The review, involving every major government department, emerged as the Prime Minister bluntly accused France and Germany of orchestrating “constant attacks” on the City of London through new EU red tape on the financial sector. Mr Cameron’s attack is the latest escalation in the tension over Europe since this week’s record rebellion by Conservative MPs demanding a referendum on the EU. Ministers at the Foreign Office are privately backing plans by back-bench MPs and peers to set out a “menu” of demands from the EU, including repatriating powers on employment regulations and human rights legislation. Some Tory MPs believe that the process should start next month when leaders begin formal talks on changing EU treaties to allow a rescue package for the eurozone. Conservative attempts to claw back power from the EU are likely to face opposition from their Liberal Democrat Coalition partners. Nick Clegg, the Deputy Prime Minister, said yesterday there was “no question” of Britain “unilaterally” repatriating powers from the EU. But he indicated that there was room for negotiation. He said Britain was “entirely within its rights” to defend its economic interests in Europe but argued the best way to do that was to “have a voice at the top table”.

Greece has a "governor" - Horst Reichenbach

BRUSSELS (Dow Jones)--Some Greek banks may have to be nationalized after the application of the agreed 50% write down in nominal value of Greek bonds held by the private sector, as part of new euro-zone package for the country, Greek prime minister George Papandreou said Thursday. Speaking to reporters after the conclusion of a marathon euro area leaders΄ summit, Papandreou said Greek banks would be re capitalized with official funds that would come out of the country΄s fresh EUR130B bailout package. "If the private sector can overcapitalize the banks they can do that but if they can΄t it means the official sector will need to. That will mean a temporary passage of ownership to the state. After restructuring they will be sold back to the private sector," Papandreou said. He also said the details of the new package would be worked out over the next few weeks. "We want to be done with this," he added. Asked if he was contemplating calling an early election or seeking the formation of a government of national unity, Papandreou said that Greeks want changes, not elections. "We will continue to seek the maximum level of consensus possible," he added.

Merkel's spokesman Steffan Seibert told journalists that further changes to Europe's bailout fund would require the agreement of the Bundestag, the German parliament. The eurozone's efforts to solve its escalating debt crisis plunged into disarray Thursday, when Germany and France called a second emergency summit after it became clear that they would not be able to bridge their difference in time for a first crisis meeting Sunday. Merkel's address to parliament scheduled for Friday was cancelled, and Seibert said it would take place next week. Sunday's summit was supposed to deliver a comprehensive plan to finally get a grip on the currency union's debt troubles by detailing new financing for debt-ridden Greece, a plan to make Europe's banks fit to sustain worsening market turbulence and a scheme to make the eurozone bailout fund more powerful. The announcement came from the offices of French President Nicolas Sarkozy and German Chancellor Angela Merkel after it became clear that the currecy union's two biggest countries could not agree on the main points of the plan. Both governments said that all elements of the eurozone's crisis strategy would be discussed on Sunday "so it can be definitively adopted by the Heads of State and Government at a second meeting Wednesday at the latest." It also said that the two leaders would meet Saturday afternoon ahead of the summit in Brussels in the hope of making progress.

The European Union's executive may ask for powers to censor credit ratings for countries in crisis, its financial reform chief said on Thursday, describing a ban as one way of stopping fallout from "ill-thought-out" ratings. The proposal, which officials cautioned may be impossible to police, would be the most stringent curb yet on rating agencies and highlights frustration in France, which was this week warned by Moody's that its top rating was under threat, and Germany. "These rating agencies should probably be considered one of the causes of this crisis," said Michel Barnier, the former French foreign minister who is now the EU commissioner in charge of regulating finance.

A draft summit statement obtained by telegraph.co.uk on Thursday revealed plans for a revised European Stability Mechanism (ESM) treaty by the end of November which will be brought into force as soon as possible before June 2013. The ESM has been designed as the permanent replacement of the EFSF. Opposition to the bail-out plans was reinforced when Germany's growth forecast for next year was cut to 1pc down from a previous 1.8pc. The first summit starts on Friday afternoon with a meeting of finance ministers. Stephen King, chief economist at HSBC, said: "Keeping the eurozone together will involve huge financial resources and considerable ingenuity. The alternative would be worse. We argue that a break-up of the euro would be a disaster, and in a worst-case scenario could trigger another Great Depression." Meanwhile, former Prime Minister Gordon Brown has said that failure by European leaders to quickly resolve a growing financial crisis risks sparking “havoc” as Europe’s troubled banks tip the continental economy into recession. “The truth is that European banks are in a worse state than American banks, that they never really recapitalized even though they said they would,” Mr Brown said. “They didn’t write off their toxic assets. They’re not lending, and they’ve been trying to disguise the extent of the problems they face.”

Germany(the IVth. Reich) takes over Greece, according to the Ribbentrop - Molotov Pact !!!

The European Commission Task Force, headed by Horst Reichenbach, launches officially today initiatives to support Greece proceed with reforms. This Task Force is considered more powerful than Troika’s team. This is a group of technocrats with Commissioner Olli Rehn as a direct supervisor. The team would consist of European Commission and EU member states officials, and requests for participation have already exceeded 500, according to Rehn. Middle-level executives have already visited ministries and public organizations seeking issues for technical support. Although, officially the main agenda item is the National Strategic Reference Framework, it is considered clear that the substantial objective is to implement the terms of Memorandum of Understanding and promote necessary reforms. The meeting between Reichenback and Greek FinMin Evangelos Venizelos is scheduled for Tuesday, the first day of his arrival in Athens, is considered indicative. The former vice president of the European Bank for Reconstruction and Development is a man of Barroso’s absolute confidence, while his team would include also representatives of Greece’s lenders, who can propose measures. EU officials say that the Task Force’s role would expand as time passes, while there would be increased collaterals in case Greece receives the next aid instalment and the second bailout loan. The aim is to avoid the repeat of slowdowns and delays in implementation of the memorandum, which provides reforms in public utilities and sector, healthcare system, insurance system, closed professions, etc. Many government officials anticipated this team in order to overcome intraparty and union pressures in areas of great influence. But there are also government executives who clamour for loss of national sovereignty in exchange for a new loan....And so, Germany(the IVth. Reich) takes over Greece, according to the Ribbentrop - Molotov Pact !!!

The news from Brussels is that the European Financial Stability Facility is likely to be increased through means of a guarantee system. Eurozone officials are briefing that the EFSF will promise investors who buy Spanish, Italian or other debt that it will cover a portion of losses, potentially allowing it to guarantee a lot more debt than the fund is worth - €440bn. The guarantee idea is not new, but suggestions that it is the most likely solution is interesting. "This idea is the main contender," an unspecified eurozone official told Reuters. Some more poor statistics, this time from Germany. The ZEW Institute's monthly survey of German analyst and investor sentiment shows confidence falling to its lowest level in nearly three years. ZEW economist Michael Schroeder said he thought the country may already be in recession. he September figure should represent a peak in the rate of inflation, with petrol price rises and January's VAT hike falling out of the year-on-year comparisons in the fourth quarter and the new year respectively. Commodity prices, which tend to lead consumer prices, have fallen just over 10% from the peak seen in February, which also suggests we should see some further downward pressure on inflation.

Can somebody tell me what's great about this plan, and why the market and euro rallied?

RECAP-Bloomberg: "Merkel's office: “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” The search for an end to the crisis “surely extends well into next year.”" UK Telegraph: "Diplomats say Mr Geithner’s plan to use the ECB as a guarantor of eurozone sovereign bonds was dismissed out of hand, while the EU failed to offer clear assurances that bank recapitalisation would be carried out with sufficient speed and scale to halt an incipent run on the system." "German foreign minister Westerwelle politely told the US to mind its own business. “I cannot understand some of the comments of our American friends. You can’t solve a debt crisis with more debt,”" "RBS said any attempt to solve the eurozone crisis without the ECB playing a key role in shoring up the system is doomed to failure." "Trichet, ...said late last week that the bank has done “all it could” ... has now exhausted its role of “lender of last resort”." "Ackermann, head of Deutsche Bank, said plans to leverage the EFSF may be illegal. “We cannot allow a rescue fund of this magnitude. The (constitutional) court would’t permit, and nor would the people,” he said." Germany wants private investors to increase haircut to 50%. Financial Times: Investors say no. 21% was agreed, and they're sticking with that. (Search for: "Investor threat to second Greek bail-out") If banks take bigger haircut, they will incur bigger losses and will be downgraded again. If EU forces this, then it's involuntary and triggers CDS payouts on default. If EFSF is leveraged, then it will be downgraded from AAA, which means it can't borrow anymore.EU wants to re capitalize banks. DB said no. Germany and France have higher Debt to GDP ratios than Spain, and Spain is one of the PIIGS. Is this the poor helping the poor? When do their AAA ratings get downgraded? Spain was downgraded last Friday. If Germany or France get downgraded, how will the EFSF be able to sell bonds to raise the 440b euros?There are obstacles to almost every part of the plan. Can somebody tell me what's great about this plan, and why the market and euro rallied?

Angela Merkel says countries who want a rapid solution to the eurozone debt crisis should not oppose Robin Hood tax. Germany's Angela Merkel criticises opponents of a financial transaction tax in Karlsruhe on 14 October. Photograph: Franziska Kraufmann/AFP/Getty Images Germany's chancellor, Angela Merkel, led European Union critics of US and British attacks on their plans on Friday to resolve the sovereign debt and banking crises. Merkel criticised both Barack Obama and David Cameron for opposing EU proposals for a financial transaction levy, or Tobin tax, and demanding "big bang" solutions. Spain's economy minister, Elena Salgado, smarting from a cut in the country's credit rating from Standard & Poor's, insisted it would meet its tough deficit target and accused rating agencies of being too swayed by exaggerated eurozone problems. Merkel, speaking at a conference of the engineering trade union IG Metall in Karlsruhe, said: "It cannot be that those outside the eurozone who press us again and again for comprehensive action are, at the same time, comprehensively working together to prevent the introduction of a financial transaction tax." She added: "This is out of order. We must ensure that financial market actors share in the costs of fighting the crisis. I will push for this until it happens, at least in Europe but preferably worldwide." - The IVth. Reich is upon us, europeans !!!!!!!!!!!!

Speaking at the European Parliament in Brussels, Mr Barroso called for EU leaders to back his plan that would bring forward the introduction of a permanent rescue mechanism for states from mid-2012 to mid-2013 and would see more rigourous capital standards for banks. "For confidence to return we need to fix the sovereign debt problem, which can only be done through a coherent package and we must therefore urgently strengthen the banks, because, in fact, those two issues are now, whether we like it or not, linked. "This must be co-ordinated through the member states, the European Banking Authority, the ECB and the Commission," Mr Barroso said. Mr Barroso hopes that EU leaders will back the plan when they meet at a summit in Brussels on October 23. Officials say that the Commission, the EU's executive, sees this as the final opportunity to get a grip on the debt crisis, which has already forced three states into multi-billion euro bailouts and now threatens to push the world economy into a second recession.

Europe's embattled leaders gave themselves a two-week deadline to resolve the single currency debt crisis on Monday by delaying a crucial summit. The European Council president, Herman van Rompuy, announced the delay after it became clear that EU leaders were struggling to agree on proposals to expand Europe's bailout fund, and on possible changes to Greece's second bailout. With international lenders also reportedly making slow progress assessing Greece's finances, the summit has been pushed back from next Monday to Sunday, 23 October. But with Slovakia's coalition government failing to reach agreement on the existing deal to give the eurozone rescue fund stronger powers, the eurozone still appeared disunited. The postponement came as George Osborne told MPs that Europe needed to take decisive action immediately as the eurozone was now the "epicentre" of this summer's turmoil on global stock markets. "We need a comprehensive solution which ringfences vulnerable eurozone countries, recapitalises Europe's banks and resolves the uncertainty about Greece," Osborne told the House of Commons. The chancellor added his voice to those calling for the European financial stability facility (EFSF) to be expanded further. "If you're trying to protect larger countries, then €440bn is sadly not enough." Osborne also revealed that prime minister David Cameron had discussed the crisis with Barack Obama on Monday afternoon, a sign that Europe's woes continue to dominate the international agenda. World stock markets rallied again as traders welcomed the bank recapitalisation plan agreed over the weekend by the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy.

Markets across Europe fell on reports that Angela Merkel is struggling to secure the Bundestag majority needed on Thursday to approve the expansion of the European €440bn (£383bn) bail-out fund. The German Chancellor also cast doubt on the terms of the second Greek bail-out - confusing traders who were focused on whether an €8bn tranche of rescue money from the first package would be delivered before Greece runs out of money. A delegation of officials from the European Union, the International Monetary Fund and the European Central Bank are due in Athens on Thursday. Amid angry strikes, the "troika" will resume the audit of Greece's finances - and decide whether to release the €8bn of funds from the May 2010 agreement. Athens has warned it will run out of money next month unless it receives the money. Ms Merkel told reporters that the result of the audit could also impact the terms of the second package agreed on July 21 this year. She said: "So we must now wait for what the troika finds out and what it tells us: do we have to renegotiate or do we not have to renegotiate?" There were reports that private bondholders may be asked to take a bigger hit. Ms Merkel said: "Of course we would prefer that the figures remain unchanged, but I cannot foretell [the troika's report]."

• Plan to enlarge the European Financial Stability Mechanism is approved by the Finnish Parliament
• Europe "faces the biggest challenge in its history"
• Divisions in the eurozone over the terms of Greece's second bailout package hit bank shares

Mark Pritchard, the secretary of the 1922 committee of Conservative MPs, is the most senior Tory yet to demand a vote on Britain’s membership of the European Union following the eurozone crisis. Writing in The Daily Telegraph, Mr Pritchard says that the EU has become an “occupying force” which is eroding British sovereignty and that the “unquestioning support” of backbenchers is no longer guaranteed. He says the Government should hold a referendum next year on whether Britain should have a “trade only” relationship with the EU, rather than the political union which has evolved “by stealth”. He warns that the Conservatives will see constituents “kick back” if taxpayers are forced to foot the bill for the failure of “unreformed and lazy” eurozone countries to introduce fully-fledged austerity measures. Mr Pritchard is a leading figure in a group of 120 Conservative MPs who are pushing the Prime Minister to set out a “clear plan” for pulling back from Europe.

I am a strong believer that good reasons, arguments, and evidence are what matter, not credentials. So the short answer to “when should we trust an expert simply because they are an expert?” is “never.” We should always ask for reasons before we place trust. Hannes Alfvén was a respected Nobel-prizewinning physicist; but his ideas about cosmology were completely loopy, and there was no reason for anyone to trust them. An interested outsider might verify that essentially no working cosmologists bought into his model. But a “good reason” might reasonably take the form “look, this is very complicated and would take pages of math to make explicit, but you see that I’ve been doing this for a long time and have the respect of my peer group, which has a long track record of being right about these issues, so I’m asking you to go along this time.” In the real world we don’t have anything like the time and resources to become experts in every interesting field, so some degree of trust is simply necessary. When deciding where to place that trust, we rely on a number of factors, mostly involving the track record of the group to which the purported expert belongs, if not the individual experts themselves. So my advice to economists who want more respect from the outside world would be: make it much more clear to the non-expert public that you have a reliable, agreed-upon set of non-obvious discoveries that your field has made about the world. People have tried to lay out such discoveries, of course — but upon closer inspection they don’t quite measure up to Newton’s Laws in terms of reliability and usefulness.

European finance ministers on Friday heaped pressure on the Greek government to accelerate its privatisation programme and implement deeper spending cuts, after they told Athens a crucial €8bn (£6.9bn) bailout payment would be delayed until next month. Luxembourg prime minister Jean-Claude Juncker, who chaired a meeting of the eurogroup of single currency finance ministers in Poland on Friday, said officials recognised the renewed efforts by Greece to meet its fiscal targets, but a decision on releasing the next tranche of cash would not be taken until October. The move was met with incredulity by Greek officials. They have already warned they will be out of money by mid-October and are reported to be making contingency plans to lay off public sector workers. Inspectors from the ECB, EU and International Monetary Fund (IMF) are currently in Athens and should report back on progress in early October, European commissioner for monetary affairs, Olli Rehn said – meaning that the next disbursement of aid to Greece from its first bailout could be paid by mid-October. Concerns that statistics from Athens failed to present an accurate picture of its finances were given weight after two members of the government's statistics board resigned and another was quoted as alleging that 2009 deficit data had been artificially inflated in order to ensure bailout funds would be forthcoming.

End of the Wirtschaftswunder? - Carsten Brzeski of ING said that the German data was a "growth normalisation" rather than a "disappointment" on its own, as Germany should still grow by at least 3% this year. He warned, though, that the German economic recovery is clearly slowing. "Looking ahead, the million-dollar question is whether a solid second quarter is the beginning of the end of the German Wirtschaftswunder [economic miracle] and whether recent market turmoil could push the economy back into recession," said Brzeski. "While German politicians are currently racking their brains on the pros and cons of common eurobonds, the luxury of having an economy running at 'wonder' speed is fading away." Gary Jenkins, head of fixed income research at Evolution Securities, said the German data will "only add to the concern of the market that we are running into headwinds that are going to make a difficult situation even worse". French and German officials have already indicated that Merkel and Sarkozy will not discuss the idea of issuing eurobonds – debt backed by the whole eurozone rather than individual countries. Jenkins believes that eurobonds appear to be the "least worst option at this stage". He said: "A temporary fiscal union may be the endgame, where you have common bond issuance for five years that replaces all individual sovereign bond issuance, after which time that is phased back in over, say another five years. Thus you retain a modicum of moral hazard." Stock markets across Europe fell in early trading, with the FTSE 100 dropping 73 points to 5277. The euro lost ground against the dollar, as traders reacted to the news that Germany had reached near-stagnation. "Following on the back of weak GDP data announced by France this will further undermine any efforts to resolve the eurozone debt crisis," said Max Johnson, a broker at forex specialist, Currency Solutions. But he added: "Looking around the global economy, at least there will be few, if any, cases of schadenfreude."

Google’s surprise $12.5 billion bid for Motorola Mobility this morning is a bold attempt to move the needle for Google on several fronts. Google is going all in, dipping into its $39 billion of cash to make its biggest acquisition ever. The deal signals that mobile will be one of Google’s main growth drivers and that growth will come from entering new markets, specifically mobile hardware. With the acquisition, Google gains a portfolio of 17,000 patents and another 7,000 patents pending globally, an area where it is a currently a laggard. But more than anything, it signals how crucial it is for Google to control the Android experience from soup to nuts. There may now be 150 million Android phones and phones running the Android operating system command the largestmarket share smartphone , but Android the most popular single smartphone by far is still the iPhone. Buying Motorola is an acknowledgement on Google’s part that it must control the experience from software to hardware if it hopes to unseat Apple.

ECB gives signal for euro-denominated loans to become more expensive. The European Central Bank (ECB) gave the signal for euro-denominated loans to become more expensive yesterday by raising its key interest rate by a quarter of a percentage point, to 1.25% a year, reacting to accelerated inflation. The decision will also impact the Romanian market directly, with almost two thirds of loans granted to individuals and companies being euro-denominated. For instance, a client with a 40,000-euro loan that extends over 30 years used to pay a monthly installment of 230 euros amid an interest of 5.75% a year. If the interest climbs to 6% a year, the installment reaches 240 euros. Euro lending becomes more expensive at a time when the Romanian economy is struggling to come out of an over two year-long recession, but local economists say the impact will not be dramatic.

"Overall, I don't think the impact of the ECB decision will be beneficial to Romania's recovery from recession, but I think in terms of size it will be marginal. In theory, raising the interest makes investments more expensive and saving more attractive. Romania needs investments, but it also needs to save," says Florian Libocor, chief-economist of BRD-SocGen. He says he is considering improving this year's economic growth forecast to 1.5% from 1.2% at present, with the decision being based on expectations of a better absorption of EU funds. Players on international financial markets anticipated the decision, with three-month Euribor (the indicator that reflects the cost at which top-ranking banks lend to each other) yesterday reaching 1.28% a year, the highest level recorded since June 2009, from a 0.6% a year low in the spring of last year.

Cutting social security contributions paid by the employer and the employee by 3% (from an overall 44% to 41% of contributions for every gross salary) could lead to the creation of 100,000 new jobs, while contributions to the state budget would decline by around 380 million euros, according to specialists. The ruling coalition has discussed cutting social security contributions, and the measure could be introduced in the second half of this year. The information was confirmed by Labour Minister Ioan Nelu Botiş, who added that talks on this issue would continue this week. The cut would apply only to contributions paid by the employer. The state collects around 22.9 billion lei in social security contributions in six months' time, with contributions amounting to 44% of employees' gross incomes. If the contribution is cut to 41%, the amount collected by the state is down to 21.3 billion lei, i.e. a decline of 1.6 billion lei (380 million euros), an amount that could remain at the disposal of companies.(source Z.F.)

A decision of the National Bank of Romania to cut the minimum foreign reserve requirements ratio on foreign currency-denominated liabilities from 25% to 20%, thereby releasing over one billion euros to the private sector banks suprized all. This is a signal encouraging lending and indirectly the economy. Foreign currency-denominated loans are seen as an alternative to support investments and real estate acquisitions. "We see the NBR's decision as an attempt to prop up economic growth amid inflationary pressures limiting the possibility of cutting the key interest rate," comments Eugen Sinca, analyst with the BCR. The NBR has kept its key interest rate at 6.25% a year, which has remained unchanged since May last year. Florian Libocor, chief economist of the BRD, believes the central bank is trying to send a positive message to the private economy. Volksbank believes that the banks will be stimulated this way, to become more aggressive when it comes to lending and will lower their interest rates. Another possible interpretation would be that the NBR is paving the way to a new foreign-currency bond issue by the Romanian Ministry of Finance, as it did in 2009.

Romanians increased their bank deposits by one billion lei in February alone, which shows they still prefer to postpone acquisition plans and save the money instead.

Therefore individuals' deposits at the end of February exceeded 105 billion lei, 24 billion lei (almost 6 billion euros) more than in October 2008, when the global financial crunch effects reached Romania, as well. "The crisis has a number of effects. Even though it may appear counterintuitive, as incomes went down, deposits went up. The consumer spending behaviour adjusted, the appetite for borrowing was affected but savings were stimulated," says Ionuţ Dumitru, Raiffeisen Bank's chief economist. Fear of income decline or of even losing their jobs has made many people drop plans for holidays abroad or for buying a new TV and save the money instead. Spending adjustment showed in consumer spending, with the business of the home appliances retailers and car dealers plummeting.BCE, Citigroup, Agerpres Mediafax,