November 2010, by Sarah Turner (MarketWatch)
Japanese industrial output decreased 1.8% in October compared with the previous month, according to data from the Ministry of Economy Trade and Industry.
It was the fifth straight month of declines for the index, the ministry said.
US Ready to Back Bigger EU Stability Fund: Official
The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday.
"There are a lot of people talking about that. I think the European Commission has talked about that," said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund. "It is up to the Europeans. We will certainly support using the IMF in these circumstances."
"There are obviously some severe market problems," said the official, speaking on condition of anonymity. "In May, it was Greece. This is Ireland and Portugal. If there is contagion that's a huge problem for the global economy."
The remarks foreshadow a visit to Europe this week by a U.S. Treasury envoy who is expected to visit Berlin, Madrid and Paris to hold talks on the ramifications of the debt crisis.
(Another news report, however, raised questions about the true extent of the US commitment. Read more here).
The developments have echoes of the pressure applied by Washington on European capitals last May to create the near $1 trillion EFSF safety net that was last week used to rescue Ireland after its banking crisis spiraled out of control.
The IMF, whose biggest single shareholder is the United States, has committed 250 billion euros to the EFSF.
While reluctant to dictate to Europe how it should address the unfolding debt crisis, the U.S. government is growing concerned about the global fallout of Europe's predicament.
U.S. Treasurys' prices fell and the euro strengthened against the dollar on Wednesday after the news that the United States would be prepared to support an enlarged EFSF.
Germany, whose leaders have expressed frustration at the market backlash against their plans to solve the euro zone's debt problems, does not want to make the stability fund larger.
China Blames Its Stock Market Plunge On An Unnamed International Bank
1 December 2010, by Gus Lubin (Business Insider)
China is now blaming an unnamed international investment bank for the plunging Shanghai Composite, according to Caixin.
Mouthpiece publication People's Daily published a commentary today from Professor Shi Jianxun that accused an international bank of emailing investors and telling them to sell.
China's Securities Regulatory Commission had already started a probe into market manipulation after the Shanghai Composite Index fell 5.16% in one day.
Shanghai is down 11% over the past three weeks.
UK banks borrowed more than £640bn from US Federal Reserve
2 december 2010
British banks borrowed more than $1 trillion (£640bn) from the Federal Reserve during the financial crisis, led by Barclays following its swoop on the US business of Lehman Brothers.
It released the details of more than 21,000 individual transactions on its website on Wednesday, which showed that British banks represented more than a third - about $1.5 trillion - of the $3,300bn lent by the US authorities to prop up the financial sector.
Barclays borrowed $863bn from the Fed, with almost half coming in overnight loans through the Primary Dealer Credit Facility, a programme established by the central bank to help those banks that deal in US Treasuries.
Royal Bank of Scotland borrowed $446bn, Bank of Scotland $181bn, Abbey National $19bn and HSBC borrowed less than $10bn.
Fed's Emergency-Loan Borrowers Ranged From Bank of America to McDonald's
2 December 2010, by Craig Torres and Scott Lanman (Bloomberg)
The Federal Reserve’s emergency lending during the financial crisis spanned the global economy, from the largest U.S. financial firms to community banks, hedge funds and a fast-food company.
The Fed, in compliance with orders from Congress, today named recipients of $3.3 trillion in emergency aid. Among them were U.S. branches of overseas banks, including Switzerland’s UBS AG; corporations such as General Electric Co. and McDonald’s Corp.; and investors like Pacific Investment Management Co. and computer executive Michael Dell.
Lawmakers demanded disclosure, over the Fed’s initial objections, as U.S. central bankers pushed beyond their traditional role of backstopping banks to stem the worst financial panic since the Great Depression. The Fed posted the data on its website to comply with a provision in July’s Dodd- Frank law overhauling financial regulation.
“Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations,” Senator Bernard Sanders, the Vermont Independent who wrote the provision on Fed disclosure, said in a statement today. “As a result of this disclosure, other members of Congress and I will be taking a very extensive look at all aspects of how the Federal Reserve functions.”
Italian Banks' Costs Climb on Contagion Worry, Nation's Debts
3 December 2010, by Elisa Martinuzzi, Sonia Sirletti and Bryan Keogh (Bloomberg)
Italian banks are paying the price of the nation’s debt, the second-highest in the euro zone, as the crisis threatening the region’s currency erodes their perceived creditworthiness and drives up borrowing costs.
The cost of insuring the debt of UniCredit SpA, Italy’s biggest bank, posted the largest monthly jump in November since February 2009, according to data provider CMA. UniCredit’s credit default swaps this week implied a junk rating to the company’s bonds for the first time, data from Moody’s Investors Service’s capital markets research group show. Swaps on Intesa Sanpaolo SpA, the No. 2 bank, posted a record monthly increase.
Prime Minister Silvio Berlusconi faces a confidence vote on Dec. 14, adding to investor concern that Italy may struggle to finance its 1.76 trillion euros ($2.3 trillion) of debt should his government fall. While Italian banks skirted the real estate busts of Ireland and Spain, the crisis may drive up the cost of refinancing at least 118 billion euros of debt in 2011 and squeeze profitability that is already below the region’s average.
“Contagion fears due to the country’s high debt will affect Italian banks’ profitability because they will pay higher a cost of funding and will record losses on bonds they own,” said Stefano Girola, who helps oversee about 3 billion euros at Banca Albertini Syz & Co. Banca Popolare dell’Emilia Romagna, a regional cooperative bank based in central Italy, is the only Italian lender he holds.
Angela Merkel warned that Germany could abandon the euro
3 December 2010, by Ian Traynor in Brussels (Guardian.UK)
The German chancellor, Angela Merkel, has warned for the first time that her country could abandon the euro if she fails in her contested campaign to establish a new regime for the single currency, the Guardian has learned.
At an EU summit in Brussels at the end of October that was dominated by the euro crisis and wrangling over whether to bail out Ireland, Merkel became embroiled in a row with the Greek prime minister, George Papandreou, according to participants at the event's Thursday dinner.
Merkel's central aim, which she achieved, was to win agreement on re-opening the Lisbon treaty so a permanent system of bailout funding and investor losses could be established to deal with debt crises that have laid Greece and Ireland low and are threatening Portugal and Spain. The Germans also called for bailed-out countries to lose voting rights in EU councils.
At the Brussels dinner on 28 October attended by 27 EU heads of government or state, the presidents of the European commission and council, and the head of the European Central Bank, witnesses said Papandreou accused Merkel of tabling proposals that were "undemocratic".
"If this is the sort of club the euro is becoming, perhaps Germany should leave," Merkel replied, according to non-German government figures at the dinner.
Germany: Secret Contingency Plan For Bank Run
29 November 2010, by Udo Ulfkotte (Kopp Online)
(google trans from German) http://tinyurl.com/29mev7u
From Zero Hedge
and from the Huffington Post
“European Bank Run on 7th December 2010
The French want to break their banks by withdrawing their money on December 7th.
French activists call for a Europe-wide and joint account termination on 7 December 2010
"Everyone should get his money from the account."
What does this protest?
In France the last few weeks has been enough protest. Since demonstrating in the street have brought us nothing we understand that the real power lies in the hands of international banks and corporations.
All citizens of the country resolve your accounts in cash. The activists suggest, one can first put the money in a suitcase or invest it in a social bank.
So far 7000 people have signed up
You up next America”
French 'Bank Run' protest for December 7th receiving international steam
At the beginning of November, the Finance Examiner looked at the non-violent means of solidarity scheduled by French citizens against the financial institutions of their country set for December 7th. This 'Bank Run' was initially intended within the confines of France alone, but has quickly spread to other countries in and around Europe.
(See previous article on STOP BANQUE!!)
As December 7th is just one day away, we will look at how this protest has spread, and see if it has spawned fellowship here in America to join in with the French people to protest against the financial system.
Here are a list of online sources that have not only reported on the article, but have advocated joining in on the 'Bank Run' here in America.
Progressive Democrats of America
Godlike Productions - (Be warned, some profanity used by writers in forum)
Black Listed News
It is estimated that over 100,000 people will participate in the 'Bank Run', but as with anything that goes viral on the internet, it is difficult to predict for sure what the total impact will be if enough people follow through with this.
Bank runs in the 21st century have vastly different effects on financial institutions than they did back in the 19th century, or during the 1929-1932 runs just before the Great Depression. Many banks do not rely solely on deposits for their existence, and with the Federal Reserve willing to print money on demand, what is lost from individual customers can quickly be buffeted by Fed loans and money printing.
However, a protest like this would have an impact, and indeed let the banking industry realize that their actions over the past 5 years have been noticed by the people.
Ghandi was the father of the non-violent protest, and his programs weren't about a single day, but a continuous effort to bleed Britain through re-instituting manpower to deal with their cause. December 7th may have a burst of impact by the people against the financial community, but to have any real effect or real change, it must start on a single day, and continue to grow until action or change is precipitated by these global giants.
JP Morgan revealed as mystery trader that bought £1bn-worth of copper on LME
The $1.5bn (£1bn) trade was described in the LME's daily update as "between 50pc and 80pc" of the 350,000 tonnes in reserves. This pushed up the price for the immediate delivery of copper to $8,700 – its highest level since the financial crisis in October 2008.
A high premium on the spot copper price normally reflects fear of a shortage of the metal, which is in hot demand across the world as a vital component in a mass of products from electrical gadgets to wiring.
A source close to the situation said that JP Morgan had bought the copper contracts, adding that amount is closer to the "lower portion of the range" disclosed by the LME.
Copper price to rise further after JP Morgan bet
06 Dec 2010
London Metal Exchange: a history
03 Dec 2010
Why commodities are soaring in price
11 Nov 2010
Mystery trader captures 80pc of London's copper market
03 Dec 2010
Vedanta's Zambian copper operations to list in London
17 Nov 2010
New commodity funds 'may be next financial bubble', FSA warned
04 Dec 2010
Traders said JP Morgan's name had been circulating the market all day as the most likely buyer, especially since it is about to launch a physically-backed "exchange-traded fund" (ETF) in copper imminently.
One metals broker dealing on the LME said: "The story is that they're positioning themselves in front of the ETF. There's been a lot of speculation it's them."
Traders noted that there was no physical shortage of copper in the markets but that fears of a squeeze have persisted ever since a raft of investment banks announced their intention to launch ETFs this autumn.
Last month metal traders wrote to the Financial Services Authority (FSA) claiming that licensing the funds, which are also likely to be launched by BlackRock, Goldman Sachs and Deutsche Bank, may amount to "approving the next financial bubble".
It is estimated that if the copper funds are fully subscribed they would be looking to buy more than half the total stocks in LME warehouses.
Traders' concerns are based on the ETF model that will require the investments to be backed by physical metals, such as copper, lead, aluminium and nickel, rather than paper assets offered by futures contracts.
Daniel Major, a metals analyst at RBS, said: "There isn't a huge buffer available for the market. The supply situation can quite easily tighten in copper."
The LME moved to quash claims that a rogue speculator was attempting to corner the copper market.
Diarmuid O'Hegarty, head of compliance, said: "The LME has noted recent comments about the current circumstances in the copper market. Such circumstances are not unusual and the exchange is exercising its well established procedures for maintaining an orderly market."
He added that large trades were not a cause for concern because the market's rules dictate that holders have to lend out a proportion of their stock to ensure a smooth supply of the metal.
Fundamental supply pressures have also been pushing up the copper market. Rio Tinto, the mining giant, warned last week that next year's copper production would be lower than expectations. And a strike at an Xstrata mine in Chile, the third largest in the world, has been going on for longer than predicted.
EU formally adopts Irish bailout plan
BRUSSELS (AFP) – EU finance ministers formally adopted Ireland's 85-billion-euro (114-billion-dollar) bailout plan Tuesday, hours before the Irish parliament was to vote on an austerity budget.
Ministers from the 27 European Union nations "adopted a decision providing financial assistance to Ireland and a recommendation setting out the conditions" that Dublin must meet in exchange for financial aid, the EU said.
Later on Tuesday, Irish finance minister Brian Lenihan will deliver a 2011 budget that will contain a combined 6.0 billion euros (8.0 billion dollars) of taxation hikes and spending cuts.
An EU source told AFP that the aid was "not conditional" on the budget passing, but that it was "obviously quite crucial."
A protester mounted a crane outside the Dail (parliament) on Tuesday morning, with opposition politicians accusing Prime Minister Brian Cowen of selling Irish sovereignty to Brussels and Washington.
In a statement, the conditions were depicted as "an overhaul of Ireland's banking system, growth-enhancing reforms and the reduction of Ireland's government deficit below three percent of gross domestic product by 2015, extending a previous 2014 deadline."
Lenihan will set out the first in a series of budgets to implement a total fiscal correction of 15 billion euros over the next four years.
The deal with the EU and the International Monetary Fund for 67.5 billion euros in external loans and guarantees, plus 17.5 billion taken mostly from Ireland's public pension fund, has angered citizens.
The first transfers will be used to shore up Ireland's banking system, battered by the global financial crisis, a property bubble bursting and the deepest recession since the 1930s.
Ten billion euros will be "used immediately to recapitalise Irish banks" with a 25-billion-euro contingency reserve, while 50 billion euros will "cover the financing needs of the Irish government's budget."
The head of the Eurogroup of finance ministers, Jean-Claude Juncker, said Monday that Dublin would be insulated from needing to borrow on international money markets for two years under the deal.
Non-euro Britain, Denmark and Sweden have each contributed bilateral loans to the package -- 3.8 billion euros from London, with Sweden offering 600 million and Denmark 400 million.
Shrinking Euro Union Seen by Creditors Who Cried for Argentina
7 December 2010, by Ye Xie (Bloomberg)
Nine months before Argentina stopped paying its obligations in 2001, Jonathan Binder sold all his holdings of the nation’s bonds, protecting clients from the biggest sovereign default. Now he’s betting Greece, Portugal and Spain will restructure debts and leave the euro.
Binder, the former Standard Asset Management banker who is chief investment officer at Consilium Investment Management in Fort Lauderdale, Florida, has been buying credit-default swaps the past year to protect against default by those three nations as well as Italy and Belgium. He’s also shorting, or betting against, subordinated bonds of banks in the European Union.
“You will probably see at least one restructuring before the end of the next year,” said Binder, whose Emerging Market Absolute Return Fund gained 17.6 percent this year, compared with an average return of 10 percent for those investing in developing nations, according to Barclay Hedge, a Fairfield, Iowa-based firm that tracks hedge funds.
He’s got plenty of company. Mohamed El-Erian, whose emerging-market fund at Pacific Investment Management Co. beat its peers in 2001 by avoiding Argentina, expects countries to exit the 16-nation euro zone. Gramercy, a $2.2 billion investment firm in Greenwich, Connecticut, is buying swaps in Europe to hedge holdings of emerging-market bonds, said Chief Investment Officer Robert Koenigsberger, who dumped Argentine notes more than a year before its default.
Germany Plans for Death of Euro
10 December 2010
It makes sense that there is a secret group within the German Bundesbank working on a plan to resurrect the Deutsche Mark. It would be a gross failure of national risk management if the central bank did not have a plan. Call it Operation Vollkreis.
Sovereign Extend and Pretend
Isn't this script getting a little tattered? Talk of a crisis starts. Sovereign yields rise. National politicians say no need for intervention. Austerity measures are introduced. Bond yields rise even more. Bailout is announced. Attention is then focused on the next domino.
Greece bought a couple of years with a 110 billion euro bailout by the European Union and the IMF.
Ireland has bought a couple of years with an 85 billion euro bailout, also by the EU and IMF.
Attention is now focused on Portugal. On deck is Spain, which is "the big one" (representing almost 11% of euro zone banking). To be very clear, the European Financial Stability Facility does not have the money to bail out Spain (though it can handle Portugal) -- nor is it realistic to think that the EFSF can be recharged to cover more than a few of the smaller peripheral countries.
More seriously -- what happens after Spain? The next big ones are Italy, Belgium and France.
There is only one country in the euro zone capable of bailing out the euro zone members: Germany. In my opinion, it is getting near to the point where the cost to Germany exceeds the benefit.
Who Is to Blame?
It is important to understand the differences between the collapses of Iceland, Greece and Ireland.
Let's start with Greece. This country was fiscally irresponsible. It racked up massive government debt paying for social programs that it could not afford. Investors foolishly (in hindsight) thought that Greek debt was no more risky than German sovereign debt. Greece's problem was that of fiscal mismanagement.
Given the political difficulty in implementing austerity measures, usually a country's currency is devalued. However, there was no Drachma to devalue. The country is stuck in the euro zone. The only choices the country has are sovereign default, extreme austerity, return to the Drachma -- or being bailed out. You know what was decided, but it really just buys Greece three more years.
James Sillars, Sky News Online
11 December 2010, by James Sillars (Sky News Online)
Petrol prices have hit a record high in Britain with unleaded costing an average of 121.76p a litre - with further increases in the pipeline, according to the AA.
AA president Edmund King believes more rises are inevitable next year, thanks to the hike in VAT to 20% in January coupled with another planned fuel duty increase.
He told Sky News: "The coalition inherited the (planned) fuel duty increases from the last government - not VAT.
"You can't do both. A double whammy of extra tax won't help economic recovery if transport costs keep rising".
The Freight Transport Association (FTA) says additional costs on its members would be "unsustainable".
But the big question is - why are prices so high when the price of a barrel of crude oil is well below its peak of $145 in July 2008? It now stands at about $90.
S&P revises Belgium's rating outlook to negative
LONDON (MarketWatch) -- Standard & Poor's Ratings Services on Tuesday revised its outlook on Belgium to negative from stable, citing the nation's political turmoil. "We believe that Belgium's prolonged domestic political uncertainty poses risks to its government's credit standing, especially given the difficult market conditions many euro-zone governments are facing," said S&P credit analyst Marko Mrsnik. S&P pointed to the prolonged delay in forming a federal government after the June general election as well as the prolonged inability to form a policy consensus across Belgium's linguistic divide. S&P also affirmed its AA+ long-term and A-1+ short-term ratings on Belgium.
Moody's puts Spain on review for downgrade
15 December 2010, by Barbara Kollmeye - Madrid (MarketWatch)
Moody's Investor Service said Wednesday it has put Spain's Aa1 rating on review for a possible downgrade.
Among the main triggers for the downgrade are Spain's vulnerability to funding stress given its high refinancing needs in 2011, which has been "recently amplified by fragile market confidence."
Another trigger is a potential further rise in the public debt ratio should the cost of bank recapitalisation prove to be higher than expected so far.
Finally, Moody's cited "increased concerns" of the ability of the Spanish government to achieve required sustainable and structural improvement in government finances, given its limited ability to control regional government finances.
Moody's has also placed the Aa1 rating of Spain's Fondo de Reestructuración Ordenada Bancaria (FROB) on review for possible downgrade as its debt is fully and unconditionally guaranteed by the government of Spain.
Moody's said it continues to view Spain as a "much stronger credit than other stressed euro zone countries," and that its review will most likely conclude that Spain's rating will remain in the Aa range.
Analysts gloomy on Asian shipping stocks
14 December 2010, by Sarah Turner (MarketWatch)
The Baltic Dry Index hit a multi-month low this week, and many shipping analysts aren’t hopeful about the performance of either the index or shipping stocks over the near term.
FYI - Lindsey Williams said on AJS yesterday that the EU will collapse within the next calendar year, and once that happens, the dollar will collapse 2-3 weeks after.
He also revealed his high level "source"(Kenn Fromm) who died recently.
Last year, he said the Illuminati had a 2 year timeline on the table, to where by late '11, America would no longer exist. Looks like they will be on schedule.
ECB nearly doubles capital to 10.8 bln euros
16 December 2010, by William L. Watts - London (MarketWatch)
The European Central Bank on Thursday announced that it boosted its subscribed capital by 5 billion euros ($6.6 billion), bringing it to 10.76 billion euros from 5.76 billion euros effective Dec. 29.
The ECB said the decision, made by the bank's Governing Council, "was deemed appropriate in view of increased volatility in foreign-exchange rates, interest rates and gold prices as well as credit risk."
CFR running simulation games on financial collapse
U.S. Nov. CPI up 0.1%, core up 0.1%
Why core inflation matters
November consumer inflation ticks up
Retail stocks flat as consumer prices inch up http://www.marketwatch.com/story/...onsumer-prices-inch-up-2010-12-15
Euro-zone Nov. annual inflation unrevised at 1.9% http://www.marketwatch.com/story/...lation-unrevised-at-19-2010-12-16
Sweden’s central bank raises rates to 1.25% http://www.marketwatch.com/story/...nk-raises-rates-to-125-2010-12-15
European Central Bank arms itself for Spanish crisis
17 December 2010, by Ambrose Evans-Pritchard (The Telegraph)
Spain’s government and banks have to refinance almost €300bn of debt next year. Critics in Germany say the ECB is turning into a “bad bank” for toxic debts.
Officials fear that the ECB could face losses on bond purchases, as well as loans worth €334bn to Greek, Irish, Portuguese, and Spanish banks much of it in exchange for suspect housing collateral. Barclays Capital said eurozone central banks have already lost about €5bn.
A report by Goldman Sachs said EMU states hold $760bn of Spanish debt securities, on top of other loans, or three-quarters of all foreign holdings.
The ECB said it would raise its subscribed capital by €5bn (£4.2bn) to €10.76bn, the first increase since the launch of the monetary union.
The ECB’s move came as Spain braved the debt markets following a downgrade alert by Moody’s. Madrid paid the highest interest rates for a decade with yields on 10-year bonds rising to 5.45%, compared with 4.63% in November.