Finland and Russia. Well Finland is the only EU member nation to border Russia and not be a NATO member. I suspect they are wary of Russia but have a greater understanding of Russia's somewhat justified paranoia and anger with broken ' influence space' NATO invasions since the 1990's. They seek the old USSR relationship probably which worked well for Finland. Your last sentence captures this.  BTW by many polls the most pro-EU Nordic - not members yet (and they were in the list with Denmark, UK and Ireland in the 1960's - is Norway. Following April's elections, Juha Sipila, the prime minister, Timo Soini, the eurosceptic foreign minister and Alexander Stubb, the finance minister, have pledged to create more jobs, to get the economy moving and avoid a "lost decade" from a lack of reforms.  Finland is out on its own compared to the other Nordic countries in joining the Euro. Norway isn't even in the EU, Sweden has done well keeping the Krona and Denmark has kept their Krona but ties it to the Euro, a tie that could easily be broken if the proverbial hits the fan. Finland is looking rather isolated. Of course the Baltic states are in the Euro but they have all paid a heavy price for membership.  Would I be right in thinking that Finland is being hurt by Russian retaliatory sanctions rather more than other countries? Whilst they must have an historical healthy fear of Russia, I would imagine they are far more scared about the West restarting the Cold war in extreme earnest because of western interference in the internal affairs of Ukraine.

European Union talks on how to assign losses at failing banks broke down as conflicts on "core issues" doomed 19 hours of talks in Luxembourg. Finance ministers plan to reconvene July in search of an agreement on proposed rules for bank resolution and recovery in time for an EU summit that begins the following day in Brussels. "There are still core issues outstanding," Irish Finance Minister Michael Noonan said as he left the meeting on early Saturday. "We have another meeting next (this) week and there's no guarantee it'll reach a conclusion." The new rules are intended to set standards for how to prop up or shut down failing banks, along with requirements for the kind of backstops each country must have in place. The draft law adds to the EU's push for common bank supervision in the eurozone and tougher across-the-board standards for authorities. After more than three years of crisis and bailouts in five eurozone nations, EU leaders have pursued banking union as a way to reassure investors that they can break the cycle of contagion between banks and sovereign debt. Talks foundered on the question of which creditors face write-downs when banks fail. Some countries demanded more flexibility for national authorities, while others sought strict rules across all 27 EU nations. Ministers considered several ways to set thresholds for losses that would need to be assigned via strict formulas before national discretion would be allowed. French Finance Minister Pierre Moscovici said he had "no doubt" ministers will reach an agreement next week, while his German counterpart, Wolfgang Schaeuble, said a final deal must be constructed in a way that won't burden taxpayers. The fight mirrored an earlier battle among eurozone ministers over when countries may seek direct bank aid from the European Stability Mechanism, the currency zone's 500 billion euro ($656 billion) firewall fund. On June 20, eurozone ministers said private investors must be tapped before the ESM will be allowed to step in, once ECB oversight begins and the new tool is in place. If finance chiefs don't reach a deal on the resolution rules before the EU's summer hiatus, this would jeopardize their ability to reach a deal on the bill with the European Parliament and could delay the EU's follow-on proposal for a single resolution mechanism, said Sharon Bowles, chairwoman of the parliament's economic affairs committee. "It needs to be handled very carefully," Bowles said. "Telling a citizen their savings are gone and that EU rules stop you from helping out via the taxpayer even if you want to, or stop you from saving small businesses and jobs, is about as political and tough as anything." During the talks, ministers sought to bridge differences between countries inside and outside the 17-nation eurozone. Austria and the European Commission sought common rules for all 27 EU members, while Sweden led the call for rules that grant more freedom to non-euro nations to prop up banks when financial stability is at risk. Anders Borg, the Swedish finance minister, said his country isn't "asking for anybody else's money" to take care of its banks. "We think we should have the leeway to do what we think is necessary," he said. "If we are building a very rigid system that can hardly work in practice, this could be something creating more uncertainty in the European economy."

European leaders yesterday warned that youth unemployment – which stands at up to 59% in some countries – could lead to a continent-wide "catastrophe" and widespread social unrest aimed at member state governments.

The French, German and Italian governments yesterday joined together to launch initiatives to "rescue an entire generation" who fear they will never find jobs.

More than 7.5m young Europeans aged between 15-24 are not employed or in education or training, according to European Union data. The rate of youth unemployment is more than double that of adults, and more than half of young people in Greece (59%) and Spain (55%) are unemployed.  François Hollande, the French president, dubbed them the "post-crisis generation", who will "for ever after, be holding today's governments responsible for their plight".

"Remember the postwar generation, my generation. Europe showed us and gave us the support we needed, the hope we cherished. The hopes that we could get a job after finishing school, and succeed in life," he said at conference in Paris. "Can we be responsible for depriving today's young generation of this kind of hope?

"Imagine all of the hatred, the anger. We're talking about a complete breakdown of identifying with Europe.

"What's really at stake here is, not just 'Let's punish those in power'. No. Citizens are turning their backs on Europe and the construction of the European project.  Germany's finance minister Wolfgang Schäeuble warned that unless Europe tackles youth employment, which stands at 23.5% across all European Union countries, the continent "will lose the battle for Europe's unity".  Italy's labour minister Enrico Giovanni said European leaders needed to work together to "rescue an entire generation of people who are scared [they will never find work].  "We have the best ever educated generation in this continent, and we are putting them on hold," he said.  The UK department for work and pensions and the Treasury were unable to say why Britain, which has a 20.7% rate of youth unemployment, was not represented at the conference in Paris on Tuesday.  Stephen Timms, shadow employment minister, attacked the coalition for remaining "utterly silent on youth unemployment".

"This government has totally failed to tackle Britain's youth jobs crisis. This government must stop sitting on the sidelines and take the urgent action we need to get young people back to work."

Hollande outlined a series of measures to tackle the problem, including a "youth guarantee" to promise everyone under 25 a job or further education or training.

The plan, which has already been discussed by the European Commission, will be supported by €6bn of EU cash over the next five years. Another €16bn in European structural funds is also being made available for youth employment projects.

Herman Van Rompuy, European Council president, pledged to put the "fight against unemployment high on our agenda" at the next EU summit in June. "We must rise to the expectations of the millions of young people who expect political action," he said.

The commission estimates youth joblessness costs the EU €153bn in unemployment benefit, lost productivity and lost tax revenue.

"In addition, for young people themselves, being unemployed at a young age can have a long-lasting negative 'scarring effect'," the commission said. "These young people face not only higher risks of future unemployment, but also higher risks of exclusion, of poverty and of health problems."  The European ministers, who will meet with German chancellor Angela Merkel to discuss the youth unemployment crisis in July, said small and medium-sized businesses (SMEs) will form a central plank of the plans.  SMEs traditionally employ the vast majority of young people, but have complained they haven't been able to borrow enough money to grow since the financial crisis struck in 2008.  Ursula von der Leyen, Germany's labour minister, said: "Many SMEs, which are the backbone of our economies, are ready to produce but need capital, or they have to pay exorbitant borrowing rates."  The minsters are working on establishing a special credit line for small and medium-sized businesses from the European Investment Bank (EIB), which will have a €70bn lending capacity this year.  However, Werner Hoyer, head of the EIB, warned minister not have "expectations completely over the horizon".

"Let's be honest, there is no quick fix, there is no grand plan," he admitted.  Schäeuble warned that European welfare standards should not be jeopardised in order to cut the youth unemployment figures. "We would have revolution, not tomorrow, but on the very same day," he warned. Germany and Austria have the lowest rate of youth unemployment, with just 8% not in work, education or training.

German "Think Tank experts" push for wealth seizure to fund EMU bail-outs …Two top advisers to German Chancellor Angela Merkel have called for a tax on private wealth and property in eurozone debtor states to force the rich to fund rescue costs, marking a radical new departure for EMU crisis strategy.  Professors Lars Feld and Peter Bofinger said states in trouble must pay more for their own salvation, said arguing that there is enough wealth in homes and private assets across the Mediterranean to cover bail-out costs. “The rich must give up part of their wealth over the next ten years,” said Prof Bofinger.  The two economist are members of the Germany’s Council of Economic Experts or “Five Wise Men”, a body that advises the Chancellor on major issues. There is no formal plan to launch a wealth tax but the council is often used to fly kites for new policies.   Prof Bofinger told Spiegel Magazine that it was a mistake to target deposit holders in banks, the formula used in the EU-IMF Troika bail-out for Cyprus where those with savings above €100,000 at Laiki and Bank of Cyprus face huge losses. “The canny rich in southern Europe just shift their money to banks in Northern Europe to escape seizure,” he said.   Prof Feld said a new survey by the European Central Bank had revealed that people in the crisis countries are richer than the Germans themselves. “This shows that Germany has been right to take a tough line of euro rescue loans,” he said.  The ECB study found that the “median” wealth of is €267,000 in Cyprus, compared to just €51,000 in Germany where home ownership rate is just 44pc and large numbers of people have almost no assets.

A chapter of the IMF's latest financial stability report, released to coincide with the build-up to the meetings, warns that long periods with ultra-low interest rates and so-called "unconventional" monetary policy, such as quantitative easing, can spawn serious long-term problems, even if they succeed in boosting short-term growth.

At home, "zombie" firms and households that would have gone bust can be propped up by super-cheap borrowing – only to face an even greater risk of collapse when interest rates finally go up.

Meanwhile, some of the cheap money created in the US, Japan and the UK will leak overseas, as investors seek better returns elsewhere. Emerging economies in Asia and Latin America are increasingly concerned about speculative investment flows pumping up their currencies and inflating asset bubbles.

"Despite their positive short-term effects for banks, these central bank policies are associated with risks that are likely to increase the longer the policies are maintained," the IMF warned.

Depreciation is another welcome by-product of the hyperactive central banks' policies, and there will also be a debate in Washington about the risks of a beggar-my-neighbour battle to create the cheapest currency.

Even before Japan's dramatic expansion of its bond-buying programme, the sharp devaluation in the yen over the past six months had raised concerns in Europe that a strong euro will harm competitiveness.

Danny Gabay, of City consultancy Fathom, said an appreciating euro would drive Europe's economies deeper into recession and put the region's fragile banks at greater risk. "Do they think the banking system that is already under stress from high unemployment and non-performing loans can withstand a stronger euro too?"

Face-to-face talks, like those that take place at these IMF gatherings, can force policymakers to confront the consequences of their domestically motivated policies – but they are rarely persuaded to change their plans as a result. Sir Mervyn King, the outgoing Bank of England governor, is likely to repeat his frequently expressed fear that there remain deep, fundamental tensions in the world economy, between creditors and debtors, savers and spenders, which have never been tackled.

Spanish industrial production dives again - The economic crisis in Spain continues. Data released this morning showed that industrial production in the country tumbled by 6.5% in February, compared with a year ago.

That's the 18th monthly contraction in a row.

The slump was driven by a double-digit decline in production of durable goods for consumers, who are suffering badly as Madrid implements its austerity programme.

But production was also down across the board, from other consumer goods to large-scale industrial equipment:

Many Spanish factories have closed since the financial crisis struck, creating a vicious circle of rising unemployment and falling demand.

One example, thousands of people were employed at a door factory in the town in Villacanas, south of Madrid. In the good days they churned out products for Spain's property boom - but the plant is now closed, along with most of of the Villacanas industrial park....

The picture is slightly better in France this morning, where industrial production only fell by 2.8% year-on-year in February, and actually picked up by 0.7% compared with January.

I'll be tracking the reaction to today's data, and watching developments across the eurozone -- particularly Slovenia (whose PM yesterday rejected speculation that a bailout would be needed), and Cyprus (where time is running out to agree its bailout).

Savers in Cyprus could face losing one-quarter of their bank deposits under new proposals being discussed by the government as ministers flew to Brussels to salvage a European bailout.

The new bank levy would only apply to people with more than €100,000 (£85,260) in their accounts, according to the finance minister, Michael Sarris, who also said that significant progress had been made in talks with European officials.

President Nicos Anastasiades travelled to Brussels to work out an alternative plan to raise funds that would allow the country to qualify for an international bailout. Cyprus must raise €5.8bn (£4.9bn) before Monday to qualify for the €10bn EU bailout it needs to prevent the collapse of its banks and a potential departure from the eurozone.

The idea of raising money through a one-off levy on bank deposits was criticised in Cyprus, Russia and elsewhere and was unanimously rejected by the Cypriot parliament earlier this week, but is being reconsidered after negotiations with Russia to find alternative finance did not achieve a result.

On Friday, the Cypriot parliament passed nine bills, including three that would see ailing banks restructured, starting with Laiki, Cyprus's second-largest bank, a "national solidarity fund" and capital controls that would prevent large withdrawals from the country. A decision on the controversial bank savings levy and how it would be applied is due on Saturday.

Other Cypriot politcians discussed a smaller bank levy of 1% which would be aplied to all accounts. The debate is divided between those that want the levy to be borne only by the wealthy which includes a high percentage of Russians who hold €30bn in Cypriot banks.

Eurozone ministers are scheduled to meet on Sunday to decided how to help Cyprus avoid economic chaos. The European Central Bank has threatened to cut off funding from Monday and the banks face a run of investors withdrawing money when they re-open.

The Cypriot parliament will meet after the meeting of the eurozone ministers on Sunday evening.

Opinion ....2...

Disaster was visited on the global economy 40 years ago with the Nixon 'shock' - the disengagement between the dollar and gold and other currencies with gold via their linkage with the dollar. That is the demise of the Bretton Woods agreement.
With the end of that arrangement countries were now free to create as much money as they liked and run as big a trade deficit as they liked. Under Bretton Woods, any trade defict had to be quickly reversed by cutting demand to maintain parity with the dollar and therefore gold
In 1963 Reginald Maudling tried to stimulate the UK economy only for UK business to fail to meet demand and so sucked in imports. That stimulus had to be quickly reversed. The same 10 years later with Anthony Barbour. The failure of Brits to create wealth goes back way before Margaret Thatcher. And way before GCSEs - but that's another matter.
Of course, Germany was the exception as the Bundesbank was not about to engage in this game of Monopoly.
Like all frauds, it starts small and the fraudster, having got away with it, then becomes more ambitious.
By 2007 the global economy had split into two camps - those who could create wealth, Germany (being smart and well-organised) and China (using slave labour) being the two prme examples, and those who could only consume wealth, the UK and US being the best examples. The US having exported a large chunk of its wealth creating capacity to the likes of China for the benefit of the few
The circle being squared with debt.
The Anglo-saxons convinced themseleves that crazy maths could be used to make even the worst debt perform.
In an attempt to maintain this farce from 2008 onwards the fraudsters now went one better by a quasi-monetisation of debt, quantative easing. Rather than solve the basic problem of not creating wealth they reach for their trusty tools of deceit and fraud.
Having got over the last few years with quasi-monestisation the UK, like all confident fraudsters, now becomes more confident and goes for full monetisation as Osborne claws back interest payments on bonds owned bythe BoE. One of the attributes of fraudsters is being adept at the use of convoluted logic to defy logic.
Eventually they will also write off the capital value of these bonds.
That gives a short breathing space but just as qe has solved nothing neither will that. The 'grand plan' seems to hope something will turn up.
But still there is this huge global trade imbalance that is being addressed by the default of everything just winding down as the there are fewer and fewer buyers for the sellers.

The German (Fourth Reich's ) Governor of Greece - Horst Reichenbach made no comments !!!!!

No final decision on next tranche of Greek bailout expected today, despite "broadly positive" Troika report ( Governor's Horst Reichenbach report in fact).

The German finance ministry has declared that there is no chance of a deal today on Greece's bailout programme, despite Athens approving its 2013 budget last night.

Ministry spokeswoman Marianne Kothe told reporters in Berlin that it wasn't realistic to expect a decision at tonight's Eurogroup meeting (of euro finance ministers), particularly as German MPs must have their say first.

Kothe said: Everyone is working under a lot of pressure to resolve questions which are still open...I think it's rather unrealistic to expect a final decision today as in Germany the Bundestag has to agree to it in advance.

There are also reports this morning that Jean-Claude Juncker, chair of the eurogroup, has also ruled out a decision this evening.

The precise whereabouts of the Troika report on Greece is another issue ... Germany's Kothe said today that she didn't think the final version was complete yet...in fact The German (Fourth Reich's ) Governor of Greece - Horst Reichenbach made no comments !!!!!

WSJ - about the election day ...

WSJ - We begin with the three words everyone writing about the election must say: Nobody knows anything. Everyone’s guessing. I spent Sunday morning in Washington with journalists and political hands, one of whom said she feels it’s Obama, the rest of whom said they don’t know. I think it’s Romney. I think he’s stealing in “like a thief with good tools,” in Walker Percy’s old words. While everyone is looking at the polls and the storm, Romney’s slipping into the presidency. He’s quietly rising, and he’s been rising for a while.

Obama and the storm, it was like a wave that lifted him and then moved on, leaving him where he’d been. Parts of Jersey and New York are a cold Katrina. The exact dimensions of the disaster will become clearer when the election is over. One word: infrastructure. Officials knew the storm was coming and everyone knew it would be bad, but the people of the tristate area were not aware, until now, just how vulnerable to deep damage their physical system was. The people in charge of that system are the politicians. Mayor Bloomberg wanted to have the Marathon, to show New York’s spirit. In Staten Island last week they were bitterly calling it “the race through the ruins.” There is a disconnect.

But to the election. Who knows what to make of the weighting of the polls and the assumptions as to who will vote? Who knows the depth and breadth of each party’s turnout efforts? Among the wisest words spoken this cycle were by John Dickerson of CBS News and Slate, who said, in a conversation the night before the last presidential debate, that he thought maybe the American people were quietly cooking something up, something we don’t know about.

I think they are and I think it’s this: a Romney win.

Romney’s crowds are building—28,000 in Morrisville, Pa., last night; 30,000 in West Chester, Ohio, Friday It isn’t only a triumph of advance planning: People came, they got through security and waited for hours in the cold. His rallies look like rallies now, not enactments. In some new way he’s caught his stride. He looks happy and grateful. His closing speech has been positive, future-looking, sweetly patriotic. His closing ads are sharp—the one about what’s going on at the rallies is moving.

All the vibrations are right. A person who is helping him who is not a longtime Romneyite told me, yesterday: “I joined because I was anti Obama—I’m a patriot, I’ll join up But now I am pro-Romney.” Why? “I’ve spent time with him and I care about him and admire him. He’s a genuinely good man.” Looking at the crowds on TV, hearing them chant “Three more days” and “Two more days”—it feels like a lot of Republicans have gone from anti-Obama to pro-Romney.

Super writting by Helena Smith - The Guardian

Up close Angela Merkel is very static. She stands immoveable, her eyes flashing this way and that. In Athens, as she stood behind a lectern following talks with the Greek prime minister, Antonis Samaras, the German chancellor was so restrained she hardly moved at all. The Greek capital resembled Fort Knox – with riot police guarding her every move, helicopters roaring overhead and sharp shooters installed on the rooftops of buildings great and small – but Europe's most powerful woman was having none of it. The angry chants and hoarse slogans of the thousands of protesters who had also come out to greet her, eliciting one of the biggest security operations ever put on by near-bankrupt Greece, belonged to another world. As did the copious amounts of acrid teargas that wafted through the Athens air.

In the hushed marble interior of the mansion that is the prime minister's office, Merkel had a message and on this, her first visit to Greece since the eruption of Europe's debt drama, it was a message she was determined to convey.

"I have not come as a task-master," she said, her eyes elevated towards the room's ornate sunlit ceiling as if focusing on some indefinable spot. "And nor have I come as a teacher to give grades," she added, now focusing intently on the marble floor. "I have come as a friend to listen and be informed." Three years into the crisis that began in Athens, Merkel also wanted to say that she understood "a lot" was being demanded of Greece. She was not the austerity warmonger that critics had painted her to be. "I come in full and firm awareness of what the people of Greece are going through," she insisted. But, she continued, Europe's weakest link was badly in need of change – and, if reforms were not made now, they would come back "in a much more dramatic way".

"I come from East Germany and I know how long it takes to build reform," she said, almost by way of reassurance. "The road for the people of Greece is very tough, very difficult, but they have put a good bit of the path behind them. I want to say you are making progress!"... But even as the leader attempted not to sound like the matriarch in charge of the family till, there is no denying that that is exactly what she is.

"Saying that she is not here to preach is bullshit," said one of the small retinue of Berlin-based journalists who follow her every move. "She is here to tell them exactly what to do."  For the vast majority of Greeks, no person is more identified than Merkel with the punitive measures that have ensnared the country in unprecedented recession and record levels of poverty and unemployment.

As up to 300,000 took to the streets in a massive display of fury over the savage cuts and tax increases that have brought growing numbers to the brink of penury, it was the woman who is widely seen as the "architect of austerity" that was firmly in their sights.   "If I met her I would say if you had read Greek history you would have been more aware," said Takis Stavropoulos, a bearded leftist who had converged with thousands of other protesters on Syntagma square. "If she had done that she would have known we would resist."   No government has been in as difficult a place as the ruling coalition that Samaras has lead since June. Although Merkel's surprise visit was seen as a major coup, with officials hailing it as further proof of Berlin's new-found willingness to keep Greece in the 17-member eurozone, there was also an acceptance that the chancellor's six-hour presence in Athens, while rich in symbolism, did not yield much in the way of substance.   Merkel's Calvinist approach to dealing with Europe's crisis-hit southern periphery may have softened, as the leader looks to re-election next year, but as tiny Greece stares into the abyss with enough funds to survive only until the end of next month, the message was clear: apply more draconian measures and the rescue funds will keep pouring in. Echoing the complaint of German commentators, Greek analysts agreed that the visit was long-overdue.

"It is hard not to see that this visit had a more important message for Germany ahead of [next September's] general elections than it did for Greece," opined the prominent commentator Yiannis Pretenderis.  The sad reality remained. After the biggest debt write-down in the history of world finance and two EU-IMF-sponsored bailouts worth a mammoth €240bn, Greece was still far from being saved and, even worse, was slipping inexorably into social meltdown with its political arena becoming ever more radicalised.

The draconian €13.5bn package of spending cuts that is the price of further aid could, many fear, push Greece further to the edge.  Back at the heart of the government, untouched by the discord of everyday life, the awkwardness of Greece's disharmonious relationship with its big brother Germany was on full display in the awkwardness of the body language of its prime minister.   As Merkel, the pastor's daughter, spoke, Samaras, whose background is privileged elite, Harvard and moneyed, looked on and winced.

"Greeks are a proud people," he said. "And our enemy is recession. But we are not asking for favours. In my discussion with the German chancellor I pointed out, however, that the Greek people are bleeding."  As he spoke, Merkel remained absolutely static before pursing her lips and looking away.  Police fired teargas and stun grenades to hold back crowds chanting anti-austerity slogans and waving Nazi flags while Merkel's host, Prime Minister Antonis Samaras, welcomed her as a "friend" of Greece.  On her first visit to Greece since the euro zone crisis erupted three years ago, Merkel struck a conciliatory tone.  She reaffirmed Berlin's commitment to keep the debt-crippled Greek state inside Europe's single currency but offered Samaras no concrete relief ahead of a new report on Greece's reform progress due by next month.  "I have come here today in full knowledge that the period Greece is living through right now is an extremely difficult one for the Greeks and many people are suffering," Merkel said at a news conference with Samaras just a few hundred yards from the mayhem on Syntagma Square, outside parliament.

"Precisely for that reason I want to say that much of the path is already behind us," she added. (source guardian.uk)

The World Trade Organisation warning

The World Trade Organisation has warned the outlook for global trade is deteriorating, citing the eurozone crisis as the main drag on growth.  The WTO slashed its forecast for global trade growth this year from 3.7% to 2.5% onprevious 20-year average. The WTO director general, Pascal Lamy, said there was more risk of things getting worse than better.

The news came as Brazil's finance minister lambasted the US and Japan for their latest rounds of quantitative easing, which will devalue their currencies and, he said, trigger a global currency war.

Next year the WTO expects trade to grow by 4.5%, compared with previous forecasts of 5.6% growth. That forecast is, however, based on the assumption that current policy measures will be enough to avoid a breakup of the euro and that US politicians will reach an agreement to stabilise public finances and avoid the "fiscal cliff". The WTO is targeting 1.5% growth in exports from developed economies, down from its previous forecast of 2% growth. The situation has deteriorated even more for developing countries, where the WTO cut its forecast from 5.6% growth to 3.5%.

 

What the incompetent idiot stated :Rehn added that the euro was "irreversible"....hahaha!

Spanish banks borrowed a record €402bn (£316bn) from the European Central Bank in July, leaving them as far as ever from returning to capital markets, and heaping further pressure on Madrid as it tries to avert a full sovereign bailout. The banks borrowed 10% more than the €365bn they tapped in June, Tuesday's data from the Bank of Spain showed. Spiralling debt costs and balance sheets ravaged by a domestic property bubble that collapsed in 2008 have shut most domestic banks out of the bond markets. The banks' use of the ECB facility has increased sharply this year, rising from €161bn in January, and the sector was propped up in July with the promise of a European rescue package – which it has yet to tap – worth up to €100bn. The pattern is similar if less acute in Italy – like Spain at the sharp end of the eurozone debt crisis – where banks held €283bn in ECB funds in July compared with €281bn in June, Bank of Italy data showed last week. In Spain, only heavyweights with big operations abroad such as Santander and BBVA continue to have few problems raising funding from the market. One likely factor in the July increase was the higher charges that some clearing houses were levying on the use of Spanish bonds – which many domestic banks have invested heavily in – as collateral for raising funds, one analyst said. The eurozone has avoided entering a technical recession, defined as two consecutive quarters of negative growth, because growth was flat over the first three months of 2012. Howard Archer of IHS Global Insight predicted that GDP will fall again during the current quarter. Archer said the eurozone was "struggling against tight fiscal policy in many countries, high and rising unemployment, muted global economic activity and ongoing serious sovereign debt tensions that weigh down on confidence and limit investment. Stock markets, however, were cheered by the news as the contraction was smaller than expected and share prices rose across Europe. The FTSE 100 finished 32 points higher at 5864, while the DAX closed 0.8% higher. The European commission vice-president, Olli Rehn, told CNBC that the EU and the European Central Bank would take action "once certain conditions are met". Rehn added that the euro was "irreversible".

Germany's main opposition, the Social Democrats, have upped the ante, saying that Chancellor Angela Merkel must assume greater risks to avert a breakup of the single currency.

Bloomberg has a report on an interview the SPD floor leader, Frank-Walter Steinmeier, gave to the Rheinische Post newspaper.

He raised the pressure on Mrs Merkel to agree to more burden-sharing to stem the euro crisis, claiming that Mrs Merkel, while rejecting euro-region bond sales, fails to say that Germany is already exposed to losses from the debt crisis through the European Central Bank’s bond purchases:

The government should finally be honest about it to the people. If we want to prevent the breakup of the euro zone, it won’t be without risks for Germany.....I have been following the EU. crisis for the last three years and the Muppets in Brussels still have no idea what to do. It gives me no confidence at all in our leaders in Brussels. The numpties in Westminster are not too bright but they beat the nutters in Brussels and Strasbourg hands down.

From debt crisis to food crisis. The UN's food agency has warned today that the world could face a food crisis like that of 2007/08 if countries restruct exports on concerns about a drought-fuelled grain price rally. In its latest update, the Food and Agriculture Organisation said its food price index climbed 6pc last month, after three months of decline, driven by a surge in grain and sugar prices.

Anxieties over extreme hot and dry weather in the US Midwest sent corn and soybean prices to record highs last month, driving overall food prices higher.  Grain markets have also been boosted recently by speculation that Black Sea grain producers, particularly Russia, might impose export restrictions after a drought there hit crops.

The FAO's senior economist and grain analyst Abdolreza Abbassian told Reuters:  There is an expectation that this time around we will not pursue bad policies and intervene in the market by restrictions, and if that doesn't happen we will not see such a serious situation as 2007/08. But if those policies get repeated, anything is possible.

Germany gets to show its eurosceptic side

The preamble of the constitution makes Europe into a major premise of our constitution," says Alexander Graf Lambsdorff, the head of the pro-business Free Democratic Party (FDP) group in the European Parliament. "Today's judges treat it like an annoying postscript. That's alarming."

Yes, and the actual central clauses of the constitution state that that all power derives from the people.

The european parliamentarians are particularly noisy about the court daring to interfere, at this time. They're probably still sore about the fact that the Court ruled that the European Parliament didn't meet "international democratic standards", and so wasn't a suitable receptacle for future transfer of sovereignty.

From memory, the international democratic standard they saw the european parliament failing had to do with one MEP representing 300,000 germans, and 50,000 maltese....Ah well. Germany gets to show its eurosceptic side, for a change.

IMF ....explained ...

IMF in context (explained) : As of mid 2008, the IMF had around $1,6 billion in the bank. Compared to the sums involved in the designed financial collapse, this represents a grain of sand on Peblle Beach. There was a story about the IMF selling off 400 tons of gold. We don't know if this was real gold, tungsten coated bars, or pure make believe gold?? There were stories floating around that India would pay hard cash for this imaginary gold, but then all went quiet.....Whatever reserves the IMF has acquired since the designed financial collapse, they are digitally created Monopoly Money reserves. The IMF is a global extortion racket...they force cuts, force payments to bust banks, in exchange for Monopoly Money created out of thin air, that states will pay back with REAL money, plus interest....nice business !!!...The US is already broke. Britain is broke and Canada wants to stay solvent. Why would anyone in their right mind impose more sacrifices on their own people to prop up an insane political project like the Euro?The argument that it is in their own self-interests doesn't wash as there will inevitably be a day of reckoning for this mess and delaying it will make the pain worse all around, not better; so its time for Europe to bite the bullet rather than taking everyone else down with them.....And... the news item : Global politics and economic theory don’t lend themselves easily to punch lines. But in January this year, Christine Lagarde managed to inject a little light relief into proceedings at the World Economic Forum. Holding up her Louis Vuitton handbag, the new managing director of the International Monetary Fund (IMF) turned to her fellow power brokers in one session and said: “I am here, with my little bag, to collect a bit of money.” The joke broke the ice and the room rippled with laughter. But, beneath the disarming charm, Lagarde was deadly serious. For months now, the IMF has been trying to coerce its 187 members into committing as much as $600bn (£378bn) more to the fund to build what she described at the Brookings Institute in Washington last week as a “global firewall” to defeat once and for all the European sovereign debt crisis.

NEW YORK -(Dow Jones)- The euro rose Wednesday in uneven trading, retreating below $1.38 as cautious optimism over a European bailout deal gave way to mounting skepticism that a final solution will solve the euro zone's debt crisis. In advance of a pivotal weekend summit, France and Germany are locked in intensive negotiations on whether investors in Greece's nearly $500 billion stack of distressed debt will be asked to take a significantly larger writedown on their holdings. European leaders are also mulling a range of options on how to buttress the European Financial Stability Fund. On Tuesday, the euro surged on a report from The Guardian that European policymakers may more than quadruple the EFSF from its current EUR440 billion. While numerous officials acknowledge a deal is in the works, they have vigorously diminished the prospect of a final solution exceeding EUR1 trillion. According to many analysts, that sum would fall short of the necessary resources to simultaneously shore up Greece and protect Italy and Spain, both of which are seen as increasingly vulnerable to contagion risks in the event of a Greek default or hard restructuring. "You see the outlines of a solution, but there are a tremendous number of loose threads hanging there," said Steven Englander, head of G10 strategy at Citigroup in New York. European leaders are "smelling the coffee but at some point the market will pull on them and everything will unravel," he said. In early trading, the euro flirted with levels just below $1.39 but pared those gains as traders mulled whether Europe's efforts--after so many false dawns--would provide the clarity the market desperately needed. The single currency was up 0.23%, trading near $1.3785. The dollar bought Y76.81, virtually unchanged from Tuesday's close, and the euro rose 0.20% to trade around Y105.94.

Moody's, the ratings agency, issued a warning to France last night that it could face the loss of its coveted status as one of the world's most creditworthy nations after saying the euro debt crisis and slowing world economy left the country's AAA rating under pressure. It said that while the French economy remained able to absorb normal shocks, "the government's financial strength has weakened, as it has for other euro area sovereigns, because the global financial and economic crisis." The warning will come as a shock to many in France and is likely to unnerve markets already anxious at the prospect of the euro debt crisis spreading to the US and Asia. Germany's finance minister, Wolfgang Schäuble, added to the uncertainty earlier in the day when he said detailed talks to solve the crisis were likely to go beyond a self-imposed deadline set for this weekend. He also hinted that a rescue deal will fall short of the "big bazooka" that markets believe is needed to prevent the currency club breaking up. Schäuble said a final package would not be in place until the G20 world leaders' summit in Cannes next month. His comments dismayed investors concerned that Berlin and Paris have failed to grasp the magnitude of the eurozone's debt crisis. Stock markets in London, Paris and Frankfurt fell, while in New York the Dow Jones industrial average plummeted 247 points by the close of trading. A two-month flight of cash from European banks accelerated, according to analysts, while fears grew earlier that ratings agencies were poised to downgrade French sovereign bonds, increasing the difference between France's borrowing costs and those of Germany to the highest level since 1995. Oil prices, which had steadied after recent falls, turned downwards again and the euro fell against the dollar as investors sought safe havens. David Jones, chief market strategist at IG Index, said: "German officials clearly decided that a degree of expectation management was needed, and a statement was made warning that if anyone expected a package to be in place by next Monday then they were setting themselves up for disappointment." Markets were at fever pitch after the French president, Nicolas Sarkozy, and German chancellor, Angela Merkel, said at the weekend that they would reveal a rescue plan this Sunday at a crucial European council meeting. The US treasury secretary, Tim Geithner, warned at the weekend it was crucial to agree a package of measures that would reassure markets and end 18 months of wrangling over how to deal with Greek debts. EU policymakers are due to meet this weekend in Brussels ahead of the G20 conference in Cannes on 4 November hosted by Sarkozy. The chancellor, George Osborne, said the Cannes meeting would be crucial in determining whether the global economy could maintain growth. "The biggest boost to growth across the world – and for Britain – would be a resolution to the crisis in the eurozone. Maintaining the momentum towards that will be the focus of my discussion with my international counterparts." Britain has ruled out participating directly in funding any scheme, though it is likely to become involved in a broader backstop plan put forward by the International Monetary Fund.

Fitch Ratings on Friday issued twin cuts to two of the euro zone's largest economies as it downgraded its foreign and local currency ratings on Italy and Spain. The cut on Italy—to A-plus from double-A-minus—leaves the ratings four steps down from the coveted triple-A designation. The outlook is negative. Alongside a broader debt crisis sweeping the euro zone, Fitch noted that Italy's high level of public debt and low rate of potential growth renders the regions' third-largest economy especially vulnerable to external shocks. On Tuesday, Moody's Investors Service slashed Italy's government bond ratings by three notches, citing a fragile market mood and mounting political uncertainty that could make raising debt more difficult. In a statement, the Italian government said the downgrade by Fitch was expected and "above all a reflex of an uncertain climate that is sweeping the euro zone." Pointing to Spain, Fitch lowered its foreign and local currency ratings two notches to double-A-minus from double-A-plus, pushing the ratings three steps down from triple-A. As cause for the cut, Fitch also cited an intensifying euro-zone crisis, adding that the firm expects Spain's annual economic growth to remain below 2% through 2015 and unemployment to remain high. Meanwhile, Fitch said its ratings on Portugal remain on watch for downgrade, and it intends to resolve its review in the fourth quarter, The review will look at the country's 2012 budget, risks to the banking system and its medium-term economic and fiscal prospects, among other things. Its foreign-currency rating is currently triple-B-minus, which is the lowest level of investment-grade territory.

Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks. About $75 billion was withdrawn from funds that focus on shares during the past four months, according to data compiled by Bloomberg from the Investment Company Institute, a Washington-based trade group, and EPFR Global, a research firm in Cambridge, Massachusetts. Outflows totaled $72.8 billion from October 2008 through February 2009, following Lehman’s bankruptcy, the data show. $177.7 billion has been removed during the past 30 months from mutual and exchange-traded funds that invest in U.S. shares as the benchmark gauge for American equity rallied as much as 102 percent, before falling 17.9 percent through Aug. 8. Investors pumped in $18.7 billion during the first four months of 2011, before removing about four times that amount since, according to the average of data from EPFR and ICI, the money managers’ trade group. The August estimate doesn’t include ETF data from ICI. Bond funds added $42.3 billion from the end of April through July and started posting weekly outflows last month, according to ICI. Since the bull market began, fixed-income managers have received a net $666.4 billion.

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.