AUSTRIA - Austrian lawmakers have voted to expand the powers of the eurozone's bailout fund, which is designed to help Greece and other potentially struggling countries deal with their debts. Friday's passage means that Austria guarantees to provide 21.6 billion euros ($29.4 billion) to the fund, compared to 12.2 billion euros previously. If all 17 eurozone nations agree to increase their share, the fund will have 440 billion euros ($600 billion) at its disposal. Parliament's backing had been expected, with the governing center-left coalition supported by the opposition Greens in backing the measure. Only two rightist parties opposed the bill. Austria's endorsement comes a day after German parliamentarians approved beefing up the so-called European Financial Stability Facility.

"Germany neither intends nor wishes to interfere in the internal affairs of Austria, to annex Austria, or to conclude an Anschluss."
Adolf Hitler - 21st May 1935

BREAKING The German parliament has backed the expansion of the European bail-out fund. Reuters reports 523 politicians voted in favour of it, 85 opposed and three abstained. Debate is continuing in the Bundestag, with MPs explaining their votes. So far, only lawmakers from the opposition Left party have set out why they opposed the legislation. Sevim Dagdalen says she voted against the EFSF deal. She accused the German government of pandering to banks, speculators, the "financial mafia". She added she sympathised with the Greeks who are protesting against their government's harsh austerity measures, as well as the Portuguese. She attacked a "Europe that is unsocial and unfair".

Here's the voting details:
In favour: 523 MPs
Against: 85
Abstentions: 3

So, a huge majority for Angela Merkel. We'll get the full breakdown of who voted, and whether many of the coalition government rebelled, soon.

Here's a few events to watch out for today:

• Spain and Italy to auction government debt - this morning
• Greek PM George Papandreou addresses a conference for the Federation of German Industries - this morning, Berlin
• CBI Distributive Trades Survey (measuring UK retail sales in September): 11am
• Greek property tax vote - 7pm CET, Athens
• Papandreou/Merkel "working dinner" - evening, Berlin

Bucharest (ADF) - The International Monetary Fund (IMF) has revised its forecast of economic growth in Romania next year 2012 from 4,4 percent to 3.5 percent down. The proceeds from the released Tuesday, "World Economic Outlook" shows. The growth forecast for the current year has been kept unchanged at 1.5 percent of gross domestic product (GDP). The IMF also revised its inflation forecast for Romania slightly upward. This year, the IMF expects an inflation rate of 6.4 per cent (originally 6.1 percent). 2012 consumer price inflation is likely to decline by only 0.9 percent to 4.3 percent, it said the IMF report.
In general, the IMF made in its recent report little hope for a significant economic upturn in the global economy in general and in the European Union in particular. Overall, the global economy rise this year, only 4.0 percent (down 0.3 percent less than forecast in June).
The performance of the EU economy this year will grow by only 1.7 percent of GDP, instead of the original 2.0 percent of GDP. Also, the 2012 forecast for the European Union, the IMF revised downward, from plus 2.1 percent of GDP to 1.4 percent of GDP plus only.

EU is run by unelected commissioners, the MEP's are just front men, window dressing to give the appearance of democracy.

I say : When you see the likes of Siemens and Lloyd's move their liquidity out of France and French Banks.....Does that give you a hint ? -- A communiqué from the finance ministers and central bankers of the IMF's member states, released after Saturday's meetings, reiterated the need for urgent action from the eurozone and set a deadline of mid-October for reforming the bailout fund. G20 sources said the meetings had ratcheted up the sense of alarm over the crisis, saying "there's been a very visible shift in pace, mood and urgency", but there was a sense of exasperation among non-eurozone members about the lack of concrete action. A clearly exasperated Canadian finance minister, Jim Flaherty, told journalists: "We've been talking about Greece since January 2010." European ministers had to endure an ear-bending from their counterparts in the rest of the world this weekend. George Osborne used his statement to the IMF committee to press Europe to accelerate measures to transform the single currency into a fully fledged fiscal union. "The eurozone should follow the remorseless logic of monetary union through progress on institutional reform, greater fiscal integration and coordination of budget policies," he said. Ministers from the G20 group of major economies have called for an urgent ratification of the 21 July agreement, brokered by Angela Merkel and Nicolas Sarkozy, to beef up the powers of the EFSF. Osborne warned on Friday that Europe has just six weeks to resolve its political crisis. Insiders say there is disarray among Europe's leaders about the best way to contain the fallout from a Greek default. The European Central Bank would have to play a major role in any rescue package, but so far has intervened only reluctantly. Its president, Jean-Claude Trichet, has repeatedly insisted that a Greek default is unthinkable.

Recap of the day - sept. 23. 2011

Just a recap of the day

1. The G20 settled markets with a comminiques overnight on Thursday, pledging to "take all actions to preserve the stability of banking systems and financial markets as required".

2. In London the FTSE 100 opened up 1.2pc with banks rising strongly, but the bounce was shortlived. By 10.45am the index had tumbled through the psychologically important 5,000 level after reports that Greece saw orderly default as possible. The mood was darkened after an EU spokesman said there were not plan to further recapitalise eurozone bank - other than what has been done. This seems to contradict the thrust of the G20 statement.

3. By lunchtime the market was turning around after rumours of further ECB measures to support the eurozone economy. Sentiment was further boosted by comments from Osborne at the IMF annual meeting in Washington. He said Europe had until the G20 meeting in Cannes in November to solve the political crisis in the eurozone. This six-week deadline seemed to give investors hope that leaders understood the urgency of the eurozone's situation.

4. London's leading shares close up 0.5p on the day, but down 5.6pc on the week. Markets in Germany, France, Italy and Spain also rose, closign up 0.6pc, 1pc, 2.1pc and 1.36pc respectively. However, after European markets closed the Dow Jones and the S&P 500 seemed to be trading sideways as nerves returned.

The Greek Finance Minister Evangelos Venizelos. The Greek Finance Minister Evangelos Venizelos presented to the parliament three scenarios to solve the budget crisis, including a default ordered at a discount of 50% for holders of sovereign debt, the Greek press reported Friday. A spokesman for the Greek government has denied reports the newspaper Ta Nea and Ethnos, which state that the other two scenarios are disordered or defective, or the implementation of the second rescue plan 109 billion euros agreed on 21 July. Citing witness a speech given by Evangelos Venizelos, Ta Nea reported that the Greek Finance Minister would also have considered "very dangerous" for Athens to claim a discount of 50%. "This would require a large coordinated effort," would have said. A spokesman for the Ministry of Finance said not to be able to comment on articles, but a spokesman for the Greek government, Angelos Tolk, has denied.

The cat is out of the bag. Eurozone leaders, in various states of denial about the need for their banks to raise more capital, now have to face some hard facts, courtesy of the International Monetary Fund. The sovereign debt risk to European banks has risen since the start of 2010 by about €200bn, with a total spillover effect of €300bn, estimates the Fund. These are staggering figures. They are not, it should be said (and as the IMF emphasises), the size of the black hole in the collective balance sheets of European banks, since there's a very significant difference between a risk and an estimated loss. All the same, €200bn, or €300bn, has to be prepared for. The IMF's analysis explains why the funding climate for many European banks has become icy. When huge losses are guaranteed, but their precise size and location is unknown, the rational response is to play safe by reining in lines of credit. And when everybody wants to retreat, the flow of money slows, thereby exaggerating the crisis by choking lending to economies. There really is only one remedy – get capital into the banks, raise the buffers and generate confidence that losses, however large they turn out to be, can be absorbed. Now that the IMF itself is recommending recapitalisation of the European banking system, there is a greater chance it might happen. That's the good news. The bad news is that there is no guarantee that the eurozone leaders will act in time to prevent an avoidable crisis turning into a catastrophe. Many flew into a funk when the IMF's new managing director, Christine Lagarde, emphasised the need for recapitalisations a few weeks ago. Some screeching U-turns are required.

"The Eurozone will survive" says Fitch..."The issue was never in doubt" . Never in the history of propaganda have so many words been wasted to so little effect.

Why not just abandon the mistake and revert to national currencies. If managed properly it should not be disastrous, but just a money changing exercise, which puts right the daft notion of a common currency in the current situation. They changed to the euro quite simply so change back quite simply and let the drachma etc. float. Debts will still remain but national economies will adjust. The E.U. dinosaur will not like it, but when you make a mistake instead of trying to fudge a solution it is better in the long run to face reality.
The next step is to revert the E.U. to the common market and the ECU and forget federalization and the human rights act, both of which hinder progress and national ambitions. I believe the above would receive the whole-hearted support of the European nations.

Investors have pulled more money from U.S. equity funds since the end of April than in the five months after the collapse of Lehman Brothers Holdings Inc., adding to the $2.1 trillion rout in American stocks. About $75 billion was withdrawn from funds that focus on shares during the past four months, according to data compiled by Bloomberg from the Investment Company Institute, a Washington-based trade group, and EPFR Global, a research firm in Cambridge, Massachusetts. Outflows totaled $72.8 billion from October 2008 through February 2009, following Lehman’s bankruptcy, the data show. $177.7 billion has been removed during the past 30 months from mutual and exchange-traded funds that invest in U.S. shares as the benchmark gauge for American equity rallied as much as 102 percent, before falling 17.9 percent through Aug. 8. Investors pumped in $18.7 billion during the first four months of 2011, before removing about four times that amount since, according to the average of data from EPFR and ICI, the money managers’ trade group. The August estimate doesn’t include ETF data from ICI. Bond funds added $42.3 billion from the end of April through July and started posting weekly outflows last month, according to ICI. Since the bull market began, fixed-income managers have received a net $666.4 billion.

Eurozone finance ministers rejected a plea from Timothy Geithner, the US Treasury Secretary, to expand the European Financial Stability Fund (ESFS) to tackle the escalating debt crisis in the region. He called for the 17 European countries that use the single currency to commit money to avoid financial system difficulties but rejected suggestions for a financial transaction tax, Austria's finance minister said. Maria Fekter was commenting on an exchange between Mr Geithner and finance ministers including Germany's Wolfgang Schaeuble in Poland on Friday. She said: "He conveyed dramatically that we need to commit money to avoid bringing the system into difficulty ... [but] Schaeuble made him very aware that it was unlikely to be possible to push that onto taxpayers, and especially not if [the burden] is imposed mainly on the triple-A countries." Ms Fekter said: "In these countries, there is a desire for a transaction tax because a transaction tax would use the liquidity which is on the market for stability. He (Geithner) ruled that out." At the meeting in the Polish city of Wroclaw, eurozone countries delayed a decision on whether to grant the next $8bn tranche of bailout funds to Greece until next month. A European Commission team arrived in Athens this week to assess the progress of the austerity drive, and will report back to Brussels. The basis of the team’s findings will dictate whether the funds will be released. Mr Geithner's presence in Wroclaw reflects deep worries in Washington that the scale of euro-zone debt crisis could inflict further woe on America’s struggling economy. “What is very damaging (in Europe) from the outside is not the divisiveness about the broader debate, about strategy, but about the ongoing conflict between governments and the central bank, and you need both to work together to do what is essential to the resolution of any crisis,” he said after the meeting. “Governments and central banks have to take out the catastrophic risks from markets ... (and avoid) loose talk about dismantling the institutions of the euro.” Euro-zone ministers also called for the ratification of the July 21 agreement on upgrading the European Financial Stability Facility (EFSF). The agreement allows for the facility to recapitalize institutions and intervene in the markets. They called for all member states to ratify the agreement by early October.

"Europe must go for a big bang, a federation, the United States of Europe, or quite simply, integration" - Joseph Daul
For Joseph Daul MEP, Chairman of the EPP Group: "The time has come for the Eurozone countries and for all other EU states who want to be involved, to take decisive action by adopting, together and at the same time, measures which are strong enough to put an end to the doubts on Europe's ability to assume its responsibilities."
In a debate in the European Parliament on the economic crisis, Joseph Daul said that on a proposal by the Commission, the governments of the Eurozone and all those in the Union who wish to do so, should decide to deal drastically with their debt, collectively, and on the same day, by taking coordinated measures to guarantee the sustainability of the pension systems or to ensure the effective harmonisation of their fiscal policies, particularly on companies.
"By making an economic government reality, a government run by all the Eurozone countries, Europe would kill two birds with one stone: it would show its capacity to act in the long term, and it would strengthen unity among its citizens, who would finally be subject to the same rights and duties. By taking coordinated measures of budgetary discipline while promoting the necessary growth of our economies, the Eurozone would arm itself with converging rules, and would give a clear and strong signal of its willingness to strengthen integration", continued Joseph Daul.
Joseph Daul said: "Our citizens, although they are aware that this European crisis calls for a European response, not just a national response, are still questioning the capacity of national and European leaders to put an end to this crisis of confidence and low growth. What's at stake in the next three months is Europe's capacity to get back on the path to growth and employment, to preserve its way of life and defend its values. Only with a major act of integration will we finally be able to live up to the challenges", concluded Joseph Daul.

Greek Prime Minister George Papandreou has held his teleconference with German Chancellor Angela Merkel and French President Nicolas Sarkozy. We weren't expecting anything particularly dramatic, but what has emerged is going to be small consolation for investors. France and Germany came out and said that Greece's future lies in the eurozone. Greece, in turn, promised to stick to its budget program in an attempt to stop its debt crisis worsening. Aside from that, no concrete reassurances emerged. At a teleconference Greek prime minister George Papandreou told Merkel and Sarkozy his country was determined to meet all obligations agreed with international lenders in exchange for an EU/IMF bailout. Officials from the European Commission, European Central Bank and the International Monetary Fund returned to Athens to try to get the Greek rescue package back on track. All three leaders have a vested interest in playing for time over Greece despite the sense that time is running out.

Please stop pretending, Greece in insolvent, it is bankrupt, see the parrot sketch from Monty Python for what the Greek economy is really like. Just to make sure that it is dead, an ex-economy then pushing it even further down with draconian austerity should do the trick.
If I don't believe it then you can be damn sure that the markets don't believe it, and all this sticking plaster means that the problem will be here tomorrow, and the day after that....just kicking the can down the road. All this "bail out" is just free money for them and yet another loss for the taxpayers, who are throwing good money after bad.

Saving Merkel and the Bruxelles "shysters"

Germany's highest court has ruled that Angela Merkel's controversial decision to contribute billions of euros to the first rescue package of Greece and other fiscally troubled countries last year was not illegal. But the federal constitutional court also decreed that parliament should be more involved in such decisions. The ruling means that Germany's agreement to take part in the financial rescue of Greece will not be affected, but participation in future bailouts might be more complicated. European stock markets were boosted by the ruling, which heads off the prospect of total chaos in the eurozone but could lead to delays in further interventions. Presiding judge Andreas Vosskuhle told the court that although Germany's participation had not violated parliament's right to control spending, "the government is obligated in the cases of large expenditures to get the approval of the parliamentary budgetary committee". The verdict "should not be misinterpreted as a constitutional blank cheque for further rescue packages," he added. The three cases had been brought by a group of Eurosceptic academics and a rebel MP from the Bavarian sister party of chancellor Merkel's Christian Democratic Union (CDU). They argued that the bailouts violated German law, as well as European treaties, and could turn the EU into a "transfer union", where rich states such as Germany finance the fiscal indiscretions of poorer members like Greece.

Leading European experts have said that, although the German Court is unlikely to throw out the bail-out policy, which would cause chaos across the eurozone, it is likely to set conditions on continuing German support for the policy. Matt Persson, of the think tank Open Europe, said: "The Court will almost certainly approve the bail-outs, possibly citing as a reason that monetary stability is a legally protected interest. However, the Court is also susceptible to public opinion and, in order to guard its reputation, could well demand more influence for the German parliament and lay down additional constitutional red lines in return for approving the bail-outs." It could also make moves towards fiscal union in the eurozone even more complicated, he said. Chancellor Angela Merkel has faced criticism for not seeking fresh democratic mandates for the millions of euros the German government has provided in support for the eurozone's struggling nations such as Greece and Ireland. "Injecting more parliamentary democracy into the eurozone crisis is clearly a good thing but it will also further limit European Union leaders' room for manoeuvre to deal with the crisis, which in turn could increase market uncertainty," Mr Persson said. "Unfortunately for the ECB, under such a scenario it would once again be forced to pick up the responsibility of lender of last resort, as the European Financial Stability Facility will be too inflexible and unresponsive to play that role." Judges in the Constitutional Court will decide on Wednesday whether Merkel was right to sign off on multi-billion euro bail-outs for floundering economies. Five German professors launched the lawsuit which, even if it fails, has galvanised lawmakers in Berlin to demand more say in decision making.

The International Monetary Fund approved a further €1.4bn (£1.2bn) payout to Ireland on Friday as part of a wider European bailout. Ireland's government announced a four-year €15bn austerity programme last year, which included deep cuts to public spending and benefits, and large tax hikes. The programme paved the way for a €85bn bailout package from the IMF and the EU. The four-year plan was intended to help the debt-stricken country take control of its financial crisis and the IMF said on Friday that its government had "maintained resolute implementation" of the programme. It also said Ireland's efforts to reorganise and reduce debt in its domestic banks was "ahead of schedule in some areas". While Ireland has so far received €8.7bn of the total bailout package it has also been restricted from accessing the bond markets – which in effect means it cannot borrow money on its own. One of the biggest fears within the eurozone about Ireland's financial crisis and of other troubled member states such as Greece, has been in the threat of contagion. Despite the praise for being on target, the IMF was also keen to stress Ireland had to continue with the austerity programme to "rebuild market confidence". "Continued timely implementation of the programme remains essential to support the ongoing recovery, limit contagion risks and rebuild market confidence," it said. Despite fears last year that Ireland could be forced to extend the bailout or seek a second rescue if it failed to return to the bond market by itself, the Irish finance minister Michael Noonan said he did not expect that to happen.

A remarkably gloomy assessment of the world economy - Ms Lagarde warned that urgent action is required to stave off the threat of global recession and another credit crisis. Sounding a stark warning to stronger European countries such as Britain and Germany, the new IMF chief said: "We could easily see the further spread of economic weakness to core countries, or even a debilitating liquidity crisis." To reduce these risks, she called for "substantial" and mandatory recapitalisation to bolster European banks' balance sheets, which will be "key to cutting the chains of contagion". Ms Lagarde, who was speaking at the US Federal Reserve's annual forum at Jackson Hole, said the recapitalisation should first be financed through private channels, but could also be sourced from a Europe-wide bail-out fund. "Developments this summer have indicated we are in a dangerous new phase. The stakes are clear. We risk seeing the fragile recovery derailed. So we must act now," she said. Put simply, macroeconomic policies must support growth. Monetary policy also should remain highly accommodative, as the risk of recession outweighs the risk of inflation." Ms Lagarde's comments risk creating new panic about the funding levels and financial stability of European banks. There have been concerns that lending between banks has started drying up over recent weeks, which was a key sign of the "credit crisis" in 2008.

The Fed chairman admitted that recovery from recession had been slower than hoped and that short-term growth prospects for the US had been adversely affected by Europe's debt crisis, and by the wrangling between Democrats and Republicans over the US budget. He stressed that any repetition of that partisan in-fighting could make global investors less willing to hold US assets or to put money into job-creating enterprises. "Bouts of sharp volatility and risk aversion in markets have recently re-emerged in reaction to concerns about European sovereign debts and developments related to the US fiscal situation, including the recent downgrade of the US long-term credit rating by one of the major ratings agencies and the controversy concerning the raising of the US federal debt ceiling," said Bernanke. "It is difficult to judge by how much these developments have affected economic activity thus far, but there seems little doubt that they have hurt household and business confidence and that they pose ongoing risks." While the Fed was alert to the risks, he said there was also a strong case, despite the poor state of America's public finance, for the new jobs package being planned by the Obama administration to tackle long-term unemployment. "Although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the current economic recovery. Fortunately, the two goals of achieving fiscal sustainability – which is the result of responsible policies set in place for the longer term – and avoiding the creation of fiscal headwinds for the current recovery are not incompatible. Acting now to put in place a credible plan for reducing future deficits over the longer term, while being attentive to the implications of fiscal choices for the recovery in the near term, can help serve both objectives." Rejecting the idea that slow growth could morph into a long-lasting downturn, Bernanke said there had been some encouraging signs, including a 15% rise in US manufacturing output and a narrowing of the trade deficit.

The European Central Bank will hold a conference call of its governing council to discuss its response to the debt crisis, an ECB source said. Italy's pledge to speed up austerity measures and whether the ECB should buy Italian government bonds are expected to be discussed. S&P's downgrading of the US credit rating on Friday added to fears over debt levels and economic growth in the world's biggest economy and in large European nations, such as Italy and Spain. As the effect was felt across the globe, China, the largest foreign holder of US debt, issued an extraordinary demand that Washington change its economic ways and address its "debt addiction". It said the rating reduction would be followed by more "devastating credit rating cuts" and global financial turbulence if the US failed to learn to "live within its means". "China, the largest creditor of the world's sole superpower, has every right to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said. It also insisted the US should slash its "gigantic military expenditure and bloated social welfare costs", and repeated its demand for a new global reserve currency to replace the dollar. In London, opinion was split between those who believed the markets would take the US credit decision in their stride and others who believed it could trigger a series of events that would do untold damage to the global financial system. "The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," the statement continued.

America did receive some support yesterday, with Francois Baroin, France's finance minister, insisting that he had total confidence in the US economy, while Russia said it would keep the current level of its US investments in national reserve funds.

The attempt to bail-out Greece and other struggling eurozone countries raised the prospect of a two-speed European Union with far closer ties between countries using the euro compared with those, such as Britain, that remained outside. Nicolas Sarkozy, the French president, said the deal had pulled the eurozone back from the brink of disaster and laid foundations for the creation of an EU “economic government”. He hailed it as “a historic moment” that would provide “bold and ambitious” plans for the creation of an embryonic EU treasury in the form of a European Monetary Fund. “By the end of the summer, Angela Merkel and I will be making joint proposals on economic government in the eurozone. Our ambition is to seize the Greek crisis to make a quantum leap in eurozone government,” he said. “The very words were once taboo. We will give a clearer vision of the way we see the eurozone evolving. We have done something historic. There is no European Monetary Fund yet, but nearly.” Even large euro countries such as Italy and Spain have seen their borrowing costs jump, raising fears of a financial crisis that could destroy the single currency. In response, eurozone leaders meeting in Brussels were drawing up a deal that would effectively use money from successful northern economies such as Germany to support the budgets of indebted nations in southern Europe. Greece will receive another bail-out worth €159 billion and will be allowed to default on some of its debts for the first time. Private investors holding Greek bonds will be asked to contribute to the bail-out, losing some of their money, or having to wait longer for repayment. European stock markets and the euro rose as investors bet that the deal would avert any immediate break-up of the single currency. The agreement being discussed last night will hugely expand the role of a €440  billion (£389 billion) eurozone emergency bail-out fund, effectively creating a European Monetary Fund. The European Financial Stability Facility was set up last year as a rescue fund for countries struggling to raise money from bond markets. Under the deal it will be given significant new powers to use its funds to pre-empt debt crises in euro economies. The fund will be able to make “precautionary” loans to eurozone members, which they could use instead of borrowing money from the markets. It will also be able to make loans to recapitalise banks in the weaker economies and buy back government bonds from private investors.