....The entire problem is laid bare for all to see.

"Angela Merkel will have to relent and agree to the European Central Bank being unleashed. She will be forced to allow quantitative easing and for the ECB to be the lender of last resort. She will be forced out of office as Germany’s cherished inflation rises. "... She'll have to find some way to get the Bundestag and Constitutional Court to look the other way while she does it. Wait, I've got it, she could send them on vacation to Greece. It is little known, but Western finance is actually a CIA funded black ops. (undercover) unit. Traditionally, it has been used to deal with emerging economies that may pose a threat to Western dominance. Once the emerging economy is spotted, the CIA sends in their Western finance black ops team. Initially, they lend money at low interest rates to invest and “help” the emerging economy, once confidence is gained they lend more and more. At the critical point, they suddenly jack up interest rates as the loans roll over and leave the economy in chaos, with a financial crisis that will set them back decades. The Western finance black ops. unit have already been used on:
Latin America – financial crisis, early 1980s
Asia – financial crisis 1997
Russia financial crisis 1998
I can only assume the US became concerned with the emerging Euro-zone threatening the US position. The CIA then sent in their Western finance black ops. team to create chaos. As usual with the CIA, their operations are frequently hampered by unforeseen consequences (blowback). The CIA forgot about the inter-connected nature of the Western banking system and these days a collapsing bank in the Euro-zone can cause a cascade effect that will bring down banks in the US. The FED have had to step in and help bailout the Euro-zone because of this. Needless to say the FED aren’t very happy with the CIA. This is the only explanation I have been able to come up with to explain the totally destructive nature of Western finance. IN CONCLUZION : Given the ever declining share of world GDP generated in Europe, it will increasingly become irrelevant. Crisis, or no crisis, it will become a footnote in economic history, governed by a bureaucracy with delusions of grandeur.

Yesss.....we are brushing the dust under the carpet ...see you after the holydays

The use of the European Central Bank's overnight deposit facility reached a new record high for the year Thursday, suggesting recent measures by central banks and policy makers still aren't enough to restore confidence in inter-bank lending markets. Banks deposited €346.99 billion ($453.38 billion) in the overnight deposit facility, up from €264.97 billion a day earlier and a previous high for the year of €346.36 billion, reached earlier this month. The high level reflects ongoing distrust in inter-bank lending markets, where banks prefer using the ECB facility as a safe haven for excess funds rather than lending them to other banks. The high deposit level also suggests markets aren't fully convinced that the ECB's massive long-term loan allotment is enough to fortify the currency bloc's banking sector. The central bank extended nearly half a trillion euros in long-term loans to euro-zone banks Wednesday, hoping to ease fears of a new credit crunch as banks struggle to borrow from markets. The turmoil has hit the French economy during harder than first thought forcing a revision of the country's third quarter growth figures down to 0.3pc from 0.4pc. Household disposable income, or the cash that consumers have to spend, "markedly decelerated", said France's Insee statistics body. Spanish producer-price inflation slowed for a second month in November, after the economy stalled. Prices of goods leaving factories, mines and refineries rose 6.3pc from a year earlier, after increasing 6.5pc in October, the National Statistics Institute in Madrid said. In Italy, consumer confidence fell in December to the lowest since January 1996 as households grew concerned about austerity measures and a probable recession. And Greece's unemployment rate has soared again - it rose to 17.7pc in the third quarter, from 16.3pc in the second, according to Hellenic Statistical Authority data. Meanwhile, Mr Juncker said he was determined to push ahead with the controversial Financial Transaction Tax (FTT), at the eurozone level if not across the G20 and EU. He added: "And if it's not a financial transaction tax, then another form of financial responsibility for the financial sector." Europe is suffering from a debt crisis marked by worries that heavily indebted governments such as Italy may be unable to pay off their bonds. That means trouble for banks because they typically hold government bonds. The large deposits come despite Wednesday's massive central bank credit operation, in which the ECB let banks borrow as much as they wanted for up to 3 years. As a result 523 banks took €489bn, the largest ECB loan operation in the 13-year history of the euro. The ECB has increased lending to banks to help them get through the crisis. Some are finding it impossible to raise money elsewhere, so the ECB steps in as lender of last resort, a typical role for central banks in times of turmoil....So, the banks deposited billions in order to borrow twice AS MUCH ??? to and from BCE ...what is this nonsense ???? The ECB further said banks borrowed €6.34 billion from the ECB's overnight lending facility, compared with €7.55 billion borrowed a day earlier. When markets are functioning properly, banks only use the facility to the tune of a few hundred million euros overnight.

Far from reassuring markets, the scale of Wednesday's bail-out for eurozone banks by Draghi's European Central Bank (ECB) should simply confirm fears

European banks face a €600bn tsunami of debt coming due in 2012 (mostly in the first quarter) and many simply can't pay up because the usual source of refinancing, wholesale money markets, are refusing to lend them any more. Sound familiar? One Northern Rock-style collapse after another would have reverberated around the eurozone over the next three months if the ECB hadn't stepped in with unlimited cash costing 1pc. Almost certainly there would have been a euro-Lehman moment too as a once mighty lender, probably in France, fell over. Draghi has had to ignore any sense of moral hazard and agree to fund weak banks at the expense of strong. He has opened a quantitative easing (money printing) exercise of enormous proportions. Weak banks unable to fund themselves on the open market are now hooked on cheap ECB money. Clearly, the fault for this chaos lies with the architects of the eurozone, who claimed to believe, all evidence to the contrary, that the productivities of seventeen countries would move in lockstep because the politicians demanded it. The Bankers loaned to Greece, Portugal, Italy etc. because the same politicians promised that the creditworthiness of all the parts stood with the whole, and that the whole would stand behind the parts. In the result, productivity in Greater Germany far outstripped productivity in Club Med, so that Germany ended up with a wildly undervalued currency, whilst Club Med now have a similarly overvalued currency. The essential problem is not the Club Med governments, nor the Bankers, but the architecture of the eurozone itself. The current situation was widely predicted, here and elsewhere, but the architects were and are driven by a megalomaniac mission to create a European superstate, and the consequences for the peoples of Europe are beneath their contempt. It is now impossible to see an evolutionary solution to the current impasse - at some unpredictable point, the solution will happen in the streets.

This is direct funding in all but name

The ECB will offer eurozone banks loans of up to 3 years on December 21 at a rate of 1pc in an unprecedented move to fend off a credit crunch that could stall the currency bloc's economy. Spanish bond yields have tumbled from euro-era highs since the ECB announcement - The ECB could buy all Eurozone debt and re-issue at 2 per cent reducing the interest bills for all. A reasonable grant transfer system to the South to make up for them struggling with to high a currency and a commitment for all to balance budgets from what would then be 'year zero'. Countries that contravene this new era pact could then be monitored and shown the door from the Euro to a very orderly default, which would then be their free and fair choice.The Germans would still be able to trade on what for them is a very low currency. The UK wouldn't have to stump up another 25 bill. Everyone's happy.Hell the Euro would even go up ... they'd have to print a bit more(easy money to use for the grant transfer system) to keep it from stomping Sterling and the dollar. It shows how easy it would be for the Eurozone/ECB to draw a line under the mistakes of the past and build for the future with political will. Now that's a currency I'd like to be invested in - I still think the inflexible Germans are magnetically attracted to the Gotterdammerung alternative instead though. What a disgrace! This is direct funding in all but name and is simply another example of the desperation of the Eurofools to bend/break/create any rules in a doomed attempt to rescue the greatest folly the world has ever seen.
Well now : the ECB lets Bank A borrow at 1% to buy Bonds from Country B which pays interest at 5%. When Country B defaults, then Bank A has lost its money. How does it repay its debt to the ECB? Not only that, but with inflation running at way above 1% the ECB is losing money on a daily basis. I'm sure that some europhile will crawl out of the swamp and tell that its all right because Santa Claus is coming soon.

The ECB's support for eurozone banks was praised but Fitch

The eurozone’s third- and fourth-biggest economies were warned by Fitch of a “near-term” downgrade, alongside Ireland, Belgium, Slovenia and Cyprus. In a further blow, Belgium separately saw its credit rating downgraded two notches, to Aa3, by another leading agency, Moody’s. It cited the “sustained deterioration” in funding conditions for eurozone countries with relatively high levels of public debt, like Belgium, and new risks stemming from the country's troubled banking sector. The downgrade and warnings, delivered after the markets closed last night, came as Spain said its debts had soared; talks with Greece’s private bondholders stalled; and Hungary broke off talks with the International Monetary Fund (IMF). Pitching itself firmly against Germany, the rating agency warned that the European Central Bank (ECB) needed to give a "more active and explicit commitment" to prevent "self-fulfilling liquidity crises" ripping through the eurozone. The ECB's support for eurozone banks was praised but Fitch said the central bank's "continued reluctance to countenance a similar degree of support to its sovereign shareholders" was undermining the efforts to create a firewall to stem the crisis. Fitch said it recognised the "positive commitments" but said its concerns for the debt crisis had "not been materially eased by the summit outcome". The agency said it welcomed leaders' pledges to accelerate the creation of the permanent bail-out fund, the European Stability Mechanism (ESM). But its "particular concern" was still the "absence of a credible financial backstop" in the eurozone. Meanwhile Klaus Regling, chief executive of the European Financial Stability Facility, said he was surprised by the impression that only the ECB has the resources to tackle the debt crisis. He also said Greece may need €100bn for its second bail-out programe.

It could be worse than we can imagine. So there's no room for complacency.

Europe's hopes of "ring fencing" the embattled single currency through a €1 trillion-plus leveraged bailout fund are sinking due to spiraling bond yields, investor flight from euro zone debt, and failure to entice cash-rich governments in the far east to commit to the plan. Klaus Regling, the head of the European Financial Stability Facility (EFSF), is expected to tell euro zone finance ministers meeting in Brussels on Tuesday evening that the scheme to quintuple the firepower of the fund by underwriting initial losses on euro zone bond-buying by China and sovereign wealth funds in the far and Middle East has failed to attract enough interest. The blow to euro zone efforts to save the currency came amid increasingly apocalyptic predictions of a euro collapse........ The Organisation for Economic Co-operation and Development in Paris forecast a "deep depression" across Europe and a tidal wave of bankruptcies if any of the 17 countries was forced to quit the euro. The Polish foreign minister, Radoslaw Sikorski, urged Germany to save the EU from "a crisis of apocalyptic proportions". Stock markets rebound sharply after days of heavy losses as investors ignore IMF denial of aid for Italy and an OECD warning of euro zone recession and risk that US could follow suit...for investors read central banks....The stock market is rigged. Same with the bonds, it is only a matter of time when we get a eurobond. Currencies are rigged by the G 20 who are running an un-official world exchange rate mechanism. Why do journalists keep talking as though there is a free market ?... We will see the FTSE now heading for 6500 and the Dow to 12500, then we will head down back to 5000 and 11000. The dealers in the stock market and bond market brokers are making an absolute fortune, you can read the central banks like an open book.....Meanwhile - Christine Lagarde, the head of the International Monetary Fund, throws her weight behind the unnamed denials - she says neither Italy nor Spain has made a funding request to the IMF. She was speaking from Lima, Peru today as part of a tour of South America. The story that the IMF was drawing up a £517m rescue package for Italy and Spain, sparked by Italian newspaper reports over the weekend, was denied by an unnamed IMF spokesman earlier today. However Ms Lagarde's denial that there has been a request for funding still leaves open the possibility that the fund is thrashing out possible ways to help the eurozone without waiting to be asked... Sir Mervyn King - he's been asked again to defend the rate of inflation being so far above the bank's target of 2 %. The overshoot in inflation is not because we've had a very buoyant economy growing fast - it's not that we overestimated the amount of capacity around. It's not domestically generated inlfation, it's caused by external factors. The nature of the crisis, changes to the banking system - this has made life extremely hard. What we failed to understand was how long it would take for conditions in the banking markets to get back to normal. We thought that by now funding conditions would be better but in fact they are worse. That's one of the things that has made assessing the economy very difficult. Sir Mervyn King has been speaking to the Treasury Select Committee about the latest Inflation Report. He warned the dangers from Europe are so unpredictable that no accurate predictions can really be made.

Markets fall as Germany fails to sell 35pc of the bonds it offers at auction

"The scale of the deterioration is surprising, but it seems that manufacturing is the sector probably most affected by the spillover from the financial tensions of the sovereign debt crisis, because it is highly cyclical," said Clemente de Lucia, economist at BNP Paribas.The 17 nations using the euro suffered the deepest fall in new industrial orders since December 2008, well below analysts' forecasts of a 2.5pc fall. The core nations of Germany, France, Italy and Spain all registered sharp contractions, the EU's statistics office said. The 6.4pc drop in orders of capital goods, which indicates investment in new machinery, shows factory managers are pulling back on expansion plans and hoarding cash as the debt crisis shatters business confidence. Falling export demand from Asia, fewer new orders, unemployment at 10pc and weak consumer confidence are combining to create a very difficult business environment. "This clearly indicates that we are now entering into a recession," said Peter Vanden Houte, economist at ING. "It is now very clear that this debt crisis has also affected the real economy, and the real economy is now going down." He said banks in peripheral eurozone countries are facing deposit withdrawals that could create a credit crunch, further slashing industrial orders. He said output in the fourth quarter will be "quite negative", as could the first quarter of 2012.

U.S. CONGRESS - The special deficit-reduction super committee appears likely to admit failure on Monday, unable or unwilling to compromise on a mix of spending cuts and tax increases required to meet its assignment of saving taxpayers at least $1.2 trillion over the coming decade. The panel is sputtering to a close after two months of talks in which the members were never able to get close to bridging a fundamental divide over how much to raise taxes to address a budget deficit that forced the government to borrow 36 cents of every dollar it spent last year. Members of the bipartisan panel, formed during the summer crisis over raising the government's borrowing limit, spent their time on Sunday in testy performances on television talk shows, blaming each other for the impasse. Republicans said Democrats' demands on taxes were simply too great and weren't accompanied by large enough proposals to curb the explosive growth of so-called entitlement programs like Medicare and Medicaid. "If you look at the Democrats' position it was 'We have to raise taxes. We have to pass this jobs bill, which is another almost half-trillion dollars. And we're not excited about entitlement reform,' " countered Republican Jon Kyl of Arizona on NBC's "Meet the Press." Under the committee's rules, any plan would have to be unveiled Monday, but it appeared that Murray and co-chair Rep. Jeb Hensarling of Texas would instead issue a statement declaring the panel's work at a close, aides said. Failure by the panel would trigger about $1 trillion over nine years in automatic across-the-board spending cuts to a wide range of domestic programs and the Pentagon budget, starting in 2013, according to the Congressional Budget Office. This action, called a "sequester," would also generate $169 billion in savings from lower interest costs on the national debt.

As eurozone leaders have tried but failed miserably to convince markets that they have either the will or the way to solve the region's sovereign debt crisis, a growing number of world leaders and economists are calling on the ECB to step in and fight the raging fire. They argue that as the region lurches from one crisis to another, with Italy its latest focus, the ECB is the region's best chance of drawing a line under this terrible chapter by agreeing to act as lender of last resort to its governments through the large-scale purchase of sovereign bonds. Yet Mr Draghi is strongly opposed to the suggestion. He insists that such a move would compromise the central bank's independence and amount to a bail-out for individual countries which is not the role of the ECB. Instead, he and his fellow policymakers would like to continue to focus on the ECB's remit of targeting below 2pc inflation. But as days and weeks pass without a resolution of the crisis - which is plaguing the region, weighing down on the global economy and threatening to bring down the European Monetary Union - it may now be the only credible option. The problem is not going to go away. Among major European economies, a total of €1.1 trillion of debt will mature in 2012. Question marks over Italy's ability to honour its debts pushed the Italian government's borrowing above 7pc this week, an unsustainable level which forced fellow eurozone countries including Greece and Ireland to be bailed out. So who is going to come to the rescue?

Italy - Another country destroyed by the EU fantasy (in fact hitler's dream). Truth is Italy is not bust . It is the euro which is causing all the problems, Italians as individuals are wealthy. So to whom do they owe so much money ? This whole fiasco is a nonsense and I bet someone is getting very rich off the back of this non-existent default. As usual, the wealthy will be untouched . It is the PAYE taxpayers and pensioners who will be hardest hit.I do not know if politicians are even aware of the enormity of their world ! for they walk into their seat in their parliament nowadays straight from university, rarely from a work arena.... and they have legions of civil servants to teach them the ropes so what is a parliamentary MP but a mouth piece a celebrity face... ...I believe Lee kwan Yew was a true hands on politician,a peoples politician a true honest disciplinarian who knew human nature much better than many of the people today actually do! Far sighted intelligent and generous man who had a plan and saw it into fruition! Europe has no such leadership, only it seems our appeasing the minority with a gripe! Instead of serving the majority who enable a way of life....Greece, Portugal, Spain and Italy should never have gone into the Euro, nor Ireland. Only Germany, France and the UK could make it work and who needs a 'Euro' anyway. There is not one single benefit to anyone . Businessmen say it works because currency fluctuations work against. They forgot they also work for them. If our goods are not competitive because of exchange rates, then manufacture them in the countries where you want to sell to. Did Waterford crystal do well out of the Euro ? Or Woolworths ? Good businesses got along just fine for hundreds of years without the Euro !

Germany goes to the G20 summit in Cannes with financial regulation at the top of its official agenda. But behind that widely publicised aim, Chancellor Angela Merkel desperately needs to come away with a watertight solution to the Greek debt crisis.With the US and Britain showing no sign of budging in their opposition to an FTT, however, Merkel could well come away without a deal, but she will not be happy – and will not drop her own plan. She has said: "I don't think this is acceptable. We must ensure that financial-market actors share in the costs of fighting the crisis. I will push for this until it happens, at least in Europe, even better worldwide." Germany also wants the IMF to have greater resources to support the latest eurozone rescue deal, although there are doubts that the summit will produce definitive numbers. But getting some movement on Greece's rescue is vital to Merkel. She came away from a eurozone summit last week assuming she had a deal on a Greek bailout and she will want answers from Papandreou in Cannes. Before the talks the German chancellor stressed that Germany wanted to get the ball rolling on last week's agreed rescue package. "We want to put this plan into practice, but for this we need clarity." On the domestic political front, the latest opinion polls raise the pressure on Merkel over Greece. A poll in news magazine Stern asked Germans for their view of her handling of the eurozone crisis, with 46% saying she had not reacted well, while 42% approved of her actions. Given that tensions and undercurrents of prejudice between Germany and Greece go back decades, those perceptions will be hard to shift whatever Merkel comes away with this week. Even before Papandreou's shock referendum call, on overwhelming majority of Germans surveyed - 87% - said the eurozone crisis was not solved with last week's Brussels deal.

Can somebody tell me what's great about this plan, and why the market and euro rallied?

RECAP-Bloomberg: "Merkel's office: “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” The search for an end to the crisis “surely extends well into next year.”" UK Telegraph: "Diplomats say Mr Geithner’s plan to use the ECB as a guarantor of eurozone sovereign bonds was dismissed out of hand, while the EU failed to offer clear assurances that bank recapitalisation would be carried out with sufficient speed and scale to halt an incipent run on the system." "German foreign minister Westerwelle politely told the US to mind its own business. “I cannot understand some of the comments of our American friends. You can’t solve a debt crisis with more debt,”" "RBS said any attempt to solve the eurozone crisis without the ECB playing a key role in shoring up the system is doomed to failure." "Trichet, ...said late last week that the bank has done “all it could” ... has now exhausted its role of “lender of last resort”." "Ackermann, head of Deutsche Bank, said plans to leverage the EFSF may be illegal. “We cannot allow a rescue fund of this magnitude. The (constitutional) court would’t permit, and nor would the people,” he said." Germany wants private investors to increase haircut to 50%. Financial Times: Investors say no. 21% was agreed, and they're sticking with that. (Search for: "Investor threat to second Greek bail-out") If banks take bigger haircut, they will incur bigger losses and will be downgraded again. If EU forces this, then it's involuntary and triggers CDS payouts on default. If EFSF is leveraged, then it will be downgraded from AAA, which means it can't borrow anymore.EU wants to re capitalize banks. DB said no. Germany and France have higher Debt to GDP ratios than Spain, and Spain is one of the PIIGS. Is this the poor helping the poor? When do their AAA ratings get downgraded? Spain was downgraded last Friday. If Germany or France get downgraded, how will the EFSF be able to sell bonds to raise the 440b euros?There are obstacles to almost every part of the plan. Can somebody tell me what's great about this plan, and why the market and euro rallied?

Deepening economic gloom has forced Europe's biggest retailer, Carrefour, to issue its fifth profit warning this year and Germany's leading independent forecasters to highlight the risk of a recession in 2012. As EU policymakers struggle to find a common solution to the sovereign debt crisis within the next two weeks, the real economy is rapidly deteriorating as confidence seeps from consumers and investors. France-based Carrefour blamed "an increasingly uncertain environment" for an expected fall in operating profit this year of up to 20%. Only six weeks ago it said the decline could be 15%, prompting analysts to suggest the group's guidance was worthless. Across the Rhine, the eight leading German economics institutes slashed their earlier growth forecast for next year from 2% to just 0.8% and warned of an even deeper downturn if there is a "credit event" in Greece or elsewhere in the eurozone. Germany grew just 0.1% in the second quarter of 2011 but the full-year result could still be 2.9% after a huge spurt in the first quarter. The IMF is forecasting 1.3% German growth next year. In France, a Reuters poll of 20 economists resulted in a growth forecast of just 1% in 2012 after 1.6% this year. In its recent budget the government forecast 1.75%. It was the poor performance of its French hypermarkets, with sales down 4.4% in the third quarter, that drove Carrefour to issue its latest profits warning. Pierre-Jean Sivignon, Carrefour's chief financial officer, said the decline in consumer sentiment had hit "discretionary" (mostly non-food) spending – down almost 10% in France – and economic conditions were likely to remain challenging.

Markets across Europe fell on reports that Angela Merkel is struggling to secure the Bundestag majority needed on Thursday to approve the expansion of the European €440bn (£383bn) bail-out fund. The German Chancellor also cast doubt on the terms of the second Greek bail-out - confusing traders who were focused on whether an €8bn tranche of rescue money from the first package would be delivered before Greece runs out of money. A delegation of officials from the European Union, the International Monetary Fund and the European Central Bank are due in Athens on Thursday. Amid angry strikes, the "troika" will resume the audit of Greece's finances - and decide whether to release the €8bn of funds from the May 2010 agreement. Athens has warned it will run out of money next month unless it receives the money. Ms Merkel told reporters that the result of the audit could also impact the terms of the second package agreed on July 21 this year. She said: "So we must now wait for what the troika finds out and what it tells us: do we have to renegotiate or do we not have to renegotiate?" There were reports that private bondholders may be asked to take a bigger hit. Ms Merkel said: "Of course we would prefer that the figures remain unchanged, but I cannot foretell [the troika's report]."

• Plan to enlarge the European Financial Stability Mechanism is approved by the Finnish Parliament
• Europe "faces the biggest challenge in its history"
• Divisions in the eurozone over the terms of Greece's second bailout package hit bank shares

BNP Paribas SA and Societe Generale SA, France’s two largest banks, are trimming about 300 billion euros ($405 billion) off their balance sheets as Europe’s deepening debt crisis threatens to make them too big to save. At the end of March, French financial firms had $672 billion in public and private debt in Greece, Portugal, Ireland, Italy and Spain, according to Basel, Switzerland-based Bank for International Settlements. That’s the biggest exposure to the euro-area’s troubled countries and almost a third more than German lenders. The four largest French banks have 5.9 trillion euros in total assets, including loans and bond holdings, or about three times France’s gross domestic product. “The banks are entering a slimming cure, which is forced by the sovereign crisis,” said Jerome Forneris, who helps manage $10 billion, including the two French lenders, at Banque Martin Maurel in Marseille, France. Rather than tap the market for capital, BNP Paribas and Societe Generale are seeking to free up a combined 10 billion euros through asset cuts and disposals. Paris-based BNP Paribas plans to cut $82 billion of corporate- and investment-banking assets, while Societe Generale may exit businesses such as aircraft and real-estate finance in the U.S.

Greek Prime Minister George Papandreou has held his teleconference with German Chancellor Angela Merkel and French President Nicolas Sarkozy. We weren't expecting anything particularly dramatic, but what has emerged is going to be small consolation for investors. France and Germany came out and said that Greece's future lies in the eurozone. Greece, in turn, promised to stick to its budget program in an attempt to stop its debt crisis worsening. Aside from that, no concrete reassurances emerged. At a teleconference Greek prime minister George Papandreou told Merkel and Sarkozy his country was determined to meet all obligations agreed with international lenders in exchange for an EU/IMF bailout. Officials from the European Commission, European Central Bank and the International Monetary Fund returned to Athens to try to get the Greek rescue package back on track. All three leaders have a vested interest in playing for time over Greece despite the sense that time is running out.

Please stop pretending, Greece in insolvent, it is bankrupt, see the parrot sketch from Monty Python for what the Greek economy is really like. Just to make sure that it is dead, an ex-economy then pushing it even further down with draconian austerity should do the trick.
If I don't believe it then you can be damn sure that the markets don't believe it, and all this sticking plaster means that the problem will be here tomorrow, and the day after that....just kicking the can down the road. All this "bail out" is just free money for them and yet another loss for the taxpayers, who are throwing good money after bad.

EURO-ZONE - Fears that the eurozone crisis is escalating and further evidence of the weakness in the US economy drove stock markets lower on Wednesday as policy makers failed to restore confidence in global markets. The FTSE 100 index closed at its lowest level since November, after its biggest one day fall for nine months of 133 points. After a nerve-racking day Wall Street narrowly avoided its ninth consecutive day of falls – a losing streak unseen since 1978. A much anticipated speech by Italy's prime minister, Silvio Berlusconi, was delayed until European markets closed but failed to calm the storm on international financial markets that threatens to engulf his country and imperil the entire eurozone. Italy and Spain – whose prime minister, José Luis Rodríguez Zapatero has cut short his summer holiday – are now at the centre of the eurozone debt crisis that began with Greece more than a year ago and has enveloped Ireland and Portugal. European commission president José Manuel Barroso tried to inject calm into the markets by insisting that record high yields – interest rates – on Spanish and Italian government bonds were "unwarranted". "Developments in the sovereign bond markets of Italy and Spain are a cause of deep concern," Barroso said.

European politicians had hoped their deal on 21 July to bailout Greece for a second time and impose losses on bond holders would restore confidence in the eurozone. Their efforts have failed, particularly as US debt crisis compounded the febrile atmosphere in the markets. In France, shares in the second largest bank Société Générale were temporarily suspended – they eventually closed 9% lower in heavy turnover – after it took a €395m (£345m) hit on its exposure to Greece because of its contribution to the bailout plan. Concerns were also mounting that banks across the eurozone were finding difficulties in funding themselves on the markets. Huw van Steenis, banks analyst at Morgan Stanley, said: "Investors, we and some banks are increasingly concerned that funding markets won't reopen with sufficient depth or at good enough terms for Italian and Spanish issuers, requiring banks to take offsetting measures". Berlusconi's statement to the lower house of parliament faced immediate criticism for failing to tackle the problems facing the Italian economy even though he promised to work with unions and employers on a reform of Italy's notoriously rigid employment laws. He drew attention to the fact that his government had earlier given the green light to €9bn of infrastructure projects which he said would promote growth, especially in the poorer south.

Germany staged an impressive recovery from the 2008/2009 global economic crisis, but there are increasing signs that the boom is now coming to an end. After almost two years of strong growth, its economic outlook is starting to deteriorate, due to a slowdown in major emerging markets including China and fears of a possible United States recession caused by $2.4 trillion in spending cuts linked to the debt ceiling deal. Various indicators released in recent weeks point to a deceleration of Europe's largest economy. The Ifo business climate index for July fell sharply to its lowest level in nine months, and analysts say it is likely to keep dropping. The ZEW investor sentiment index showed the weakest level since January 2009. And the Markit/BME purchasing managers' index for the German manufacturing sector fell 2.6 points in July to 52 points, its lowest level since October 2009. "New order levels went into reverse in July, as fewer export sales helped end a two-year period of sustained growth," Tim Moore, senior economist at Markit, said. German engineering orders in June rose by just 1 percent year-on-year, after having jumped 21 percent in May, the VDMA engineering industry association said. "There are initial indications that demand for investment goods has become less dynamic in Germany and in the other euro member states," said VDMA economist Olaf Wortmann. In addition, top German firms have given more cautious outlooks for the remainder of 2011. Analysts have been paying particularly close attention to what is being said by the chemicals industry, which is regarded as a bellwether for the general industrial outlook because it supplies many different sectors.

Spanish and Italian benchmark bond yields rose after the auctions, and the premium demanded to hold Spanish debt rather than lower-risk German bonds widened. Investors also focused on possible obstacles to the implementation of the Greek deal, with benchmark interbank lending rates for euros rising amid speculation some bondholders might not participate in the crucial debt exchange. Just days after policymakers toasted a €109bn (£96bn) bailout aimed at hauling Greece back from the brink of insolvency, speculation gathered pace that some of its hapless bondholders might shun a distressed debt exchange. There are also worries that the recent move to boost the powers of the European Union's bailout fund will not be enough to limit contagion and that its size will need to be increased to provide assistance for larger economies. Italian and Spanish bond yields were at levels seen before the Greek second bailout agreement amid renewed worries about contagion to debt-laden countries. The main European debt concern is now whether larger countries like Italy and Spain will get sucked into the mire. Peter Schaffrik, head of European rate strategy at RBC Capital Markets, said: "Over the past couple of days we have had a [re-escalation] of the crisis in the eurozone because the Greek deal isn't seen to be a solution, and at the same time we have the debt ceiling saga in the US. It all contributes to tension." The ratings agency Moody's has already cut Greece's debt rating by three notches to Ca, leaving it just one notch above what is considered default, and has said that the chance of a default is now "virtually 100%". Moody's warned that while last week's bailout package agreed by eurozone leaders would make it easier for Greece to reduce its debt, the country still faced medium-term solvency challenges and that there were significant risks in implementing the required reforms.

The US faces the prospect of a "catastrophe" as President Barack Obama stands firm against Republican demands for deep spending cuts without any tax increases as the condition for raising the country's borrowing limit and avoiding a debt default. With Washington gripped by a growing sense that it may be too late to avert a crisis, the president has said he will give the increasingly rancorous negotiations until the end of next week to reach agreement on the terms for raising the US's $14.3 trillion (£8.9tn) debt ceiling. The White House has said that if there is no agreement by 22 July, then discussion about budget cuts and taxes should be abandoned in favour of legislation dealing solely with raising the debt ceiling before the borrowing limit is reached on 2 August. But the Republicans have rejected legislation without agreement on budget cuts. With European leaders also facing a potentially ruinous debt crisis, a leading Wall Street figure described the prospect of a US default as catastrophic. Jamie Dimon, chief executive of JP Morgan, one of Wall Street's biggest banks, said: "No one can tell me with certainty that a US default wouldn't cause catastrophe and wouldn't severely damage the US or global economy. And it would be irresponsible to take that chance." On Wednesday, Ben Bernanke, the chairman of the Federal Reserve, warned of a "huge financial calamity" if a political agreement is not reached. He told Congress a default would "send shockwaves through the entire financial system". Hours later, the credit ratings agency Moody's warned that it may downgrade the US's AAA credit rating, saying there is a "rising possibility" that no deal will be reached by next month's deadline. (source the guardian.uk)