“The markets have drawn comfort” from the Fed, said Mr Lewis after officials at the central bank said they believed economic developments would “warrant only gradual increases in the federal funds rate”.  However, Mr Lewis said further rises presented “a major uncertainty” hanging over both the Fed and markets.  “All territory is now uncharted”, he argued, as the US central bank attempts to raise rates from historically low levels, while the banking system is flush with cash.

He added: “The Fed and other major central banks have maintained emergency policy-settings for so long that the global economy cannot be presumed to react in standard fashion to a rise in interest rates, however small that might be.”  The central bank, led by chairman Janet Yellen, plans to keep increasing rates by quarter-point increments after raising rates by a quarter of a percentage point from their 0pc to 0.25pc range last month. Stephen Lewis, chief economist at ADM ISI, said that Fed policymakers would regard “the mildness of the response to their action as a tribute to their success”. While the main US index, the S&P 500, closed lower in 2015 as a whole – its first annual loss since the financial crisis – economists have not attributed this to the Fed’s move. Annual wage growth is expected to have picked up from 2.3pc to 2.8pc in December, generating inflationary pressures. Central bank watchers will also pay close attention to the minutes of the Fed’s December meeting, being released on Wednesday. These will show how confident policymakers are in returning inflation to target. The Fed has a mandate to promote full employment and to steer inflation towards 2pc. The inflation measure tracked by US policymakers stood at just 0.4pc in the year to November. Analysts at Barclays said that they expected to see “disparate views on the current state of inflation” and they would “be attentive” to how this impacts on “different views on the most likely path of monetary policy in 2016”.

The Eurozone has no fire-power to strengthen. QE has failed because they are already mired deep in a Japanese style deflation trap to which there is no easy escape. Draghi's peashooter has allowed them to standstill for a few months and nothing more.  The only thing to be done now is to forcibly devalue the currency and drive it through dollar parity as policy. This is what is necessary to re-establish inflation and growth on the continent.  This would be European style economics but may be the only way to save the euro. It must be done now though. The alternative is a slow death and definitely lose the euro.  My bet is that the Europhiles cannot face up to what they have done and will therefore opt to do nothing. So it will be the slow death then...the Central Banks are in trouble...and relying on Draghi's monthly or quarterly QE payroll. It's as simple as that. Deflation will hit their books hard. Notice the pressure on Banks to impose charges, more now than ever before. As for Deutsche Bank; it's all their satellites that will feel the pinch....something that Merkel has overlooked at her peril....There is no money. Nobody can buy anything so nobody can sell anything so there is no growth and all kinds of social bills still to be paid through more borrowing along with all the previous debt service costs. Reciprocal debt forgiveness: for some nations temporary retreat from an utterly inappropriate €conomic instrument used as a political weapon that has failed on both battlefields: sustainable, as equable as possible, benefit reduction and an opening of the democracy door to all of the peoples with the same voting weight at all levels are the only answers now. But I think the burden is too great and it is too late, especially with the utterly divisive irritant of the imperial court's decrees on immigration to add to the stew....The ECB printing up more trillions of fiat currency to lavish on their .1% cronies in the financial sector "to combat deflation" (and buy up the distressed assets of the increasingly pauperized middle and working classes at fire sale prices) - my, how groundbreaking.  Remind me again of the clinical definition of insanity.

EU - Observer -- Greek prime minister Alexis Tsipras has put the painful question of German war reparations back on the table, saying his country was never paid for the infrastructural damage inflicted in World War II.  In a highly emotive speech before parliament on Tuesday (10 March), peppered with references to Nazism, the Third Reich, and the Holocaust, Tsipras said Berlin had an "unfulfilled moral, as well as material historic debt".  He acknowledged that Germany paid 115 million deutschmarks (€59 million) to Greece in 1960, but said this went only to individual victims of Nazis and did not compensate for the "destruction" of the country.   "This agreement, however, provided compensation only for the victims of the Nazis in Greece and not for the damages inflicted on the country itself," he said.  "And of course it did not relate either to the obligatory occupational loan or the claims for damages due to war crimes as a consequence of the nearly total destruction of the country’s infrastructure and the economy’s disintegration during the war and the occupation".  He accused Berlin, which has long said it has honored its war obligations, of using "legal technicalities" to get around paying.  "They see the mote in their brother's eye but not the beam in their own," he added, quoting a passage from the Bible, and speaking of a "moralistic tone" in Europe in an apparent allusion to Berlin's statements on Greece.  He also said that a parliament committee on "claiming the German debts owed to Greece" is to be reconstituted and upgraded and that his government will offer "political and legal assistance" so that its efforts "bear fruit". The motion to re-establish the committee was then backed unanimously by parliament late on Tuesday.  For his part, Nikos Paraskevopoulos, the Greek justice minister took the rhetoric a stage further on Wednesday by saying that German property in Greece could be seized as compensation.  He said he is "ready to approve" a Greek Supreme Court ruling in 2000, which ordered Germany to pay around €28 million to the relatives of 218 civilians in the village of Distomo, massacred by Nazi forces in 1944. The ruling said that assets such as property could be seized as compensation.  "The law states that the minister must give the order for the Supreme Court ruling to be carried out ... I am ready to give that order," he told Antenna TV, reports AFP.  The Greek statements come after weeks of uneasy relations between Berlin and Athens since the Greek far-left/nationalist coalition government came to power in late January.  Tsipras' first move as PM was to vist a memorial honoring  Greek resistance fighters killed by the Nazis in 1944 - a symbolic gesture that did not go unnoticed in Berlin.  Since then, the Greek government has sought to make good on its election promises to restructure its debt and to end EU-imposed austerity.  But tough negotiations with its creditors have seen it win only small concessions, such as renaming the hated Troika (representing its three international creditors) as "the institutions".   Contrary to what it wanted, the government was forced to extend an existing bailout - by four months - and is currently trying to reach a deal on which reforms it needs to carry out to get the next tranche of cash.  Germany is at the forefront of those saying Athens must stick to its prior commitments on reforms. Rhetoric between the two countries has turned nasty on several occasions since Athens' first bailout in 2010, with Greece - wracked by high unemployment and low growth - viewing Germany as too single-minded on austerity and with Germany seeing Greece as slow to undertake major changes.  The current talk from Athens is much harder than anything before, however.  It comes amid criticism of Tsipras by his own, hardline backbenchers, who expect him to deliver more of his campaign pledges.   Tsipras' defense minister Panos Kammenos, from the nationalist party in the coalition, also recently threatened to "flood" Europe with migrants if Greece does not get a debt deal.  "If they [the Eurogroup, a body which oversees eurozone governance] strike us, we will strike them. We will give to migrants from everywhere the documents they need to travel in the Schengen area [the EU's passport free zone], so that the human wave could go straight to Berlin."

The slump in business lending has deepened, it has emerged, further sharpening the contrast with a surging mortgage market.

Companies took £4.7bn less in loans in November, the biggest drop in more than two years and nearly five times the recent average monthly decline of £1bn, according to figures from the Bank of England. The slide was due to a fall in lending to large businesses, as loans to small and medium-sized companies actually edged up slightly.

Economists are split over whether the decline is due to weak demand for bank finance or lenders’ reluctance to grant loans to business.

Howard Archer, chief UK economist at IHS, said the data suggested that banks “have yet to become markedly more prepared to lend to businesses amid the improved economic situation and outlook”. But Blerina Uruçi, economist at Barclays, believes businesses are unlikely to be held back by weak bank finance as the corporate sector has amassed a large cash surplus in recent years. Businesses are also increasingly turning to the bond market as a cheaper alternative.

Mark Carney, governor of the Bank of England, has redoubled efforts to boost business lending by making it the sole beneficiary of the Funding for Lending Scheme, which allows lenders to borrow at rock-bottom rates in exchange for providing loans. Previously, the scheme applied to all loans.

Dynamic, fast-growing small and medium enterprises (SMEs) are driving a recovery that will transform the UK’s economic landscape, London Stock Exchange chief executive Xavier Rolet said yesterday.   Speaking at the launch of the LSE’s publication 1,000 Companies to Inspire Britain, Mr Rolet gave an upbeat assessment of their impact on economic growth.   “Vibrant, dynamic SMEs are the engine of the capitalist economy,” he said. “Large caps and the public sector have created no new net jobs over the last eight years – SMEs are powering our recovery”.   The 1,000 companies identified by the research agency Growth Intelligence have an average revenue growth of 80pc over the last three years and span 100 different sectors and every region. Far from being dead, manufacturing accounts for nearly one in five of the list – significantly more than the 105 technology companies represented.   While 267 of the companies are London-based, more come from the north of England than from the South East excluding the capital.  Mr Rolet said the debate over SME finance had focused too much on bank lending: “We need to balance bank financing with equity, building a funding ladder that starts with Business Angels and goes up through venture capitalists to private equity and the public markets”.  He praised initiatives, such as the abolition of stamp duty on AIM shares, making it easier to invest in SMEs and contributing to the strongest AIM performance since 2007 with 45 IPOs.  Featured companies include Mulberry, Addison Lee and Hunter Boot, as well as “hidden gems” specializing in everything from motor racing to animal antibiotics.

"David Cameron and other European

Union leaders need to show the same political courage and vision of Winston Churchill's call for "a kind of United States of Europe", José Manuel Barroso has said."

It takes possibly more courage to say "NO" to such nonsense.

Continuing down the now clearly wrong path. with a EU that has changed almost completely from the "Common Market" it started out as, will require courage, a lot of it, and the ordinary working people have that in abundance- question is which of our "leaders" has that and is willing to pay the price it requires- "You cannot please all of the people all of the time!" The wise leader right now will see that its much better. long-term, to please his own people, and stop listening to the EU loonies who say thay can please all the people, all the time- they can't, they haven't and they won't ! Get us out of this obvious compromised loyalty mess- get out of the EU, and do it NOW!...This man and Van Rumpooy are at the top of the EU tree. Unelected by any of the people of the EU they have insurmountable power and can do as they wish. Thus we the people have been denied democracy. They are not bound by MEP's voting in the EU parliament and can and do ignore their wishes. EU rules trump national laws and regulation where the EU has competency, The EU has competency where it has been given to them by the governments(politicians) of the sovereign members. Thus we have a politburo largely ruling over us. Not the trading arrangement that was voted on in the 1970's is it. They use every crisis as a means of even more control over our lives. The EU is like a rather fat and unpleasant spider, and we are caught in its web!...I have been warning about the ever increasing powers of the EU for some time now, could this be the straw that finally breaks the camels back? What sovereign Govt. will tolerate such interference in it's financial affairs? If this measure is allowed to happen it signals the end of Democracy in Europe, is that a price worth paying? As I see it we now have no choice but to vote UKIP to remove ourselves from this wholly dictatorial club before we lose our sovereignty forever, Rule Britannia!!

China and France should strengthen high-level exchanges to enhance mutual trust and deepen strategic cooperation on both bilateral and international issues, Chinese Foreign Minister Wang Yi said on Wednesday.

Wang arrived in France on Wednesday for a two-day visit, which will pave way for Chinese President Xi Jinping's visit to France next year which marks the 50th anniversary of the establishment of diplomatic relations between the two countries.

The trip to France is Wang's first official visit to Europe as foreign minister. He met French President Francois Hollande and Foreign Minister Laurent Fabius and exchanged views with them on hot international topics including the Syrian and Iranian issues.

"The relations between China and France go far beyond the bilateral realm and have distinct strategic importance. Therefore we should strengthen not only our bilateral cooperation but also coordination on major international issues," Wang said at a news conference.

China and France have vast potential to cooperate in areas such as urbanization, information technologies and agricultural modernization, he said.

Wang also reiterated China's position on the Syrian issue which is to support the settlement of the crisis through political means.

"China supports the second round of Geneva peace talk and the international community should create favorable conditions for various parties in Syria to reach a consensus for the settlement," he said.

French Prime Minister Jean-Marc Ayrault will soon visit China for the preparation of the 50th anniversary of China-France relations, according to the French Foreign Minister Fabius.

He said that France has decided to further simplify the visa application procedures for Chinese citizens, which will allow them to get French visa in just two days.

Fabius also noted that the French government wants to deepen cooperation with China on environmental issues as Paris will hold the United Nations Climate Conference in 2015.

A major Swiss gold refiner is being investigated on suspicion of money laundering linked to the processing of gold allegedly looted from DR Congo. Swiss federal prosecutors confirmed criminal proceedings against Argor-Heraeus SA, over claims it knew gold it handled in 2004 and 2005 had been taken from DR Congo during an armed conflict. The case has been brought by the Swiss non-governmental organisation TRIAL.  Argor-Heraeus has strongly refuted all allegations in a statement.  The Swiss gold refiner said the allegation had "arrived like a bolt out of the blue" and there had been "no request or contact whatsoever from TRIAL beforehand".

It said "Argor-Heraeus has been cleared of all above mentioned allegations", referring to an investigation at the time by the UN, SECO and FINMA.

The firm said it would "collaborate in complete transparency with the authorities" to prove its innocence.

'Growing pressure'

The Swiss federal prosecutor's office said on Monday that after reviewing the criminal complaint submitted by TRIAL, it had decided to initiate proceedings against Argor-Heraeus "for suspected money laundering in connection with a war crime and complicity in war crimes".

"Given the secrecy of the investigation and function, we are not able to provide more information for now," it said.

TRIAL alleges that gold looted from DR Congo in 2004 and 2005 was smuggled to Uganda and then refined in Switzerland by Argor-Heraeus.

According to TRIAL, the refinery knew or should have assumed that the gold resulted from pillage, a war crime.

DR Congo was in the midst of an armed conflict at the time, driven partly for control of natural resources.

An estimated six million people are believed to have been killed in DR Congo since 1997.

TRIAL says the sale of the gold "contributed to financing the operations of an unlawful armed group in a brutal conflict".

A report at the time by a UN Group of Experts recommended sanctions against Argor, saying the company must have known the gold was obtained illegally. Sanctions were imposed only on Ugandan businesses involved in the trade. TRIAL alleges that Argor escaped sanctions because of pressure applied at the UN by Swiss diplomats.

However, Argor says that "subsequent detailed in-depth verifications executed by SECO and UNO resulted in the removal of the name of Argor-Heraeus from the report and confirmed that the company was in no way directly or indirectly involved in the alleged claim".

Most of the world's gold is refined in Switzerland and the country is also a major trading hub for gold and other commodities.

The BBC's Imogen Foulkes in Geneva says there is growing pressure for traders and refiners to be more transparent.

Argor is owned partly by German company Heraeus, Commerzbank, and the Austrian Mint.

The European Union wasted almost £6 billion last year on fraudulent, illegal or ineligible spending projects, official auditors have found.

At a time of unprecedented European-wide austerity, the EU mis-spent almost 5 per cent of its budget in 2012 on projects that should never have received any of its money.

This so-called ‘error rate’ in Brussels spending was up from 3.9 per cent the previous year, according to the auditors. It meant that for the 19th year in a row, they refused to give the EU’s accounts a clean bill of health.

EU bureaucrats were accused of “shambolic” mismanagement yesterday in the wake of the report, with Conservative MEPs suggesting it appeared as though Brussels simply had a licence to Carry on Squandering’.

The European Court Auditors (ECA) found that 4.8 per cent of the EU’s £117 billion budget in 2012 - £5.7 billion - was spent in “error”, on projects that were either tainted by fraud or ineligible for grants under Brussels’ rules. This meant British taxpayers saw up to £832 million of their contributions to the EU wasted at a time of deep public spending cuts domestically. The EU spending watchdog found that supervision and control of Brussels spending was only “partially effective in ensuring the legality and regularity of payments underlying the accounts”. 

“All policy groups covering operational expenditure are materially affected by error,” the auditors concluded.

“For these reasons it is the ECA’s opinion that payments underlying the accounts are materially affected by error.”

A British Government spokesman yesterday described the findings as “unacceptable and undermining the credibility of EU spending”.

“When countries across Europe are taking difficult decisions to tackle their deficits, Europe’s taxpayers need to have confidence that every effort is being made to improve the way EU spending is managed,” she said.

Included among the “errors” discovered by the auditors was a Polish landowner paid almost £80,000 a year to maintain 350 acres of grassland to help preserve uncut grassland for the protection of endangered bird species. In fact, the farmer had only met the agreed funding requirements for 14 per cent of the land and the payments.

“Similar cases of non-compliance with agri-environment requirements were detected in the Czech Republic, Germany , Greece, France and the United Kingdom,” found the auditors.

The EU’s regional policy spending had an error rate of 6.8 per cent, or £2.4 billion, of the £34 billionn spent in 2012. Most ineligible funding followed a failure to follow EU laws on public procurement and issuing of contracts.

The error rate in “external relations, aid and enlargement” spending overseen by Baroness Ashton, the EU foreign minister, totalled 3.3 per cent, or £169 million of £5 billion in spending.

In one case, the European Commission paid £14 million for a programme to support female teachers in rural Bangladesh but over half the money was given with “no documentation”.

Philip Bradbourn MEP, the Conservative spokesman on EU budgetary control, described the latest audit as “another year, another story of lax monitoring and shambolic control”.

“If you found misappropriation and misspending on this scale in a commercial business — or in a properly-accountable public administration — there would be sackings all round. In Brussels, it’s ’Carry on Squandering’,” he said.

Vitor Caldeira, the president of the EU auditors, warned that poor financial planning by the European Commission for “will put added pressure on EU cash flows and may increase the risk of error over the next few years”.

“Europe’s citizens have a right to know what their money is being spent on and whether it is being used properly,” he said.

Meanwhile, EU funds worth £418 million intended to help rebuild the Italian city of L’Aquila and the Abruzzo region after an 2009 earthquake have been mired in suspected corruption, a separate European Parliament report has found.

Serious allegations have surfaced that part of the money spent on building new accommodation for the earthquake’s victims was paid to companies with “direct or indirect ties” to organised crime because it was paid in breach of public procurement rules.

As long as we don't worship the Keynesian Dogma we are going to read things like this one.

Mr Rajoy said the eurozone's fourth largest economy was "out of recession but not out of the crisis", and faced a long period of more austerity before the country could sustain the recovery.

"The task now is to achieve a vigorous recovery that allows us to create jobs," he told the Wall Street Journal.

Spain's unemployment rate, at 25pc, is among the highest in the eurozone. The bloc's official unemployment rate of 12.1pc also masks huge disparities. While Austria boasts an unemployment rate of just 4.8pc, the jobless rate in bailed-out Greece is 27.6pc.

The recovery in Germany, Europe's largest economy, has also been fragile. Data on Tuesday showed business sentiment rose for a fifth consecutive month in September. The Ifo Institute's business climate index, which is based on a survey of 7,000 firms, rose to 107.7 in September, from 107.6 in August. However, the reading fell short of the 108.2 expected by economists.

European Central Bank rate-setter Ewald Nowotny said on Tuesday that the bank had "flexible" tools at its disposal if it needs to take additional measures, including providing banks with additional central bank money. ECB President Mario Draghi said on Monday that the ECB stood ready to deliver a fresh injection of cash into Europe's banks. Asked about the possibility of the central bank giving banks another chance for those loans, known as Long Term Refinancing Operations (LTRO), Mr Nowotny said: "It is certainly important to show all that we have in the way of instruments, which are flexible...Pier Carlo Padoan, the OECD's chief economist, said he expected growth in the 17-nation bloc to be negative this year, despite several countries showing signs of recovery. Mr Padoan said the single currency area, which emerged from its longest recession in more than 40 years in the second quarter, remained "a considerable source of risk" to the global recovery, though he added that the systemic risk from the eurozone's debt crisis had subsided. He added that while countries should continue to implement austerity policies, automatic stabilisers such as unemployment benefits should be allowed to kick-in if economies stalled. Mr Padoan also urged policymakers to tackle high jobless rates. "There is no doubt that policy priority number one in the euro area is fighting unemployment. Let's not fool ourselves and expect unemployment to come down in a stable fashion," he said.

Economists expect growth in the eurozone to pick up in the second half of the year. On Monday, Spanish prime minister Mariano Rajoy said the country would exit recession - defined as two or more consecutive quarters of negative output - in the third quarter, following two years of contraction. 

Once again, European leaders believe that they are out of the woods.....

Europeans have lost the sense of clear and present danger. Once again, European leaders believe that they are out of the woods. Well, miracles happen. But it's my impression that the formula is being applied that promises the least amount of success in the longer term and is the least painful -- a little reform here, a little tinkering there, and a dose of business as usual.  Europe will not be buried by ashes, like Pompeii or Herculaneum, but Europe is in decline for sure. It's certainly horrifying to consider its helplessness in the face of the approaching storms. After being the center of world politics for so long, the old continent now runs the risk of becoming a pawn.

Freedom, human rights, social justice are all wonderful, and I don't want to minimize the achievements of European societies. But a role model? Europe is much too weak to play a civilizing or moral role in world politics. Nice speeches and well-intentioned admonitions carry little weight when made from a position of weakness. In fact, all they do is aggravate China and Russia. Such reproofs are presumptuous, insincere and, unfortunately, often ridiculous. Under the current circumstances, Europe would be well advised to keep a lower profile.  I believe that Europe has largely squandered its moral credit. It shies away from imposing sanctions; it has a very hard time intervening in crises outside Europe; and it has even demonstrated its general impotence in wars in its own backyard. Most European governments, not least the German government, don't even have the guts to admit that they are playing a double game.

Oh, NOOOO...trouble in "natziland"???

The FTSE fell 74 points, or 1.2%, while the German Dax and French CAC tumbled 1.5% as markets digested rumors that the resignation of Portugal's finance minister and foreign minister could be followed by more colleagues. Market unease over the health of the world economy was exacerbated by the political drama unfolding in Egypt and a weakening in China's growth.

The Portuguese ministers quit the coalition government this week in a row over the ruling party's handling of the country's economic plight, amid fears that they will be followed by two ministerial colleagues who are members of the junior coalition partner. If that happened, observers fear that they could take down the centre-right government. However, the junior coalition party, CDS-PP, said this evening that there would be no more ministerial resignations.

European commission president José Manuel Barroso, a former Portuguese premier, said the indebted nation risked damaging its hard-earned financial credibility after two years of closely following its €78bn (£66.4bn) bailout programme, coordinated by the International Monetary Fund, European Union and European Central Bank.

"This delicate situation requires a great sense of responsibility from all political forces and leaders," he said.

The government's future hung in the balance after president Aníbal Cavaco Silva's office said he would meet the leader of the main opposition Socialists and other parties to discuss the deepening schism in the coalition. Under the constitution, he has the power to dissolve parliament and can invite opposition parties to form a government.

Speaking in Berlin, where he was attending the EU summit on youth unemployment, prime minister Pedro Passos Coelho reiterated that he had no plans to resign. He said: "I am confident that we will be able to surpass this difficulty … I hope this internal crisis can be overcome very quickly."

With no solution imminent, the euro fell and the interest rate on Portuguese government debt soared past the 7% level – where debts are considered unsustainable – to hit 8.1% at on point, before settling back at 7.5%. The PSI 20 stock index in Lisbon fell by 5%, led by sharp losses of over 10% in bank shares

Deutsche bank posts surprise loss.

Germany - Deutsche bank posted a surprise net loss of €2.2bn for the fourth quarter. Germany's biggest bank was hit by hefty litigation and restructuring charges as the bank slims down, in light of the changing investment banking environment. Deutsche is being investigated for alleged manipulation of benchmark interest rates. Today it announced €1bn in litigation charges in the fourth quarter, which it said reflected "adverse court rulings and developments in regulatory investigations". Co-chief executives Juergen Fitschen and Anshu Jain said: We embarked upon the path of deliberate but sometimes uncomfortable change in order to deliver long term, sustainable success for the bank. Simultaneously, we set the bank on course for fundamental cultural change. This journey will take years, not months. Last week Germany's second-biggest lender, Commerzbank said it was planning to cut as many as 6,000 jobs, or more than 10% of its workforce. Secret Monte dei Paschi document found in 14th-century palace. At the risk of sounding flippant, Italy's Monte dei Paschi scandal has to be one of the more colorful banking scandals. For a start, it deals with the world's oldest bank, established in 1472 to lend to "the poor or miserable or needy". Now it seems the secret document at the heart of the scandal lay for months in a concealed safe in a 14th-century Tuscan palace. Silvia Aloisi and Stefano Bernabei of Reuters report: Chief executive Fabrizio Viola said he learned about the safe's contents only last October, a full 10 months after he had been called in to sort out Italy's third biggest bank. The 2009 document revealing derivatives deals that have run up huge losses for Banca Monte dei Paschi (BMPS.MI) came to light in the office of Viola's predecessor at the bank's headquarters in Siena. 'The document was in a safe, moreover in an office that was no longer mine,' said Viola. 'I don't think that the person who put it there had been trying to hide it. But there is no doubt that the document had not been used in the bank's accounting.' The document found at the 540-year-old bank's head offices – which are appropriately in a restored ancient fortress – was a contract mandating Japanese bank Nomura to carry out deals on behalf of Monte dei Paschi.

'Disastrous' and 'unbelievable' are the words which spring to mind!

The EU has now shown that it is not simply a fraudulent organisation (audits not signed for 16 years) but a criminal one. Expropriating funds deposited in banks is no better than daylight robbery.
The lesson or ALL is to quit this organization without further delay.....Under an arrangement expected to be announced on Saturday, depositors in Bank of Cyprus will receive shares in the lender worth 37.5pc of any savings over €100,000, while the rest may never be paid back, according to Reuters, citing a source with direct knowledge of the terms. Of the 62.5pc of uninsured deposits not converted to bank shares, about 40pc will continue to accrue interest but will not be repaid unless the bank does well, while the final 22.5pc will cease to attract interest, the source told Reuters. Government figures, including finance minister Michalis Sarris and central bank governor Panicos Demetriades, had previously indicated that depositors in the island's largest lender would lose around 40pc of their uninsured savings as part of an 11th hour agreement reached in Brussels in the early hours of Monday. Meanwhile, account holders in Laiki Bank, the country's second largest, stand to lose up to 80pc of their money as the lender is wound down and insured deposits transferred to Bank of Cyprus. The harsher-than-expected terms on the Bank of Cyprus' largest depositors will provoke further anger among Cypriots, who face sharp economic decline with the contraction of their dominant banking sector. The most irritating thing about this whole tragic saga is the constant use of the euphemism 'haircut'. Theft is theft pure and simple. Theft is, and always has been a serious criminal offence; anyone found guilty of it should be properly punished for their crime. When we start trying to dilute the meaning of it and pretend to mitigate the affects of it we seriously jeopardize our morality as human beings. Perhaps rape will soon be described as undesired sex, and murder as a premature termination etc, etc.

Waiting for poverty to strike is no game. It makes ordinary men and women helpless, desperate and scared. "If you look at it mathematically, there is no way out: we will just never be able to repay our bills to the EU and IMF," said Haris Christou, one young Cypriot speaking for his compatriots. "Am I afraid? Of course I am afraid. Everybody knows everything in Cyprus is going to get bad, really bad. And nobody knows where exactly we are headed."

On Wednesday night men and women, some young, some old, gave voice to that fear. They gathered outside the offices of the European commission, and then lined the road that leads up to Cyprus's colonial-era presidential palace, to protest against a rescue programme that, wittingly or not, will destroy their country's banking sector and bring its economy to its knees.

"Out with the troika", "Fuck the troika", "Go home Troika", said the placards. "No to the policies of austerity." "No to privatisations." "No to the memorandum of catastrophe."

But more than words, or any amount of hoarse chanting, it is uncertainty that now speaks loudest in Cyprus. The uncertainty that has come with the knowledge that the island's economic output will shrink dramatically as a result of the austerity now being demanded in return for €10bn in aid. The uncertainty unleashed by policies that will see many Cypriots wake up with much less than they once had in the bank. And the insecurity of suddenly being the subject of capital controls that possibly could change Cypriots' lives for years....I, too, would be inclined to withdraw all my funds from any Cyprus bank and I suspect there will be a run on them. There are 'policies in place' to restrict such a run but I don't see how they can prevent people taking out what is their own money. That is the worry. The Russians called it theft and so would any Cypriot who cannot access savings. The safest place to deposit money is still the UK and I'm surprised that London has not offered to make itself a safe haven for Italians, Portuguese and the Spanish to place their life savings. That's what I'd do if I were a Mediterranean saver. The GBP and USD have their moments but nobody will lose a penny by keeping their money in those currencies which are trusted around the world. I don't know how any Cypriot would be able to do a SWIFT transaction to get cash out of harm's way but surely it can be done.

Heil ....

Merkel disapproves of the Cypriot proposal, which involves bundling state assets into a "Solidarity Fund" that includes the country's retirement fund to back bond issues. According to reports on Friday, she is not alone. The troika, made up of the European Commission, the European Central Bank and the International Monetary Fund, agrees with her assessment.

What happens next? "I hope that it doesn't result in a crash," Merkel told FDP parliamentarians according to a meeting participant. Merkel has long warned of a potential domino effect should a euro-zone member state enter insolvency. But now, her government is no longer excluding the possibility.

The chancellor is particularly frustrated by the lack of communication with Cypriot leaders even as the situation worsens dramatically. Some in her party have even used the word "autistic" to describe Nicosia's apparent unwillingness to communicate with Berlin. "What we have never experienced before is that, over a period of days, there has been no contact with the EU or with the troika," Merkel reportedly told the parliamentarians. Merkel, for her part, managed to force herself on Friday to return to the moderate words for which she has become famous. She insisted she will try to "be emotionally wise." On this particular Friday, it wasn't easy.

In a statement released this morning, leaders promised that their fiscal and monetary policies would “not target exchange rates.”

“We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market-determined exchange rates and to consult closely in regard to actions in foreign exchange markets,” said the statement.

“We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates.”

Spelling out the fears that have been raised, particularly by Francois Hollande, the French president, the statement added: “We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and cooperate as appropriate.”

Fears of so-called “currency wars” were sparked when Japan's new prime minister Shinzo Abe ordered the country's central bank to be more expansionary. Mr Abe is determined to force down the value of the yen in a bid to boost exports and in turn Japan's sluggish economy.

Fresh data from the Bundesbank show that Anglo-German trade in goods and services soared to €153bn in the first nine months of 2012, with both exports and imports booming at double-digit rates.

It is one of the fastest growing trade relationships in the developed world. France lagged behind at €150bn as trade stagnated, with the US at €149bn and China at €115bn.

David Marsh from the financial group OMFIF said the trade swing underlines a “sobering truth” that Germany’s fundamental interests are shifting away from the eurozone core as Berlin embraces the wider world. The EMU share of German trade has fallen from 46pc to 37pc since the launch of the euro, displaced by Asia, as well as Eastern Europe and the Anglo-sphere.

British goods exports to Germany rose 20pc over the first three quarters compared to a year earlier, despite the economic downturn. The surge was led by medical equipment, drugs, car components, and petroleum goods. The deficit with Germany narrowed slighty to €17bn, a sign that trade is becoming better-balanced.  Although rarely acclaimed, British suppliers and manufacturers are deeply integrated into the German industrial machine and enjoy the follow-through benefits of German exports to the rest of the world....Now...Does anyone believe British conmpanies have won this business based on EU membership or on the timely and safe delivery of quality products at a competitive price?  The UK and Germany are the two major players and net contributors in the EU. France talks it large and is extremely well represented in positions, but without the massive EU funding it receives it would struggle.  The real danger here is not the UK leaving the EU and sinking, it is that we will leave and surge ahead. Weakening the EU and strengthening our own position. Add to this the repeated polls in Germany where the majority do not want to be run by the EU and also wish to leave the Euro, and the real danger is clear. The UK leaving the doomed EU project will hasten its demise and open Europe up to trade and competition with the World. The very last thing Socialist leaders want.

A thriving UK outside of the EU would prove an irrisistable pull to other net contributors to leave. This is what keeps the EU commission up at night, not wondering what Pro-EU Cameron will mumble in his speech this week.

Winning the war against the people of Europe ...

Europe (Germany in fact) clinched a deal on Thursday to give the European Central Bank new powers to supervise euro zone banks from 2014, embarking on the first step in a new phase of closer integration to help underpin the euro. After more than 14 hours of talks and following months of tortuous negotiations, finance ministers from the European Union’s 27 countries agreed to hand the ECB the authority to directly police at least 150 of the euro zone’s biggest banks and intervene in smaller banks at the first sign of trouble. “This is a big first step for banking union,” EU Commissioner Michel Barnier told a news conference. “The ECB will play the pivotal role, there’s no ambiguity about that.” The euro rose to a session high in Tokyo of 1.3080 against the U.S. dollar on news of the deal. After three years of piecemeal crisis-fighting measures, agreeing on a banking union lays a cornerstone of wider economic union and marks the first concerted attempt to integrate the bloc’s response to problem banks. The new system of supervision should be up and running by March 1, 2014, following talks with the European Parliament, although ministers agreed that could be delayed if the ECB needed longer to prepare itself. The plan sets in motion one of the biggest overhauls of any European banking system since the financial crisis began in mid-2007 with the near collapse of German lender IKB. The focus is now on EU leaders, who meet in Brussels on Thursday and Friday, to give it their full political backing. In an about-turn, German Finance Minister Wolfgang Schaeuble dropped earlier objections that had led him to clash openly with his French counterpart, Pierre Moscovici, last week over the ECB’s role in banking supervision. With time running out to meet a year-end deadline, both sides managed to settle their differences and Germany won concessions to temper the authority of the ECB’s Governing Council over the new supervisor. Agreement on bank surveillance is a crucial first step towards a broader banking union, or common euro zone approach to dealing with failing banks that in recent years dragged down countries such as Ireland and Spain. The next pillar of a banking union would be the creation of a central system to close troubled banks. The decision also sends a strong signal to investors that the euro zone’s 17 members, from powerful Germany to stricken Greece, can pull together to tackle the bloc’s problems.