European Central Bank (ECB) president Mario Draghi unveiled bigger-than-expected quantitative easing measures on Thursday but still faced a fierce fight from Germany over any policy that could mutualise debt in the eurozone.  "The combined monthly purchases of public and private sector securities will amount to €60bn euros,” said Mr Draghi at a press conference following a meeting of the ECB’s governing council.  “They are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation," he added, meaning the package will amount to at least €1.1 trillion.  Mr Draghi’s package of asset purchases, including bonds issued by national governments and EU institutions such as the European Commission, is intended to boost the eurozone’s flagging economy and to ward off the spectre of deflation.  It took a dramatic toll on the euro, which dropped to an 11-year low against the dollar at $1.14. ....A trillion euros here, a trillion euros there... Before you know where you are, you;re talking real money....And still the fantasy rolls on...that somehow things will be OK in the end with the single currency, despite individual countries having different tax and fiscal regimes, different industrial, agricultural and commercial capacity, different wage and benefits structures...the list goes on and on. We all know that the Eurocrats love the idea of a superstate, and that such arrangement is the only way a single currency can work. Unfortunately for these dreamers, there are several problems along the way - by and large voters don't want it, national governments don't wish to lose power, the countries have wide differences in social and economic outlook. Fiddling the figures to pretend that certain late entrants to the Euroclub met the necessary requirements for entry was the beginning of the end of any credibility in the project. Doubtless QE will be another nail in its coffin. Little wonder that all the big banks have dusted off their plans for a return to the mark, franc, peseta, drachma et al... So much for German law and High Court. They'll do their usual faux debate, issue more faux warnings, etc. They have nothing better to offer. They look at the Dresden marches and see the ghost of old Prussia, Most Germans would sooner join Islam. What Draghi did is completely illegal, but it saves the Union. It was wink-wink from Berlin all along. Mutti has things under control, and Germans' only fear is that Mutti will step down. Last week the Reich outlawed marches offensive to violent religions--much to the relief of most Germans. Dhragi thus saves beer, bratwurst, cars for the foreseeable future, the past remains buried--which means no more Israeli blackmail--and beyond that a German has no business thinking about. Meanwhile, the Project shrugs and drags its carcass on to the next crisis. Like the Plague, all it has to do is stay alive for its next victim.

Why is it called a prize in "economic sciences", rather than just "economics"? The other prizes are not awarded in the "chemical sciences" or the "physical sciences."

Fields of endeavour that use "science" in their titles tend to be those that get masses of people emotionally involved and in which crackpots seem to have some purchase on public opinion. These fields have "science" in their names to distinguish them from their disreputable cousins.

The term political science first became popular in the late eighteenth century to distinguish it from all the partisan tracts whose purpose was to gain votes and influence rather than pursue the truth. Astronomical science was a common term in the late nineteenth century, to distinguish it from astrology and the study of ancient myths about the constellations. Hypnotic science was also used in the nineteenth century to distinguish the scientific study of hypnotism from witchcraft or religious transcendentalism.

There was a need for such terms back then, because their crackpot counterparts held much greater sway in general discourse. Scientists had to announce themselves as scientists.

In fact, even the term chemical science enjoyed some popularity in the nineteenth century – a time when the field sought to distinguish itself from alchemy and the promotion of quack nostrums. But the need to use that term to distinguish true science from the practice of imposters was already fading by the time the Nobel prizes were launched in 1901.

Similarly, the terms astronomical science and hypnotic science mostly died out as the twentieth century progressed, perhaps because belief in the occult waned in respectable society. Yes, horoscopes still persist in popular newspapers, but they are there only for the severely scientifically challenged, or for entertainment; the idea that the stars determine our fate has lost all intellectual currency. Hence there is no longer any need for the term "astronomical science."

ECB - Troubled bank balance sheets ...

Troubled bank balance sheets had the potential to “choke the engine of recovery” in the 17-nation bloc, and “exert a more persistent drag on economic growth,” said Mr Coeuré, who sits on the executive board of the European Central Bank (ECB). Mr Coeuré said ailing banks had to be repaired or shut down. Failure to do so could result in a decade of stagnant growth in the eurozone, similar to Japan in the 1990s. He said the eurozone crisis risked creating a Japanese-style wave of “zombie banks” in which lenders, fearful of falling foul of capital rules, chose to “evergreen” - or roll over - bad loans instead of recognizing losses on their books. This had led to the “perverse” practice of banks extending credit to insolvent borrowers, rather than lend to creditworthy firms, said Mr Coeuré. Banks then “gambl[ed] on the hope that [firms] would recover or that the government would bail them out”. Mr Coeuré called on leaders to complete the steps needed to implement the eurozone’s banking union. He also said measures were needed to tackle youth unemployment...

Meanwhile, Olli Rehn, an incompetent idiot, the European commissioner for economic and monetary affairs, said the next tranche of Greece’s bail-out could be paid in installments amid growing frustration with Athens’ slow pace of reform.

“It is possible, but not certain,” Mr Rehn said on Friday. “It all depends on whether Greece can meet all requirements that they are committed to.”  A separate report by the European Commission and the ECB showed that Spain’s troubled lenders did not need further taxpayer support. The eurozone’s fourth largest economy has so far received €41.3bn to recapitalize its banks....

German politicians have been vocal in their opposition to the EU Commission's plans for a single bank resolution authority, concerned that it could override a national decision on how to deal with a struggling bank. Yesterday finance minister Wolfgang Schaeuble warned that the plans could require treaty change. I would strongly ask the commission in its proposal for a [single resolution mechanism] to be very careful, and to stick to the limited interpretation of the given treaty.  We have to stick to the given legal basis, as otherwise we risk major turbulence.  More on the plans for the so-called "single resolution mechanism" to be proposed by the EU Commission today.  If plans go ahead at the planned pace, a new agency within the European Central Bank will be in charge of the wind-down or rescue of failed banks by 2015. The eventual aim is for the ECB to draw from a common multibillion euro fund, supplied by eurozone banks. However, since it will take years to accumulate the €60bn needed for a bank resolution fund, it will be limited to overseeing national-level bank bail-outs to begin with.

 

My text may sound offensive, but such absolute opinions should be criticised strictly...

Angela Merkel has said youth unemployment is the biggest crisis facing Europe and urged other governments to do more to copy the German system – concentrating on apprenticeships and not simply academic study – to prevent the emergence of a "lost generation".

In an interview before a summit to tackle joblessness among young Europeans, the German chancellor said her country's tried and tested dual system – a mix of classroom learning and on-the-shop-floor work experience – was the best way forward at a time when almost six million under-25s in Europe are out of work.Typical Merkel, telling everyone 'you have to do it like we do in Germany'. The Chinese, Brazilian and German economies all have their own weaknesses that will surface sooner or later, they are not models for other countries.

Merkel eptiomises the smug, superior 'I 'told you so, we know better in Germany attitude' that appeals to the Bild reader but alienates everyone else. She's not capable of leading or setting an example in Germany let alone Europe. A leader withut any vision except beyond being reelected. Someone who turned down the invitation to attend Thtacher's funeral but a few weeks later found time to attend the all-German champions league final and cheered like a schoolgirl when Germany thumped Greece 4-0 in Euro 2012 shows she has no tact or diplomacy or sense of how her actions or behaviour are played out beyond her narrow constituency. She is not the leader of Europe's strongest nation we need. Unfortunately there is no one better on the horizon. Germany as a democracy is incapable of producing leaders of stature or vision....Merkel alone cannot push the solutions to youth unemployment in Europe. Other countries need to examine their own situations... How much nepotism plays a part in getting a job?
How can inter-generational mobility be improved, so that the young can look forward to better life?  How can the scam of unpaid internship be stopped?  Do the private companies have social responsibility in the period when public sector's ability is curtailed in the name of austerity?
Importantly, how can we embrace re-industrialization and leave behind the obsession with financial services sector, risk-taking with other people's money, and highly skewed wage-compensation structure? As we focus on manufacturing of surplus through production and innovation, we need to manufacture consent regarding distribution. We cannot expect to have healthy societies if we persist with the current model of production (outsourced abroad at the expense of domestic capacity) and distribution of rewards concentrated on one sector of the economy.

The Wall Street Journal flags up that weaker euro-zone governments would be able to borrow from the currency union's rescue fund, the European Stability Mechanism, to top up their own backstops. But it won't be easy: Taxpayer-funded bailouts will only be allowed under "extraordinary circumstances," when it is technically impossible to impose losses on certain creditors in a rush or when a government is worried about effects on financial stability, officials said. Such exceptions will have to be authorized by the European Commission, the EU's executive arm. Rich countries like Germany and Finland worked hard to make it as difficult as possible for poorer countries to tap the euro-zone rescue fund. Ministers agreed that the common fund could eventually be used to recapitalize failing banks directly, but only to protect depositors—not shareholders or bondholders—and if the bank's home government has run out of money. Speaking to reporters after the deal was agreed, Dutch finance minister Jeroen Dijsselbloem argued it was a significant step forward: If a bank gets in trouble we will now, throughout Europe, have one set of rules on who pays the bill," he said. "The financial sector itself will now to a very, very large extent become responsible for dealing with its own problems. Dijsselbloem had been heavily criticised a few months ago for indicating that the Cyprus bailout (which forced massive losses on some large depositors) was a template for future rescue deals. He backtracked on the comments, but this deal confirms that the Cypriot experience could be repeated across the continent. And German finance minister Wolfgang Schaeuble confirmed this point, telling reporters: They can affect German savers just as well as they can affect any other investor in the world. France's Pierre Moscovici told the press pack that Europe's bailout fund could still be used for bank rescues (after creditors have been hit). Reuters got the quotes: French Finance Minister Pierre Moscovici signalled that ministers also agreed to French demands that the euro zone's rescue fund, the European Stability Mechanism, can be used to help banks in the 17-nation currency area that run into trouble. It makes the whole thing coherent," said Moscovici. "It creates a solidity for the system and a system of solidarity.

Rubbish, it's about pretending that the Euro is still viable as a currency, and that Greece can continue to stay within in.

"Austerity" wasn't a political choice for the Greeks - just a simple statement of reality. When your economy produces almost nothing, when your country has been living on cheap borrowed money for a decade, and when the source of borrowing dries up - you can't just decide to carry on spending money that isn't there: A point that the writer of this article seems incapable of grasping....

Since Greece can not stimulate the economy with more government spending, they must encourage businesses through other means. Here's some possible ideas...

1. Go through their regulatory environment, removing any regulation whose purpose is not obvious and sound. or which favors special interests over the public interest. I have heard, for example, that transporting goods in Greece is a nightmare because of all of the restrictions. That's grit in the wheels of commerce.

2. Go through their labor code as well, asking if they've struck the right balance between worker's and employer's rights. Employers are reluctant to hire someone who's near impossible to fire.

3. Revamp their tax code, perhaps making it more favorable for business, but then make sure it's rigorously enforced.

As a topic of debate, the Greek economy certainly seems to attract more than it's share of people keen to testify to their fervent belief in the heavenly mandate of the rights of property.

And the constant attempts to blame the economic situation there on the likes of taxi drivers, barbers and waiters certainly qualifies as one of the shabbier sophistries dragged into play.

It really needs to be stressed: they get the blame for the tax gap because otherwise the light would be shone on the real tax cheats - professionals and business owners large and small, in comfortable complicity with the Greek state. And that can't be allowed because it would undermine the moral authority of everything that the Greek people are being sacrificed to protect. Taxi drivers, waiters and barbers all come across as essentially plebeian -- so blaming them fits comfortably with the received wisdom that the rightful lot of the little people is externally-imposed discipline and obeisance to their betters. ...Blaming them solves any number of issues of cognitive dissonance - if we can speak of 'cognition' when referring to the beliefs of those whose world-view doesn't stray beyond kneejerk loyalty to the status quo....Over the past few weeks, Athens' top brass have been trying to convince the world that happy days are here again. Prime minister Antonis Samaras now talks of the Greek "success story". The boss of the central bank and the finance minister say Greece has turned a corner. Editorialists in the national press and parts of the international financial press dutifully nod their assent. And those with Greek or European assets to sell clap along: "Forget Grexit – it could be Greecovery instead," ran one particularly bone-headed "research" note I received on Friday....What's at stake here is a much bigger prize than whether an economy worth 2% of Europe's annual GDP really is on the mend. It's about justifying the shock therapy imposed on distressed members of the eurozone.

This was frankly put by Maria Paola Toschi, a market strategist at JP Morgan, in the FT last week. "If Greece can present itself as a recovering economy, having taken the medicine of fiscal austerity and supply-side reform, then the reform agenda of the European Central Bank and International Monetary Fund will be given a further boost."  If the elites of Europe and Washington can claim to have "healed" Greece, then they can shrug off criticisms of eurozone austerity. And they can also defend an economic model that just three years ago looked as if it had crashed into a wall.

Yet the exhibits the boosters are using do not a case make. Athens shares doubled in the past year? Cheap money from central banks and investors desperate for returns can play funny tricks. Wages have fallen? Yes, but the business investment that was meant to follow on from that hasn't materialised. The public finances are back in some kind of order? Taking an axe to the welfare state and public services will do that; still, few think Athens could go a day outside the sovereign version of debtor's jail.

And no one is seriously disputing that the economy remains badly sick; the OECD predicts Greece will face its seventh year of recession in a row in 2014. More than one in four Greeks are out of a job; of young Greeks, nearly two in three. Around 60% of those out of work haven't been employed in more than a year. According to a recent piece by Nick Malkoutzis and Yiannis Mouzakis for Ekathimerini, there are 400,000 families in Greece without a single breadwinner.

GERMANY–Deutsche Bank said Monday it will raise €2.8 billion ($3.65 billion) in fresh capital in a dramatic about-face for the bank, which has repeatedly said it won't turn to shareholders for help boosting its capital cushion. The bank, Europe's second-largest by assets, has long faced doubts from investors and analysts about whether it has enough capital to absorb potential future losses and to meet increasingly stringent regulatory requirements. On paper, Deutsche Bank had one of the thinnest capital ratios of large European banks.  The Basel rules don't fully kick in until 2019, but banks across Europe are under pressure from regulators and investors to comply with the rules well before then. Few investors or analysts expected the bank to meet the targets in 2013.  The size of Deutsche Bank's capital hike is relatively modest compared with what some bankers, analysts and investors think it needs. Analysts previously estimated the bank needs up to €10 billion. Deutsche Bank executives have been meeting in recent weeks with senior investment bankers to sound them out about how much capital the bank would need to raise to placate investors, according to people who participated in the meetings. The bankers' response: Deutsche Bank should come up with at least €6 billion and possibly as much as €10 billion to put the capital concerns behind it, these people said. The bank's change-of-heart apparently stemmed from executives' frustration with the lack of reaction among investors to the bank's strategic changes, according to industry officials. The bank's management felt they could raise a token amount to alleviate market concerns without destroying credibility, these people said. "This is a blatant U-turn," said a senior investment banker who was involved in the talks. "It's a real climb-down for them."  The timing of the capital increase could raise questions because earlier this year, with Deutsche Bank's stock trading more than 15% above its current levels, executives insisted they had no plans to raise new capital. If they had proceeded with the share sale at the time, they could have raised more capital by selling a fewer number of shares, a preferable outcome for the bank's existing shareholders. While Deutsche Bank didn't disclose the terms of the share sale, industry officials said the deal's structure would likely involve a small number of big institutional money managers picking up the shares at a small discount to the stock's current trading price. Because the share sale is relatively small, Deutsche Bank doesn't need to go through the process of offering all existing shareholders the right to participate, a potentially costly and complex process that Deutsche executives were eager to avoid....NOW, WE ALL KNOW THAT THE fed PUMPED OVER 25 TRILLION DOLLARS IN THIS BANK IN THE PAST TWO YEARS !!! Show us the money Mrs. Merkel !!!!

Capital Economics: eurozone crisis wil flare up again this year -

Here's some analysis from Julian Jessop of Capital Economics on today's minutes from the Federal Reserve Open Market Committee meeting last month. Among other points, he predicts more alarm in the eurozone this year.The revelation (although hardly new) in the latest FOMC minutes that some members would favour at least a tapering of QE by the end of the year has refocused attention on the role that Fed buying has been playing in keeping Treasury yields low. (See US section below.)The conventional wisdom appears to be that 10-year Treasury yields are only likely to remain below 2% if the US central bank maintains its current pace of buying. In fact, the launches of successive bouts of quantitative easing have seen yields rise, rather than fall. Instead, the prospects for Treasuries depend mainly on the outlooks for short-term interest rates, inflation expectations, safe haven demand and other overseas buying, which together should keep yields low for at least another year.At first sight, it might seem obvious that the Fed’s purchases of government bonds under QE3 have been a key factor keeping their yields low, and hence that any scaling back of these purchases would inevitably see yields surge. But the reality is more complicated. Indeed, Treasury yields actually rose during most of the period when the Fed was buying government bonds during QE1 and QE2, and are higher now than when the Fed launched QE3.There are several ways in which large-scale central bank purchases of government bonds can put upward pressure on their yields. One is by raising long-term expectations for inflation. Another is by improving the prospects for the real economy and increasing the appetite for risk, thus encouraging investors to buy assets such as equities or industrial commodities rather than safe-haven government bonds. (Correspondingly, these riskier assets might be the major casualties if the Fed stops buying Treasuries, rather than Treasuries themselves.) To the extent that QE succeeds in restoring confidence, it might lead investors to revise up their expectations for the average level of short-term interest rates over the life of the bond too. The upshot is that we would not necessarily expect a sustained rise in Treasury yields even if the Fed, perhaps mindful of the implications for its balance sheet and eventual exit strategy, does scale back its purchases later in the year. These concerns may matter less for “conventional” monetary policy and high unemployment would still be likely to keep official interest rates on hold near zero. There is also now more room for inflation expectations to drop again, especially if commodity prices continue to fall.Finally, other investors might simply step up to take the Fed’s place. In particular, we expect a renewed escalation of the euro-zone crisis in the second half of the year to boost safe haven demand for Treasuries. And at the margin, the fact that the Bank of Japan will now be buying a lot more JGBs may encourage (or even force) some Japanese institutions to increase their purchases of Treasuries instead.

MILAN—Italian police early on Tuesday arrested Finmeccanica SpA FNC.MI -7.31%Chief Executive Giuseppe Orsi as part of an investigation into possible international corruption related to the 2010 sale of helicopters by the Italian aerospace company to India, according to the prosecutor in the investigation. Hours after the arrest, India's Defense Secretary Shashikant Sharma told The Wall Street Journal that the country's government had ordered its federal investigation agency to investigate the helicopter deal. The official gave no further details of the Indian investigation. Mr. Orsi has been under investigation for several months in the case, in which Italian prosecutors are looking into whether the helicopter unit of Finmeccanica paid bribes to secure the €560 million ($750 million) sale of 12 helicopters to the Indian government, according to Finmeccanica and a person close to the investigation. Mr. Orsi was chief executive of AgustaWestland, the helicopter unit, at the time. Eugenio Fusco, the prosecutor on the case, also said that Bruno Spagnolini, current head of AgustaWestland, had been placed under house arrest as part of the same probe. Mr. Spagnolini was chief operating officer of AgustaWestland in 2010. A lawyer for Mr. Orsi, who hasn't been charged in the case, wasn't immediately reachable for comment. Mr. Orsi has in the past denied any wrongdoing. In a statement, Finmeccanica expressed support for Mr. Orsi and said the company's operations would not be affected by the arrest. A spokesman for AgustaWestland had no comment, and a lawyer for Mr. Spagnolini—who hasn't been charged—wasn't reachable for comment. The arrest of Mr. Orsi—who runs a company that is majority-owned by the Italian state—comes at a politically sensitive moment, just two weeks ahead of national elections. Outgoing Prime Minister Mario Monti said the government would deal with management issues created by the arrest. "(This opens up) a problem of governance at Finmeccanica, which we will address," he said in a radio interview on Tuesday morning. Mr. Orsi has said that he would step down from his position if the Italian government, which owns 30.2% of Finmeccanica, asked him to. Finmeccanica's stock fell 8.06% to €4.37—its lowest in two months—after being suspended from trade on the opening of the Milan exchange.

Brussels- The EU agreement on banking union is "no triumph". The evidence sits hidden in plain sight in the difference between the summit text before and after yesterday's negotiations...

The summit deal on banking supervision was no triumph. It was another EU exercise in decision dodging and fudge as German procrastination won the day.

Angela Merkel wanted to postpone a new European Central Bank banking supervisor because that in turn delays decision on using the euro’s bail-out fund to recapitalise banks until after German elections.

To see the tricksy, evasive, responsibility-doging fudge – a tortuous linguistic exercise that went into the early hours of today – it is necessary to contrast before and after.

Here is the original draft that the leaders began discussing yesterday: “We need to move towards an integrated financial framework, open to the extent possible to all Member States wishing to participate. In this context, the European Council invites the legislators to proceed with work on the legislative proposals on the Single Supervisory Mechanism (SSM) as a matter of priority, with the objective of completing it by the end of the year:”

Here is the agreed summit text: "We need to move towards an integrated financial framework… In this context, the European Council invites the legislators to proceed with work on the legislative proposals on the Single Supervisory Mechanism (SSM) as a matter of priority, with the objective of agreeing on the legislative framework by 1 January 2013. Work on the operational implementation will take place in the course of 2013.”

This is no triumph. The EU has gone from a deadline to “complete” from one to “agree” with the schedule slipping from December 2012 to anytime next year. This will mean that Chancellor has deferred the issue of using the ESM to directly recapitalise banks until after elections in September 2013, significantly reversing a June summit decision.

Interviewed by the Guardian and five other European newspapers from France, Germany, Spain, Italy and Poland, Hollande also called for monthly meetings of the national leaders of the 17 eurozone countries to end the cycle of "so-called 'last-chance' summits", which he said in the past had led only to "fleeting successes".

He said domestic electoral considerations should not get in the way of solving the euro-crisis. Merkel "is very sensitive to questions of internal politics and to the demands of her parliament. I understand that, and can respect that. But we all have our own public opinion. Our common responsibility is to put Europe's interests first."

France's first socialist president for 17 years also rejected the idea that Germany was the only nation putting its hand in its pocket for everyone else.

"We're all taking part in this solidarity. The French, the Germans, just like all the Europeans in the ESM [the eurozone's new rescue fund]. Let's stop thinking that there's only one country who's going to pay for the others. That's false. However, I know the sensitivity of our German friends to the problem of supervision. Whoever pays should control, whoever pays should sanction. I agree. But budgetary union should be completed by a partial mutualisation of debts through eurobonds."

Hollande's assertion of the need for the eurozone to pool some of its debt through eurobonds challenged one of Merkel's red lines. She has repeatedly refused to countenance the proposal and there is scant chance of her shifting that position as she moves into an election year.

"We are near, very near, to an end to the eurozone crisis," said Hollande. But decisions taken at the last EU summit in June had to be implemented "as fast as possible".

What has Weimar to do with the Greece ...????? nothing !!!!

I was in Greece a few weeks ago, people are living on nothing, some people have not been paid in months, others surive on low salaries while the social welfare system is nowhere near good enough.  Greek people are being crushed, their livelihoods are being crushed, their spirit is being crushed, their country is being crushed.  If this EU is assisting in that process rather than stepping in to try and assist and find proactive ways forward then the whole damn thing should be wrapped up as a monumental failure, it simply has not performed in the way the founding fathers envisaged as it is all stick and no carrot. Debt on debt, austerity and stupid statements out of  Berlin and Brussels from mult-millionaire natzies like The Governor designated of Greece - Horst Reichenbach... who know next to nothing about deep personal and financial struggle.

What has Weimar to do with the Greeks?  Fake Left and Neo-Fascist Right keep on talking about ...Weimar.  Greece never was an imperialist power. It is almost  a banana republic. It is currently occuppied by the Troika and has a german governor. Under the Euro Greece had massive de-industrialisaion, massive importation of illegal labour. a collapse of agricultural production and an arms budget that has skyrocket beyond all proportion.  Yesterday they used riot police vans to arrest half a dockworkers demo outside the Defence Ministry, which is a crime scene, for all the financial fraud and bribery from Franco-German defence contractors.

On the other hand ... Germany went nationalist under Hitler, rearmed, got involved in civil wars in other countries and then allied itself with France, took over Europe leading to a war where 50-70 million died.
That was Weimar..."WTF" has that to do with a small banana republic on the outskirts of Europe ????  Nothing.

 

The EU is dead in the water....

The EU is dead in the water already, the Euro and Eurozone even more so. Or perhaps you think the whole mad caboodle is a roaring success, and on an ever-upwards curve? Who cares when it finally unravels - it will, by its nature, never be a success in the future, because its structure and aims are stuck in the past in a fast-changing world. UKIP were top in the EU elections, and have gained significant success in the polls ever since the last General Election, so much so that they are challenging the Limp Dicks for third place. Most Conservatives agree privately with UKIP, and significant numbers have deserted to UKIP, so much so that the Conservatives cannot possibly win the next General Election without UKIP aid or without adopting UKIP policies in a significant fashion. There's a message for you there, chum. There is a great irony here that the steps taken in order to prevent a deflationary collapse could mean there is an even greater "danger" if we do start to recover. Put simply, the debt burden of the major economies are so large that they cannot afford to pay higher rates. The central banks, have massive rate risk through the bonds they are holding. What we are trying to do is create via financial alchemy a solution to the problem that the debtors cannot pay the creditors, but a restructuring is politically impossible as well as a mortal threat to undercapitalized banks. Therefore, we hope that we can somehow flood the world with liquidity, to inflate only specific assets (property, equities) but not others (food and energy). Because this is "unnatural" we see efforts made to manipulate markets (officially sanctioned fudges of housing data, outright equity market intervention, and rumors of oil releases) so the markets just get weirder every day. The question is, whether we are happy to live in a world of extreme central planning, which seems to benefit the ultra wealthy the most or would be prefer to stop the charade, allow the markets to clear, accept the reality that we are not as rich as we thought, but move on.

The "details" of a soap bubble ...

European Central Bank president Mario Draghi is expected to announce the details of a bond-buying programme to help keep down borrowing costs of crisis-hit countries later on Thursday. Leaks suggest it will involve unlimited purchases of government debt that will be "sterilised" to assuage concerns about printing money. The bond-buying scheme is rumoured to be called the "outright monetary transactions", with a shorthand title of OMT.

 

Maturity

The life of a bond, at the end of which it will be repaid in full. A bond's maturity can be as short as a year to as long as 100 years.

Seniority

This refers to how likely you are to be repaid if a bond issuer goes bankrupt. Bondholders with seniority over others will be paid back before other bondholders. There was some concern that the ECB would demand seniority over other bondholders when it undertook the bond-buying scheme, but leaks now suggest otherwise.

Unanimity

Was the ECB governing council united in backing Thursday's decision, or was there opposition? Bundesbank head Jens Weidmann has spoken out against a bond-buying programme before – is he now onside? Was the ECB split over interest rate levels, or were the decisions unanimous? Draghi's answer to these questions (which will surely come up) could be crucial.

Pari passu

A Latin phrase meaning "equal footing". In the bond markets, this means bondholders will be treated the same if a bond issuer goes bankrupt. Any purchases the ECB makes as part of its bond-buying programme are expected to be pari passu with other bondholders.

Collateral requirements

The ECB asks banks for collateral in return for taking out cheap loans. If they relax collateral requirements, they can accept a wider range of assets as collateral from banks. They have already relaxed these requirements, and can now accept everything from bundles of car loans to mortgage-backed securities.

Conditionality

This is the way the ECB would keep the Germans happy, by imposing conditions on receiving assistance from the ECB; so, if the ECB helps keep a country's borrowing costs low by buying up its bonds, that country may have to agree to some strict austerity. Without conditionality it would be easier for the ECB to unilaterally intervene.

Convertibility risk

This refers to the risk that you will buy bonds denominated in euros but could ultimately be paid back in lire or drachma (or deutschmarks) if the country taking out the debt leaves the eurozone before the end of the bond's life.

Unlimited intervention

Exactly what it says on the tin. Expectations are that the ECB will not put a limit on its bond buying. This is seen to be an improvement on the previous bond-buying programme, which was limited in size and therefore lacked credibility in the markets. If other traders do not believe the ECB has the firepower (or inclination) to buy enough bonds to bring down yields, they may continue to bet on them rising.

Sterilisation

This makes sure the money supply does not increase as a result of the bond-buying programme. When the ECB buys bonds, it is injecting liquidity into the financial system, effectively creating new money. To counteract that, the ECB has in the past followed bond purchases by subsequently draining an equal amount of liquidity from the system. It does this at the weekly deposit tender by increasing the rates it will pay commercial banks to deposit money with the ECB. The idea is that this will encourage banks to deposit more money with the ECB, thereby taking it out of the system.

Yield cap

Rumour had it that the ECB would set a yield cap on certain countries' government bonds. This would mean if the yield looked like it would break through that level, the ECB would start buying bonds to push prices higher and bring yields back down.

Germany and France are heading towards financial problems, but as yet these are not as serious as the problems in Italy, Spain, Portugal, not forgetting Eire, and of course Greece, along with a few others. At the behest of the EU, but mainly Merkel pretty well every country in the euro zone have been forced to apply austerity measures, shed jobs, and make things so tight that many businesses have closed down. Add to this that in almost every euro zone country personnel, and business taxes have risen dramatically, along with ever increasing fuel bills. Not surprisingly the this means that the working public, assuming people still have a job, just do not have the money to buy in some cases not even basic food, and certainly not new cars, TV’s, fridges etc., etc. When you drive most Europeans down to near poverty levels there is no way they will spend. Even the pensioners, who had money to invest, can now only get a meager return on investments, because of the very low interest rates. Against this background it is not surprising that sales of both products and services are in serious decline. For me the question is, why did we get to this state of affairs? The answer is to try and keep the euro alive. For me this is the root problem all across Europe. If you look at Europe as a whole we have many different and divergent economy bases, some based on manufacturing, and some based on tourism, with many others. To expect each and every one of these very different economy bases to be able to hold the value of the euro to within such very tight limits is just not practical. To turn their economies round, what most of Europe needs is not increased borrowing leading to unsustainable debt, but growth and increased tax revenue, and this can only comes from creating a climate of stimulating higher employment levels, and investment in business by lower taxes, on both people and business. Most of the euro zone countries need to devalue their currency to create this climate for growth, but the single currency prevents this, which leads to the inevitable conclusion that the euro is in fact a dead duck.

Well, it seems almost every analyst accepts that Greece right now is truly "on the edge" and that anything could happen, as it has before. Many people in Greece appear to be concerned about SYRIZA because it isn't actually one democratic political party but rather a coalition of SYN, AKOA, DEA, KEDA, "Active Citizens", and a number of other assorted independent left-wing groups and activists. Most of these groups have had no political experience and a history of squabbling amongst each other and voters in Greece are concerned that if SYRIZA is given power it will then enter into extremely treacherous and difficult times as the leading force in the government and it may not have the strength and unity required to simply stay together. In other words, if any party is likely to fall apart under the pressure and stress it's SYRIZA. For all the bold things that Tsipras did and said last week, he also demonstrated some political naivety. I also note that quite a lot of ordinary people in Greece are now saying that it's time to stop punishing ND & PASOK, that they've been given a good shock, but that it's now time to put together a government that actually has some experience of successful business and government. Personally, I would like to think that SYRIZA will win the election and will successfully guide Greece through the turbulence, saying "No!" to all of the transnationals that have previously been allowed to plunder the country and addict the Greek people to excessive consumerism. But like most Greeks all I can have is hope. I see that the other parties are now fighting very hard to win on June 17. Samaras made me snort yesterday when he declared, trying to take the ground from under SYRIZA, rather like an angry schoolboy, that he was the first person to object to the memorandum. And Venizelos has been doing a lot of angry shouting of late. The other possibility of course is that if Greeks in Greece keep draining the banks of cash as they have been, then the banks may run dry well before June 17. It's May 18 today and a month is a long time in Greece these days. If the money does run out at the banks, some people will survive on the money they have stashed under the mattress, but a lot of others simply won't have any money at all and that could spell trouble on the streets. And the tanks COULD roll in. It's an extraordinary situation. 80% of Greeks want to stay in the Eurozone but between 30 and 40% currently support the party that has said it could quite easily tell Brussels that the bailout agreements are "null and void"....I think the most dangerous outcome of all this is in fact Greece NOT leaving. Although departure will be hard for Greece, the massive over-valuation of the economy does in one way or another have to happen. If Greece is bankrolled to stay in, the danger is that countries like Spain and Italy will then believe that they too can be bailed out. The problem is that the EU (i.e. Germany) can afford to bail out Greece but it cannot afford to do this for either Spain or Italy. Also, the price of Greek exit is manageable, perhaps more so than the price of a full bailout.  If Greece is forced out and restructures, this should hopefully focus minds in Madrid and Rome. They will realise that they MUST take serious and painful steps to correct their own failures and mispricing.... It of course comes down to Germany, and really Angela Merkel's electoral calculation. Germany can save the Euro, but only by cutting Greece loose. If it insists on bailing Greece out, the Euro is doomed to failure and with it, probably, the EU as we know it.

S&P said this money crunch is likely to only be the start of a wider credit crisis as national austerity programmes and sovereign debt fears combine to put "refinancing needs in jeopardy". On Thursday, the Dutch central bank said it thought Europe was on the brink of a "lost decade" of low economic growth as the region struggles to get its finances in order. Against this backdrop, eurozone and British companies will have to have to deal with managing the £7.1 trillion debt pile they have accumulated, equivalent roughly to 80pc of the region's economy. The vast majority of the debt to which S&P refers is standby lines of credit to Britain's largest companies. The FTSE is not over-geared, companies haven't borrowed outside their means and there is no great "wall" coming. Corporates have been feverishly hoarding cash and de-levering over the last 3 years in full expectation of another recession....Most of the debt facilities will simply be rolled by existing lenders at or before maturity as they always do, probably at higher margins. The problem here is that some of the lenders who are looking to reduce their balance sheets will find it harder to support smaller businesses (and by that I mean FTSE250 companies, not SMEs) at the stupidly low margins that they are currently charged. Pricing will therefore go up in order to compensate for the increased capital requirements which the regulators have rightly imposed on the banking sector. A few will really struggle and they might need external support.....A little less headline grabbing and a few more facts might actually bring some reasoned argument.

I say....

I've been scriblling about the super amounts of money that European taxpayers have been paying out every year in interest payments to the banking sector - €5.6 trillion since 1995. This has to be one of the longest running extortion rackets in history. Remember that the banks lend money to governments that they don't actually have - they use the magic conjuring trick of fractional reserve banking to create the "money" out of thin air. They then charge taxpayers interest despite the fact that lending to governments must surely be one of the safest bets around....The figures for long-term interest rates in the European Union can all be found on the ECB's website. If you click here, you can see the figures for the last year or so. But I've just discovered that you can easily generate graphs showing the interest rates for all EU countries since as long ago as 1993. First, here is the official ECB graph showing interest rate variations for the 17 Eurozone countries.
Intringuingly, there was a moment back in 2007-2008 when all the countries were paying the same rate of roughly 4% - it was a good time to be in the Eurozone. But since then, the rates have gone all over the place with Greece, Portutal and Ireland being forced to pay extortionate rates - so high that they might as well pay using a credit card. Some countries, such as Germany have done very well since their rates are now down below 2%. This gives them a fantastic competitive advantage. Could that explain why they are so keen on maintaining the status quo?

As the Euro dies, the Power grab accelerates...we're waiting...

As the Euro dies, the Power grab accelerates

"The issue referred to by Vanessa of the "opt out before 2014 of the EU legislation on laws such as the European Arrest Warrant etc. " is absolutely crucial. These provisions bring Justice and Home Affairs into the EU's purview.

We must never forget that whoever controls JHA controls the power of using physical force on the bodies of the citizens of a country - it is the heart of state power. If we fail to opt out, then, as I understand it, under Lisbon Brussels can use QMV to bring in Corpus Juris, providing for a European Public Prosecutor with the terrifying powers of arbitrary incarceration IN BRITAIN that such figures have always enjoyed on the continent, and the lethally-armed European Gendarmerie Force paramilitary riot-batallions to make sure that his wishes are obeyed.

The EGF is controlled directly from Brussels, so once they have their boots and their weaponry on our soil we will be virtually under military occupation, and our Parliament will be impotent to stop them. For if Parliament then repeals the ECA72 and orders them to leave, they will disregard Parliament's order, and will seek to enforce the order of the ECJ that will (obviously) rule that our Parliament's Act of repeal is invalid. The EGF might even be ordered by the ECJ to arrest the MPs who voted for the repeal. In which case they would certainly carry out the order. "Newly revealed German government documents reveal that many in Helmut Kohl's Chancellery had deep doubts about a European common currency when it was introduced in 1998. First and foremost, experts pointed to Italy as being the euro's weak link. The early shortcomings have yet to be corrected.It was shortly before his departure to Brussels when the chancellor was overpowered by the sheer magnitude of the moment. Helmut Kohl said that the "weight of history" would become palpable on that weekend; the resolution to establish the monetary union, he said, was a reason for "joyful celebration." ...Soon afterwards, on May 2, 1998, Kohl and his counterparts reached a momentous decision. Eleven countries were to become part of the new European currency, including Germany, France, the Benelux countries -- and Italy. ....14 years later, the weight of history has indeed become extraordinary. But no one is in the mood to celebrate anymore. In fact, the mood was downright somber when current Chancellor Angela Merkel met with her Italian counterpart Mario Monti in Rome six weeks ago. Even as the markets were already prematurely celebrating the end of the euro crisis, the chancellor warned: "Europe hasn't turned the corner yet." She also noted that new challenges would constantly emerge in the coming years. Her host conceded that his country had not even overcome the most critical phase yet, and that the fight to save the currency remained an "ongoing challenge." It didn't take long for the two leaders' concerns to prove justified. The Spanish economy has continued its decline, interest rates for southern European government bonds are rising once again, and election results in both France and Greece have shown that citizens are tired of austerity programs. In short, no one can be certain that the monetary union will survive in the long term....Many of the euro's problems can be traced to its birth defects. For political reasons, countries were included that weren't ready at the time. Furthermore, a common currency cannot survive on the long term if it is not backed by a political union. Even as the euro was being born, many experts warned that currency union members didn't belong together....It didn't take long for the two leaders' concerns to prove justified. The Spanish economy has continued its decline, interest rates for southern European government bonds are rising once again, and election results in both France and Greece have shown that citizens are tired of austerity programs. In short, no one can be certain that the monetary union will survive in the long term....With all of the moaning in Greece from the populace about how onerous are the terms that are being imposed on them, I have yet to hear one single suggestion of a solution to the problem. In case the folks in Greece haven't noticed, their current level of public expenditure is completely unsustainable. Who do they think is going to pay for their largesse? It's a simple fact that the Greek economy cannot generate the wealth necessary to support the massive, bloated state (not like anywhere near enough people pay the taxes required for it anyway...) and all of its waste. So, Greece: what's the solution? How are you going to pay? It's your mess: you got yourselves into it, you get yourselves out of it. Enough moaning. Some solutions, please - or we're going to find solutions for you, and no vote in the world will help you escape these.....We're waiting...