Free as long as ...accept, pay, agree...

EUROPE will speak german - "Free" as long as you: Pay 50 million a day membership fees ; Agree to sanctions if your GDP debt deficit is more than 3 % ; Accept that we shall oversee and approve your budgets from Brussels/ Frankfurt HQ ; Rob you of the right to vote ; Impose further Tobin taxes on your financial transactions ; Impose the will of a European Commision of 27 unelected Kommisars and its Communist President many of whom have been Communists or former Supreme Soviet activists upon you.The EU is an evil institution. It is systematically removing the power of people to have any say in what happens to them. It is turning people into slaves rather than free people. It removes the democratically elected leaders of nations which criticize it, and then it replaces them with their unelected puppets. And all to further the agenda of the financial and political elites who hide in the shadows behind it. SHUT IT DOWN NOW, AND TRY THE LOT OF THEM FOR THEIR CRIMES AGAINST THE PEOPLE. The powers behind the EU (read banking elites) are removing democratically elected leaders of nations and then replacing them with their unelected henchmen (more bankers). And all to further their power mad agenda. You sir, need to get treatment in order to remove your head from your anus. Maybe then, you would be able to remove the crap from your eyes, which would in turn allow you to see what is actually going on. Free trade zone my backside, everything is being controlled by those who have been wrongly given the power to issue our currencies. Standard & Poor's warned France, Germany and 13 other eurozone members before last week's summit they faced a possible downgrade amid worsening economic conditions. But economists said France, which has been under the shadow of a downgrade for months, could fall further and faster than others despite the agreement reached in Europe on rules for budget-tightening. France, the second-biggest economy in the eurozone, was the only AAA country singled out for a possible two-notch credit downgrade because of growth predictions seen as too optimistic, the threat of recession, budget cuts judged to be inadequate and the exposure of its banks to the sovereign debt crisis in Greece, Portugal, Italy and Spain. A Reuters survey of 13 economists found 11 thought France would be downgraded by one of the major ratings agencies within the next three months. That would cause serious difficulties for Nicolas Sarkozy's 2012 re-election battle because he has staked his campaign on his personal ability to lead France out of the economic crisis. A downgrade could push the government to hurriedly introduce a third austerity plan, after two rounds of limited budget cuts and tax rises in recent months. Unlike Britain, France has focused chiefly on tax rises rather than sweeping spending cuts. "If we lose the triple A, I'm dead," the president was recently reported saying in private. A poll this weekend found just over half of French people feared a credit rating downgrade would have a big impact on their daily lives. A one-notch cut would hit the country with extra interest payments of up to €3bn (£2.5bn) a year if the markets react by pushing up bond yields.

Red carpets, pageantry, tuxedos, and "Deutschland Uber Ales".

THE RUSSIAN BEAR - Widespread reports of fraud in last Sunday's national parliamentary election have galvanized an opposition long marginalized by repressive policies and by state-run news media that virtually ignored them. Protests, some attracting thousands, rolled on for three consecutive nights in Moscow and St. Petersburg after the election showed unexpectedly fierce anger against the government and Prime Minister Putin's ruling United Russia party. United Russia suffered losses of more than 20 percent of seats it previously held in the State Duma, and critics and local election observers say even that result was inflated by fraud. Smoldering resentment caught fire, largely through social media, and the country on Saturday expects to see a massive protest rally in Moscow and demonstrations in some 70 other cities."This will be a watershed step in the development our democracy. We expect it to become the biggest political protest in 20 years," Ilya Ponomarev of the Left Front opposition group said Friday.There may soon be a symbol to the protests: white ribbons. A group of activists sent up a web site urging people to wear them in support of Saturday's demonstrations. They're not yet visible on Moscow's streets but some opposition leaders and even TV presenters are wearing them in their lapels.....

But... we are more into red carpets, pageantry, tuxedos, and "Deutschland Uber Ales". All of this goes to prove that the Ribbentrop -Molotov treatie is being implemented with vengeance and that the Russian Bear will fish the European ponds and The German Boot will stamp allover our nations without remorse !!! Beware of the German criminal record !

Draft of new euro measures a 'confidence trick'

The EU summit in Brussels agreed to provide up to €200 billion more to the International Monetary Fund, which could use some of that money to support debt-laden countries. The 17 eurozone countries will provide €150 billion of that, with the remaining €50 billion due to come from EU members who do not use the single currency. Several non-euro nations including Denmark and Sweden have said they are prepared to provide loans from their central banks. EU officials said it remained possible that Romanian Central Bank could be asked to contribute to the €50 billion. Final decisions on the IMF package are due in 10 days. Leaders are hoping that economies outside Europe will contribute. Even The Central Bank of England may be asked to contribute. Christine Lagarde, the head of the IMF, welcomed the deal as the beginning of an answer to the eurozone crisis. “I appreciate this demonstration of leadership from Europe, and I am hopeful that others will also do their part,” she said.

If anyone thinks things are getting better then they simply don't understand how severe the problems are.

Everyone talks about the amount of CDS's that have been issued and how they could all be paid without a collapse of the entire banking system. I would expect that every financial institution that has issued CDS insurance has themselves hedged the risk with another institution that has itself hedged the risk they took and so and so on. The NET liabilities of each financial institution would therefore be far less than the CDS's they have issued. The way to do with this is by setting up of clearing house for CDS claims in the event of a default. Any thoughts on this idea, how it would work and how effective it would be? The European Central Bank admitted it had held meetings about providing emergency funding to the region's struggling banks, however City figures said a "collateral crunch" was looming. "If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank. Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding. "The system is creaking. There is a large amount of stress," said Anthony Peters, a strategist at Swissinvest, pointing to soaring inter bank lending rates. MY COMMENT IS : Since The ECB has already acted this week to help the bank liquidity crisis in Europe, bu it did not get the prominence in the media I felt it deserved but it provided 50.7 billion US dollars of 84 day liquidity, I'm publishing this on this blog of mine. Perhaps in these days of numerical inflation 50 billion isn’t what it was! This was from the central bank liquidity swaps I have been discussing for a couple of months and as the funds are in effect borrowed from the US Federal Reserve if the crisis was a western film this stage would see the arrival of the US Cavalry! Whether this will turn out to be Little Big Horn or a triumph remains to be seen."

Nicolas Sarkozy is warning that the risk of disintegration has never been greater.

What's on offer in Brussels is a fiscal union which represents different outcomes for different groups of countries. But both outcomes will be equally unpalatable for voters. In Germany, and its satellites, what's being discussed will mean vast transfers of wealth south, to support the insolvent banks and governments of the Club Med countries. For voters in these places, such as Greece, Portugal and Italy, what's on the agenda is the imposition of a new set of rules which are about to change their lives irrevocably. They will be forced to become like the north as they submit their national rights to tax and spend to outside supervision by the European Commission. Comply or be punished is the highly enticing prospect. Arriving in Brussels on Thursday, Jose Manuel Barroso, president of the European Council, said it was essential that national interests were set aside at the summit for the greater good of the single currency – a dig at David Cameron's threat to veto any EU-wide treaty rewrite that damages UK interests. But if Eurocrats such as Barroso think British national interests are proving an irritating diversion, he is fatally underestimating the power of national interests in countries from Spain to Slovakia which are about to be unleashed in the weeks and months to come as the detail of the new treaty starts to emerge. Until recently, contemplating the break-up of the single currency was thinking the unthinkable. Now those openly discussing it – just about everybody – are merely adopting a mainstream, orthodox view. Even Nicolas Sarkozy is warning that the risk of disintegration has never been greater.

Finland has objected to a Franco-German plan to make decisions on using the

Finland has objected to a Franco-German plan to make decisions on using the eurozone bail-out fund easier, saying it is an "alarming" move. Finnish finance minister Jutta Urpilainen on Wednesday (7 December) said she could not accept Paris and Berlin's push, outlined in a letter sent to Brussels on Wednesday evening, that decisions on the eurozone's rescue mechanisms should be made by majority vote rather than by unanimity. ”In the future, consensus would no longer be required. From the Finnish perspective, it is a very alarming arrangement, and one that Finland cannot accept," she said, according to YLE, Finland’s public broadcaster. The Finnish parliament on Thursday (8 December) will decide on the constitutionality of the proposal, hours before the start of summit negotiations in Brussels, expected to last until the early hours of Friday morning. The country's constitutional law committee heard constitutional law expert Kaarlo Tuori on Wednesday, who said that the proposal would infringe upon the rights of Finnish taxpayers. “Finland will give up its veto rights when it comes to [the still-to-be-implemented, permanent bail-out fund, the European Stability Mechanism] decisions,” Tuori said. “Without its own consent, Finland could be committed to decisions that concern using tax money paid by Finnish taxpayers.” The committee’s chair, Miapetra Kumpula-Natri, said the committee's decision will tie the hands of Prime Minister Jyrki Katainen when he negotiates at Friday’s crucial EU summit, YLE reports. The Franco-German plan, put forward on Monday, aims to avoid having the decision-making held up by just one country, as happened earlier this year when Slovakia's domestic politics delayed ratification of the current bail-out fund. Under the proposal, a super majority - corresponding to 85 percent of capital in the European Central Bank - would be enough to secure use of the fund's money. Critics, however, point out that this would still give a de facto veto to the big countries. Separately, the biggest opposition party in the Netherlands on Wednesday said that elections should be called if the Franco-German plans, which include suggestions for tighter economic governance, are put in place.

The Frankfurt Group, as it's known, is composed of the leaders of France and Germany, the heads of the ECB and IMF, as well as three top EU officials.

A select group of top EU officials have met behind closed doors. The Frankfurt Group, as it's known, is composed of the leaders of France and Germany, the heads of the ECB and IMF, as well as three top EU officials. They met secretly to forge a common line ahead of the main event. On her way in, IMF chief Christine Lagarde said her institution was ready to take part in the leaders' desperate struggle to save the euro but insisted on "decisive" and "coordinated" action. The over-riding concern of the German is that one's currency above all else be a store of value. One's national currency is not a device to ensure the profits of the banking industry or wealthy individuals who made poor bets in the credit markets. National currency is not some abstract Keynesian lever to be pulled by the economic dons to protect their best friends and future or past employers. The power brokers in the Anglo world are defending the absolute right of those who benefit from 40:1 leverage and then expect a bail-out by devaluing the national currency. This is not a position that finds sympathy with the typical German but apparently is a good fit for the City of London. Basing one's national wealth on financial services is the same as basing future economic wealth on haircuts or laundry service. Finance is a service, plain and simple, just like policing or the fire department. Money creation in any society is not a private right, it is societal function that reflects the growth in tangible value, not the private domain of a central banker for the sole benefit of his friends in the bond and equity markets. So if you want to ensure the right of every investment banker and financial engineer to provide the latest breast implant upgrade for his mistress, go right ahead. I for one hope Angela Merkel brings down economic hell on the Central Bankers in the Anglo world and their spineless politicians who make my hard won savings more worthless on a daily basis. Ellen Synon reports in the Irish Daily Mail: "I understand from a well-placed source that they won’t be allowed out again until they’ve agreed it, or something close to it. The plan has been already been worked out by Mr Van Rompuy under the direction of the Germans, also José Manuel Barroso, the president of the European Commission, and Jean-Claude Juncker, prime minister of Luxembourg and president of the Eurogroup. I say that just to point out that the only brush with democracy this plan has had is the electorate of Luxembourg (electorate approximately 400,000) when they voted to put Mr Juncker in as their prime minister." And that is the only brush with democracy the euro-elite intend that their plan shall have. Mr Van Rompuy and his mates are determined there will be fiscal integration in the eurozone, with member states forced to change their own constitutions to accept sanctions on debt and deficits, and to enforce balanced budgets, and submit their budgets to the new supranational power of EU. The euro-elite intend to give the European Court of Justice the power to enforce their agreement.

Joseph Daul at the EPP Congress in Marseilles speaking at the EPP Congress in Marseilles

Joseph Daul at the EPP Congress in Marseilles, speaking at the EPP Congress in Marseilles. "We will not allow ourselves to be hindered in our effort to rebuild the 'House of Europe' by those who refuse to move forward. But we cannot build a solid, safe house if those living in it don't feel comfortable" - Speaking at the EPP Congress in Marseilles on the eve of the European Council, the Chairman of the EPP Group (center-right) of the European Parliament called for Europe to choose "the right path". "The right path is that of governance of the Euro through freely-shared sovereignty on budgetary, tax and social aspects. The right path is that of a common effort from the 27 Member States, and an even bigger effort from the 17+ Euro zone countries, to better manage their public finances and to help entrepreneurs create new wealth and jobs." Joseph Daul said that the EPP has the heavy responsibility of getting Europe out of the crisis: "But the EPP has always proved in the past that it is up to meeting challenges, be it the creation of the European Community, European reunification, the Single Market or implementing moral standards for the financial markets." Finally, the Chairman of the biggest parliamentary Group in Europe called for "great caution on how we plan our exit from this crisis." "We will either succeed or divide, depending on whether our plans are inclusive - equally respecting small and bigger Member States - or dictated. Depending on whether we prioritize relative strength or whether we prioritize cohesion, we will either emerge from this crisis or we will stay mired in it." On any eventual change to the European Treaties, Joseph Daul said that if the Council is in favor, the European Parliament and the European Commission, guarantors of the general European interest, will actively play their role in the negotiations.

The talks between the leaders of Germany and France are hoped to tie together a financial rescue package of up to €2 trillion (£1.3 trillion), via the European Central Bank, the IMF and the European Financial Stability Facility (EFSF), ahead of a final summit of all European leaders on Friday. Monday's Paris "work lunch" between Mrs Merkel and Mr Sarkozy is intended to settle differences between the two core members of the single currency about how a fiscal union might work. Both leaders agree that ultimately some nations, including those with excessive debts such as Italy and Spain, will have to sacrifice some independence on setting national budgets in exchange for financial support from their wealthier counterparts. Italy's cabinet last night adopted a new €30bn austerity programme in order to ease the pressure on the embattled country. The "grand European bargain" envisaged by Mrs Merkel will involve a framework of automatic penalties and oversight through a new "stability commissioner" to keep countries in check. ...FINALLY : So, let's see if I've got this right. All the eurozone banks - who ran out of money...give money they haven't got...to the IMF, which has no money of its own... and the IMF passes on this (non) money...to countries in the EU that are more or less bankrupt. This stabilizes the euro.... how? and promotes strong eurozone growth... how? Meantime, Germany's control of the EU moves up a notch...with facile France in its dutiful wake.

IN THE WEEK AHEAD

IN THE WEEK AHEAD: Investors will have only a few U.S. economic reports to distract them from the events in Europe. Factory orders and an update from the service sector will be followed by monthly updates on consumer credit and sentiment. Investors will focus on the European summit in Brussels at the end of the week. Yes, we are still talking about Europe. Fiscal union and tighter controls will be the main topics, as the wealthier nations (read: Germany) try to extract a pound of flesh in exchange for a full-fledged bailout of weaker nations. Economists have been saying that to solve the European crisis, Germany would have to come down from its moral high horse and admit it has far too much to lose if the EU were to implode. Last week, Merkel's comments, along with the central bank action, were seen as positive developments towards that end. To wit, stocks were up 7 percent, the strongest weekly performance since 2009. German government bonds, which until recently had been a haven from turmoil in the rest of the euro zone, are losing their allure as the sovereign-debt crisis roils Europe. For most of the two years since Greece's budget woes set off a spiral of selling in the bond markets of some euro-zone countries, German bonds, known as bounds, have benefited from a flight to safety along with Treasury bonds and U.K. gilts. But that relationship started to crack a few weeks ago when Germany had its worst 10-year bond auction in history, which sparked one of the biggest sell offs in some time. Despite the brouhaha about the U.S. jobs report (more on that below), the stock market-moving news last week was all about Europe and the coordinated central bank action to attack one of the symptoms of the European contagion --liquidity for European banks. Sure, the action could be called a "band-aid," but it could also be seen as the necessary preparation for the major procedure that is required to treat the ailing patient.

The costs of insuring European Bank Debt against default fell Friday amid hopes that policymakers are nearing a solution to the debt crisis. In early trading Friday, the five-year CDS spreads on core European financial companies mostly fell, with senior and subordinated banking indexes both tightening, according to Markit. The CDS spreads on major lenders in Germany and France narrowed, with Deutsche Bank AG (DB) and Credit Agricole SA (ACA.FR) tightening the most. Deutsche Bank tightened 10 basis points to 229 basis points, while Credit Agricole tightened nine basis points to 265 basis points. Commerzbank AG (CBK.XE) saw its five-year CDS spread tighten four basis points to 306 basis points, with both BNP Paribas SA (BNP.FR) and Societe Generale SA (GLE.FR) also tightening four basis points. BNP Paribas was back on par with Credit Agricole at 265 basis points, while Societe Generale tightened to 331 basis points. Italian bank UniCredit SpA (UCG.MI) was the only major bank in the core euro-zone economies to see its CDS spread widen, advancing one basis point to 590 basis points. Spanish banks all pushed lower with Banco Popular Espanol SA (POP.MC) narrowing the most, tightening 21 basis points to 840 basis points. At around 0925 GMT, the iTraxx Europe Senior Financials index was six basis points tighter at 284/289 basis points, while the Subordinated Financials index tightened 12 basis points to 503/514 basis points, according to Markit. Credit default swaps are derivatives that function like a default insurance contract for debt. If a borrower defaults, sellers compensate buyers.

It could be worse than we can imagine. So there's no room for complacency.

Europe's hopes of "ring fencing" the embattled single currency through a €1 trillion-plus leveraged bailout fund are sinking due to spiraling bond yields, investor flight from euro zone debt, and failure to entice cash-rich governments in the far east to commit to the plan. Klaus Regling, the head of the European Financial Stability Facility (EFSF), is expected to tell euro zone finance ministers meeting in Brussels on Tuesday evening that the scheme to quintuple the firepower of the fund by underwriting initial losses on euro zone bond-buying by China and sovereign wealth funds in the far and Middle East has failed to attract enough interest. The blow to euro zone efforts to save the currency came amid increasingly apocalyptic predictions of a euro collapse........ The Organisation for Economic Co-operation and Development in Paris forecast a "deep depression" across Europe and a tidal wave of bankruptcies if any of the 17 countries was forced to quit the euro. The Polish foreign minister, Radoslaw Sikorski, urged Germany to save the EU from "a crisis of apocalyptic proportions". Stock markets rebound sharply after days of heavy losses as investors ignore IMF denial of aid for Italy and an OECD warning of euro zone recession and risk that US could follow suit...for investors read central banks....The stock market is rigged. Same with the bonds, it is only a matter of time when we get a eurobond. Currencies are rigged by the G 20 who are running an un-official world exchange rate mechanism. Why do journalists keep talking as though there is a free market ?... We will see the FTSE now heading for 6500 and the Dow to 12500, then we will head down back to 5000 and 11000. The dealers in the stock market and bond market brokers are making an absolute fortune, you can read the central banks like an open book.....Meanwhile - Christine Lagarde, the head of the International Monetary Fund, throws her weight behind the unnamed denials - she says neither Italy nor Spain has made a funding request to the IMF. She was speaking from Lima, Peru today as part of a tour of South America. The story that the IMF was drawing up a £517m rescue package for Italy and Spain, sparked by Italian newspaper reports over the weekend, was denied by an unnamed IMF spokesman earlier today. However Ms Lagarde's denial that there has been a request for funding still leaves open the possibility that the fund is thrashing out possible ways to help the eurozone without waiting to be asked... Sir Mervyn King - he's been asked again to defend the rate of inflation being so far above the bank's target of 2 %. The overshoot in inflation is not because we've had a very buoyant economy growing fast - it's not that we overestimated the amount of capacity around. It's not domestically generated inlfation, it's caused by external factors. The nature of the crisis, changes to the banking system - this has made life extremely hard. What we failed to understand was how long it would take for conditions in the banking markets to get back to normal. We thought that by now funding conditions would be better but in fact they are worse. That's one of the things that has made assessing the economy very difficult. Sir Mervyn King has been speaking to the Treasury Select Committee about the latest Inflation Report. He warned the dangers from Europe are so unpredictable that no accurate predictions can really be made.

Euro zone member states are discussing dropping private sector involvement from the permanent bailout mechanism that is due to come into force in 2013, four EU officials said on Friday. The discussions are taking place as part of wider negotiations over changing the EU treaty to introduce stricter fiscal rules as Germany wants. Germany insisted that private sector investors -- banks and insurance companies -- bear a portion of the losses in the bailout of Greece. Euro zone states originally agreed to include clauses in the permanent bailout fund, the European Stability Mechanism (ESM), that would enforce private sector involvement. But the majority of the euro zone's 17 countries now want those clauses removed from the ESM and there is movement toward that happening, the sources said. "France, Italy, Spain and all the peripherals" are in favor of removing the clauses, one EU official told Reuters. "Against it are Germany, Finland and the Netherlands." Others said that while German insistence on retaining the clauses was fading, they would only be removed as part of a broader negotiation over changes to the EU treaty. Berlin wants full backing for changes to the treaty before it moves on other areas where member states want it to soften its stance, the officials said.

Sky News's business news editor Lucie McInerney tweets that her office has developed a new nickname for the Merkel, Sarkozy, Monti trio: And so we have a new European nickname after the Monti, Sarkozy, Merkel presser in Strasbourg today: #Monkozel is born! ... Merkel stressed that her position on "stability bonds" hasn't been altered by the meeting. She's not a fan. What she wants to see are EU treaty changes and punishments for countries that step out of line: The countries who don't keep to the stability pact have to be punished - those who contravene it need to be penalized. we need to make sure this doesn't happen again.... Sarkozy reminds the conference that Fitch currently rates France's AAA rating as "stable", before having a dig at Merkel by suggesting this information must not have made it across the Rhine. Nevertheless, he admits that things are far from rosy. Of course we're going into a crisis, it's a crisis of sovereign debts. If it gets worse it will pose a problem for all of us, not just France. That's why we're working towards a solution. The current situation is not satisfactory: we're working on that. I understand that our German friends have not understood what the rating agency Fitch has said. What they said was the triple A rating of France is stable - maybe that translation has not crossed the Rhine river. We've got a choice between being obstinate, regressing because we're not listening to others. Germany has a history, traditions and culture amd France has different ones - we're trying to come to the same point of view to try and recover the trust Europe needs . ... Angela Merkel about the EU treaty changes she's seeking: The ECB is independent, the modification of the treaty does not conern the ECB, which is dealing with monetary policy and financial stability. We are worried about a fiscal policy. It's a very different chapter. It has nothing to do with the European bank. Sarkozy says that France, Germany and Italy will do all they can to ensure stability in the eurozone. Sarkozy says that he and Merkel will meet again with Mario Monti soon, in Rome, and claimed that during today's meeting all three of them underlined their faith in the ECB.

Germany - Europe's saviour – or biggest problem?

It could all be over by the New Year... Germany's finance minister Wolfgang Schaeuble says next month's EU summit will calm jittery markets and offer a rapid solution to the eurozone crisis. In particular he believes that changes to European treaties to institutionalize budgetary discipline will be forthcoming. It's going to be quicker than 12 months. I think decisions will be made on December 9. There's no alternative. We must change the structures. It's not the arrogance of the Germans, that's just the way it is. The rift between France and Germany over the issue of the ECB's role in solving the debt crisis is widening. Although Angela Merkel disagrees, French Prime Minister Francois Fillon said today that it should start buying up more eurozone bonds: We still face a major difficulty, which is to convince Germany that we must give the eurozone a defense tool for our currency through a certain evolution of the central bank's role. Staying in France, the head of the agency that manages government debt, Philippe Mills, acknowledged that the country isn't in the best position compared with other eurozone countries that it shares a AAA rating with: I recognize that based on the criteria of public finances that France isn't in the best position compared to the other AAA countries in the eurozone, even if the responsiveness of the government has been welcomed by the (ratings) agencies and investors....AND... MY SUBJECTIVE OPINION ON "UBER ALLES" NOW : Post-war German politics has always been founded on consensus so hardly surprising you get successive generations of German politicians who are exceptional only in their dullness and mediocrity: Kohl, the last 'great' chancellor was as dull as ditchwater; Schröder was laughed off as a 'used car salesman'. Only Willy Brandt - a bit of a showboater - and Helmut Schmidt rose above the rest in terms of vision and intellect, but they didn't last long. Germans like their politicians dull and boring, unadventurous and unambitious. The current crop of German politicians is even more miserable: Westerwelle, Rösler, Steinmeier, Ude, who of them could do a better job than Merkel? The one guy who might have made broken the pattern - Guttenberg - has disappeared off to the US after the plagiarism scandal. For a Europe crying out for leadership Germany is indeed a problem.

The eurozone faces calamity unless Germany gives up it's expantionist behavior...

Ferdinand Foch allied commander said after the Treaty of Versailles : "This is not a peace. It is an armistice for twenty years" Well it would prove prophetic; World War II started twenty years and sixty five days later. It must be about 20 years since German reunification and they are at it again !!! ... The all-important spread between the 10-year French government bond and its German equivalent touched yet another euro-era high last week. Spain, also, despite its relative fiscal strength, just paid a crippling 6.9pc on 10-year money. Yields on paper issued by the EFSF, the bail-out fund meant to reassure eurozone creditors, are now spiraling out of control. Investors beyond Europe, deeply disturbed at the region’s economic incoherence, are even questioning German bonds. How much louder do the alarm bells need to ring before time is called on this absurd monetary experiment? There may be “no such thing as an orderly break-up”. But there is a very big difference indeed between embarking on a tough transition to a smaller eurozone with a coherent plan agreed by respective governments on the one hand, and a hugely-damaging systemic meltdown on the other, to be followed by years of pan-European loathing and mutual recrimination. Maybe Merkel will attempt to “muddle-through” - printing a bit here, a bit there, trying to keep it all under wraps. If so, she will learn that the status quo really isn’t an option. The euro in its current form is incendiary and explosive, a macro-economic weapon of mass destruction. It simply must be defused.

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.

Fitch: Italy is already in recession

Italy's new prime minister, Mario Monti, said the euro zone's third-largest economy faces an emergency, and he promised sweeping but fair reforms to dig the country out of a major financial crisis. Monti's government of technocrats must pursue fiscal and structural economic reforms but the downturn in Italy and Europe will complicate his job, Fitch said"Italy is likely already in recession and the downturn in activity across the euro zone has rendered the task of the new government much more difficult," Fthe ratings agency said in a statement. Fitch, which downgraded Italy to A+ from AA- with a negative outlook last month, warned it would cut the country's ratings to the low investment grade category if it were unable to borrow at sustainable rates on the markets. "Sustaining political and public support for structural reforms and austerity will be challenging in the face of rising unemployment. Convincing investors that the reforms will be effectively implemented and will boost economic growth over the medium term will be equally if not more challenging," it added. Italy's borrowing costs hovered close to euro-era highs on Thursday, with yields on 10-year bonds touching 7.1pc early in the day - past the levels that forced its smaller neighbours Greece and Portugal to seek a bail-out. The country has to refinance €312bn (£267bn) of debt next year. Fitch said Italian bond yields had risen to a level which, if protracted, would place public debt on an unsustainable path.

The prospect of a euro zone breakup intensified

The prospect of a euro zone breakup intensified on Tuesday night as borrowing costs around the region soared and the Dutch prime minister said it should be possible to expel some members from the currency union. Investors are rapidly losing hope that a solution to the sovereign debt crisis will be found, and their fear was demonstrated by rising bond yields – the rate of interest governments have to pay to borrow – across almost all single-currency countries. The Dutch premier, Mark Rutte, stoked fears that a collapse could become a reality as he aired the prospect of countries being ejected, albeit as a last resort. "We would like countries to be able to be pushed out of the euro zone," Rutte said on a visit to London, adding member countries must "put out the fire" of the debt crisis. As analysts warned of "terror taking hold", even some of those countries until now regarded as safe havens, such as the Netherlands, came under pressure as fears about countries' creditworthiness spread from peripheral countries such as Greece into Europe's core. One bond expert described this as the most worrying day yet in the crisis - he said - France was now suffering a "full-blown run" on its debt, with investors dumping French bonds to move their money to safer havens. The source added that the credit default swap (CDS) market – where investors in effect bet on the prospects of countries going bust – now indicates that the chance of France losing its coveted top AAA rating is a near certainty. Italy's growth figures for the third quarter have yet to be released, but the latest update for the euro zone does not bode well. The 17-nation group grew by just 0.2% during the quarter, and many forecasts expect the euro zone economy to contract in the final months of this year. In Spain, there was more evidence of investors' frayed nerves as the government was forced to pay out its highest borrowing costs in 14 years on new debt. Investors did come forward with enough money, but Spain's borrowing costs shot up to more than 5%, compared with less than 4% at similar recent sales. Belgium was victim to the same flight from eurozone bonds, and yields on a sale of 12-month debt by Brussels were at a three-month high. Investors were looking outside the currency union, and Switzerland fared rather differently at its latest debt auction. Its sale of six-month bills had an average interest rate of -0.3%. In other words, investors are paying the Swiss government for the privilege of lending their money to the country.

EC internal market and services - commissioners office

The European Commission says it wants to cut reliance on credit rating agencies, encourage more competition so there is less reliance on three major agencies - Moody's, Standard & Poor's and Fitch - and reduce potential conflicts of interest. The Association of Corporate Treasurers (ACT) said it was concerned over forced rotation in a market dominated by three main players - S&P, Moody's Investor Service and Fitch Ratings. Martin O'Donovan, ACT's deputy director of policy, said that while companies would welcome more choice there were "huge practical difficulties" for rotation in the current "oligopolistic" market. Moody's has said that the plans to overhaul regulation of the sector will undermine the integrity of the whole European credit market. In a letter to European finance ministers including George Osborne, Michel Madelain, chief operating officer at Moody's, said the changes would undermine investors' confidence. He said allowing ESMA to "pre-approve" methodologies would "undermine credit rating agencies".