Six of the world's leading central banks, including the US Federal Reserve, say they will provide each other with ready supplies of their currencies on a standing basis, extending arrangements set up to steady the global financial system during post-2007 turbulence.

The decision, announced on Thursday, extends currency swap arrangements that until now had been considered temporary measures.

The central banks are: the Fed, the European Central Bank, the Bank of Japan, the Bank of England, the Bank of Canada and the Swiss National Bank.

The so-called swap lines enable those central banks to make sure banks in their home countries can always borrow ready cash from them in any of the currencies involved, should they need it.

The ECB said the arrangements "have helped to ease strains in financial markets" and "will continue to serve as a prudent liquidity backstop".

The Fed and the ECB started their first dollar-euro swap arrangement in December 2007 as the losses on mortgage-backed bonds began to shake the banking system. Subsequent bilateral deals between the different banks were added during the financial turbulence that followed, which included the collapse of the US investment bank Lehman Brothers in 2008, sudden extreme falls on stock markets, the subsequent recession and Europe's crisis over too much government debt in several countries.

Central banks serve as custodians of their countries' currencies and play an important role in supporting the stability of banks so companies can do business and the economy can function properly.

They typically provide liquidity – ready cash to meet the demands of everyday business – to their banks, even when banks may be having trouble borrowing elsewhere due to market trouble. With the new currency arrangements, they can do this in currencies other than their own.

For example, the European Central Bank holds credit offerings in US dollars for periods of seven days and three months, offering as much in dollars as European banks may want in return for collateral such as bonds or other securities.

Regling was more optimistic about Portugal. He said that, despite market speculation, it was not yet a foregone conclusion that the country would need more aid. International donor countries recently evaluated Portugal's reform efforts and determined that they were sufficient, he added, and the country continues to meet its goals according to plan.

So far, the ESM has only extended €46 billion to Spain and Cyprus to help prop up their banking systems. Regling likewise told the Handelsblatt that he has "no indication so far" that there would be new programs for other euro-zone countries.

Regling is reportedly even more confident when it comes to the stability of the European banking system. "I see no indications that we will experience larger bank problems in Europe in the near future," he said, according to Reuters. He also noted that overall market confidence in the economies of the EU's crisis-plagued countries, as well as in the euro itself, had risen.

Germany, for its part, could do something to increase political stability in Europe, Regling added. "Of course it would be good for Europe and the markets if the new government in Germany could be formed soon," he told Reuters.

GREECE - During the first seven months of 2013, the surplus reached €1.1bn (£921m), he said, adding this would enable the country to negotiate with its creditors, the European Union (EU) and the International Monetary Fund (IMF).

Greece has received massive rescue funding, tied to tough conditions, from the EU and the IMF to help it overcome a debt crisis which threatened the eurozone.

However, the a resulting structural reforms, including an overhaul of its public sector and its tax system, have proved unpopular.

On Saturday Samaras promised no further austerity measures would be introduced, saying the economy "cannot take" them any more.

"Debt levels will be manageable, Greece has respected its commitments... now, the creditors must also respect what was agreed," he added.

Protests in Thessaloniki, the country's second largest city, were organised by the private and public sector trade unions, GSEE and Adedy, who called for "fighting austerity and poverty".

Police said about 4,500 extra officers had been sent to the city to avert rioting during the four-hour demonstration.

The EU and the IMF recently praised the Greek government's progress in turning the economy around, but bemoaned delays to a programme of privatisation and reform, and the fact that the country will likely need further aid in 2014 and 2015 amounting to around €10bn.

Hmmm...I wonder what would the master EU idiot - Ollie R. say about this ...

Telling people that they can lose their deposits, even possibly below guaranteed amount (100,000 euros), which later was retracted, had not been a mistake. Firstly people realized and got used to the idea that such thing was no longer unthinkable. Secondly, by hitting deposits above 100,000 euros with up to 40% (or even maybe up to 60%) tax, it was made clear that such hit can be very hard indeed. Not some 6.75% or 9.9% as originally mooted: so now it is matter for the 'financial markets' to extend their target, below 100,000 euros. It is indeed a very primitive piece of social engineering and coaching people for the forthcoming loss. It is preparing psychologically all countries in Europe for the next step of the largest heist in history: direct and hard targeting of people's deposits. There is also a rather ironic twist in the events in Cyprus. It has been widely reported that many billions of euros held in banks in Cyprus came from all sorts of dodgy businesses (Russia?). There is even a whispering subliminal propaganda designed to make it easier to accept this new phase of the largest heist in history. The message is that there is nothing wrong in stealing money from the thieves.

Technically what happened there was that the billions of euros in cash deposited in Cyprus was used to redeem for a lot of toxic waste of the financial institutions (it is called 'making investments' in a financial language, with depositors cash). So, as expected, those who had cash ended up with nothing and those who held (and are still generating) zillions of toxic waste, got another tranche of their heist. The largest heist in history continues. Now...if it is true, as it is widely rumored, that many billions of euros of mafia money have been kept in Cyprus and now something like 40% or even 60% are going to be lost, one could wonder whether European politicians, central bankers, who drive this process, e.g. finance ministers, or some other decision makers, even lower down the chain, are going to sleep comfortably. Or are they going to think more about their own and their families safety? Is mafia going to accept such multibillion euros loss? Or would they plan to teach a lesson in order to get their money back, to get a compensation for the current 'inconvenience' and mess and to make sure such a thing is unthinkable in the future. Mafia starts wars when there is big money at stake. And in Cyprus some powerful groups lost billions of euros. Therefore we can also look forward to listen to some interesting news. Don't be surprised.

The Statement by the Eurogroup President

Statement by the Eurogroup President on Cyprus - The Eurogroup held a teleconference this evening to take stock of the situation in Cyprus. I recall that the political agreement reached on 16 March on the cornerstones of the adjustment programme and the financing envelope for Cyprus reflects the consensus reached by the Cypriot government with the Eurogroup. The implementation of the reform measures included in the draft programme is the best guarantee for a more prosperous future for Cyprus and its citizens, through a viable financial sector, sound public finances and sustainable economic growth. I reiterate that the stability levy on deposits is a one-off measure. This measure will - together with the international financial support - be used to restore the viability of the Cypriot banking system and hence, safeguard financial stability in Cyprus. In the absence of this measure, Cyprus would have faced scenarios that would have left deposit holders significantly worse off.

The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below €100,000. The Cypriot authorities will introduce more progressivity in the one-off levy compared to what was agreed on 16 March, provided that it continues yielding the targeted reduction of the financing envelope and, hence, not impact the overall amount of financial assistance up to €10bn.

The Eurogroup takes note of the authorities' decision to declare a temporary bank holiday in Cyprus on 19-20 March 2013 to safeguard the stability of the financial sector, and urges a swift decision by the Cypriot authorities and parliament to rapidly implement the agreed measures.

The euro area Member States stand ready to assist Cyprus in its reform efforts on the basis of the agreed adjustment programme.

The current global economic slowdown cannot be blamed solely on the EU, but the mechanisms and strictures now in play for countries whose traditional strategy when in a crisis was to devalue and rebuild simply do not make sense. It is both unconstitutional and simply applying the most superficial of sticking plaster to imagine that you can put off the inevitable by offering a few well-meant but ultimately short-term guarantees - which are ultimately going to be unacceptable - if continued (which is inevitable) to the various Constitutional Courts in Member States, not to mention against the Lisbon Treaty.

The Eurozone crisis has a lot to do with a bureaucratic, technocratic machinery running aground when the proactive market participants start addressing the various - and major disparities in the economies under the same trading bloc. Rather than create a sensible way out for countries with huge youth unemployment issues, suffering under severe austerity, they are forcing Europeans to carry on unabated.  There is no central tax revenue collection or coherence in this vastly diversified trading area, and sovereign authority is, at best, paid lip service to when countries have to make tough decisions. There is scope for an entrepreneurial and proactive trading bloc, but not on these terms. As countries struggle under the weight of market pressures, the last thing they need is fewer options. Which is exactly what the EU is giving them. Just ask Iceland - now pushing out healthy GDP growth figures after their own economic crisis of a few years ago. The EU is simply not responsive enough to market demands to be a credible single currency zone. And its southern Member states are paying a heavy price for its inflexibility and blindness to proactive. With an ex-Communist in charge - is anyone truly surprised? I still think the EU can be made to work, but fear with the current incumbents that it is too late to wind back the clock and get the trading area to function effectively.

Ex-Premier Milos Zeman and Foreign Minister Karel Schwarzenberg ....

A former leftist prime minister and the Czech Republic’s conservative foreign minister will face each other in a presidential runoff later this month after finishing Saturday as the top two candidates in the ballot’s first round. Ex-Premier Milos Zeman and Foreign Minister Karel Schwarzenberg will compete in the second round of voting for the largely ceremonial post on Jan. 25-26. Czechs are electing the country’s president in a direct popular vote for the first time, to replace euroskeptic President Vaclav Klaus, whose second and final term ends March 7.  Since Czechoslovakia officially split into Slovakia and the Czech Republic in 1993, the republic has had two presidents elected by Parliament: Vaclav Havel and Klaus. But bickering during those votes led the legislature to give that decision to the general public.  With the votes from almost all of the 15,000 polling stations counted on Saturday, Zeman was leading with 24.24 percent of the vote, followed by Schwarzenberg with 23.34 percent. Another former premier, Jan Fischer, was a distant third with 16.37 percent.  Zeman and Schwarzenberg will advance to the runoff, since no candidate achieved a majority. They were among nine candidates in the race. “It will be a presidential race between a candidate for the left and a candidate for the right,” Zeman said. “We’ll start from scratch for the second round.” Zeman and Fischer were considered favorites, but Schwarzenberg finished his campaign in style, attracting an unusually big crowd of about 10,000 in a rally in the capital this week. Schwarzenberg said he would do all he can for the Czech Republic to be “a successful country.” Zeman, 68, is attempting to stage a return to power after he retired following a failure in the 2003 presidential election.  A chain smoker with a soft spot for alcohol, Zeman made international headlines as prime minister with outspoken comments. For example, he compared late Palestinian leader Yasser Arafat to Adolf Hitler, drawing condemnations from the EU and the Arab League, and called the Austrians who opposed a Czech nuclear plant “idiots.”  After the Sept. 11 attacks in the U.S., Zeman and his interior minister said they believed that hijacker Mohamed Atta met with a senior Iraqi intelligence official in Prague in April 2001. That purported meeting was cited as evidence of a possible al-Qaida connection to Iraq. The 9/11 commission later said such a meeting never happened. Schwarzenberg, 75, is chairman of the conservative TOP 09 party, a member of the center-right ruling coalition. He is a member of a European noble family, and lived in exile on his family’s estates in Austria and Germany during communist rule. After the Velvet Revolution, he became chancellor to Vaclav Havel. He served as foreign minister from 2007-09 and again took the post after the 2010 general elections. Zeman and Schwarzenberg were already looking ahead to the upcoming runoff, trading political barbs Saturday. Schwarzenberg said Zeman belongs to the past, and the ex-premier replied by saying Schwarzenberg should be held responsible for the austerity cuts pushed through by the current government that his opponent is a member.

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.

WSJ - about the election day ...

WSJ - We begin with the three words everyone writing about the election must say: Nobody knows anything. Everyone’s guessing. I spent Sunday morning in Washington with journalists and political hands, one of whom said she feels it’s Obama, the rest of whom said they don’t know. I think it’s Romney. I think he’s stealing in “like a thief with good tools,” in Walker Percy’s old words. While everyone is looking at the polls and the storm, Romney’s slipping into the presidency. He’s quietly rising, and he’s been rising for a while.

Obama and the storm, it was like a wave that lifted him and then moved on, leaving him where he’d been. Parts of Jersey and New York are a cold Katrina. The exact dimensions of the disaster will become clearer when the election is over. One word: infrastructure. Officials knew the storm was coming and everyone knew it would be bad, but the people of the tristate area were not aware, until now, just how vulnerable to deep damage their physical system was. The people in charge of that system are the politicians. Mayor Bloomberg wanted to have the Marathon, to show New York’s spirit. In Staten Island last week they were bitterly calling it “the race through the ruins.” There is a disconnect.

But to the election. Who knows what to make of the weighting of the polls and the assumptions as to who will vote? Who knows the depth and breadth of each party’s turnout efforts? Among the wisest words spoken this cycle were by John Dickerson of CBS News and Slate, who said, in a conversation the night before the last presidential debate, that he thought maybe the American people were quietly cooking something up, something we don’t know about.

I think they are and I think it’s this: a Romney win.

Romney’s crowds are building—28,000 in Morrisville, Pa., last night; 30,000 in West Chester, Ohio, Friday It isn’t only a triumph of advance planning: People came, they got through security and waited for hours in the cold. His rallies look like rallies now, not enactments. In some new way he’s caught his stride. He looks happy and grateful. His closing speech has been positive, future-looking, sweetly patriotic. His closing ads are sharp—the one about what’s going on at the rallies is moving.

All the vibrations are right. A person who is helping him who is not a longtime Romneyite told me, yesterday: “I joined because I was anti Obama—I’m a patriot, I’ll join up But now I am pro-Romney.” Why? “I’ve spent time with him and I care about him and admire him. He’s a genuinely good man.” Looking at the crowds on TV, hearing them chant “Three more days” and “Two more days”—it feels like a lot of Republicans have gone from anti-Obama to pro-Romney.

Comments on EURO-JOBLESS rise: I believe that the politicians have let us down, are continuing to do so and will carry on doing it. Where I digress is that I believe they do not tell us the whole truth. And here i am thinking about Balls and Milliband junior who try to seduce us with easy solutions when there are none. This is a long haul and we have to cut Govt spending. to say otherwise is either cloud cuckoo land or lies.Although the unemployment figures are still dreadful I am assuming that the slight reduction in Portugal’s rates would have to do with seasonal work related to tourism which always influences partial figures for Q2 and Q3. Probably not really a trend, unfortunately.

And I wonder, as with Greece, if reality isn’t a bit worse in Portugal as I read a lot of reports of companies that don’t pay their employees. So, they are neither unemployed nor in meaningful employment. A bookshop chain where I regularly buy most of my literature apparently only pays their employees one wage every 3 months. Portuguese law only allows for a contract to be cancelled by an employee with a justifiable reason for non-payments if these are not paid for 3 months.  In this case this means that the employees cannot have access to the Portuguese equivalent of JSA or ESA but can’t also cancel their contract with justifiable reason, which would allow them to eventually claim those benefits. If they were to cancel their contracts at this stage they would actually need to pay probably pay some money back to the company as severance but would also lose all rights to claim for their missed wages for previous months....There is an alternative. A very good one. Watch. A bank charges interest to a firm which means it earns interest and can pay its staff. The staff then spend their money at the firm and get stuff the firm produces for them. The firm now has the income which it can use to pay the bank interest. Monetary result is zero (the bank interest charged paid for itself), but real goods and services were produced and transferred to bank staff. Money and goods are not the same thing. They operate in different circuits and respond in different ways. Why have a bank issuing money out of thin air?, that is still a Monetary based system. Why not have a Resource based system?. An economy based upon meeting peoples needs (and desires) while accepting there are finite resources in the world to be shared amongst the population. Any system based upon interest is fundamentally flawed and damages us and the environment in the long run.

Brussels- The EU agreement on banking union is "no triumph". The evidence sits hidden in plain sight in the difference between the summit text before and after yesterday's negotiations...

The summit deal on banking supervision was no triumph. It was another EU exercise in decision dodging and fudge as German procrastination won the day.

Angela Merkel wanted to postpone a new European Central Bank banking supervisor because that in turn delays decision on using the euro’s bail-out fund to recapitalise banks until after German elections.

To see the tricksy, evasive, responsibility-doging fudge – a tortuous linguistic exercise that went into the early hours of today – it is necessary to contrast before and after.

Here is the original draft that the leaders began discussing yesterday: “We need to move towards an integrated financial framework, open to the extent possible to all Member States wishing to participate. In this context, the European Council invites the legislators to proceed with work on the legislative proposals on the Single Supervisory Mechanism (SSM) as a matter of priority, with the objective of completing it by the end of the year:”

Here is the agreed summit text: "We need to move towards an integrated financial framework… In this context, the European Council invites the legislators to proceed with work on the legislative proposals on the Single Supervisory Mechanism (SSM) as a matter of priority, with the objective of agreeing on the legislative framework by 1 January 2013. Work on the operational implementation will take place in the course of 2013.”

This is no triumph. The EU has gone from a deadline to “complete” from one to “agree” with the schedule slipping from December 2012 to anytime next year. This will mean that Chancellor has deferred the issue of using the ESM to directly recapitalise banks until after elections in September 2013, significantly reversing a June summit decision.

At least the Greeks, the Spanish and the Portugese are starting to fight against the rape of their countries by the EU and the IMF.
Unlike the spineless Brits who just bend over and take it, from Cameron and his Atlantic Bridge coterie.
The fire-sale is under way, and the taxpayer will be paying for the largesse enjoyed by the shareholders and parasites of the multinationals.

It isn't going to be a two-speed Europe; it is going to be Greater Germany and the rest. And sooner or later, if Angie is still in office, she is going to be kowtowing to a (German) president of Europe. Only vassal states need apply. And they have. It's just that one or two are choking on the small print....Anthee Carassava is on the ground in Athens and she writes:

Thursday's protests are part of a 24-hour nationwide strike the country's two biggest labour unions have organised as European leaders meet in Brussels to decide the fate of the single currency. It is the second job walk out millions of Greeks have taken to in three weeks; the 20th since the financial crisis here erupted nearly three years ago.

“Just once,” said Yannis Panagopoulos, head of the GSEE private sector union, “the government should reject [international] lenders’ absurd demands. “Agreeing to catastrophic measures means driving society to despair and the consequences as well as the protests will be indefinite.”

From taxi drivers to doctors and diplomats, the strike is expected to paralyze an already suffocating economy. Ships remained docked, hospitals were operating on skeleton staff, and dozens of domestic and international flights face cancellations leaving travelers stranded as air traffic controllers joined the protest, keeping aircraft grounded and the country isolated from the rest of the world for three hours.

At least 4000 police have been deployed in the city centre alone. At least 12 buses of riot police and three water canons were propped outside parliament, shielding the building -- a favourite target of protests -- from militant demonstrators.

...fulcrum of Merkels German Dream - to rule Europe without a shot being fired

The reason that the Euro will NOT be put to the sword is that it is the (well they can't can they because they are not allowed guns anymore). Merkel is a typical Prussian - NEVER WRONG - and that will soon lead to the impoverishment of most of the less powerful in Europe, which in turn will lead to massive civil unrest. And who will "take charge", or "come to the rescue"?...Why the very person who caused it - Angela Merkel.

Ring any bells Greek people?".... Meanwhile, The Greek coalition seeks two extra years to NOT meet bailout deficit targets!""The general target is for there to be no further reductions in wages or pensions and no more taxes"  A good target for a country with budget in red for years and still in red and it seems has no intention getting out of red and asking basically EU taxpayers to cover its unbalanced budget for next two years or more probably forever . "They ask extra two years' grace to meet the tough deficit targets laid down in the bailout deal, and was hoping to reverse cuts in the minimum wage and cancel planned civil service layoffs."....So,minimum wages upwards, regardless of the fact that even now with all the "cuts" their minimum wage is higher than in Spain. Promised excess state administration lay-offs to be cancelled,actually they have not even started with the cuts, and is still only a promise to IMF, EU of 150,000 out of 1 milion public sector workers. ... And, aaa, taxes, not to be forgotten, Please, no more taxes!!!....Is it only me, or it just doesnt really makes sense? I mean how do they plan to run their country like this? Who do they think should foot the difference between their overspending and taxes they (dont) collect??? To whom they think they can go and make this "case" with straight face??? To EU taxpayers??? I somehow dont think their "argument" will work.

Well, it seems almost every analyst accepts that Greece right now is truly "on the edge" and that anything could happen, as it has before. Many people in Greece appear to be concerned about SYRIZA because it isn't actually one democratic political party but rather a coalition of SYN, AKOA, DEA, KEDA, "Active Citizens", and a number of other assorted independent left-wing groups and activists. Most of these groups have had no political experience and a history of squabbling amongst each other and voters in Greece are concerned that if SYRIZA is given power it will then enter into extremely treacherous and difficult times as the leading force in the government and it may not have the strength and unity required to simply stay together. In other words, if any party is likely to fall apart under the pressure and stress it's SYRIZA. For all the bold things that Tsipras did and said last week, he also demonstrated some political naivety. I also note that quite a lot of ordinary people in Greece are now saying that it's time to stop punishing ND & PASOK, that they've been given a good shock, but that it's now time to put together a government that actually has some experience of successful business and government. Personally, I would like to think that SYRIZA will win the election and will successfully guide Greece through the turbulence, saying "No!" to all of the transnationals that have previously been allowed to plunder the country and addict the Greek people to excessive consumerism. But like most Greeks all I can have is hope. I see that the other parties are now fighting very hard to win on June 17. Samaras made me snort yesterday when he declared, trying to take the ground from under SYRIZA, rather like an angry schoolboy, that he was the first person to object to the memorandum. And Venizelos has been doing a lot of angry shouting of late. The other possibility of course is that if Greeks in Greece keep draining the banks of cash as they have been, then the banks may run dry well before June 17. It's May 18 today and a month is a long time in Greece these days. If the money does run out at the banks, some people will survive on the money they have stashed under the mattress, but a lot of others simply won't have any money at all and that could spell trouble on the streets. And the tanks COULD roll in. It's an extraordinary situation. 80% of Greeks want to stay in the Eurozone but between 30 and 40% currently support the party that has said it could quite easily tell Brussels that the bailout agreements are "null and void"....I think the most dangerous outcome of all this is in fact Greece NOT leaving. Although departure will be hard for Greece, the massive over-valuation of the economy does in one way or another have to happen. If Greece is bankrolled to stay in, the danger is that countries like Spain and Italy will then believe that they too can be bailed out. The problem is that the EU (i.e. Germany) can afford to bail out Greece but it cannot afford to do this for either Spain or Italy. Also, the price of Greek exit is manageable, perhaps more so than the price of a full bailout.  If Greece is forced out and restructures, this should hopefully focus minds in Madrid and Rome. They will realise that they MUST take serious and painful steps to correct their own failures and mispricing.... It of course comes down to Germany, and really Angela Merkel's electoral calculation. Germany can save the Euro, but only by cutting Greece loose. If it insists on bailing Greece out, the Euro is doomed to failure and with it, probably, the EU as we know it.

Why do we even write about the EU and its politicians any more?---The truth has been laid bare so many times already. The political class in Europe are not worthy of electoral support, and have decided they don't need a popular mandate to rule. The Eu politicos are interested only in themselves and will destroy nations to maintain their troughing habits. The Euro was a financial concept designed by EU politicians to control their own national governments. It has worked so well, there are now ungovernable nation states in Europe just waiting for Brussels to step into the political vacuum so created. This was always going to be the outcome, the fear recently injected into the "Project" is that it will destroy not only European nations who have already lost their sovereignty but the knock on effect will be so severe around the world that even non Euro nations are getting involved in the debate. The Bilderbergers and New World Order prime movers, didn't predict the latest financial rupture in their megalomaniacal plans. Why don't these "world leader" just read and learn from history?...Did the world leaders really expect to carry forever their Ponzi scheme of paying the debt with more debt, and borrowing more every time, using the borrowed money to pay interest? Why is everyone surprised that this scheme is finally collapsing? When will the politicians and the economists understand that development of a nation is not measured by how many shirts they can change a day, or how many hairdressers are there, or how many holidays people have, but by the nation's capacity for innovation and technological progress? Germans understand this perfectly; engineers are regarded as Gods there. The PIGS (I for Italy, not Ireland) don't, nor does the GB - there civil servants have the God-like salaries and pensions, for not very much and not very professional work that many of them are doing (I shall avoid sweeping generalizations here, as no doubt there are professional hard-working civil servants somewhere, but they are hard to see for some reason)....It looks like politicians and financiers are still looking for quick fixes to prolong the Ponzi scheme for a little longer. If only ECB could lend more. If only Germans shared their wealth. The markets could indeed be persuaded - again - that all is well - but no Ponzi is sustainable in the long term. Merkel is insisting on structural reforms - why no-one has ever argued this point, asking her what structural reforms Germany would be willing to finance? Maybe offer engineering expertise? Pure annonymous GDP figures is all that commentators are fixated on these days.
I do not understand how smart people expect to boil down complex socio-economic issues down to a single financial aspect... I seem to remember that "They" called Mario Monti a 'gentleman' and I begged to differ. His position and that of his ministers is that of puppets in the hands of the real powers in Italy: the delinquent misterial burocracy. 100 billion euros are owed in terms of unpaid invoices (70%) and tax reimbursements (30%) to small and medium sized companies, by the Italian government. Giving rise to countless banruptcies and suicides primarily caused by tax demands in some cases illegal. Yet, italians are painted as inveterate tax evaders, where tax evasion is in fact justified in terms of shear survival, your family's welfare comes before anything and anyone else, the reality is that the italian treasury collects exactly the same amount of money as the german treasury. For every 100 euros of net wages 120 euros are paid in taxes and contributions. In order to qualify for Euro entry Mr Ciampi fiddled the sale of italy's gold reserves which in fact were never sold to balance Italy's books, with the full knowledge of the German embassy in Rome and Mr Kohl. The italian end of this fraud were Mr Ciampi, Mr Romano Prodi, Mr Giuliano Amato who actually raided millions of bank accounts to collect 60 billion old liras (30 billion euros) once again to fiddle the balance sheet for euro entry. Italy's Financial and Political establishment which of course includes the likes of Mr Mario Draghi, Mr Tremonti and Mario Monti are well versed cynical experts of managing Italy's debt and euro entry was always comceived as a permanent expedient to off load the debt to the Germans.Seems that the expedient won't be that permanent, indeed it will turn out to be very temporary. These people I have mentioned should be standing in a dock with their Greek and German counterparts, yet the italians at least enjoy incomes of thousands of euros per month paid with the toil and I am sad to say the blood of good honest and brilliant italian working citizens.

A short story ...

At the end of 2007 beginning of 2008, $1.9 trillion was wiped off the value of securitized MBS and ABS products as credit rating agencies started to downgrade many thousands of trenches. S&P for example downgraded 16,381 trenches by July 2008 which they had originally given a AAA rating. At least that is my understanding. If I am in error, perhaps you can tell me where for there is nothing in your short response to indicate a lack of understanding on my part. Unfortunately, there is nothing in your response to demonstrate a more thorough understanding on your part either which is a very good example of what Bally was talking about. But it may be that you are not referring to the process but to the detail of how each tranche was given a rating, ie. the mathematics behind each securitized product. Is this what you hoped to challenge? How that works? If you don't know but wish to know, see this paper for a good overview:
Credit Securitization and Credit Derivatives: Financial Instruments and the Credit Risk Management of Middle Market Commercial Loan Portfolios
It specifically addresses the sub portfolio middle market and notes; "In recent years, the development of markets for credit securitization and credit derivatives has provided new credit risk management tools. However, in the addressed market segment adverse selection and moral hazard problems are quite severe." The important thing is the date, 1998. The risks are flagged ten years before the crash. They were known about before the crash as Belinda Ghetti's email to Nicole Billick (internal S&P) demonstrates: "Let's hope we are all wealthy and retired by the time this house of cards falters." If you have some additional knowledge of interest, please share it with us.

Post for march 20th.2012

The final results of today's Greek credit default swap auction are in! Greece's old bonds have been valued at 21.5% of their face value, following its debt restructuring. That means that CDS contracts should pay out 78.5 cents in the euro. The total net value of CDS contracts on Greek debt comes to around $3.2bn, which means (I think) that the banks who issued that debt must pay out around $2.5bn to those who took out the insurance. Credit default swaps are meant to protect against losses on bonds -- so today's auction has effectively found that Greek bond with a face value of €1m would only be worth €215,000. So, if the investor had also taken out €1m of Greek debt insurance through a CDS, s/he should receive €785,000 to cover the loss on the bond.
Or as Markit (which conducted the auction) explained: Market participants who bought protection against a Hellenic Republic default will receive the face value of their bonds in exchange for a payment of 21.5% of face value to protection sellers. UPDATE: Reuters has also calculated that the auction means CDS contracts will pay out around $2.5bn. In conclusion : Greece's creditors are due to receive $2.5bn in insurance payments, following the country's debt restructuring. A credit default swap auction that Greek bonds are worth 21.5% of their face value.

Spain - Spanish prime minister José Luis Rodríguez Zapatero made a direct appeal for intervention by the European Union and the European Central Bank (ECB) on Thursday as the country's borrowing costs soared to levels widely considered to be unsustainable. Referring to the sovereign powers ceded to those European institutions since Spain joined the euro club, Zapatero said: "That is why power has been transferred to them." His request appeared to have been answered by late in the day as pressure on Spanish bond yields relaxed amid reports that the ECB was buying Spanish debt. In the meantime, pressure was piling up on Mariano Rajoy, the People's party (PP) leader expected to take over as prime minister after Sunday's general election, to reveal his plans for saving the country from a bailout that might bring eviction from the eurozone. Rajoy remained tight-lipped, however, as Spain's treasury was forced to borrow money at a rate of almost 7% on Thursday for the first time since 1997, declining to give further details of what is expected to be a major reform and austerity programme. "I do not have a magic wand to fix these problems, nor can we expect that they will all be solved in one day," El País quoted the conservative leader as saying at a campaign rally.

Responding to the riots that followed last week's proposal as well as dissent from within his own Socialist party, Prime Minister George Papandreou said: "The command of the Greek people will bind us. Do they want to adopt the new deal, or reject it? If the Greek people do not want it, it will not be adopted." Staging a referendum threatens to throw the euro zone further into crisis as the majority of Greeks object to the bail-out, according to a survey published last week. If Greece were to reject the plan, which requires deep spending cuts, it would risk a full-scale default and possible ejection from the euro. The country could even run out of money to pay civil servants or state pensions if the troika decided to pull the plug. European leaders and the IMF have struck a deal that would see banks take a 50pc write down on Greek loans, cutting the country's debt by up to €100bn, alongside a €130bn international rescue effort on top of the existing €110bn package. No dates have been set for the referendum, which would include a confidence vote in the government. Yields on 10-year bonds jumped to 6.18pc on Monday, while spreads over German Bonds reached 410 basis points, nearing the critical level where LCH Clearnet raises margin requirements. This, in turn, triggers further selling. However, The Greek Constitution permits referenda EXCEPT for questions involving potential revenue measures including taxation. On that basis any referendum in Greece on the aid package and accompanying revenue measures is unconstitutional.

Mario Draghi has little latitude for monetary stimulus. Germany has imposed a de facto veto on large-scale purchases of Italian and Spanish bonds, viewed by orthodox monetarists as a slippery slope towards debt monetization. Intesa Sanpaolo Giovanni Bazoli said the spreads are un stainable "not just in the medium run, but in the short run as well". He warned of a credit crunch in Italy as banks struggle to meet higher capital ratios set by EU leaders. The renewed jitters came as the OECD club of rich states slashed its euro zone growth forecast for next year from 2pc to just 0.3pc, implying an outright recession over the winter. The body called on the ECB to cut interest rates and deploy its full lending power to head off debt contagion to Italy and Spain. The OECD said the world risks a fresh crisis of equal magnitude to the Great Recession if authorities fail to act in time, with GDP contractions of up to 5pc in some big economies by early 2013. The ECB's new president The Bundestag voted last week to upgrade the EU's bail-out fund (EFSF) to around €1.2 trillion but only on condition that the ECB steps back from its support role. This pits Germany against much of the world. The US Treasury, the International Monetary Fund, and most leading economists fear the fund will fail without a central bank prop.

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.”