(Reuters) - A war of words between Greece and EU paymaster Germany escalated on Tuesday with Athens' new leftist prime minister rejecting what he called "blackmail" to extend an international bailout and vowing to rush through laws to reverse labor reforms.  A source close to the government said Greece intends to ask on Wednesday for an extension for up to six months of a loan agreement with the euro zone, on conditions to be negotiated. The source drew a distinction between a loan agreement and the full bailout program which the government insists is dead.  However hardline German Finance Minister Wolfgang Schaeuble dismissed the Greek gambit, telling broadcaster ZDF: "It's not about extending a credit program but about whether this bailout program will be fulfilled, yes or no."   Financial markets held their nerve after the latest talks among euro zone finance ministers broke down late on Monday and EU partners gave Greece until the end of the week to request an extension or lose financial assistance.   Many investors believe that whatever the rhetoric, both sides will find a face-saving formula before Athens' credit lines expire in 10 days. If they fail, Greece could rapidly run out of cash and need its own currency.  Greek banking sources said outflows of deposits increased on Tuesday after the failure of Monday's talks, but were not as severe as on some days last month around the election of a radical anti-austerity government.  The European Central Bank will review emergency funding for Greek banks on Wednesday but should not cut the lifeline this week, a source familiar with the situation said.   Both sides continue to insist Greece will remain in the euro.  Greek Prime Minister Alexis Tsipras told lawmakers in his Syriza party that the government - elected to scrap the bailout, repeal hated austerity measures and end cooperation with the "troika" of EU, ECB and IMF lenders - would not compromise.

The 4th. Reich will continue the implementation of the Ribbentrop - Molotov Pact, Europeans are doomed !

Angela Merkel's conservatives won a resounding victory in Sunday's general election, sharply increasing their share of the vote to around 42 percent and putting her on track for a third term.

But she may have to form an alliance with the rival center-left Social Democrats because her junior coalition partner, the pro-business Free Democratic Party, saw its support slump so dramatically that it may not make the five percent threshold needed for parliamentary representation.

"We will do everything to ensure that the next four years will be successful ones for Germany," a beaming Merkel told cheering supporters. "We will now wait for the election outcome, it's too early to say how we will proceed. We will discuss all this tomorrow in our leadership meetings. But we can already celebrate today because we did great."

Her SPD rival, Peer Steinbrück, told supporters: "The ball is in Frau Merkel's court, she has to find herself a majority."

An alliance with SPD, a so-called "grand coalition" of the two biggest parties, would be a repeat of the right-left alliance with which she governed in her first term from 2005 until 2009.

Merkel's conservative Christian Democratic Union party and its Bavarian sister party, the Christian Social Union, were at 42.1 percent, up sharply from 33.8 percent in 2009, an ARD network TV projection based on actual results showed after polling stations closed at 6 p.m. CET.

A TV projection by ZDF showed a similar result with the conservatives at 42.3 percent.

"This is the FDP's bitterest defeat in decades," said Christian Lindner, a senior member of the party leadership.

Radiation levels around Japan's Fukushima nuclear plant are 18 times higher than previously thought, Japanese authorities have warned.

Last week the plant's operator reported radioactive water had leaked from a storage tank into the ground. It now says readings taken near the leaking tank on Saturday showed radiation was high enough to prove lethal within four hours of exposure. The plant was crippled by the 2011 earthquake and tsunami. The Tokyo Electric Power Company (Tepco) had originally said the radiation emitted by the leaking water was around 100 milliseverts an hour.

However, the company said the equipment used to make that recording could only read measurements of up to 100 milliseverts.

The new recording, using a more sensitive device, showed a level of 1800 milliseverts an hour. The new reading will have direct implications for radiation doses received by workers who spent several days trying to stop the leak last week, the BBC's Rupert Wingfield-Hayes reports from Tokyo. In addition, Tepco says it has discovered a leak on another pipe emitting radiation levels of 230 milliseverts an hour.  The plant has seen a series of water leaks and power failures. The 2011 tsunami knocked out cooling systems to the reactors, three of which melted down.

The damage from the tsunami has necessitated the constant pumping of water to cool the reactors. This is believed to be the fourth major leak from storage tanks at Fukushima since 2011 and the worst so far in terms of volume. After the latest leak, the Japanese nuclear energy watchdog raised the incident level from one to three on the international scale that measures the severity of atomic accidents.

Experts have said the scale of water leakage may be worse than officials have admitted.

ECB is one of the very few that do not publish minutes of its meetings. Current rules mean they are published 30 years after rate decisions are taken. Other banks, such as the Bank of England or the US Federal Reserve, publish their minutes with a time lag of some weeks. On the eurozone, Draghi suggested that economic indicators showed that it had come through the worst of the crisis. He also indicated that the low interest rate is to be kept in place for the foreseeable future using "forward guidance" language, first introduced at a press conference last month. The move is a bid to signal to markets that the ECB will keep rates slow enough to spur economic growth, amid tentative signs of economic recovery. Asked to compare the situation to this time last year, when the eurozone was in the throes of the crisis, Draghi said: "All in all the picture seems to be better from all angles than it was a year ago." Draghi said that looking beyond the game-changing promise he made a year ago to do "whatever it takes" to save the euro, single currency states had made "significant" progress in policy implementation over the 12 months. He singled out reform efforts undertaken in bail out countries Greece, Ireland and Portugal and noted the labour market reforms in Spain.

"Look at the results," he said. "If you look at structural improvements, all across the board I don't think you can find a country which hasn't improved."

"Look at current account surpluses - the actual figures are quite impressive ... you have strong increases in exports, not just in Germany but in Spain and Italy."

Total eurozone debt as a proportion of annual gross domestic product (GDP) stood at a record €8.75 trillion (£7.5 trillion) in the three months to the end of March, or 92.2pc of GDP, up from €8.6 trillion in the previous quarter and €8.34 trillion the year before.

Bailed-out nations Greece, Portugal and Ireland saw some of the biggest rises, even after implementing austerity measures imposed by Brussels in an attempt to balance the books.

Greece's debt rose to 160.5pc of GDP from 156.9pc in the first quarter compared with the final three months of 2012, while Portugal's debt burden rose to 127.2pc from 123.8pc. Germany and Estonia were the only countries to reduce their public debt.

Meanwhile, Portuguese prime minister Pedro Passos Coelho ruled out a snap election and confirmed he would make junior coalition party leader Paulo Portas his deputy, sending the country's benchmark borrowing costs down 0.5 percentage points, to 6.31pc. Total eurozone debt as a proportion of annual gross domestic product (GDP) stood at a record €8.75 trillion (£7.5 trillion) in the three months to the end of March, or 92.2pc of GDP, up from €8.6 trillion in the previous quarter and €8.34 trillion the year before.

Bailed-out nations Greece, Portugal and Ireland saw some of the biggest rises, even after implementing austerity measures imposed by Brussels in an attempt to balance the books.

Greece's debt rose to 160.5pc of GDP from 156.9pc in the first quarter compared with the final three months of 2012, while Portugal's debt burden rose to 127.2pc from 123.8pc. Germany and Estonia were the only countries to reduce their public debt.

Meanwhile, Portuguese prime minister Pedro Passos Coelho ruled out a snap election and confirmed he would make junior coalition party leader Paulo Portas his deputy, sending the country's benchmark borrowing costs down 0.5 percentage points, to 6.31pc.

The reporting in germany on the government response to developments at the IMF conference:

-Merkel refused to comment on the suggestion of a two year extension, saying she'd await the troika report.
-Schäuble ruled out OSI, sounded extremely unconvinced about a two year extention for Greece, and basically said things were going better than the media presented it.
-Brüderle (FDP Floor-Leader) said that he didn't see a majority in the Bundestag for a 3rd Greek Bailout. Which is polite language for "we're not voting for it". The CSU would be against, but has made no public comment. Plenty in the CDU would be against too, but the majority will hold to Merkel's line. The SPD are for it, as I think are the Greens.

So it looks like another one of those wrapped-together-with-sticky-tape temporary coalitions, to get it through the Bundestag. And probably bundled together with other applications from Spain, Slowenia, Cyprus.

European Central Bank policymaker Jörg Asmussen has argued against Greece leaving the eurozone, at the IMF/World Bank shindig in Tokyo.   Asmussen argued that Athens was making good progress.  The Greek authorities have to demonstrate that they can continue to stick to their commitments... This is the best way out of its crisis: for Greece to reform within the euro area....CNN is also focusing on the growing divisions between the IMF and the eurozone over austerity....Its correspondent, Andrew Stevens, writes from Tokyo:The EU will produce its own conclusions about the impact of austerity measures next month. Whether that brings us any closer to a consensus is hard to judge.....Remember the old joke about economists: if you laid all the economists in the world end-to-end you still wouldn't reach a conclusion.  But this is no joking matter. Millions of Europeans have fallen into poverty or at least economic hardship as a result of the current austerity programs.

Matters are worse in the banking sector. Each country's banking system is backed by its own government; if the government's ability to support the banks erodes, so will confidence in the banks. Even well-managed banking systems would face problems in an economic downturn of Greek and Spanish magnitude; with the collapse of Spain's real-estate bubble, its banks are even more at risk. In their enthusiasm for creating a "single market", European leaders did not recognise that governments provide an implicit subsidy to their banking systems. It is confidence that if trouble arises the government will support the banks that gives confidence in the banks; and, when some governments are in a much stronger position than others, the implicit subsidy is larger for those countries.

In the absence of a level playing field, why shouldn't money flee the weaker countries, going to the financial institutions in the stronger? Indeed, it is remarkable that there has not been more capital flight. Europe's leaders did not recognise this rising danger, which could easily be averted by a common guarantee, which would simultaneously correct the market distortion arising from the differential implicit subsidy.  The euro was flawed from the outset, but it was clear that the consequences would become apparent only in a crisis. Politically and economically, it came with the best intentions. The single-market principle was supposed to promote the efficient allocation of capital and labor. But details matter. Tax competition means that capital may go not to where its social return is highest, but to where it can find the best deal. The implicit subsidy to banks means that German banks have an advantage over those of other countries. Workers may leave Ireland or Greece not because their productivity there is lower, but because, by leaving, they can escape the debt burden incurred by their parents. The European Central Bank's mandate is to ensure price stability, but inflation is far from Europe's most important macroeconomic problem today.
AP - The European Parliament has overwhelmingly defeated the international ACTA anti-piracy agreement, after fears that it would limit Internet freedom mobilized broad opposition across Europe.
The vote Wednesday was 39 in favor, 478 against, with 165 abstentions.
The defeat means that, as far as the EU is concerned, the treaty is dead - at least for the moment - though other countries may participate.
A spokesman for the European Commission, the EU’s executive arm, said it may try again after it obtains a court ruling on whether the agreement violates fundamental EU rights.
Supporters said ACTA - the Anti-Counterfeiting Trade Agreement - was needed to standardize international laws that protect the intellectual property rights.
Opponents feared it would lead to censorship and a loss of privacy on the Internet

Barclays is named as one of around 20 defendants, which also include Royal Bank of Scotland and HSBC, as well as US lenders

One of the biggest class-action claims has been filed in New York by the Mayor and City Council of Baltimore and the City of New Britain Firefighters and Police Benefit Fund. Damages claims running to billions of dollars against the world’s biggest banks have been given fresh “credibility” by Barclays £290m Libor settlement, lawyers said. The cases are being brought under the Sherman Act, America's anti-trust legislation, which allows for triple damages. Lawyers for the banks are due on Friday to file an attempt to have the Baltimore case thrown out. But Mr Hausfeld said Barclays' settlement “should undermine any effort to dismiss the claim on the basis that it is implausible that the alleged events took place”. Barclays is named as one of around 20 defendants, which also include Royal Bank of Scotland and HSBC, as well as US lenders Bank of America, Citigroup and JP Morgan. The action is co-ordinated with five other lawsuits, including a claim by discount brokerage Charles Schwab against 11 banks, including Barclays. The sums involved are potentially vast. Libor is used to price various financial products. The Bank for International Settlements calculates that the market for over-the-counter interest rate derivatives, such as swaps, had a notional value of more than $500 trillion in 2011. Just a small element of proven mispricing could trigger billions of dollars of claims.

HEY MERKEL ....Why don't you give it a rest?

ITALY AND THE E.U.--- Monti is desperate. Reform fatigue has breached breaking point," said a top Italian official. "There is a feeling here that the euro is basically dead already. Unless Germany offers a road map out of this crisis, Monti is not going to be able to hold it together much longer." The main Left and Right parties have until now backed Mr Monti's fiscal squeeze – a net tightening of 3.2pc of GDP this year – and radical reform of pension and labor markets. The implicit trade-off was that Brussels and the European Central Bank would in return intervene to keep the bond vigilantes at bay, if necessary. Germany has so far blocked such action. Yield spreads of 10-year Italian bonds over German Bunds neared a record 500 basis points last week. Party leaders fear an electoral massacre akin to the PASOK defeat in Greece if they back further austerity with no reward. Dissidents are near open revolt.  So, 'gentleman' Monti is in fact a 'double agent'!
Just a small correction on your otherwise excellent judgement. Italian labor so called reforms have been rubbish. They are no reforms at all and are made to appear so, as a bargaining chip with Merkel. HEY MERKEL ....Why don't you give it a rest? Europe is closer? Are you quite mad or just happy to peddle lies ? Every poll, every indication, every election shows that more and more people dislike the EU and are against further integration. You and your friends in the EU have become fascists, attempting to impose your One Europe fantasy on an increasingly resistant population. How does that feel?
The fact of the matter is that the Italian establishment is thriving on this euro adventure, Their over valued euros finance property investments abroad. Just to give you an example an ordinary Italian would rather spend €5000 on an English study holiday in America or Britain rather than spend €700 on a perfectly normal course in a language school in Italy. And at the other end of the scale the same course is offered through government and EU subsidies at €100 by local authorities. This confirms the personal wealth issue of Italians and of course the nonsensical spending patterns caused by an essentially corrupt administrative system.

Yep, Stiglitz and Krugman have been shouting from the rooftops ... but they are on the outside of the System ... they are effectively economic dissidents.

Spain has given up the battle to rescue its ailing banks alone and accepted a European bailout of up to €100bn to join Greece, Ireland and Portugal in requesting outside aid to survive Europe's debt crisis.

European leaders hope a bailout will prevent a wider deterioration of the eurozone's fourth largest economy, which is paying punishing interest rates on borrowed money and is key to the survival of the single currency.

"The Spanish government states its intention to request European financing for the recapitalisation of banks that need it," the country's finance minister, Luis de Guindos, said after an emergency video conference with fellow eurozone ministers. It remained unclear, however, exactly how much of the €100bn Spain would need, with De Guindos saying it preferred to wait for two independent reports on its banking system before making a formal request. These reports would be ready within weeks or days, according to De Guindos, who implied that the final sum would be lower than €100bn. "The €100bn sum is a maximum figure," he stressed. "It includes a considerable margin of security."

Eurozone policymakers had been eager to shore up Spain's position before 17 June elections in Greece that could push Athens closer to a eurozone exit and unleash contagion. Various estimates have put the outside capital needed by Spanish banks at between €40bn and €100bn. "The loan amount must cover estimated capital requirements with an additional safety margin," the eurozone ministers said. (source : the guardian)

WELL ---the Spanish (and worldwide) Property Bubble. The gift that keeps on giving.  If the Spanish banks own all these properties (I presume they own them), wouldn't it make more sense to sell them off at some ridiculously low price simply to not be carrying these negative assets on their books? The banks are never, ever going to get the ridiculously over-inflated prices that were so common during the heyday of the global property bubble; far better off for the banks to sell these properties for €1,000 or so and clear them off the books. I would imagine if that you could purchase, let's say, a 3 room apartment on the Mediterranean Coast for €4,000 don't think for one minute they wouldn't have buyers.  Property prices aren't coming back, at least not in our lifetimes...THAT'S FOR SURE...

The dysfunctional eurozone.....

Uncertainty is increasing and  is unlikely to subside until Germany defines the 'new reality' for the eurozone. The fall in UK inflation re-opens the door for QE ... Watch out for action by other central banks looking for ways to stimulate growth

Eurozone --- The dysfunctional eurozone remains a major concern to all. Recessionary forces are strengthening and no sensible solutions are close to implementation. In Spain, with recession drifting towards depression and unemployment over 25%, investors are heading for the exit, leaving the local banks, funded by the ECB, as the only material buyers of government debt. Voters throughout Europe are exercising their democratic rights and are voting against further austerity. Uncertainty is increasing and is unlikely to subside until Germany defines the 'new reality' for the eurozone – a move to a more federal Europe with no leavers, partial fragmentation or breakup. No one can be certain about the outcome. Forget market manipulation by international banks and hedge funds; Germany is the ultimate insider.  In Greece, having delivered a protest vote, perhaps the Greek voters will shift back on 17/6, allowing the formation of a government that will cooperate with the EU/ECB/IMF

Spain reintroduced checks at the border with France ahead of the meeting, temporarily suspending the Schengen agreement. So far reports say 17 arrests have been made at the border and 43 people denied entrance because of previous police records involving "violent protest". Authorities want to avoid clashes staged by "anticapitalist" protestors who may travel from abroad for the event. However, students from Barcelona University are staging a "strike" today and have taken to the streets to protest education cuts announced by Mariano Rajoy's conservative government last month. Streets have been blocked by the demo in the centre of the city. Some 8,000 police are on the streets of Barcelona during the ECB meeting to prevent trouble. Snipers visible on rooftops, armoured vehicles and riot police at the ready and helicopters flying overhead. The sunny city is on lockdown with some twitter uses dubbing the Catalan capital "carcelona" - carcel means prison in Spanish. No signs of any trouble as yet.... Mr Draghi's predecessor, Jean-Claude Trichet (below) has told German TV that Europe is "only halfway" through the crisis. In an interview with he said: Hard work has been done, but we are only halfway, and a lot still has to be done [...] As the leader of the Governing Council which has taken all those difficult decisions, yes they are doing a very good job... Mario Draghi will tonight hold a private meeting with Prime Minister Mariano Rajoy in which the Spanish leader is expected to ask for affirmation that the ECB can be relied on to provide liquidity boosts for Spain’s ailing banks. Mr Draghi’s had some positive things to say about Spain. In the press conference he recognised that Spain had “carried out significant reforms in a short time” though insisted that “perseverance was needed to push through more structural reforms” especially in the banking sector. ... The online edition of Spain’s financial newspaper Expansion chose to highlight his comments on further reforms. “Draghi calls for more forceful measures: ‘If you have a problem with the banks, confront it’” said the headline. Overall the paper said there were no surprises in decisions taken during by the ECB governing council.

Welcome to a new world of chaos !!!!!

When European politicians use the concept of "merit" as a subset of "democracy", most of us buy into that as we see it (at face value) an argument for the best people in the respective political jobs. The "Meritocracy Party" (yes there is one, but individual members remain anonymous) advocate a meritocracy in which there aren't political parties, there's a 100% tax on inheritance, to vote you must be qualified (i.e. have a Finance Degree to vote on a Finance Minister), they want to do away with democracy and free market capitalism. The "Meritocracy Party" bastardize the word 'Meritocracy' placing a different meaning on the word to which the person in the street does. I have come to realize that the Europrat believes in the meaning of this bastardized use of "meritocracy". To the Europrat it doesn't really mean the best person based on qualifications, talent and experience. To them it means a derivative of communism. There are just too many similarities between what the Meritocracy Party stands for and the behavior of the Europrat. I suspect many of these Europrats are anonymous members of the Meritocracy Party. They argue for the replacement of free market capitalism with what they call "social capitalism".. It appears to me the Europrat is pushing for a kind of "social capitalism, which no doubt will replace personal property rights.

"My take on this is simple….Bernanke thinks QE3 isn't going to help, so why do it? He’s expecting nature to take its course. I'm sure he didn't tell the Committee members that, but you know, he gets a bad press for nothing sometimes. I think he knows that Europe is out of control, and he’s sure that American politics will screw things up there too. He’s been consistent since last Spring on giving warnings and expressing doubts. He’s one "helluva" good barometer.”....the Fed is secretly printing money like crazy and throwing it at Western Banks desperate to stay alive. Both the US & EU are fucked beyond recognition. If they stop the money printing, the banks die and then so does Western civilisation as we know it. If they continue against the back drop of a growing powerful East and declining oil then energy costs skyrocket which also destroys Western oil based economies. The game is over for the West. The elite will then seek to save themselves as the masses start to panic. You want evidence of this? Witness what happened the other week when the politicians mentioned there may be a slight shortfall in fuel. What did the average idiot do? Panic like crazy, fighting at petrol stations. One idiot burnt herself in her own home. Welcome to a new world of chaos !!!!!

Italian Prime Minister Mario Monti is still whistling to keep his spirits up - he's announced his jobs market reform bill tonight, the most controversial of all his austerity and economic reform measures. He called the bill, which will go before parliament in the coming days, "historic" and said his aim was to end the "dualism" between well-protected employees in jobs and first-time applicants trying to break into the market, by making it easier to hire and fire staff. He said: This is a turning point for the labor market. Now he just has to persuade the unions, who hate the changes with a passion - Italy's largest union, Cgil, has pledged a general strike.

Tensions within the zone are mounting as we enter this week

Tensions within the zone are mounting as we enter a week in which Italy, Belgium, Spain and France plan to tap the markets for some €17 billion ($22 billion) in new loans and, says Goldman Sachs, the European economy slides into recession. Bankrupt Greece; junk-rated Portugal pleading with Angola for inbound investment; jobless Spain, facing some interest rates that have doubled in the past month; and recovering Ireland have already fallen to the bond vigilantes. Growth-free Italy is fighting a rearguard action, facing unsustainable interest rates despite the stellar reputation of its newly appointed technocrat prime minister, Mario Monti; Belgian debt, now equal to its GDP, has been downgraded, in part because of the inability of this seat of the EU to form a new government. France, consumer confidence dropping, is likely next. Some German IOUs were unsold, and prices of bunds are slipping. No euro-zone country and no euro-zone company can any longer escape the consequences of the structural flaw in the euro-zone architecture. German Chancellor Angela Merkel opposes measures that might stem the tide that is about to engulf the euro. Nor can countries outside the euro zone. Great Britain, with high deficits, mounting debt, and a deficit-reduction plan that just might not work, retains its triple-A rating because it has its own currency and the rating companies increasingly consider governance when deciding whether to downgrade.
Britain is considered governable, but that might change after Wednesday's strike of public service workers shuts down the country. The failure of the super committee to find some trivial deficit reductions means America might also slip into the ungovernable category. And the Federal Reserve Board is imposing new stress tests to determine whether leading banks can withstand a wave of sovereign- debt and bank defaults in Europe. One thing is certain: The euro cannot survive without a major change in the governance structure of the euro zone. The first prescription for what ails the zone was "austerity", but that has produced recessions and government oustings. Then came the European Financial Stability Facility, but it turns out to be too puny to halt the bond vigilantes' rampage through the euro zone, and anyhow rests in part on France's waning ability to join Germany as a guarantor by retaining its triple-A credit rating. The European Central Bank, operating within the legal limits imposed on it by thetreaties that govern the European Union, is providing some liquidity to the banks and a bit of relief on the interest-rate front for sovereign borrowers, but it cannot do much to prevent the insolvent from being forced to default. Ms. Merkel, Germany's latest Iron Chancellor, has set her face against any of the measures that might stem the tide that is about to engulf the euro. She is against allowing the ECB to become the lender of last resort, aka printer of money. She refuses to share her balance sheet with stressed countries by allowing the issuance of euro-bonds, until they reform, even though such reforms cannot be implemented in time to head off sovereign defaults that would take down many under-capitalized European banks, now desperately juggling their books to inflate their capital ratios.

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 !!!

Misha Japaridze/AP . -0 Hopes that BP could take the focus away from its failure to tie-up a ground-breaking deal with Rosneft in Russia were crushed on Wednesday when black-clad special forces raided its main offices in Moscow. The law enforcement officers were acting with the consent of a court in Tyumen, where minority shareholders are pursuing a $3bn (£1.8bn) compensation claim against BP over the collapse of the share swap with Rosneft. The move comes less than 24 hours after the Russian state-owned oil company triumphantly unveiled an alternative strategic alliance to explore the Russian Arctic with BP's rival ExxonMobil. Lawyers acting for Andrei Prokhorov, a disgruntled shareholder from BP's Russian joint venture TNK-BP, said the raid was a reaction to BP's failure to provide documents on the proposed tie-up between the UK firm and state-owned Rosneft. "We therefore applied once again to the court of arbitration of Tyumen region to have the measures to secure evidence replaced, and on 30 August the court permitted the bailiff to examine documents held by BP Exploration Operating Company Limited," said Dmitri Chepurenko, a partner in the Liniya Prava legal practice which represents Prokhorov but also – allegedly – the Alfa Access Renova (AAR) consortium led by oligarchs such as Mikhail Fridman. BP dismissed the raid as unnecessary and said there were no grounds for anyone to seek compensation over the collapse of the Rosneft deal. "We do not believe there is any legitimate basis whatsoever for the claim launched against BP in the Tyumen court and we intend to defend our interests vigorously," said a spokesman at BP's London headquarters, adding: "We do not believe there are legitimate grounds for today's raid."

Renewed worries about the Eurozone's finances and the state of its banks - particularly the French ones - have sent shares sharply lower again, all but wiping out Tuesday's Bernanke bounce on Wall Street. The US market, which invoked a rule to help prevent turbulence at the open, is down more than 242 points, having started down 75 points and fallen by more than 300 points at its worst so far. Last night the US market mounted a more than 400 rise after US Federal Reserve chairman Ben Bernanke vowed to keep interest rates low until 2013, but it seems investors are now nervous about what that means for the state of the US economy, and how bad it could get. But attention also moved back to Europe, with news that President Sarkozy was locked in emergency talks with his ministers seeking ways to cut the country's deficit. That prompted rumours that the country was likely to be next to lose its Triple A rating, and also talk that one of its banks could be in trouble in the current financial turmoil, leading to hefty double digit share price falls at the likes of Societe Generale and BNP Paribas. In a note on the rating this week Citigroup said: We expect that France, with its high public debt and deficit, and popular resistance to cutbacks in its even by euro area standards extremely large welfare state is now likely to be the G7 country at the highest risk of losing its AAA rating. The markets appear to share this sentiment with French 10-year spreads over German Bunds reaching 16-years highs on Friday.

The US faces the prospect of a "catastrophe" as President Barack Obama stands firm against Republican demands for deep spending cuts without any tax increases as the condition for raising the country's borrowing limit and avoiding a debt default. With Washington gripped by a growing sense that it may be too late to avert a crisis, the president has said he will give the increasingly rancorous negotiations until the end of next week to reach agreement on the terms for raising the US's $14.3 trillion (£8.9tn) debt ceiling. The White House has said that if there is no agreement by 22 July, then discussion about budget cuts and taxes should be abandoned in favour of legislation dealing solely with raising the debt ceiling before the borrowing limit is reached on 2 August. But the Republicans have rejected legislation without agreement on budget cuts. With European leaders also facing a potentially ruinous debt crisis, a leading Wall Street figure described the prospect of a US default as catastrophic. Jamie Dimon, chief executive of JP Morgan, one of Wall Street's biggest banks, said: "No one can tell me with certainty that a US default wouldn't cause catastrophe and wouldn't severely damage the US or global economy. And it would be irresponsible to take that chance." On Wednesday, Ben Bernanke, the chairman of the Federal Reserve, warned of a "huge financial calamity" if a political agreement is not reached. He told Congress a default would "send shockwaves through the entire financial system". Hours later, the credit ratings agency Moody's warned that it may downgrade the US's AAA credit rating, saying there is a "rising possibility" that no deal will be reached by next month's deadline. (source the guardian.uk)

Jean-Claude Trichet, president of the European Central Bank, tightened the screws on Greece, Portugal and Ireland on Thursday by pressing ahead with an increase in interest rates, and insisting the single currency's weakest members must avoid a default at all costs. Trichet also attempted to keep Portugal away from the abyss by pledging to keep accepting its bonds, despite some rating agencies regarding such securities as no better than junk. This stance pushed shares higher across Europe and helped the euro to strengthen, as fears abated that Portuguese banks would soon struggle to finance themselves. Speaking after the ECB's governing council met in Frankfurt, Trichet warned eurozone governments against pursuing any plan that the credit ratings agencies would deem a default. "Our message is no credit event, no selective default, no default. As simple as that." The ECB is nervous that a default would trigger billions of pounds-worth of complex financial instruments such as credit default swaps, and destabilise the European banking sector. Trichet's staunch defence of the ECB's stance came as he announced a quarter-point increase in interest rates, to 1.5%, to clamp down on inflation, despite some of the single currency's members – including Greece – remaining deep in recession. Trichet said he would "monitor very closely" price developments – usually regarded as code for another rate rise in the pipeline, though not at the next meeting. The ECB is tightening policy in response to above-target inflation, driven by the strong recovery in the eurozone's largest member, Germany, as well as other northern economies including France. Inflation across the eurozone hit 2.7% in June. Analysts said higher borrowing costs would make life even harder for the struggling "peripheral" economies of Greece, Portugal, Ireland, Italy and Spain, which are all imposing tough austerity measures to deal with budget deficits, at the same time as coping with sickly economic growth, or outright recession.

Eurozone finance ministers are sharply divided over how to handle the spiralling Greek debt crisis, Dutch finance minister Jan Kees de Jager revealed as he attacked France's plans for a new rescue package. Speaking in London after a meeting with the chancellor, George Osborne, de Jager said it was "illusory" to hope that Europe's banks would voluntarily bear their fair share of the costs of a new bailout for Athens, and that President Sarkozy's current proposals let Greece's private sector creditors off too lightly. Any evidence of a fresh split among European policymakers will increase anxiety in the financial markets, which were rattled on Wednesday by news that ratings agency Moody's had downgraded Portugal's debt to junk status. "We do have concerns about the French scheme," de Jager said. "I think it's illusory to think of such a scheme as voluntary, so we have to work on solutions so that banks reach a level playing field." As a non-eurozone member, Britain is on the sidelines of talks about a new bailout for Greece, but de Jager said Osborne was "very close to our position". The cost of insuring Portuguese government debt through credit default swaps hit a record high after the downgrade, while the yield on Portuguese 10-year bonds jumped by more than a percentage point to 12.07%, ratcheting up the pressure on Lisbon. European commission president José Manuel Barroso criticised Moody's announcement, saying: "In this context, and the absence of new facts on the Portuguese economy that could justify a new assessment, yesterday's decisions by one rating agency do not provide for more clarity. They rather add another speculative element to the situation."