The US government was forced to begin closing swathes of non-essential services on Tuesday morning after frantic rounds of late night political sparring failed to avert the first federal shutdown in nearly two decades.

As a midnight deadline to extend Congressional spending authority ticked ever closer, Republicans staged a series of last-ditch efforts to use a once-routine budget procedure to force Democrats to abandon their efforts to extend US health insurance.

Three separate attacks on the Affordable Care Act, known as Obamacare, were staged by the House of Representatives, only to be rejected in turn by the Democrat-controlled Senate, which accused Republicans of holding the country to ransom.

Shortly before midnight, Senate majority leader Harry Reid marked the end of the process by rejecting House calls for formal talks to reconcile their conflicting positions, arguing it was impossible to negotiate with a “gun to our heads”.

“This is a very serious time in the history of our country,” Reid said. “Millions of people are going to be affected tomorrow and the Republicans are still playing games”

An estimated 800,000 federal workers will be forced to stay at home from Tuesday under a stalemate that could drag on for days and disrupt services as varied as national parks and the US space programme.

The White House has drawn up a list of essential staff who are legally allowed to carry on working, but President Barack Obama warned that a shutdown would have an immediate affect on the fragile US economy.

“We do not have a clear indication that Congress will act in time for the president to sign a Continuing Resolution before the end of the day tomorrow, October 1,” said a White House statement issued shortly before midnight. 

“Therefore, agencies should now execute plans for an orderly shutdown due to the absence of appropriations. We urge Congress to act quickly to pass a Continuing Resolution to provide a short-term bridge that ensures sufficient time to pass a budget for the remainder of the fiscal year, and to restore the operation of critical public services and programs that will be impacted by a lapse in appropriations.”

Obama also issued a statement to military employees after signing a Republican-proposed law that exempts active-duty servicemen from the effects of the shutdown, but will not protect civilian workers.

“I know the days ahead could mean more uncertainty, including possible furloughs,” Obama said. “You and your families deserve better than the dysfunction we’re seeing in Congress.”

House speaker John Boehner denied that Republican tactics were responsible for the shutdown, insisting Democrats were to blame for refusing to negotiate over Obamacare.

“I didn't come here to shut down the government,” Boehner told one of several heated House debates. 

“I came here to fight for a smaller, less costly and more accountable federal government. But here we find ourselves in this moment dealing with a law that’s causing unknown consequences and unknown damage to the American people and to our economy. And that issue is Obamacare.”

But Democrats are confident that US public opinion will continue to hold Republicans to blame for what could be days of disruption until a deal can be struck.

They argue that Republicans are using underhand methods to overturn a law that was passed four years ago, ratified by the supreme court and endorsed by voters at the last presidential election.

Senator Bernie Sanders, of Vermont, said: “If we surrender to hostage-taking tonight, these guys would be back within a couple of weeks without a shadow of a doubt. What we are dealing with tonight is an extraordinary anti-democratic act.” 

A deepening recession in the 17-nation eurozone sent shares lower on Thursday amid evidence that the problems of the single currency's crisis-hit periphery were spreading northwards to affect monetary union's core economies of Germany and France.

Despite an easing of financial tensions in the second half of the year, gross domestic product in the members of the monetary union dropped by 0.6% in the final three months of 2012, a heftier decline than the markets had been expecting.

An across-the-board fall in output that affected both large and small economies meant that the eurozone economy failed to register an increase in activity in a single quarter of 2012, with a flat first three months of the year followed by three successive drops in output. The combination of weakening activity and high budget deficits prompted a warning from the credit rating agency Standard & Poor that Spain, France, Italy and Portugal were at risk of a downgrade in 2013.

Although Britain also registered a fall in output in the final three of 2013 and is one quarter of contraction away from triple-dip recession, Moritz Kraemer, managing director of European sovereign ratings at S&P said it was not a foregone conclusion that the UK would be stripped of its coveted AAA rating.

Eurostat, the EU's statistics office, said seven eurozone countries – Greece, Spain, Italy, Cyprus, the Netherlands, Portugal and Finland – were already officially in recession after suffering two or more successive quarters of falling output.

The poor performance of the eurozone's two biggest economies meant the drop in GDP in the fourth quarter was worse than the 0.1% fall in the third quarter. Consensus among analysts polled by Reuters had been for a 0.4% drop.

Germany's main stock market index, the DAX, fell by 1% yesterday, with shares in Paris, Milan and Madrid also losing ground. The euro dropped against the dollar and the yen on the foreign exchanges amid speculation that the European Central Bank will cut interest rates in a response to the fall in output.

The US grew by 2.2% in 2012 and Japan by 1.9%, while GDP in the eurozone contracted by 0.5%.

Commenting on the British Prime Minister David Cameron's speech on the UK's future in the EU, the Chairman of the EPP Group, Joseph Daul, said: "I find it surprising that after forty years of partnership and common decisions, one of our Member States discovers that it is unhappy and wants to renegotiate the terms for a joint future. It is even more astonishing that it is a Conservative Prime Minister who is trying to wipe out the contributions of his predecessors: Conservative Prime Ministers such as Winston Churchill, Harold Macmillan, Edward Heath, Margaret Thatcher, and John Major, who all helped forge the European Union of today. We will not renegotiate the fundamental principles which have given us peace and prosperity on this continent; principles which were negotiated and accepted by the United Kingdom for forty years.

For sixty years, Europe has worked to create a model that remains a beacon for the rest of the world, one that received last year's Nobel Peace Prize. Europe is no longer just about the nation state. It never was just a Single Market, a single currency or a set of common standards. Europe is above all a community of shared destiny with common values, founded on solidarity and responsibility.

The Prime Minister's speech is a retreat from these common values and a retreat from a shared common future. The United Kingdom was always at its highest point when it was working with its partners, not retreating from them. Today, I worry that this has been done for electoral purposes more than for the benefit of the British citizens. Europe cannot be taken hostage until 2017.

I want the United Kingdom to be a full Member State of the European Union but, I want a European Britain, just as I want a European France, a European Germany. Europe needs 27 Member States which are fully European. More than anything, we need a united Europe, an integrated Europe, a political Europe and I believe each Member State can contribute to this."

Super measure to improve the economy....

Tax officials are promoting the little known Seed Enterprise Investment Scheme (SEIS), which offers a range of generous incentives for angel investors, after a slow start following its launch last year. HM Revenue & Customs has indicated that investors can use a process called “carrying back” to avoid paying CGT on money put into companies before April 2014 – 12 months longer than previously thought. Angel investor Dale Murray, who has worked to improve awareness of SEIS among backers of start-ups, said it is right to give investors more time to access the CGT holiday since the initiative only received Royal Assent last summer. “Investors only had part of the current tax year to benefit. The [CGT holiday] is a great way of kicking the scheme off,” she said. SEIS offers 50pc income tax relief on investments of up to £100,000. The CGT holiday means tax breaks of up to 78pc are available until next year on successful qualifying investments – while loss relief measures mean investors can write off more than 100pc of money put into failed start-ups. It’s unbelievable – the Government is effectively underwriting your investment. Even very enterprising countries like the US and Israel have nothing that compares with SEIS,” Ms Murray said. “This will mean more high-growth start-ups getting much-needed funding, which can only be a good thing. It’s the world’s most generous scheme for angel investors.” Lord Young, the Government’s enterprise adviser, has described SEIS as “ridiculously generous”. Experts have suggested that take-up of the scheme may be being inhibited by an investment limit of £150,000 per company, which in some cases is considered insufficient to fund the early stages of a high-growth business. Kathryn Robertson, a HMRC tax official, spoke about the CGT relief at an event to promote SEIS this week. A HMRC spokesman said there had been no "extension" of SEIS. However, investors can access the capital gains tax relief until April 2014 under certain circumstances, he said, because the scheme allows SEIS shares to be treated as if they were acquired in the previous tax year. Further information is available on the HMRC website, he added.

I am afraid that Capitalism and Communism as with our left and right parties have all failed. we need a new "ism"!!!!

The Chinese do understand one thing we have forgotten and that is you need to make stuff to create wealth. They still have huge problems, like the debt for this development which is largely un paid and just floating, like our fiat currencies. They also have a population problem, as have far to few females to breed the next generation, so will be in the same old age situation as Japan in the future. Unfortunately what you say about the poor is not true as they are really suffering, it is the well off middle class workers that now want to consume and get higher wages.

The rich seem to have creamed off billions like Russia and there are more Rolls Royce sold in china today and property in Shanghai has gone out of the roof and flats now cost millions of dollars. Corruption is rampant and the Triads are firmly entrenched. So not all a rosy future for China, as the rest of the World is now broke and can not afford to by Chinese goods. But they seem to have a lot of gold, but their US bonds will crash in value soon, mas the USA can not keep interest levels down for long and has to inflate their debts away... If a politician is anything useful, it is as a device to deliver and oversea, as an elected representative, the welfare and security of their constituents. What then for Europe, as it is manifestly failing to deliver that with its unelected decision makers and a powerless Council neither of which is delivering their basic function. If Europe is achieving anything, it is its ability to explore the depths of crass incompetence and waste. Unemployment and despair are now the norm in several member states with just a few being forced to pay to keep others afloat to satisfy a corrupted vision. These vast numbers of unemployed youth are a powder-keg and heaven help us when the millions of people who have no chance of getting any kind of work in the foreseeable future decide it is time to pop down to their Parliament as and ask why.

Lies and missleading statements ...The EZ is on the brink of collapse ...see what china did ..

BRUSSELS - Business investors are confident the eurozone has weathered the worst of the sovereign debt crisis, according to European Commission chief Jose Manuel Barroso. In a speech given to Portuguese diplomats in Lisbon on Thursday (3 January), the former Portuguese leader said that "the perception of risk in the eurozone has disappeared." He added: "Investors have understood that when European leaders commit themselves to doing everything to safeguard the integrity of the euro, they mean business." His speech comes after Portugal earlier this week became the latest EU country to break ranks on economic policy. Its president, Anibal Cavaco Silva in his New Year address condemned what he described as the "social injustice" of the country's bailout terms and promised a court enquiry on the subject. For his part, Barroso acknowledged that his native country is facing "a true ... social emergency." Amid criticism that EU-mandated austerity has caused a spike in unemployment across the Union, he conceded that the commission is "willing to analyze the completion of programmes and to make adjustments and do the fine-tuning necessary to minimize social costs." But Barroso's remarks reflect a growing belief among EU officials that market pressure on the single currency is starting to abate. Last month, German finance minister Wolfgang Schauble also told reporters the euro has survived the worst of the crisis, following a buy-back deal on Greek bonds. The optimistic tone was bolstered by a survey out this week. A poll of 778 investors in December by research group Sentix showed that the business community by and large expects the single currency to stay alive....

 

http://www.chinadaily.com.cn/b...

Include this with the 'bombardier Siemens' situation and the economic argument is blown away.
The longer the eurocrisis persists, the less important economically the EU is to the world.
All these business leaders that depend on mass immigration from eastern Europe to keep down wages down and profits at a maximum (without paying tax for it) want us to stay in.
Investors that are more interested in high value production and investment couldn't care less either way.   Europe is a big enough entity with enough history and respect to stand up for herself. South Korea doesnt need to be in political union afterall....International Monetary Fund data show that emerging nations have cut the weighting of EMU bonds in their reserves to 24.7pc from a peak of 30pc at the onset of Europe’s crisis three years ago, with a record drop in the third quarter of 2012.  “They have lost their appetite for peripheral EMU bonds, and some have simply cut Italy and other countries from their benchmarks,” said Jens Nordvik, currency chief at Nomura.  The IMF data also show a record $19bn (£12bn) surge in holdings of sterling by advanced central banks to $98bn, the biggest three-month jump ever recorded. Analysts say this is almost certainly caused by the Swiss National Bank as it takes extreme measures to hold down the franc. The SNB has already bought an estimated $80bn-worth of euro bonds and is increasingly switching to other assets.  “There aren’t many places to go in this 'ugly contest’ if you don’t like the euro, dollar or yen,” said HSBC’s David Bloom.
The effect has been to thwart the Bank of England’s efforts to weaken the pound. The Swiss and UK central banks are effectively in a “low intensity” battle against each other. “This is what happens in currency wars. Desperate times lead to desperate acts,” said Mr Bloom.

Source - The Guardian: "It's been a busy day at the market in downtown Volos. Angeliki Ioanitou has sold a decent quantity of olive oil and soap, while her friend Maria has done good business with her fresh pies.

But not a single euro has changed hands – none of the customers on this drizzly Saturday morning has bothered carrying money at all. For many, browsing through the racks of second-hand clothes, electrical appliances and homemade jams, the need to survive means money has been usurped.

"It's all about exchange and solidarity, helping one another out in these very hard times," enthused Ioanitou, her hair tucked under a floppy felt cap. "You could say a lot of us have dreams of a utopia without the euro."

In this bustling port city at the foot of Mount Pelion, in the heart of Greece's most fertile plain, locals have come up with a novel way of dealing with austerity – adopting their own alternative currency, known as the Tem. As the country struggles with its worst crisis in modern times, with Greeks losing up to 40% of their disposable income as a result of policies imposed in exchange for international aid, the system has been a huge success. Organisers say some 1,300 people have signed up to the informal bartering network.

For users such as Ioanitou, the currency – a form of community banking monitored exclusively online – is not only an effective antidote to wage cuts and soaring taxes but the "best kind of shopping therapy". "One Tem is the equivalent of one euro. My oil and soap came to 70 Tem and with that I bought oranges, pies, napkins, cleaning products and Christmas decorations," said the mother-of-five. "I've got 30 Tem left over. For women, who are worst affected by unemployment, and don't have kafeneia [coffeehouses] to go to like men, it's like belonging to a hugely supportive association."

Greece's deepening economic crisis has brought new users. With ever more families plunging into poverty and despair, shops, cafes, factories and businesses have also resorted to the system under which goods and services – everything from yoga sessions to healthcare, babysitting to computer support – are traded in lieu of credits.

"For many it plays a double role of supplementing lost income and creating a protective web at this particularly difficult moment in their lives," says Yiannis Grigoriou, a UK-educated sociologist among the network's founders. "The older generation in this country can still remember when bartering was commonplace. In villages you'd exchange milk and goat's cheese for meat and flour."

Other grassroots initiatives have appeared across Greece. Increasingly bereft of social support, or a welfare state able to meet the needs of a growing number of destitute and hungry, locals have set up similar trading networks in the suburbs of Athens, the island of Corfu, the town of Patras and northern Katerini.

But Volos, the first to be established, is by far the biggest. Until recently the city, 200 miles north of Athens, was a thriving industrial hub with a port whose ferries not only connected the mainland to nearby islands but before Syria's descent into civil war was a trading route between Greece and the Middle East. Once famous for its tobacco, Volos was home to flour mills and cement factories, steel and metal works.

But, today, it is joblessness that it has come to be known for in a country whose unemployment rate recently hit a European record of 26%, surpassing even that of Spain.

"Frankly the Tem has been a life-saver," said Christina Koutsieri, clutching DVDs and a bag of food as she emerged from the marketplace. "In March I had to close the grocery store I had kept going for 27 years because I just couldn't afford all the new taxes and bills. Everyone I know has lost their jobs. It's tragic."

Last year, the Greek government stepped in with a law that supported finding creative ways to cope with the crisis. For the first time, alternative forms of entrepreneurship and local development were actively encouraged.

Although locals insist the Tem, which is also available in voucher form, will never replace banknotes – and has not been dreamed up to dodge taxes – they say it is a viable alternative.

For local officials such as Panos Skotiniotis, the mayor of Volos, the alternative currency has proved to be an excellent way of supplementing the euro. "We are all for supporting alternatives that help alleviate the crisis's economic and social consequences," he said. "It won't ever replace the euro but it is really helping weaker members of our society. In all the social and cultural activities of the municipality, we are encouraging the Tem to be used."... Fiat currency pre-dates Law by a couple of thousand years. Roman coins (e.g.)started off at 100% gold or silver and finished up at 1%. It's a terrible indictment of the central banks and globalist tamperers that people have to abandon the official currency for their own. Barter systems are always poverty-stricken because the exchange isn't flexible or efficient enough but as someone pointed out this isn't barter -- it's just an unofficial currency.
How I'd love to deal in an unofficial currency and bypass our dictators but it won't happen. Any threat to their control and they'd make such a currency illegal. Half the wars you can name since 1700 were fought over the right to print money.

The British are solely concerned about their economic interests, nothing else...OOOOKKK !!!!

The former European Commission president, who is credited as the architect of the modern EU and the euro, has broken ranks with other European leaders to offer Britain an exit from the Union.

"The British are solely concerned about their economic interests, nothing else. They could be offered a different form of partnership," he told Handelsblatt, a German financial newspaper. "If the British cannot support the trend towards more integration in Europe, we can nevertheless remain friends, but on a different basis. I could imagine a form such as a European economic area or a free-trade agreement." The comments will add weight to growing demands from Conservative backbench MPs and Euro-sceptics for David Cameron to renegotiate Britain's relationship with Europe and to bring back powers from the EU to Westminster. The Prime Minister has said that he supports continued EU membership but wants a "new settlement" which will involve Britain opting-out of justice measures and seeking exemptions to any further centralisation of power in Brussels...at last an honest acknowledgement that the goal is a federal europe. if there was any doubt about it monsieur delors has settled it once and for all. So now the way forward is clear. the choice is between being part of this federation and losing our independence and sovereignty, or coming out and retaining our sovereignty. and it is for the british people to decide, not the politicians.  There can no longer be any attempts to bamboozle the electorate with hypocritical talk of renegotiation. it is time for a referendum without further delay. The future is not further 'integration' and the assembly of a colossal superstate - the future is independence and individuality. Nowhere in the world do people think the same way as politicians and bureaucrats. Everywhere you see that when left to themselves, people want their own unique identity, control over their own environment and their own destiny. Bureaucrats believe 'bigger is best' while people know that small is beautiful. That's why the Berlin wall fell, why Slovakia split from the Czech republic, why the Baltic states went their own way; why Belgium had no government for over a year; why Scotland wants independence and why even California and Texas talk about seceding from the Union. Then one and only treason why bureaucrats want bigger and bigger is because it means more money for them. Like lawyers, they'll happily sell you down the river in return for 30 pieces of silver, or in the case of the EU, 300,000 pieces of silver. They're nothing if not greedy.  Britain should find its own way in the world. As a nation we are more than capable. We don't need thousands of regulations, tens of thousands of bureaucrats, mollycoddling or being told what to do all the time. We want freedom - freedom to invent, to explore, to create, and determine our own future. The EU project is at an end - it is time for us to create a nation fit for the future, fit for all our people to live and thrive in - a nation where we alone hold the reins and guide our own destiny. Just leave, it is only the corrupt who want us to stay in this corrupt organisation. The EUSSR must be with out any doubt the most corrupt organisation in the world. Why was my father and millions of others killed for our freedom, as I was told as as child. Was this just a lie, if not was was it? Did our government say this so control of us could be done in different way? Our government only has a white flag to wave at the EUSSR. I would now take up arms against this invasion of England, but the young of this country are brainwashed in believing in a none existent country. Europe is not a country it is a continent. People should Think, Think, Think, but no, that is not allowed.

If Delors thinks ' the British are solely concerned about their economic interests, nothing else' he is deluded. The British are concerned about their increasing inability to make and uphold their own laws, control their own borders , have an elected Parliament accountable to the electorate not a foreign governing body, and all other issues resulting from having the jackboot of the EU on its neck. There is also the little matter, not often in the news, of the plan to abolish England! Prezza was merrily engaged in working on EU plans to split England up into EU departments when he wasn't chasing his secretary round his desk. Kept that one quiet, haven't you Jacques?,,,The UK shall not exist as a nation state if it remains in the EU. Instead, we shall be a northern province of centrally ruled state run by unaccountable people who consider themselves a special priestly caste with unique access to the truth and what is good for everyone. Little people will be expected to genuflect to these Platonic Kings who know the real world beyond the dark cave of ignorance which is our lot. Those who shout for democracy will be seen as trouble makers and silenced accordingly because they will be attacking the dear leaders who, by definition, know the truth and do not need or want to be pestered by shouts from the ignorant. We ditched this sort of disgusting ignorance when we kicked out King James 1 in the Glorious Revolution. And, now, Cameron, Clegg and Milliband seem to want to junk several hundred years of political evolution to return to a primitive, unstable and very dangerous form of government lacking, even, the checks and balances extant in the late 17th century...Delors is right.... but it seems the ignorant, selfish and small minded politicians in Westminster are still trying to tell the rest of us that the UK system is substandard and should be junked in favour of the political disaster that is the EU....Simple response to any EU apologist like Delors. Do not believe them, these are the people who have destroyed currencies, installed puppet governments, created poverty for millions and replaced national sovereignty with EU sovereignty through an authoritarian EU.

These politicians loathe normal people and have absolutely no regard for our right to vote them in and out and have persistently lied and covered up the systematic selling out of UK sovreignty over the last 45 years.  They have betrayed us and think our rights can be disposed of as quickly and with as little compunction as a knifeman slits the throat of a calf in an abbatoir.

Britain is expected to lose its AAA credit rating this year, dealing a blow to George Osborne's defence of deep spending cuts as the key to retaining Britain's status with global investors.
Many economists predict at least one of the three main credit ratings agencies – Moody's, Fitch or Standard & Poor's – will declare the UK a bigger lending risk in response to the chancellor's admission in the autumn statement that austerity will run for at least eight years, until 2018, rather than the original five.
Those same economists largely agree that in a world where most developed countries have found life tough going, there will be little impact on the UK's creditworthiness. Like the US and France, which have already seen their pride dented by a demotion to AA, the UK will still be a safe haven for foreign cash, and thereby enjoy relatively low interest rates.
But lower growth and bigger borrowing add up to a greater risk that the UK will find 2013 tougher than expected.
All the major forecasters have downgraded growth for the coming year, including the Treasury's own Office for Budget Responsibility. The OBR's most recent outlook put growth in 2013 at 1.2% – down from the previous prediction of 2%. Not until 2017 does the trend return to a point where unemployment comes down in any significant way.
Part of the downgrade in growth stems from expectations of lacklustre investment spending by business. Without investment in new equipment, the economy is likely to suffer over the longer term. Osborne has promised a rise in public investment this year, partly to make up the difference, but only enough to make up a quarter of the total he cut in 2010.
In budget terms 2013 will be characterised by social security cuts, which are due to take effect in earnest after an initial focus on tax rises (the increase in VAT to 20%) and job losses in the public sector (more than 700,000 so far).

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.

Agreement on a eurozon banking union ...

France and Germany appear to have found a compromise on the scope of the ECB's new supervisory powers. The sticking point has long been the threshold at which the ECB would intervene - Germany argues that many of its regional banks are too small to warrant ECB attention. The summit's chairman, European Council President Herman Van Rompuy, will try to get a commitment to launch the SSM in January 2014 at the latest. His vision for far-reaching eurozone integration is set out in a report, which will be the focus of the discussions. The report included input from the European Commission, ECB and Eurogroup - the finance ministers of the 17 eurozone nations. While banking union is the immediate focus, the report also proposes "contractual" arrangements between eurozone governments and the Commission, to prevent governments delaying, or reneging on, important economic reforms. The quid pro quo would be central financial support for specific reforms - "solidarity" money from a new eurozone budget, to which all eurozone members would contribute. Such a mechanism could in future help to ease the kind of chronic unemployment that is afflicting Greece and Spain. Only two EU members - the UK and Denmark - have formal opt-outs from the euro. The others still outside the euro are committed to joining, and can sign up to the banking union in the meantime. The leaders are likely to avoid any measures that could trigger treaty change before the European elections in mid-2014, because treaty change is nearly always a thorny issue for the EU. It took seven years for the EU to adopt the Lisbon Treaty. Germany's Constitutional Court has already flexed its legal muscles over eurozone integration. There is strong opposition in Germany and other richer eurozone nations to any further taxpayer-funded bailouts of indebted banks and governments. Chancellor Angela Merkel insists that the banking union cannot be rushed - and she does not want to jeopardise her chances in Germany's elections next autumn.

....What an incompetent! - Ollie Rehn's opinion in WSJ...

"A casual reader of much recent commentary could be forgiven for believing that European governments are blindly enacting harsh policies of austerity, under the watchful eye of a European Commission obsessed with enforcing arbitrarily chosen nominal deficit targets. It is time to debunk this damaging myth.

In fact, the European Union's Stability and Growth Pact can adapt a country's agreed fiscal adjustment path if the economic situation calls for it.   Alongside the nominal targets for deficit reduction, each new recommendation issued to a member state specifies the structural fiscal effort to be achieved each year until the excessive deficit is corrected. While the nominal targets may continue to dominate the headlines, the Commission focuses its assessments of member states' actions first and foremost on their compliance with the agreed structural effort.

This is consistent with another little-known, yet key element of the pact: the medium-term objective of a balanced budget in structural terms. The appropriate pace of progress towards this medium-term objective is agreed by taking into account the specific economic circumstances of each EU member state. Accordingly, a member state may receive extra time to correct its excessive deficit. This has occurred twice this year already: in July for Spain, and in October for Portugal. Both now have until 2014 to bring their government deficits back below 3% of GDP. ".... excerpt of OR's article in the WSJ

There is no German help that can solve the basic problem in Spain. Money, or access to it, is not the problem for the Spanish sovereign. It has had quitre literally hundreds of billions of euros thrown at it since it joined the EU a quarter of a century ago and it has still failed to develop a sustainable and functional economic model.   Fully a third of people in Madrid are employed by the state, many in utterly futile positions which are duplicated at regional and local model. Spain would be better off if it offered redundancy to all such public sector workers, with a view to cutting down numbers by say a third. Those who take up the offer should in addition to their redundancy pay be assured of loan and equity funding for business start ups to generate wealth that the country badly needs. And I'm not talking about property development projects on the coast which seems to be the default Spanish notion of entrepreneurialism.  All this schlepping up and down from one European capital to another by leaders and finance ministers is utterly futile. The fundamental problem will not be solved by finding some ingenious way of getting "free money" funneled from North to South. The basic problem is that, given developments in the East, not enough wealth is being generated to sustain our current economic and social model in both South and North. Countries such as Greece and Spain are being picked off in the same way that we see the least fleet of foot in the herd being picked off by the predator on those BBC wildlife programmes.   But if the basic problem is not tackled, what is happening in those countries will surely happen in countries such as France and the UK, which because of their proud histories implicitly believe that they are somehow immune, in a few years time. Let's stop sloganeering about bankers and tax evaders - for whom incidentally I have not an ounce of sympathy - and stop putting our faith in the chimera of revolution. Let us rather face up to the simple fact that if we want to maintain our existing social model we must start to generate wealth or within a generation we ALL will be eking out our livings on the verge of grinding poverty.

More from the IMF: "The external position of the Euro area as a whole has been close to balance, and only slightly weaker than the estimated value consistent with fundamentals and desirable policies. However, this masked, and continues to mask, substantial divergences across the Euro area primarily financed from within the union, including by major banks with global links. Germany currently has the world’s second largest current account surplus, partly with the rest of the world, while Spain and (to a lesser extent) Italy have deficits. Major estimated external imbalances that are regionally-financed imply a need for substantial real and financial rebalancing within the Euro area as well as a much more modest rebalancing by the bloc with the rest of the world. Unsustainably large intra-Euro area imbalances were part of the global boom-bust cycle, and the failure to resolve the Euro area crisis is causing heightened stresses that are spilling over to other countries". -- Germany is doing OK though, and have done since the Eurozone was created. No wonder Merkel wants to preserve the status quo. The eurozone is on life-support, it won't be long before the apparatus is switched off, but by then millions of people in Spain, Portugal, Ireland, Italy, Greece et al will have had their lives ruined by arrogant, stubborn eurocrats. ..... What's the youth population of Europe? Say, around 100 million people (depending on how you define youth) of which roughly 20 million are unemployed. Now take the quantitative easing (QE: new money printed and issued, a taxpayer liability) amounts given to the banks, and the other forms of money given to them in bank bailouts. £375 billion and counting in the UK. Don't have close to hand, the QE, bank bailout, and other monetary relief sums for the bad debt of banks given to Spain, Italy, Greece, Ireland, and Portugal. Let's take a conservative estimate of a total of £600 billion: divide this by 20 million and you have £30,000 per unemployed youth. The new money printed and issued by European governments if given directly to the public instead of the banks would certainly wipe out unemployment for at least a year or two. That would be even truer for the Non-Euro Countries, forget about the rest of Europe. But we the public are such stupid, apathetic sheep, we play along with this massive misdirection of financial resources by the states, done for the banks, at your cost.

IMF - John Lipsky, the acting managing director of the International Monetary Fund, has taken a tougher approach than his predecessor, Dominique Strauss-Kahn. Photograph: Aleofficials and diplomats in Brussels confirmed that the IMF threat to pull the plug on its funding – in stark contrast to the more emollient line of Strauss-Kahn – had been defused because of a German climbdown. As political turmoil continued in Greece on Thursday, with the prime minister, George Papandreou, scrambling to form a new government, the stage was being set for a political struggle between Europe's powerbrokers over the fine print of the proposed new €100bn-plus rescue of Greece. Berlin is deeply at odds with France and with the key EU institutions – the European Central Bank (ECB), the European commission, the presidency of the EU and the head of the eurozone, Jean-Claude Juncker, prime minister of Luxembourg – over the terms of a new deal. Germany was forced to agree to bail out Greece for the second time in a year under strong pressure from the International Monetary Fund following the resignation last month of its head, Dominique Strauss-Kahn, the Guardian has learned. Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance and it warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece's rescue.

AsiaNewsAgencies - China: Xintang: police and army occupy city to stop protests. Climate akin to martial law, with police patrolling every street, road blocks, orders for shops and restaurants to close early, people advised not to go out at night. Tens of thousands of migrants are ready to protest on the streets for justice and recognition, tired of constant harassment.Beijing (AsiaNews / Agencies) - The police are now patrolling the streets and putting roadblocks on main thoroughfares of Xintang in the city of Zhengcheng, to end to urban guerrilla warfare that first broke out June 10. But it is a deceptive calm, with tens of thousands of immigrants ready to explode with further protests and violence. Beijing (AsiaNews / Agencies) - The police are now patrolling the streets and putting roadblocks on main thoroughfares of Xintang in the city of Zhengcheng, to end to urban guerrilla warfare that first broke out June 10. But it is a deceptive calm, with tens of thousands of immigrants ready to explode with further protests and violence. summoned the managers of 1,200 companies in the area telling them to "pay close attention to their employees." In an atmosphere akin to martial law, shops and restaurants have been ordered to close early. Residents have been "advised" not to go out at night and not to post pictures of the clashes on line.
http://www.eucouncilfiles.eu/

George Papandreou should resign

George Papandreou pledges to form a new government - After a day which saw world stocks tumble, on which tens of thousands marched on parliament to oppose the swingeing austerity measures designed to stave off bankruptcy, George Papandreou effectively conceded that he had not been able to muster enough support in parliament for the cuts required by international creditors to enable Greece to balance its books. Papandreou has told his conservative opposite number, Antonis Samaras, that he would stand aside and make way for a new leader if the opposition joined his party in a national unity government committed to sweeping reform to pull Greece's economy out of its tailspin. It remained unclear whether the opposition New Democracy party would agree to the move. Party insiders indicated that it would only do so if the government renegotiated the terms of last year's €110bn (£96bn) international bailout package, designed to save Greece from default. "The most important member of a ship's crew is the captain, and the captain has to go," conservative deputy Theodoros Karaoglou said, according to Associated Press. "If we joined forces, we could go to our [creditors] together to negotiate and the results of course would be better." Greece's economy is drowning in more than €300bn of debt – around one and a half times more than the country's entire annual output. Unemployment has rocketed to 16.2%, and the economy is predicted to contract by as much as 3% this year, making it Europe's worst performing economy – and one of the worst in the world.

With Europe's debt crisis intensifying by the day, fear appears to be the single biggest factor motivating those in charge of policy on the common currency. But as finance ministers from the 17 euro countries debated how to bail out Greece for a second time in a year, before an EU summit on 25 June, the signs are not promising. In Athens, a day after Standard and Poor's gave Greece the lowest rating of any country it covers – lower even than Pakistan and Ecuador – the omens appeared to be particularly poor. Differences over involvement of private investors in the rescue package – which is seen as the key to getting Europe's paymaster, Germany, to agree to it at all – this week pushed the cost of insuring Greek government debt against default up to 1,600 basis points, a record high even by the standards set so far. More than ever, Papandreou appears stuck between a rock and a hard place. Faced with a €340bn (£300bn) debt projected to hit 160% of GDP by 2012, Greece is teetering on the brink of bankruptcy. In a country plagued by a shadow economy that accounts for almost 30% of GDP, the medicine prescribed by the EU, IMF and ECB in exchange for €110bn of emergency loans last May, has resulted in a deeper than expected recession with further cost-cutting measures now seen as crucial if Greece is not only to rein in its debt but make it sustainable.

- Romania’s major grain traders such as Cargill, Alfred C. Toepfer, Glencore and Nidera exported grain worth EUR1.3 billion from June 2010 through 2011, according to Victor Beznea, president of the Romanian Association of Farm Product Traders (ARCPA).

- The record-high EUR1.5 billion raised by the Finance Ministry last week from the foreign markets brings to over EUR4.5 billion the foreign currency debt accumulated by Romania since the beginning of the year.

According to the source, the U.S. carmaker will produce over 70 B-Max prototypes in Romania this summer. The car parts needed to assemble the B-Max models were produced at Ford's car plants in Germany. The B-Max minivans will be tested soon in Belgium, at Ford Lommel Proving Ground and in other countries. After tests are finished, the cars will be dismantled. Ford Romania will start the production of the new car model next year. B-Max will be produced exclusively in Romania. At the end of March, Ford finished installing the production lines for B-Max and a new family of engines at the Craiova car plant. Ford produced about 3,000 Transit Connect light commercial vehicles in Romania. The U.S. carmaker has invested EUR450 million so far in operations carried out in Craiova.

European Union - EU solidarity ?!...

French banks lead exodus of EU lenders from hardest-hit European economiesEuropean banks increase pressure on Greece and other struggling economies by refusing support for business dealsThe crisis enveloping Greece, Ireland and Portugal appeared to deepen after figures showed EU banks were refusing to support business deals in the EU's hardest-hit economies. Figures from the Bank of International Settlements (BIS) show French, German and UK banks have embarked on a mass exodus from Greece, Portugal, Spain and Ireland, in what analysts see as an effort to bolster their balance sheets and conform to new rules designed to protect financial institutions from going bust. The move is expected to add to tensions in Brussels over how to prevent Greece defaulting on its loans because vital business contracts will cost more to insure. French banks cut their exposure to Greece from $92bn (£57bn) to $65bn in the last three months of 2010. They also reduced their involvement in Ireland, Portugal and Spain, slicing their total exposure to the four hardest-hit economies by $112bn. Richard Batty of Standard Life Investments said the reduction in credit derivatives issued by French banks was due to "the reduced risk appetite of the major banks, and in parallel, a shift to bolstering capital positions to reflect the requirements of the Basle III rules". He said stress tests planned by Brussels for the summer could lead to a further exodus as banks sought to insure only the safest risks.

German and French banks held over two-thirds of the Greek government bonds at the end of last year, accounting for 70% of the $54.2bn owned by banks from 24 countries that report to the BIS.

Romania's Government will seek a confidence vote in Parliament to adopt the act on the country's administrative reorganization, Democratic Liberal Party general secretary Ioan Oltean announced in a press conference on Friday. The government's proposal is to reorganize the country into eight counties, from the current 41. According to Oltean, this new system would improve European Union fund absorption and increase the efficiency with which these funds are used. He pointed out that the EU has not explicitly asked Romania to implement a new territorial organization. The new counties would have their capitals at Cluj-Napoca, Brasov, Timisoara, Craiova, Constanta, Iasi, Ploiesti and Bucharest. The ministries' decentralized services would have eight local offices, instead of 41, bringing the authorities closer to the citizen, according to Oltean. He added that many matters handled by these services and by the county councils would be transferred to commune, town and city halls. Oltean added that the ruling coalition wants the 2012 local elections to use the eight-county administrative organization. Asked why the government has not held a public referendum or a survey on the issue, Oltean replied that they would block or delay reform.