Just in – new survey data suggests that the eurozone's bruised economy has turned a corner.

Marki's Eurozone Composite PMI, which measures business activity across thousands of companies, hit a 10-month high of 48.6 In January, up from 47.2 in December

Markit reported that businesses were more optimistic about the future. However there are sharp differences between countries.

Reuters has the early details:

While still signalling a contraction as the index has been below the 50 mark that signifies growth since February last year, it has risen consistently in the last three readings.

Private industry makes up nearly two-thirds of the euro zone's economy and worryingly for policymakers, the data showed a widening chasm between Germany - Europe's largest economy - and France, the bloc's second biggest.

Chris Williamson, chief economist at Markit, said the eurozone is showing "clear signs of healing", having entered recession last year,

However, there were stark differences between Germany and France: Markit's composite German PMI chalked up its biggest one-month rise since August 2009, soaring to its highest since June 2011. But in neighbouring France it plummeted to its lowest in nearly four years.

At 43.6, France's services PMI was even below readings from Spain and Italy.

Allegations of corruption against Spanish PM Rajoy and reports that former Italian PM Berlusconi is gaining ground in the country’s polls ahead of this month’s election took some of the shine off the euro on Monday.

Notwithstanding its latest wobble, we continue to forecast an appreciation of the euro to $1.40 by mid-year as sentiment towards the euro-zone slowly improves. But we are also sticking to our forecast that that the exchange rate will slip back to $1.25 by year-end – a view which is predicated on the assumption that the crisis will flare up again in the second half of the year.

That being said, Monday’s news underlines the fact that such a flare-up could happen at any time. 

Spain’s governing People’s Party (PP) has just said it will take legal action against whoever has leaked documents published last Thursday that purported to show Prime Minister Mariano Rajoy receiving €250,000 that had been hidden from tax authorities.

"All those who may have attributed, leaked and published,” the documents -- allegedly drawn up by two former PP treasurers -- may be subject to the action, third-ranking PP member Carlos Floriano told a news conference called before Rajoy is due to speak to the media alongside Angela Merkel after a summit in Berlin.

Rajoy denied the allegations in a televised speech on Saturday, but did not take questions. On Sunday, opposition Socialist leader Alfredo Pérez Rubalcaba called for Rajoy to resign, which the premier has ruled out.

Also on Sunday, opinion polls showed the PP’s popularity had tumbled from when they won power in November 2011 to within a whisker of the Socialists, although neither party would be able to command anything like a majority.

Fed up with record unemployment, an economic crisis with no signs of ending after five years and now fresh reports of corruption almost daily, Spanish voters have increasingly turned to small parties or the streets. Police helicopters buzzed central Madrid rooftops for three nights in a row after Thursday’s allegations as protestors rallied outside PP headquarters.

"Citigroup said it now expects Spain's economy to contract by 2.2pc this year and another 2pc in 2014, pushing unemployment to 28pc.The effects of the slump will overpower any gains from fiscal austerity. The bank said public debt will surge from 88pc to 110pc of GDP in just two years." "Premier Mariano Rajoy has so far resisted a full rescue from the EU bail-out fund (ESM), fearing a political backlash and loss of sovereignty. Yet the ECB cannot purchase Spanish debt until Madrid pulls the trigger and signs a "memorandum"." "Julian Callow from Barclays said the ECB’s Mario Draghi is “itching” to buy Club Med bonds, seeing this as a way of targeting monetary stimulus on the countries in trouble - without an causing inflationary spillover in Germany - but he is paralyses until Madrid relents." Ah, when it all collapses the EU socializes private debt and gets to appoint another country's leader. Now I see what the strategy is. Meanwhile, Ireland has now a debt to GDP ratio of 120% and rising are now predictably making noises such as, forgive us our debt or else the best boy in the class is going native! Put "precautionary" loans in place as we will not be able to exit the bailout without a second bailout i.e. "precautionary loans" or if you prefer a "bailout extension" call it what you like, just make sure the money is there for us! The government are back in talks to extend their sweet heart deal Croke Park deal with the 23 public sector unions that represent government workers, so no surprises. They will be requiring additional funding to finance the Labor trade union government nexus. Labor are in coalition. As for Spain they will get their bailout from the ESM with a vicious MOU attached. They will underestimate (deliberately) how much they require, the further austerity will cause even greater unemployment and they will be on the road to Greece and the EU will be on the road to either break up or an admission that democracy has been overthrown and that you cannot rule a democratic EU. The whole project has been derailed because it was never possible to unite countries of such diverse cultures and work ethics. France wants to be socialist, therefore it needs Germany which is capitalist to pay up! Greece does not collect taxes so it wants them collected elsewhere and passed on to them otherwise they might have to pull out and it might be a systemic risk, Cyprus needs a bailout they too could be "systemic" and what about all that Russian money? Sure Russia might give a dig out? It is a tower of Babel ... I wonder whether most people in more stable Northern European countries realize just what exposure they are going to have to these bailouts via the ESM (for that is what the EU are now touting as the Spanish rescue vehicle)The ESM can make a capital call any time it likes on it's EZ members at 7 days notice and it's officers are immune from prosecution in any EU jurisdiction.. and it's records inviolable. So all those EZ member states that thought they were relatively safe are going to end up providing whatever funds a bunch of people with no accountability whatsoever demand of them. Budgetary independence and fiscal prudence gone in a flash and they never even noticed....Well, the next round of protests/riots ought to be interesting. Maybe Draghi, LaGarde, Merkel, Barroso, Van Rumpy and Rajoy could sit down with the hungry masses to explain how the worst is behind them.

Gross domestic product (GDP) in the world's second-largest economy expanded 7.8pc last year in the face of weakness at home and in key overseas markets, the National Bureau of Statistics (NBS) announced on Friday.  But it grew 7.9pc in the final three months of 2012 as industrial production and retail sales growth strengthened at the end of the year, snapping seven straight quarters of slowing growth in a positive sign for the spluttering world economy.

The official statistics come as optimism grows among analysts that China will pick up steam in 2013 after two years of relative weakness, although they - and the government - caution that the improvement will not be dramatic. "The international economic environment remains complicated this year and... there are still unbalanced conflicts in the Chinese economy," NBS spokesman Ma Jiantang told reporters.  Still, Ma added: "We expect China's economy to continue to grow in a stable manner in 2013."  The problem is that the economic and social arrangements that have emerged in China on the back of a decade or so of double-digit growth don't work, ie are unsustainable when the growth rate subsides. This is what worries the hell out of the Chinese leadership. The risk is that Chinese society becomes unstable. It's really no different to us over here having got used to trend economic growth of, say, 2.0% - 3.0% pa trying to sustain our own massively indebted complex societies on annual growth rates of 1.0% - 1.5%. In essence, we're going bust....The fundamental issue in all of this is that politicians won't tell their societies that they/we are indeed going bust. By the same token, many/most folk don't fully appreciate that a society that has emerged on the back of 60 years of a trend of, say, 2.5% pa growth (as is the case in the UK) cannot survive in recognisable form for more than about 5 years, 10 years at the very most, without that society fracturing. China certainly has its problems; we certainly have ours. Our mutual predicament is that "infinite" economic growth predicated on "infinite" supplies of cheap energy, primarily cheap oil, is by definition unsustainable. .....We have entered interesting times.

And the dollar falllsss, and the markets rrrriseee...?? abslute madness...?

LONDON—Euro-zone industrial output declined the most in three years in November, pulled lower by countries in the region's south facing recession as they attempt to cut debt and deficits through austerity policies. The decline is a further indication that the wider economy could contract for a third consecutive quarter in the final three months of 2012 as fiscally frail countries struggle with still-high borrowing costs and demand for goods suffers amid continuing job cuts. Output dropped 3.7% from a year earlier, the biggest decrease since November 2009, when output slumped 7%, Eurostat, the official European statistical office said Monday. Industrial output fell 0.3% in November compared with October, the third consecutive slide on a month-to-month basis. The yearly decline was due to weakness across the board with production of intermediate and capital goods falling at the steepest pace since 2009. In October, industrial output retreated 3.3% on the year and 1.0% on the month, Eurostat said. The October data were revised after previously being reported as falling 1.4% on the month and 3.6% on the year. The November figures were weaker than expected. Economists surveyed by Dow Jones Newswires last week projected the data to show industrial output rose 0.2% on the month and fell 3.2% on the year. The data provide further evidence that the economy of the 17-nation currency bloc contracted for a third straight quarter in the final three months of 2012. "November's euro-zone industrial production data provided further strong signs that the recession in the region as a whole intensified in the final quarter of last year," said Ben May, European economist for Capital Economics. Ireland, Greece, Spain, Italy and Portugal all saw production decline in November compared with October. Italy also published its full industrial production release Monday. Output fell 1.0% on the month and by 7.6% on the year in November last year, a bigger fall than expected. Output has declined for six straight months in monthly terms, and 15 consecutive months on an annual basis. Italy's national statistics agency Istat said the decline was mainly due to a fall in investment and energy output. Eurostat also reported that Germany saw a meager 0.1% monthly increase in November, while in France, output grew 0.5% over the same period.

Norway's foreign minister has urged the UK to assess the advantages of staying in the European Union, rather than consider leaving.

Norway is not in the EU but has access to the single market. UK Eurosceptics use it as a model for how the UK could relate to the EU from outside. But Foreign Minister Espen Eide said Oslo had "limited scope for influence".

"We are not at the table when decisions are made," he told Radio 4's The World This Weekend.  Mr Eide is pro-EU, though Norwegian voters have twice rejected the chance to join the EU in referendums in 1972 and 1994. Sir Nigel Sheinwald, a former UK ambassador to the US and to the European Union, said: "The issue is - do you want to be part of the single market? All the economic indicators are that the UK needs to be.

"But [the Norwegians] have no role in negotiations... they have no impact, no influence and there's no accountability. So this is regulation without representation. "It's the first thing the UK needs to decide, whether it wants to be associated with the single market, from the inside or the outside.

"If on the outside, both the Swiss and the Norwegian models give you no actual impact on the substance of what's agreed."

Conservative MEP Daniel Hannan said he was "not aware of any British Eurosceptics who are arguing that we should precisely replicate the Norwegian model".  He added: "What we're after is something a bit more like what the Swiss have, but actually I think we could get better terms than either Norway or Switzerland."

Prime Minister David Cameron has consistently said he supports Britain's continued membership.

 

In other news: Germany's DIHK say's German exports could grow by 4% in 2013. If you are educated and looking for a decent paid job, good healthcare, 25 day's vacation, maternity leave, a decently maintained road network, public transport that runs on time, airports that don't close when there is 1/10 inch of snow go, speak English then look for a job in the fatherland. They are still making things that people want.

A political and economic system in which underachievers forcibly redistribute their mediocrity to the rest of society

E.U = Socialism: A political and economic system in which underachievers forcibly redistribute their mediocrity to the rest of society...or is it ???....Liberal bloggers always point to socialist Europe as a shining example of how wonderful life can be? Oliver Stone is coming out with a documentary about how Hitler and Stalin were just misunderstood. I read daily about how Europe is in economic free fall and see the same in the tea leaves for America. So death and destruction are goals to admire now??? God help us! Oh yeah, god is dead according to these nihilist lunatics. Oh yeah, I can't say lunatic anymore now that Congress has voted to ban that word. I'll stick with God help us.

Life is actually much better for European working class than in the US. US workers are more and more like obedient little slaves, working two jobs just to earn enough for living. 10-12 hour days and maybe two weeks holiday per year. Then they eat shit food which basically poisons them over the decades slowly but surely, causing high cholesterol, hypertension, diabetes and all sorts of other sicknesses. When they got sick, their health insurance is a form of financial torture, designed to find ways to not to pay. Public education is quite crappy and social safety nets are mostly missing.

The creation of the EU and the common currency was never anything more than a thinly veiled campaign to force European nations into a monolithic Socialist union and help the new Soviet Union (EEC) acquire the production and energetic capacities of Europe, while Germany gets to "administer" the EU states. Economists around the globe warned of the consequences and kept on warning over the last 15 -20 years. The voters in Europe ignored the harsh facts and instead chose bread and circus... and now they reap the benefits of their stupidity and greed. The Forth Reich is ruling Europe since the "independent union nations" budgets have to be approved by the Bundestag before being implemented !!! Deucland uber ales !!!

In a dramatic about-turn, German Finance Minister Wolfgang Schaeuble ditched his earlier objections that had led him to clash openly with his French counterpart, Pierre Moscovici, last week over the ECB's role in banking supervision.
With time running out to meet a year-end deadline, both sides managed to settle their differences and Germany won concessions to temper the authority of the ECB's Governing Council over the new supervisor.
Agreement on bank surveillance is a crucial first step towards a broader "banking union," or common euro zone approach to dealing with failing banks that in recent years dragged down countries such as Ireland and Spain.
The next pillar of a banking union would be the creation of a central system to close troubled banks.
The decision also sends a strong signal to investors that the euro zone's 17 members, from powerful Germany to stricken Greece, can pull together to tackle the bloc's problems. 

There isn't a banking union, and no chance it will happen

As regards any idea of a Federal Europe is concerned it's interesting to see what's happening in Spain which is apparently in danger of fragmentation......"Hundreds of thousands of Catalans took to the streets of Barcelona  in an unprecedented show of mass support for autonomy from Madrid, blaming Spain’s economic crisis for dragging their wealthy region down.The central government said the crowd was 600,000 strong. Catalan police gave figures as high as 1.5 million...They held up banners and signs saying “No to the Fourth Reich”, “No to Europe”, “Independence Now!” and “Catalonia: the New European State”.  Catalans complain of paying billions of euros more in taxes than they receive back from Madrid, even as their regional government has been forced to fire workers and cut services."  In general people don't like the idea of supporting other populations, even within their own country. Asking nations to do it within a federation simply won't work.  There isn't a banking union, and no chance it will happen. They're talking about common banking regulation and Germany has said 'Nein' to Draghi's suggestion.....Reuters - Schäuble said that, despite the current crisis in the Euro zone, the Euro will ultimately emerge as the common currency of the entire European Union. He said he “respects” Britain’s decision to keep the pound, but insisted that the survival and eventual stabilisation of the Euro will convince non-members to join the currency club. “This may happen more quickly than some people in the British Isles currently believe,” he added....I say: Yet another example of the EU apparatchiks trying to gain control of the UK's financial structure by stealth....(and the other non Euro countries) - but the UK is the big target here.   Come on Great Britain! ... cut the head off this serpent and tell the EU to bugger off ... you'll be doing yourselves a great favor, not to mention the rest of Europe...Does anyone in their right mind think trade with the UK will stop if they leave the EU?   The vast majority of UK exports come here to the USA, Germany second, then France. A vast majority of UK imports come from Germany, USA second, then China, Netherlands, Norway, and France.  50 million quid a day dumped into this black hole the EU, and for what?!  Will Germany stop selling to the UK if they drop out of the EU?
Hell no! it's a major part of their economy.

The ECB is understood to be considering setting internal yield band targets under a new bond-buying programme to allow it to keep its strategy shielded and avoid speculators trying to cash in, central bank sources told Reuters. Such a strategy would bring down yields, which translate into the interest rates countries can borrow at, without traders knowing where the ECB will stop buying.  Samaras, who arrived in Berlin with his foreign secretary and finance minister, has spent much of the week arguing that his country should have more time beyond the mid-2014 deadline to complete reforms that are a condition of it continuing to receive bailout loans. Without the help, Greece would be forced into a chaotic default on its debts and could be forced out of the eurozone.

Leading German politicians have voiced deep scepticism about granting Greece any concessions. Merkel and Hollande, meeting a day before Samaras came to Berlin, put the onus squarely on Greece to fulfill its pledges.

Greece has faltered in the speed and effectiveness of implementing the reforms irritating creditors, notably Germany, which is the single largest contributor to its two bailout packages, totalling €240bn.

Merkel said: "To win back confidence, we must fulfill expectations, and so I made clear in the talks that we of course expect from Greece that the commitments that were made be implemented, that deeds follow words.

"But fulfilling expectations also means that Greece can rightly expect from Germany that we do not pass premature judgments." Merkel added that Germany needed to wait for the debt inspectors' report.

The Athens coalition government has said it was considering passing a law blocking politicians from hiring relatives as staff after a series of corruption scandals. (source guardian.uk)

A draft statement leaked on Thursday said the bailout fund would be capped at €700bn and fall back to €500bn when current lending programmes expire, but that a further €240bn would be held in reserve to ensure the fund's lending capacity. At issue is whether a bigger euro firewall will deter the bond markets from attacking the eurozone's weak points – Spain and Italy – by pushing the costs of their borrowing to unsustainable levels, or whether it will simply encourage profligacy.The Germans take the latter view. The Americans, the French, the International Monetary Fund and the Organisation for Economic Co-operation and Development argue the bigger the firewall, the greater the deterrent and therefore the less likelihood that the fund will need to be used."The bigger the firewall, the less risk weaker countries will be attacked by the markets," said François Baroin, the French finance minister. He said the fund should extend to €1tn, a figure also used this week by Angel Gurría, head of the OECD, calling on Europe to create "the mother of all firewalls".That demand was dismissed on Thursday by Germany's finance minister, Wolfgang Schäuble, who is tipped to take over the chair of the eurogroup from Jean-Claude Juncker, the prime minister of Luxembourg, although that decision may be postponed on Friday. "You can make a firewall as high as you want and it will be no help," said Schäuble.

The European Central Bank announced a shakeup in responsibilities on its board yesterday

EU, IMF and ECB inspectors are expected in Athens mid-January to flash out the new bailout plan agreed in principle by EU leaders in October to avoid a Greek default and a euro exit. Opinion polls show Greek voters want the government to do all it takes to stay in the euro even if they disagree with austerity reforms. Asked if the government would have to take extra austerity measures to make up for last year's fiscal slippages, Mr Kapsis said: "We will see. There could be a need for extra measures." The talks with bankers on a debt swap deal that is a key aspect of the rescue plan are particularly difficult. "The next three to fourth months are the most crucial and that is the reason this government exists," Mr Kapsis said. Prime Minister Lucas Papademos said in a New Year's Eve address over the weekend that Greece must stick to reforms to stay in the euro.if Greece had left the Euro months ago they would already be on the road to recovery. Instead they are receiving special drawing rights SDR's the New World Order currency from the IMF and getting deeper and deeper in trouble. Just go bankrupt Greece and save what you got left, democracy, people will win this battle if you don't, we are all doomed to having chips under our skin and a world currency.

The European Central Bank announced a shakeup in responsibilities on its board yesterday, as two new members arrived to replace Jürgen Stark, the German member who resigned amid controversy about the bank's role in the spiraling sovereign debt crisis, and Lorenzo Bini-Smaghi of Italy. Peter Praet, a Belgian technocrat who was already a member of the ECB governing council, has been handed the role of chief economist previously held by the hawkish Axel Weber, who left last year after expressing skepticism about the ECB's bond-buying program, which has helped to drive down Spanish and Italian borrowing costs. Praet was given the job ahead of ECB newcomers Jörg Asmussen, from Germany, and Frenchman Bernard Coeure. That decision avoids a potential controversy about whether a German or French number-cruncher should have the role, at a time when Paris and Berlin have different views about the ECB's responsibilities in tackling the sovereign debt crisis. French president Nicolas Sarkozy has made clear he would like to see the ECB acting as a lender of last resort, a view shared by Britain; but German chancellor Angela Merkel has repeatedly rejected the idea, fearful it could unleash inflation.

I'm happy to call The United States MY HOME !!!

U. S. - On the bright side, the corporate sector is surprisingly healthy. During the third-quarter reporting season, a majority of companies beat expectations and the average earnings per share reported was higher than predicted at the beginning of the season. Goldman Sachs's estimate for earnings growth next year for the constituents of the S&P 500 is down on this year's 17pc but, at 11pc, is strong enough. Businesses are also beginning to dust off spending plans again, with fixed investment by companies rising at an annualised rate of 15pc in the past two quarters. The US has been the most resilient of the world's major equity markets this year but it has still been relatively disappointing. As a consequence, shares in the biggest companies are on average trading at less than 12 times earnings. Valuations are back to where they were 20 years ago when the dotcom bubble wasn't yet a twinkle in investors' eyes. The key reason to prefer the US today, however, is the commitment of the Federal Reserve to providing economic stimulus when necessary at a time when the hope that the European Central Bank will do the same in Europe looks ever more forlorn this side of a market catastrophe. If you believe that high quality, defensive stocks with an exposure to faster-growing emerging markets will be the safest haven in a difficult investing environment then the US remains the best place in the world to go looking for them. I'm happy to call The United States MY HOME !!!

Most notably, the Dow Jones Industrial Average jumped 700 points in the last three days of November to give the index an overall gain of 0.8 percent for the month. Much of the market's returns are determined by surprises, not simply by good or bad news. A company can experience its greatest quarter ever and still see its stock price hammered simply because the outstanding news still wasn't as good as the market expected. The same is true of bad news: A stock can soar if its company reports overall poor results that were much better than expected. The market as a whole responds similarly. In this case, we see the IMF action to provide liquidity to banks on a major scale, addressing the liquidity problem threatening the markets. Also, many economic indicators -- such as consumer confidence numbers, employment numbers and retail sales figures from the past weekend -- were all positive surprises. The market reacted accordingly.

Therefore : always keep in mind these two issues. Your plan should realize that surprises will occur and that just because things are bad (or good, for that matter) doesn't mean it will continue that way.

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.

Mr Schauble said eurozone finance ministers, who are meeting in Brussels, could not agree on the terms of the European Financial Stability Facility (EFSF). He told Germany's Handelsblatt that although Europe desperately needed a fund "capable of action", plans for the EFSF were too "intricate and complex" for investors to understand. The finance ministers, who were meeting ahead of a full Ecofin summit today, admitted the €440bn (£376bn) fund was unlikely to win support to leverage it up to €1trillion. It would be closer to €625bn instead. There was also disagreement about whether the bank recapitalisation programme should be carried out nationally or by Brussels. However, Mr Schauble concurred that the €8bn of international aid to Greece should be disbursed before Athens runs out of cash in two weeks. Evangelos Venizelos, Greece's finance minister, said: "In Greece we have all the necessary conditions in order to go ahead with the next disbursement. It was seen as a small advance amid the worsening crisis. Italy was forced to pay a crippling 7.89pc - the highest level since 1996 - to raise €3.5bn of three-year debt. Meanwhile, the ECB admitted it had failed to attract enough deposits from European banks to balance out the sovereign bonds it has recently bought. As part of its strategy called "sterilisation" the bank said it had asked European banks for €203bn of deposits for a week but had only attracted €193bn. Although small, the €9bn shortfall was a rare failure.Here's what Didier Reynders, Belgian finance minister , said on his way in: ""We will discuss with the ECB. The ECB is an independent institution, so we will put on the table some proposals and after that it is for the ECB to take the decision." Jan Kees de Jager, his Dutch colleague, said that the main bailout find, the EFSF, could only be boosted 2.5 times at most (that is, to around €626bn, rather than the hoped-for €1 tn) and added: ""We will have to look at the IMF, which can also make available additional funds for the emergency fund. I think countries in Europe and outside of Europe should be prepared to give more money to the IMF. Then you have more money but it's still not enough." Greece hopes they will now get their long-delayed "sixth trance" - or €8 bn - after tonight's meeting. The French prime minister François Fillon has dismissed a report in the French newspaper La Tribune that suggested credit ratings agency Standard & Poor's could cut its outlook on France within day. Fillon told Reuters: "I can tell you that La Tribune is reporting nonsense."...The Euro-zone project was just another case of the elites being detached from the majority of the population.....In the UK, the upper tiers of society have no regional identity or loyalty. From an early age, any traces of a regional accent and identity are removed. From this section of society, someone from Cornwall and someone from Manchester, will sound the same and have a similar outlook on life. For the majority of the UK population you can tell where they come from as soon as they start speaking....The elites in Europe, probably have the same outlook on life and to them the Euro-zone made sense. It did make sense in their little world. But, the outlook on life, of the majority in the Mediterranean countries and those of the Northern nations are fundamentally different. Trying to make them the same over a few years is never going to work, no matter what regulations you try and put in place.....I love the way the Italians & the Greeks are told by Merkelozy via their unelected new governments are going to give grief to their populations. Already the Greeks riot! Let's wait until the italians understand what is being planned for them! Come on let the Euro die!!! Better to have the grief which we are told will happen with their local currency BUT at least they are in control of their grief & will better understand! Can't wait for France to lose its AAA!! Who will Merkel have meetings with ? Luxembourg???

Markets fall as Germany fails to sell 35pc of the bonds it offers at auction

"The scale of the deterioration is surprising, but it seems that manufacturing is the sector probably most affected by the spillover from the financial tensions of the sovereign debt crisis, because it is highly cyclical," said Clemente de Lucia, economist at BNP Paribas.The 17 nations using the euro suffered the deepest fall in new industrial orders since December 2008, well below analysts' forecasts of a 2.5pc fall. The core nations of Germany, France, Italy and Spain all registered sharp contractions, the EU's statistics office said. The 6.4pc drop in orders of capital goods, which indicates investment in new machinery, shows factory managers are pulling back on expansion plans and hoarding cash as the debt crisis shatters business confidence. Falling export demand from Asia, fewer new orders, unemployment at 10pc and weak consumer confidence are combining to create a very difficult business environment. "This clearly indicates that we are now entering into a recession," said Peter Vanden Houte, economist at ING. "It is now very clear that this debt crisis has also affected the real economy, and the real economy is now going down." He said banks in peripheral eurozone countries are facing deposit withdrawals that could create a credit crunch, further slashing industrial orders. He said output in the fourth quarter will be "quite negative", as could the first quarter of 2012.

"If you want a vision of the future, imagine a german boot stamping

A total of £36.2bn was wiped off the UK's biggest companies on Monday as the FTSE 100 dropped 2.6pc. European markets lost more. The Stoxx Europe 600 index fell 3.2pc; the French CAC and German Dax sank 3.4pc each; Italy's MIB dropped 4.7pc and Spain's Ibex fell 3.5pc. US markets also fell, with the deadlock on plans to cut America's debt driving the declines. The costs of insuring Spanish, Italy and French debt rose. The International Monetary Fund (IMF) said global growth was "slowing down". Min Zhu, IMF's deputy managing director, said: "Last year the world had 5pc GDP growth rates by IMF PPP measures, we forecast this year 4.4pc, with the downgrade in October it became 4pc. And I can tell you even that number becomes too optimistic. If we further adjust that, it can only go down, particularly for the advanced economies."Investors were shocked by the rapid downward revision of the Bundesbank's prediction: five months ago, the central bank forecast growth of 1.8pc in 2012. On Monday in its monthly bulletin it said Europe's powerhouse economy could suffer "pronounced" weakness if the euro zone debt crisis continued. The Bundesbank sharply lowered Germany's growth forecast for next year to 0.5pc - savagely knocking confidence in Berlin's ability to solve the rapidly intensifying crisis. Meanwhile there were fears that France would succumb to spiraling borrowing costs as Moody's warned that the country could lose its cherished AAA rating. The doubts pounded confidence in Europe's fragile rescue mechanisms. The ability of the European Financial Stability Facility (EFSF) to raise debt would be seriously damaged if France lost its credit rating. The bail-out fund - designed as Europe's €1trillion "big bazooka" - has already struggled in the bond markets while leaders deliberate over the funds structure. How many times do we have to say it. We will not print money. Every German knows the history of the Weimar Republic. A better solution is an expanded EFSF combined with austerity. The markets need to give us time to adjust our constitutional constraints to allow for a further commitment to the facility.

Last night's farewell gala in Frankfurt for ECB president Jean-Claude Trichet, who steps down at the end of the month, was a lavish affair by all accounts. The two-hour event at Frankfurt's historic Alte Oper concert hall, interspersed with musical interludes, was attended by a number of political dignitaries such as former French president Valery Giscard d'Estaing and former German chancellor Helmut Schmidt who fell over themselves to praise Trichet as a great European. Schmidt, wheeled onto the stage in a wheelchair, used the opportunity to lash out at the "dramatic inability of the EU's political bodies to curb the dangerous turbulence and uncertainty". Only the ECB directorate, under Trichet's leadership, he said, had proved effective and able to act. "The constant talk of a 'euro crisis' is mere chatter on the part of politicians and journalists," Schmidt said. "In truth, we have a crisis in the ability to act of the EU's political bodies. This inability to act is a much bigger danger for the future of Europe than the over-indebtedness of individual eurozone countries." Trichet, who turns 69 in December, will hand over to Italy's Mario Draghi on 31 October. The farewell gala began with a short film spanning the Frenchman's eight-year reign and ended with a concert by the Mozart Orchestra under its founder and chief conductor, the legendary Italian maestro Claudio Abbado.

The Spanish and French bond auctions have gone reasonably well this morning. Spain sold €3.91bn of government bonds in its first auction since Moody's cut the country's sovereign rating by two notches on Tuesday. France sold €7.49bn of fixed coupon bond and is due to sell inflation-linked debt later, only days after Moody's warned its top credit rating could be under threat.

The news from Brussels is that the European Financial Stability Facility is likely to be increased through means of a guarantee system. Eurozone officials are briefing that the EFSF will promise investors who buy Spanish, Italian or other debt that it will cover a portion of losses, potentially allowing it to guarantee a lot more debt than the fund is worth - €440bn. The guarantee idea is not new, but suggestions that it is the most likely solution is interesting. "This idea is the main contender," an unspecified eurozone official told Reuters. Some more poor statistics, this time from Germany. The ZEW Institute's monthly survey of German analyst and investor sentiment shows confidence falling to its lowest level in nearly three years. ZEW economist Michael Schroeder said he thought the country may already be in recession. he September figure should represent a peak in the rate of inflation, with petrol price rises and January's VAT hike falling out of the year-on-year comparisons in the fourth quarter and the new year respectively. Commodity prices, which tend to lead consumer prices, have fallen just over 10% from the peak seen in February, which also suggests we should see some further downward pressure on inflation.

Deepening economic gloom has forced Europe's biggest retailer, Carrefour, to issue its fifth profit warning this year and Germany's leading independent forecasters to highlight the risk of a recession in 2012. As EU policymakers struggle to find a common solution to the sovereign debt crisis within the next two weeks, the real economy is rapidly deteriorating as confidence seeps from consumers and investors. France-based Carrefour blamed "an increasingly uncertain environment" for an expected fall in operating profit this year of up to 20%. Only six weeks ago it said the decline could be 15%, prompting analysts to suggest the group's guidance was worthless. Across the Rhine, the eight leading German economics institutes slashed their earlier growth forecast for next year from 2% to just 0.8% and warned of an even deeper downturn if there is a "credit event" in Greece or elsewhere in the eurozone. Germany grew just 0.1% in the second quarter of 2011 but the full-year result could still be 2.9% after a huge spurt in the first quarter. The IMF is forecasting 1.3% German growth next year. In France, a Reuters poll of 20 economists resulted in a growth forecast of just 1% in 2012 after 1.6% this year. In its recent budget the government forecast 1.75%. It was the poor performance of its French hypermarkets, with sales down 4.4% in the third quarter, that drove Carrefour to issue its latest profits warning. Pierre-Jean Sivignon, Carrefour's chief financial officer, said the decline in consumer sentiment had hit "discretionary" (mostly non-food) spending – down almost 10% in France – and economic conditions were likely to remain challenging.