Shares in Bankia have slid almost 20% after Spain's bank rescue fund said the troubled lender had a negative value of -4.2bn euros (£3.4bn; $5.6bn). Bankia's parent company, BFA, which is being bailed out, was deemed to be worth -10.4bn euros. The assessments suggest losses on bad loans are even worse than expected. Bankia shares will be suspended from Spain's benchmark Ibex index from 2 January until at least after it is recapitalised, the stock exchange said. The Spanish government-owned bailout fund, which is called the FROB, said that a further 13.5bn euros of rescue money would have to be injected into BFA, on top of the 4.5bn provided by Madrid in September. The money, which is ultimately provided by the eurozone's bailout fund, is being injected into the bank via the sale of new shares in BFA to the FROB. By doing this, the FROB increases the bank's capital - its ability to absorb potential future losses on the loans it has made - by putting Spanish taxpayers' money at risk.Ordinary investors The FROB told the BFA it must provide 10.7bn of the rescue money as new capital to Bankia, which will have the effect of diluting the value of the bank's existing shares. The statement by the rescue fund has made clear that this dilution will be even worse than feared, causing Bankia's shares to drop further on the stock exchange. Its shares have lost over 80% of their value since the bank was first listed on the Madrid Stock Exchange in July 2011. Bankia is the largest of a string of Spanish banks to suffer massive losses on the loans it made to property developers and home buyers during the country's property bubble in the past decade. As well as Bankia, three other banks are currently being patched up by the FROB - Catalunya Banc and NGC of Galicia, as well as Banco de Valencia, which was in such bad shape that it is being sold off to another, privately-owned bank. Some 10bn euros of the cost associated with the four banks' rescue must be borne by other investors in the banks. This decision has proved controversial in Spain, as these investors include many ordinary Spaniards, particularly older investors, to whom their banks sold preferred shares - a high-risk form of bank debt - as a savings product. In Bankia's case, about 350,000 such investors are expected to have most of their money wiped out as part of the bank's rescue, according an unnamed source cited by the Reuters news agency.

TOO LITTLE TOO LATE... Deuchland uber ales !!!..

Berlusconi, who announced this month he will again lead his People of Freedom party (PDL) in a national election expected in February, said on a talk-show on state broadcaster RAI that the ECB should become a lender of last resort for the currency bloc.

"If Germany doesn't accept that the ECB must be a real central bank, if interest rates don't come down, we will be forced to leave the euro and return to our own currency in order to be competitive," Berlusconi said in comments reported by Italian news agencies Ansa and Agi.

The 76-year-old media tycoon has made similar remarks in the past about the possibility of Italy, or even Germany, leaving the euro, but has often at least partially rectified them later, Reuters reported.

Berlusconi is already campaigning hard for the election with a spate of television interviews in an attempt to close the wide gap with the centre-left Democratic Party which is polling at above 30pc, some 14 points above the PDL.

Berlusconi was forced to resign as prime minister in November last year as Italian bond yields surged at the height of the euro zone debt crisis.

Italy woke up on Sunday to discover that politics was once again a world of bitter, personal attacks, sleight of hand, stunning egotism and shocking obsequiousness, meaning just one thing: Silvio Berlusconi was back. Overnight, the calm, grey world of Italy's technocrat prime minister, Mario Monti, vanished after the former EU commissioner said on Saturday he was resigning because Berlusconi, the 76-year-old media mogul and three-time prime minister, had withdrawn his parliamentary support. Hours earlier, Berlusconi had stood outside the gates of AC Milan, the football club he owns, declaring that after much soul-searching he would stand in elections, now likely in February. He boasted that after searching far and wide, he had failed to find a successor as brilliant as himself. Monti's austerity polices, tax hikes and spending cuts had dragged Italy to "the edge of an abyss", Berlusconi said last week, before his MPs were ordered via text to walk out of key votes and his party secretary, Angelino Alfano, told parliament: "We consider the experience of this government closed." Alfano then accused the centre-left Democratic party – currently riding high in the polls – of communist tendencies, jolting Italians back to Berlusconi's heyday of claiming commies boiled babies alive. Gian Antonio Stella, a leading commentator with Corriere della Sera, lamented: "I thought we had got beyond all that; it is so unpleasant to return to the 'You are either for me or against me' version of politics.

"Italians are sick of the Guelph and Ghibelline mentality, which cuts off the oxygen from political debate."

But for Berlusconi that vitriol is his lifeblood and he now has two months to turn up the heat on his TV channels and persuade Italians to take his side once again, following his resignation in November 2011 in the midst of sex scandals and an economic crisis that threatened to send Italy into meltdown.

Monti's plan to resign at the end of the year after he passes the 2013 budget, bringing elections forward a month from March, deftly denies Berlusconi the pleasure of shooting down the government's remaining bills as they struggle to get through parliament.

"The big question now is whether Monti himself wants to run as the head of a centrist group in the election," said Roberto D'Alimonte, a professor of politics at LUISS university in Rome.
Italy faces a return to political chaos - IN FACT , ITALY WANTS OUT FROM UNDER THE GERMAN BOOT - after Prime Minister Mario Monti announced at the weekend that he will resign, prompting his notorious predecessor Silvio Berlusconi to say he would attempt a comeback. The renewed uncertainty sent European shares into a slump as trading for the week began on Monday morning. Investors aren't the only ones worried, either. German Foreign Minister Guido Westerwelle told SPIEGEL ONLINE on Monday that the situation in Italy threatened to spark renewed financial problems in the euro zone. "Italy can't stall at two-thirds of the reform process," he said. "That wouldn't cause turbulence for just Italy, but also for Europe." Westerwelle's concerns were echoed by Klaus Regling, the head of the permanent euro-zone bailout fund, the European Stability Mechanism (ESM), who told German daily Süddeutsche Zeitung on Monday that he feared the heavily indebted country could abandon necessary reforms. "In the last year Italy has pushed through important reforms," he told the paper. "So far, the markets have honored that, although they have reacted with concern to the developments of recent weeks." The reform process must continue for the sake of both Italy and the entire currency union, Regling said. BERLUSCONI SHOUL GET iTALY OUT OF THE FOURTH REICH !!!!

Opinion ....2...

Disaster was visited on the global economy 40 years ago with the Nixon 'shock' - the disengagement between the dollar and gold and other currencies with gold via their linkage with the dollar. That is the demise of the Bretton Woods agreement.
With the end of that arrangement countries were now free to create as much money as they liked and run as big a trade deficit as they liked. Under Bretton Woods, any trade defict had to be quickly reversed by cutting demand to maintain parity with the dollar and therefore gold
In 1963 Reginald Maudling tried to stimulate the UK economy only for UK business to fail to meet demand and so sucked in imports. That stimulus had to be quickly reversed. The same 10 years later with Anthony Barbour. The failure of Brits to create wealth goes back way before Margaret Thatcher. And way before GCSEs - but that's another matter.
Of course, Germany was the exception as the Bundesbank was not about to engage in this game of Monopoly.
Like all frauds, it starts small and the fraudster, having got away with it, then becomes more ambitious.
By 2007 the global economy had split into two camps - those who could create wealth, Germany (being smart and well-organised) and China (using slave labour) being the two prme examples, and those who could only consume wealth, the UK and US being the best examples. The US having exported a large chunk of its wealth creating capacity to the likes of China for the benefit of the few
The circle being squared with debt.
The Anglo-saxons convinced themseleves that crazy maths could be used to make even the worst debt perform.
In an attempt to maintain this farce from 2008 onwards the fraudsters now went one better by a quasi-monetisation of debt, quantative easing. Rather than solve the basic problem of not creating wealth they reach for their trusty tools of deceit and fraud.
Having got over the last few years with quasi-monestisation the UK, like all confident fraudsters, now becomes more confident and goes for full monetisation as Osborne claws back interest payments on bonds owned bythe BoE. One of the attributes of fraudsters is being adept at the use of convoluted logic to defy logic.
Eventually they will also write off the capital value of these bonds.
That gives a short breathing space but just as qe has solved nothing neither will that. The 'grand plan' seems to hope something will turn up.
But still there is this huge global trade imbalance that is being addressed by the default of everything just winding down as the there are fewer and fewer buyers for the sellers.

The European Union's Autumn economic forecasts said gross domestic product (GDP) across the 17-nation currency area would shrink 0.4pc in 2012 and that it would take until 2014 to recover, with expected growth then of 1.4pc.

"Europe is going through a difficult process of macro-economic rebalancing, which will still last for some time," EU Economic Affairs Commissioner Olli Rehn said in a statement, pointing to a gradual pick-up "from early next year."

The Commission expected the United States to far outstrip Europe, with steadily-increasing growth above the two-percent mark going forward.

However, Rehn said there is still a risk that record and mounting unemployment - put at nearly 12pc next year across the debt and austerity ravaged eurozone - could undo progress on financial markets where the pressures on government borrowing rates have eased in the past few months.

With inflation at next year forecast to "fall below two percent," the core target underpinning eurozone-wide economic planning, Rehn said that decisions taken at some two dozen crisis summits had "laid the foundations for strengthening confidence."
A German government spokesman told reporters that parts of the troika report on Greece would be ready by Monday, although they added that Germany’s lower house of parliament would need to approve the tranche before any cash could be disbursed.

The permanent loss of national sovereignty over government budgets to Brussels is being demanded by Germany at a time when eurozone taxpayers - and primarily German taxpayers - look likely to be called on to foot the bill for solving the eurozone crisis. A new "banking union" currently being fleshed out will make the eurozone as a whole collectively responsible for any losses associated with future bank bailouts, irrespective of which country the troubled bank happens to be located in. There is however still uncertainty as to whether this sharing of risks will also apply to the rescue of Spain's banks that is currently being prepared, or whether the Spanish government will instead be required to guarantee the bailout.Meanwhile, expectations are growing that Greece will be given a further write-off or "haircut" of its debts, including possible relief on its debt repayments to the eurozone's bailout funds or the European Central Bank. Mr Schaeuble ruled out any direct debt forgiveness on Sunday. "You don't give a debtor who doesn't service your debt claims new money," he told Deutschlandfunkradio. "We would be prevented by law from doing any more." He did however leave the door open to an arrangement under which new bailout loans could be used by Greece to buy back its private sector debts at what are currently cheap market prices. Greece has also been asking for two more years to meet the spending cuts demanded by international creditors. On Wednesday, the Greek Finance Minister Yannis Stournaras had claimed that a deadline extension had been agreed. But both Mr Draghi and Mr Schaeuble have denied this was the case, pointing out that the negotiations over the release of Greece's next tranche of bailout money were not yet complete.

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.

Interviewed by the Guardian and five other European newspapers from France, Germany, Spain, Italy and Poland, Hollande also called for monthly meetings of the national leaders of the 17 eurozone countries to end the cycle of "so-called 'last-chance' summits", which he said in the past had led only to "fleeting successes".

He said domestic electoral considerations should not get in the way of solving the euro-crisis. Merkel "is very sensitive to questions of internal politics and to the demands of her parliament. I understand that, and can respect that. But we all have our own public opinion. Our common responsibility is to put Europe's interests first."

France's first socialist president for 17 years also rejected the idea that Germany was the only nation putting its hand in its pocket for everyone else.

"We're all taking part in this solidarity. The French, the Germans, just like all the Europeans in the ESM [the eurozone's new rescue fund]. Let's stop thinking that there's only one country who's going to pay for the others. That's false. However, I know the sensitivity of our German friends to the problem of supervision. Whoever pays should control, whoever pays should sanction. I agree. But budgetary union should be completed by a partial mutualisation of debts through eurobonds."

Hollande's assertion of the need for the eurozone to pool some of its debt through eurobonds challenged one of Merkel's red lines. She has repeatedly refused to countenance the proposal and there is scant chance of her shifting that position as she moves into an election year.

"We are near, very near, to an end to the eurozone crisis," said Hollande. But decisions taken at the last EU summit in June had to be implemented "as fast as possible".

SO MUCH FOR THE ECB plans...

MADRID--Mariano Rajoy, the Spanish prime minister, has said he is more determined than ever to avoid having to ask for a bailout – despite the insistence last week by ECB president, Mario Draghi, that it would be a condition of the central bank helping to keep down a country's borrowing costs.

"If there is one overriding priority for creating employment it's reducing the public deficit. That is far more important than what people like to call a bailout," Rajoy said in a televised interview on Monday night. Draghi announced last week that the bank would buy unlimited quantities of sovereign debt to ensure eurozone governments retained access to funding, but he made it clear that there would be strings attached. However, Rajoy said he was not prepared to accept such conditions. "I couldn't accept anyone else telling us what our policies should be or where we have to make cuts," he said. How this apparent intransigence is received in Brussels and Berlin remains to be seen, but Rajoy received some support for his stance on Tuesday during a visit to Madrid by the Finnish prime minister, Jyrki Katainen, who said a bailout could be avoided as long as the measures taken in Madrid were seen as credible. Rajoy is at pains to show that he is in charge, that he is not the victim of circumstance and that he is making decisions of his own free will and not because they have been imposed on him. He appears to have decided that, if he has to make spending cuts and other unpopular decisions, then he will do it without ceding sovereignty the way the Greeks have been forced to do.

..."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.

Short item ...

Romania's top court has ruled that a referendum on the impeachment of President Traian Basescu was invalid, because turnout failed to reach 50%.  The decision thwarts efforts by Prime Minister Victor Ponta to oust Mr Basescu, a bitter rival. It means Mr Basescu, who was suspended from his post pending the referendum, can now return to the presidency. In the 29 July referendum, more than 87% voted for impeachment - but only 46% of registered voters took part.  The rivalry between the Mr Ponta and Mr Basescu reached a stand-off after the former accused the president of obstructing government policies and starting a witch hunt against politicians from rival political parties.  But, ahead of the Constitutional Court's verdict on Tuesday, Mr Ponta said: "If six (judges) decide to declare the referendum invalid... then Basescu returns to his post."  The chief judge of the court, Augustin Zegrean, confirmed that the ruling against the referendum was passed "with a legal majority of 6-3". Romania's acting president and co-leader of Mr Ponta's ruling alliance, Crin Antonescu, promised to abide by the court ruling.  "I took note of the court decision and as previously announced, we will obey the decision," he said. A former oil tanker captain and undercover securitate officer, Mr Basescu, who has been president since 2004, has accused the centre-left coalition led by Mr Ponta of trying to take over control of independent institutions in Romania.  The centre-right president's popularity has fallen since he introduced a programme of wage cuts and tax increases as part of two deals with the International Monetary Fund in 2009 and 2011.

Smoke and mirrors...

Lord Rothschild has taken a near-£130m bet against the euro as fears continue to grow that the single currency will break up. --- If Lord Rothschild doesn't know what is going on, well, then nobody does..... As a wise man once said "watch where the wise money goes".The member of the banking dynasty has taken the position through RIT Capital Partners, the £1.9bn investment trust of which he is executive chairman. The fact that the former investment banker, a senior member of the Rothschild family, has taken such a view will be seen as a further negative for the currency. The latest omen follows news in The Daily Telegraph late last week that the government of Finland is already preparing for the euro’s break-up. RIT, which Lord Rothschild has led since 1988, had a -7pc net short position in terms of principal currency exposures on the euro at the end of July, up from -3pc at the end of January. Given a net asset value of £1.836bn at the end of July, the position is worth £128m. Sources close to RIT suggested that the position was not a dogmatic negative view on the euro as a currency, but rather a realistic approach on a currency that remains relatively weak....Meanwhile, Germany and France, the eurozone’s two biggest economies, did better than expected, even if their second quarter performances were far from being success stories. Germany’s GDP grew by 0.3%, beating its own forecasts, and France flat-lined at 0% growth, but avoided slipping into a much feared recession…..On news of Germany and France’s numbers, stock markets bounced up and share prices rose across the continent. Britain’s FTSE 100, Germany’s DAX and France’s CAC-40 all finished with slight gains on Tuesday.  According to Jeremy Batstone-Carr, director of client research for Charles Stanley, a financial advising firm, the figures as a whole should be a cause for worry. “According to further looking projections, data for Germany suggests the next six months will be just as bad if not worse,” he said.  The data also showed a clear divergence between the region’s northern core countries and weakness in the southern periphery countries, which threatens to exacerbate existing problems. Hard-hit over the past three months were Italy (-0.7%), Finland (-1.0%) and Portugal (-1.2%).  On another gloomy note, Britain’s economy shrank by 0.7 percent, according to Eurostat. That compared to .03% negative growth for the first quarter of the year, which meant that Britain has been in recession for the last nine months. Recession is defined by economists as two consecutive quarters of contraction.  During the same three-month period, GDP increased by 0.4% in the United States and 0.3% in Japan - Europe’s main economic partners.

In theory, Europe's leaders created...bla,bla, bla - in fact the concoring of Europe !

In theory, Europe's leaders created the temporary euro rescue fund, the European Financial Stability Facility (EFSF) and its successor, the European Stability Mechanism (ESM), both headed by Germans (though some have different citizenships but the same origin) precisely to support countries facing financial bottlenecks. But providing more help for Greece would be a very tough sell for Europe's politicians. Chancellor Angela Merkel would have to get the consent of the German parliament, the Bundestag, which could prove tricky. And Merkel's junior coalition partner, the conservative Bavarian Christian Social Union (CSU), has been adopting an increasing shrill tone against Greece lately -- meaning that the government could plunge into crisis if the chancellor supports more aid for Athens. For some weeks now, it has been clear that the Greeks would run out of money this summer. And there is no emergency backup plan in place. Everyone has instead counted on the ECB. For his part, ECB chief Mario Draghi seems to have accepted this and allowed the leaders of the euro-zone countries to force him into the role of the pragmatic emergency helper. ... For now, the priority for Greece is to keep its head above water until it receives its next planned bailout payment. The troika overseeing Greece's aid package, comprised of the European Commission, the ECB and the International Monetary Fund (IMF) and headed by Horst Reichenbach, The German Governor of Greece is expected to decide on the payment of the next tranche of €31 billion in September. In terms of communication, it appears that the troika is already trying to pave the path for a "yes" on the tranche payout. Recently, it gave unexpected praise for an agreement that would see Greece introduce additional austerity measures worth €11.5 billion in 2013 and 2014. "Talks went well, we made good progress," the IMF's mission chief for Greece, Poul Thomsen, told reporters. And the troika has stated that progress has been made with Greece's plans to privatize state-owned assets. The Greek government is claiming it will have binding offers for the sale of state gas company Depa and the gas grid operator DESPA by the end of September. The message is meant to be that things are moving forward. Meanwhile, Greek Prime Minister Antonis Samaras wants to do a bit of hustling before the governor of Greece Mr Horst Reichenbach issues his decision. He is planning visits to Germany and France at the end of August. The Greek media have already reported on his plans for the trip: Samaras wants to ward off Greece's "quick euro death."....well there is no "troika" - there is a 4th Reich however and Greece is a test site for what it is to follow for Europe.

Romania has been rocked by political turmoil after parliament suspended President Traian Basescu from office, paving the way for a referendum on his future later this month. The procedure comes despite European Union and U.S. concerns over the status of democracy in the former communist nation.  Basescu was suspended from his job Saturday after 256 legislators voted in favor of a procedure that could lead to him being permanently removed from office. Only 114 lawmakers were against the action. Senate Speaker Crin Antonescu was appointed interim president.  Reacting to the vote, Basescu said he will now prepare for the July 29 referendum when Romanians will get a final say on his fate.  Basescu survived a similar vote in 2007. Analysts say he faces a tougher challenge this time, in part because of his declining popularity in a period of economic crisis in this nation of 19 million people.  Additionally, a recently adopted law requires only a simple majority of votes to push him out. Before, the requirements were more demanding. Romania's ruling center-left coalition says Basescu should leave office because he overstepped his authority and interfered in the government's work since his re-election in 2009.  In one of the latest stand-offs, a public quarrel emerged between the president and Prime Minister Victor Ponta over who should represent the country at a European Union summit. The Basescu has also been accused of alleged harsh remarks towards gypsies, also known as Roma, and disabled people, though the president has denied wrongdoing.  He told parliament before the suspension vote, the real reasons why the prime minister wants him to go is to increase his own power. Unlike in some European nations, Romania's president is chosen by popular vote and is in charge of foreign policy, the powerful intelligence services and the country’s defense policies.  The latest moves have prompted the U.S. and the EU to express worries over Romania's democratic credentials. The U.S. State Department said in a statement that it was concerned that developments in the country “threaten democratic checks and balances."  The EU's executive body, the European Commission, has also urged the government not to reduce the effectiveness of democratic principles and institutions, as the explained by commission spokesman Olivier Bailly.  "The rule of law, the democratic checks and balances and the independence of the judiciary are cornerstones of European democracy and indispensable for mutual trust within the European Union. Government policy and political action must respect these principles and values."
Bailly added that the latest developments threaten progress that was made in these areas since Romania joined the EU in 2007.  In addition to Basescu, Prime Minister Ponta has also come under opposition pressure to resign after an academic panel concluded that he copied a significant part of his doctoral thesis from other authors without proper attribution. Ponta, who calls the charges politically motivated, says they have been orchestrated by an adviser to Basescu.

German Chancellor Angela Merkel is well known for her opposition to further aid for crisis-stricken euro countries without additional controls, but what do German voters think? A new SPIEGEL ONLINE survey reveals that a narrow majority is opposed to any more bailouts, and almost three-quarters of Germans want stricter fiscal oversight from Brussels.

Europe is now in the third year of its sovereign debt crisis and the prospect of a breakup of the single currency no longer seems as farfetched as it once did. But from the perspective of most Germans, the euro crisis is still something that mainly affects other countries, namely Greece, Spain, Portugal, Italy, Ireland and now Cyprus.

But although the German economy has shown itself to be surprisingly robust, with unemployment falling and tax yields rising, Germany will not be able to withstand the negative trend in the euro zone for ever. "The crisis in the euro zone is catching up with the German economy," commented Ferdinand Fichtner, chief economist at the German Institute for Economic Research, earlier this week. Indeed, the institute has just dropped its growth forecast for the German economy for 2013 from 2.4 percent to just under 2 percent.

THE 4TH. REICH UPON EUROPE - Chancellor Angela Merkel has managed to ensure that Brussels has more control over the finances of eurozone countries, something she had wanted.  The deal came about after new French President Francois Hollande appeared to throw his weight behind Italy and Spain.  "I'm here to try to find rapid solutions for those countries facing pressure from the market, despite having made huge efforts to balance their budgets," the socialist French president said.  The new growth package, announced by Mr Rompuy, is made up of:  - A 10bn-euro boost of capital for the European Investment Bank, expected to raise overall lending capacity by 60bn euros. -Targeting 60bn euros of unused structural funds to help small enterprises and create youth employment. -A pilot launch of EU project bonds worth 4.5bn euros for infrastructure improvements, focusing on energy, transport and broadband.
European press views

• Liberation, France: "The story runs as if some leaders - including in the front row Angela Merkel - are now counting on the break-up of the area and the establishment of a core group of countries sharing both their currency and sovereignty"
• Spiegel, Germany: "It is already clear that the high expectations on the financial markets and in capitals outside the EU will not be met. Instead of a clear commitment to a robust monetary union, with all that entails, the European leaders will probably only agree on a vague roadmap - in other words, the usual muddling through"
• El Pais, Spain: "The German chancellor has rejected any compromise to change the order of the factors in the salvatory equation: you must first create control and accountability systems and only then will debt be shared. Apparently she does not feel under pressure from fear of the euro dying"

I wouldn't be surprised to hear that Greece has already started printing Drachmas in secret and that Germany had been printing DMs

The Pew Global Attitudes Project polled 8,000 people in France, Germany, Spain, Italy, Greece, Poland, Britain and the Czech Republic from mid-March to mid-April and identified unprecedented levels of discontent with the EU. "The European project, which began with the creation of a small common market in 1957, grew to a larger single market in 1992 and then created the single currency in 2002, is a major casualty of the sovereign debt crisis," the report concluded. "Majorities or near majorities in most nations now believe that the economic integration of Europe has actually weakened their economies." At a time when the EU is pushing closer to an economic and fiscal union for the eurozone, popular opinion is pulling the other way. That contradiction has led to electoral upsets across Europe, from Greece to the Netherlands and France in the past three months alone. Majorities in most countries now blame EU integration for damaging their economies, but the figures hit 70% in Greece, 63% in France and 61pc in Italy, all countries once regarded as staunchly pro-European. Just one third of the people – 34% – believe that economic integration, a central plank of the EU's raison d'etre, is a benefit.
De La Rue, the money printer, failed to dampen speculation that it has been secretly awarded a contract to start printing drachmas the moment Greece is forced out of the euro. The company said that its order book had increased by 14pc, to £248m, but its policy was to never reveal which specific contracts it was working on. The chief executive Tim Cobbold said: “We have people in every region in the world. We are very close to all geopolitical conditions that develop.”

He said, however, that in most circumstances it took six months between an initial order being placed by a central bank or government, and the notes being delivered. This was the time it took when South Sudan introduced the South Sudanese pound after it gained independence last year.

To print a new currency in the space of a couple of weeks “would be impossible”.

Sergey Shvestov, the vice president of Russia’s Central Bank, said that Greece already has a plan to introduce its own currency, in parallel to to the euro. He said it with high certainty.

Making contingency plans for different options is the right thing to do for anyone, but saying it about Greece and with such a degree of certainty is new.

Shvestov didn’t want to share more details, but said that leaving the euro-zone is a necessity for Greece. He said it would be a “good example” for other countries.

The Russian Center for Strategic Studies in Moscow said that a Grexit will ignite a global crisis affecting the price of oil. They see a a chance of more than 50% that Greece will leave the euro-zone and that it will cause other countries will leave as well. El Economista brings this report. Rumors about fresh polls show that anti-bailout SYRIZA is in the lead, with 30% support. The situation in Greece is so bad that the country may leave the zone even if pro-bailout parties win.

EUR/USD is struggling between 1.25 and 1.26. Is another fall coming?

Greeks needed a programme that supported growth, creation of work places and investment, Tsipras said....

UniCredit and Intesa Sanpaolo announced on Tuesday night that they intend to sell their holdings in the LSE to institutional investors.

Combined, their stakes account for more than 11pc of LSE shares. Morgan Stanley has been appointed to act for both banks and the sale is expected to take place via an “accelerated bookbuild”, where most shares are likely to be offloaded overnight. It is understood the shares have been offered at between 960p and £10.00, a sizeable discount to Tuesday’s closing price of £10.21.....UniCredit and Intesa Sanpaolo have been shareholders in the LSE since 2007, when the exchange bought its Italian equivalent, the Borsa Italiana, for €1.63bn (£1.31bn). Neither bank offered a reason for the surprise sale but the move comes a week after they were both downgraded by rating agency Moody’s amid mounting gloom over the stability of Italy’s financial system. Today starts the most important EU- Summit-since the last G8-summit three days before. In line with his few days as new French president, Hollande will convince all other Presidents, that he is unable to marshal the French economy as he is lacking any experience and training and interest in economy, which is normal for a Socialist, but he feels fully committed to the Socialist principle of pick pocketing, now in the wallets of the rich North, Britain included, and spending the picked money for the poor in the South, France included...In the mean time - what was his "price" ..."The leader of Greece's radical left coalition, Alexis Tsipras, has appealed to Germans to show solidarity towards the embattled, debt-ridden Greeks, telling them that his country's economic woes were those of a whole continent.  On the Berlin leg of a charm offensive to win over European politicians, the 37-year old, whose Syriza coalition has a good chance of securing victory at a repeat election on 17 June, stressed that he wanted to work with the Germans to "find a solution to our joint problem". Following a visit to Paris on Monday, Tsipras met likeminded, anti-capitalist far-left politicians in Berlin.  He said the trenchant views of Angela Merkel's German government on the eurozone debt crisis and her adherence to unpopular austerity measures were part of the problem. "It would be helpful if we focused on this as a geographical problem facing the whole of Europe rather than concentrating on one country and looking to destroy a nation of peoples," he said.