Ah yes - this morning, out of the ER room. Tonight, back in theatre. Why do hacks write nonsense about the EU being 'over the worst' ????

Twelve big lenders have confirmed their participation in the Greek debt swap, according to the catchily-titled Steering Committee of the Private Creditor-Investor Committee for Greece (PCIC). They are: Allianz, Alpha Bank, Axa, BNP Paribas, CNP Assurances, Commerzbank, Deutsche Bank, Eurobank EFG, Greylock Capital Management, ING Bank, Intesa San Paolo and National Bank of Greece. Following reports that German investor representative Deutsche Schutzvereinigung für Wertpapierbesitz has recommended that some holders of Greek debt should reject the proposed debt swap .... Reuters are reporting that most German lenders will accept the proposed haircut of 53.5pc. More from Reuters: While Greek sovereign debt owned by German lenders has a face value of roughly 15 billion euros ($20 billion), in most cases they have already written down that value in their books by about three quarters. FMS Wertmanagement, the biggest creditor with an exposure of nominally more than 8 billion euros, will accept the deal, a person close to the lender said on Monday. FMS, the bad bank set up to hold the toxic assets of bailed-out former bluechip lender Hypo Real Estate, is to formally decide on accepting the debt cut later this week, the person said. Commerzbank, which had originally invested almost 3 billion euros in Greek sovereign bonds but has written down its exposure to 800 million, said last month it had little choice but to take part in the bond swap. At the time, chief executive Martin Blessing said: "The voluntariness (of the Greek debt swap) is about as voluntary as a confession at a Spanish inquisition trial." A true analisys of the private sector activity across the eurozone suggested business activity contracted in February after showing tentative signs of growth a month earlier. Markit's eurozone composite PMI fell to 49.3 – revised down from an initial reading of 49.7 – from 50.4 in January, where anything below 50 shows a contraction. The poor data, which suggest the region is slipping back into recession, pushed markets lower, with the Ibex in Spain down 1.3pc and Italian markets 0.7pc lower. The data also heightened concerns that the austerity measures pushed by European policymakers are merely serving to cut off growth in already hard-hit countries. Markit said its reading for Spain's services sector, which accounts for 70pc of the economy, fell from 46.1 to 41.9, against forecasts for a decline to 45.9. The services sector in Italy fell from 44.8 to 44.1, with employment shrinking at its fastest rate since July 2009, while the Bank of Italy predicted the country's economy was set to shrink by 1.5pc this year. That compares with the Italian government's forecast of a 0.4pc contraction....Ah yes - this morning, out of the ER room. Tonight, back in theatre. Why do hacks write nonsense about the EU being 'over the worst' when (even if it was) this wouldn't excuse its undemocratic approach to every problem....??????

The Greek Ministry of Finance released on Friday the highly anticipated offer document, firing the start on a colossal effort to find Greek bondholders and persuade them to participate in a €206bn debt swap. Athens needs bondholders to agree to the deal within days as part of its effort to unlock the €130bn bail-out funds needed to avert default on March 20. Wolfgang Schaeuble warned that the bailout, which was agreed late on Monday night, might not work. In a letter to German politicians, the finance minister said: “It may also not be the last time the German Bundestag will have consider financial aid to Greece. However, the chances of success with alternatives appear to me to be significantly lower at the current time.” Before heading to the G20 finance ministers’ meeting in Mexico this weekend, Mr Schaeuble suggested he was prepared to consider combining the eurozone’s two bailout funds, the European Financial Stability Mechanism (EFSF) and the European Stability Mechanism (ESM), to protect Spain and Italy. Lucas Papademos, Greece’s technocrat interim prime minister, chaired a cabinet meeting on Friday afternoon that approved the deal after the Greek parliament voted it through on Thursday evening. “We are making a titanic effort to secure financial support for the country,” said Mr Papademos as he left the meeting. Bondholders will be asked to voluntarily take a 53.5pc hit on their bonds by swapping them for new instruments worth 46.5pc of their current value. Bondholders will receive two-year bonds issued by the EFSF and new Greek bonds that will mature over 20 years from 2023. The new bonds will pay a coupon of 2pc for three years and 3pc for another five, followed by 4.3pc for the final 20 years. Saturday 25 February: Group of 20 finance ministers, central-bank governors meet in Mexico Monday 27 February: Belgian bond auction, Italian T-bill auction. German lower house extraordinary session to vote on Greek bailout. Wednesday 29 February: Allotment of ECB three-month, three-year long-term refinancing operations. Finland due to vote on Greek bailout. Thursday 1 March: Euro-zone finance ministers meet. Euro-zone February manufacturing PMI data. Spanish and French bond auctions. Thursday 1 March 1 to Friday 2 March: E.U. leaders' summit. Wednesday 7 March: German bond auction. Thursday 8 March: ECB interest rate decision. Monday 12 March: Euro-zone finance ministers meet. Greece aims to complete PSI by this date. Tuesday 20 March 20: €14.4bn of Greek government bonds mature.

The German Bundestag must vote to approve the Greece package, probably on February 27th.

Greece must still clear four hurdles before it receives its €130bn bailout package.

1) The eurogroup of finance ministers, which meets on Wednesday night, must agree that it has now met the terms of the package
2) The leaders of its political parties must pledge in writing that they will implement it.
3) The German Bundestag must vote to approve the package, probably on February 27th.
4) The long-running negotiations with its creditors over debt restructuring (the Private Sector Involvement) must be concluded.

Gilles Moer of Deutche Bank told Bloomberg TV this morning that it is essential for Greece to maintain its credibility with its international partners. He said that the demand for Greece's leaders to make a commitment in writing "shows the pressure that the Troika is still prepared to put on Greece".

Speaking earlier this morning, Phillip Rösler said the vote was merely a "necessary condition" on the path to Greece's second rescue package, as Athens must also prove that the measures will be implemented. Rösler added that the German parliament must receive a report on Greece from the Troika [the IMF, the EU and the ECB] before deciding whether to give its approval for the bailout fund. That vote is expected to take place in the Bundestag on 27 February.

Fitch Ratings downgraded Italy, Spain, Belgium, Cyprus and Slovenia's sovereign debt ratings Friday as it wrapped up a review of the region. Fitch affirmed its rating on Ireland. All six countries ratings carry a negative outlook, which means there is a slightly greater-than-50% chance they are downgraded in the next two years. The euro briefly tumbled on the news, which came mere moments after the common currency climbed above $1.32 for the first time since Dec. 31. However, the euro clawed back all of those losses already. It was most recently trading at $1.3204. The knee-jerk reaction in the currency market was likely short-lived because Fitch's moves weren't considered as severe as the ones taken by Standard & Poor's two weeks ago. At that time, S&P slashed ratings on nine euro-zone members, including stripping France of its triple-A rating. Fitch's review didn't include any triple-A rated euro-zone nations so France's top-notch rating in the eyes of Fitch remains intact. In downgrading the five nations, Fitch said it is concerned about the divergence of monetary and credit conditions across the euro zone. The ratings firm is also worried about the vulnerability of these countries to further monetary and financing shocks. Spain and Italy have seen yields on their sovereign debt fall sharply in recent weeks, thanks in large part to the European Central Bank's long-term lending program. However, Fitch said future shocks could plague the region until the euro zone secures greater economic and financial stability, including great fiscal integration. "The government is aware of the imbalances in the economy and that's why it's launched an ambitious program of structural reform that will be completed in the first quarter," said a spokeswoman at Spain's Finance ministry. Spain's rating was cut to single-A from double-A-minus. Fitch said without further convergence within the euro zone and a broad economic recovery, a breakup of the common currency bloc cannot be completely ruled out. The likelihood of such a scenario remains small, Fitch added. Fitch cut Belgium's rating to double-A from double-A-plus. Cyprus was cut to triple-B-minus from triple-B. Italy's rating was slashed to single-A-minus from single-A-plus. Slovenia saw its rating cut to single-A from double-A-minus. Ireland's rating was affirmed at triple-B-plus.

• Belgium cut from AA+ to AA
• Slovenia cut from AA- to A
• Cyprus cut from BBB to BBB-
• Spain cut from AA- to A
• Italy cut from A+ to A-

Just a few oints...:

Just a few points :

1. The USA faces West towards the Pacific Rim and China, where growth has continued virtually unabated despite the crisis in the West. Companies like Caterpillar can grow their exports into investment-rich economies. We face East towards a stagnant Europe;
2. We may well find that a recovering USA causes us real problems over the next eighteen to twenty-four months as the rising price of oil in particular, and commodities in general, hits us just as we might have been making a recovery. The USA is investing in shale gas, whilst we are buying windmills;

3. The USA is recovering despite the collapse of the housing market. If you are right, and our housing market has yet to fall, we can expect horrifying negative wealth effects, as well as the turmoil of widespread repossessions, bankruptcies, and a new round of failed banks.

4. Besides, even with Obama in the White House, America is still lightly taxed and regulated compared to the British model. They feed themselves easily and leave a huge surplus for export. And they have still to a far greater extent than here retained the free-spirit, entrepreneurial can-do spirit which has been destroyed here by sixty-five years of socialism. I do fervently wish some of these structural economists would wake up and realize the real economy on Main Street is a wholly different beast than the ephemeral and vacuous "Economy" of the public sector and the financial dis-services. No wonder so many white vans were rushing around the M 25 with ladders on the roof! No wonder imports went so high and retailers were so busy. I am thus most interested to learn how Mr Bootle proposes Britain will drag itself up by its bootstraps, next time, when far too many families are struggling to meet excessive utility bills, motoring costs, food and debt service, etc and taxes direct and indirect are now crippling. Santa Claus?....When GDP growth is driven by government spending which itself is driven by borrowing we have a major problem. GDP = C + I + G + (X - M) ...Take away debt fueled government spending and the grim facts of the depth of our problem and the Herculean task to get out of it are laid bare...What a mess !!!!The US is pumping trillions of dollars into it's economy in an effort to counter the market effects of contraction and deflation. We to a lesser extent, are doing the same. Both are in effect fighting a process essential to balance their economies. There will be huge growth in both the UK and the US. This will be in; unemployment, insolvency, bankruptcies, repossessions, homelessness, civil unrest, crime, and then just when you thought it couldn't get any worse inflation! but fear not, super rich hedge fund, pension fund and bankers will be voting to reduce the pay of super rich CEOs NOT!

The Bank of Spain said its indicators showed a "marked weakening" of household consumption and investment in the last quarter. The construction industry, which has been at the forefront of the downturn after Spain's property bubble burst, is still on a "path of contraction", the Bank added. Exports had slowed to almost half the pace registered in the third quarter, and tourist numbers also fell. Slow economic growth will raise concerns that Spain will not be able to meet its target to cut the budget deficit to from 9.2pc of GDP last year to 3pc by 2013. Mr Rajoy has promised to cut Spain's deficit by €16.5bn in 2012 through a series of tough spending cuts as well as banking and labor reforms. Some of the details of his plans will be laid out today following Mr Rajoy's second cabinet meeting. However ...In a real fiscal union where everybody was really committed, Germany would shift some industrial production facilities down into Spain, Italy, and Greece, maybe some automotive production or something similar and would lead with the introduction of Eurobonds so that the entire Euro Zone shared the debt (which actually isnt as high as the USA, UK or Japan) and the economic plight of these southern countries could be greatly alleviated. The simple fact is that its a single currency area in name only, and the hard fast one for all commitment just isn't there. Germany wont put its money where its mouth is. I know Germany cant be blamed and understand the feelings they have against what they feel is a lackadaisical attitude down south, but its the same thing in the UK for Wales and Scotland and in the USA for Mississippi and Louisiana, but the fact is that if Germany isnt willing to share the debt and the wealth, its not a union and by all rights should be immediately disbanded.

Spain's new economy minister warned the E.U. that the fragile economy was slipping back into recession – barely two years after climbing out of its last economic downturn. Luis de Guindos, economy minister in the new conservative Popular Party government led by Mariano Rajoy, conceded that he expected the economy to contract up to 0.3% in the final three months of 2011 and again in the first quarter of the new year. Technically, a recession is two consecutive quarters of negative growth. Spain last pulled out of recession at the start of 2010 but is still trying to tackle the highest rate of joblessness in the eurozone of 21.5%. Its new government is committed to curbing the budget deficit by €16.5bn (£14bn) in 2012 through sweeping cuts and is expected to try to clean up banks that have been battered by loans to property companies and exposure to troubled countries in the eurozone. "This quarter the Spanish economy will surely see a downturn and we will return to negative growth," de Guindos told a news conference. "Let nobody be fooled, the next two quarters are not going to be easy either in terms of growth or employment," he was quoted as saying by the Associated Press. Spain is trying to reassure markets that it can curb its deficit to avoid being punished by investors anxious about the future of the 17 nation European single currency. Just before the Christmas holiday, the yield on 10-year bonds – which reflects the real cost of borrowing for governments – increased two basis points to 5.41% before a 7 January deadline for employers and unions to come up with a labour reform agreement demanded by the government.

The West's economic malady is basically caused by an American decision about 15 years ago, as the nation's industrial policy in a post industrial world. The policy is imposed on the rest of the world through a new form of American "banking", which eventually led to the 2008 debacle. Since then, only two major economies (Germany and China), BOTH of which resisted the continued predatory practices by American banksters, and both economies recovered. Other Western nations were not as vigilant, and have no hope of recovering. Today, American banking is synonymous with "trading". Trading what? Mostly derivatives. I believe it was reported that B of A made 90% of its profits in 2010 on trading; the number of SBA loans made also dropped by about 90% from previous levels. American banks don't bank (lend) anymore, they trade. One can not create or maintain stability by pushing a national policy of rounding up all the major banks and financial institutions of the nation, and have them GAMBLE (derivatives trading is purely redistributive, and produce nothing) as a principal occupation, at a scale 50 times the GDP of the entire nation. Worse yet, this irresponsibility is further forced upon the world, on all other nations that wish to trade with America, in the name of free trade. Trying to achieve stability for the world that way, is like walking south from Paris, in order to reach London.

Europhiles remind me of religious...freaks

BUCHAREST - ROMANIA - Do we want a new place in Europe? There's a whole world of independant countries out there, some of them even have functioning economies. The EU have completely lost their way, we should have nothing more to do with it until sanity returns. Europhiles remind me of religious people. In fact I think being a Europhile is a kind of religion. If you give some of the overwhelming scientific evidence of how old the world really is to a religious person who believes the world is only 4000 years old, they will still believe the world is 4000 years old no matter what you tell them. Tell a Europhile who is frightened that we could not survive out of the EU, that the Swiss or Norwegians are better off for being out of the EU, they will still be as worried & convinced we couldn't survive out of the EU as before you spoke to them.
Yet they wouldn't be able to provide any evidence why they believe this. Without even understanding their own reasons why. Yet we don't even have enough money to fund our own police, hospitals & schools properly & pensioners who've paid taxes & national insurance for 45 years barely exist on their pension.

Red carpets, pageantry, tuxedos, and "Deutschland Uber Ales".

THE RUSSIAN BEAR - Widespread reports of fraud in last Sunday's national parliamentary election have galvanized an opposition long marginalized by repressive policies and by state-run news media that virtually ignored them. Protests, some attracting thousands, rolled on for three consecutive nights in Moscow and St. Petersburg after the election showed unexpectedly fierce anger against the government and Prime Minister Putin's ruling United Russia party. United Russia suffered losses of more than 20 percent of seats it previously held in the State Duma, and critics and local election observers say even that result was inflated by fraud. Smoldering resentment caught fire, largely through social media, and the country on Saturday expects to see a massive protest rally in Moscow and demonstrations in some 70 other cities."This will be a watershed step in the development our democracy. We expect it to become the biggest political protest in 20 years," Ilya Ponomarev of the Left Front opposition group said Friday.There may soon be a symbol to the protests: white ribbons. A group of activists sent up a web site urging people to wear them in support of Saturday's demonstrations. They're not yet visible on Moscow's streets but some opposition leaders and even TV presenters are wearing them in their lapels.....

But... we are more into red carpets, pageantry, tuxedos, and "Deutschland Uber Ales". All of this goes to prove that the Ribbentrop -Molotov treatie is being implemented with vengeance and that the Russian Bear will fish the European ponds and The German Boot will stamp allover our nations without remorse !!! Beware of the German criminal record !

Joseph Daul at the EPP Congress in Marseilles speaking at the EPP Congress in Marseilles

Joseph Daul at the EPP Congress in Marseilles, speaking at the EPP Congress in Marseilles. "We will not allow ourselves to be hindered in our effort to rebuild the 'House of Europe' by those who refuse to move forward. But we cannot build a solid, safe house if those living in it don't feel comfortable" - Speaking at the EPP Congress in Marseilles on the eve of the European Council, the Chairman of the EPP Group (center-right) of the European Parliament called for Europe to choose "the right path". "The right path is that of governance of the Euro through freely-shared sovereignty on budgetary, tax and social aspects. The right path is that of a common effort from the 27 Member States, and an even bigger effort from the 17+ Euro zone countries, to better manage their public finances and to help entrepreneurs create new wealth and jobs." Joseph Daul said that the EPP has the heavy responsibility of getting Europe out of the crisis: "But the EPP has always proved in the past that it is up to meeting challenges, be it the creation of the European Community, European reunification, the Single Market or implementing moral standards for the financial markets." Finally, the Chairman of the biggest parliamentary Group in Europe called for "great caution on how we plan our exit from this crisis." "We will either succeed or divide, depending on whether our plans are inclusive - equally respecting small and bigger Member States - or dictated. Depending on whether we prioritize relative strength or whether we prioritize cohesion, we will either emerge from this crisis or we will stay mired in it." On any eventual change to the European Treaties, Joseph Daul said that if the Council is in favor, the European Parliament and the European Commission, guarantors of the general European interest, will actively play their role in the negotiations.

MerKozy "demand tough new eurozone treaty" - demand of whom ???...what a farce !!!

Smoke and mirrors - - Speeding up implementation of the permanent bailout funds, the European Stability Mechanism, to 2012"... The intra-euro zone ESM treaty, draft signed on July 11th here: http://consilium.europa.eu/med... is legally dependent upon the EU treaty change agreed by EU leaders on March 25th: http://eur-lex.europa.eu/LexUr...which now awaits ratification by all 27 member states "in accordance with their respective constitutional requirements" before it can come into force. That is the EU treaty change which Hague ruled would not be put to a referendum, in his statement laid before Parliament on October 13th. "In my opinion the European Council Decision of 25 March 2011 amending Article 136 TFEU with regard to a stability mechanism for Member States whose currency is the euro adopted under Article 48(6) TEU does not fall within section 4 of the Act and no referendum is required in the UK." Far from speeding up the Bill to approve that EU treaty change, Cameron should announce that pending further negotiations he will not be proceeding with its ratification ... About half an hour ago, the Financial Times reported that S&P is putting the 6 AAA-Eurozone counteries, i.e. France, Germany, Netherlands, Austria, Luxemburg and Finnland COLLECTIVELY on negative watch, meaning that there will be a 50pc chance of a downgrade in 90 days. S&P cited "political turmoil" in the midst of the eurocrisis as a main reason for their decision, knowing this move will lead to yet more recriminations of politicians against itself: http://www.ft.com/intl/cms/s/0/7cf2e0ae-1f63-11e1-9916-00144feabdc0.html#axzz1fgeFjZei .... So much for the new investor confidence in the new approach of the eurozone leaders towards a solution of the crisis.

Sky News's business news editor Lucie McInerney tweets that her office has developed a new nickname for the Merkel, Sarkozy, Monti trio: And so we have a new European nickname after the Monti, Sarkozy, Merkel presser in Strasbourg today: #Monkozel is born! ... Merkel stressed that her position on "stability bonds" hasn't been altered by the meeting. She's not a fan. What she wants to see are EU treaty changes and punishments for countries that step out of line: The countries who don't keep to the stability pact have to be punished - those who contravene it need to be penalized. we need to make sure this doesn't happen again.... Sarkozy reminds the conference that Fitch currently rates France's AAA rating as "stable", before having a dig at Merkel by suggesting this information must not have made it across the Rhine. Nevertheless, he admits that things are far from rosy. Of course we're going into a crisis, it's a crisis of sovereign debts. If it gets worse it will pose a problem for all of us, not just France. That's why we're working towards a solution. The current situation is not satisfactory: we're working on that. I understand that our German friends have not understood what the rating agency Fitch has said. What they said was the triple A rating of France is stable - maybe that translation has not crossed the Rhine river. We've got a choice between being obstinate, regressing because we're not listening to others. Germany has a history, traditions and culture amd France has different ones - we're trying to come to the same point of view to try and recover the trust Europe needs . ... Angela Merkel about the EU treaty changes she's seeking: The ECB is independent, the modification of the treaty does not conern the ECB, which is dealing with monetary policy and financial stability. We are worried about a fiscal policy. It's a very different chapter. It has nothing to do with the European bank. Sarkozy says that France, Germany and Italy will do all they can to ensure stability in the eurozone. Sarkozy says that he and Merkel will meet again with Mario Monti soon, in Rome, and claimed that during today's meeting all three of them underlined their faith in the ECB.

German government officials tried to play down the scale of the abortive bond auction

The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues. "We carried an undue burden for protecting the European banking system from contagion," said finance minister Michael Noonan. "We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Wherever there is a reckless borrower, there is also a reckless lender," he said, alluding to German, French, British and Dutch banks. Mr Noonan hinted that Dublin is asking for some of interested relief on a €31bn EU promissory noted linked to the Anglo Irish fiasco, among other matters. Mr Noonan said Ireland's public mood has turned very sour. "We have indicated to Europe's authorities that it will be difficult to get the Irish public to pass a referendum on treaty change," he said. The EU's new fiscal rules would be legally binding and "justiciable" before the European Court, he said. This raises the likelihood that Ireland's top court would insist on a referendum. The Irish voted `No' to both the Nice and Lisbon Treaties, before being pressured into repeat ballots, and would certainly some form of quid pro quo in this case. The European commission president, José Manuel Barroso, has admitted that it will be impossible to save the euro unless eurozone countries agreed to strict central controls on their tax and spending policies. Barroso's warning, his starkest yet in the sovereign debt crisis, came as Germany suffered what analysts called a "disaster" as it managed to sell only two-thirds of its 10-year bonds (bunds) at auction. With markets already pricing in an imminent endgame for the single currency, France suffered further ignominy with a warning shot across its bows about its triple-A credit rating from US agency Fitch. The euro slid to its lowest level against the dollar for seven weeks. German government officials tried to play down the scale of the abortive bund auction, pointing to the lowest rate – 1.98% – ever recorded for such a long-term bond. But the Bundesbank was forced to retain almost €2.4bn of the planned €6bn sale "for another day" and analysts said the weak demand indicated that eurozone contagion was now afflicting Europe's strongest economy. The commission president, bristling with impatience, exasperation and anger, made his remarks on the euro's survival at a Brussels news conference where he launched a green paper on so-called stability bonds – common eurozone debt instruments for pooling sovereign risk.

The eurobond battle rages on

IMF managing director Christine Lagarde said: The Fund has been asked to enhance its lending toolkit to help the membership cope with crises. We have acted quickly, and the new tools will enable us to respond more rapidly and effectively for the benefit of the whole membership. The reform enhances the Fund’s ability to provide financing for crisis prevention and resolution. This is another step toward creating an effective global financial safety net to deal with increased global interconnectedness. No potential customers for the IMF's new lending facility have yet been named, but as Italy and Spain continue to struggle with their cost of borrowing they would seem like ideal candidates. The IMF has said it will work with countries that have "relatively strong policies and fundamentals", which seems likely to rule out Greece. The fund would allow a country to borrow up to five times the value of the country's IMF quota, or permanent contribution, over six months. Based on its IMF quota, Rome could potentially tap the new IMF fund for some €45.5 billion, while Spain could get €23.3 billion. More on the IMF's new lending facility, which is aimed at helping "bystander" countries protect themselves from contagion. According to a statement released this afternoon the new tool will be used to aid countries with "relatively strong policies and fundamentals" but whose economies are endangered "during periods of heightened economic or market stress"....The "idiocy" of the day : A cunning ruse from EU Commisioner Olli Rehn - to try and win round a sceptical German public, he has renamed "eurobonds" - debt which would be issued jointly by all 17 nations using the euro rather than by Greece, Germany etc individually - as ... "stability bonds"... hahaha (what an imbecile) - Catchy... And unusual for a European Commissioner to suggest the euro has become such a tainted brand that it's better off airbrushed from any financial dealings... The eurobond battle rages on today. Sarkozy, Cameron and the EC have been pushing for them hard, claiming they are the solution to the debt crisis. EC President Barroso even rebranded them "stability bonds" yesterday, not that it seemed to sway a cynical Angela Merkel. She continued her resistance to the plan, joined by Jean-Claude Juncker and Herman Van Rompuy (onother narrow minded fella'), saying: If at all, this discussion belongs at the end - so I don't find it particularly fitting that we are now once again conducting it in the middle of the crisis, as if it were the answer to this crisis. In the long term, it isn't.

Silvio Berlusconi has agreed to resign by January

Italy is very much to the forefront again - the government is hanging by a thread. Italian newspaper Repubblica is reporting that Silvio Berlusconi has agreed to resign by January in exchange for agreement from his coaltion partners on reform of pensions and government bureaucracy.

Italy, which has €1.9 trillion (£1.65 trillion) of debt, will try to sell €10.5bn of government bonds today, even as it races to come up with a credible debt-reduction plan in time for today's summit in Brussels. Obviously if Italy is without a leader, or can't get agreement on debt reduction, it will make getting a final agreement at this afternoon's meeting all the harder - it is the eurozone's third-largest economy after all...

The International Monetary Fund is considering taking part in the bail-out fund via a special investment vehicle (SPIV), Reuters reported. To increase the firepower of the €440bn EFSF without actually putting more money into it, the SPIV (try not to laugh at the name) will be able to issue debt and use the money raised to buy the bonds of indebted nations in the secondary markets, or make loans to governments. The SPIV would be able to raise money from private investors and sovereign wealth funds, and the IMF could also contribute. Of course, when the IMF is involved, it means stakeholders countries taxpayers are on the hook because of the country's contribution to the fund.

The European Central Bank (ECB) has done all it could to halt the spread of the European debt crisis and protect the financial system, and now it's up to governments to do their part, outgoing ECB President Jean-Claude Trichet says. "I think that the ECB has done all it could to be up to its responsibilities in exceptional circumstances…The ultimate backstop is, of course, the governments. To do anything that would let governments off their responsibilities would be a recipe for failure,” Trichet tells the Financial Times. Further economic integration among eurozone countries will be needed to end the current crisis and prevent new ones, says Trichet, whose eight-year terms ends later this month. "I think that we are experiencing history in the making. My sense is that no country, no individual, no leader will take the responsibility of going backwards. That’s the reason why I am confident." Europe remains at risk of falling back into recession in wake of the debt crisis, caused by fears that Greece may default and take the continent's financial system down with it. The ECB has cut interest rates and held them at 1.5 percent and some European monetary authorities say there should be no rush to raise them, as inflation remains at bay. "I expect inflation to drop below 2 percent next year," says Jozef Makuch, Slovakia's central bank chief, according to Reuters. "Negative gross domestic product can't be ruled out if downside risks materialize."

Europe could melt down in two weeks — three tops — and take the world down with it, IMF adviser and Harvard economist Robert Shapiro says.
The fate of the industrial world's economy lies in European policymakers' hands.
"If they cannot address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system," Shapiro tells the BBC, as reported by Zero Hedge. "We are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world."
Greece has been teetering on the brink of default for a while now, and European officials have been working with the country to keep it in the eurozone via aid packages. A default on its debts could damage the European banking system since banks across the continent are either directly or indirectly exposed to Greek debt.
U.S. banks exposed to Greek banks will feel the heat as well should Greece default and spark a crisis similar to the Lehman Brothers collapse in 2008.
"This would be a crisis that would be in my view more serious than the crisis in 2008," Shapiro adds.

AUSTRIA - Austrian lawmakers have voted to expand the powers of the eurozone's bailout fund, which is designed to help Greece and other potentially struggling countries deal with their debts. Friday's passage means that Austria guarantees to provide 21.6 billion euros ($29.4 billion) to the fund, compared to 12.2 billion euros previously. If all 17 eurozone nations agree to increase their share, the fund will have 440 billion euros ($600 billion) at its disposal. Parliament's backing had been expected, with the governing center-left coalition supported by the opposition Greens in backing the measure. Only two rightist parties opposed the bill. Austria's endorsement comes a day after German parliamentarians approved beefing up the so-called European Financial Stability Facility.

"Germany neither intends nor wishes to interfere in the internal affairs of Austria, to annex Austria, or to conclude an Anschluss."
Adolf Hitler - 21st May 1935

"The sovereignty of the German state is inviolate and anchored in perpetuity by basic law.

Andreas Vosskuhle, head of the constitutional court, said politicians do not have the legal authority to sign away the birthright of the German people without their explicit consent. "The sovereignty of the German state is inviolate and anchored in perpetuity by basic law. It may not be abandoned by the legislature (even with its powers to amend the constitution)," he said. "There is little leeway left for giving up core powers to the EU. If one wants to go beyond this limit – which might be politically legitimate and desirable – then Germany must give itself a new constitution. A referendum would be necessary. This cannot be done without the people," he told newspaper Frankfurter Allgemeine. The extraordinary interview comes just days before the Bundestag votes on a bill to revamp the EU's €440bn bail-out fund (EFSF), enabling it to purchase EMU bonds pre-emptively and recapitalise banks. Tensions are running high after it emerged over the weekend that officials are working on plans sketched by the US Treasury and the European Commission to "leverage" the firepower of the EFSF to €2 trillion, in conjunction with lending from the European Central Bank. Carsten Schneider, finance spokesman for the Social Democrats, demanded that Chancellor Angela Merkel and finance minister Wolfgang Schäuble clarify their "true intentions " before the vote on Thursday. "A new multi-trillion programme is being cooked up in Washington and Brussels, while the wool is being pulled over the eyes of Bundestag and German public. This is unacceptable," he said. Prince Hermann Otto zu Solms-Hohensolms-Lich, the Bundestag's deputy president and finance chief for the Free Democrats (FDP) in the ruling coalition, expressed outrage over the secret plans. "Unless the German finance minister can give an immediate assurance that there will be no leveraged formula, I will not vote for this law. We might as well dispense with months of negotiations if all this means is that the Bundestag will be circumvented and served cold left-overs," he said. The accusation that German leaders are conspiring with EU officials to emasculate the Bundestag is highly sensitive, going to the core of the raging debate in recent months over EU encroachments on German democracy.