The European Commission reacted on Tuesday, after the deputies of the Commission for Industries and Services have passed a series of amendments to the Natural Gas Law, according to which the gas producers will be required to fully trade their output on the OPCOM, with the Romanian Commodities Exchange being left out in the cold. Currently, they have licenses for the trading of natural gas on two entities: the Romanian Commodities Exchange, private company, and the OPCOM, a branch of Transelectrica, in which the state owns 58.68%. The amendments made in the Commission for Industries would leave the BRM without a license. On Tuesday, the European Commission wrote to Iulian Iancu, the president of the Commission for Industries, that the proposal for the production of natural gas to be traded completely on the OPCOM is problematic.  The commission thinks that moving trading to the OPCOM is not recommended, as the BRM is currently a more liquid market, and granting exclusive rights to the OPCOM raises competition issues. Also, the Commission considers that the trading of 100% of the natural gas output on an exchange can be excessive. A warning letter concerning the "severe consequences" of the amendments to the Law of natural gas was recently received by the president of the Chamber of Deputies Liviu Dragnea, from the PEGAS European natural gas platform. That letter also arrived, among other places, at the Ministry of Energy, the ANRE and the European Commission. It is debatable whether the amendments are compatible with the competition laws of the European Union, since they limit the ability of offering trading services, amid the obligation of using only one platform, according to PEGAS, which also says that there is a risk that the platform used by the operator would not reflect the requirements of the market.  Furthermore, the measures proposed can raise an obstacle in the implementation of the EU package of energy, which would lead to an isolation of the Romanian gas market, says PEGAS, the trading platform of the German EEX Group, operated by Powernext, in France. PEGAS had 238 members and offers access to the trading of natural gas on contracts from Austria, Belgium, Holland, France, Germany, Italy, Denmark, Czech Republic and Great Britain.

Russia - "Experts estimate that some 400,000 to 500,000 citizens could apply for bankruptcy,".  So Putin is like Great Britain in the Suez Crisis, his economy is falling and when more sanctions hit he will have to make a choice. Plus new travel bans and his financial empire (purchased by Russian Taxpayers) exposed. The Oil prices is falling and set to remain low. His population is falling and people leaving Russian for their Human Rights. The cost of running a foreign war will hit the Soviet budget.  Russia like Britain is no longer an Empire, get over it Mr. Putin. Russia has previously allowed companies to declare themselves bankrupt but not individuals.

Russian banks encouraged people to take out loans and mortgages during the boom years of high oil prices and many are now struggling to make the repayments, particularly those who took out loans denominated in foreign currency before the ruble plummeted last year on the back of low oil prices and Western sanctions over the Ukraine crisis. Some experts have questioned how many will actually be able to do so, due to the relatively high cost of the procedure. Banks, however, fear that a large number of lenders will use the law to avoid paying back loans, with the number of delayed payments already soaring over the past year. "I receive many such letters [on the issue] and behind each is a personal tragedy," said the deputy president of Russia's central bank, Vasily Pozdyshev. "Experts estimate that some 400,000 to 500,000 citizens could apply for bankruptcy," Mr Pozdyshev said. "The law is entering force at an inconvenient moment," wrote Vedomosti business daily. "Debts on consumer loans today total six trillion rubles, while mortgage debts total three trillion rubles."  "Formally, just under 600,000 Russians fall under the terms of the law."

The Economist 2015 cover - At first glance, we see political figures like Obama and Putin, references to the Rugby cup and the new Spider-Man movie. But a closer look reveals a plethora of disturbing elements. - The Economist is not a random newspaper that publishes quirky 2015 predictions to sell a few additional copies. It is directly connected to those who shape global policies and who make sure that they are applied. The publication is partly owned by the Rothschild banking family of England and its editor regularly attends Bilderberg meetings. In other words, The Economist is connected to those who have the means and the power to make “predictions” a reality.  The 2015-themed cover basically reflects the overall Agenda of the elite and is peppered with cryptic symbols that appear to be included for “those in the know”. And the masses, like Alice watching the Cheshire Cat disappear, will focus on illusions while the wolf in sheep’s clothing will strike … and strike hard....The presence of the Pied Piper on this 2015-themed cover is downright unsettling. The Pied Piper of Hamelin is a German legend about a man who used his magical flute to lure away the children of the city of Hamelin, never to be seen again....This folkloric figure dating from the Middle-Ages is said to represent either massive death by plague or catastrophe, or a movement of massive immigration. It also perfectly represents today’s youth being “lured” and mystified by the “music” of mass media. Conveniently enough, there’s a small boy right under the Piper’s flute.

Crude dropped to its lowest since April 2009 in the wake of a glut of supply, triggering more swings in share prices after heavy falls on Monday.  At one point Brent crude fell 2 per cent to $51.23 a barrel and US crude dropped nearly 3 per cent to $48.47, adding to market worries about a possible Greek exit from the euro.  The UK's FTSE 100 index of leading shares plunged as much as 78 points, after a 130 point drop on the previous day, before staging an afternoon rally to close down 50.7 points to 6366.5 points.  Shares in Germany and France were also under pressure, as Wall Street fell 141 points in early trading following Monday's 331 point slump.  Oil prices have been driven lower by a combination of higher US shale gas and oil production and a refusal by Saudi Arabia to cut output.  Alastair McCaig, analyst at broker IG, said: "Commodity prices continue to play havoc with the FTSE."   Despite market volatility, chief European economist Jonathan Loynes at Capital Economics predicted UK economic prospects would be improved by lower energy costs which would hold down inflation. 

Capitalism covers a very wide range of systems, and is not the direct culprit for our problems. However, the way capitalism is implemented today is a big problem, it is undermining democracy and radicalizing large portions of the population. It will not end well, if this trend is allowed to persist.

Probably the single most harmful detail is the stock exchange. There are many other issues also, but shareholders in particular have been given the rights of owners, which is illogical, as they are in fact speculators. The owners should be the long term caretakers of corporations, with managers more interested in short term benefits. All shareholders care about is the short to mid term value of the stock, not the long term viability of the enterprise. To get the managers to play this game, they have given managers salaries that approach investor profits in scale. As a result, capitalism has gone bananas, not caring for long term viability, the communities they function in, the environment, the law, not even the customers .... share value is all that counts these days and no cost is too great to achieve it.

Democratic Capitalism need not be like this, it is just the default mode of operation it will slip into if left unattended. And this mode is bent on self-destruction, with a tendency to degenerate into Fascism or Communism ... if left to play out its natural course. If this is not to happen, the democratic part of Democratic Capitalism needs to be more pronounced...point / counterpoint...Capitalism works because entrepreneurs and managers figure out how customers, employees, suppliers, communities, and people with the money all can cooperate to benefit....No it doesn't.

• Capitalism works by creating profit. Where there is profit there is deficit.
• Capitalism works by making profit out of the exploitation of those who create that profit in the first place. This is why workers are not paid the actual value of what they produce, because the capitalist or entrepreneur cant make any profit out of that.
• Capitalism may not be perfect, yet it is the greatest system of social co-operation ever created thus far.

No it isn't, the greatest system of social co-operation is where everyone is equal and treated equally, that is true co-operation. Capitalism is exploitation of the masses for the benefit of the minority.

There is probably no way to know whether conflicts in the brokerage business are more severe or common than they used to be.

But they aren’t hard to find. An adviser might earn undisclosed fees that could taint his objectivity or recommend mutual funds run by his firm over cheaper third-party choices; he could collect upfront commissions on funds right before moving the client’s assets to a fee-based account.

Often, the code of conduct meant to guide brokers’ behavior doesn’t require them to act in their clients’ best interest. The Finra report urges firms to adopt such a proviso. Some firms don’t give brokers specialized training to sell complex products like “structured notes,” debt securities whose returns depend on factors beyond interest payments alone.

However, other firms review such products after launching them to see whether they perform as promised and to learn whether they have been sold to investors—or by brokers—who don’t understand them.

“That’s a strong process,” Ms. Axelrod says, “and one that I would strongly suggest that firms consider adopting.”

Some brokerages, according to the Finra report, refuse to offer higher payouts for selling in-house mutual funds or other investments; that might help prevent brokers from pushing funds that benefit the firm more than the client.

Spain's prime minister, Mariano Rajoy, has announced a further round of cuts, despite worries that austerity measures may prolong a recession that has left more than a quarter of Spaniards unemployed.

Rajoy said the measures, which would be announced in detail on Friday, were necessary as Spain battles to bring down the European Union's highest budget deficit, which reached 10.6% of GDP last year. "We have taken difficult, unpleasant decisions, but we have done so because it is absolutely necessary. Otherwise, we would be destroying the future," he said.

His announcement came amid reports that Brussels is set to significantly relax this year's deficit target, set at 4.5% of GDP.

Last year's deficit was inflated by a €40bn (£34bn) banking bailout, but it would still require major cuts or tax rises to reduce the underlying deficit from 7.1% to 4.5%.

The International Monetary Fund (IMF) boss, Christine Lagarde, last week added her voice to a growing wave of concern that austerity has gone too far and could prevent Spain from exiting recession.

"We favour a reasonable and sensible adjustment for Spain rather than focusing exclusively and excessively on deficit reduction," she told Spain's Expansion newspaper.

Spain's recession eased slightly in the first quarter, with output shrinking 0.5% compared with a 0.8% fall in the previous quarter. The country has been in recession for 21 months.

Jobs will not come until significant growth reappears. And with the economy expected to shrink by 1.5% this year, that will not happen soon. The IMF predicts unemployment will hit 27% next year, further reducing the spending power of Spanish families.

Rajoy said he would resist increases to VAT and income tax. But he has been under pressure from Brussels to increase revenue, and may have to raise indirect taxes.

There was good news, however, from bond markets, where Spain's borrowing costs fell again, bringing the gap between the interest Germany and Spain must pay to borrow money for 10 years down to below three percentage points for the first time in a year.

So what are we expecting from this summit? The leaders divide into two camps - the fiscally conservative northern countries and those in the south and east that stand to benefit from more money for infrastructure and agriculture. It is believed that in the build up to the summit some consensus was reached around a budget of €950m - which would be a reduction on the last seven-year spending cycle. This will please the northern bloc. But it is also believed that in a concession to the south, the bulk of the spending, around 40%, would still go on agriculture and related farm subsidies. Indeed, two of the biggest recipients of farm spending - France and Italy - have hinted they could block the budget unless their appropriations are maintained. It is far from clear that the leaders will reach an agreement this time round, though if talks collapse its possible no resolution will be reached until late 2014.,,,Angela Merkel seems pessimistic on the prospect of resolution at this summit. I can't say whether we will be successful, the positions are still far apart. For Germany I can say that we will do everything for such an agreement to materialize because it is very important in a time of economic uncertainty and high unemployment to have a plan. We have to be careful with the way we spend but also show solidarity between net contributors and recipients. Whether we will have a joint vote or whether we will get into a situation where we will have annual tranches in the future I can't say today. It would be desirable to have a joint result but we have to wait and work hard, and that's what I will do....Well now... Why do central bankers and Treasurers from around the world invariably insult our collective intelligence with bland assurances that the euro/US dollar/sterling is in good shape/has weathered the storm/will gradually recover when it is so blindingly obvious that these statements are untrue? Not only are these statements patently false but the people who make them are almost invariably implicated in the processes that created or exacerbated these problems in the first place. If they do it to try to convince the bond and currency markets, then they are doubly stupid because markets are operated by real people putting real money on the line that generally have a low tolerance for bullshit.... Dragi thinks we are the fools that his tin pot immoral and primitive theory of the justification of unaccountable rule by selfish self enrichers defines us as. We are ignorant little people to whom he can feed any lie he likes. He thinks we shall swallow it as if thinking Tizer were little more than a tasty form of the latest exotic continental Lager. He and his kind shall soon be spat out with the same force as a proper beer drinker would Tizer if anyone were so foolish to attempt such a wildly insulting trick. With apologies to Tizer for coming anywhere close to such unpleasant people, if only, by way of metaphor.

THE WALL IS BEING REBUILT...

THE WALL IS BEING REBUILT...we, the Romanians, as well as England seriously have to get out NOW...the fact that they are even THINKING about asking why someone would want to move is sickening!!!!

It would be far better to leave the EU than to keep saying 'no' to everything. Of course, we could just say 'yes' instead but that would be anti-democratic, as the British people, via Parliament, have decided not to.
This is the crux of the matter; the EU is an inherently anti-democratic machine and has nothing whatsoever to do with trade. It is time that this 'red herring' was netted and gutted. Then again, the Common Fisheries Policy doesn't allow us the freedom to catch this type of fish as and when we want to in our own waters.

A google translation of news from today from germany:

"Handelsblatt": European Commission wants to prevent legal tax avoidance
For "anti-abuse clause" in national tax laws...The European Commission wants to press action against it that companies and wealthy citizens escape by moving within the EU taxation. The EU member states would have to an "anti-abuse clause" in their national tax laws add to remedy the situation, told the newspaper "Handelsblatt" (Wednesday edition) of Commission circles. The clause is intended to enable the tax authorities to check migration willing companies or individuals. Affected businesses and citizens would have to show that there is in addition to the tax or otherwise, for their move to another country. The complaint about the lack of tax compliance by companies and wealthy citizens by moving to another country is widespread.

The "details" of a soap bubble ...

European Central Bank president Mario Draghi is expected to announce the details of a bond-buying programme to help keep down borrowing costs of crisis-hit countries later on Thursday. Leaks suggest it will involve unlimited purchases of government debt that will be "sterilised" to assuage concerns about printing money. The bond-buying scheme is rumoured to be called the "outright monetary transactions", with a shorthand title of OMT.

 

Maturity

The life of a bond, at the end of which it will be repaid in full. A bond's maturity can be as short as a year to as long as 100 years.

Seniority

This refers to how likely you are to be repaid if a bond issuer goes bankrupt. Bondholders with seniority over others will be paid back before other bondholders. There was some concern that the ECB would demand seniority over other bondholders when it undertook the bond-buying scheme, but leaks now suggest otherwise.

Unanimity

Was the ECB governing council united in backing Thursday's decision, or was there opposition? Bundesbank head Jens Weidmann has spoken out against a bond-buying programme before – is he now onside? Was the ECB split over interest rate levels, or were the decisions unanimous? Draghi's answer to these questions (which will surely come up) could be crucial.

Pari passu

A Latin phrase meaning "equal footing". In the bond markets, this means bondholders will be treated the same if a bond issuer goes bankrupt. Any purchases the ECB makes as part of its bond-buying programme are expected to be pari passu with other bondholders.

Collateral requirements

The ECB asks banks for collateral in return for taking out cheap loans. If they relax collateral requirements, they can accept a wider range of assets as collateral from banks. They have already relaxed these requirements, and can now accept everything from bundles of car loans to mortgage-backed securities.

Conditionality

This is the way the ECB would keep the Germans happy, by imposing conditions on receiving assistance from the ECB; so, if the ECB helps keep a country's borrowing costs low by buying up its bonds, that country may have to agree to some strict austerity. Without conditionality it would be easier for the ECB to unilaterally intervene.

Convertibility risk

This refers to the risk that you will buy bonds denominated in euros but could ultimately be paid back in lire or drachma (or deutschmarks) if the country taking out the debt leaves the eurozone before the end of the bond's life.

Unlimited intervention

Exactly what it says on the tin. Expectations are that the ECB will not put a limit on its bond buying. This is seen to be an improvement on the previous bond-buying programme, which was limited in size and therefore lacked credibility in the markets. If other traders do not believe the ECB has the firepower (or inclination) to buy enough bonds to bring down yields, they may continue to bet on them rising.

Sterilisation

This makes sure the money supply does not increase as a result of the bond-buying programme. When the ECB buys bonds, it is injecting liquidity into the financial system, effectively creating new money. To counteract that, the ECB has in the past followed bond purchases by subsequently draining an equal amount of liquidity from the system. It does this at the weekly deposit tender by increasing the rates it will pay commercial banks to deposit money with the ECB. The idea is that this will encourage banks to deposit more money with the ECB, thereby taking it out of the system.

Yield cap

Rumour had it that the ECB would set a yield cap on certain countries' government bonds. This would mean if the yield looked like it would break through that level, the ECB would start buying bonds to push prices higher and bring yields back down.

The European week in review - our so called union...

- Another bailout in Spain.
- Another Eurogroup meeting in Brussels.
- Another speech about shared debts in Cyprus.
- Another case of unconstitutional pay cuts in Portugal.
- Another debate about renegotiating bailout conditions in Greece.
- Another delay of VAT increase in Italy.
- Another frustration in Germany.
- Another threat from Finland.
- Another sign of utter indecisiveness in Holland.
- There is no Europe. It has never existed, does not exist and will never exist.

Sunday posting - "the German fist"

European leaders will discuss whether to weld the funds together at a summit in Brussels this week. But, Germany has so far refused to say whether it would support such a move.... Germany also raised doubts that finance ministers would come up with a deal on IMF funding this weekend. “I expect no decision at the G20 summit on boosting the IMF’s resources,” said Jens Weidmann, head of Germany’s central bank. ...Other major contributors to the IMF are insisting that Europe must combine its two existing bail-out funds as a pre-condition of any extra money from the IMF. The European Financial Stability Facility, which is worth about €250bn, will be joined this summer by the €500bn European Stability Mechanism. “We have to take a hard look at the firewall,” said Angel Gurria, head of the Organisation for Economic Co-operation and Development. “The bigger, the thicker, the deeper and the taller it is, the more credible it will be and the less likely it will have to be used.” Becoming the first member of Germany’s cabinet to openly call for a Greek exit, Hans-Peter Friedrich told Der Spiegel magazine that Greece’s chances of restoring its financial health would be greater outside the euro. “I’m not saying that Greece should be thrown out but rather to create incentives that it can’t say ‘no’ to,” he added.

I think that the ECB deserves a pat on the back for smoothing the path for Greece. Once this Greek blip is out of the way things will settle down. The Euro of course strengthened which was on the cards months ago (unless you were a trader or economist ) and now we may see a weakening US Dollar as America attempts to recover some ground. It has a long way to go as further banking problems for the US may be on the cards. The United States of Europe remains solid and further announcements will further strengthen the Euro. We can discount any talk of so called ‘recession’ in Germany. It is not really true. Just a tool to move focus as said earlier. Germany along with several other of the states of Europe have juggled numbers in order to satisfy some underhand deals that were done on the markets. It was very unethical and it has cost the markets dear but it serves them right and I have no sympathy. Angela Merkel's spokesman said Greece must move swiftly to return to a sustainable and viable path. Steffen Seibert, speaking on behalf of the German chancellor said: "This is not a question one can take a lot of time to tackle, it is important that the negotiations now come to an end." Typical Fench hypocrisy. CDS viewed as rogue transactions and part of the horrid Anglo-Saxon casino efforts to subvert the good French stats, centrist, clientelist, protectionist, foist on everybody else through the € economic model, get taxed at 0.01% rather than 0.1% for shares. Investors shrugging off a slump in German exports and French forecasts of zero growth for the first quarter. Do they know fascist politicians will spend taxes, collected from those with the least, propping up share values? More fascist EU imposed co2 emissions rules on vehicles forcing companies to purchase much more expensive 2 year old models to comply with their global warming money making scam. All the unnecessary costs will filter down to end prices. Rising prices will see more and more companies go to the wall as consumer are hit hard in their pockets with the added burden of fascist governments raising taxes NIC and VAT to fund their wastefulness, greed and more non job vote bribing. The council rip-off tax stays the same or keeps rising to save the fascist public sector fat cat workers any pain. We are being severely forked over by these political fascist scum.

Italy - Another country destroyed by the EU fantasy (in fact hitler's dream). Truth is Italy is not bust . It is the euro which is causing all the problems, Italians as individuals are wealthy. So to whom do they owe so much money ? This whole fiasco is a nonsense and I bet someone is getting very rich off the back of this non-existent default. As usual, the wealthy will be untouched . It is the PAYE taxpayers and pensioners who will be hardest hit.I do not know if politicians are even aware of the enormity of their world ! for they walk into their seat in their parliament nowadays straight from university, rarely from a work arena.... and they have legions of civil servants to teach them the ropes so what is a parliamentary MP but a mouth piece a celebrity face... ...I believe Lee kwan Yew was a true hands on politician,a peoples politician a true honest disciplinarian who knew human nature much better than many of the people today actually do! Far sighted intelligent and generous man who had a plan and saw it into fruition! Europe has no such leadership, only it seems our appeasing the minority with a gripe! Instead of serving the majority who enable a way of life....Greece, Portugal, Spain and Italy should never have gone into the Euro, nor Ireland. Only Germany, France and the UK could make it work and who needs a 'Euro' anyway. There is not one single benefit to anyone . Businessmen say it works because currency fluctuations work against. They forgot they also work for them. If our goods are not competitive because of exchange rates, then manufacture them in the countries where you want to sell to. Did Waterford crystal do well out of the Euro ? Or Woolworths ? Good businesses got along just fine for hundreds of years without the Euro !

TWO NAMES : Horst Reichenbach = GREECE'S APPOINTED GOVERNOR and Klaus Regling = CEO - ESFS !!!! THE GREEKS ARE WRIGHT !!! ...At a press conference Mr Sarkozy said: "Our Greek friends must decide whether they want to continue the journey with us. "We cannot commit European taxpayers' money unless the rules unanimously adopted in Brussels are respected to the letter." He was flanked by Mrs Merkel, who added: "The referendum will revolve around nothing less than the question: does Greece want to stay in the euro, yes or no?" David Cameron said that the world was facing a "financial storm" as Greece may now be forced out of the single currency. Simon Johnson, the former chief economist at the IMF said Europe was "looking straight into the face of a great depression". The National Institute of Economic and Social Research said that Britain had a 70 per cent chance of falling back into recession under the "increasingly more likely" scenario that the euro crisis will not be resolved imminently. The Prime Minister will travel today to the G20 summit but is expected to be little more than a bystander as key meetings take place between European and American leaders. The British government has refused to contribute money to help the euro but European leaders are expected to lobby the Chinese, Russians and Brazilians for loans. An EU diplomat claimed last night that European leaders thought they had been misled by the Greek prime minister – as he had used the threat of a referendum during a eurozone summit last week in order to win concessions. "Everyone thought the threat had been dropped. Only one way to describe this: 'absolute bloody fury'," said the diplomat. "If it wasn't a case of mutually assured destruction this would be the moment that it is game over for Greece." With Greek national opinion currently against perceived European interference in its affairs, the country could be forced out of the single currency in a disorderly and chaotic manner. The removal of EU support comes as Greek politicians begin discussions on whether to vote in favour of a no–confidence motion in Mr Papandreou, which could trigger the government's collapse. European leaders are hoping that, by increasing dramatically the pressure on Greece, politicians may demand that the referendum is scrapped. An IMF source said: "The [IMF] board would not want to give money to Greece and then wonder what will happen. The board will want comfort that Greece will fulfil its commitments and right now Papandreou is unable to give that." There are mounting fears that the Greek crisis will fatally undermine Italy's economy in the coming days.

German finance minister Wolfgang Schauble said it would be a folly to boost the EU's bail-out machinery (EFSF) beyond its €440bn lending limit by deploying leverage to up to €2 trillion, perhaps by raising funds from the European Central Bank. "I don't understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said. Mr Schauble told Washington to mind its own businesss after President Barack Obama rebuked EU leaders for failing to recapitalise banks and allowing the debt crisis to escalate to the point where it is "scaring the world". "It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," he said. The comments risk irritating the White House. US Treasury Secretary Tim Geithner has been a key driver of plans to give the EFSF enough firepower to shore up Italy and Spain, fearing a drift into "cascading default, bank runs and catastrophic risk" without dramatic action. Markets across the world ignored the mixed signals about the true scope of EU rescue measures, convinced that EU leaders have a "grand plan" up their sleeves and will unveil the details after the Bundestag has voted on Thursday on the earlier July deal to revamp the fund. France's CAC-40 surged by 5.7pc, led by a 17pc rise for Societe Generale. Germany's Dax was up 5.3pc. The FTSE 100 jumped 4pc in London, the biggest one-day rise this year. Oil jumped almost $4 in New York to $88 a barrel. In Berlin, Chancellor Angela Merkel was fighting for her political life as the rump of lawmakers from her coalition vowed to reject the EFSF package, though the latest tally suggests she may squeeze by with her own majority. Angry dissidents suspect that secret plans are being withheld until after the vote.

The truth about Germany

Germany’s public debt is much higher than officially shown, Handelsblatt reported, citing calculations by Bernd Raffelhueschen, an economics professor at Freiburg University. Apart from 2 trillion euros ($2.7 trillion) of public debt, there are liabilities of another 5 trillion euros because of shortfalls in the social security and pension funds, according to Raffelhueschen, the newspaper said.

US government debt is a cornerstone of the world's financial system, is held in large amounts by foreign creditors such as China and Japan and is used as collateral on a daily basis by banks and investors. While the move has been anticipated by markets since last week's deal in Washington agreed a cut of only $2.5trillion in the deficit, it's unclear how markets will react when they open on Monday. America's debt is still rated AAA by Moody's and Fitch, the two other largest agencies. Analysts at Capital Economics said the move will "surely rock the financial markets when they open on Monday" but added that any moves are likely to be short-lived because the slowing global economy makes US government debt, or Treasuries, an attractive place for investors to park money. At roughly $9trillion in size, the Treasury market has advantages and liquidity that rival government bond markets, including Britain's, cannot match. Despite the threat of the downgrade, the prices for Treasuries are close to their highs for the year as investors seek safe-havens and expectations for economic growth diminish. Whatever the reaction next week, investors are clearer that the downgrade is a severe blow to America's prestige and is also likely to increase the US government's borrowing costs. JPMorgan this month estimated that such a move could add about $100bn a year to America's funding costs as lenders demand more to compensate for the greater risk. The US spent $414bn last year on interest payments. "I have a feeling the dust may settle quite quickly," said David Buik of BGC Partners in London. "The US Treasury market is the most liquid in the world." Either way, it frays nerves further before what was already going to be tense opening of financial markets next week.

Hedge funds have roared back from the financial crisis, delivering profits of $129bn to their clients in just six months. While many industries are still suffering from the aftermath of the global economic downturn, hedge funds appear to be in rude health. LCH Investments has calculated that the 10 leading hedge funds alone made $28bn for their customers in the second half of 2010. That is more than the combined net profits of Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley, Barclays and HSBC over the same period, according to the Financial Times. LCH's figures show how much profit was generated for hedge fund clients. The firms themselves will typically earn a 20% cut of profits, plus a fee of perhaps 2% of funds under management. So if prices go up and then back down again but a hedge fund or investment bank makes a profit then who has made the balancing loss? And is this opportunity available equally to everyone? or do they hold a privileged position. They may be taking greater risks (but to what benefit for the greater economy?) and do they fit well on the risk-reward line or are they skewed towards the latter due to some privileged position e.g. access to better/earlier information or ability to move markets?...perhaps NOT.