Germany's central bank, the Bundesbank....

The German economy grew by 0.7% in 2012, a sharp slowdown on the previous year, preliminary figures show. The figure was well below the 3% growth seen in 2011 and suggests the economy contracted in the fourth quarter. "In 2012, the German economy proved to be resistant in a difficult economic environment and withstood the European recession," the federal statistics office Destatis said. Some analysts believe the German economy will enter recession itself. Destatis said economic activity "slowed down considerably" in the second half of the year, and particularly in the final quarter. "The full-year growth figure [of 0.7%] implies a contraction of around half a percentage point in the fourth quarter," the office's top statistician Norbert Raeth said. Last month, Germany's central bank, the Bundesbank, cut its growth forecast for this year to 0.4% and warned that the economy may have contracted in the final three months of 2012, and may do so again in first quarter of 2013. The eurozone economy as a whole is already in recession, having contracted in both in the third and fourth quarters of last year. For 2012 as a whole, Destatis said foreign trade was "very robust", with exports up 4.1% on 2011. Imports grew by 2.3%. The positive trade balance was "once again the main driving force for economic growth in Germany". Household expenditure increased by 0.8%, while government spending was up 1%. The figures also showed that while the service sector of the economy expanded, industry and construction contracted. Destatis will publish official fourth-quarter growth figures on 14 February.

French unions and businesses on Friday agreed on broad changes to labor laws, a key plank of President François Hollande's efforts to arrest rising unemployment and restore France's competitive edge. But after months of wrangling, only three of the five labor unions around the table gave their backing to the accord, depriving Mr. Hollande of the unanimous support that would give him a strong political boost.

New ways for employers to cut pay and working hours in tough times

• Simplification of legal procedures for layoffs
• Health insurance benefits extended to more workers
• Higher levies in fixed-term contracts to encourage permanent hires
• Incentives to hire young workers on permanent contracts.

"This is the first time in over 30 years that a negotiation at this level and with such depth has reached agreement," Mr. Hollande said. "This is a success for social dialogue." The government will now present the text to Parliament, where Mr. Hollande has a majority. French President François Hollande, right, speaks to Prime Minister Jean-Marc Ayrault after a meeting with French government ministers, focused on France's economic situation and employment, earlier this month. Negotiators still have to return to their unions to finally sign off on the agreement. Joseph Thouvenel, a representative for the Christian CFTC union, and moderate CFDT union negotiator Patrick Pierron said they will give a favorable opinion, and the CFE-CGC union negotiator Marie-Françoise Leflon said she had helped achieve a more balanced agreement. "The objective of creating conditions to fight insecurity and boost employment has been achieved," Mr. Pierron said. "We have met the challenge of getting extremely positive things for business and new points for employees," said Patrick Bernasconi, the negotiator for employers' group Medef. As expected, two more radical unions the CGT and the FO, said they won't sign the pact. Under terms of the agreement, business associations secured a victory that will allow companies to cut working hours and wages when times are tough, as German businesses have done during the global economic crisis to ensure their survival. Employees will have their jobs guaranteed during those periods of flexible wages and hours.

History explains all....

History explains all....The EU is experiencing its 'Stalingrad' moment....Sheer hubris makes it impossible for the EU to make the right decisions. Draghi's wears his vanity as if it alone is enough to save the EU. His vision is correct in his eyes, and to him that is all that matters, and that imprisons him in a course of action that is clearly failing. He is the only one who can't see it, though his generals nod their approval to maintain their salaries and privileges. Even Greece has deferred the worst effects of their austerity measures, which means that there will be no avoiding mounting civil disorder. If Golden Dawn show some political maturity (which they haven't so far) they'll walk in to power. Samaras is trying to defuse the Golden Dawn threat with some cynical changes to citizenship law but that's only upsetting his coalition partners. His government is doomed to collapse. European governments should focus on spending cuts, not tax rises to get their deficits down, according to the head of the European Central Bank. Mario Draghi said that the ECB's action (via its €1 trillion LTRO bazooka and announcement of the OMT programme) had helped to calm markets, but that it was up to governments to regain credibility.The growing tension between Germany and Greece was on show today as public sector workers stormed a building where officials from the two countries were meeting in the Greek city of Thessaloniki. Police had to form a shield around German Consul Wolfgang Hoelscher-Obermaier as he tried to enter the building. They also pelted him with water bottles and coffee in a protest against austerity measures. The workers chanted: "It's now or never!" and held up mock gravestones and banners proclaiming "Fight until the end!" ...Workers said that they were furious at comments by German envoy Hans-Joachim Fuchtel, who reportedly told journalists on Wednesday that it takes 3,000 Greek public sector workers to do the work of 1,000 of their German counterparts. Mr Fuchtel is Angela Merkel’s special envoy to Greece. Michael Meister, a member of Chancellor Angela Merkel's Christian Democratic Union party, told reporters that he could "live with" giving Greece more time to bring down its debt levels, adding that the EU had "many tools" to enable this to happen. However, he said that a writedown of Greek debt would be unacceptable to Berlin, and that MPs would not rush through a vote on the country's next aid tranche.

The Single Market is like a customs union. Tax and duty paid in one member country is deemed as tax and duty paid in another member country and so goods are free to move across borders between members. Many readers eher will not remember the bad old days when trucks crossing borders had to queue and wait for a customs official to measure the amount of diesel in the fuel tank and then the driver had to pay tax on the import of that fuel into that particular country. Only passenger vehicles were exempt.

Hannah is simply playing word games. He admits the EU is internally a free trade area but, the fact that it is not free and open to the world is not unusual. Most of the world is not free and open to the EU or to many other parts of the world.

Hannah provides examples of free trade areas, Nafta (Canada, the United States and Mexico) and ASEAN (ten South East Asian states). The EU is setting up similar Free Trade Agreements, EU-Japan Free Trade Agreement, EU- Canada Comprehensive Economic and Trade Agreement, EU-US Transatlantic Economic Council, EU-India Free Trade Agreement, EU-Mercosur Free Trade Agreement.

Hannah says nothing but he does demonstrate his naivety; "The optimum deal for the United Kingdom is surely to be in a European free trade area but not in a customs union." That's like saying that the optimum deal for the United Kingdom is one where the UK is the sole winner.

We'd all like unlimted freedoms but with no attached responsibilities but you will never ever eliminate 'if you sell to him, I won't sell to you' and very quickly, 'and I'll ask my mate not to supply you at all'. Deals are struck, bargains are made. No one allows a single trader to take all the profit.

Spain is being made to return to competitiveness through so-called internal devaluation. Wages are falling to offset their rapid appreciation relative to those in core Europe during the years leading up to the crisis. It would help Spain if inflation—and thus labor costs—were rising faster in core Europe, reducing the amount of domestic deflation needed. But that’s not happening—indeed core inflation is running below rates around the euro zone’s troubled fringe, in part because of austerity-related tax increases in the latter. Without German acceptance of higher inflation, Spain is looking at more of the same. More wage cuts, more unemployment, more contraction.

The country is already into its second recession since the financial crisis and forecasters have been paring back growth expectations for the coming year. Official unemployment makes up around a quarter of the potential labor force and continues to rise. Even ignoring that the data are probably distorted upward by overly generous employment protections that give firms strong incentives to use unreported workers, the jobless rate is unsustainably high. Social and political strife is already common.  Even where economic measures have improved, the turnaround isn’t all positive. For example, Spain has managed to turn its current-account deficit into a surplus, but only because domestic demand and thus imports have collapsed.  The ratings agencies don’t tell us anything we don’t know. Their downgrades have little or no significant bond-market impact. But they’re still relevant because they confirm an increasingly gloomy outlook.

It looks very likely there will be mass demonstrations in Athens to mark Angela Merkel's visit next Tuesday. Our correspondent Helena Smith has spoken with the radical left-wing main opposition Syriza party, and they are confident that the German chancellor will be met with vocal protests.“She should expect demonstrations. Greek society will welcome her with mass protests,” Panos Skourletis, the party’s spokesman told me, emphasizing that Syriza’s leader Alexis Tsipras would not be meeting the German chancellor. “Firstly, we have no intention of meeting her,” said Skourletis. “Secondly, we will propose that trade unionists aligned to Syriza meet with other trade unions in emergency session to decide on holding a general strike on the day of the visit. Demonstrations will obviously coincide with the strike.” Protestors would be united by an over-riding demand: to abolish the brutal austerity that was pushing societies across Europe, and especially Greece, to the brink, he said.The Independent Greeks party, also vehemently anti-bailout, has said it will make war reparations a major part of its own protest when it stages a “symbolic blockage” outside the German embassy in Athens on Tuesday.

Difficulties in the markets for Spain, a slippery slope towards a bailout, austerity, protests and social unrest, we have seen this movie before. Here is my a guide for how to deal with the situation.

An ancient Greek guide for Spanish and other PIIGS who wish to deal effectively with the crisis

1. Dealing in private with the pain and anxiety caused by the market turmoil and/or frequent visits of the Troika and their impossible demands (for how to deal in public see other points below): Draw from Stoicism. Stoics strived to be free of suffering and through exercise of reason achieve peace of mind - meant in the ancient sense of having "clear judgment" – as well as maintain equanimity in the face of life's highs and lows.

2. Dealing with “nice” comments about your morality: Use Aristotelian or Chryssipian logic. Convince yourself with sound deductive syllogisms that the rubbish posted around the world about your country & culture is the result of incorrect induction and reckless stereotyping (one pig does this, two pigs do this, therefore all pigs do this).

3. Dealing with the unethical behaviour of political and economic elites in your country and the abroad: Adopt Socratic dialectic and ethics in public life. Socrates was renowned for his relentless questioning of authorities and public figures, which was aimed not to humiliate individuals (yeah sure – never swallowed this at school) but to discover truth with a view to achieving the “good life” for everyone.

4. Dealing with seemingly endless half-baked attempts to re-establish financial stability: Recall Zenon’s paradoxes especially the one of Achilles and the Tortoise. If the Tortoise is given advantage in the race, Achilles will never reach her because by the time he has reached the last position, the Tortoise will always have moved a bit further.

5. Dealing with debt slavery: Recall σεισάχθεια (seisachtheia), Prior to Solon (5th cent BC) Athenians practiced debt enslavement: a citizen incapable of paying his debts became "enslaved" to the creditor. This issue primarily concerned peasants working leased land belonging to rich landowners and unable to pay their rents. In theory, those enslaved would be liberated when their original debts were repaid. Solon put an end to it with the σεισάχθεια / seisachtheia, liberation of debts, which prevented all claim to the person by the debtor.

6. Finally, if you fail to bring about the much desired relief or political change with the above measures why not go for a Roman style “Spartacus slave revolt” and then establish “Epicurean philosophical communes” all over the Med. They survived for hundreds of years in antiquity and provided peace and happiness to millions.

What the incompetent idiot stated :Rehn added that the euro was "irreversible"....hahaha!

Spanish banks borrowed a record €402bn (£316bn) from the European Central Bank in July, leaving them as far as ever from returning to capital markets, and heaping further pressure on Madrid as it tries to avert a full sovereign bailout. The banks borrowed 10% more than the €365bn they tapped in June, Tuesday's data from the Bank of Spain showed. Spiralling debt costs and balance sheets ravaged by a domestic property bubble that collapsed in 2008 have shut most domestic banks out of the bond markets. The banks' use of the ECB facility has increased sharply this year, rising from €161bn in January, and the sector was propped up in July with the promise of a European rescue package – which it has yet to tap – worth up to €100bn. The pattern is similar if less acute in Italy – like Spain at the sharp end of the eurozone debt crisis – where banks held €283bn in ECB funds in July compared with €281bn in June, Bank of Italy data showed last week. In Spain, only heavyweights with big operations abroad such as Santander and BBVA continue to have few problems raising funding from the market. One likely factor in the July increase was the higher charges that some clearing houses were levying on the use of Spanish bonds – which many domestic banks have invested heavily in – as collateral for raising funds, one analyst said. The eurozone has avoided entering a technical recession, defined as two consecutive quarters of negative growth, because growth was flat over the first three months of 2012. Howard Archer of IHS Global Insight predicted that GDP will fall again during the current quarter. Archer said the eurozone was "struggling against tight fiscal policy in many countries, high and rising unemployment, muted global economic activity and ongoing serious sovereign debt tensions that weigh down on confidence and limit investment. Stock markets, however, were cheered by the news as the contraction was smaller than expected and share prices rose across Europe. The FTSE 100 finished 32 points higher at 5864, while the DAX closed 0.8% higher. The European commission vice-president, Olli Rehn, told CNBC that the EU and the European Central Bank would take action "once certain conditions are met". Rehn added that the euro was "irreversible".

I bet even the IMF has no idea how much the game is going to change.

President Mario Draghi admitted his eurozone rescue plan was a work in progress. ... First there was light at the end of the tunnel - now there is just work in progress meaning that they are thinking of trying to locate where they are in the tunnel but they haven't got a clue what to do. Euro is just a shamble the biggest political failure of all times, the biggest wealth destroyer the humanity has ever known. Congratulations to the europhiles for making the world a poorer place. You're in a big hole and you're still digging.... There is a need for the europhiles for an apology for all the misery they piled onto the people and start urgent negotiations on how to get rid of the euro. We will forget all your sins. It is up to you to put your hands up and say sorry. wELL :The elephant in the room is losing it's grip on the ceiling light flex? Stand by for the mass stampede through doors and windows and walls. The IMF is as informed as manuel as to the whole picture, the truth is nobody can know the extent of the desolation bankers and financial whizzkids have visited upon us and anyone who can be convinced otherwise has little appreciation of the shortcomings of human nature. It's likely that from top to bottom they were all behaving with the mindset of the shoplifters during the riots, driven mad in their bonus rush, many also under the influence of cocaine?
Over four years some of the known truth has been drip fed out, it's rumsfeldt's unknown unknowns (as it were) that will lock in the longest depression yet, as we especially seem stuck with the present establishment using the austerity argument totally dishonestly for dogmatic gains and repression.... I SAY : The economic shock from the eurozone crisis has not yet hit said the IMF- AND That's because it ISN'T a "eurozone crisis", it's a crisis of western consumer 'growth' capitalism, mainly caused by a bubble stoked by profligate bank lending activities, reckless and stupid corporate borrowing and a disastrous corporate 'globalisation' process which saw the biggest transfer of wealth across the globe in human history - oh, and diminishing conventional oil reserves.

Top bankers messed up, top business leaders gave away the wealth of the west for short term profit and dumb politicians didn't understand what was going on. Those that did, were easily 'persuaded'.  They're all sliding down the mountain side, using ice picks for brakes but kicking the Eurozone ahead of themselves, so that they have someone to blame....it called for a "policy game changer"

I bet even the IMF has no idea how much the game is going to change.

An interesting point -- Spanish 10 year debt is yielding 7.5pc, half of what it ought to yield but enough to spook markets not yet ready to face the inevitable deflation of what has long been a bond super-bubble. This bubble is particularly evident in France. The debt levels which the country has are as unsustainable as Britain’s, yet its policies are more irresponsible and its remedies more restricted. Although it is considered a core country in the eurozone, France’s economic profile now bears more resemblance to Greece’s the Germany’s. Public debt in France is at 86.1pc of GDP (146pc if ECB liabilities and bank guarantees are included). The projected budget deficit this year is 4.5pc, with France having exempted itself from the EU’s instruction to bring deficits down to 3pct by the end of the year. These numbers are not unusual in the context of eurozone economies in general. What distinguishes France is the lack of political will to address them and, as a consequence, a projected debt to GDP ratio which would place it firmly amongst the PIIGS grouping. A 2010 paper by the Bank of International Settlements – cited by economist John Mauldin in his brilliant recent dispatch on ‘hidden lions’ – sought to model the likely effects of three separate policy paths by European governments. These range in severity from governments essentially carrying on as they are, to the most extreme austerity the authors believe to be politically possible, a gradual downwards movement in government spending while age related entitlements are frozen.

UPSSSSS....!!!!

Finland and Holland move to block bond-buying plans, casting the first doubts on last week's summit deal, as figures show a slide in Spain, Greece and Italy's manufacturing activity and a rise in unemployment across the eurozone....A little more detail on this German court hearing. Germany's parliament last week approved the ESM, but President Joachim Gauck said he will not sign it into law until the powerful constitutional court has given its go-ahead. Several critics have already filed complaints against the ESM with the court, who will hear these complaints on Tuesday 10 July - one day after the fund is supposed to take effect. Over in Greece, ministers are deep in talks over how to ease the punishing terms of its bailout before a review by the country's lenders. Antonis Samaras, the country's prime minister, wants more time to meet targets and to dilute austerity measures. Reuters reports that ministers from the conservative-led coalition were huddled in talks on Monday to work out the plan before "troika" inspectors from the EU, ECB and IMF begin their review of Greece's faltering progress in fiscal adjustment and reforms.

Angela Merkel, the German chancellor, was asked about this today. She said we must accept decisions of other states and there is no need to make decisions now... Confusion still reigns, it would appear, over whether direct overcapitalization of banks by the eurozone's permanent rescue fund would require a treaty change. Yesterday, the European Commission said no legislative changes were needed in the treaty governing the European Stability Mechanism. But the Dutch government said today it was uncertain if a direct overcapitalization of banks by the euro zone's permanent rescue fund would require a treaty change. For now, however, it was assuming that no treaty change would be needed and, when appropriate, the cabinet would propose that parliament approve the addition to the ESM's mandate.

France's finance minister has said that the country's revised budget, due to go before the cabinet on Wednesday, will rein the government's deficit to a targeted 4.5pc of GDP. ...

Reuters reports that Pierre Moscovici said that without budget amendments the deficit would hit 5.0pc of GDP this year - implying the government needed some €10bn in new deficit cutting measures. 

Debt crisis...

Debt crisis: Germany caves in over bond buying, bank aid after Italy and Spain threaten to block 'everything'. The agreements at a European Union summit in Brussels suggested Germany had yielded on its insistence on forcing tough reforms in exchange for rescue money. That was a victory for Italy and Spain, who have argued they have done a lot to clean up their economies yet are facing rising borrowing costs. European Council chairman Herman Van Rompuy said the aim was to create a supervisory mechanism involving the European Central Bank by the end of this year, and to break the "vicious circle" between banks and sovereign governments. Jose Manuel Barrose, the European Commission president, said the deal was "ambitious".My excuses but I forgot to take my 'suspension of disbelief' pill this morning. So this 'deal' comes into effect at the end of the year and after the Bundestag presumably vetoes Germany allowing any more money? And because the money is not available from a non-existent-fund that hasn't been set up yet and won't happen anyway the markets have reacted favorably? Until when will this non-solution solve the problem of Spanish and Italian debt yields, to say nothng of Greece, Portugal, Ireland, Cyprus and possibly France? I shall go and celebrate immediately !!!

Post for ....3/25/2012

"To me, we are still in a crisis," Mr Trichet said. "It is not just the privilege of Europe to still be in a crisis." Starting 35 years ago with Latin America and Asia, the global economy remains in period of structural adaptation, he aid, with major western economies currently the focus. Mr Trichet : a mix of globalization and the instant transmission of information to investors made possible by the internet may have made a permanent change to the financial system. Without defining it, Mr Trichet suggested it may present a new "tail risk" to policymakers. "That is something to do with behavioural contagion that is not captured by traditional modelling." In a visit to Harvard University earlier this week, Mr Trichet insisted that "I don't regret anything " about the ECB's policy while he was leading it during the crisis. The ECB was widely criticised for raising interest rates last April. The increase has since been reversed.I would have thought that technological innovation and emerging markets should have boosted the real economy in the last decades. But unfortunately the real economy is infested with financial parasites, and the structural adaption he talks about is the transformation of the world into a latin american society - some mega-rich corrupt parasites, the rest starving and treated like domestic animals.

Quiet day - The FTSE 100 rose 1.5pc, or 84.44 to 5,696.7 after investors were reassured by the ratings agency that Europe's second largest economy was not at front-line risk of contagion from the ongoing eurozone debt crisis. "In the absence of important shocks that could be linked to a strong worsening of the situation in the eurozone, Fitch does not foresee modifying its negative outlook [on France] before 2013," a spokesman said. The CAC 40 in Paris closed up 2.66pc at 3,210.79, while the DAX in Frankfurt rose 2.42pc to 6,162.98. Fitch affirmed France's top-tier credit rating in December but revised its long-term outlook to "negative" from "stable", citing the intensification of the eurozone debt crisis. Italy remained the biggest worry among the embattled eurozone countries, Fitch said, and warned it could see its credit rating cut this month.

" A senior German official" has been talking to Reuters. The unnamed official has said they are "not sure if summit will reach conclusion on using IMF funds in eurozone crisis" and "can't forsee running EFSF and ESM simultaneously". They have also said they are "more pessimistic than last week on overall summit deal". Well, that's reassuring....Meanwhile : The ECB said banks asked for $50.7bn in 84-day dollar funds and $1.602bn in the 1-week tender in the operations, in which they are guaranteed to get all funds they requested. The demand was well above the $10bn median forecast in a Reuters poll of money market traders. Traders attributed banking strains in countries mired in the debt crisis as the main reason for the high amount allocated. Remember that liquidity boost last week? Reuters reports that banks took more than $50bn from the European Central Bank today in its first offering since slashing the cost of borrowing dollars, a sign that some euro zone banks have problems finding dollar funding as the region's debt crisis intensifies.www.ziaruldeinvestigatii.ro

MerKozy "demand tough new eurozone treaty" - demand of whom ???...what a farce !!!

Smoke and mirrors - - Speeding up implementation of the permanent bailout funds, the European Stability Mechanism, to 2012"... The intra-euro zone ESM treaty, draft signed on July 11th here: http://consilium.europa.eu/med... is legally dependent upon the EU treaty change agreed by EU leaders on March 25th: http://eur-lex.europa.eu/LexUr...which now awaits ratification by all 27 member states "in accordance with their respective constitutional requirements" before it can come into force. That is the EU treaty change which Hague ruled would not be put to a referendum, in his statement laid before Parliament on October 13th. "In my opinion the European Council Decision of 25 March 2011 amending Article 136 TFEU with regard to a stability mechanism for Member States whose currency is the euro adopted under Article 48(6) TEU does not fall within section 4 of the Act and no referendum is required in the UK." Far from speeding up the Bill to approve that EU treaty change, Cameron should announce that pending further negotiations he will not be proceeding with its ratification ... About half an hour ago, the Financial Times reported that S&P is putting the 6 AAA-Eurozone counteries, i.e. France, Germany, Netherlands, Austria, Luxemburg and Finnland COLLECTIVELY on negative watch, meaning that there will be a 50pc chance of a downgrade in 90 days. S&P cited "political turmoil" in the midst of the eurocrisis as a main reason for their decision, knowing this move will lead to yet more recriminations of politicians against itself: http://www.ft.com/intl/cms/s/0/7cf2e0ae-1f63-11e1-9916-00144feabdc0.html#axzz1fgeFjZei .... So much for the new investor confidence in the new approach of the eurozone leaders towards a solution of the crisis.

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.

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.

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.

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.