The  10 countries identified as imbalanced by the EC  are Belgium, Bulgaria, Denmark, Italy, Malta, the Netherlands, Finland, Sweden and the UK.

The full report is here - here's the top-line reasons for each:

Belgium:

Macroeconomic developments in the areas of external competitiveness of goods, and indebtedness, especially concerning the implications of the
high level of public debt for the real economy, continue to deserve attention.

More specifically, Belgium has experienced a long-term decline in its export market shares due to persistent losses in both cost and non-cost competitiveness.

While Belgian goods exports are gradually being reoriented towards more dynamic regions, the specialization in cost-sensitive intermediate products is intensifying...

Bulgaria

The impact of deleveraging in the corporate sector as well as the
continuous adjustment of external positions, competitiveness and labour markets deserve continued attention.

More specifically, Bulgaria rapidly built up imbalances during the boom phase that coincided with its accession to the European Union. In a context of catching up, high foreign capital inflows contributed to the overheating of the domestic economy and a booming housing sector.

Denmark

The continuing adjustment in the housing market and the high
level of indebtedness in the household and private sector as well as drivers of external competitiveness, deserve continued attention.

More specifically, there has been a weak export performance linked to a rise in unit labour costs due to high wage growth and, in particular, weak productivity growth.

Italy

Export performance and the underlying loss of competitiveness as
well as high public indebtedness in an environment of subdued growth deserve continued attention in a broad reform agenda in order to reduce the risk of adverse effects on the functioning of the Italian economy and of the Economic and Monetary Union, notably given the size of the Italian economy.

More specifically, in a context of elevated risk aversion in financial markets, Italy's high public debt weighs on the country's growth prospects through several channels, in particular the high tax burden needed to service the debt, funding pressures for Italian banks and thus for the private sector, increased macroeconomic uncertainty and a severely limited margin for countercyclical fiscal policies and growth-enhancing public expenditure.

Hungary

On-going adjustment of the highly negative net
international investment position, largely driven by private sector deleveraging in a context of high public debt and a weak business environment continue to deserve very close attention so as to reduce the important risks of adverse effects on the functioning of the economy.

Malta

The long-term sustainability of the public finances warrants attention
while the very large financial sector, and in particular, the strong link between the domestically-oriented banks and the property market poses challenges for financial stability and deserves continued monitoring.

More specifically, the long-term sustainability of public finances is at risk due to the high projected cost of ageing and other sizeable contingent liabilities.

The Netherlands

Macroeconomic developments regarding private sector debt and deleveraging pressures, also coupled with remaining inefficiencies in the
housing market deserve attention.

Although the large current account surplus does not raise risks similar to large deficits, the Commission will also continue monitoring the developments of the current account in the Netherlands.

More specifically, rigidities and distortive incentives have built up over decades to shape house financing and sectorial savings patterns.

Finland

The substantial deterioration in the current account position and the weak
export performance, driven by industrial restructuring, as well as cost and non-cost competitiveness factors, deserve continued attention.

More specifically, the loss in competitiveness weakens the country's economic position and risks compromising future prosperity and living standards, especially as population ageing already poses a challenge in this regard.

Finland has rapidly lost world market shares and the current account balance has been on a downward trend, and even turned into a deficit in 2011, which is forecast to widen.

Sweden

Macroeconomic developments regarding private sector debt and
deleveraging, coupled with remaining inefficiencies in the housing market deserve continued attention.

Although the large current account surplus does not raise risks similar to large deficits in other countries, the Commission will continue to monitor developments of the current account in Sweden.

The UK

Macroeconomic developments in the areas of household debt, linked to the high levels of mortgage debt and the characteristics of the housing market, as well as unfavourable developments in external competitiveness, especially as regards goods exports and weak productivity growth, continue to deserve attention.

More specifically, the UK faces tensions between the needs for deleveraging, maintaining financial stability and avoiding compromising investment and growth

WoWWWW....I can't believe this ...

Largest German bank’s Singapore unit helped birth companies and trusts in tax havens. Germany’s largest financial institution, Deutsche Bank, helped its customers maintain more than 300 secretive offshore companies and trusts through its Singapore branch, an investigation by German newspaper Sueddeutsche Zeitung, German public broadcaster NDR and the International Consortium of Investigative Journalists has found. More than 100 customer consultants at Deutsche Bank Singapore helped create or manage 309 offshore entities for its customers in the British Virgin Islands and other tax havens, according to secret records obtained by the news organizations. Besides Deutsche Bank, the article on the same topic at the Sueddeutsche also mentions UBS and JP Morgan and "virtually all big banks" as being implicated in the offshore scandal.  I know it's kind of stating the obvious, but these offshore money bunkers are only possible with the help of a) the big banks and b) the big four accounting firms - as clearly stated in "the tax free tour", an excellent dutch documentary on this subject. The biggest part of it is in english. The outrage I see by politicians is kind of funny - as if we only find this out now. Because of course, this entire system has been allowed by our leaders - and us. In other news, there now seem to be 400 Belgians on the list as opposed to a hundred yesterday. BUt we have already been assured that there are no politicians or leaders of BEL20 companies involved, and neither are the very wealthy families in there. Hmmmm...

Excellent news ..."adios" investments in European Banks ....hahahaha...what an idiot !!!!

Plans from Brussels put the onus on bank depositors, rather than the taxpayer, to bear the costs of bank failures.   "Cyprus was a special case ... but the upcoming directive assumes that investor and depositor liability will be carried out in case of a bank restructuring or a wind-down," Mr Rehn, the European Economic and Monetary Affairs Commissioner.   "But there is a very clear hierarchy, at first the shareholders, then possibly the unprotected investments and deposits. However, the limit of €100,000 (£85,000) is sacred, deposits smaller than that are always safe."   Mr Rehn was referring to a directive being drafted by the European Commission on bank safety which would set out investor liability in the law of member states.   He was speaking in an interview with Finnish TV after Cyprus last month forced richer depositors to suffer heavy losses in order to secure a €10bn bail-out from the EU and the International Monetary Fund. ... Cyprus had initially planned to make people with deposits under the crucial €100,000 mark to take a cut also before performing backtracking in the face of an outcry. Smaller deposits are supposed to be protected by state guarantees. Mats Persson, director of think-tank Open Europe said: "Rehn was only re-stating what's in an EU proposal tabled in 2012, which quite sensibly suggests a mechanism whereby first, investors and secondly, large depositors - rather than taxpayers - foot the bill when a bank goes bust.   “However, there's so much uncertainty around the precedent set by the Cyprus bail-out that his comments may still cause some jitters."   Mr Rehn also said that the European Central Bank should launch fresh action to help boost the recession-hit euro zone economy....

Cyprus will not be the model for future EU bailouts
Cyprus will no be the model for future EU bailouts
Cyprus will n be the model for future EU bailouts
Cyprus will be the model for future EU bailouts.
EU word games.
Just like all Humpty Dumpty outfits - when they use a word it means whatever they want it to mean.

French authorities search Christine Lagarde's flatAway from Cyprus and indeed the UK Budget, it seems French authorities have searched the Paris flat of IMF boss Christine Lagarde.

The move is part of an investigation into her handling of a 2008 compensation payment of €285m to businessman Bernard Tapie. There are claims that Lagarde, then finance minister, acted illegally in approving the payment. She denies any wrongdoing.

 

CYPRUS GOVERNMENT SPOKESMAN DENIES REPORTS OF DEAL TO SELL CYPRUS POPULAR BANK  TO RUSSIAN INVESTORS...Confusion over reported Cyprus bank sale...there are reports that Cyprus Popular Bank has been sold to Russian investors, something which has gave a lift to markets and the euro.  However, in this atmosphere of speculation and rumour, it may not be correct.

Merkel regrets Cyprus vote decision and awaits new proposals...Angela Merkel regrets the outcome of last night's vote in the Cypriot parliament, according to snaps on Reuters.

But the German chancellor accepts the decision and now awaits a proposal from the Cypriot government to the Troika. She will look at all the proposals the government makes.

Hammering home the point made by the ECB earlier, she said Cyprus does not have a sustainable banking sector.  Savers in Cyprus with more than €100,000 in the bank should be ready to contribute to any bailout (it was the plan to hit savers with more than €20,000 that scuppered the vote).

French President François Hollande pledged to reverse the country’s surging unemployment rate as he gave his first New Year’s televised address at the Elysée Palace on Monday.

Speaking of the “serious and legitimate” concerns of the public, Hollande acknowledged the “fits and starts” of his first six months in office, but said France would emerge from the financial crisis “sooner and stronger” than expected because of the course he and his government had taken. “We’ve set the course – jobs, competitiveness and growth – and I will not deviate. It’s the future of France.”

With the number of jobless breaking the three-million barrier for the first time this year, Hollande said “all our efforts will be aimed at a single objective: reversing the unemployment trend within a year, whatever the cost”.

He also promised to tackle what he described as “useless spending” in government. “The French public’s money is hard earned and must be put to the service of a thrifty and exemplary state”.

“Those with more will have to contribute more”

But speaking of his controversial 75% income tax levy, which was overturned by France’s highest legal body on Saturday, the Socialist president said that while the law would be “redesigned” its objective would remain the same. “Those with more will have to contribute more,” he said.

Hollande also stressed the increase in teacher numbers he promised during his election manifesto and touted his delivery of promises to allow 60-year-olds the right to retire if they began working early, along with the return of French combat troops from Afghanistan.

Briefly mentioning the controversial issues of same-sex marriage and euthanasia, Hollande stressed the importance of civil rights. “We have all it takes to succeed,” he said, adding that France is most successful “when it moves forward on equal rights”.

Ending his address with a thought for the “sick, lonely, disabled and unassisted” people in France, the French president said social security was as important as a competitive economy and called for a “collective effort” to make that balance possible.

He He!! ....hahaha !!!

I'm waiting to see what Merkel has to say when Germany slides into recession (probably early next year) Germans start to lose their jobs and exports dry up because their world wide customers are running out of cash. I just wonder how good she will think the Euro is then. I know Germany went through it's own tough period with reunification but it's one thing to do it for your own people but quite another when it's for a bunch of ungrateful's.

It seems incredible that this bunch of unelected bureaucrats have got this far.....Greece must leave the euro and it will increase the chances for the rest. The departure should be orderly, so as to give the Greeks chance to resurrect themselves....The politicians are only interested in saving their own false dream which has become our worst nightmare. They are not focussing on where the ship is going and it is getting too close to the island. Think about economic recovery and jobs and stop playing around with the lives of the Greeks. The Euro will probably recover a lot if some positive and common sense actions are taken.

They made a fortune selling machine tools to developing countires and now there is a surplus of production.... and falling world demand......so prespects of selling more look grim....and due to the austerity they have imposed on all Europe the middle classes are now just trying to survive....so little or no money for treats like expensive German cars ......but more importantly its a change in mind set, and image is no longer important or so important  seems like they have been digging their own grave (and the rest of Europe) .....just a surprise that it took so long to arrive at their door....and I think that in the case of Germany it could be dramatic turndown  seem to remember that Spain was Audis biggest European Market....and so here we are in the umpteenth round of the European Can Kicking Contest and are we any further along for all the meetings replays and extra time towards a resolution?
The ECB wanted it settled by penalty shoot out but the Spanish refuse to play; the French team threatens to go on strike again, Greece demands a longer run up, the Italians fell over spectacularly on the run up screaming "Penalty!" England formed a wall inside the 6 yard box and Ireland refused to kick it and opted instead to beat it with sticks.....and Germany elected to play like Kuntz.
He He!!

....resistance, resistance",

Thousands of demonstrators took to the streets of Paris on Sunday to protest against the spread of economic "austerity" in France and Europe.  Chanting "resistance, resistance", the crowds had been rallied by around 60 organisations, including the leftwing Front de Gauche and the French Communist party, which oppose the European budget treaty.  "Today is the day the French people launch a movement against the politics of austerity," said the Front de Gauche president, Jean-Luc Mélenchon. A few hours before the protest started Jérome Cahuzac, a junior budget minister, described the demonstration as a "fundamental" error. "I think they are committing a fundamental error in thinking that the policies we are following are weakening France, when in fact these policies are strengthening it," he told Europe 1.  The French prime minister, Jean-Marc Ayrault, defended the European budget treaty and accused the protesters of taking a risk with history. "To take the risk of aggravating the crisis, which is not only an economic crisis but also a euro crisis … The ambiguity of saying 'non' is also something that could lead to the end of the euro."

He added that he and the president, François Hollande, "would never be responsible … for the disappearance of the euro. The support of the majority in these circumstances is essential. We can't swerve away, the future of the euro as well as growth and prosperity are in doubt," Ayrault added.

For Annick Coupé of the Solidaires union, the demonstration on Sunday was aimed at creating a "show of force for the weeks to come" in which the government will consider pension, social security and employment reforms. "Just because we helped defeat Nicolas Sarkozy [the former right of centre president] doesn't mean we're now going to shut up," she said.

G8 - David Cameron has issued an ultimatum to the Greek people to accept austerity or leave the eurozone. The UK Prime Minister insisted failure to provide clarity could prove disastrous for the world economy, and told the Greek people that fresh elections must decide once and for all whether the country stays in the eurozone. The message came as his Cabinet colleague Ken Clarke said the European banking system was already "in tatters". Mr Clarke warned that Britain was "heavily exposed" to potential problems and could be among the next targets for market speculation. Deputy Prime Minister Nick Clegg also criticized the lack of leadership on the eurozone crisis, raising fears of a rise in extremism and civil unrest unless it was addressed. Mr Cameron, in America for back-to-back G8 and Nato summits, said talks with fellow world leaders had "crystallized" the problems.... Justice Secretary Mr Clarke, a former chancellor, said Greek voters had to "face up to reality". "These are hardships inflicted on them by the irresponsibility of their former politicians," he said. "But they cannot just vote for saying, 'could people just carry on giving us some money so we do not have to change anything'." Mr Clarke said the consequences would be "serious" if the Greek people elected "cranky extremists" and defaulted on their debts as a result. "No-one knows exactly what will happen in the rest of Europe. But the banking system is in tatters, it is weak in very many places," he went on. "We don't know what the knock on effects would be, they could be very serious and of course people will start barking at the door of Portugal, Ireland, Italy and here in Britain. "Our banks are heavily exposed to some of these countries, we have overcapitalized them so far... "I obviously hope the Greeks will vote responsibly and that we can avoid turmoil."

High-speed computerized trading, called high-frequency trading, is exacerbating the market's big swings. "The moves up and down are because of headlines. The volatility is so high I have no doubt it's due to role of high-frequency trading and algorithms that are exasperating price moves in the market, " says Sal Arnuk of Themis Trading. "Where see 3% and 5% moves — the moves would have been half that without high-frequency trading," Arnuk says. "You'd still have the moves up and down — that's the natural flow of the markets, but because of the outsized role of (exchange traded funds) and the increasing role of high frequency trading and how they prey on (investors), these moves become more outsized." Gold, considered a safe haven in troubled times, continued climbing to new highs, surging through $1,800 an ounce before closing at about $1,794. U.S. Treasuries also rallied, pushing yields down to 2.12%, near Tuesday's record 2.03% low.

LONDON—Europe's financial markets plunged after a volatile, nervy open Tuesday, following another wave of stock selling in Asia, with investors focused on the U.S. Federal Reserve's policy meeting later in the global day. To say that the market will be watching closely "would go down as a great under-statement," said analysts at Rabobank, especially given Fed chairman Ben Bernanke's belief that the effectiveness of past quantitative easing can be seen in the buoyancy of stock prices. By 0830 GMT, London's FTSE 100 index was down 4.8%, the CAC 40 in Paris was down 3.8% and the DAX in Frankfurt had lost 7%; all had risen soon after the open. Despite a torrid Asia session Tuesday, which saw the Nikkei 225 index in Tokyo end down 1.7%, there was some relief, especially in the Australian market. There, stocks made a dramatic recovery from over 5% down to close 1.2% higher, while the Australian dollar climbed off a four-month low of $0.9927 to $1.0167 at 0810 GMT. Traders said that some profit taking on short positions in Asia, in currencies such as the Australian dollar, had led to some buying of risk currencies in Europe. The euro was at $1.4233 at 0810 GMT, well above the Asian low of $1.4152. Elsewhere, yields on Italian and Spanish sovereign bonds fell further early Tuesday after the European Central Bank bought the bonds of both countries for the first time Monday and then did so again Tuesday. Spanish 10-year yields dropped to 4.995%, according to Tradeweb, 0.21 percentage point tighter versus safe-haven German bunds. Italian 10-year bonds tightened 0.20 percentage point versus bunds to yield 5.14%. The ECB was widely expected to maintain its presence in the market to stop Italian and Spanish yields drifting higher again.

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