Just to complete my daily bit of good-natured German-bashing...

German media (in a complete misrepresentation of the facts) says the Greeks work less and retire early... yet the EU's own figures show that the average Greek works many more hours P/A than the average German.

And they overlook that Greece is largely in the trouble it is, because the one-size-fits-all interest rate of the Euro is essentially decided by Germany, for Germany.

Financial houses (many German) were lending to Greece at the same rate as they would lend to Germany.

Where was the German discipline there?

As Schäuble mentions, the population of Europe are not going to agree to German domination of Sovereign states until they have been "convinced" that the measures are necessary.

This is where the lack of leadership in solving the Euro crisis comes into play.

Markets are panicking because everyone is being told we need German leadership in Europe but we don't have it.

Merkel keeps going to meetings. Still no solid solution.

This game will continue to be played, and markets continue to take a hit, until European leaders BEG for Germany to take what she wants in return for German financial underwriting. UPDATE - European leaders have agreed a timetable to set up a single eurozone-wide banking supervisor run by the European Central Bank over the course of next year, a rapid pace that marks a victory for a French-led group that had pushed for a quick first step towards a banking union for the single currency.
But at an EU summit that stretched into the early hours of Friday morning, leaders failed to agree on the second key step in the process: when the eurozone’s €500bn rescue fund will be able to start injecting cash directly into failing European banks, giving in to German resistance.

....“impossible for Germany to pay everybody’s bills,”

While Germany and the other euro members will “stick to the monetary union,” every euro state has to fight the problems it faces as it’s “impossible for Germany to pay everybody’s bills,” Schaeuble said. Germany “would be destroyed” if it overstretched its resources, he said. ....Turning to Spain, the German minister said financial markets have yet to appreciate efforts made by the country’s government, led by Prime Minister Mariano Rajoy, to return to sustainable public finances. Standard & Poor’s cut Spain’s sovereign-debt rating by two levels to BBB- on Oct. 10, citing the backtracking of euro-region peers on a pledge to sever the link between the sovereign and its banks. “Since Spain is under the pressure of markets, Spain had to take decisions on reducing its deficit, to increase its competitiveness, but Spain is delivering since the Rajoy government is in place,” Schaeuble said. “They’re doing very well but it takes time until markets believe them.”

Swedish Finance Minister Anders Borg said yesterday it’s“most probable” that Greece will quit the common currency and such an outcome shouldn't be ruled out over the next six months. Schaeuble told the Singapore-German Chamber of Industry and Commerce that a Greek exit would create “huge” problems and wouldn't happen. .... “If you look at how much interlinked we are in the European Union and in the currency union, to leave it would create huge, incredible difficulties for everyone,” Schaeuble said. “Therefore the better way is to solve it, but of course it has to be solved.” Euro-area finance ministers on Oct. 8 backed Greece’s plan to trim its budget and reshape the economy, while demanding that the government in Athens commit to a list of 89 policy steps before the summit. They didn't commit on whether the next 31 billion-euro aid installment will be paid out in one go or released in smaller chunks. “Everyone is trusting that Samaras and his government is really decided to do what is needed,” Schaeuble said.

BS_BS_BS_ and that's all...

The European Stability Mechanism (ESM) will have a full lending capacity of 500bn euros (£400bn; $650bn) by 2014. It will initially run alongside, and then eventually replace, the European Financial Stability Facility (EFSF).  Europe's largest economy, Germany, will make the biggest contribution to the fund, about 27% of its total. The ESM, which is a new European Union agency, will be chaired by Jean-Claude Juncker, the Prime Minister of Luxembourg and chair of the Eurogroup.  The launch of the ESM "marks an historic milestone in shaping the future of monetary union", Mr Juncker said after the inaugural meeting of the Eurogroup of finance ministers that makes up the fund's board.

Countries will make their first payments towards the fund this week.   Earlier, the EU economic and monetary affairs commissioner, Olli Rehn, said: "It provides the eurozone with a robust and permanent firewall and it provides us with a strong toolbox of effective and flexible instruments.  "Thinking of where we were two-and-a-half years ago when we had no instruments of crisis management, we had to create the Greek loan facility and the temporary European facility, we are moving forward and we are supplementing the economic and monetary union with one important building block," he said as he arrived at the meeting.

"Nobody is in party mood, but I am less pessimistic for the moment for the eurozone than in the spring."

NICOSIA, Cyprus—Euro-zone finance ministers indicated Friday they are open to giving Athens more time to meet budget targets and that they aim to decide by the end of October on whether to give Greece its next installment of a bailout money….In their first gathering after a long summer hiatus, finance ministers from the 17-member currency bloc spent the morning discussing the economic and financial crises of Greece, Spain, Portugal and Cyprus. They were joined later by the 10 ministers from the rest of the European Union to debate proposals, released this week, for a system of common banking supervision.  European Central Bank President Mario Draghi, center, with IMF chief Christine Lagarde, left, Eurogroup President Jean-Claude Juncker and German Finance Minister Wolfgang Schäuble talk at the start of a two-day informal meeting in Cyprus….The meeting comes days after the European Central Bank announced a revamped plan for purchases of government bonds in the open market in coordination with the euro zone's rescue funds, and follows a German constitutional court ruling clearing the way for the launch of the European Stability Mechanism, the permanent bailout fund.  Friday's gathering turned attention back to the governments of bailed-out countries and what they will do to implement tough reforms to qualify for support from the currency bloc.   Ministers sought to keep pressure on the Athens government, which hopes to win approval soon for the next disbursement in its €173 billion ($224.7 billion) second bailout package…. The Greeks "need to show very strongly decisive action" on structural reforms and spending cuts, said Luxembourg's Jean-Claude Juncker, head of the Eurogroup of finance ministers. Athens must agree to a "set of credible measures to close the fiscal gap between 2013 and 2014," he said.

..."troika" ???? Greece has a German Governor - Horst Rechenbach ...what "troika" ??

The so-called "troika" of inspectors from the European Commission, the European Central Bank and the International Monetary Fund returned to Athens on Friday to conclude a report on Greece's progress in meeting the terms of its latest bailout, Reuters reported.

The inspectors, who held talks with Greece's finance minister on Sunday, must approve the plan to trim roughly €12bn from the state budget over the next two years if Athens is to get a green light for the bailout money it needs to avoid bankruptcy.

"The troika has not accepted all the measures, but we have alternative proposals," said Socialist leader Evangelos Venizelos, a junior partner in the ruling coalition who was briefed by the finance minister at a party leaders' meeting.

Greek Finance Minister Yannis Stournaras played down the inspectors' objections, saying they had rejected only a "few" measures. A senior Greek government official had said earlier that the troika had sought more details on the proposals to understand them better.

Officials declined to specify what the objections related to but a source familiar with the matter said they were over measures to save roughly €2bn by cutting expenses in the public sector.
FRANKFURT - Deutsche Bank AG's new co-chief executives are expected this week to explain how they aim to turn around the underperforming company, amid considerable investor skepticism.
The strategy presentation to investors comes just over 100 days after Anshu Jain and Jürgen Fitschen took over one of Europe's largest bank by assets. The two chiefs vowed to thoroughly review the bank's vast operations, with an eye to boosting profits amid tougher regulation and Europe's debt crisis.  With a balance sheet of €2.2 trillion ($2.8 trillion), Deutsche Bank is one of the world's largest banks, yet one of the least well-capitalized.
LONDON -- A panel of European officials would be given sweeping new powers to police the financial sector across the continent but also in the City of London.  They would be given "full decision making powers" to impose EU law and to arbitrate disputes between Britain and the eurozone over the risks posed by British banks, according to the proposals being tabled on Wednesday at the European Commission. Decisions taken by the powerful body would be automatically binding unless Britain was able to win the unlikely backing of a majority and overturn them.  Rulings by the panel could create huge costs for the British government and banks if they were ordered to bail out a struggling institution, contribute to cross-border bail-out funds, or allow the EU to rule over breaches of European law. The moves stem from proposals for a eurozone "banking union". The radical new EC blueprint for banking regulation at the EU level is focused on giving the European Central Bank new powers to supervise the eurozone's banks, in order to shore up struggling financial institutions in southern European countries such as Spain. But the ECB's new role would see the existing European Banking Authority (EBA) - the current pan-European bank regulator that has its headquarters in London - being radically overhauled and strengthened. Its panel of European officials would be given new powers to stamp its authority on potential disputes between both eurozone and non-eurozone countries, including Britain.

QUATRO REICH = THE EUROPEAN UNION

EUROPEAN UNION —The European Central Bank should police the more than 6,000 banks in the euro zone, the European Union's executive said Friday, setting itself up for a clash with Germany, which wants to retain oversight over smaller lenders.  A proposal from the European Commission, to be finalized in coming days, will call for the central bank to set up an agency to take responsibility for supervision of all banks in the 17-nation currency area. The proposal follows a June decision from euro-zone leaders who wanted the supervisor created as a step to break the "vicious circle" between weak banks and governments with strained finances that have eroded confidence in the euro zone. The proposal, however, falls far short of creating the true "banking union" that the ECB and the commission have called for. It doesn't set up a regional fund for guaranteeing bank deposits or give powers to euro-zone agencies to wind down or restructure shaky banks and distribute losses among investors. The ECB would, however, be able to take operating licenses away from unstable lenders. The supervisory agency would be run by a separate decision-making panel at arm's length from the ECB, in an effort to prevent conflicts of interests with the central bank's main role of fighting inflation and to allow EU states that don't use the euro to join.   As the supervisor, the ECB would have to make sure banks build up sufficient capital levels to absorb economic and financial shocks—such as the real-estate crashes that triggered the Irish and Spanish problems or over-investments in shoddy products like the U.S. subprime mortgages that sank banks across Europe in 2008.The threat to withdraw a license would be the ECB's most potent enforcement tool. "That's the first crucial element: to empower the European supervisor with the right to withdraw the license," said Guntram Wolff, deputy director of Brussels-based think tank Bruegel. But other powers and responsibilities that are central to creating a unified banking framework for the euro zone would remain in national hands. Proposals that would force private investors to share the burden—for instance by converting debt into equity once a bank's capital falls below are certain level—aren't set to come into force until 2018. In a sign of possible movement, German Finance Minister Wolfgang Schäuble, in an opinion piece in the Financial Times Friday, said the so-called bail-in mechanism should already come into force in 2015. (WSJ)

Monti is growing on me ..... He certainly plays a clever game - hitting the Germans with the dreaded inflation card. Why can't the smaller countries like Greece and Portugal find someone to fight their corner? Looks like we just have to hold on tight and hope that some crumbs from any Spanish/Italian gains will fall our way. That or revolution. Can't be much longer coming. Fresh wave of pay cuts and tax demands on its way and the weather's getting cooler...While Monti is keen to push down Italy's borrowing costs, Merkel is more concerned about reshaping the fundamental framework of the eurozone. That's certainly connected, isn't it. Merkel and the German ECB council member Asmussen already said that they both support the bond buying program. Weidmann will remain opposed and nobody will care as he's always been an idiot (scholar of the preceding idiot: Axel Weber). However, in the long term there must be a new framework. It will be crucial to get support for this, keep the process going and find the right moment to get the European people involved....WELL, i don't get this one bit. Where's this inflation coming from? Because the only place i can see it coming from is a weaker Euro due to unlimited money printing by the ECB to support the basket cases of Italy, Spain, Greece et al. It's just a vacuous comment.

Whether they do it by using the ESM to buy primary debt, or another SMP, it's just prining. I think Monti is trying to be too clever & will just paint himself into a corner.

Austerity was always a dumb idea...

We are not in a recession because industry is incapable of producing enough goods, or because there are productivity problems, or cost or quality problems.

One of the most notable phenomena of the past three years has been a 25% increase in exports. You simply can't get that kind of increase if you are producing goods that are inferior in quality or price.  Foreign buyers obviously don't have to buy your goods, so if they increase their purchases by 25% in such a short period of time, quality and price aren't the issue, and if you can ramp up export production by 25% in a couple of years, then obviously capacity and productivity aren't the problem either.....So what is the problem? It is that consumers got over-leveraged and took on too much debt while house prices were rising and unemployment was low, pre-2007. Then, when the house bubble burst, and unemployment started to climb, consumers got nervous about debt levels and future employment prospects and started to pay down debt, which means cutting back on consumption.We are not short of productive capacity - we are running well below long-term trend - and we are not production constrained. We are in a recession because of shortage of domestic demand.  Incidentally, if you think about it, if we really were production, capacity or productivity constrained, but had eight percent unemployment, that would be very weird indeed.  Instead of increasing it's level of debt the Private sector is reducing it (Deleveraging) - This is the result of the bursting of the credit bubble resulting in Falling demand -
If Government attempt to reduce it's own debt at the same time as the private sector it will cause the shrinking economy to contract faster - Deflation will only make the private sector more cautious making it contract further - Austerity was always a dumb idea that is never going to work as long as the private sector debt is contracting.

 

closer scrutiny will reveal not just the mess but the dishonesty.

"Greece is planning to sell 6Billion Euro of treasury bills to cover its financing needs". This is on top of the 200billion + Euros advanced by the EU/IMF/discounted bond holders. The time must have arrived when someone asks the obvious question. What are they doing with the money? There is a follow up question just as mystifying. Who apart from the ECB is daft enough to buy Greek treasury the bills?

Italy - "In an interview today with Finnish daily Helsingin Sanomat, Mr Monti said that Italy might European rescue funds and the ECB to buy its sovereign debt. He told the paper:
"The basic idea is that Italy does not seem to need special aid right now, especially not to save its economy [but we may need some breathing space so] We're thinking of a possible intervention in various combinations involving the EFSF, the ESM and the ECB. "Is Monti using the same sort of euphemisms as Spain and its "bridging loans"? i.e. when is a bailout not a bailout? Bit of a strange time for a tour of Eurozone countries/leaders as well?

Germany wants decisive moves to political integration in return for further help not more and more verbiage about reforms that magically evaporate as soon as the noose is relaxed. After all, if Spain is so willing to make all these dramatic cuts why would they fear asking for a formal bailout with CONDITIONALITY...They are doing it anyway???The reason is, as we know, twofold:
1. they do not even intend to deliver on this verbiage, as they know the regions are out of control.
2. they are hiding an awful lot of bad stuff and fear closer scrutiny will reveal not just the mess but the dishonesty.

Germany, the Netherlands and Luxembourg had the outlooks for their AAA credit ratings lowered to negative by Moody’s Investors Service in past week, citing “rising uncertainty” about Europe’s debt crisis, the risk of Greece leaving the eurozone, and the growing likelihood of massive bailout bills in Spain and Italy. On the whole, they seem like pretty sound reasons to me.

The IMF has, as I predicted, written off Greece. The Greek elite is, in turn, not even trying to hide how little effort they’re exerting to put their own public sector feathered-nest in order. The managements of Greek state-run enterprises seem to be so forgetful, they forgot to implement government decisions concerning wages cuts for thousands of employees at state-run enterprises (DEKO) and other state bodies and organizations. And the Coalition itself omitted to pass the legislation forcing them to do it.

The Troika arrived in Athens this week, to be vociferous in pointing out the non-compliance. (I doubt if they’ll bother to mention that all the forgotten public sector cuts have been dumped onto the already flatlining private sector). It is just possible that the Troikanauts will say “That’s it, no more money”, but unlikely: with Spain and Italy in bond-yield intensive care, this would be bad timing.

Spain’s two-year bond yield saw its biggest one-day move since the eurozone debt crisis broke out in early 2010, closing at 6.53 per cent. “Spain is close to losing access to markets entirely,” said John Stopford, a senior fund manager at Investec Asset Management. “It’s not sustainable to borrow at these levels for very long.” He’s not wrong: Spain is entering the Greek Twilight Zone --- An association representing German banks has called for an extra year to implement tougher rules that would force them to hold more cash as a buffer against possible financial crises. The BVR group of private and public banks called for a delay until January 1, 2014 for the entry into force of the so-called Basel III regulations due to the "enormous technical restructuring and implementation work" needed. The planned implementation at the beginning of 2013 was "no longer realistic" said the group.

The Euro and the EU itself have never been about what the 'Germany' or 'Spain' or 'The UK' wants, it is only what the leaderships of those countries want, even in the face of popular votes against the EU.

"Germany" ( read Germans ) will not decide anything, the people will never be given a say, much like the rest of the peons across Europe.

Of course Germany wants to save the Euro, but will only do so if they are able to maintain their 'advantage' in the export markets to other Euro and EU states. One disadvantage for Germany would be if the Eurozone countries decided to allow the ECB to start buying the sovereign bonds of the indebted countries. Germany will never allow that to happen as it would mean that they would have to share a much bigger burden of the Eurozone "collaterized" debt than they do at present. It's called German self preservation....Unfortunately, it still appears as though Europe’s top policymakers – that is, the Germans – are trying to “muddle through”, as opposed to coming up with a good, powerful solution. To understand this situation, it is instructive to reflect on Spain’s “problems” in comparison with those of Greece and perhaps Ireland. While Spain’s widely cited problems of high unit labour costs and current account deficit are symptoms of it sitting inside a rigid currency zone, before 2007-08 these problems existed but were not highlighted. They were seen as an understandable consequence of a monetary union such as the euro area.

The euro has completely broken down as a workable system and faces collapse with “incalculable economic losses and human suffering” unless there is a drastic change of course, according to a group of leading economists. Europe is “sleepwalking towards disaster”, according to the 17 experts, who warned that over the past few weeks “the situation in the debtor countries has deteriorated dramatically”. “The sense of a never ending crisis, with one domino falling after another, must be reversed. The last domino, Spain, is days away from a liquidity crisis,” said the economists. They include two members of Germany’s Council of Economic Experts and leading euro specialists at the London of School of Economics, all euro supporters. “This dramatic situation is the result of a eurozone system which, as currently constructed, is thoroughly broken. The cause is a systemic failure. It is the responsibility of all European nations that were parties to its flawed design, construction and implementation to contribute to a solution. Absent this collective response, the euro will disintegrate,” they added in a co-signed report for the Institute for New Economic Thinking. The warning came as contagion from Spain pushed Italy’s borrowing costs to danger levels, with two-year yields rocketing 40 basis points to more than 5pc. The Milan bourse tumbled 3pc, led by bank shares. Italian equities have been in freefall since it became clear two weeks ago that the EU’s June summit deal had failed to break the nexus between crippled banks and sovereign states.

The crisis is starting to ricochet back into Germany, where the PMI manufacturing index for July fell to its lowest since mid-2009. Doubts are emerging about the creditworthiness of the German state itself.

Well, I never thought I would admit it, but I am just another old “saddo” who writes all these comments with passion. This whole European saga goes on and on. We have seen our European leaders go through a wide spectrum of so-called solutions to the euro crisis, with tax hikes, austerity, unsustainable borrowing, a European central bank, and several other “solutions”, but the end result is always the same – the weaker countries get weaker, and even the almighty Germany now faces a downgrade by the credit rating agencies, because of their exposure to the debt crisis. There is only one solution to Europe’s problems, and that is to drop the idea of a single currency. In principle it was a great idea, but in practical terms it could never work. There is simply no way that each and everyone of the European economies with such widely different economy bases, from manufacturing to tourism, and many in between can hold the value of the euro to within the tight limits imposed. Almost all of Europe needs growth and increased tax revenue. This cannot be achieved against a background of high unemployment and businesses closing down. To create growth and tax revenue most of Europe needs to devalue its currency, but this is not possible whilst they have to adhere to the demands of the single currency. Despite several comments saying that the euro will survive, all I can say is they are wrong, the euro can't and never ever could work across the many different economies all across Europe. Make no mistake about it until the financial markets see that there is a credible solution to create growth and increased tax revenue across Europe as a whole, they will continue to remain in turmoil..... An association representing German banks has called for an extra year to implement tougher rules that would force them to hold more cash as a buffer against possible financial crises. The BVR group of private and public banks called for a delay until January 1, 2014 for the entry into force of the so-called Basel III regulations due to the "enormous technical restructuring and implementation work" needed. The planned implementation at the beginning of 2013 was "no longer realistic" said the group.

Eurozone leaders hoping for a quiet few weeks will be sorely disappointed. Short-selling bans on banking and insurance stocks by financial authorities in Rome and Madrid are a sure sign that all is not well, although I fear that these restrictions will only offer the most temporary of respites. After the summit in June that provided a brief burst of euphoria, there were mutterings that the crisis was not over, and the pessimists have now been proved right..... after a particularly grim day, European markets have closed and its time to rake over the pieces.....Growing fears that Spain could need a bailout, worries about whether Greece will get more money or will instead quit the eurozone, and a drop in EU confidence have conspired to sent shares and the euro sharply lower and bond yields higher. News of a ban on short selling in Italy and Spain - whether misguided or not - seemed to help haul markets slightly back from the brink. We may rapidly be approaching a decisive moment for the eurozone; previous bailouts were of smaller countries that were of manageable size. Spain is a different order of magnitude entirely, and it may not be possible to rescue this economy in the same way that Greece, Ireland and Portugal were bailed out. Eurozone leaders will likely hold yet another summit, but they will need more than fine words if they are to truly save the single currency.

The East provides a mirror

Since Brussels is quite happy to ignore referendum results it doesn't like, it's hardly n a good position to lecture others about democracy.

People in Eastern Europe have a healthy attachement to actual results. That's why they get impatient with the endless process-driven talk and de facto status quo and paralysis in most of the West (perfectly represented by EU institutions themselves). So it is more likely to get radical ideas and non-standard politicians in the East than in the West. East embraced nationalism, clericalism, fascism, socialism, communism, capitalism, whatever came along as long as the perception by people was that things might get better.

People in the east go for the jugular, game the systems, and in general act in self-serving ways. This can be annoying, but is is also more honest and authentic. Capitalism in the east very quickly disintagrated into plutocracy, abuse of labor rights, tunneling of companies, and a general kleptocracy - things that took a lot longer in the West, although it is clearly happening in the West right now.

People in the West need to understand that abstract "systems" that don't deliver results are just that: empty verbiage surrounding well-hidden and self-serving power. The East provides a mirror: there can be no truly free media that is owned by private interests, there can be no general prosperity in dog-eats-dog capitalism, there is no such thing as "meritocracy" any more in the West than there is one in the East, and maybe there is no such thing as "liberal democracy", only better and worse ways to run a society.

The ugly truth is that without self-restraint by the powerful, without growing wealth, and without external unifying threats, all these pathologies from th East are appearing the West. The political threat of communism made the prosperity and balanced societies the West possible (maybe inevitable). That's gone, how are we going to do the right thing without this external threat?

The monthly survey of funds by Bank of America Merrill Lynch has picked up a sudden crumbling of confidence in the eurozone core, with France viewed as the country most likely to deliver a nasty surprise later this year. Europe’s debt crisis is by far the biggest worry worldwide, with the US “fiscal cliff” and China’s property slide well behind.

A net 32 of money managers expect trouble in Germany, a dramatic reversal since May. The worries may be linked to the Bundesbank’s rocketing claims on eurozone central banks under the ECB’s “Target2” payment system, now €729bn (£572m). These reflect the scale of capital flight from the Club Med bloc, and may prove hard to collect if the euro blows apart.

A net 55pc expect a bad surprise from France, which has $710bn (£456bn) of bank exposure to Club Med. President François Hollande is courting fate by raising the minimum wage, employing 60,000 new teachers and clinging to a largely unreformed state that takes 56pc of GDP.

While investors seem willing to overlook the leisurely pace of fiscal tightening, they may be less forgiving of Mr Hollande’s nonchalance over France’s relentless loss of global competitiveness.

The growing doubts about Germany and France have not yet surfaced in the debt markets. Short-term borrowing costs have turned negative in both countries. The immediate flight to safety has overwhelmed all other effects.

LONDON—The euro zone's financial plumbing is badly backed up—and none of policy makers' efforts to clear it has worked.

That was apparent Friday in fresh data from the Bank of Spain, which said the country's banks borrowed €365 billion ($446.7 billion) from the European Central Bank in June, a new high, accounting for 30% of all the central bank's lending. The Spanish borrowing figure is €50 billion higher than the level in April and is double the figure at the beginning of the year.

The data reflect one of the euro zone's great, unsolved problems

It would then take considerably longer....

The German Federal Constitutional Court may take longer than expected to decide on a request by plaintiffs that it issue a temporary injunction blocking Germany from signing up to Europe's permanent bailout fund and the fiscal pact.

Court President Andreas Vosskuhle announced at a public hearing on Tuesday that the court would undertake a "constitutionally sensible assessment" of the legal complaints that may go beyond normal procedures in weighing temporary injunctions. People who took part in the hearing said it could now take the court up to three months just to decide on whether to issue the injunction. It would then take considerably longer than that for it to reach its verdict on the substance of the complaint -- whether Germany is handing over too much sovereignty to European authorities.

The slower-than-usual injunction procedure means a further delay in launching the €500 billion ($613 billion) European Stability Mechanism (ESM), which was to have gone into operation on July 1 but has been stalled by the legal complaints in Germany. Uncertainty about the court's verdict has raised doubts about whether Europe will get the extra firepower it needs to combat the debt crisis.

The German parliament ratified the treaties to launch the ESM and the fiscal pact on debt limits on June 29. But President Joachim Gauck has refrained from signing them into law while the court hears objections from politicians and academics who argue that the measures will infringe on the constitutional role of parliament to decide how taxpayers' money is spent.

Bailout renegotiation - Greece

In February, European Union and international lenders had imposed strict targets on spending and economic reforms on Greece in return for a 130bn euro ($171bn) rescue package - the country's second such bailout.  But Greece's national wealth has shrunk for five years in a row and unemployment remains high, which adds to the country's benefit costs while reducing government income in terms of tax receipts.   Measures intended to reduce government debt, such as selling off state-run companies and reducing the minimum wage, risk raising the number of jobless and lowering household incomes, further damaging Greek economic growth .  The government fears that the country is increasingly trapped in a vicious cycle of internationally enforced austerity followed by shrinking wealth or recession.

"With this uncontrolled recession, the programme's funding needs are rising. We want this to stop and to start getting out of this dead end," Mr Samaras said.

"This is the subject of our 'renegotiation'."

German economic think-tank suggests mandatory loans for the rich.

Spiegel Online's actual headline is, that a German economic think-tank suggests mandatory loans for the rich.

I think, I have a better, voluntary idea: We see crisis countries struggling to pay interest rates of around 7pc.  We also see, that the ordinary private saver is struggling to find secure investment opportunities that at least pay better interest rates than the inflation rate.  There are enormous amounts of wealth in the hands of the common people, ordinary savers, in all European countries, especially in Germany. And they actually get not more than 3pc from the banks even on 5 or 10 years time deposits, if the want to have the full German deposit protection. Without time deposit, the interest rates are even meandering around 0.5 - 1 pc.
And from that low interest rates, they even have to pay around 28pc flat rate withholding tax (Abgeltungsteuer) on capital gains.  This should be put together, the need for lower interest rates for the crisis countries, and the demand of ordinary people for save deposits at reasonable interest rates.  And this, if possible, while avoiding the costs private Banks would add for their services.  So, if European Countries are guaranteeing States or Banks via ESM or other measures, why don't the just guarantee the deposits of common people on something like an European Savings Certificate, issued by the ECB or another new bank like European institution....If such an institution could offer guaranteed deposit with a net profit of around 3pc, ordinary European savers would pry this certificates out of their hands.  At German capital gains tax rate, that would mean an interest rate of around 4,05pc must be offered.  The institution would add their bureaucratic costs, and surely could offer the so collected money of the European people, at an interest rate of around 4.3pc or so, to the crisis countries.

That would help the crisis states to get some air, meaning time to reform, and the ordinary European people.  And it would even help Mr. Schaeuble's tax office, as Germany would collect more capital gains tax than today, because of the rising average interest rates. After the crisis, one could even think about keeping such a scheme, as a regular way to support private capital formation for ordinary people and financing European states.

I've been wondering about Norway; for many the model to emulate. Many of the numbers here come from Norsk Industris Konjunkturrapport 2012. It's an employers' association, so expect a center-right bias. I'd be delighted if a Norwegian were to comment.

Norway's Sovereign Wealth Fund means the country has no insolvency problems. Unemployment is a low 3%. One out of three jobs is in the public sector. The Norwegian oil industry is expected to show a revenue growth of 15% next year, and is hiring. But Norway's traditional export sectors - industry and mining - will grow only 0 to 2%, and are firing people. And these traditional sectors employ about five times as many people as the oil sector.

There is a clear dichotomy in Norway's industry: on the one hand a booming oil sector which keeps the currency strong and wages high; and on the other hand an export-oriented industry which are suffering from the combined effect of the high kronor and high wages.  Surprisingly enough, given the strong sense of crisis in Europe, Norwegian companies actually increased their exports to the EU in 2011 by 12%. Exports increased to all EU countries except the PIGS countries in the south. Norway is not whining demand is weak. Exports to the UK increased +6.2%. Exports to the US dropped -4.3%. These are data for the whole of 2011. 80% of Norwegian exports go to the EU, 2% to China. Being outside the EU, Norway is free to make its own free-trade agreements with China, but China is not interested. Negotiations broke off when Norway gave Liu Xiaobo the Nobel Prize back in 2010. Norway had its banking crisis, following a period of financial deregulation. Small banks began to fail in 1988. The crisis peaked in 1991, and ended in 1994, six years after it began. Just imagine the Guardian running a "Norwegian Banking Crisis Live Blog" six years on end.
What's my take on Norway?

There are two Norways. The oil industry is booming; the export-oriented industry is suffering. The kronor-euro exchange rate is causing discomfort for Norway's export industry.  When a overvaluation of the Swiss franc threatened Swiss exports the Swiss National Bank intervened, and the Swiss franc has been at exactly 1.20 euro since. Of course, this means a large part of Swiss monetary policy is no longer determined in Bern, Switzerland but rather in Frankfurt, Germany. Nevertheless, pegging the franc to the euro is seen by many Swiss as a pragmatic solution.  Norway's future may be Switzerland's past. We may see the Norwegian kronor pegged to the euro sooner than we think. Yes, such a move would be political suicide in the UK. So what?