Nicolas Sarkozy is warning that the risk of disintegration has never been greater.

What's on offer in Brussels is a fiscal union which represents different outcomes for different groups of countries. But both outcomes will be equally unpalatable for voters. In Germany, and its satellites, what's being discussed will mean vast transfers of wealth south, to support the insolvent banks and governments of the Club Med countries. For voters in these places, such as Greece, Portugal and Italy, what's on the agenda is the imposition of a new set of rules which are about to change their lives irrevocably. They will be forced to become like the north as they submit their national rights to tax and spend to outside supervision by the European Commission. Comply or be punished is the highly enticing prospect. Arriving in Brussels on Thursday, Jose Manuel Barroso, president of the European Council, said it was essential that national interests were set aside at the summit for the greater good of the single currency – a dig at David Cameron's threat to veto any EU-wide treaty rewrite that damages UK interests. But if Eurocrats such as Barroso think British national interests are proving an irritating diversion, he is fatally underestimating the power of national interests in countries from Spain to Slovakia which are about to be unleashed in the weeks and months to come as the detail of the new treaty starts to emerge. Until recently, contemplating the break-up of the single currency was thinking the unthinkable. Now those openly discussing it – just about everybody – are merely adopting a mainstream, orthodox view. Even Nicolas Sarkozy is warning that the risk of disintegration has never been greater.

The Frankfurt Group, as it's known, is composed of the leaders of France and Germany, the heads of the ECB and IMF, as well as three top EU officials.

A select group of top EU officials have met behind closed doors. The Frankfurt Group, as it's known, is composed of the leaders of France and Germany, the heads of the ECB and IMF, as well as three top EU officials. They met secretly to forge a common line ahead of the main event. On her way in, IMF chief Christine Lagarde said her institution was ready to take part in the leaders' desperate struggle to save the euro but insisted on "decisive" and "coordinated" action. The over-riding concern of the German is that one's currency above all else be a store of value. One's national currency is not a device to ensure the profits of the banking industry or wealthy individuals who made poor bets in the credit markets. National currency is not some abstract Keynesian lever to be pulled by the economic dons to protect their best friends and future or past employers. The power brokers in the Anglo world are defending the absolute right of those who benefit from 40:1 leverage and then expect a bail-out by devaluing the national currency. This is not a position that finds sympathy with the typical German but apparently is a good fit for the City of London. Basing one's national wealth on financial services is the same as basing future economic wealth on haircuts or laundry service. Finance is a service, plain and simple, just like policing or the fire department. Money creation in any society is not a private right, it is societal function that reflects the growth in tangible value, not the private domain of a central banker for the sole benefit of his friends in the bond and equity markets. So if you want to ensure the right of every investment banker and financial engineer to provide the latest breast implant upgrade for his mistress, go right ahead. I for one hope Angela Merkel brings down economic hell on the Central Bankers in the Anglo world and their spineless politicians who make my hard won savings more worthless on a daily basis. Ellen Synon reports in the Irish Daily Mail: "I understand from a well-placed source that they won’t be allowed out again until they’ve agreed it, or something close to it. The plan has been already been worked out by Mr Van Rompuy under the direction of the Germans, also José Manuel Barroso, the president of the European Commission, and Jean-Claude Juncker, prime minister of Luxembourg and president of the Eurogroup. I say that just to point out that the only brush with democracy this plan has had is the electorate of Luxembourg (electorate approximately 400,000) when they voted to put Mr Juncker in as their prime minister." And that is the only brush with democracy the euro-elite intend that their plan shall have. Mr Van Rompuy and his mates are determined there will be fiscal integration in the eurozone, with member states forced to change their own constitutions to accept sanctions on debt and deficits, and to enforce balanced budgets, and submit their budgets to the new supranational power of EU. The euro-elite intend to give the European Court of Justice the power to enforce their agreement.

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

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

Breaking news out of Italy tonight : Mario Monti has announced that he will present the results of his lengthy negotiations over the make-up of his government to the country's president tomorrow morning. The meeting with president Giorgio Napolitano is scheduled for 10am GMT. Italian media are reporting that this means Monti has reached an agreement and will officially succeed Silvio Berlusconi as prime minister. But it probably pays to be cautious....This development follows another day of meetings with Italy's various political parties At a press briefing, Monti also said he was confident about the country's reaction to the crisis. European bond markets are now closed for the day, so I've been looking at how bond yields have risen compared with mid-October, and mid-August.

Italian 10-year yields closed at 7.134%, up from 5.8% on 14 October and 5.03% on 15 August.
Spanish 10-year yields closed at 6.36%, up from 5.25% on 14 October and 5.014% on 15 August
Belgian 10-year yields closed at 4.91%, up from 4.41% on 14 October and 4.05% on 15 August
French 10-year yields closed at 3.69%, up from 3.14% on 14 October and 2.96% on 15 August
Austrian 10-year yields closed at 3.62%, up from 3.09% on 14 October and 2.833% on 15 August
Netherland 10-year yields closed at 2.41%, down from 2.62% on 14 October and 2.67% on 15 August

European leaders will redraft key treaties to ensure that beleaguered economies cannot borrow or spend too much in future as a condition of receiving billions of euros in rescue packages. However, the treaty changes will involve a transfer of sovereignty, triggering an Irish referendum. The Irish vote, to be proposed at a European Union summit next month, will increase demands in Britain for a popular vote on Europe, setting off calls for referendums across Europe in countries such as Holland, Finland and France. The Government fears the pace of developments in Europe, including the imposition of "technocrat governments" in Greece and Italy, combined with a German demand for treaty change, will make a campaign for an EU referendum unstoppable. Ministers have stopped saying that they plan to use treaty change to take powers back from the EU. This follows private warnings from Germany that it is not willing to trade eurozone "fiscal union" for British opt-outs. Bill Cash, chairman of the Commons scrutiny committee, said last night he was concerned that the emergence of French plans for a twin-track Europe, regular eurozone summits and German domination of EU decision-making amounted to a serious change in Britain's place in Europe. "Despite all the talk about it being a limited treaty change this is real fundamental change," he said. "Germany is pushing with determination to have a Europe made in its own image. The changes are a fundamental change in the relationship between Britain and Europe. A referendum is absolutely demanded."

Italians have low personal debt, the second biggest manufacturing economy in Europe and Berlusconi claims the restaurants in Rome are full. So why is Italy now at the centre of the euro zone crisis? -- I say: could it be that according to the Ribbentrop -Molotov pact of 1939, the time has come for Germany to take over Europe after the Russians became the owners of the European energy capacities? It certainly looks this way !!

There is an "implanted fake problem" in the Italian business environment that prevents growth. Italy scores low in the World Bank indicator of how easy it is to do business – 80th place . The problem is bureaucracy and sluggishness of the justice system in courts to clear financial and business matters. People say: despite all the problems Berlusconi made a fortune and built a big business. The state and tax system never helps business; they are an obstacle to be overcome. It's remarkable that despite all of this Italian firms still do so well. There are also entrenched special interests that hold a monopoly over certain services, such as lawyers, notaries and all services that business need to operate and the state and Italy has no independent state service like France, there is too much vested interest. If Italy fails to repay its debts the impact would be far worse than if Greece defaults as it has a much greater overall level of debt, meaning its creditors, mostly European banks, would be in serious trouble. The immediate problem for Italy is in the bond market. The bond markets are essentially the trade in government debts and Italy's is among the largest at around €1.9tn. The yield on the price of government Italian bonds has risen sharply – this is equivalent to the interest rate charged to the Italian government to borrow money.

Right now the death howls for the EU are underway; what matters is how the people will handle the challenges to come, and prepare for the resetting of their nations economies...deal with some pain now and make the needed changes, or face catastrophic care later with the implementation of draconian measures ...these are the choices. Yesterday, Angela Merkel, the German chancellor, said the market turmoil could last for a decade and there was still “a chunk of work” to do. “The Germans want more fiscal unity and much tougher central observation – with the idea of a finance ministry.” Titles , titles, lot's of hot air :

1) The euro is the EU.
2) France is Club Med and will not desert PIIGS.
3) This is why Greece cannot be allowed to exit. It will pull all Club Med with it.
4) The EU/euro is a Project which cannot be tinkered with. It will either survive or collapse whole. There will be no derivative.
5) If the Project collapses, Europe is in free fall. There are no contingency plans.
6) The Project is not even stressed yet. When matters get real desperate, Brussels will go nuclear with the ECB. As a major reserve currency, the euro will join the dollar in a race for the bottom, but buy enough time for the EU to emerge intact. Schroeder bragged about making an honest currency out of the EU, Schauble will do better by making a dishonest bank out of the ECB.

Germany goes to the G20 summit in Cannes with financial regulation at the top of its official agenda. But behind that widely publicised aim, Chancellor Angela Merkel desperately needs to come away with a watertight solution to the Greek debt crisis.With the US and Britain showing no sign of budging in their opposition to an FTT, however, Merkel could well come away without a deal, but she will not be happy – and will not drop her own plan. She has said: "I don't think this is acceptable. We must ensure that financial-market actors share in the costs of fighting the crisis. I will push for this until it happens, at least in Europe, even better worldwide." Germany also wants the IMF to have greater resources to support the latest eurozone rescue deal, although there are doubts that the summit will produce definitive numbers. But getting some movement on Greece's rescue is vital to Merkel. She came away from a eurozone summit last week assuming she had a deal on a Greek bailout and she will want answers from Papandreou in Cannes. Before the talks the German chancellor stressed that Germany wanted to get the ball rolling on last week's agreed rescue package. "We want to put this plan into practice, but for this we need clarity." On the domestic political front, the latest opinion polls raise the pressure on Merkel over Greece. A poll in news magazine Stern asked Germans for their view of her handling of the eurozone crisis, with 46% saying she had not reacted well, while 42% approved of her actions. Given that tensions and undercurrents of prejudice between Germany and Greece go back decades, those perceptions will be hard to shift whatever Merkel comes away with this week. Even before Papandreou's shock referendum call, on overwhelming majority of Germans surveyed - 87% - said the eurozone crisis was not solved with last week's Brussels deal.

Capitalism is like a pure glass of water. Then govt drips the sewage of socialism into the pure water until it becomes toxic, and then they blame the capitalism for the toxic outcome. Hours after an all-night summit of euro governments ended, flaws began to emerge in a package that was billed as a “grand and comprehensive” solution to the European debt crisis. The concerns were led by Germany’s powerful central bank, which expressed fears that a plan to leverage a €440 billion eurozone rescue fund to amass a “fire power” of €1 trillion, or £880 billion, resembled the risky finance methods that triggered the crisis in 2008. EU leaders are expected to sanction the establishment of a so-called special purpose investment vehicle, or SPIV, to be set up in the coming weeks. It is aimed at attracting investment from countries such as China and Brazil. Jens Weidmann, the president of the Bundesbank and a member of the European Central Bank, sounded the alarm over the plan to “leverage” the fund by a factor of four to five times without putting any new money into the pot. He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds. The important thing to remember is that we get what we deserve, we wanted our houses to increase in value, we wanted to make out we were middle class, we were fed lies so others could gain, like little children we were taken advantage of, but do you know that 90% of you wont want to see that, with heads in sand you will lie to yourselves till the end, you are lambs to the slaughter. The problem is the same one you have suffered from for 1000's of years, usury(interest) many times though history you have been told, but like the thick monkeys you are you cant work it out, look it is easy 1+1 = 2 and not 1+1 = 2.2, now until you can work that one out I suggest you give up money and go back to bartering. “Their priority is that we pay back our loans.”" WOW! Who' "da thunk"? Novel concept. Why is it the Left thinks the world owes them a living? Why is it even when the bondholders are willing to take a haircut at 50%, the Socialists still whine? It sucks when socialists run out of other peoples money. Socialism will bankrupt a country in time. You can only rob Peter to pay Paul so many times until Peter is broke too. The underlying cause of our global economic mess is government socialism interfering in the markets like when the US Congress, via social(ist) engineering, forced banks to make loans to people who should have never gotten the loans in the first place & government buying votes through excessive spending for everyone with a handout.

Berlin’s DIW institute, one of Chancellor Angela Merkel’s five official advisers, said attempts to boost the €440bn (£384bn) EFSF bail-out fund – possibly to €2 trillion – with guarantees to shore up southern Europe would be “poisonous” for France’s credit worthiness. Dr Ansgar Belke, the group’s research chief, said the leverage proposal emerging as part of the EU’s “Grand Plan” to restore confidence is self-defeating. “It counteracts efforts made so far to stabilise the eurozone debt crisis, which are premised on the AAA rating of a sufficiently large number of strong economies. In extremis, it would probably cause the break-up of the eurozone”, he told newspaper Handelsblatt. Berlin yesterday played down hopes of a major breakthrough as EU leaders rush to complete their plan before a deadline next week. Mrs Merkel’s spokesman said “dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled”. European stock markets slid as traders took profits on the October rally, digesting Chinese data showing a sharp fall in new loans. Germany’s DAX fell 1.8pc, Italy’s MIB was off 2.3pc and the FTSE 100 eased 0.5pc. Wolfgang Schäuble, Germany’s finance minister, said there would be no “definitive solution” but expected a deal to use an enhanced EFSF in “the most efficient way”. It is unclear whether such plans breach last month’s ruling by Germany’s top court, which said the Bundestag may not transfer “fiscal responsibilities” to EU bodies or take on “incalculable” liabilities beyond German control. Any change would need a new constitution and a popular vote.

New Challenge Could Be Launched at Highest Court

GERMANY - A new panel of lawmakers set up by the German parliament to reach quick decisions on the release of rescue funds from the European Financial Stability Facility (EFSF) may be in breach of the German constitution, a study by the parliament's research unit has shown. The panel is intended to ensure that parliament has a say in the release of funds from the EFSF, following a Constitutional Court ruling last month which said the parliament must be involved in measures to bail out other euro-zone member states. The nine-member body, to be selected from the parliament's budget committee, is to approve bailout decisions with the necessary speed and confidentiality to avoid fanning financial market turmoil. New Challenge Could Be Launched at Highest Court - But the study, undertaken by legal experts and commissioned by a member of parliament from the opposition center-left Social Democrats, Swen Schulz, has cast doubt on whether the panel will preserve an adequate degree of parliamentary sovereignty on budget decisions amounting to billions of euros. "Delegating this authority to a special body shifts responsibility onto a small number of people and obstructs the involvement of all members of parliament in the parliamentary process," the study says. Schulz is now considering taking the matter to the Constitutional Court, which is Germany's highest judicial authority. "A nine-member panel can't replace the Bundestag in such an important question," he says. Last month, the court rejected lawsuits filed by eurosceptics aimed at blocking the participation of Europe's biggest economy in bailout packages for Greece and other euro-zone countries. But it said the government must seek the approval of parliament's budget committee before granting aid.

Lot's of "smoke" again ...

Jose Manuel Barroso has said he will this week propose “individual criminal responsibility for financial players to be recognised in European law”. The plans for an EU-wide directive would focus on curbing high frequency trading. “We have seen abusive behaviour, and some of this caused the current crisis. We are going to clamp down on these practices,” Mr Barroso told Le Parisien. “Those who violate the rules will face criminal penalties. This will be a first in European legislation and a strong signal.” The Commission will invoke new powers under Article 83 of the Lisbon Treaty allowing the EU to impose minimum rules and sanctions on member states when needed “to ensure the effective implementation” of EU policies. The clause allows the EU to broaden the European Arrest Warrant beyond limited areas such as terrorism, drug-trafficking, and money-laundering to softer crimes if they have a “cross-border dimension”. G20 finance ministers praised Europe’s efforts to “maximise the impact” of the EU’s €440bn bail-out fund (EFSF) and ensure that the region’s banks are “adequately capitalised”, but there were heated exchanges behind closed door as the Anglo-Saxon states, and India rebuked Europe’s leaders for failing to grasp the nettle and mobilize the full lending power of the European Central Bank. “They clearly have more work to do on strategy and details,” said US Treasury Secretary Tim Geithner. “In financial crises, it is more risky to act gradually and incrementally than to act with bold force”. Diplomats say Mr Geithner’s plan to use the ECB as a guarantor of eurozone sovereign bonds was dismissed out of hand, while the EU failed to offer clear assurances that bank recapitalisation would be carried out with sufficient speed and scale to halt an incipent run on the system. Olli Rehn, the EU’s economics commissioner, said Brussels will announce a “very serious plan” over come days to beef up banks and strengthen the firewall against contagion. German foreign minister Guido Westerwelle politely told the US to mind its own business. “I cannot understand some of the comments of our American friends. You can’t solve a debt crisis with more debt,” he told Bild Zeitung. Germany's finance minister says private holders of Greek government bonds must accept bigger losses to achieve "a durable and sustainable solution" for Europe's debt crisis. Wolfgang Schaeuble told German public broadcaster ARD on Sunday that an agreement struck in July when banks and other investors agreed to renounce on 20 percent of their Greek debt must be renegotiated. He says the private sector's contribution to a reduction of Greece's debt burden "will probably have to be higher." The Institute of International Finance, a global bank lobbying group, says its managing director Charles Dallara is in talks with officials from the 17-nation eurozone about the July agreement. Spokesman Frank Vogl declined to elaborate, but the group's leadership has so far rejected accepting bigger losses.

Angela Merkel says countries who want a rapid solution to the eurozone debt crisis should not oppose Robin Hood tax. Germany's Angela Merkel criticises opponents of a financial transaction tax in Karlsruhe on 14 October. Photograph: Franziska Kraufmann/AFP/Getty Images Germany's chancellor, Angela Merkel, led European Union critics of US and British attacks on their plans on Friday to resolve the sovereign debt and banking crises. Merkel criticised both Barack Obama and David Cameron for opposing EU proposals for a financial transaction levy, or Tobin tax, and demanding "big bang" solutions. Spain's economy minister, Elena Salgado, smarting from a cut in the country's credit rating from Standard & Poor's, insisted it would meet its tough deficit target and accused rating agencies of being too swayed by exaggerated eurozone problems. Merkel, speaking at a conference of the engineering trade union IG Metall in Karlsruhe, said: "It cannot be that those outside the eurozone who press us again and again for comprehensive action are, at the same time, comprehensively working together to prevent the introduction of a financial transaction tax." She added: "This is out of order. We must ensure that financial market actors share in the costs of fighting the crisis. I will push for this until it happens, at least in Europe but preferably worldwide." - The IVth. Reich is upon us, europeans !!!!!!!!!!!!

Mămăliga din Orientul Mijlociu" ("Middle East Polenta") that is the title chosen by Shachar Shaine, the former head of Tuborg Romania, for his speech delivered at the luxury Loft restaurant in Bucharest, held by a businessman closely connected to the beverage industry, Pepe Berciu, on Wednesday night. Shaine, 42, said goodbye to his co-workers, as well as to competitors in a relaxed atmosphere, pointing out that Romania was definitely "the country worth living and investing in". The manager who spent the last six years at the helm of United Romanian Breweries Bereprod (URBB), the bottler of Tuborg and Carlsberg, says he decided to stay in Romania, despite propositions from shareholders for whom he had worked to take over similar businesses in other countries. "I will stay and develop business here," Shaine said without providing further details. He is one of the managers with the longest-standing career in the beer industry, having worked for the same company for the last eleven years. Israeli-born Shaine has repeatedly said he loves Romania and even became a Romanian citizen six months ago.(Z.F.) BCE,ECB,IMF,Germany,France,Euro,currency,forex,investments,bucharest,Romania,cluj,