In Brazil, the central bank has unveiled a $60bn intervention to support the country's tumbling currency, which is languishing at five-year lows against the US dollar. The four-month programme, which launches today, will see the bank sell $500m of currency swaps, contracts which provide investors with a hedge against a weaker Brazilian real, on Mondays through Thursdays. On Fridays, it will offer $1bn on the spot market through repurchase agreements.

Both are designed to prevent companies and individuals with dollar obligations from scrambling to the market at the same time, afraid that waiting will force them to pay more to buy dollars. When that happens, the real tends to weaken further and faster.

The move follows a day of crisis meetings in Brazil in which Dilma Rousseff, Brazil’s president, held an emergency meeting on Thursday with her top economic officials to halt the real’s slide after it hit a five-year low against the dollar. The central bank chief, Alexandre Tombini, meanwhile, cancelled his trip to the Fed’s Jackson Hole conclave in order “to monitor market activity” amid reports Brazil is preparing direct intervention to stem capital flight.

The country has so far relied on futures contracts to defend the real – disguising the erosion of Brazil’s $374bn reserves – but this has failed to deter speculators. “They are moving currency intervention off balance sheet, but the net position is deteriorating all the time,” said Danske Bank’s Lars Christensen.

I am going to ruffle a few feathers, but let me still say it – We had a dream run from 2003-2008 and now it is over. The days of 20% salary hikes and 30% stock returns are gone (at least for now) for the masses.

If you are really good at your job or in investing, you may get above average raises or returns, but that is not going to be the norm for everyone

If you entered the workforce in 80s or 90s, you may have seen tough times yourself (or maybe your family did). The reason why the current slowdown feels horrible is because our expectations are high now. Don’t get me wrong – I am equally angry with the government for running the economy to the ground.

I  faced a similar market from 2000-2003, when the market dropped by around 50% over a three year period. At the market bottom in April 2003, capital goods companies like BHEL, Blue star were selling at 5 times earnings. The current market darlings like Asian paints (15 times PE), Marico (around 5-7 times PE) and other consumption stocks were selling a very low PEs too.  At the risk of getting philosophical, I can think of the following things to do this time around.

- Assess your risk tolerance:  If you have trouble sleeping in the night after seeing your portfolio drop by 10-15% ,  you should reduce your level of equity holdings.  My thumb rule – will I be able to sleep well if my portfolio dropped by 40%+ ? 

- Clean out the trash: Now is a good time to clear up junk from the portfolio. A bear market and 40% loss on weaker ideas concentrates your mind. One should evaluate each position closely, sell the weaker ones and redeploy the cash in the better ideas.

- Have faith:  There is no data or logical argument which can make you hold on to your stocks or add money to it. You need to trust that the markets will recover in time and so will your portfolio.

It is easy for people to say that they want to think independently and stand apart from the crowd. Now that that we have a blood on the streets and no end in sight, you will know whether you can truly do that.

A point of view...

Since restrictions on the free flow of capital are forbidden by the EU Charter of fundamental rights, Cyprus is no longer in the same Europe with the same currency as the rest of the Euro Area members, its position in the Eurosystem is different, unequal. This also means that the single currency has already broken up, albeit on a small scale and in a way that has received little fanfare in the press. On the other hand this is probably the start of something bigger and not the end of the crisis. The break up of the eurozone could be 'sneaky' in just this way, the slow failure of 'peripheral' states and the implementation of capital controls, without changing the name of the individual currencies. This would still leave the larger (population size) nations in the main position of power.
Short of revolution, the contradictions in treating a small country the same as a large one in terms of economic policy seems like it can never be overcome in Europe, or will take forever, because essentially it would mean the end of the national borders and the re-shaping of regions of more-or-less similar size, so that they become like, say, the 'counties' of the UK. Member states of a union can be different sizes, as in the USA, but measures are taken federally to relativize the effect of this. While the smaller countries are by necessity already more open in this respect to outside influences, the larger nations with the clout are more likely to resist, even though they are understood as the main motors of integration. The brings up the question exactly what kind of integration is being sought here? A democratic, relatively equalized regional unity? Or, one that has the largest economies with the biggest populations in the same positions of economic and thus financial power?...For example: the Greek GDP is roughly the same as that of the German state of Lower Saxony. Lower Saxony (Niedersachsen) is the second largest in area in the country with 47,624 square kilometers, and is fourth in population size with 8 million people, while Greece has about 11 million citizens, so it is comparable, but eighty percent of Greece consists of mountains and it has the eleventh longest coastline in the world. When we compare these two, Greece no longer seems so bad in terms of productivity, yet the rhetoric of power is that Greece is the basket case of Europe because of its history of entitlement and state interference in the 'free economy'. In other words 'socialism' is blamed and more raw capitalist free enterprise is seen as the answer. Why is Greece focused on? Because in other nations suffering the crisis it was, in a big way, the major private 'free' financial institutions that blew up needing, you guessed it, public sector welfare, or in other words 'socialism for the rich'.

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.

European Union talks on how to assign losses at failing banks broke down as conflicts on "core issues" doomed 19 hours of talks in Luxembourg. Finance ministers plan to reconvene July in search of an agreement on proposed rules for bank resolution and recovery in time for an EU summit that begins the following day in Brussels. "There are still core issues outstanding," Irish Finance Minister Michael Noonan said as he left the meeting on early Saturday. "We have another meeting next (this) week and there's no guarantee it'll reach a conclusion." The new rules are intended to set standards for how to prop up or shut down failing banks, along with requirements for the kind of backstops each country must have in place. The draft law adds to the EU's push for common bank supervision in the eurozone and tougher across-the-board standards for authorities. After more than three years of crisis and bailouts in five eurozone nations, EU leaders have pursued banking union as a way to reassure investors that they can break the cycle of contagion between banks and sovereign debt. Talks foundered on the question of which creditors face write-downs when banks fail. Some countries demanded more flexibility for national authorities, while others sought strict rules across all 27 EU nations. Ministers considered several ways to set thresholds for losses that would need to be assigned via strict formulas before national discretion would be allowed. French Finance Minister Pierre Moscovici said he had "no doubt" ministers will reach an agreement next week, while his German counterpart, Wolfgang Schaeuble, said a final deal must be constructed in a way that won't burden taxpayers. The fight mirrored an earlier battle among eurozone ministers over when countries may seek direct bank aid from the European Stability Mechanism, the currency zone's 500 billion euro ($656 billion) firewall fund. On June 20, eurozone ministers said private investors must be tapped before the ESM will be allowed to step in, once ECB oversight begins and the new tool is in place. If finance chiefs don't reach a deal on the resolution rules before the EU's summer hiatus, this would jeopardize their ability to reach a deal on the bill with the European Parliament and could delay the EU's follow-on proposal for a single resolution mechanism, said Sharon Bowles, chairwoman of the parliament's economic affairs committee. "It needs to be handled very carefully," Bowles said. "Telling a citizen their savings are gone and that EU rules stop you from helping out via the taxpayer even if you want to, or stop you from saving small businesses and jobs, is about as political and tough as anything." During the talks, ministers sought to bridge differences between countries inside and outside the 17-nation eurozone. Austria and the European Commission sought common rules for all 27 EU members, while Sweden led the call for rules that grant more freedom to non-euro nations to prop up banks when financial stability is at risk. Anders Borg, the Swedish finance minister, said his country isn't "asking for anybody else's money" to take care of its banks. "We think we should have the leeway to do what we think is necessary," he said. "If we are building a very rigid system that can hardly work in practice, this could be something creating more uncertainty in the European economy."

Greece's coalition leaders are due to sit down in two hours time to discuss the way forward, following the row over state broadcaster ERT's closure. The Junior partners, Evangelos Venizelos of Pasok and Fotis Kouvelis of Democratic Left, have already held a meeting to agree a joint position ahead of their crunch talks with PM Antonis Samaras. Could the government collapse? Mujtaba Rahman, European director at Eurasia Group, reckons not.Here's highlights from Rahman's latest analyst note: Importantly, neither PASOK nor Democratic Left have threatened to leave the government. Instead, they have been looking to extract certain concessions. Venizelos wants a cabinet reshuffle to actually increase his party's participation and visibility in the government (his original strategy was to shadow the government in case things went wrong; however, as the program has performed Samaras has been swallowing all of the credit). In terms of specifics, the current speculation is that PASOK is targeting the ministry of administrative reform as well as some deputy minister positions in the health and labour ministries. Likewise Kouvelis does not object to a reshuffle. Venizelos's and Kouvelis also keep repeating their desire for a renewal of the government's agreement and better "coordination of the government". In the aggregate, these statements should be interpreted as a warning to Samaras that he cannot decide on big policy issues without more active involvement and agreement of the coalition heads. Of course, the latest opinion polls show that Pasok and Democratic Left would be big losers if an election was held soon. Both are currently polling around the 4-7% mark, compared to New Democracy at 29-30%....Rahman adds: Samaras personally comes in around 43% compared to Syriza's Tsipras at 37%, depending upon the poll). And government collapse would almost certainly lead to an internal leadership challenge within PASOK.

Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is "leading to disaster".  "The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt," he said.  "The Germans have not yet realized that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later," he said, blaming much of the crisis on Germany's wage squeeze to gain export share.  Mr. Lafontaine said on the parliamentary website of Germany's Left Party that Chancellor Angela Merkel will "awake from her self-righteous slumber" once the countries in trouble unite to force a change in crisis policy at Germany's expense. His prediction appeared confirmed as French finance minister Pierre Moscovici yesterday proclaimed the end of austerity and a triumph of French policy, risking further damage to the tattered relations between Paris and Berlin.  "Austerity is finished. This is a decisive turn in the history of the EU project since the euro," he told French TV. "We're seeing the end of austerity dogma. It's a victory of the French point of view." ... Lafontaine is widely regarded as a joke and a failed politician in Germany, so its only fitting when AEP is basing his arguments on him .... The immediate problem with the Euro is essentially in not having a single borrowing authority issuing Euro bonds - as I argued. This does not require a single European government,  just better financial coordination.  The big problem with "Europe" is the need for a unanimous vote on big issues - and that's hard to overcome in the fractious atmosphere caused by the counter-productive austerity a outrange mind- set currently in fashion. But there are signs that this suicidal approach to finance and economics is coming to an end in Europe at least.  But where is the European leader (or couple of leaders) we need to push (for reducing waste of course) for investing in the future and making sure any "easing" goes to lending to those, government and private, entities that are investing and providing knowledge and jobs for the future? Investing in education, job training, research and development will bring in private investment.  But when people spoke of a president for Europe Tony Blair's name was bandied about! We in Europe need politicians who aren't smeared with the past or chained by ideology, but look out with clear eyes on what went wrong and how to put it right. The next generation must be given a chance towards meeting the immense challenges faced not just by Europe but by all humanity. 

Capital Economics: eurozone crisis wil flare up again this year -

Here's some analysis from Julian Jessop of Capital Economics on today's minutes from the Federal Reserve Open Market Committee meeting last month. Among other points, he predicts more alarm in the eurozone this year.The revelation (although hardly new) in the latest FOMC minutes that some members would favour at least a tapering of QE by the end of the year has refocused attention on the role that Fed buying has been playing in keeping Treasury yields low. (See US section below.)The conventional wisdom appears to be that 10-year Treasury yields are only likely to remain below 2% if the US central bank maintains its current pace of buying. In fact, the launches of successive bouts of quantitative easing have seen yields rise, rather than fall. Instead, the prospects for Treasuries depend mainly on the outlooks for short-term interest rates, inflation expectations, safe haven demand and other overseas buying, which together should keep yields low for at least another year.At first sight, it might seem obvious that the Fed’s purchases of government bonds under QE3 have been a key factor keeping their yields low, and hence that any scaling back of these purchases would inevitably see yields surge. But the reality is more complicated. Indeed, Treasury yields actually rose during most of the period when the Fed was buying government bonds during QE1 and QE2, and are higher now than when the Fed launched QE3.There are several ways in which large-scale central bank purchases of government bonds can put upward pressure on their yields. One is by raising long-term expectations for inflation. Another is by improving the prospects for the real economy and increasing the appetite for risk, thus encouraging investors to buy assets such as equities or industrial commodities rather than safe-haven government bonds. (Correspondingly, these riskier assets might be the major casualties if the Fed stops buying Treasuries, rather than Treasuries themselves.) To the extent that QE succeeds in restoring confidence, it might lead investors to revise up their expectations for the average level of short-term interest rates over the life of the bond too. The upshot is that we would not necessarily expect a sustained rise in Treasury yields even if the Fed, perhaps mindful of the implications for its balance sheet and eventual exit strategy, does scale back its purchases later in the year. These concerns may matter less for “conventional” monetary policy and high unemployment would still be likely to keep official interest rates on hold near zero. There is also now more room for inflation expectations to drop again, especially if commodity prices continue to fall.Finally, other investors might simply step up to take the Fed’s place. In particular, we expect a renewed escalation of the euro-zone crisis in the second half of the year to boost safe haven demand for Treasuries. And at the margin, the fact that the Bank of Japan will now be buying a lot more JGBs may encourage (or even force) some Japanese institutions to increase their purchases of Treasuries instead.

France is another PIG. In fact, France is the "F in PIG". It's just a matter of time until the Euro does to France what it has done for Italy.
Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage.

“There is a state but it is a totally bankrupt state,” Mr Sapin said. “That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.”

The comments came as President Hollande attempts to improve the image of the French economy after pledging to reduce the country’s deficit by cutting spending by €60bn (£51.5bn) over the next five years and increasing taxes by €20bn.

Data from Banque de France showed earlier this month that a flight of capital has already left the country amid concerns that France’s Socialist leader intends to soak the rich and businesses. The actor Gérard Depardieu has renounced his French citizenship and decamped to Russia in protest, while David Cameron said Britain will “roll out the red carpet” to attract wealthy individuals.

Pierre Moscovici, the finance minister, said the comments by Mr Sapin were “inappropriate”. France has declared war on business.
This country has been told for decades it could ignore globalisation, and that the Brits and Americans are more-or-less contemptible.Their businesses close and capital leaves as fast as it can.They described Sarkozy as Mr Bling because he had one expensive inauguration dinner.They have been lied to about reality and there are vast numbers of unreconstructed communists and super-socialists, with a bureaucracy that defies belief. For Germany, France now is THE problem - not Britain, which is similar to Germany in many ways.Hollande is loathed by many in France and now feared by most for the insanity and naivety of what he is doing.There is no budget correction here, just rapid decline, illusion and mounting irrelevance.This place is becoming very frightening...

Well ....There is a common theme here...Someone has nicked all the money, from virtually every country in the world. And we are all sat here twiddling our thumbs worrying about all the debt.   ...  Now think about debt.... How can nearly all the countries in the world, legitimately be in debt?..Who is the debt owed to?...  Whoever these people are, must live in some of these countries, and I am almost certain, that they have - or they think they have - complete power and control over what is going on in these countries...

They are not as some people try and make out - the likes of pensions and insurance companies - otherwise pensioners wouldn't themselves be in the process of being totally screwed. All these problems should be resolvable. Money, no matter what it is based on, does not simply evaporate into thin air and completely disappear.

So the people of all the countries in the world must take this one step at a time, and identify whose hands are actually on the levers of power.  What are the fat controllers planning to do with all their power, if we do not take back control from them?..They are going to try and kill us all. That is what always happens with such enormous power. Ask any old German or Russian who actually survived and witnessed it...We helped come to their rescue. No one's going to come to ours except ourselves.

Greek finance minister: Bankruptcy is still a risk - Greece's finance minister has slightly deflated the sense of optimism as we ease into the Christmas break, by warning that the country faces another very difficult year.

Yannis Stournaras has cautioned against getting carried away by recent progress, pointing that things could unravel next year "if the political system finds the situation too difficult to handle".

He made the comments in an interview with the Financial Times, published just a day after Greece's credit rating was upgraded.

Stournaras is not all doom and despair, arguing that 2013 will be crucial:

We can make it next year if we can stick to the programme agreed with the EU and IMF.

But only if the Greek people accept the job cuts and austerity measures that were contained in the 2013 budget. Stournaras warns that this is far from guaranteed:

What we have done so far is necessary but not sufficient to achieve a permanent solution for Greece...The issue now is implementation.

As such, there's a 'possible risk' of Greece leaving the euro, he added, despite Athens having now received its latest aid tranche.

With bond yields falling sharply, and yesterday's general strike passing off peacefully, Greece has reached a calmer state. But it's going to be a grim winter for many Greeks - and Stournaras is clearly concerned that he may struggle to hit his deficit targets and improve the competitiveness of the battered Greek economy.

As he put it:

We still face the possible risk of bankruptcy.

But get through 2013, and the future will be brighter, he added.

Romanian President Traian Basescu signed on Monday the decree designating Victor Ponta, leader of the Social Democrats (PSD) and co-head of the Social Liberal Union (USL) as prime minister of Romania. The move comes as the USL, the alliance of PSD and the Liberals (PNL), obtained a large majority of votes in the December 9 parliamentary elections.

Ponta has been serving as prime minister for seven months. In spring this year, his alliance replaced a rightist government who had only spent several weeks in office. Over the seven months, USL's main focus was a battle with President Basescu, which included a failed and controversial referendum to remove him from office.

A presidential press release on Monday announced Victor Viorel Ponta was designated candidate for prime minister, in charge with forming a new government due to be validated by the Parliament.

The press release says that during consultations between political parties and the President on Monday morning there was only one proposal for prime minister. As a result, President Basescu designated Ponta as candidate for prime minister.

Ponta has ten days to form a government and come before the newly elected Parliament to receive the vote of support. The USL leader has said he wanted to move faster than that so that Romania have a government by Christmas.

Just to complete my daily bit of good-natured German-bashing...

German media (in a complete misrepresentation of the facts) says the Greeks work less and retire early... yet the EU's own figures show that the average Greek works many more hours P/A than the average German.

And they overlook that Greece is largely in the trouble it is, because the one-size-fits-all interest rate of the Euro is essentially decided by Germany, for Germany.

Financial houses (many German) were lending to Greece at the same rate as they would lend to Germany.

Where was the German discipline there?

As Schäuble mentions, the population of Europe are not going to agree to German domination of Sovereign states until they have been "convinced" that the measures are necessary.

This is where the lack of leadership in solving the Euro crisis comes into play.

Markets are panicking because everyone is being told we need German leadership in Europe but we don't have it.

Merkel keeps going to meetings. Still no solid solution.

This game will continue to be played, and markets continue to take a hit, until European leaders BEG for Germany to take what she wants in return for German financial underwriting. UPDATE - European leaders have agreed a timetable to set up a single eurozone-wide banking supervisor run by the European Central Bank over the course of next year, a rapid pace that marks a victory for a French-led group that had pushed for a quick first step towards a banking union for the single currency.
But at an EU summit that stretched into the early hours of Friday morning, leaders failed to agree on the second key step in the process: when the eurozone’s €500bn rescue fund will be able to start injecting cash directly into failing European banks, giving in to German resistance.

Bad news...

BRUSSELS -- Unemployment across the 17 countries that use the euro remained at its record high rate of 11.4 percent in August renewing concerns that efforts to slash debts have sacrificed jobs.

While European leaders have calmed financial markets in recent months with promises to cut spending and build a tighter union, they haven't solved the eurozone's deep-rooted economic problems and the rising tide of joblessness. In August, 34,000 more people lost their jobs in the eurozone, according to data released Monday by the European statistics agency, Eurostat. The unemployment rate – the highest since the euro was created in 1999 – is the same as July's, which was revised up from 11.3. Europe's problems are dragging down the global economy. The region is the U.S.'s largest export customer and any fall-off in demand will hit American companies – as well as President Barack Obama's election prospects. The U.S.'s 8.1 percent unemployment rate is already making re-election an uphill battle for the president. The eurozone is in danger of slipping into recession this year after its economic output dropped 0.2 percent in the second quarter. Six countries in the eurozone – Greece, Spain, Italy, Cyprus, Malta and Portugal – are already in recession. Howard Archer, the chief economist for IHS Global Insight, said it will take some time before Europe's labor market rebounds. "There looks to be a very real danger that the eurozone unemployment rate could reach 12 percent in 2013," he said. He thinks that will be the high-water mark, hit somewhere around the end of next year. While austerity measures were introduced to ease the financial crisis by lowering public debt, they are also slowing down economies as government spending drops off. This is also pushing unemployment higher and threatening the continent with recession. Some experts urge leaders to instead loosen spending to encourage growth.

MEANWHILE - a dengerous development :
Turkey's military have struck targets inside Syria in response to a mortar bomb fired from Syrian territory which killed five Turkish civilians, Prime Minister Recep Tayyip Erdogan's office said in a statement.
The mortar fired from the Syrian side into the region of Akçakale sparked an urgent round of meetings with military chiefs and led the Turkish foreign minister, Ahmed Davagotlu, to formally complain to UN secretary general Ban Ki-moon.
"Our armed forces in the border region responded immediately to this abominable attack in line with their rules of engagement; targets were struck through artillery fire against places in Syria identified by radar," the statement from Erdogan said. "Turkey will never leave unanswered such kinds of provocation by the Syrian regime against our national security."
Nato said it was following developments and senior officials would meet urgently to discuss the issue. Turkey is a member state of the powerful body and earlier this year invoked a clause in the Nato treaty which called on it to respond to an earlier clash in which a Turkish jet was shot down from inside Syria.
The escalating border tensions came amid a day of grave violence inside Syria, with central Aleppo ravaged by three large explosions that killed at least 41 people and the capital Damascus again the scene of fierce clashes between loyalists and rebels and security sweeps by regime forces.
The Aleppo bombings were among the biggest seen in Syria in 18 months of uprising. Attackers, believed to have been dressed in military fatigues, are thought to have convinced regime soldiers stationed in Saadallah al-Jabiri Square to let them enter the secure zone. They are then thought to have detonated the bombs believed to have been packed into cars

EUROPE - Official data released this morning showed that the Spanish economy shrank by 1.3% in the second quarter of 2012, on a year-on-year basis. That's worse than the first estimate, of a 1% drop in GDP. The contraction in the first three months of 2012 has also been revised down to -0.6% year-on-year, from -0.4%. On a quarterly basis, Spain shrank by 0.4% between April and June, and 0.3% between January and March. This comes a day after Spanish GDP data for 2011 and 2010 were revised down, showing that Europe's fourth-biggest economy is in rather worse shape than feared. The news comes as Spain prepares to welcome the EC president, Herman Van Rompuy. He will hold talks with the Spanish PM, Mariano Rajoy, today: another piece of euro-diplomacy in the approach to key events in September. Spain is also holding an auction of short-term debt this morning, but that should go smoothly, given the recent recovery in Spanish sovereign debt.Angela Merkel has urged other politicians to rein in their criticism of Greece.

Elsewhere, political tensions remain high in the eurozone after a war of words over the weekend in Germany regarding Greece's future. Alexander Dobrindt, general secretary of the Bavarian sister party to Angela Merkel's Christian Democrats, began the spat by declaring that Greece would quit the single currency by 2013. But with the Bundesbank chair, Jens Weidmann, launching another full-throated attack on the European Central Bank's plan to buy Spanish and Italian debt – warning that bond-buying could be 'addictive, like a drug' – there's still no unity on how to address the crisis …

Spain wil fall under the German boot as well...

Prime Minister Mariano Rajoy has said he would not take a decision on whether to apply for a new aid package, on top of a €100bn loan for the country's banks, until he knew what conditions would be attached. Possible options would be for Spain to apply for a precautionary credit line or to petition the European rescue fund to buy Spanish sovereign bonds to force down yields. European Central Bank President Mario Draghi earlier this month laid out plans. The yield on Spain's benchmark 10-year government bond , dropped on Friday to 6.49 percent, its lowest level since early July, as banks took the bonds for use as collateral to raise funds. Rajoy has slashed public spending and hiked taxes in an effort to deflate one of the euro zone's largest public deficits and convince nervous markets, which have pushed borrowing costs to 14-year highs, he can control the country's finances. Botella was made mayor after the conservatives came to power in December and her predecessor was named to Rajoy's cabinet. She said she blamed the previous Socialist government for leaving the country with a massive public account shortfall and leaving Rajoy no choice but to seek international aid. Source: Reuters

The eurozone is bust.

"Mario Draghi, president of the European Central Bank, will meet the head of Germany's Bundesbank in an effort to gain support for his controversial bond purchase plan"

Well....he never said he had a bond buying programme. That notion is the result of idiotic media and markets reading between the lines. He never 'pledged', swore an oath or promised anything. He merely said the ECB would do everything within its very limited price stability mandate to save the euro. That's it.... My understanding is not that he is going to see the Bundesbank but that he has been summoned. Germany is still awaiting an important court ruling. .... Draghi will be told, that Germany is now ready to pull out, and that, "that", will give the ECB all the freedom it has prayed for. Draghi will also be told that Germany can no longer continue with stealth measures to monetize southern debt and that he either re finds the party hymn-sheet or finds himself with the power to write a whole new one, the one of his own....Expect no extraordinary interventions next week. Expect a new hard line Draghi.... hahahahaha ~!!!!....The eurozone is bust. Why should it be enabled to go on borrowing with no strategy that would lead anyone to believe it could even sustain these rising debts let alone ever repay any of them. Anyone who thinks the industrious north will beaver away for years to keep the drones in the south in the life to which they have grown quite accustomed, needs to go away to quiet room.........If they continue down this path we will have unions in Germany demanding parity with the Greek and Spanish entitlements.....and wage hikes to reflect their 'war effort'. and that would be for starters......There is one thing worse than the people rebelling and putting an end to it. It is the people putting up their hands and saying perverse incentives! Sign me up!

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

Buxelles Summit - Wow....blah , blah, blah..= summit statement

Translation of the EU Leader's joint statement: "BLAH,BLAH, blahh - waffle..... We have not yet learned that although this kind of crap may be taken seriously in good times, and even sometimes lead to something concrete after further negotiations, in bad times the markets show that we cannot agree on anything except words. "We fully commit ourselves to thinking about the following measures, but cannot carry them out unless our "social partners" (employers and trade unions) agree, and unless the measures follow our "social models" (paying ourselves more than we can afford now, or promising ourselves more than we can afford later, or both). "We will increase training schemes or apprenticeships to keep young people off the unemployment numbers, and if we cannot find any private sector employers who have any use for these people, we will put them on the public payroll, which we are having to shrink.
"The French, or someone, have pushed ... the idea of Eurobonds. As a compromise, we commit ourselves to rapidly examine the idea of "Euro Infrastructure bonds", and Germany in particular has committed itself, after this rapid examination, to throwing the idea in the waste paper basket"...what a farce, HOW COULD PEOPLE OF Europe ELECT SUCH IDIOTS TO RUN THEIR LIFES...???

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,