“The real pr0blem Despite the incessant jawboning to the contrary by Fed and central bank mouthpieces - who under an honest system would be charged with currency manipulation - there is zero possibility of a rate rise. You can't taper a Ponzi scheme, and central bankers are not about to give up their most effective tools for asset-stripping the 99% and transferring their wealth to the .1% in the financial sector. The City of London and Wall Street must keep luring in new suckers and new money, and since the supply of Greater Fools is running out and the retail investor herd is starting to get spooked, the Fed has no option but to maintain ZIRP. Moreover, it will need to print new trillions in QE4/helicopter money and shower them on its TBTF banker cohorts to keep the Ponzi levitated long enough to lure in the last of the retail bag-holders before the pump & dump. So on Thursday Yellen will announce continued ZIRP and foreshadow a new round of "stimulus." No other outcome is possible. The con game is becoming more brazen even as people are finally waking up and rejecting the crony capitalist status quo, as seen by the meteoric rise of anti-establishment political contenders in the US and UK. problem isn’t what the Fed may do, but the ultimately unavoidable consequences of what the Fed has already done. The cost of reckless Fed-induced yield seeking will likely be felt first in the financial markets as  previous paper gains evaporate, while defaults on excessive low-quality covenant-lite credit will emerge over the course of the economic cycle, and the  impact of investment will be to limit productivity and economic growth over the longer run. This is all rather inevitable except in the eyes of those who haven’t watched and memorized a dozen adaptations of the same movie…my view is that activist Fed policy is both ineffective and reckless (and the historical data bears this out), and that the Federal Reserve has pushed the financial markets to a precipice from which no gentle retreat is ultimately likely. Similar precipices, such as 1929 and 2000, and even lesser precipices like 1906, 1937, 1973 and 2007 have always had unfortunate endings... A quarter-point hike will not cause anything. The causes are already baked in the cake. A rate hike may
be a trigger with respect to timing, but that’s all. History suggests we should place our attention on valuations and market internals in any event.”

How does it work in this world of smoke and mirrirs...

The SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase the domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.  The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. As of March 17, 2015, 204 billion SDRs were created and allocated to members (equivalent to about $280 billion).  Only a few years after the creation of SDRs, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime. In addition, the growth in international capital markets facilitated borrowing by creditworthy governments. Both of these developments lessened the need for SDRs. However, more recently, the 2009 SDR allocations totaling SDR 182.6 billion have played a critical role in providing liquidity to the global economic system and supplementing member countries’ official reserves amid the global financial crisis. The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations...

IMF members often need to buy SDRs to discharge obligations to the IMF, or they may wish to sell SDRs in order to adjust the composition of their reserves. The IMF may act as an intermediary between members and prescribed holders to ensure that SDRs can be exchanged for freely usable currencies. For more than two decades, the SDR market has functioned through voluntary trading arrangements. Under these arrangements a number of members and one prescribed holder have volunteered to buy or sell SDRs within limits defined by their respective arrangements. Following the 2009 SDR allocations, the number and size of the voluntary arrangements has been expanded to ensure continued liquidity of the voluntary SDR market. The number of voluntary SDR trading arrangements now stands at 32, including 19 new arrangements since the 2009 SDR allocations.

In the event that there is insufficient capacity under the voluntary trading arrangements, the IMF can activate the designation mechanism. Under this mechanism, members with sufficiently strong external positions are designated by the IMF to buy SDRs with freely usable currencies up to certain amounts from members with weak external positions. This arrangement serves as a backstop to guarantee the liquidity and the reserve asset character of the SDR...

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Today the SDR basket consists of the euro, Japanese yen, pound sterling, and U.S. dollar. The value of the SDR in terms of the U.S. dollar is determined daily and posted on the IMF’s website. It is calculated as the sum of specific amounts of the four basket currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.  The basket composition is reviewed every five years by the Executive Board, or earlier if the IMF finds changed circumstances warrant an earlier review, to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems. In the most recent review (in November 2010), the weights of the currencies in the SDR basket were revised based on the value of the exports of goods and services, and the amount of reserves denominated in the respective currencies that were held by other members of the IMF. These changes became effective on January 1, 2011. In October 2011, the IMF Executive Board discussed possible options for broadening the SDR currency basket. Most directors held the view that the current criteria for SDR basket selection remained appropriate. The next review is currently scheduled to take place by the end of 2015.   Under its Articles of Agreement (Article XV, Section 1, and Article XVIII), the IMF may allocate SDRs to member countries in proportion to their IMF quotas. Such an allocation provides each member with a costless, unconditional international reserve asset. The SDR mechanism is self-financing and levies charges on allocations which are then used to pay interest on SDR holdings. If a member does not use any of its allocated SDR holdings, the charges are equal to the interest received. However, if a member's SDR holdings rise above its allocation, it effectively earns interest on the excess. Conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall. The Articles of Agreement also allow for cancellations of SDRs, but this provision has never been used. The IMF cannot allocate SDRs to itself or to other prescribed holders.  General allocations of SDRs have to be based on a long-term global need to supplement existing reserve assets. Decisions on general allocations are made for successive basic periods of up to five years, although general SDR allocations have been made only three times. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72, the second—for SDR 12.1 billion—distributed in 1979-81, and the third—for SDR 161.2 billion—was made on August 28, 2009. Separately, the Fourth Amendment to the Articles of Agreement became effective August 10, 2009 and provided for a special one-time allocation of SDR 21.5 billion. The purpose of the Fourth Amendment was to enable all members of the IMF to participate in the SDR system on an equitable basis and rectify the fact that countries that joined the IMF after 1981—more than one fifth of the current IMF membership—never received an SDR allocation until 2009.   The 2009 general and special SDR allocations together raised total cumulative SDR allocations to SDR 204 billion.  The SDR interest rate provides the basis for calculating the interest charged to borrowing members, and the interest paid to members for the use of their resources for regular (non-concessional) IMF loans. It is also the interest paid to members on their SDR holdings and charged on their SDR allocation. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt instruments in the money markets of the SDR basket currencies.

An Unsustainable Demographic Makeup - But that is only part of the truth. The dilemma had its beginnings years earlier. "Interest rates are as low as they are today because the key economies loaded up on debt until 2007," says DekaBank economist Kater. In the financial crisis, it then became clear that these nations, as well as companies and citizens in many countries, had amassed too much debt, which could no longer be reduced by higher economic growth as it could in earlier years.

There are also demographic reasons for this. The percentage of young people in the population is shrinking, and yet they must generate greater economic output to reduce the debts they are inheriting from the current generation.

Because this is unsustainable, a redistribution from creditors to borrowers, or from savers to the state, is now occurring, as Kater explains. The operative expression is "financial repression." The government makes money when interest rates on government bonds are lower than inflation. Its debt burden is decreased, while savers are left to foot the bill, with their assets losing value in real terms.

The consequence is a massive redistribution. McKinsey, the consulting firm, has calculated that the governments of the United States, Great Britain and the euro zone already saved $1.6 trillion between 2007 and 2012 as a result of low interest rates. This is offset by a loss to private households of $630 billion. Older citizens are losing more than younger people, because the latter tend to have more debt and fewer savings.

As much as savers are being fleeced, there are also those who profit from low interest rates. People who own real estate have benefited from increases in value in recent years, while stock owners have seen Germany's DAX share index climb from one record high to the next. But this primarily benefits those who are not worried about having enough retirement income.

Chancellor Angela Merkel's conservatives are meeting the center-left Social Democrats (SPD) for a second round of preliminary talks on Monday afternoon and plan to decide by the end of the week whether to start formal coalition talks with them or the Greens.  A grand coalition between the conservatives and the SPD -- Merkel's preferred option because it would give her comfortable majorities in both houses of parliament -- is looking increasingly likely.  So far at least, progress has been easier than anticipated. The two parties are finding scope for compromises on a range of domestic policy issues including the introduction of a minimum wage, tax policy and the energy revolution.  The allocation of cabinet posts could, however, prove contentious. The SPD wants the post of finance minister, a key position in tackling the euro crisis which is currently occupied by veteran Wolfgang Schäuble of Merkel's Christian Democratic Union (CDU), but Merkel doesn't want to hand it over. The SPD also wants the labor portfolio, which would require Labor Minister Ursula von der Leyen to find another post. Rumor has it that she would like to be foreign minister, but sources have told SPIEGEL that Merkel may offer her the Health Ministry instead, a less attractive position.  There is speculation that Schäuble could become Foreign Minister and that SPD member Jörg Asmussen, currently on the European Central Bank's executive board, could replace him as finance minister.   Another difficult issue is likely to be dual citizenship. Merkel's CDU and its Bavarian sister party, the Christian Social Union (CSU), oppose it and the current law requires people born in Germany to foreign parents to choose by the age of 23 whether they want to be German or foreign citizens. The SPD wants to amend the law and allow permanent dual citizenship.  Merkel said last week she wants to know which party she will be entering formal coalition talks with by Oct. 22, when the newly elected Bundestag, Germany's lower house of parliament, assembles for its first session.  That doesn't mean a new government will be in place by that date, though. It means she wants to be sure who her likely coalition partner is going to be. 'New Government by Mid-November'  Schäuble told reporters that a new government could be formed quite quickly. "I think we'll have a new government by around the middle of November," he said Saturday on the sidelines of international financial talks in Washington. Merkel, who led her conservatives to their best general election result since the heady days of reunification in 1990, is just five seats short of an absolute majority.  Some observers said in the immediate aftermath of the election that the coalition talks could drag on to the end of the year or even into January. Germany may have a government a lot sooner than that.

Merkel does put German interest above European interest. But that's not the whole story. She also puts German corporate interest above German public interest. And most of all, her own interest above anything else.

I understand people in Germany being upset about everyone in Europe wanting their tax money. But that's only half the truth. The other half is, Germany profits from investors taking back their money from other European countries, and now investing it in the much safer and quite profitable Germany. Our interest rates in Germany have reached an all-time low in the crisis, so German economy profits from this crisis. And we still live from exports, and so from the EU. German economic interest is: try to keep up the status quo as long as possible, and that is what Merkel does.

Problem is, in my opinion, that will be disastrous for Europe. Polemics aside, the south europeans have a point. There's need for reforms, there's need for savings, but there also needs to be a perspective. You can't just close schools, hospitals, stop investments in infrastructure and deny people their healthcare for nothing in return but a lack of perspective. Just fire everyone from public service and don't offer any alternative for them. You can't just sacrifice the future of countries and societies for nothing but the need to save money.

It almost seems like Britain was right in its Euro-scepticicm. And everyone who was afraid of a too strong Germany after its reunion. That doesn't mean we should split up. In present and future, we simply have no choice but to work together in Europe. We're all in the same boat. If Britain wasn't in the European boat, few would care about it anymore. UKIP is wrong, British interest has to be in a strong Europe, not in a lone Britain.

Our unpopular former chancellor Gerhard Schröder made the reforms that led to present German economic strength. He risked his chancellorship, against his own party, to put through inevitable reforms. He turned the inert giant into an economic powerhouse. Merkel hardly does anything, the economic success she rests on was caused by her predecessor who took great risks. Risks that Merkel would never take. She's not the risky type. Schröder made reforms that were in parts flawed, but his own party, the SPD, is willing to work with and against the flaws today. Merkel is nothing like that. Her own influence is everything, and everything else plays second role, be it Germany, be it Europe.

Chancellor Schröder would have forced similar reforms on those countries, but he would have tried to convince them. Something like "it's going to be hard, but we're in the same boat, and we need to work together to get out of the crisis with greater strength". Even if it would damage his reputation in Germany. Merkel doesn't care about that. She simply says: "it's inevitable, deal with it. German savings are secure, I don't care a lot about the rest of Europe". She only cares about her position. And her position doesn't depend on Greece, Italy, Spain, or Britain. It only depends on Germans wanting to keep their money, and German economy, which is, again, profiting from the Euro crisis.

I am convinced that will destroy Europe, and I will vote for her adversary this month, but I have very little hope in a regime change. My hope is for a large coalition in which the SPD will have a little bit of influence on her Europe policy. A Europe policy, that is, contrary to her claims, careless and heartless.I find the idea that a German chancellor is responsible for solving the European economic crisis quite ridiculous. It is not in her powers to do so as she is no monarch but the democratically elected head of the German government. To all those moaning about her putting Germany's interest first - well that's actually her job description. That means, that she will, quite free of any ideological leaning decide hand in hand with the German industry what should be pursued for Eurozone. Be the next chancellor Steinbrueck or Merkel, nothing will change that.

The head of the European Central Bank has ruled out handing Greece a debt relief lifeline, hours after the head of the eurozone finance ministers admitted that Athens will need additional aid next year.

ECB president Mario Draghi was adamant that the ECB would not participate in any debt restructuring, despite growing speculation that Greece will be unable to fully return to the financial markets when its current bailout ends in 2014.

"It is pretty clear that we cannot do monetary financing," Draghi told reporters in Frankfurt on Thursday, insisting that the ECB's own treaty made it impossible. Asked directly if the ECB would take part in any Greek debt relief, he said: "No", adding that any future assistance for Greece must also come with strings attached, or "conditionality". Greece faces a funding gap of up to €11bn in the second half of 2014, according to figures from the International Monetary Fund. Rumours that a third bailout will be needed have swirled through the financial markets in recent weeks.

Dutch finance minister Jeroen Dijsselbloem, who also chairs the eurogroup of finance ministers, left MEPs in little doubt that euro governments will have to consider some extra help for Greece soon. Appearing at the European parliament, Dijsselbloem said it was "realistic to assume that additional support will be needed" when the existing bailout concludes at the end of next year.

"As far as the potential need for a third programme for Greece is concerned, it's clear that despite recent progress, Greece's troubles will not have been completely resolved by 2014," said Dijsselbloem, who warned that Greece would probably not be able to return to borrowing from the financial markets when its bailout ends. Dijsselbloem said the Eurogroup "stood ready" to help Greece, while rejecting suggestions that a full-blown third bailout package would be needed. He argued that officials would not be able to assess Greece's progress until next April. But according to Reuters, Euro officials may need to take a decision this November.

Silvio Berlusconi, Italy's longest-serving postwar prime minister, has railed against the country's "uncontrollable and uncontrolled" judiciary and accused them of persecuting him with a "fury that has no equal anywhere in the civilized world" hours after being handed his first definitive criminal conviction in more than two decades of legal battles. In a defiant video message broadcast on one of his own private television channels, the billionaire centre-right leader denied having committed the tax fraud of which he was convicted and for which he was sentenced to a four-year jail term by Italy's supreme court. "No false invoice exists in the history of [Berlusconi's television empire] Mediaset," he said. In the wake of the landmark verdict, which threatened to plunge the eurozone's third-largest economy back into political instability, he said: "In return for all this, in return for the commitment that I have lavished on my country in the course of almost 20 years, now almost at the end of my working life, I receive as a reward accusations and a sentence founded on absolutely nothing which deprives me of my personal freedom and my political rights."  As Italian politics reeled from the decision of the five judges at the court of cassation, Giorgio Napolitano, the 88-year-old president, and Enrico Letta, the centre-left prime minister in charge of a fragile coalition with Berlusconi's Freedom People (PdL) party, pleaded for calm to prevail. After more than seven hours of closed-door deliberations, the judges dismissed Berlusconi's final appeal against his convictions for the fraudulent purchase of broadcasting rights by Mediaset, ordering him to serve a jail sentence that had already been cut to one year according to a 2006 amnesty. Owing to Berlusconi's age – he will be 77 in September – it will not be served in prison but through house arrest or community service. The only element of the verdict which prevented it from being an unmitigated disaster for the three-times prime minister was the judges' decision to order another court to determine the length of his ban from public office. Prosecutors this week had argued that the ban, which their lower court equivalents had fixed at five years, should be cut to three.  Had the ban been upheld, it would have stymied Berlusconi's immediate political ambitions. As it is, he will be able to continue as a senator in Italy's upper house of parliament and leader of his party – although he made clear in his video message on Thursday night that that party would not be the PdL but a revamped Forza Italia, the party named after a football chant with which he entered politics in 1994. Even as Letta appealed in a statement for "a climate of serenity", the huge pressure that the conviction will place on his government was starting to show. Government under secretary Michaela Biancofiore, a member of the PdL, was reported to have said she would be resigning in protest at the verdict. Luca d'Alessandro, a PdL MP and secretary of the lower house of parliament's justice commission, said: "This country was famous for being the cradle of the law. Today it has become its tomb run by a corporation of grave diggers in gowns who have carried out the perfect crime. Honour and solidarity with Silvio Berlusconi, who is certainly more innocent and clean than those who unjustly convicted him." But the verdict was thought likely to prompt equally strong reactions within Letta's centre-left Democratic Party (PD), many of whose members were already squeamish about joining forces with their political bête noire and may draw the line at continuing in a coalition with a convicted criminal. Immediately after the verdict, Nichi Vendola, head of the opposition Left Ecology Freedom party, said it was "not possible" for the coalition to continue. "Faced with this conviction I think it is necessary to bear the consequences: it is not possible to imagine that the PD can remain an ally of Silvio Berlusconi's party. It is not possible to imagine that Silvio Berlusconi can remain at the centre of the political scene. I think that big changes are necessary to give a moral response to the country." Beppe Grillo, the figurehead of the anti-establishment Five Star Movement, declared on his blog: "The verdict is like the fall of the Berlin wall in 1989." Berlusconi's lawyers were led by Franco Coppi, a lawyer specialised in cassation appeals who successfully defended former prime minister Giulio Andreotti against charges of mafia ties. After the verdict they issued a statement saying they were evaluating all their options "even at the European level so that this unjust sentence is radically changed". Until Thursday night not a single one of Berlusconi's many court cases had ended in his definitive conviction. Several lower grade convictions were either thrown out, overturned on appeal or timed out owing to their statute of limitations. On Wednesday, his defence lawyers had argued that he should be acquitted because his political commitments meant he was not actively involved in the company. They also argued that the crime of which he was accused was not technically a penal offence. But prosecutors, supporting the verdicts of two lower courts which convicted Berlusconi in October last year and again in May, said Berlusconi's control over Mediaset was "ongoing" at the time, and he was "the mind" behind the system of tax fraud. Berlusconi was not present at the court but spent the day at his Rome residence, Palazzo Grazioli, reportedly with two of his children, his closest advisers, lawyers and girlfriend Francesca Pascale. It is not only with the court decision on his public office ban that his legal battles will continue. In June he was given a lower-grade conviction and sentenced to seven years in jail and a lifetime ban on public office for paying for sex with an underage prostitute and abusing his office to cover it up. He is appealing against the verdict – and, even if that appeal fails, he will be allowed a second.He is also appealing against a conviction for publishing the transcript of a leaked wiretap in his family newspaper, Il Giornale, for which he was ordered to serve a one-year jail sentence. In October, meanwhile, a court is due to rule on whether he should be tried for allegedly bribing a senator to switch political sides. He denies the allegations.

The electronics chain Maplin has become the first high street retailer to sell 3D printers to consumers.

The £700 machine allows users to print three-dimensional objects and has been hailed as the future of manufacturing.

To print something simple such as a new mobile phone case can take 30 minutes, while something more complicated such as a piece of jewellery could take several hours.

Last week at Paris fashion week for haute couture, the Dutch designer Iris van Herpen used the technology to create intricate shoes for the catwalk.

Maplin hopes to tap into a market which has so far been used only by professional printing companies. It appears to be popular, with online orders for the K8200 printer already requiring a 30-day wait for delivery.

The device is no bigger than a paper printer but users must assemble it and replacement cartridges of the plastic raw material cost £30.

The new technology has caused controversy in the US after a student managed to build a working gun with the printer. He later posted the designs online.

The printers work by building tiny layers of plastic on top of each other to make the 3D creation.

Jens Weidmann, the Bundesbank’s hard-line chief, testified that the ECB’s bond rescue plan for Spain and Italy risks “significant losses” for Germany’s central bank and grave damage to its credibility. “Ultimately, it is the German taxpayer who carries the risk,” he said. Mr Weidmann said the bond scheme, known as Outright Monetary Transactions (OMT), blurs the line between fiscal and monetary policy and encroaches on the terrain of parliaments. It leaves the ECB with the task of carrying out rescue operations that is the proper responsibility of the euro bail-out fund and compromises the bank’s independence. The two-day hearings at the constitutional court in Karlsruhe will investigate the legality of the OMT, the “game-changer” that defused the EMU debt crisis last July and has been so successful that no country has yet needed to use it. The case stems from complaints by 37,000 citizens, including the Left Party, More Democracy and eurosceptic professors, most arguing that the ECB is financing bankrupt states.

While the court has no jurisdiction over the ECB, it could prohibit the Bundesbank from taking part in bond purchases. This amounts to the same thing, since the OMT would collapse if Germany stepped aside. Chief Justice Andreas Vosskuhle said the court would adhere strictly to the law, regardless of whether ECB actions have been successful, “otherwise the end would justify the means – such an idea would go against the central tenets of a democratic state grounded in constitutional law"...

SECO argues that Europe's financial crisis "cannot be regarded as addressed" because countries in southern Europe are still "relatively far from a significant economic improvement".

I agree. A chain is only as strong as its weakest link. The EZ chain is Germany-France-Italy-Spain.

Until Spain and Italy are on a firm footing, I don't think we can consider the problems "solved"....

Here's what Spiegel thinks about the German CC ruling on OMT:http://www.spiegel.de/wirtschaft/soziales/politik-der-ezb-vor-dem-verfassungsgericht-vier-szenarien-a-904828.html

They see for possible outcomes:
1) The court rejects the ruling on a European institution => unlikely
2) The CC sees a violation of the ECB charter and refers the case to the ECJ. In that case an approval of OMT is seen likely, but it would take a long time to get the ruling
3) The CC could rule that the participation of German institutions (such as the Bundesbank) is in violation with the German constitutions => chaos
4) The CC dismisses the complaints but defines rules and proceedings that teh German side has to adhere to, to avoid being in violation of the Constitution. That had been the case for the previous lawsuit against the ESM in which the CC demanded parliamentary participation in the decision process. => This is seen as the most likely outcome.

Italian manufacturing output slides-Economic data just released shows that the Italian economy is in a bad way - manufacturing activity has fallen for the 19th month in a row, and by more than expected. The monthly PMI survey came in at a mere 45.8 for February, down 47.8 in January -- which means the country's manufacturing sector is shrinking at a faster pace [any number below 50 means contraction].

Other European economies are also reporting PMI data - and it shows that Germany continues to outperform weaker members of the eurozone.

German manufacturing PMI rose to 50.3, from 49.8 in January - meaning it returned to growth.

But France manufacturing sector is still shrinking, but at a slower pace (with a PMI of 43.9, up from 42.9 in January). 

With the ESM, the Fiscal Compact and the troika behaviour in Greece, Portugal and Ireland, I absolutely agree on the power grab aspect. The ECB and the EU Commission are unaccountable and going out on a basically unsupported limb. That doesn't mean obviously that the EU parliament is without power or only doing bad things.

I do see the way forward as MORE Europe, but not of the kind we have seen since the crisis. And should such a way forward be found, the UK would make a major mistake in not being a part of it.

Yesterday Belgium's PM was commenting that Europe no longer will decide with unanimity, referring to the banker bonuses. The UK either get with it or are left behind imho.

To be clear, that decision on bonus cap made me pretty happy, as did the discussion on the Guardian - but the basic problems that caused the crisis - the size and interconnectedness of banks, and the mixing of retail and investment - have NOT been adressed.

As much as I think the bonus cap is called or, I fear it's only window dressing.

The police are becoming frequent guests at Deutsche Bank headquarters in Frankfurt. For the second time in a week, authorities raided the bank in connection with an ongoing investigation, this time looking for evidence of witness collusion relating to court testimony in a high-profile case pitting Deutsche Bank against the family of the deceased German media magnate Leo Kirch.

The raid took place on Wednesday, but only became public early on Thursday afternoon, partially because it was not nearly as disruptive as a raid conducted a week ago Wednesday, when authorities showed up with 500 armed police and secured the bank's lobby. Nevertheless, the new search and seizure operation underlines yet again the dark cloud of suspicion that hangs over Deutsche Bank despite its stated desire to turn over a new leaf.

Police confiscated documentation and data on Wednesday, but did not make any arrests, according to a spokesperson for the public prosecutor's office in Frankfurt. The visit marks the second such raid in connection to the Kirch proceedings, the first having taken place in November of 2011.

At its heart, the Kirch case is a civil suit. The family accuses former Deutsche Bank supervisory board head Rolf Breuer of hastening the demise of Leo Kirch's media conglomerate by voicing doubts in an interview about the company's creditworthiness. Last Friday, a court in Munich decided in favor of the Kirch family and indicated damages Deutsche Bank would be forced to pay would be somewhere between €120 million and €1.5 billion.

Latest Low Point

But prosecutors also believe that several senior bank executives and board members, including Breuer, former CEO Josef Ackermann and two others, may have illegally coordinated their testimony prior to initial hearings in that case. They deny the charge. Officials on Wednesday were looking for information that could provide clues as to whether the quartet had indeed acted illegally.

Wednesday's raid marks just the latest low point in a 2012 full of them. The investigation relating to the emissions certificates directly implicates current co-CEO Jürgen Fitschens and it led to five arrests last week, though all suspects have since been released from pre-trial detention. Still, it could prove a difficult corner for the bank to wriggle out of. Fitschens is said to have signed a questionable tax declaration for the year 2009 which included refund claims on fraudulently traded emissions certificates. The investigation has been ongoing since 2010, but authorities seem to believe that Deutsche Bank's criminal intent was greater than the financial institution is willing to admit.

The bank, Germany's largest, also stands accused of having played a role in the LIBOR scandal, which saw prominent international banks collude to manipulate the key international lending rate. On Wednesday, the Swiss bank UBS was fined $1.5 billion for its role in the ploy by US, British and Swiss regulators. Furthermore, a former bank employee has also accused Deutsche Bank of having cooked its books during the peak of the financial crisis in order to avoid being forced to accept a government bailout. There are several additional legal proceedings pending as well.

According to the Süddeutsche Zeitung, in a story which will appear in the paper's Friday edition, this week's raid is linked to last week's. In a pre-publication press release, the Munich daily reported that investigators confiscated information last week that was also linked to the Kirch case and decided to come back for more. It is unclear for how long the investigation will last.(source...der spiegel)

Eurozone unemployment hits new euro era high --- More data from the eurozone: inflation in the 17-nation currency bloc remained steady for a third month in July at 2.4%.  But unemployment rose in June, with another 123,000 people out of work across the eurozone, according to Eurostat figures. The jobless rate hit 11.2%, a new euro era high. There are huge divergences - in Austria unemployment is just 4.5% of the working population while in Spain it is 24.8%, the highest level in the eurozone....EFSF holds auctionThe European Financial Stability Facility today held a tap via auction. The reopening was in relation to a 3-year bond which was initially placed on 24 May for €3bn. Today’s auction raised an additional €1.48bn. Investor demand was high with over €5.47bn in bids received. The weighted average price was 101.63% and the average yield was 0.54%. The bid/cover ratio was 3.7. The funds raised will be used to support struggling EU member states....Capital flight from Spain gathers paceCapital outflows from Spain gathered pace in May with the rescue of one of the country's biggest banks. Outflows rose to €41.3bn, according to the latest Bank of Spain data.  Between January and May, a total of €163bn left Spain - equivalent to 16% of economic output - as the country's banks sent money abroad, foreign lenders pulled out cash and investors dumped Spanish assets....Greece running out of cash. Greece is rapidly running out of cash, its deputy finance minister admitted today. Its European partners have promised the country will be funded through August when it must repay a €3.2bn bond, but the details have not been disclosed yet.  Without that money, Greece would run out of funds to pay its wage bill for public sector workers, pensions and social benefits.

Moody’s downgrades....

New York, July 7 (FinanceEnquiry.com) – Analysts at Moody’s Investors Service has downgraded the long term debt and deposit ratings of Deutsche Bank Trust Corporation (DBTC) and subsidiaries, including Deutsche Bank Trust Company Americans. The outlook on all the ratings have been stable.

In a research note published yesterday, the analysts state that the long term bank deposit and issuer ratings of Deutsche Bank Trust Company has been downgraded from Aa3 to A2 and the short term bank deposit ratings have been confirmed Prime1.

The long term bank deposit and issuer ratings of Deutsche Bank Trust Company Delaware has been downgraded from Aa3 to A2 and the short term bank deposit ratings have been confirmed at Prime1 and the issuer ratings of Deutsche Bank Trust Corporation has been downgraded from A1 to Baa1 and the subordinated debt ratings have been downgraded from A3 to Baa2.

DBTC is a US bank holding company fully owned by Deutsche Bank AG. DBTC owns Deutsche Bank Trust Company Americas and two smaller trust companies named DBNTC and DBTCD. The three trust companies have been engaged in private wealth management, corporate and personal trust and securities services, which Moody’s considered as closely integrated operationally. The downgrade of the long term debt and deposit ratings of DBTC and the two other companies indicates Moody’s downgrade of the ratings of Deutsche bank AG, the analysts say.

UPSSSSS....!!!!

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

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

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

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

HEY MERKEL ....Why don't you give it a rest?

ITALY AND THE E.U.--- Monti is desperate. Reform fatigue has breached breaking point," said a top Italian official. "There is a feeling here that the euro is basically dead already. Unless Germany offers a road map out of this crisis, Monti is not going to be able to hold it together much longer." The main Left and Right parties have until now backed Mr Monti's fiscal squeeze – a net tightening of 3.2pc of GDP this year – and radical reform of pension and labor markets. The implicit trade-off was that Brussels and the European Central Bank would in return intervene to keep the bond vigilantes at bay, if necessary. Germany has so far blocked such action. Yield spreads of 10-year Italian bonds over German Bunds neared a record 500 basis points last week. Party leaders fear an electoral massacre akin to the PASOK defeat in Greece if they back further austerity with no reward. Dissidents are near open revolt.  So, 'gentleman' Monti is in fact a 'double agent'!
Just a small correction on your otherwise excellent judgement. Italian labor so called reforms have been rubbish. They are no reforms at all and are made to appear so, as a bargaining chip with Merkel. HEY MERKEL ....Why don't you give it a rest? Europe is closer? Are you quite mad or just happy to peddle lies ? Every poll, every indication, every election shows that more and more people dislike the EU and are against further integration. You and your friends in the EU have become fascists, attempting to impose your One Europe fantasy on an increasingly resistant population. How does that feel?
The fact of the matter is that the Italian establishment is thriving on this euro adventure, Their over valued euros finance property investments abroad. Just to give you an example an ordinary Italian would rather spend €5000 on an English study holiday in America or Britain rather than spend €700 on a perfectly normal course in a language school in Italy. And at the other end of the scale the same course is offered through government and EU subsidies at €100 by local authorities. This confirms the personal wealth issue of Italians and of course the nonsensical spending patterns caused by an essentially corrupt administrative system.

Clowns ....clowns and clowns...in fact sheisters...

"The cost of default - rioting, sieges and death"

The penny has dropped?

Then we must ask, who is responsible? Then they must be removed. Then we might address the question of those who watered down democracy to create this ghastly, avoidable situation.   It might also be an idea to suggest positive solutions to how to recover from the wreckage of the futile arrogant ambitions fostered by the same people who have so carefully and covertly undermined the foundations of democracy over the last 40 years.  So far, we have little more than money manipulation. The real problem is how to start up or recover our productivity. On this subject, most politians are silent and most people berating them, even in these posts, seem to be in equal denial.....Francois Hollande, France’s new socialist leader, and Mario Monti, his Italian counterpart, met in Rome to discuss ways to tackle the eurozone’s problems, to the sound of angry protests against spending cuts.

“The progress made, including in the governance of the eurozone, is not sufficient and we need to strengthen the weak part of the system,” Mr Monti said at a joint press conference after the talks.

“The Greek elections will take place in three days: I want to reaffirm the hope, shared with President Hollande, that Athens will remain in the eurozone and respect its engagements.”   He and his French counterpart agree on the need for more pro-growth policies, in addition to spending cuts, the Italian prime minister added.   Mr Hollande confirmed: “On growth, we share the same objective and have a broad agreement on the instruments to be used.”

Last time I looked, these two jokers were Presidents of France and PM of Italy respectively.   Well if these two cant do a bit of 'action', I dont see why they should be asking anyone else to. And in case they dont know, the best thing to do is pay off a bit of your own debt and close down any banks under your jurisdiction that are trading insolvently.

So far, almost the only thing that happened due to the memorandum was Greece getting lots of money to pay its debtors

Monti path to salvation is looking very much like a hike up the "Brenner Pass", and that is among the main concerns of investors. Italy's prime minister has so far made a good fist of imposing fiscal austerity. But he is having a lot more difficulty with phase two, which is to stimulate growth. None the less than four different measures are stuck at various stages on their way to the statute book. They include a bill to introduce greater flexibility and fairness into the labor market (which is horrendously complicated, and problematic for the left); another to tackle corruption (which is being held up by objections from the right who seem to think it could have unpleasant implications for one Silvio Berlusconi) and a wide-ranging "growth package" that hasn't so far made it past the cabinet.
Quite a few reports in the German media the last couple of days on Monti's inability to truly reform his country and becoming increasingly unpopular.....Monti is another Goldman Sachs operative. He is working for the International banking cartel for sure. He's not interested in the Italian people or their standard of living. Interesting too is news (haven't seen it in the MSM) that an Italian investigative magistrate has filed papers against Standard and Poor after a thorough investigation into their downgrade of Italian banks. At least someone is fighting back against this totally corrupt system. The Italian banks need another 100 billion to get by. Like Spain, we are told by the so called specialists (bank spokespeople) and then we are told after less than 24 hours ( in the case of Spain) it hasn't worked. Are these people taking the piss out of us ? We are basically giving the banks money directly so as they can pocket it all and keep asking for more. And this morning the BBC described our current crisis as the worst for over 100 hundred years. Sorry but don't think the thousands queuing at soup kitchens and dying of poor health conditions etc in the 1930's would agree with the current policies ---- This is a man made crisis of greed. A brief report in Spiegel online that Greece, since getting that second bailout or "memorandum", has hardly done anything regarding implementing the obligations of the memorandum.... Considering this information and the fact that the memorandum is just 3 months old I wonder how comes so many people are confidently telling us that the memorandum did not help Greece, made matters only worse, is not working at all (they're right there, but not in the way they think), is another fiendish plot against the people of Greece and needs to be stopped (again of course only regarding Greece's obligations, not the payments it receives).... So far, almost the only thing that happened due to the memorandum was Greece getting lots of money to pay its debtors - as the reforms demanded in the memorandum are allegedly not yet implemented any ongoing deteriorating of the Greek economy can hardly be blamed on the memorandum, and calls for its abrogation because it would be "too harsh" seem disingenuous to say the least....Officials in Berlin say privately that Chancellor Angela Merkel is willing to drop her vehement opposition to plans for a “European Redemption Pact”, a “sinking fund” that would pay down excess sovereign debt in the eurozone. “It is conceivable so long as there is proper supervision of tax revenues,” said a source in the Chancellor’s office. The official warned that there would be no “master plan” or major break-through at the EU summit later this month. Mr Merkel rejected the Redemption Pact last November as “totally impossible”, even though it was drafted by Germany’s Council of Economic Experts or Five Wise Men and is widely-viewed as the only viable route out of the current impasse. Fast-moving events may have forced her hand. She is under immense pressure from the US, China, Britain, and Latin Europe to change course as the crisis engulfs Spain and Italy, threatening a global cataclysm.The debt would be covered by joint bonds, paid for from a designated tax. Each country would be responsible for its own share of debt in the fund -- Italy €960bn, Germany €580bn, France €500bn, and so forth -- but would issue bonds jointly.".... How can this work exactly? And what price would the debt be issued at?... Surely the market would price it at a rate closer to that Italy and Spain have to pay now, rather than the German 10-yr bond rate, because Italy's debt would not have fallen, and essentially Germany's would increase....And, how useful is it for Italy to put up just 20% collateral?....And how will it fix the chronic uncompetitiveness of Southern Europe compared to Germany? Isn't it just another last massive kick of the can down the road?

Mircea Halaciuga, Esq.
004.0724.58.1078PROXEMIS - Managementul Riscurilor

"There are none more hopelessly enslaved, than those that believe they are free."

I wonder if Van Rompuy would give me a well paid position in the "EU government".... We see Greeks are talking of a local currency, I said over a year ago this was an option, not just for Greece but us all, a local currency that cant be traded outside the country would keep some form of money circulating and provide the basics, it would also allow the Greeks to keep the bulk of their savings in euros if governments allowed the local currency to pay taxes then it will take off on its own, it will mean that local currencies will find their own level against the main currency, put as you have the option to hold money in a main currency account that to will be self limiting, now i suggested this ages ago as a way to keep people in work and in their homes and i said that it would come sooner or later because people always have the need to trade so always find a token for that....one could almost get rid of welfare and pensions cost if you paid them in a local currency....We had to watch Barroso, and Rumpoy , "Twins of Evil" talking about the Greek election, how Greece must be allowed "Democracy" said Barroso. Democracy, what Democracy?Democracy When the Brussels parliament Says so, is Not Democracy! The Greek's were denied an election a few months ago, so another Goldman Sacks puppet could be Un-Democratically installed! It's a Takeover! The poor people in Greece, and Spain, Italy, and Britain are next. Dictator's don't know where their boundaries end. They have none. They want It ALL.The slavery laws are in place. People are being enslaved by Debt. "There are none more hopelessly enslaved, than those that believe they are free." Wellll...as for me, I've got a great idea which will be a "courageous leap of political imagination" ... An EU VAT on top of all the outrageous VAT's already burdening the citizens of Europe's individual nation states. Of course start it off at a mere 5% or so....and then when the lemmings simmer down and forget about it, you can jack it up to 15 or 20% ...

The average European (Greek, Portuguese, Spanish, Irish, Italian, even British and German) before paying one more coin to the government in taxes, need to ask for a full, popular and independent audit of all expenditures decisions which bring us to the present disaster. States lost their credibility. ... We need a big TRIAL, Nuremberg style. To find responsibilities for the present mess. All those rendered guilty for corruption and robbery expeditiously judged and jailed. Traitors, who plotted the enslavement of its own people by opaque schemes and treaties, irresponsible debts and high regulation and taxes, associated with foreigners powers and multinational interests, judged and publicly executed. All debts related with the submission of the nation canceled and remaining sound debts paid for the society even with utmost sacrifice. Otherwise people will not be cooperative with the current state of affaires. We need a new era of clean people, clean policy and clean money before we move to the next step. Let´s sort out who is who first. I think it would be a good idea to let the people get what they asked for. They want a socialist government and now it is time to reap the rewards. In a few weeks they will be broke and unable to borrow more money. Instead of cuts they will have nothing. It sucks but sometimes people can only learn the hard way....It is easy to blame the Greek man in the street for th e failures of his government to collecttaxes and t toleraate forms of corruption> votes or no votes he man in the street has little control over his governemt. So let us put the blame where it ddoes lie.
1. The greek government of the day who lied their way into the Eurozone in the first place.
2. Goldman sachs who created the fiddles whicj allowed thenm to lie their way into th eeurozone
3. The euro zone experts who should have been fully aware of the potential greek difficulties and did nothing.

Fitch Ratings downgraded Italy, Spain, Belgium, Cyprus and Slovenia's sovereign debt ratings Friday as it wrapped up a review of the region. Fitch affirmed its rating on Ireland. All six countries ratings carry a negative outlook, which means there is a slightly greater-than-50% chance they are downgraded in the next two years. The euro briefly tumbled on the news, which came mere moments after the common currency climbed above $1.32 for the first time since Dec. 31. However, the euro clawed back all of those losses already. It was most recently trading at $1.3204. The knee-jerk reaction in the currency market was likely short-lived because Fitch's moves weren't considered as severe as the ones taken by Standard & Poor's two weeks ago. At that time, S&P slashed ratings on nine euro-zone members, including stripping France of its triple-A rating. Fitch's review didn't include any triple-A rated euro-zone nations so France's top-notch rating in the eyes of Fitch remains intact. In downgrading the five nations, Fitch said it is concerned about the divergence of monetary and credit conditions across the euro zone. The ratings firm is also worried about the vulnerability of these countries to further monetary and financing shocks. Spain and Italy have seen yields on their sovereign debt fall sharply in recent weeks, thanks in large part to the European Central Bank's long-term lending program. However, Fitch said future shocks could plague the region until the euro zone secures greater economic and financial stability, including great fiscal integration. "The government is aware of the imbalances in the economy and that's why it's launched an ambitious program of structural reform that will be completed in the first quarter," said a spokeswoman at Spain's Finance ministry. Spain's rating was cut to single-A from double-A-minus. Fitch said without further convergence within the euro zone and a broad economic recovery, a breakup of the common currency bloc cannot be completely ruled out. The likelihood of such a scenario remains small, Fitch added. Fitch cut Belgium's rating to double-A from double-A-plus. Cyprus was cut to triple-B-minus from triple-B. Italy's rating was slashed to single-A-minus from single-A-plus. Slovenia saw its rating cut to single-A from double-A-minus. Ireland's rating was affirmed at triple-B-plus.

• Belgium cut from AA+ to AA
• Slovenia cut from AA- to A
• Cyprus cut from BBB to BBB-
• Spain cut from AA- to A
• Italy cut from A+ to A-