A group of top European banks is disclosing that they didn't borrow money under the European Central Bank's bank-lending program, fearful of being perceived as bailout recipients. The ECB in late December doled out a total of €489 billion ($643 billion) in three-year loans at a 1% interest rate to 523 banks. The primary goal was to avert problems at banks that faced waves of maturing debt but didn't have access to borrow money via traditional funding markets. The broad participation in the program, known as the Long-Term Refinancing Operation, fueled a sense of euphoria among many bank executives.

The ECB, Brussels and Germany are corrupt and self interested and don't give a damn about Greece or the amount of austerity they pour over Greek heads. They just want their money back - and with interest. He also points out that the banks in general are incompetent - leaving themselves open to gargantuan losses and not a sign of an insurance policy, relying on depositors' money to cover any losses. The greedy west has stuffed itself, but at least the top boys have paid themselves so much they are now independently wealthy and can just walk away and let others pick up the pieces. The ECB is relunctant to forego of profits from the Greek bonds they purchased but prefer to throw Greece into turmoil and its people into dire poverty as the economy disintegrates in a fifth year of deep recession? ....What an odd position for a Central Bank to take! Even if an involuntary restructuring is averted at this point, a messy default may still take place in Greece a year or two down the road as the debt is still not manageable. Who can guarantee that the overall economy will be strong enough to contain it then? Postponing the crisis may end up costing dearly in the long run.

A DIFFERENT NOTE : --- Romania's prime minister quit on Monday after a series of at-times violent nationwide protests against budget cuts and declining living standards, as deepening political turmoil fueled by Europe's prolonged economic crisis spreads across the Continent. Thousand of Romanians have taken to the wintry streets of Bucharest and other cities in recent weeks to vent their anger at the center-right administration of Emil Boc, who has implemented tough austerity measures in an effort to shore up state finances. "In times of crisis, the government is not in a popularity contest, but is saving the country," Mr. Boc said on Monday. But he said he and his cabinet would step down to "defuse political and social tension" and urged Parliament to quickly choose a new government. The collapse of confidence in Mr. Boc and his team reflects waning popular support for belt-tightening after years of higher taxes and reductions in public-sector salaries and pensions that have so far not been accompanied by a return to robust economic growth.

2012 - Expect Barroso and Rumpy Pumpy to demand more Europe, not less! Until Barroso has "total" control, he will not be satisfied. Coming from a Maoist, this is not surprising. All those, delusional who think he has moved to the center, better think again! A leopard does not change its spots!
- Expect the ECB to shell out more 100s of billions as the European Banks are hit with more funding crisis.
- Expect the ECB and the European financial fighting fund to be downgraded as we progress through the year!
- Expect most of the European Banks, including Germanys to be downgraded further as the crisis intensifies.
- Expect Germany to consider leaving the EU and the Euro as the situation spirals out of control!
- Expect Cameron to U turn on allowing a British Referendum on leaving the EU completely!...And the biggest EU news of all: "Following the collapse of the Euro, Europe's single currency, David Cameron will be forced to hold a referendum on Britain's continued membership of the EU. It is expected that the British will vote overwhelming to leave." ....Sarkozy will lose his election....Merkel will increasingly, smooze Cameron....Talk of - "a remarkable Cameron euro rise".....The new treaty will quietly die.....EU banks will have no spare money. No loans to sick member countries. Arrangements in place for Greece to leave euro - Ireland, Portugal tipped to follow soon after.
Wellllll, enogh "good" news for now ...

Germany - completely schizophrenic: - 78% still mourn the DMark ; 80% are against Club Med bail outs ; 66% want to keep the euro ?!?!?!

Lenders are already attempting to reduce their balance sheets by selling trillions of euros of assets, as well as so-called "liability management" exercises to cut the size of their debt piles. BNP Paribas, Lloyds Banking Group and Santander have all attempted with varying degrees of success to buy back or replace junior debt in an attempt to strengthen their core capital rations. However, Societe General analysts noted that these programs would not be enough to close the capital shortfalls worrying investors. The European banking system is a 31 trill.$ monster.The US printed some 16 trill from the beginning of the crisis to save the much smaller Wall Street . I assume that for saving the EU banking system and that includes the UK,the ECB and the BOE would have to 'create' money in a amount similar to 50% of world GDP.The moment France goes, 380 bill. black hole opens in Frankfurt and when Germany goes down,the city crashes as Britain holds some 400 bill in German debt. The world faces a cascading default in the largest economic unit on the globe. Frankly there is nothing that Paris,Berlin,London or Brussels can do about it, except for a complete reset of the system next year. Germany is however ahead of the curve since it endured 3 currency reforms in the past century and they realize when things are headed in that direction. So do it like us and go on a shopping therapy just before the crash,while you can still get something for the cash. I guess German angst was changed for escapism. The nation is completely schizophrenic: - 78% still mourn the DMark ; 80% are against Club Med bail outs ; 66% want to keep the euro ?!?!?! In the meantime, funding market conditions for euro zone banks continued to deteriorate last week despite the introduction by the European Central Bank of two long-term refinancing operations (LTRO) providing three-year funding. Euro zone banks shortage of collateral to borrow against, led the central bank to widen the pool of assets that "It" will accept, however analysts warned the move could be a "fast-track to destruction ". Excess bank usage of the three-year LTRO runs the risk of creating more banks who are dependent on ECB funds – ie. the classic model of "zombie" banks, said an analysts at Barclays Capital. A "zombie" bank is defined as one which relies on central bank funding to survive.

Over the last few weeks we have had a series of anonymous "EU officials" making statements to the press that have gone on the wires about 1 hour before the New York markets close. On each occasion the effect has been to ramp the markets as brainless headline-scanning algorithms and brainless headline-scanning traders rush out to buy, buy buy. And on each occasion it has subsequently become clear that these "EU officials" were talking garbage. You financial journalist chaps need to ask yourselves one question before printing this sort of un attributed rumor: Why exactly are you being given a story that if published at 7.30pm EST will cause the New York markets to go from -100 on the day to +200 in a matter of minutes? What is the agenda? Whoever is doing this will know that you can't keep ramping the markets on late-afternoon rumours. Giving the markets its daily rush will require evolving techniques of spin and innuendo. Any market that moves so sharply on an un attributed comment is clearly hopelessly, disastrously dysfunctional.

EFSF could be leveraged to any level I suppose 2trn, 3 - 100trn etc. It would be more debt, probably owed by - us and our children. It would be surprising if France and Germany agreed a deal, though. But they will have to appear to make up something. They want to see what happens in Greece first. They play it by ear and stall for time. There is no real plan apart from that. Leaking stories of decisive action is a part of the plan, but if you think about it the kind of things they can do are not going to work in the end anyway, and they must know it. It has become farcical. If you read the Greek press it gives a more realistic picture, by necessity. " The European Commission has raided several banks, on suspicion that they may have been operating a cartel in relation to complex derivatives". Well its a start if they need any further information on who to target next I'm sure Max Keiser would be more than happy to help them out. At least there's one person we can turn to for getting the true facts about what is happening. And if you're interested in speaking out about something closer to home which is just as important in its own way, make a comment.

ATHENS—Greece was paralyzed by a massive two-day strike Wednesday as groups ranging from civil servants to pharmacists and bakers walked off the job ahead of a key parliamentary vote Thursday on new austerity measures. Across the country, public services were frozen, with central and local government offices closed, schools and courts shut, and hospitals operating at bare minimum staff levels. A couple walks by pilling garbage during the second week of a strike by municipality workers and garbage collectors in Athens on Wednesday. Transport services were disrupted as ferry operations were suspended by a dockworkers' strike, while national rail services ground to a halt, and Greece's two major airlines—Olympic Air and Aegean Airlines canceled dozens of flights owing to a 12-hour walkout by air traffic controllers. Tens of thousands of Greek retailers and small businesses joined in, shutting their shops in protest over recent tax hikes and government cuts that have pushed the country deep into recession and led to a dramatic rise in the number of businesses declaring bankruptcies. The 48-hour strike, called by private-sector umbrella union GSEE and its public-sector counterpart ADEDY, is the second time this year that the two unions have called a two-day walkout over government austerity measures. It follows weeks of almost daily strikes, demonstrations and sit-ins, as well as a two-week-long protest by municipal workers that has left uncollected garbage piling up on the streets of Athens and other cities. "We have reached the limits of our endurance and, what is worse, is that there is no ray of hope," said Stathis Anestis, spokesman for GSEE. "We want to send a message that these austerity policies have been a catastrophe for Greece." Under pressure from its international creditors, Greece's government this month submitted legislation that would further cut public-sector jobs and wages, slash pensions for high-income earners, curtail collective-bargaining rights for workers and enact a new levies on taxpayers, among other things. On Thursday, Parliament will vote on the bill just days before a Sunday summit of European leaders that is expected to produce a comprehensive solution to the bloc's debt crisis, and which will also decide whether to release badly needed aid for Greece. At stake is an €8 billion ($11.0 billion) tranche of aid from the European Union and the International Monetary Fund that Greece needs in the next few weeks. The government has said that without the funding, it will run out of money by mid-November.

Germany said European Union leaders won’t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit. German Chancellor Angela Merkel has made it clear that “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,” Steffen Seibert, Merkel’s chief spokesman, said at a briefing in Berlin today. The search for an end to the crisis “surely extends well into next year.” Group of 20 finance ministers and central bankers concluded weekend talks in Paris endorsing parts of an emerging plan to avoid a Greek default, bolster banks and curb contagion. They set the Oct. 23 summit of European leaders in Brussels as the deadline for it to be delivered. On the summit agenda is how any recapitalization of Europe’s banks “might be carried out in a coordinated way” and how to make the European Financial Stability Facility, the EU’s rescue fund for indebted states, as effective as possible, Seibert said. The leaders will also discuss ways to tighten economic and financial policy, he said. The euro retreated from a one-month high against the dollar after Seibert’s comments, following last week’s biggest gain in more than two years on speculation that European policy makers are stepping up efforts to stop the crisis. German 10-year bonds rallied and the Stoxx Europe 600 Index pared an advance of as much as 1.5 percent and was up 0.3 percent at 12:47 p.m. in Frankfurt.

The European Banking Authority (EBA), was conspicuous by its silence

Nicolas Sarkozy, the French president, and Angela Merkel, the German chancellor, will meet in Berlin on Sunday to debate whether a government must empty its pockets to prop up its country's struggling banks, or if the euro region's shared rescue fund can be deployed outside a full-blown emergency. one notch to A+ from AA- and cut Spain's by two rungs, to AA- from AA+, citing a worsening of the eurozone's debt crisis. "A credible and comprehensive solution ... is politically and technically complex and will take time to put in place," it warned.
A string of European banks, including the UK's Royal Bank of Scotland and Lloyds TSB, saw their credit ratings downgraded on Friday, highlighting the pressure on politicians to agree coordinated action to recapitalise the sector.
Overnight deposits at the European Central Bank (ECB) made by eurozone banks reached their highest this year for the fifth consecutive day as banks become less willing to lend to each other, a warning signal of a credit crunch.
The European Commission is expected to offer an outline of a plan to member states before the deadline of October 17, when EU leaders meet for a Brussels summit.

London, 07 October 2011 -- Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of 1 institution. This concludes its review of systemic support assumptions from the UK government for these institutions initiated on 24 May 2011. The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for 7 smaller institutions and the reduction of systemic support by one to three notches for 5 larger, more systemically important financial institutions. According to Moody's, announcements made, as well as actions already taken by UK authorities have significantly reduced the predictability of support over the medium to long-term. Moody's believes that the government is likely to continue to provide some level of support to systemically important financial institutions, which continue to incorporate up to three notches of uplift. However, it is more likely now to allow smaller institutions to fail if they become financially troubled. The downgrades do not reflect a deterioration in the financial strength of the banking system or that of the government.The rating actions include a one-notch downgrade of Lloyds TSB Bank plc (to A1 from Aa3), Santander UK plc (to A1 from Aa3), Co-Operative Bank plc (to A3 from A2), a two-notch downgrade of RBS plc (to A2 from Aa3) and Nationwide Building Society (to A2 from Aa3); and downgrades of one to five notches of 7 smaller building societies. The ratings of Clydesdale Bank were confirmed at A2 (negative outlook).

As outlined in the May press release, we have reviewed the standalone ratings of all entities prior to concluding on the debt ratings. A separate announcement today covers the upgrade of the standalone rating of Co-Operative Bank to C- (mapping to Baa1 on the long-term debt scale) from D+ and earlier announcements cover the upgrades of the standalone ratings of Santander UK, Nationwide, Yorkshire, and Principality Building Societies. A detailed summary of the rating actions and the current levels of systemic support for UK financial institutions is available here http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_136526.
Separate announcements will follow on entities included in the May 24th review, but not concluded in this action: this includes certain subsidiaries of RBS and Lloyds, as well as Bank of Ireland (UK).

Stocks sank, while the euro touched a ten-year low versus the yen and a six-month low against the dollar, as concern grew about Greece’s debt crisis. European bank and sovereign credit risk reached all-time highs as 10-year Treasury yields slid to a record. Oil fell 2 percent. The MSCI All-Country World Index retreated 2.9 percent and the Standard & Poor’s 500 Index slipped 2.7 percent to 1,154.23 at the 4 p.m. close in New York, wiping out a weekly gain. The euro sank as much as 2.1 percent to 105.3 yen and fell 1.8 percent to $1.3627 before trimming losses. Ten-year Treasury yields slid as low as 1.89 percent. Credit-default swaps signaled a more than 90 percent probability Greece will default. Stocks extended losses as three German officials said Chancellor Angela Merkel’s government is preparing plans to shore up banks in the event that Greece defaults. The European Central Bank said Juergen Stark resigned from the executive board, suggesting policy makers are divided over how to fight the debt crisis. U.S. President Barack Obama called on Congress last night to pass a $447 billion plan to boost employment after jobs growth stalled last month. “There’s that nagging thought that we can continue to have a downward spiral in Europe,” James Dunigan, chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. The firm oversees $109 billion

The International Accounting Standards Board has said European banks may have inflated their balance sheets and profit and loss accounts by not taking full writedowns on distressed Greek debt ---In a highly unusual intervention, the IASB on Tuesday published a letter from chairman Hans Hoogervorst to the European Securities and Markets Authority saying that some banks were using models to mark down the value of Greek assets, where market valuations existed. When accounting for trading assets, banks are required under International Accounting Standard 39 to use arm's-length values taken from actual transaction prices to value the assets on their books. Where trading is very illiquid and market valuations cannot be obtained, they can then use valuation models using internal estimates of value. "There have been indications in the market that some European companies are applying the accounting requirements for fair value measurement and impairment losses in a way that seems to differ from the objective of [accounting standards]. This is evident particularly in their accounting for distressed sovereign debt, including Greek government bonds. Those indications have now been confirmed by recently published financial reports, which show inconsistent application across Europe. This is a matter of great concern to us," Hoogervorst said in the letter. The letter does not name the banks concerned, but the Financial Times said it related to the accounting of BNP Paribas and CNP Assurances. Both took 21% writedowns on Greek debt, much smaller than the hits suffered by other banks, including RBS, which took a 51% writedown. "It appears that some companies are not following IAS 39 when determining whether the Greek government bonds are impaired. They are using the assessed impact on the present value of future cash flows arising from the proposed restructure of those bonds, rather than using the amount reflected by current market prices as required," the IASB letter said.

Switzerland's central bank announced further measures to weaken the franc, but failed to take the anticipated step of pegging the franc to the euro to discourage safe-haven investors. The Swiss National Bank (SNB) said it would further boost liquidity by expanding "sight deposits" – overnight deposits by banks to help liquidity – to Sfr 200 bn (£152bn) from Sfr 120 bn and was prepared to take more action if necessary. The measures saw the euro strengthen initially, past Sfr1.15 for the first time this month. But once it became clear that the bank had stopped short of radical action, heavy buying of the franc resumed. Over the past 18 months the franc has risen 25pc against the euro, squeezing Switzerland's vital export market. Almost 50pc of Swiss products, from cheese to pharmaceuticals, are exported. Tourism has also been hit by the currency swing as the price of goods has soared. Clive Lennox, head of foreign exchange trading at Clear Currency, said: "The supposedly neutral Swiss are causing some amount of trouble. The SNB shied away from its threat to peg the Swiss franc to the euro, boosting the safe-haven currency. Investors initially wound down their speculative short franc positions as protection against eurozone sovereign debt and global growth concerns."

BERLIN—Barely 12 hours after a reluctant European Central Bank breathed new life into the euro project, German politics dashed hopes that Europe would soon receive a bigger bulwark against a spreading government-debt crisis. A spokesman for German Chancellor Angela Merkel, Christoph Steegmans, removed hopes of a more robust European Financial Stability Facility, saying the fund will stay as agreed at a July 21 European Union summit. "The EFSF will remain what it is, and keep the volume it had before July 21," Mr. Steegmans said at a regular government press conference. The ECB Sunday made a landmark decision to expand its bond-buying program to include Italian and Spanish government debt, a step aimed at stopping a market sell-off that threatened to send their borrowing costs to unsustainable peaks. The ECB hesitated last week to take such a step, which greatly expands its role as an underwriter of government finances. But it was deemed critical to buy time until an improved bailout fund, the EFSF, could be ratified and implemented before October. The changes to the EFSF mandate would allow the fund to buy government bonds in the secondary market. The European Commission has asked for a massive increase in the EFSF's current lending capacity of €440 billion ($628.23 billion) guaranteed by euro-zone governments. Market watchers said a new volume of up to €1.5 trillion or more might be needed to reassure investors that the fund can offset government solvency threats. The euro promptly lost much of the ground gained from the overnight ECB announcement as investors responded to German opposition to a massive build-up in the euro-zone's defenses against debt contagion.

Italian households and businesses are sitting of the biggest stockpiles of private cash in Europe. There are three reasons for this. The huge Italian black market means that many transactions go unrecorded. The arrival of the euro means that unrecorded transactions have spread into the rest of Europe and especially eastern Europe. The peculiar nature of Italy's economy. Not only does it have a massive agricultural sector and enormous tourist industry, but it also has a vast industrial base in the north made up substantially of small firms who intertrade. It is the intertrading, much of it unrecorded, between all these enterprises, industrial, agricultural and touristic, both at home and abroad, which generates stockpiles of private cash.
Add to that the high Italian savings ratio and you have the biggest deposits of private cash in Europe, all denomitaed in euros so it keeps its value. The Italian govt on the other, hand, takes all the nation's debt upon itself. Bereft of potential tax receipts, it issues more and more bonds to fund its activities. Now these bonds are being supported by Italy's eurozone partners in order to protect the euro.
Effectively Italy's public debt is being paid off by foreigners, while the Italians get to keep their mountains of private money.

Eurozone - Remedy won't be available soon - Faced with the prospect of the Eurozone crisis spreading to Spain, Italy and Cyprus, "Eurozone governments are accelerating efforts to bolster their €440bn rescue fund", reports the Financial Times. On July 21, "they agreed to equip the EFSF with the ability to repurchase the bonds of stricken governments on open markets, provide them with short-term lines of credit and cash to help recapitalise ailing banks." With Spanish and Italian risk premiums on the rise, "the ability to repurchase Spanish or Italian bonds at distressed prices would be one way to help stabilise the markets". "Yet European diplomats and officials acknowledged that it would be weeks – and possibly months – before the EFSF’s new powers could be put to use", notes the FT, reporting that officials of the Eurozone are accelerating their work to produce a draft document. The final text would then have to "be signed by the 17 Eurozone governments, and then undergo a ratification process that includes parliamentary approval in most of those countries."

Personally, I don’t trust the banks to even get their hair cut to the extent they’re promising. They remain the spivs and dissemblers they’ve always been – and bank accounting is the most surreal (as in open to every trick in the book) of any business with which I’ve ever worked. To count obviously bad debts as assets is, let’s face it, a truly Swiftian idea. So probably, S&P is right to be saying Greece won’t make it. I mean that in the sense that it will be proved right with little or no risk to its reputation. For a commonsense "southerner" like me, it’s glaringly obvious Greece will default: it won’t make the asset sales targets it needs, and it won’t make the growth targets either.The ratings agencies agree with The Slog – not a position I’m that happy with, because on the whole they’re just as mad as the lenders and borrowers they monitor. However, there is no point in shooting the messenger, and one or two players in this mess are in touch with reality: German Finance Minister Wolfgang Schäuble admitted yesterday, in a circular to his Christian Democratic Party colleagues, that ‘the euro-zone debt crisis isn’t over, and that more discipline is needed’. Er ist eine gute Eier, Herr Schäuble. The Treasury had to pay sharply higher rates to sell off €8bn in bonds including 4.80pc on bonds due in 2014 that had last sold for 3.68pc, and 5.77 percent on bonds due in 2021 compared with 4.94pc before. Italy's benchmark FTSE MIB index fell as much as 2pc, while the difference between the rate of return on Italian and German 10-year sovereign bonds - a key measure of the financial risks as perceived by investors - rose to near-record highs of around 330 basis points. The euro also fell by a cent against the dollar to $1.4269 and by 0.7cents against sterling to £0.8745. Investors are concerned that the Italian economy, suffering from high public debt, low growth and growing infighting in the government could follow Greece, Ireland and Portugal into a debt spiral that has thrown the eurozone into crisis. Tensions on the Italian bond market went down after a second bailout for Greece was agreed at a summit in Brussels last week but have returned on concerns over the details of the Greek rescue plan and US debt fears...I say..through away the phony currency - euro!!

The biggest Romanian-held private bank - profit.

Banca Transilvania (TLV stock exchange symbol), the biggest Romanian-held private bank, posted a 69.7 million-RON (16.3 million-euro) net profit in the first nine months of the year, 44% higher than in the similar period of last year.
In the first nine months of the year, the bank's operating revenues amounted to 1.104 billion RON, up 17% on the similar period of last year. At the end of September, the bank had a volume of loans of 13.173 billion RON, up 8% against the beginning of the year, with the biggest share (around 60%) being held by loans granted to companies.
Non-performing loans, more than 90 days overdue, account for 6.92% of the overall loan portfolio. The bank's solvency ratio is 12.33%.
"We were very careful about the provision policy and the risk management, as well as about cost control, our focus continues to be to meet 2010 targets, although another difficult period is coming," said the bank's CEO Robert Rekkers.
For this year, the bank has budgeted a 150 million-RON profit.