The proposed creation of a single euro-zone bank supervisor is shaping up to be a test of the willingness of countries to give up national powers for the sake of the euro. Though still in its infancy, the effort—which envisions a key role for the European Central Bank in supervising the bloc's largest and most internationally active banks—faces hurdles as officials try to streamline a patchwork of regulators and supervisors numbering in the dozens. German central bank officials are reluctant to add another responsibility to the ECB that might weaken its anti-inflation vigilance. French bank executives worry that a Europe-wide supervisor wouldn't take into account the unique ownership structure of some banks. Behind a painted fence, the new European Central Bank building rises in Frankfurt. A banking supervision plan sees a key role for the ECB. "It will be a test case, so they'd better pass the test, otherwise it would put euro area in danger," says Daniel Gros, head of the Center for European Policy Studies, a think tank in Brussels. German Chancellor Angela Merkel has made the creation of a new euro-zone banking supervisor under the aegis of the ECB a precondition for agreeing to let Europe's bailout fund re capitalize banks directly, rather than indirectly via loans to national governments. Such a European financial backstop for banks would alleviate pressure on countries with banking crises, such as Spain and Ireland, and would correct one of the omissions in the design of the euro that economists say has made the currency union unstable. Creating a single supervisor would require countries to give up some of their sovereignty over how their banks are regulated.

Handful....

"Drachma" is an ancient Greek currency unit and translates as a "handful", which is a lot less than what Greece will need to pay off all its debts.

For two years, everyone has been asking what would happen if Greece left the euro and went back to the drachma. Now that time may be upon us. ... With Greece unable to devalue its currency, the country is hobbled with crippling debt payments it cannot afford. Even though it has cut its debt in half, Greece has been subject to much social unrest as five years of recession and bailout-imposed spending cuts have bitten hard.

Last week, a majority of Greeks voted for parties that want to rip up the country's bailout agreement with the European Union and International Monetary Fund (IMF) - including neo-Nazis.

The biggest winner was the leftist anti-bailout coalition, Syriza, whose share of the vote more than tripled and who describe the austerity imposed by the bailout as "barbaric".

Syriza is among those holding talks about forming a government, one that rejects policies of austerity, and if it comes to pass, a Syriza-led government will definitely not adhere to the terms of the bailout.....So how would Greece leave the euro?

No big announcement

In reality, the new prime minister probably will not announce it on TV one day, between broadcasts of the lottery and the football.

The new government will want to renegotiate some parts of the bailout, but if that doesn't happen, then Greece could simply stop paying its debt.

That would be a euro default.  Actually, a second, as Greece technically defaulted on its debts when it renegotiated a 50% write-off of its debts with its creditors earlier this year....And that would put the ball back in Brussels' court

As the Eurocrats toy with “Grexit”, Spain is trying to plug holes in regional budgets

If the World goes into a nose dive there will still be top dog countries or safer heavens. The time to worry is when people start to starve then civil war breaks out. AS long as they can keep bellies full then civil unrest will be held at bay.

Back in the 1970s, the eurozone economies, then among the most dynamic on earth, generated 20pc of global growth. Over the past decade, this growth share has fallen to 5pc. Yet the single currency area still accounts for more than a fifth of the global economy. More fundamentally, the region’s banking sector is so distressed, and many of its governments so close to insolvency, that “eurogeddon” could spark a worldwide shockwave every bit as damaging as Lehman. And this time, of course, there is far less scope for fiscal and monetary bail-outs – not only in Europe, but in the US and elsewhere, too. Of course, the UK, already in recession and reliant on the eurozone to buy more than half its exports, is among the most seriously exposed. In May, Britain’s manufacturing PMI index nosedive to 45.9, the weakest reading since May 2009, down from 50.2 the month before. This marked the second biggest one-month drop in 20 years. Global markets are clearly skittish. The only thing that has stopped asset prices falling further, perhaps, is the belief that escalating market turmoil could push central banks into action – not just the ECB, but the Bank of England and Federal Reserve, too. That’s why gold prices are firming up once again. It’s also why the dollar index, typically inversely correlated with investor risk appetite, has lately shown signs of reversal.... - Well, the week past, brought worrying signs, though, that while the eurozone’s woes are not easing, ongoing concerns about monetary union are now having an impact on alternative growth centers, too, imposing real damage on commercial activity in other parts of the globe.....There is no talk of firewalls, or of simply letting Spain go, or of the European banking system being re-capitalised to compensate for the losses that it would suffer. Nope. This is it. The cancer has now spread to the vital organs of the EU. Spain is not a peripheral Mediterranean country. It is not an insignificant player in the political project. It is not a marginal going-along-for-the-ride-and-the-free-money passenger on the euro train. Not only is its economy so large as to be indispensable, but its ties with Italy mean that the Italian economy (which is the third largest in the EU) would be fatally compromised by its fall. “Itexit” is almost unpronounceable, so perhaps it’s fortunate that it will never be required: after Spexit, there would be nothing left to exit from.

The eurozone is confronted with the prospect of "financial disintegration"

José Manuel Barroso began his press conference to outline today's report on the European economy (see 12.03pm onwards) by expressing sympathy to the victims of yesterday's earthquake in Italy. Moving to economic issues, Barroso argued that Europe is moving in the right direction on public finances, and also moving towards "greater integration in the euro area". Barroso stuck to broad-brush issues (I think Olli Rehn will do the detail shortly), insisting that the euro had delivered benefits, and wasn't the cause of this crisis – on the grounds that countries who aren't in the euro have also been caught up in the financial turmoil. The key message within the 1,000 pages of reports issued by the European Commission is that the eurozone risks imploding unless it uses the tools at its disposal to calm the crisis.

From Brussels, reports: The eurozone is confronted with the prospect of "financial disintegration" and should use its new bailout fund to overcapitalize distressed banks directly while embarking on a transnational banking union, the European commission said today. Delivering more than 1,000 pages of diagnosis and policy prescriptions on the dire condition of the European economy and how to try to end almost three years of euro crisis, the commission also talked up the merits of eurobonds or pooling of eurozone debt, a proposal gaining in traction but strongly resisted for now by the biggest economy, Germany.

So, as a good socialist I transfer the debt to the average Joe

The vast majority of the EU states are socialist, so I believe, the main aim of socialism is to transfer wealth from those that have to those that have not to make it a fairer society.--- So as a good socialist I transfer the debt to the average Joe tax payer to protect the wealth of shareholders, bondholders and depositors. So Joe tax payer gets poorer and the rich get richer.---So I am a capitalist, I believe in a free market....Joe tax payer is protected for small amounts by the government i.e. all taxpayers. Its just insurance really Joe taxpayer has already paid for with his taxes. The bank goes bust free market forces. The shareholders, bondholders and wealthy depositors get stuffed. Wealth redistribution at a stroke with out the need for expensive tax collection and redistribution....I am sure all the educated people will tell me were I am going wrong....The wealthy by winning the competition have power to circumvent the market forces. So no pure market exists or is possible, and if ever it happened it would destroy itself in monopoly. It is even doing a good job of this at the moment without this 'purity'....Question - rhetoric : With so much continuing financial doom and gloom around Europe, the Euro and Spanish banks why have European stock markets followed far East markets and risen by more than 1% on opening this morning?. Is there something happening out there in the 'markets' that only a select few are aware of?... The ECB has  let the broader M3 money supply contract for the whole eurozone late last year, badly breaching its own 4.5pc growth target. This was not purist hard-money discipline. Let us not dress it up with the bunting of ideology, or false authority. It was incompetence, on a par with the errors of 1931.

Spain’s Bankia fiasco has merely brought matters to head, though the details are shocking enough. A €4bn bail-out in mid-May. A €23bn bail-out two weeks later. You couldn’t make it up.

G8 - David Cameron has issued an ultimatum to the Greek people to accept austerity or leave the eurozone. The UK Prime Minister insisted failure to provide clarity could prove disastrous for the world economy, and told the Greek people that fresh elections must decide once and for all whether the country stays in the eurozone. The message came as his Cabinet colleague Ken Clarke said the European banking system was already "in tatters". Mr Clarke warned that Britain was "heavily exposed" to potential problems and could be among the next targets for market speculation. Deputy Prime Minister Nick Clegg also criticized the lack of leadership on the eurozone crisis, raising fears of a rise in extremism and civil unrest unless it was addressed. Mr Cameron, in America for back-to-back G8 and Nato summits, said talks with fellow world leaders had "crystallized" the problems.... Justice Secretary Mr Clarke, a former chancellor, said Greek voters had to "face up to reality". "These are hardships inflicted on them by the irresponsibility of their former politicians," he said. "But they cannot just vote for saying, 'could people just carry on giving us some money so we do not have to change anything'." Mr Clarke said the consequences would be "serious" if the Greek people elected "cranky extremists" and defaulted on their debts as a result. "No-one knows exactly what will happen in the rest of Europe. But the banking system is in tatters, it is weak in very many places," he went on. "We don't know what the knock on effects would be, they could be very serious and of course people will start barking at the door of Portugal, Ireland, Italy and here in Britain. "Our banks are heavily exposed to some of these countries, we have overcapitalized them so far... "I obviously hope the Greeks will vote responsibly and that we can avoid turmoil."

Why do we even write about the EU and its politicians any more?---The truth has been laid bare so many times already. The political class in Europe are not worthy of electoral support, and have decided they don't need a popular mandate to rule. The Eu politicos are interested only in themselves and will destroy nations to maintain their troughing habits. The Euro was a financial concept designed by EU politicians to control their own national governments. It has worked so well, there are now ungovernable nation states in Europe just waiting for Brussels to step into the political vacuum so created. This was always going to be the outcome, the fear recently injected into the "Project" is that it will destroy not only European nations who have already lost their sovereignty but the knock on effect will be so severe around the world that even non Euro nations are getting involved in the debate. The Bilderbergers and New World Order prime movers, didn't predict the latest financial rupture in their megalomaniacal plans. Why don't these "world leader" just read and learn from history?...Did the world leaders really expect to carry forever their Ponzi scheme of paying the debt with more debt, and borrowing more every time, using the borrowed money to pay interest? Why is everyone surprised that this scheme is finally collapsing? When will the politicians and the economists understand that development of a nation is not measured by how many shirts they can change a day, or how many hairdressers are there, or how many holidays people have, but by the nation's capacity for innovation and technological progress? Germans understand this perfectly; engineers are regarded as Gods there. The PIGS (I for Italy, not Ireland) don't, nor does the GB - there civil servants have the God-like salaries and pensions, for not very much and not very professional work that many of them are doing (I shall avoid sweeping generalizations here, as no doubt there are professional hard-working civil servants somewhere, but they are hard to see for some reason)....It looks like politicians and financiers are still looking for quick fixes to prolong the Ponzi scheme for a little longer. If only ECB could lend more. If only Germans shared their wealth. The markets could indeed be persuaded - again - that all is well - but no Ponzi is sustainable in the long term. Merkel is insisting on structural reforms - why no-one has ever argued this point, asking her what structural reforms Germany would be willing to finance? Maybe offer engineering expertise? Pure annonymous GDP figures is all that commentators are fixated on these days.
I do not understand how smart people expect to boil down complex socio-economic issues down to a single financial aspect... I seem to remember that "They" called Mario Monti a 'gentleman' and I begged to differ. His position and that of his ministers is that of puppets in the hands of the real powers in Italy: the delinquent misterial burocracy. 100 billion euros are owed in terms of unpaid invoices (70%) and tax reimbursements (30%) to small and medium sized companies, by the Italian government. Giving rise to countless banruptcies and suicides primarily caused by tax demands in some cases illegal. Yet, italians are painted as inveterate tax evaders, where tax evasion is in fact justified in terms of shear survival, your family's welfare comes before anything and anyone else, the reality is that the italian treasury collects exactly the same amount of money as the german treasury. For every 100 euros of net wages 120 euros are paid in taxes and contributions. In order to qualify for Euro entry Mr Ciampi fiddled the sale of italy's gold reserves which in fact were never sold to balance Italy's books, with the full knowledge of the German embassy in Rome and Mr Kohl. The italian end of this fraud were Mr Ciampi, Mr Romano Prodi, Mr Giuliano Amato who actually raided millions of bank accounts to collect 60 billion old liras (30 billion euros) once again to fiddle the balance sheet for euro entry. Italy's Financial and Political establishment which of course includes the likes of Mr Mario Draghi, Mr Tremonti and Mario Monti are well versed cynical experts of managing Italy's debt and euro entry was always comceived as a permanent expedient to off load the debt to the Germans.Seems that the expedient won't be that permanent, indeed it will turn out to be very temporary. These people I have mentioned should be standing in a dock with their Greek and German counterparts, yet the italians at least enjoy incomes of thousands of euros per month paid with the toil and I am sad to say the blood of good honest and brilliant italian working citizens.

Joseph Daul, Chairman of the EPP Group - Daul, took note of the election of Francois Hollande to the Presidency of the French Republic, and said he hoped that France continues to meet its European commitments, including the Fiscal Pact Treaty. The Chairman of the main European Parliamentary Group (center-right) congratulated the outgoing President, Nicolas Sarkozy, for his remarkable commitment to Europe, including during the French Presidency of the Union and in managing the debt crisis. "Nicolas Sarkozy has, in close collaboration with German Chancellor Angela Merkel, and with all the European partners, taken the measures required to address national public finances and restore confidence in the ability of Europe to emerge of the crisis. He also had the courage, domestically, to make fundamental reforms in the areas of pensions and higher education, among others. These reforms will serve his country well". Joseph Daul believes that the essential growth policy which must be implemented alongside the policy of sound management of public finances, should not result in additional spending as "we no longer have the means."

IN  GERMANY...(THE IVth Reich) : The governing Christian Democrats and the opposition Social Democrats (SPD) are neck-and-neck in opinion polls. The CDU and its struggling coalition partner, the Free Democrats, look set to lose their majority in the state legislature.But the SPD and the Greens could also struggle to muster a majority. The vote comes ahead of another vital electoral test for Mrs Merkel - elections in Germany's most populous state, North-Rhine Westphali....The collapse of the liberal FDP in recent opinion polls could deprive Mrs Merkel of her coalition partner in federal elections due in 2013. The party has now lost all its seats in five state legislatures. The vote in Schleswig-Holstein is seen as hinging on whether the Free Democrats can achieve the minimum 5% of the vote needed to gain representation. In the latest state election, in Saarland in March, the FDP only won 2% of the vote. Early polling in Schleswig-Holstein indicated the FDP would fail to reach 5%....But the latest surveys suggest they could just scrape in.

Another deciding factor could be the performance of the new Pirate Party, which looks likely to win seats in the state parliament....The party, which campaigns on "digital rights" issues, has already pulled off a string of surprise state election successes, winning seats in Saarland, as well as in Berlin last year.

However, a party representing the state's small Danish-speaking minority, which has guaranteed representation, could also help the SPD and the Greens to form a government.

Joseph Daul, Chairman of the EPP Group, welcomed the decision of the Greek people to entrust Nea Demokratia with the most votes in today's elections. The Chairman of the EPP Group said: "Greece is an indispensable and undeniable part of Europe. We recognise there will be difficulties in creating a new government in Greece, according to election results so far. However we wish the Chairman of Nea Demokratia Antonis Samaras success in the difficult negotiations to form a coalition government and we support all of his efforts towards guaranteeing the European course of the country and bringing it back on the path of economic recovery and growth."

An eerie calm seems to have settled across global markets in the lead up to today's decision on a Greek bond swap .

The ECB left interest rates unchanged at 1% as it published new forecasts underlining the impact of the sovereign debt crisis on activity in the 17 countries that use the single currency. While the bank's president, Mario Draghi, said a deal was "very close", his economic staff said they now expected eurozone growth this year of between -0.5% and 0.3% (down from a previous forecast of between -0.4% and 1%). In 2013, they forecast growth of between 0% and 2.2% (down from between 0.3% and 2.3%) On inflation, the ECB expects the consumer price index to be between 2.1% and 2.7% (from 1.5% to 2.5%). Analysts said that the pick-up in inflation ruled out any further cuts in the cost of borrowing for the time being. Matters will come to a head soon. The IMF must decide by September whether Portugal needs more money and debt relief. If Portugal now spirals into a Grecian vortex, large haircuts loom. This time EU leaders will have to accept that their own taxpayers will suffer losses - avoided until now - or violate their pledge. Bondholders are not waiting to learn whether Europe will keep its word this time. There has been no rally in Portuguese debt since the ECB flooded banks with €1 trillion. Ten-year yields are stuck at 13.2pc. Return to market access is a distant dream. The risk for Europe is that investors will charge a "political risk" premium to invest in any EMU country subject to EU legal whim. The greater risk is that Euroland's crisis rumbles on as fiscal contraction in Italy and Spain plays havoc with debt dynamics, and reforms come much to late to close the North-South trade gap. Europe's handling of Greece has guaranteed that global funds will rush for Club Med exits at the first sign of trouble. The next spasm of the debt crisis will that much dangerous if it ever comes. As the saying goes: Hell hath no fury like an abused bondholder. More than 75% of private-sector creditors have pledged to take part in Greece's €200 billion ($262.98 billion) debt swap, an official said.

A financial transaction tax would have a positive impact on growth and jobs -- My latest opinion ON GREECE

The introduction of a financial transaction tax in Europe could benefit the European economy and raise the level of growth, according to a study written by two prominent economists, Professors Stephany Griffith-Jones and Avinash Persaud....The study was presented today in Brussels during a press conference chaired by S&D Euro MP Anni Podimata who will draft the European Parliament's report on the Commission's proposal. Mrs Podimata welcomed the study and said: "This study confirms what we have been saying all along. The financial markets have to make a fair contribution to the crisis they provoked. "An FTT will reduce the fragmentation of the internal market. Put together with other tools, it will act as a disincentive to high frequency trading and other practices which increase risk without ensuring liquidity. "This would contribute to a better financing of the real economy, encourage investment and job creation in the EU. "The S&D Group is against putting the entire burden on ordinary taxpayers, and calls for measures to boost growth. In this sense, an FTT is an integral part of this approach". Professor Stephany Griffith-Jones confirmed the benefits of an FTT. Among them, she said: "The Commission has calculated that it would only have a -0.2% effect on growth. It takes into account the fact that a very small part of investment by credit companies would actually be taxed and that high frequency trading would be decreased. "But, in our study, we argue that an FTT would also contribute to reduce the risk of a future crisis. When this is taken into account, you obtain a positive effect on growth of about a quarter of a percent". Professor Stephany Griffith-Jones rejected the argument that the tax would not be feasible because of fraud: "In the past, the same was said about income tax, which is indeed avoided but which still raises a lot of money", she said.

My latest opinion ON GREECE AND THE E.U.---The only way to save Greece is to expel it from the E.U and the Euro. The only way to save Europe ,is to dissolve the E.U and abandon the Euro. The E.U has been responsible for imposing the iniquitous Climate Change furphy on the ecomomies of Europe. This bizarre and truly vicious religon has smashed the global economy. ... It has acted as a wrecking ball on the financial infrastructure of all those regions witless enough to adopt it. It has driven up energy costs ,leading to the closure of businesses everywhere ,rising unemployment and excessive hardship and death by hypothermia for the elderly and the needy. It has distorted the functioning of economies everywhere by rewarding failed inefficient, primitive energy suppliers and distributors,whilst penalising those who provide cheap and reliable energy. It has rewarded rentseekers and carpet baggers ,at the expense of those who actually do an honest day's work....Ditch the insane climate change policies of the E.U and save the global economy.

The EU Comission blocks the merger between Deutsche Börse and NYSE Euronext

The EU Comission blocks the merger between Deutsche Börse and NYSE Euronext -- The EU regulator voted against the plan of Deutsche Börse and of NYSE Euronext to create the largest stock market in the world, after concluding that the merger would hurt competition, Bloomberg reports. The deal would have led to a "quasi-monopoly" of derivatives traded on the European market, the European Commission announced yesterday, and it went on to say: "Any return on this deal would not be enough to counter the damage caused to consumers following the merger". The E.U. blocked the merger amid fears that the resulting entity - which would lead to more than 90% of the derivatives market in Europe - would make competition far too difficult for new players, according to the Chicago Tribune. The U.S. regulators approved the merger in December, on the condition that the two companies would sell a minor asset. Following yesterday's decision, both companies said that they are now focusing on singular strategies and are negotiating the halting of the deal. The NYSE said it would resume its 550 million dollars stock buyback program, once it reports its earnings on February 10th and the merger agreement is officially canceled. Deutsche Börse will publish its financial results on February 13th.

What a JOKE ...to cry about ...

" The Head-Master" hahahaha- Herman Van Rompuy, "via Twitter", lets us know that the eurozone leaders have agreed a statement on jobs and growth. Hopefully they'll be on to the small matter of fiscal compact now...The statement talks a lot about unemployment - pointing out that 23m people across Europe are now out of work. Here are some of the measures put forward to tackle that huge figure:
• Increasing "substantially" apprenticeships/traineeships to tackle unemployment.
• Redirection of EU funds to states with high unemployment.
• Using ESF to support apprenticeship schemes and support entrepreneurs.
• Enhancing cross-border labour mobility, mutual recognition of professional qualifications.

WHO ARE THESE IDIOTS RUNING EUROPE ???

Now, about Greece - Is Greece insolvent? -- Yes....Can Greece get back to solvency in the Euro -- No ...Will Greece in years to come still require additional funds in bailouts -- YesSo what will happen, my guess is that todays meeting behind closed doors will be 'how can the EU stitch up the taxpayer yet again to find ways of transfering their money via Greece to the zombie German and French banks without them getting too angry about it'. So Greece will not be allowed to go bankrupt, even though in truth it is. What will come out of this summit for public consumption. A load of old bollox about fiscal compact, moving together and various other rubbish which doesn't address the core of the problem. Telegraph this morning, explained it very clearly to those who don't follow economics of why the Euro is such a bad idea. In the old days recessions were deeper and shorter. People that had taken on too much debt went bankrupt and people that had made too many bad loans went to the wall. The system, cleansed of excessive debt, could then move forwards and grow again. The weaker and more foolish players had been removed and the capitalist, evolutionary system saw the survival of the fittest. In 2008, the greedy and foolish Wall Street investment banks should have been consigned to the dustbin of history. When one institution (Lehman Brothers) went under, the cascading, domino effect nearly took the whole system down. It was quickly realised that no one else could go under and everyone else had to be bailed out. Greece is a small country, but it is still a lot bigger than Lehman brothers and a disorderly default will be catastrophic. Some European banks will go down and the domino effect will start. Unbelievably, one of the FED’s functions was to ensure banks don’t get too interconnected as they were prior to the Thirties depression. Unfortunately, Alan Greenspan and Robert Rubin (Goldman Sachs’ alumni) persuaded the FED that they shouldn’t regulate derivative trading and the FED agreed. The banks set up an un-regulated market in derivatives of ten times global GDP that inter-connected the banks and now no one can fail. The Euro-zone is “too big to fail”; Greece is “too big to fail” and any bank of any reasonable size is “too big to fail”. As no one can fail, there is no way of ridding the system of excessive debts. I think we are in for a very long, rough and bumpy ride. P.S. The shadow banking system, after an initial contraction after 2008, is now larger than it was before the 2008 crisis. The shadow banking system is where the banks keep all their un-regulated and off balance sheet trades, such as derivatives, and this is how they set up a spiders web of global inter-connection out of the view of any regulators. The banks are now even more inter-connected than they were in 2008.God help us all, the lunatics have taken over the asylum. Let's just put that stupid myth to bed that Greece "broke" any rules. All the rules were broken by almost every Eurozone member since its founding. This is all about the politics & has almost nothing to do with the economics. If it was about the economics it would have been over a while ago..

S&P delivers it's verdict on the European Central Bank's long-term refinancing operation

Standard & Poor's Ratings Services today lowered the 'AAA' long-term issuer credit rating on the European Financial Stability Facility (EFSF) to 'AA+' from 'AAA' and affirmed the short-term issuer credit rating at 'A-1+'. We removed the ratings from CreditWatch, where they had been placed with negative implications on Dec. 6, 2011. The outlook is developing. When we announced the placement of the ratings on the EFSF on CreditWatch on Dec. 6, 2011, we said that, depending on the outcome of our review of the ratings of the EFSF's guarantor member sovereigns, we would likely align the issue and issuer credit ratings on the EFSF with those of the lowest issuer rating we assigned to the EFSF members we rated 'AAA' (as of Dec. 6, 2011), unless we saw that sufficient credit enhancements were in place to maintain the EFSF rating at 'AAA' (see "European Financial Stability Facility Long-Term 'AAA' Rating Placed On CreditWatch Negative," published Dec. 6, 2011). On Jan. 13, 2012, we announced rating actions on 16 members of the European Economic and Monetary Union (EMU or eurozone; see "Standard & Poor's Takes Various Rating Actions On 16 Eurozone Sovereign Governments," Jan. 13, 2012). We lowered to 'AA+' the long-term ratings on two of the EFSF's previously 'AAA' rated guarantor members, France and Austria. The outlook on the long-term ratings on France and Austria is negative, indicating that we believe that there is at least a one-in-three chance that we will lower the ratings again in 2012 or 2013. We affirmed the ratings on the other 'AAA' rated EFSF members: Finland, Germany, Luxembourg, and The Netherlands. Germany and Finland, the remaining AAA-rated countries in the single currency, are expected to come under pressure to increase their commitments to bolster the EFSF's funds to prevent a further downgrade and the likelihood that lenders will demand higher interest costs. The blow to the EFSF came as bankers poured cold water on hopes for an early deal between Greece and its creditors after they accused Athens of making "completely unreasonable" demands for debt payment cuts. Charles Dallara, head of the Institute of International Finance which represents Greece's private creditors, said talks had yet to reach agreement on any aspect of a deal following demands from Greek negotiators for ultra-low interest rates on its outstanding debts.

The "Question ...."

The question that needs to be asked is whether or not we can afford to maintain Europe united . Britain, USA and many non-euro countries such as Romania , which are outside the Euro currency zone are helping to bail out Europe through the back door of the IMF even though their own economies are in jeopardy. The European Union, apart from being costly to maintain, is undemocratic in its decisions, with unelected/ unaccountable commissioners taking decisions that cannot be overruled by a parliament which has a president "elected by consensus". If German /French proposals are approved , the commission will take control of European fiscal policy , but no one questions the differing judicial systems within the EU.

The individual judicial systems responsible for applying the European constitution , better known as the Lisbon Treaty Judicial Systems which in many EU countries is controlled by judges appointed by government, countries where the average court case can last for twenty years. A costly united Europe competing in a globalized world has brought poverty to a vast majority of its citizens. Surely it is time for a change of course . Perhaps reverting to the old system ,when we could hold our elected representatives responsible and make our own agreements with trading partners , a system which helped develop Europe after the second world war, a system that worked well until someone "globalized" it.

Don't bet against the Fed

I was watching the news last night and the reporter on Sky used the worst word possible to show positive steps to resolve this. He Said "Diplomatic" - Diplomatic solutions to a financial problem isn't what the people need to hear. People need a clear process with definite and demonstrable actions to convince the various governments employers "The People of Europe" that there is more to this than hot air and an employment club for failed politicians and cronies of the political establishment.

The German chancellor warned that Standard & Poor's decision to downgrade nine euro-zone countries on Friday evening demonstrated that politicians needed to step up their efforts to resolve the crisis, warning that it was a "longer process" that would take more than a few months. "The decision confirms my conviction that we have a long way ahead of us before investor confidence returns," she said in a radio address. Germany was not among the countries downgraded. The downgrades, after markets closed on Friday, marked a further escalation of the debt crisis, which has seen investors lose faith in euro governments' ability to service their debts. Stalled talks over "haircuts", or write-downs, of Greek government debt will further worry investors, as they pose the threat of Athens making a disorderly default. Nicolas Sarkozy, the French President, yesterday called for cool heads after his country was scalped of its prized triple-A rating, pushing up its borrowing costs The fourth quarter of 2011 was a disaster especially for hedge funds. Markets normally thrive on volatility but conditions have become so unstable that even some of the most seasoned of investors have quit the field preferring instead to conserve cash.
The doyen of hedgie's George Soros has pulled out. The old market adage was, don't bet against the Fed. Today, this should read don't bet against the ECB. The EU has vowed to do "whatever is necessary" in the markets...we can only laugh ...what a messsss!

Europe has been plunged into a fresh crisis after France admitted it had been stripped of its coveted AAA rating in a mass downgrade of at least half a dozen eurozone countries by the credit ratings agency S&P. Share prices plunged, the euro dropped to a 16-month low against the dollar and the European Central Bank was forced to step in to buy Italian bonds after European sources admitted action by the credit ratings agencies was imminent. Bringing an abrupt end to the uneasy calm that has existed in the eurozone since the turn of the year, the heavily-trailed S&P move rekindled financial market anxiety about a Greek default and possible break-up of the single currency. Nicolas Sarkozy was due to go on national TV to explain the humiliating loss of France's top-rated status, leaving Germany as the only other major economy inside the eurozone with a AAA rating. French finance minister François Baroin downplayed the move, saying it was "not a catastrophe". Germany and the Netherlands were quick to make it clear they were not on the list of targeted countries circulated by S&P to European capitals ahead of an announcement that was expected to be made after the close of business on Wall Street. Investors piled into safe haven assets such as the dollar, while the UK was rewarded with even lower borrowing costs as 10-year bonds slipped below 2%. Britain is not at imminent risk of a downgrade. Mr Baroin was talking on France 2 television. More on what he said: I confirm that France has received, like most eurozone countries, a notification of a change of its rating [...] It's a downgrade, a one-notch change, it's the same agency that downgraded the United States [...] It means we must follow and amplify reforms. We must be bold. We must preserve employment. Mr Baroin says most eurozone countries have been notified of an S&P downgrade.

Any downgrades would also tarnish the credibility of the European Financial Stability Facility (EFSF), the eurozone's €440bn bail-out fund that Angela Merkel and Nicolas Sarkozy fought so hard to secure (and the one that was nearly brought down by Slovakia). If France loses its AAA rating, then Germany would be the only top-rated main backer left. The EFSF is also currently on downgrade review. In December, S&P said: Our 'AAA' long- and 'A-1+' short-term ratings on EFSF are based on (i) the unconditional, irrevocable, and timely guarantees from EFSF members (guarantor members) rated 'AAA' by Standard & Poor's that support EFSF's obligations (bonds, notes, commercial paper, debt securities, or other financing arrangements) and, (ii) the 'AAA' rated securities that constitute EFSF's liquidity reserves. Standard & Poor's has placed the 'AAA' long-term issue ratings on EFSF's guarantor members Austria, Finland, France, Germany, Luxembourg, and The Netherlands on CreditWatch negative (see "Standard & Poor's Puts Ratings On Eurozone Sovereigns On CreditWatch With Negative Implications," published on Dec. 5, 2011), indicating our view of their increased credit risks. In other words, the EFSF is only as good as its backers.

Unconditional "love' ....

Spiegel - Sarkozy's solo suggests that they're going to agree to disagree on the Transaction Tax. The german line remains that it should be introduced EU-wide - requiring UK agreement (which will presumably never happen). Other areas of disagreement. Both france and italy want more emphasis on growth. "The first meeting of the year between German Chancellor Angela Merkel and French President Nicolas Sarkozy. The pair held talks in Berlin at which they discussed the new 'fiscal compact' that they hope will hold the eurozone together." We could be forgiven for thinking that yet again this is completely the wrong agenda. The predictions have come true, the economic disaster foretold is upon us. Spanish near 25% unemployment levels are at those of the 1930s, so there is little to lose and everything to gain from drastic measures such as e.g.Spain leaving the euro unilaterally. It beggars belief that Spain, Italy etc are not actively and publicly discussing this. Where is the risk, what is the downside, mass unemployment? It has already arrived. German Chancellor Angela Merkel has been busy today. After an earlier jaw-jaw in Berlin with French President Nicolas Sarkozy, and a speech in Cologne at the annual meeting of the German civil service federation, 380 miles worth of journeys later, Merkel has been speaking in Düsseldorf on stimulus and economic growth, saying that government stimulus cannot be relied upon as the sole means of boosting growth: We cannot always create growth with economic stimulus packages [...] We also need structural reforms. Merkel said in a speech to the German chamber of commerce and industry.

OVER THE WATERWAYS - Atlanta Fed President Dennis Lockhart has been speaking on the US economy and eurozone crisis. The Atlanta Fed’s outlook anticipates a moderate pace of improvement but real progress on most fronts [...] At the same time, I think slow progress toward full employment justifies continuing consideration of whether more can and should be done. So for me as a policy maker, now is not a time to lock into a rigid position. Mr Lockhart said, adding that he expects “modest” GDP growth of between 2.5pc and 3pc “if there are no surprises from Europe or elsewhere.” Mr Lockhart added that the Fed would not rule out more money printing even if steady growth and "acceptable" inflation made it harder to justify: Steady even if unspectacular growth accompanied by inflation in the neighborhood of 2% justifies some reluctance to change, in either direction, the (central bank's) accommodative policy [...] At the same time, I think slow progress toward full employment justifies continuing consideration of whether more can and should be done. On European sovereign debt exposure, he said: American financial institutions have reduced their exposures fairly substantially, particularly to peripheral countries. Mr Lockhart becomes a voting member of the Federal Open Market Committee (FOMC) which decides on US interest rates and monetary policy this year.

Europe doesn't need to search for it's own identity, it has one for over 2000 years.

The capitalist model of produce, sell, re-invest has been replaced by a swarm of idle, lazy, ponzo scheming, self serving bunch of accountants who move figures around to pretend that money is being made. No wonder we are in the state that we are in...Well, we've had communism, that was a disaster, Democratic Socialism was neither democratic or socialist, Socialism in the UK was turned into something harder right than Thatcherism and now we see the capitalism falling apart as its worst excesses are shown as the economic feces of our age....has humanity the wit to think of another system....all suggestions welcome....Well, how about Merkelism, where one talks up a particular system whilst simultaneously undermining it in order to profit from its failure ?
Or is that the same as the others??????....Meanwhile : In a fresh drive to stabilize the eurozone, French President Nicolas Sarkozy will meet German Chancellor Angela Merkel on January 9 in Berlin to prepare for a European Union summit at the end of the month. "
When will this charade end? The game is up. The Euro is over. These summits are comical at best, making Europe the laughing stock of the world. The light has been shone on the entire EU plan -and no one (who hasn't been bought with the promise of a bloated EU pension) likes what they are seeing. We need a fresh group of elected political leaders with the balls to tear this EUSSR wall down and we need loyal hard working citizens with the courage to start again...Market data is rigged, and it ultimately means nothing. Europe is screwed, and it is going to take a break-up of the eurozone to start the recovery process. “It now looks as though 2012 will be the year when the euro starts to break up,” the London-based CEBR said in a statement today. “It is not a done deal yet -- we are only forecasting a 60 percent probability -- but our forecast is that by the end of the year at least one country (and probably more) will leave.” CEBR said the likelihood of a euro breakup in the next decade has increased to 99 percent. The crisis may force “most of the French and German banking systems” to seek bailouts to compensate for write-downs on their holdings of sovereign debt, CEBR said. “They might even be nationalized as well. Many other European banks will go back into crisis.”

Eurozone gets closer to break-up, warns Standard Chartered

"German Chancellor Angela Merkel said she expects turbulence in 2012 as she does "everything" to save the euro and end Europe´s sovereign debt crisis". "The path to overcoming this won´t be without setbacks but at the end of this path Europe will emerge stronger from the crisis than before," Merkel said in a New Year´s television speech yesterday. She also said 2012 "will no doubt be more difficult than 2011".German leaders will be working relentlessly to bring all of the EU more tightly together into one state under their iron and self-serving fist. No price that is required of other stuggling countries - whethere economically or in terms of their national self-respect - will be considered by her to be too high for them to pay towards this end....German Chancellor Angela Merkel said she expects turbulence in 2012 as she does "everything" to save the euro and end Europe´s sovereign debt crisis." ... The problem is she and har your colleagues' reprehensible inactivity in the face of this crisis that is causing the very turbulence of which she complains. However, a weak Euro against the US Dollar is doing wonders for the German export industry, so she's more than happy, whithout saying it !
The reality is : Only with the backdrop of the "crisis" can governments continue to get the people to swollow the necessary pills to cure the ills (caused by the governments). Without the pain they will spit it out. Thus, the crisis is a necessary tool to realign the reality of their budgets and get all in lock-step.

Sarkozy, who is hoping to win re-election in May, needs an external enemy to display his leadership qualities, according to Roger-Petit. “Germanophobia is forbidden, but visibly, Anglophobia, if we can use this term, is now the trend,” the journalist wrote on Friday. Chatham House’s Gomis agreed that Sarkozy and Cameron’s public disagreement over the EU has helped their respective images at home. “Adopting this position, as the leader who saves the euro despite British opposition, is very interesting for Sarkozy ahead of elections,” Gomis said. It really disapponts me that countries such as Holland , Denmark, Poland and others in the North part of the EU do not seem to be worried about losing their independence and ability to decide their own futures. Ireland must also be worried as it means their much vaunted way of attracting business to their country by way of low Corporation tax will shortly end... in the meantime, absolutely nothing has been done to solve the Eurozone crisis.