The draft eurozone summit statement (to be issued after Sunday's talks) is circulating and it confirms that a lot of agreement still has to be reached on the three core issues: private sector involvement in Greek debt (increased haircuts), bank recapitalisation and, above all, "increasing the efficiency of the EFSF". The first and last of these will be the hot topic at tomorrow's eurogroup meeting starting at 1400CET while the middle one (banks) is on the agenda for the ecofin meeting on Saturday morning (attended by George Osborne and the other nine "outs"). These sections are left pretty well blank or in brackets, including the agreement to give the Greeks their sixth bailout tranche worth €8bn and the prospect of a new EU-IMF programme with Athens to be concluded by the end of November. It's also worth noting the reaffirmation of "our unequivocal commitment" that PSI "is and will continue to an exceptional solition applying only to Greece as its unique condition requires a unique solution." And there's talk of the other eurozone countries reaffirming their "inflexible determination" to abide by sustainable fiscal conditions etc. There are these gaps but it is clear that Herman Van Rompuy, European Council president and proposed eurogroup president too, wants a full-scale political deal on Sunday - in tome for Monday's market openings. "The crisis, however, is far from over, as shown by the volatility of sovereign and corporate debt markets. Further action is needed to restore confidence. That is why today we agree on additional measures reflecting our strong determination to do whatever is required to overcome the present difficulties," the draft communique says. And the statement indicates that eurozone countries are discussing plans for national budgets to be based on growth forecasts produced independently from government (the OBR model) and, in case of consistent upward bias, governments will be forced to use European commission forecasts. And, yes, the commission and eurozone partners will be empowered to impose changes on budgets if countries are too far out of line regarding their deficit. As we try to get more on that Troika report into Greece (several news agencies are picking up the same story, but there seems to be little more detail immediately available), one thing worth noting is that the German finance minister has said there is no agreement on EFSF leverage. This, of course, is the idea that €440bn could become €2tn if the fund could borrow from the ECB, or just guarantee the first 20% of losses or some other way of doing it. Reuters is saying Wolfgang Schäuble saying there is no agreement as yet.

ATHENS—Greece was paralyzed by a massive two-day strike Wednesday as groups ranging from civil servants to pharmacists and bakers walked off the job ahead of a key parliamentary vote Thursday on new austerity measures. Across the country, public services were frozen, with central and local government offices closed, schools and courts shut, and hospitals operating at bare minimum staff levels. A couple walks by pilling garbage during the second week of a strike by municipality workers and garbage collectors in Athens on Wednesday. Transport services were disrupted as ferry operations were suspended by a dockworkers' strike, while national rail services ground to a halt, and Greece's two major airlines—Olympic Air and Aegean Airlines canceled dozens of flights owing to a 12-hour walkout by air traffic controllers. Tens of thousands of Greek retailers and small businesses joined in, shutting their shops in protest over recent tax hikes and government cuts that have pushed the country deep into recession and led to a dramatic rise in the number of businesses declaring bankruptcies. The 48-hour strike, called by private-sector umbrella union GSEE and its public-sector counterpart ADEDY, is the second time this year that the two unions have called a two-day walkout over government austerity measures. It follows weeks of almost daily strikes, demonstrations and sit-ins, as well as a two-week-long protest by municipal workers that has left uncollected garbage piling up on the streets of Athens and other cities. "We have reached the limits of our endurance and, what is worse, is that there is no ray of hope," said Stathis Anestis, spokesman for GSEE. "We want to send a message that these austerity policies have been a catastrophe for Greece." Under pressure from its international creditors, Greece's government this month submitted legislation that would further cut public-sector jobs and wages, slash pensions for high-income earners, curtail collective-bargaining rights for workers and enact a new levies on taxpayers, among other things. On Thursday, Parliament will vote on the bill just days before a Sunday summit of European leaders that is expected to produce a comprehensive solution to the bloc's debt crisis, and which will also decide whether to release badly needed aid for Greece. At stake is an €8 billion ($11.0 billion) tranche of aid from the European Union and the International Monetary Fund that Greece needs in the next few weeks. The government has said that without the funding, it will run out of money by mid-November.

Germany(the IVth. Reich) takes over Greece, according to the Ribbentrop - Molotov Pact !!!

The European Commission Task Force, headed by Horst Reichenbach, launches officially today initiatives to support Greece proceed with reforms. This Task Force is considered more powerful than Troika’s team. This is a group of technocrats with Commissioner Olli Rehn as a direct supervisor. The team would consist of European Commission and EU member states officials, and requests for participation have already exceeded 500, according to Rehn. Middle-level executives have already visited ministries and public organizations seeking issues for technical support. Although, officially the main agenda item is the National Strategic Reference Framework, it is considered clear that the substantial objective is to implement the terms of Memorandum of Understanding and promote necessary reforms. The meeting between Reichenback and Greek FinMin Evangelos Venizelos is scheduled for Tuesday, the first day of his arrival in Athens, is considered indicative. The former vice president of the European Bank for Reconstruction and Development is a man of Barroso’s absolute confidence, while his team would include also representatives of Greece’s lenders, who can propose measures. EU officials say that the Task Force’s role would expand as time passes, while there would be increased collaterals in case Greece receives the next aid instalment and the second bailout loan. The aim is to avoid the repeat of slowdowns and delays in implementation of the memorandum, which provides reforms in public utilities and sector, healthcare system, insurance system, closed professions, etc. Many government officials anticipated this team in order to overcome intraparty and union pressures in areas of great influence. But there are also government executives who clamour for loss of national sovereignty in exchange for a new loan....And so, Germany(the IVth. Reich) takes over Greece, according to the Ribbentrop - Molotov Pact !!!

The EU will this week launch plans to invest €50bn (£44bn) in modernising digital, energy and transport networks, creating hundreds of thousands of jobs over the next few years. The European commission scheme envisages the use of bonds backed by the European Investment Bank (EIB) to fill funding gaps left by cash-strapped governments and leverage up private investment. The plans, due to be revealed on Wednesday, are designed to pay back taxpayers for the aid and guarantees of €4.6tn given to the financial sector in the past three years. Despite this taxpayer funded support, venture capital investments in Europe slumped last year to just €3bn. EIB president Philippe Maystadt said: "Infrastructure finance in Europe has suffered since the financial crisis and banks face new constraints on long term lending. Project bonds could be a way to attract capital from other investors, such as pension funds and insurance companies, and be a useful addition to traditional financing options." The EC says developing smart infrastructure could require up to €1.5-2tn for trans-European transport networks, the energy sector and information and communication technologies. That equates to the putative size of the eurozone bailout fund discussed by G20 finance ministers at the weekend. The bulk of the funds to be announced this week (around €32bn) would go to transport infrastructure projects, with €9bn each earmarked for energy, including smart grids, and for broadband infrastructure and digital public services. Kroes said the money would be largely in the form of equity, debt or guarantees provided by the EU and EIB, thus improving the credit rating of projects. These would be proposed not only by telecoms operators but water and electricity utilities, co-ops or construction firms.

Geting closer to the Ribbentrop - Molotov Pact implemetation ..!!!

PARIS—France and Germany were moving closer on a comprehensive package to stabilize the euro zone that would bolster the firepower of the bloc's rescue fund and strengthen the region's banks, the countries' finance ministers said Friday, though officials cautioned they were still working on many of the details. French and German finance ministers Friday said they have made progress on delivering a comprehensive package to stabilize the euro zone. Meanwhile the cost of the collateral Greece is expected to provide its creditors has zoomed up. Charles Forelle reports live from Paris. Finance ministers and central-bank chiefs from the Group of 20 leading nations were meeting here Friday and Saturday, with the threat the euro zone's crisis poses to the rest of the world economy and financial system dominating discussions. France's President Nicolas Sarkozy gestures at Germany's Finance Minister Wolfgang Sch??uble after a meeting at the Elys??e Palace in Paris. Meeting ahead of that gathering, French Finance Minister François Baroin and his German counterpart Wolfgang Schäuble said the two governments have developed specific agreements to present to other European countries at a summit in Brussels on Oct. 23. The package—first promised by German Chancellor Angela Merkel and French President Nicolas Sarkozy last Sunday—includes maximizing the force of the euro zone's bailout fund and finding a solution for Greece's debts. "We also made progress on the shared plan to recapitalize banks," Mr. Baroin told reporters after a meeting with Messrs. Schäuble and Sarkozy. As Portugal announces further austerity cuts and Spain experiences another ratings cut, G-20 finance ministers talk to the IMF about a possible role in the euro-zone crisis. France and Germany hold the key to resolving the biggest question hanging over global financial markets: how to boost the European Financial Stability Facility's firepower without requiring nations to contribute further funding or guarantees. According to a European Union official familiar with the situation, Germany and France are weighing two models but leaning towards using the fund to insure bonds from euro-zone countries.

"Germany at war" to fulfill the RIBBENTROP - MOLOTOV pact provisions - European officials have confirmed that discussions are afoot to boost the eurozone bail-out fund's firepower as part of a grand plan to contain the region's sovereign debt crisis in Greece. Confirmation of the talks, however, sparked outrage in Germany, where opposition politicians threatened to derail the plans by voting against a key amendment to the bail-out fund this Thursday. The head of Germany's constitutional court also piled on the pressure by warning the government not to circumvent the law "by the back door". Despite the wrangling in Germany, markets across Europe staggered back to life on hopes that the crisis could be contained and the recovery restored. In the UK, the FTSE 100 rose 0.4pc to 5,089.37 after £78bn was wiped off shares last week. In France, the CAC 40 rose 1.75pc, and Germany's DAX recovered almost 4pc. Policymakers in Europe are working on a three-pronged plan to ringfence the euro crisis around Greece. Under the proposal, banks across the continent would be recapitalised with tens of billions of euros, the €440bn European Financial Stability Facility (EFSF) would be "leveraged up" through the European Central Bank (ECB) to provide €2 trillion of firepower, and Greece would be subjected to a managed default on 50pc of its debt but stay in the euro. Officials hope the move would restore confidence in Spain and Italy and calm nervous bond markets.
So far, Rusia took over the eurozone energy fields via the euro, that was implemented for this reason only, otherwise making no sense ...ca you imagine how hard would have been to take over the european economies one by one through their individual currencies ?

Why do they always say that ? - if the eurozone breaks up, the EU will not survive? The EU did just fine before the euro hit the scene.
And check this out: "Without the EU,...Mr Rostowski predicted there could be a new war within a generation." So they give the EU all the credit for avoiding war on the European continent over the last 70 years. But correlation does not imply causation, does it? 70 years is really not a very long time, is it? The European peace of the last 70 years could more plausibly be attributed to the vibrant postwar economic environment, to the presence of a large, dangerous and nearby enemy (USSR) and to many other factors, rather than the Brussels bureaucracy. In a continent of free speech, one might be allowed to allege that Eurokrats would rather see half the Greek population destitute before they themselves might be forced to work to retirement rather than cash in on the pig trough stuffed with European sinecures. Let us please hope that this madness ends soon and that the populations of Europe begin to realize that it is just not sustainable.

About the E.U. ? I'm afraid that the only way we will see the end of the euro & the final flourish of the eu is through market forces! The members of that corrupt organisation will fight tooth & nail to protect their ivory towers. We will never see any united statement that they have failed only a continuing, pathetic stream of comments on european unity both politically & economically! Put this stinking corrupt organisation out of its misery & kill it dead!

Urban legends : Germany is strong economy & Italy is stable

Germany - Despite its stellar status, Germany is far from all-conquering. The Dax share index has lost 29% since the beginning of July – significantly worse than London's FTSE 100 – while business confidence is tumbling at the fastest rate since the collapse of Lehman Brothers. New data showed a sharper than expected fall in industrial orders in July, especially from beyond the eurozone. German taxpayers are becoming increasingly sceptical about efforts to help eurozone strugglers such as Greece. That in turn has put domestic pressure on the chancellor, Angela Merkel, whose coalition government has suffered a string of setbacks this year.

Italy - Against a backdrop of nationwide strikes, the government of embattled prime minister Silvio Berlusconi is scrambling to secure parliamentary backing for a revised reform package, new tax rises and spending cuts. The 20% VAT bracket will be raised to 21% and a special 3% levy will be imposed on incomes of more than €500,000 (£439,000). Berlusconi said ministers would approve a new "golden rule" in the constitution on balanced budgets and simplify local government.A strike in Rome on Tuesday showed the strength of feeling that richer Italians had escaped tax rises and spending cuts. Analysts believe Italy could be the next Greece. Economist David Mackie at JP Morgan said: "Once you say to Italy, we will not allow you to fail, they then have the upper hand. There has been a moral hazard issue with Greece for some time. Now we have one in Italy, too."

BRUSSELS—Euro-zone policy makers on Thursday appeared no nearer to settling a dispute over Finland's collateral demands in exchange for participating in a €110 billion ($158.6 billion) bailout for Greece, raising concerns that the Mediterranean nation may default. Markets have grown more worried about the potential for a Greek debt default amid an apparent lack of progress in resolving the collateral issue this week. Finland, meanwhile, shows no sign of backing down. Students protesting legislation trimming education spending scuffled with riot police Wednesday in Athens. Also Thursday, German Chancellor Angela Merkel unexpectedly canceled a trip to Russia in early September to shepherd through parliament a crucial change to the euro-zone bailout fund. The cancellation comes at a sensitive time for relations with Russia, and amid growing nervousness about dissent within the ranks of her own party over her handling of the euro-zone debt crisis. "The date collides with the introduction of the [European Financial Stability Facility] treaty into the Bundestag," a German government official said Thursday, adding that the chancellor wants to stay in Berlin due to the significance of the issue. Yields on Greek two-year bonds rocketed Thursday to a record of over 43%, according to Tradeweb, and the cost of insuring Greek government bonds against default also rose sharply. Greek five-year sovereign credit-default swaps were 1.37 percentage points wider at 22.75 percentage points, according to Markit. Euro-zone governments are looking into alternative forms of collateral after a cash deal reached earlier between Greece and Finland was rejected by key member countries, including Germany and the Netherlands. Under terms of that deal, Greece would pay Finland hundreds of millions of euros from its bailout loans as collateral for those same loans at the expense of other euro-zone countries. Since Finland is set to contribute just 2% of Greece's total rescue package, guarantees from the richer euro-zone nations would be going directly to Finland. The collateral dispute, if not resolved soon, could derail a second bailout package for Greece agreed by euro-zone leaders on July 21. Without support from all 17 euro-zone countries, no funds can be released, while changes to the European Financial Stability Facility, the currency bloc's bailout fund, can't go forward either. The International Monetary Fund, which has been contributing to Greek bailout loans, opposes any deal that would threaten its preferred-creditor status, which ensures the fund is always first to be repaid.

The recent Franco-Prussian, upssss, Franco-German summit in Paris between Chancellor Angela Merkel and President Nicolas Sarkozy, the latest in a series of failed attempts by the deluded duo to overcome the sovereign debt crisis, ended with ringing tones of a "true European economic government". Cue alarm bells this side of the Channel at the prospect of the 17-strong eurozone at the very least being transformed into a fully-fledged fiscal union, nay a united federal state, with headquarters in Berlin. Germany would dictate the terms of its creation, oversee it and severely punish those which failed to live up to its own standards of Disziplin und Ordnung, Sparsamkeit und Stabilität.This paranoid fantasy was expressed most crudely in yesterday's Daily Mail by Simon Heffer, whose lengthy rant, not only eurotoxic but virulently anti-German, ended with the phrase: "Welcome to the Fourth Reich." Pitiful if it were not so perniciously poisonous.Even the notion that Merkel and Sarkozy are talking about an "economic government" is wholly erroneous. When the German chancellor talks of Wirtschaftsregierung or the French president of gouvernement économique the Brits would say "economic governance". In Paris it's shorthand for reining back politically the European Central Bank's independence; in Berlin for fiscal probity. The Franco-German pair did little more on Tuesday than rehearse arguments and notions that date back to at least earlier this year for improved economic governance in the wake of the initial Greek crisis. This means turning the EU's discredited stability and growth pact into a more effective mechanism for preventing excessive budget deficits, imposing stricter debt ceilings and resolving economic imbalances.

In one of the biggest banks in the centre of Athens a clerk is explaining how his savers have been thronging to pull out their cash. Wary of giving his name, he glances around the marble-floored, wood-panelled foyer before pulling out a slim A4-sized folder. It is about the size of a small safety-deposit box – and those, ever since the financial crisis hit Greece 18 months ago, have become the most sought-after financial products in the country. Worried about whether the banks will stay in business, Greeks have been taking their life savings out of accounts and sticking them in metal slits in basement vaults. The boxes are so popular that the bank has doubled the rent on them in the past year – and still every day between five and 10 customers request one. This bank ran out of spares months ago. The clerk leans over: "I've been working in a bank for 31 years, and I've never seen a panic like this." Official figures back him up. In May alone, almost €5bn (£4.4bn) was pulled out of Greek deposits, as part of what analysts describe as a "silent bank run". This version is also disorderly and jittery, just not as obvious. Customers do not form long queues outside branches, they simply squirrel out as much as they can. Some of that money will have been used to pay debts or supplement incomes, of course, but bankers put the sheer volume of withdrawals down to a general fear about the outlook for Greece, one that runs all the way from the humble rainy-day saver to the really big money.

Although Fitch welcomed the agreement that was unveiled in Brussels, it has also decided to assign Greece a "restricted default" rating. The decision is based on the fact that private sector investors will contribute up to €50bn by rolling debt over or writing some off altogether. "Fitch considers the nature of private sector involvement in a new financial programme of support for Greece to constitute a restricted default event," said David Riley, head of sovereign ratings at Fitch. "However, the reduction in interest rates and extension of maturities potentially offers Greece a window of opportunity to regain solvency, despite the formidable challenges that it faces." Under the agreement announced last night, investors holding Greek debt can swap it for new securities maturing in 30 years, with higher interest rates on offer if they take a haircut on the size of the loan. More encouragingly for Athens, Fitch said it expects to assign a "low speculative grade" rating to Greece's future bonds. That suggests they would still be treated as "junk", but several notches above default. Fitch also undermined Europe's efforts to build a firewall to stop the crisis spreading, predicting that Ireland or Portugal had just 18 months to avoid the same fate. "If the Irish and Portuguese economies and public finances are not firmly on a sustainable path going into 2013, when both will need to regain access to medium-term market funding, the potential precedent set by PSI [public sector involvement] in the Greek package will be incorporated into Fitch's assessment of the risks to bondholders and reflected in its sovereign rating opinions and actions," said the agency.

The attempt to bail-out Greece and other struggling eurozone countries raised the prospect of a two-speed European Union with far closer ties between countries using the euro compared with those, such as Britain, that remained outside. Nicolas Sarkozy, the French president, said the deal had pulled the eurozone back from the brink of disaster and laid foundations for the creation of an EU “economic government”. He hailed it as “a historic moment” that would provide “bold and ambitious” plans for the creation of an embryonic EU treasury in the form of a European Monetary Fund. “By the end of the summer, Angela Merkel and I will be making joint proposals on economic government in the eurozone. Our ambition is to seize the Greek crisis to make a quantum leap in eurozone government,” he said. “The very words were once taboo. We will give a clearer vision of the way we see the eurozone evolving. We have done something historic. There is no European Monetary Fund yet, but nearly.” Even large euro countries such as Italy and Spain have seen their borrowing costs jump, raising fears of a financial crisis that could destroy the single currency. In response, eurozone leaders meeting in Brussels were drawing up a deal that would effectively use money from successful northern economies such as Germany to support the budgets of indebted nations in southern Europe. Greece will receive another bail-out worth €159 billion and will be allowed to default on some of its debts for the first time. Private investors holding Greek bonds will be asked to contribute to the bail-out, losing some of their money, or having to wait longer for repayment. European stock markets and the euro rose as investors bet that the deal would avert any immediate break-up of the single currency. The agreement being discussed last night will hugely expand the role of a €440  billion (£389 billion) eurozone emergency bail-out fund, effectively creating a European Monetary Fund. The European Financial Stability Facility was set up last year as a rescue fund for countries struggling to raise money from bond markets. Under the deal it will be given significant new powers to use its funds to pre-empt debt crises in euro economies. The fund will be able to make “precautionary” loans to eurozone members, which they could use instead of borrowing money from the markets. It will also be able to make loans to recapitalise banks in the weaker economies and buy back government bonds from private investors.