Hungary pays off IMF debt, may eye EU exit

"We are open to a whole menu of monetary policy instruments," Mr Draghi said, noting that further interest rate cuts had been discussed. "The discussion was wide open."" Sounds like he has Yellen's Disease, but printing money is always the solution for the left to fix fiscal abnormalities... “The ECB will almost certainly be delivering an early Christmas present this year,” said Nick Kounis, the head of markets and macro research at investment bank ABN Amro. Draghi is an enthusiastic proponent of “forward guidance”, the strategy of sending strong verbal policy signals in order to shift financial markets – in this case, driving down the euro.  His dramatic pledge in the summer of 2012 – in the middle of the Greek debt crisis – that the ECB would do “whatever it takes” to save the single currency helped to reassure panic-stricken investors. Jeremy Cook, the chief economist of international payments company World First, said ECB policymakers were likely to have become increasingly concerned in recent weeks about the strengthening of the currency, which makes eurozone goods less competitive on international markets. “Draghi and the executive council couldn’t have been clearer that additional policy easing was coming if they’d had the words ‘sell the euro’ tattooed on their faces,” he said. Euro area GDP rose 0.4% in the second quarter of 2015, a slight slowdown from 0.5% growth in the previous quarter. We must all call attention to the salient fact that the EU, US, UK and Japan are riding along using debt to sustain their economies. QE and other nostrums directly related to money printing thus monetizing the debt must be clearly understood...A number of reasons they do this:

1) kicking the can in the hope some visionary guides us to economic enlightenment before the global economy implodes in it's entirety

2) this is simply a response to the US' decision not to raise rates as well as the Yuan's devaluation a number of months ago. Given the Euro depends on exports, a weaker Euro will prop up the currency. Make no mistake, we're at war, a currency war

3) this is also being pushed as a solution by those who seek to gain the most, ie banks and investment funds. Governments in the aforementioned states are too large and expensive, too inefficient, too prone to spend without consideration of how the debt is affected by the deficits and too prone to call for more taxation in every case where they run short of money.So now it is completely safe to say that the relationship between stocks and underlying fundamentals now NO LONGER EXISTS.

No if's, no maybe's, just absolute fact. Stock valuations are entire fiction. The entire purpose of the Fed / ECB / BoE/ BoJ is to make something levitate. What they cannot do is make anyone with a brain believe a word of it. It is almost game over, pension fund over, banking system over, savings over.  Quantitative easing is not the answer, reality is the answer. Let's just accept that our standard of living is going to fall. QE will delay it and make matters worse, facing reality on the other hand will ensure that the fall in our standard of living will happen now, but won't be as painful in the future when compared to the QE option. The reality is - Too much debt

One of the three following options are open to the central planners.

1. QE for as long as possible - outcome - Dreadful economic future.

2. Attempt to reduce the deficit to zero by the end of this Parliament. - outcome - significant reduction of our standard of living and civil unrest.

3. Attempt to reduce the deficit over a long period of time, bearing in mind the paradox of thrift will make this a slow and relatively painful process, but from my point of view, this is the best option open to us.  A tipping point passed many years ago, we needed brave politicians dealing with the debt issue. However. I can understand why politicians did not grasp the nettle, a fickle public would not vote for them, after all, who wants harsh reality.

Don't forget Target2! Germany is going to take a cold shower of 70-80 billion Euros if there is a Grexit. More worrying Italy and France are up for 10's of billions as well. So it's not exactly a picnic!... Bundesbank's TARGET2 exposure
Amount: EUR 513,365,579,273.88
(As at: 28 February 2015)

I think this whole charade may well simply be about buying time for the "made men" of the Brussels Mafia to settle THEIR creditors and bankers down enough to accept a Greek default and exit and to come up with a creditable excuse that claims the EU is intact and the euro is under no threat ... I've just read Varoufakis's six proposals for negotiation in Brussels next week, and they can be summarised as bla-de-bla-de-bla. In any serious discussion they'd get short shrift. With Juncker there trying to be Greeker than the Greeks, all moral hazard will be blown to bits. So Juncker needs to be told his business is to stay away, shut up, and stop meddling - otherwise his own past 'activities' in Luxemburg will be brought to light...I really don't think the EZ should allow Greek pension funds to be raided, or the ECB or EZ to provide cash for Greece to pay the IMF - the money would never be returned, and it would be an added burden for future taxpayers.  Let us help Greece into an orderly default, grexit from the euro, and the care of the IMF, with vaguely benign promises of rehabilitation 'as and when' ... This could be the final meltdown of the global ponzi scheme that's being going on for over a century. Then all these people who think they are rich will realise that the money they thought they were owed will never be repaid.  The UK and the US didn't avert the collapse of the world's financial systems in 2008, they just postponed it and the imbalances have only got much bigger. If creditors and saver think they're having it tough right now, they ain't seen nothin' yet !

The European Central Bank has launched a push to strengthen the eurozone's banking system and keep troubled financial institutions from holding back the region's economy.

The bank announced Wednesday that a year-long review of 130 of Europe's biggest banks will begin next month. The asset review is an effort to check for hidden bank losses such as loans that are unlikely to be repaid. That will be followed by a stress test conducted along with the European Banking Authority that would simulate bank losses in a crisis. At the end, banks could be pushed to repair their finances by raising more capital.

Troubled finances at some banks have held back the economy of the 17 EU countries that use the euro by making it harder for them to lend to businesses. Banks that have shaky assets - such as bad loans - may be unable to find cash to lend to businesses that need credit to expand their operations. The review is also aimed at restoring confidence in bank finances so they can borrow money more cheaply themselves - and rely less on the ECB's emergency credit offerings.

The asset review is a test of the ECB's credibility. Previous stress tests carried out by the European Banking Authority clcomplicated because Europe does not have a single resolution authority that could carry out the restructuring of troubled banks. European leaders are still debating how to set up such an authority. For now that job remains in the hands of national authorities who have been seen as too reluctant to take tough measures against their home banks ...German banks were "already intensively preparing for the comprehensive assessment"Haha, or in real words, walls of bluff and bluster are hurriedly being erected to hide the massive black holes of the overleveraged biggest german banks. Hopefully the proximity of the ECB in Frankfurt will provide assistance with the fraud.

At least they have money coming in from the Irish and Greek Taxpayer to pay for the credit scams they inflicted on those countries though.eared many banks - only to see some of them rescuing soon after.

Economists say Europe's delay in dealing with bank troubles has held back the eurozone economy. Officials in the United States, by contrast, moved far quicker in the wake of the 2008 collapse of investment bank Lehman Brothers.

The asset review and stress test are preliminary to the ECB taking over as the European Union's banking supervisor next year. The single supervisor is part of a broader effort to strengthen the banking system and prevent a repeat of the debt problems afflicting countries such as Greece and Portugal.

THE "ISLANDERS" - The Prime Minister was warned by Jose Manuel Barroso that his attempts to negotiate a new relationship with the EU would be vetoed by other member states.

As a war of words raged, Downing Street insisted the Prime Minister will go ahead with his plans to get a better deal.

A Number 10 spokesman said: “As the Prime Minister made clear in January, he will negotiate a new deal in the EU and then put the choice of staying in or leaving the EU to the British people in a referendum by the end of 2017.”

Mr Barroso, an unelected Portuguese politician who comes to the end of his presidency next year, had dismissed claims by Mr Cameron that there is wider European support for his agenda to “repatriate” powers on social, employment and environmental legislation back to Westminster....

He said in an interview “there will be others, many, who oppose” Mr Cameron’s call for treaty changes which must be agreed unanimously by all 28 member states.

He said: “Britain wants to again consider the option of opting out. Fine, let’s discuss it. What is difficult, or even impossible, is if we go for the exercise of repatriation of competences because that means revising the treaties and revision means unanimity. I don’t believe it will work.”

He added: “I am for a stronger EU not a weaker EU.”

The row will add to calls for Britain to quit the EU, as championed by the Daily Express.

Last night Ukip leader Nigel Farage said: “Barroso describes Cameron’s plans as ‘doomed to failure’. So they are. It is about time the pro- European establishment of this country was honest with us. There will be no change in our relationship with the EU before, during or after Cameron’s futile renegotiations.

“The EU knows this, Cameron knows this and the people of this country need to know this, too. This country needs a choice now.”

Spanish fishermen have sailed into disputed waters off Gibraltar to protest about a reef put there by the British territory's government. The fishermen say the reef restricts their right to fish but Gibraltar says it will encourage sea-life to flourish.

The Royal Gibraltar Police said the protest, which appeared to pass off without incident, had ended.  The row over the artificial reef has led to tensions between the UK, Gibraltar and Spain in recent weeks. 'Not theirs' Spanish fishing boats sailed from the "Campo de Gibraltar" - the area in southern Spain just over the border from the British territory - to protest near the spot where Gibraltar recently dropped 70 concrete blocks into the sea to create the artificial reef.  The BBCs Tom Burridge, at the scene, said it was "chaotic and tense" as Spanish and Gibraltarian police boats and Spanish fishermen weaved among each other.

At the close of the demonstration, Gibraltar's chief minister Fabian Picardo tweeted: "Big thank you also to Royal Navy, Gib Defence Police, HM Customs and Port Authority for their deployment too. Cool, professional and calm!"

Meanwhile, GBC News, Gibraltar's public service broadcaster, posted: "Spanish fishermen's demo in #Gibraltar waters seems to have passed without incident. Most fishing boats returning to La Atunara now."

Olli Rehn (the incompetent idiot), Europe's economic commissioner, welcomed news that the 17 nations that use the single currency had expanded collectively by 0.3% in the three months to June – the first pick- up in activity since the autumn of 2011.

But Rehn said celebrations should be put on hold given Europe's jobs crisis and the wide disparity in economic performance across the eurozone. "Yes, this slightly more positive data is welcome – but there is no room for any complacency whatsoever", Rehn said. "I hope there will be no premature, self-congratulatory statements suggesting the crisis is over. For we all know that there are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile."

Rehn (the conventional idiot) said the average number for the bloc hid substantial differences between states, with Germany's positive performance outstripping that of Spain and Italy, who remain in recession. He added that some member states still have unacceptably high unemployment rates, with economic reforms still in their infancy, leaving the region with a "very long way to go."

"A sustained recovery is now within reach, but only if we persevere on all fronts of our crisis response: keep up the pace of economic reform, regain control over our debt, both public and private, and build the pillars of a genuine economic and monetary union," he said. Figures released by Eurostat, the EU's statistical agency, showed that a stronger than expected performance by the single currency's two biggest economies - Germany and France - helped haul the eurozone out of recession. Financial markets had been braced for a rise in eurozone GDP following the increase in industrial production reported on Tuesday but were surprised by news that Germany grew by 0.7% in the second quarter and that France grew by 0.5%.  Along with the rest of the world, the eurozone fell into a deep slump in the winter of 2008-09 before recovering in 2010 and early 2011. But a second leg of the downturn then commenced as a result of the eurozone's sovereign debt crisis, which hit confidence, led to a mothballing of investment and resulted in the imposition of hardline austerity programmes.

Despite the growth in the second quarter, the European Commission still expects the eurozone to suffer a second full calendar year of falling output in 2013, with growth resuming in 2014.

Eurostat's figures showed that Italy and Spain - the single currency's third and fourth biggest economies - both remained in recession in the second quarter of 2013. Spain's economy shrank by 0.1% percent on the quarter, while Italy posted a 0.2% decline.

The Dutch economy also contracted by 0.2% but Portugal – one of the three countries that required a financial bailout – recorded the fastest growth of any eurozone country with 1.1% quarterly growth.Funny - some friends just returned from France on a hunt for bargain property - looked at a 3.5M Euro estate that was asking 1.2M.   They passed because as they stated, "you could smell desperation in the air - shops in the nearby town were shuttered - there was no activity on the street"... Can someone explain how France is growing?  The MSM is getting very desperate trying to create "green shoots"... Do you think we are stupid enough to believe this BS?....am so disillusioned with this its incredible. It's just a cycle which lasts 10-15 years. Growth-Depression, Growth-Depression. Couple this with increasing house prices which are doomed to crash again we have the same thing happening. Europe obviously hasn't learned and as the saying goes they will be doomed to repeat the past.

The five countries that implemented Merkel's anti-crisis recipes and cut spending massively in areas such as health and education, have been in or close to recession since 2008. Unemployment tops 27pc n Spain and Greece.   Their leaders, however, disagree with the public view. Confident that Merkel will tone down her budget cutting mantra and accept more burden-sharing within the euro zone, they are positioning themselves as close allies of Europe's main paymaster.  "I think we will see a different Mrs. Merkel after the elections," said Cypriot President Nicos Anastasiades, echoing a view shared by most of his fellow southern European leaders.  In Greece, where crunch time for plugging a budget gap with a third bailout of the country starts at the end of September, hopes are high that debt issues can finally be sorted out after the German election, maybe through a new debt write-off.  In Italy and Portugal, policymakers believe Merkel will accept a shift from the emphasis on unpopular austerity to a more balanced model for managing the economic crisis if she wins.  In Spain, where banks were rescued with 42 billion euros of European money, expectations are that the chancellor will lean towards common euro zone debt issuance and accept a full-fledged banking union, unlocking credit in the recession-hit nation.  While market turmoil has eased in the euro zone and last year's massive capital outflows from southern Europe to safe-haven Germany have started to reverse, the underlying problems are far from resolved.  The correction pace of imbalances in the European Central Bank's Target 2 cross-border payments system, a key indicator of financial stress within the single currency zone used by ECB President Mario Draghi to monitor monetary policy, remains slow. Continued German support will be key to keep the fever down. Senior government sources in southern European countries insist Merkel has signaled flexibility on these issues in recent private talks. But she has given no public indication of such a U-turn and many in Berlin caution it is highly unlikely to happen, warning against wishful thinking.

"The IMF said Germany’s currency is undervalued by up to 10pc, roughly the same as China, but monetary union is jamming the correction mechanism with EMU." Only 10pc? I would have thought nearer 15-18% at least compared to southern Med countries.

It is also interesting to see the IMF poking the sleeping giant with a sharp stick. It begs the question why the main prop beneath the whole EMU is being provoked into potentially wiping out western and southern European economies by turning off the tap of free money. Perhaps that is the plan? Oh well. Time to microwave some popcorn and watch the silly people shouting at each other. “Fiscal over-performance should be firmly avoided,” said the Fund in its annual health check on the country. “Should growth prospects sour and labour markets weaken, proactive fiscal policies would be needed. A large shock may necessitate invoking the escape clause under the debt brake rule in order to support domestic activity and employment,” it said, referring to a clause in the German constitution mandating a cut in the structural deficit to near balance by 2016. The IMF said Germany is barely above recession level, with growth of just 0.3pc this year followed by a Japan-style stagnation for the rest of decade with a peak growth rate of 1.3pc. The country will lag the United States by the biggest margin in modern history each year until 2018. While the language of the IMF report is polite, it masks a bitter dispute between the Fund and Germany over the nature of the EMU malaise, and whether austerity and reform really have cleared the way for a viable recovery....“Fiscal over-performance should be firmly avoided,” said the [International Monetary] Fund in its annual health check on the country.[Germany]" If only the Germans would perform fiscally like the Greeks everything would be rosy, I suppose. But they will insist on making things and collecting taxes and saving money and stupid stuff like that. By the way, I can't imagine my doctor telling me during my annual health check that I should firmly avoid being too healthy. But then my doctor isn't mad...Now, if one country is running a trade surplus then another must be running a trade deficit.   How do you finance a deficit?  By increasing your debt load of course. Now Germany is telling the PIIGS to decrease their debt loads, but making that virtually impossible by doing everything it can to maintain or increase it's trade surplus. The debt can only be paid back if Germany runs a trade deficit.  PIIGS debt is the other side of the coin to German surpluses...you see?

Another global economic crash?

"Was jittery Thursday a foretaste of another global economic crash?

The sharp slide in share prices was either a blip in the road to recovery or a sign that the unwinding of quantitative easing will lead to disaster. Our writers argue it out" - the Telegraph on Sunday. The banking system, sovereign debt, equity markets are all FUBAR and bare no relation to the underlining fundamentals from where price discovery should come from. That is the problem and much of it has to do with ZIRP/QE, Draghi mouthing off, which although stops any immediate crash it is still just blowing bubbles and 'can kicking' where at any point to try to unwind from that position still leaves a gap between there and real growth coming back to stop the shortfall when ZIRP/QE Draghi on a buying spree taper away from their positions. Five years on from the WFC they are no nearer to fixing the problem, or the disaster of the euro. My guess is that eventually in the coming years governments will choose from the inflation poison chalice, rather than the default poison chalice, they nearly always do. Fiat money will become very devalued, and to my mind they have already set off on this path with orchestrated currency wars, and the printing presses a rolling If another big financial crash occurs I wonder what all those experts in the astrology like subject known has economics will be citing has the cause, let alone the required solutions. Not that the accountants, politicians, top business people, and goodness knows who else have demonstrated any more competence, except to ensure that the people that are made to pay for the disaster are those least responsible for it, and least able to afford to pay. Am I the only one who is coming to the conclusion that much of the human world is being run by self serving ego maniacs?

But more importantly the facts behind Thursdays ''market blip'' relates to leverage and debt. After the 2008 crash we have failed to de-leverage, the losses have been largely hidden by accounting tricks or taken over by the taxpayer. Instead of de-leveraging and re-capitalizing the banks QE and ZIRP have resulted in a massive leveraged derivative bubble now waiting to burst.

Thursdays blip might be the realization that.

1. That despite 5 years of recession endless money printing we are still seeing no real growth, outside of that provided via stimulus then it may be that these policies of QE and ZIRP are in fact failed policies, when the markets realize this investors will start to control interest rates not Bernanke and other central bankers.

2. Despite Abe's shock and awe policies Japanese rates doubled on Wednesday, Thursday. If markets suspect (and I think they do) that Japanese monetary policies are failing as indicated by rising rates, then we maybe witnessing the beginning of the end for Japan and the rest of the world! why?

3. When investors realize QE and ZIRP have failed we will see the 1.5 quadrillion dollar derivative market melt down and it wont be an ordinary unwinding. Chaos is not a word that will describe the result as counter parties evaporate and the world banking system collapses....

Funny how words change their meaning. I remember watching a Fred Astaire Ginger Rogers film on Channel 4 one Saturday afternoon called 'The Gay Divorce'. Of course the word 'Gay' has changed completely since the 1930s and it was all very comic.

In contemporary mainstream economics the word 'recovery' seems also to have undergone a transmutation. Once upon a time it meant falling unemployment, increasing investment, rising wages and prices, all based upon official statistics you could actually believe.

Today recovery means asset price bubbles, wage repression, pension repression, grinding down the poor the sick and the old, stubborn levels of unemployment/underemployment, a massive liquidity trap, counterfeit statistics from the Bureau of Labor Statistics, and the Office Of National Statistics - but hey, stock markets are booming, companies are sitting on piles of cash, share buybacks are all the rage, the financial elite is raking it in again, the tax avoidance industry has never been healthier or more ubiquitous. Yes this is some Central Bank engineered 'recovery'.

What really amazes me is the degree to which financial commentators are taken in by such blatantly crude propaganda. Which reminds me of the old saying: ‘You cannot hope to bribe or twist (thank God!) the British journalist. But, seeing what the man will do un-bribed, there's no occasion to.'Of course there are exceptions, but the majority of commentators and opinion formers seem satisfied to simply spew out the 'official' Pollyanna rubbish. The reason for this is that they actually believe it themselves.

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

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

Hmmm...I wonder what would the master EU idiot - Ollie R. say about this ...

Telling people that they can lose their deposits, even possibly below guaranteed amount (100,000 euros), which later was retracted, had not been a mistake. Firstly people realized and got used to the idea that such thing was no longer unthinkable. Secondly, by hitting deposits above 100,000 euros with up to 40% (or even maybe up to 60%) tax, it was made clear that such hit can be very hard indeed. Not some 6.75% or 9.9% as originally mooted: so now it is matter for the 'financial markets' to extend their target, below 100,000 euros. It is indeed a very primitive piece of social engineering and coaching people for the forthcoming loss. It is preparing psychologically all countries in Europe for the next step of the largest heist in history: direct and hard targeting of people's deposits. There is also a rather ironic twist in the events in Cyprus. It has been widely reported that many billions of euros held in banks in Cyprus came from all sorts of dodgy businesses (Russia?). There is even a whispering subliminal propaganda designed to make it easier to accept this new phase of the largest heist in history. The message is that there is nothing wrong in stealing money from the thieves.

Technically what happened there was that the billions of euros in cash deposited in Cyprus was used to redeem for a lot of toxic waste of the financial institutions (it is called 'making investments' in a financial language, with depositors cash). So, as expected, those who had cash ended up with nothing and those who held (and are still generating) zillions of toxic waste, got another tranche of their heist. The largest heist in history continues. Now...if it is true, as it is widely rumored, that many billions of euros of mafia money have been kept in Cyprus and now something like 40% or even 60% are going to be lost, one could wonder whether European politicians, central bankers, who drive this process, e.g. finance ministers, or some other decision makers, even lower down the chain, are going to sleep comfortably. Or are they going to think more about their own and their families safety? Is mafia going to accept such multibillion euros loss? Or would they plan to teach a lesson in order to get their money back, to get a compensation for the current 'inconvenience' and mess and to make sure such a thing is unthinkable in the future. Mafia starts wars when there is big money at stake. And in Cyprus some powerful groups lost billions of euros. Therefore we can also look forward to listen to some interesting news. Don't be surprised.

Savers in Cyprus could face losing one-quarter of their bank deposits under new proposals being discussed by the government as ministers flew to Brussels to salvage a European bailout.

The new bank levy would only apply to people with more than €100,000 (£85,260) in their accounts, according to the finance minister, Michael Sarris, who also said that significant progress had been made in talks with European officials.

President Nicos Anastasiades travelled to Brussels to work out an alternative plan to raise funds that would allow the country to qualify for an international bailout. Cyprus must raise €5.8bn (£4.9bn) before Monday to qualify for the €10bn EU bailout it needs to prevent the collapse of its banks and a potential departure from the eurozone.

The idea of raising money through a one-off levy on bank deposits was criticised in Cyprus, Russia and elsewhere and was unanimously rejected by the Cypriot parliament earlier this week, but is being reconsidered after negotiations with Russia to find alternative finance did not achieve a result.

On Friday, the Cypriot parliament passed nine bills, including three that would see ailing banks restructured, starting with Laiki, Cyprus's second-largest bank, a "national solidarity fund" and capital controls that would prevent large withdrawals from the country. A decision on the controversial bank savings levy and how it would be applied is due on Saturday.

Other Cypriot politcians discussed a smaller bank levy of 1% which would be aplied to all accounts. The debate is divided between those that want the levy to be borne only by the wealthy which includes a high percentage of Russians who hold €30bn in Cypriot banks.

Eurozone ministers are scheduled to meet on Sunday to decided how to help Cyprus avoid economic chaos. The European Central Bank has threatened to cut off funding from Monday and the banks face a run of investors withdrawing money when they re-open.

The Cypriot parliament will meet after the meeting of the eurozone ministers on Sunday evening.

Obama originally proposed a 'grand bargain' to deal with all the remaining issues in the hope that he would avoid these regular and debilitating stand-offs with Congress.Mitch McConnell, the Republican leader in the Senate, within minutes of Tuesday's vote, flagged up the coming battles ahead over spending and the debt ceiling. So too did the Republican House Speaker John Boehner, who said: "Now the focus turns to spending. The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable." But Obama insisted he had enough of such confrontation. If Congress decides to make an issue of raising the debt ceiling, it would be responsible for the "catastrophic" consequences. The fiscal cliff crisis has been runnning since Obama won the election in early November. Attempts by Obama and the Republican House Speaker John Boehner to do a deal before Christmas collapsed. So too did negotations between the Democratic Senate leader Harry Reid and his Republican counterpart McConnell. In the end, the deal was brokered over the weekend by McConnell and vice-president Joe Biden. The bill was passed by the Senate, with 89 senators in favour and eight against, at 2am on Tuesday, too late to prevent the country breaching the midnight fiscal cliff deadline. The bill restricts tax rises to individuals earning $400,000 or more a year and households earning $450,000 or more. Estate tax also rises, to 40% from 35%, but inheritances below $5m are exempted from the increase. Benefits for the unemployed are extended for another year.

In conclusion....nada, nothing ...lots of hot air ...

European leaders wound up their final summit of 2012 on Friday in much the same manner as they started the year – kicking the euro crisis can down the road, playing for time, crossing their fingers, hoping the worst is behind them.

In almost three years since the Greek drama erupted in February 2010 and spread quickly around the fringes of the eurozone, the leaders have never quite managed to get ahead of the curve despite 22 summits and countless meetings of eurozone finance ministers.

This week's two-day summit in Brussels repeated the pattern. It was supposed to lay out a grand plan and timetable for reforming and stabilising the euro regime through a battery of federalising political and fiscal moves. In the event, the documents from the EU council president, Herman Van Rompuy, were shredded amid more clashes over fundamentals between Berlin and Paris, while an even more ambitious blueprint from the Commission president, José Manuel Barroso, was simply ignored.

"One wonders how these two gentlemen will enjoy Christmas," quipped Andrew Duff, the Liberal Democrat MEP and ardent European federalist.

Van Rompuy, who has had a very bad month, was told to come back in the middle of next year with a better, more modest plan. The mood was darkened further by German Chancellor Angela Merkel dismissing claims that the worst was over for the eurozone and stressing that the bloc faced two years of painful reforms, slow growth and high unemployment.

"The changes we are going through are very difficult and painful," she said. "We have tough times ahead of us that cannot be solved with one big step."

Despite the stalemate and the seeming complacency, leaders concluded their summit keen to list the year's achievements. And they do have things to brag about

Let me get this right....France wants more CAP money to prop up an unsustainable domestic farming culture based on 18th century methods. Germany does not want to shell out billions of Euro to pay for Greece, Spain et all, and is trying to fudge a deal until Angela can try to get back in. Spain is falling apart and refuses help as it would require to give up sovereignty, a precursor for joining and is breaking up anyway. Italy needs the cash to help its poor south, which by the way has been poor since biblical times, and Ireland , Portugal and Greece, poor bastards, are saddled with debt they cannot afford.
And that's just the biggies.
The whole concept is bankrupt both on a financial, social and an ideological basis, and on top of that, they are corrupt, never having passed an audit.
Why are we even talking to them?...

Talks on a new European Union budget have collapsed after David Cameron won German support in a row with France about his demands for more cuts in spending. The Prime Minister accused Brussels of 'living in a parallel universe' and said there could not be a 'deal at any cost.'  Speaking at the end of the failed summit Mr Cameron said: "We're not going to be tough on budgets at home just to come here and sign up to an increase. "Frankly the deal on the table was just not good enough. It wasn't good enough for Britain and neither was it good enough for a number of countries. "In the UK we are cutting admin budgets by as much as a third, civil service staff by 10 per cent in two years. None of this has been easy. Meanwhile Brussels continues to exist as if it is in a parallel universe."

The European Commission has cut sharply its growth forecast for the eurozone, warning that the "difficult process of rebalancing will last for some time".

It now projects the bloc will narrowly avoid recession next year, growing by 0.1%, compared with its previous estimate of 1% growth, and thinks the EU economy will shrink this year.

Unemployment would also continue to rise next year, the Commission said. The revision helped push global stock markets lower.

The Paris and Frankfurt exchanges closed down 2%, while London's FTSE 100 ended the day 1.6% lower. New York's Dow Jones lost 313 points, or 2.4%, at 12,933, its lowest level since early August.

The euro also weakened against the dollar following the revision, falling by half a cent to $1.278. Against the pound, it fell by a fifth of a pence to 79.93p.

Figures released earlier on Wednesday showing the biggest monthly fall in German manufacturing output since April, also weighed on markets.

As did concerns about the upcoming so-called fiscal cliff in the US, now that the US election has been won by Barack Obama.

"Having been fixated on the US election and the preferred market outcome of an Obama victory, the initial morning feel good bounce [has fizzled out], as markets quickly moved on to the next potential banana skin," said Michael Hewson at CMC Markets.

"In this case there are several, starting with today's Greek parliamentary vote on austerity, not to mention concerns about how the newly elected president will deal with the US fiscal cliff concerns."

Under current plans, $600bn (£375bn) of tax rises and spending cuts will kick in in January, with many analysts saying this will push the US economy back into recession.

Opinion....

What I love about forecasts is the certainty with which they are delivered. Nothing is certain. Whether the BRICS are trapped in the middle income trap is entirely in their own hands; the USA always bounces back; technology never stops.
The reforms that are required to make BRICS like China continue its growth and the improvements in India, are well known and in their own hands. Obviously vested interests who have done well to date, will do their damnedest to stop such reforms but it is by no means certain they will; indeed the worse the global slowdown the more likely that we will see the required reforms. This is to say nothing of the new BRICS in Africa and Asia. The explosive growth that we have seen to date pushed the price of materials to record highs as capacity could not be brought on stream to cope, slower growth should enable productive capacity to increase accordingly, reducing raw material prices. With the huge surge in oil production I expect to see a fall in the price of oil and a transfer of wealth from the oil producers back to consumers. I believe that the USA is on the cusp of an economic boom. Manufacturing is heading back home as prices in the Far east rise, gas prices have tumbled to record lows reducing the costs of basic raw materials, the banks can lend as they are clean and healthy, people have de-leveraged massively, companies are sitting on records amounts of cash and the country is angry and determined. When the USA rocks the world rocks.I also believe we are on the cusp of a massive technology boom. New materials such as graphene promise whole new ranges of products, new manufacturing techniques such as 3d printing are threatening to revolutionise production and consumer choice, new energy sources such as oil from Algae will tear up any nonsense about peak oil, new drugs from genetic research are becoming a reality, new technologies such as driverless cars are here. The only place that remains a problem is Europe but the Euro is forcing countries to reform key pillars of the socialist model that have held back economic development in southern European countries for years; even socialists in France are reforming. The Euro could be the best thing that has happened to Europe.See, I can predict an opposite future with equal reason and certainty. On a side note Schumpter, drawing from Marx, predicted that capitalism would destroy wealth continually and hence itself. It was Werner Sombart who used the term to mean that economic growth can evolve from the destruction of an previous economic order.
Angry Germans have filed a lawsuit at the European Court of Justice in an attempt to block the European Central Bank's latest plan to buy-up the debt of struggling countries.
Around 4,800 people are represented by the lawsuit, filed by German protest group Zivile Koalition e.V., which claims that the ECB’s OMT programme violates the central bank’s own statutes and has an "immediate influence on monetary stability in the euro area".
For the German speakers among you, you can find out more about the Zivile Koalition here. Beatrix von Storch, the group’s spokeswoman, has even put together a video message.
The press office of the EU court in Luxembourg declined to comment to Bloomberg 

The eurozone will struggle to emerge from a double-dip recession next year as deep budget cuts stifle growth, the European commission has said.  In a gloomy health check on the state of the 17 countries that belong to the monetary union, Brussels said a sharper than expected fall in output in 2012 would be followed by a virtually non-existent recovery in 2013.  The commission said the eurozone as a whole would contract by 0.4% this year and grow by 0.1% in 2013. It cut its forecasts for the single currency's "big four" economies – Germany, France, Italy and Spain – as it predicted that unemployment would rise to a fresh peak of 11.8% next year.

"Europe is going through a difficult process of macroeconomic rebalancing, which will still last for some time," said the economic and monetary affairs commissioner, Olli Rehn. "Europe must continue to combine sound fiscal policies with structural reforms to create the conditions for sustainable growth to bring unemployment down from the current unacceptably high levels."

Brussels blamed the deepening sovereign debt crisis and financial market concerns about a possible breakup of the eurozone for the "disappointing" growth performance in 2012. It said domestic demand would make no contribution to eurozone GDP in 2013 as the lack of jobs and tax increases hit consumer spending.

The commission expressed confidence that by 2014 the benefits of the austerity programmes would bear fruit, leading to expansion of 1.4%.

Although the UK is expected to grow by just 0.9% next year, Brussels believes it will expand more quickly than any of the major economies of the eurozone. The commission has pencilled in growth of 0.8% for Germany, 0.4% for France, a contraction of 0.5% for Italy and a retrenchment of 1.4% for Spain. In all cases the predictions are for output to be weaker than expected by national governments, leading to budget deficit reduction targets being missed.

Greece is one eurozone economy where the commission's forecasts are less pessimistic than those of the government. The EU executive believes the Greek economy will shrink by 6% this year and 4.2% in 2013 before finally emerging from a six-year slump with growth of 0.6% in 2014. The government is assuming contraction of 6.5% in 2012, 4.5% in 2013 and growth of 0.2% growth in 2014.

Prices rose faster in August across the 27 nations of the European Union (EU) compared with July, according to official figures. The EU statistics agency Eurostat said inflation hit 2.7% last month, compared with 2.5% the previous month. In the 17-nation eurozone, inflation also rose to 2.6% from 2.4% in July. Figures also showed that the number of people in work across the EU in the three months to the end of June rose to 223.4 million. Employment across the euro area remained stable at 146.4 million in the second quarter. The number of people out of work in July hit a record high of 18 million, prompting calls for the European Central Bank to cut the cost of borrowing, pump more money into the eurozone economy or both.

Major US banks are being investigated for insufficiently safeguarding against being used by drug dealers or terrorist groups to launder dirty money, it was reported Saturday.

An article in the New York Times suggested that federal and state authorities were ready to launch an aggressive crackdown on the failure to monitor transactions, in a move aimed at flagging to financial institutions that weak compliance is unacceptable. Officials told the Times that regulators are close to taking action against JP Morgan, while other firms including Bank of America are also being investigated over perceived shortcomings when it comes to putting a check on money-laundering activities. It comes just months after a Senate committee roundly criticized HSBC for ignoring warning signs that it was being used by money launderers and drug cartels in Mexico. US politicians also accused HSBC of circumventing US sanctions on countries including Cuba and Iran – a charge that has also been levied against JP Morgan. The Senate report was also highly critical of the Office of the Comptroller of the Currency (OCC), stating that the regulator needed to take "stronger action" on banks that exercise poor anti-money laundering controls. The OCC is now leading the crackdown on non-compliant banks, according to the New York Times report.