The US Federal Reserve plans to raise interest rates this year on the back of an improving American economy, and that is taking the shine off gold. ... Why? Because gold is a store of wealth for investors, but generates no returns from regular interest payments or dividend income. Investors have been happy to park their money in gold over the past six years while returns from other 'safe haven' assets have remained low and the economic backdrop has remained volatile. But, with borrowing costs set to rise, commodities, such as gold, are losing favor with investors, as higher returns can start to be generated elsewhere. The UK interest rate is 0.5pc. In the US, the interest rate, set by the Federal Reserve, is 0.25pc. US Federal Reserve chairman Janet Yellen has suggested interest rates should rise by the end of the year, while Mark Carney, the governor of the Bank of England, also signaled that UK interest rates could begin to rise around the beginning of 2016, if not earlier. .. The US dollar has been growing stronger, boosted by a resurgent American economy and the prospect for a rate rise in the next few months. The US dollar index, which tracks the price of the US dollar against the world’s currencies, has increased by more than 20pc within the past year.   The value of the US dollar typically follows an inverse relationship with commodities. When the dollar strengthens against other major currencies, the prices of commodities - such as gold - typically drop. When the dollar weakens, commodities generally move higher. The main reason for this is because most commodities are freely traded in international markets and prices are quoted in US dollars.  Foreign buyers will purchase commodities with dollars, so, when the value of the dollar drops, they will have more buying power, and demand increases. Similarly, when the value of the dollar rises, they have less buying power and commodities become more expensive, muting demand and sending commodity prices lower. .. The slowdown in the Chinese economy, the world's largest consumer of commodities, has also caused the gold price to fall steadily since 2011.  China has increased its reserves of gold bullion by 60pc since 2009. However, on Friday the People’s Bank of China revealed it has been buying far less gold than expected. China updated its gold bullion reserves for the first time since 2009 last week, showing that while reserves had increased, the 57pc gain to 1,658 metric tons was smaller than the 3,500 tons analysts had been expecting.

European Commission will use €7bn from an EU bail-out fund for Greece, as Tsipras says banks might not reopen for months

What is legal basis to use EFSM? The treaties establishing the new rescue fund ruled out the use of the previous EFSM to rescue a eurozone member. Mr Dombrovskis is asked on what the legal basis is for using the moribund fund. "Given the very difficult situation, and given the urgency, and given the way we are addressing the real concern, I think it is still possible," he says. "There are technical interpretations of this decision. There is a political problem that needs to be addressed. At the end of the day, the decision is to be made by the Council. Currently, we don't have better solutions on the table." He adds that by just helping one eurozone country, and not the bloc as a whole, the Commission can get round its own prohibition.

ECB - Christian Noyer said that Greece's debt cannot be restructured

Chancellor Angela Merkel's spokesman says Germany sees no basis at present for entering negotiations on a new bailout program for Greece. Steffen Seibert said Monday that Germany respects the "clear 'no' vote" by Greeks against austerity measures demanded by creditors and that "the door for talks always remains open." However, he said the conditions are "not there at present to enter negotiations on a new program." He said the "no" vote is a vote against the principle - still supported by Germany - that solidarity requires countries to take responsibility. Seibert says Europe will explore what possibilities there are to help Greek citizens and "a lot will depend on what proposals the Greek government now puts on the table." Regarding requests by Athens to restructure its debt, finance ministry spokesman Martin Jaeger said: "I can see no reason to enter into discussions."  Meanwhile, ECB governing council member Christian Noyer said that Greece's debt cannot be restructured. "Greek debt held by the Eurosystem is debt that cannot by its very nature be restructured because that would be monetary financing of a state," he said...The French advisor went on to say that Merkel had gone out on a limb to reach a compromise with Greece over a credit deal. 

"Merkel was very open to negotiations with Greece, showing patience and even a sort of maternal protection regarding Alexis Tspras," he said. France's Socialist government still hopes to avoid Greece leaving the euro, but France's opposition conservatives are now calling for Greece's orderly exit from the eurozone.  Alain Juppé from Nicolas Sarkozy's centre-right Republicans party, said: "Greece is no longer capable of sticking to the disciplines of the eurozone."

"We must help it to organise its exit without any drama."...Angela Merkel displayed "maternal protection" towards Greece's Leftist prime minsiter Alexis Tsipras who betrayed the trust of the German Chancellor and François Hollande - despite France's more conciliatory line with Athens, according to a French presidential aide. The comment comes as the French and German leaders are to meet in Paris at 6pm local time (5pm BST) to discuss the Greek crisis, followed by a working dinner at 7.30pm at the Elysée Palace.  The Hollande advisor's comment to AFP suggests France is hardening its line as facilitator vis a vis Greece and aligning itself more with Germany in a bid to show a united Franco-German front.  The aide admitted Hollande got his fingers burned after seeking a compromise with Greek PM Tsipras, saying: "It will be difficult with Tsipras. There's a real problem of trust between him and us and us and him."    Brussels to Greece: we're going to make your life much harder That was quite the press briefing from Commission vice-president Dombrovskis. In short, Brussels will not be giving the Greek government anywhere near an easier ride after last night.

Some points:

• "The place of Greece is and remains in Europe", but when pressed, Mr Dombrovskis did not repeat that Greece's place remained in the single currency

• Brussels questions the legality of the referendum and the nature of the question: it is "neither legally nor factually correct"

• The Commission will not carry out any talks with Athens before they get a mandate from the eurozone's finance ministers who are meeting tomorrow

• Greece's vague promise of debt relief as agreed back in 2012 is now no longer on the table after the second bail-out expired last week

• The No vote has made life much more "difficult" for the Greek government, but the ball is in their court to now come up with some credible reforms

The EU however is an unelected septic tank.The Common Market (that we were given a vote on but deliberately and criminally lied- to by our own politicians who saw nothing but a huge trough to get their fat faces in) was actually a good idea. What we have actually got is a Fourth Reich....The EU "owns" about 200 billion in EFSF bonds it sold to finance Greece the past few years. The member states will have to pay the principal and interest as it comes due. Fortunately, were Greece to leave the EU, the money to do so is available since Greece is a net drag on the EU budget and the money the EU now sends to Greece through its various programs and agencies would be more than enough to cover the EFSF bonds. That the loss of these revenues would further crush the Greek economy is unfortunate but that is Greece's problem not Europe's!...That the Euro and the EU are a horrible construct is beyond doubt. Roger Bootle made a compelling case a couple of days ago that the EU, even if there were full political and fiscal union, has become a drag on economic growth with its regulatory apparatus and fixation on 'harmonizing' everything. However, the Euro and the EU do exist and they have to be managed as best as can be done. Greece is incompatible with either institution and, if it does not withdraw voluntarily from both the EZ and the EU, it must be expelled.  Greece is going to have revolving door governments for as far as the eye can see simply because the mess it is in is intractable. It is also the case that the EU cannot be ALL Greece ALL the time as it lurches from crisis to crisis and sends an increasingly bizarre cast of characters to EU summits and meetings. Europe needs to turn its back on Greece and deal with its own internal problems....The structural weakness of the EU has been exposed. An even "closer union" will not fix the Problem and a Stalin like strong man will be required to keep the corrupt mess from falling apart. A bloc is a bloc is a bloc.

Banks are bracing for hundreds of millions of pounds in new claims for foreign exchange manipulation from class-action lawsuits triggered by last week’s vast market rigging fines.

Barclays, Royal Bank of Scotland and four other banks were ordered on Wednesday to pay $6bn (£3.84bn) by UK and US authorities.   The Barclays penalty represents the biggest bank fine in British history. The regulators, detailing how traders gathered in chatrooms using monikers such as “The Cartel” and “Coiled cobra” to rig the $5.3 trillion-a-day currency market, also forced the banks to plead guilty to criminal charges. Lawyers say that the fines, as well as an investigation from the European Commission, could be a springboard to damaging civil litigation in the UK and Europe. Some lawyers believe settlements could ultimately exceed the fines handed out by regulators, although the total bill will depend on how claimants assess the scale of damages they have suffered.

Traders at the banks colluded to manipulate currency benchmarks used to peg foreign exchange orders from corporate clients, meaning they made huge profits while clients were ripped off.

Several class-action lawsuits have been filed and settled in the US, with banks paying out hundreds of millions in compensation. Citigroup, one of the six banks to be fined last week, said on Wednesday that it had agreed $394m of payments to settle private cases in the US, and RBS said it had reached a deal, without revealing how much it will pay.  US laws make it easier to arrange such cases, but firms in the UK are now canvassing support for action on this side of the Atlantic.  Law firm Hausfeld, which has been involved in several class action cases in the US and has secured settlements worth $800m, is drumming up support from institutions in the UK and Europe. It says court cases are expected on the continent in the coming months.

Greece’s public debt is 180pc of GDP. The loans are in a currency that the country does not control. It is therefore foreign currency debt. The IMF knows that Greece cannot possibly pay this down by draconian austerity – the policy already implemented for five years with such self-defeating effects – and the longer it pretends otherwise, the more its authority drains away. It is has pushed for debt relief behind closed doors but only half-heartedly, unwilling to confront the EMU creditor powers head on. Objectively, it is acting as an imperialist lackey – as Greek Marxists might say.  Indeed, it has brought about the worst possible outcome. The Fund’s man on the ground in Athens – Poul Thomsen – has pushed the austerity agenda with a curious passion that shocks even officials in the European Commission, pussy cats by comparison. This would be justifiable (sort of) if the other side of the usual IMF bargain were available: debt relief and devaluation. This how IMF programmes normally work: impose tough reforms but also wipe the slate clean on debt and restore crippled countries to external viability.  It is a very successful formula. On the rare occasion when the IMF goes wrong it is usually because it tries to prop up a fixed-exchange rate long past its sell-by date.  All of this went out of the window in Greece. The IMF enforced brute liquidation without compensating stimulus or relief. It claimed that its policies would lead to a 2.6pc contraction of GDP in 2010 followed by brisk recovery.  What in fact happened was six years of depression, a deflationary spiral, a 26pc fall in GDP, 60pc youth unemployment, mass exodus of the young and the brightest, chronic hysteresis that will blight Greece’s prospects for a decade to come, and to cap it all the debt ratio exploded because of the mathematical – and predictable – denominator effect of shrinking nominal GDP.

Greece could start using a "parallel currency" to pay its civil servants if it runs out of cash, one of the European Central Bank's board members has suggested.  Highlighting the desperate situation faced by the country, Yves Merch, a member of the ECB's executive board and governor of Luxembourg's central bank, told Spanish newspaper La Vanguardia that Greece could resort to using "exceptional tools" to pay its obligations.  "There are intermediate solutions circulating, such as the issuance of a parallel currency or IOUs," he told the newspaper. "All these measures are among the exceptional tools that any government can consider if it has no other options. But all of them have a high cost."   His comments come as the country scrambles to reach a deal with international creditors and avoid a default. The ECB has already analysed how such a scenario could play out. Officials told Reuters in April that creating a virtual second currency within the eurozone might not be enough to keep Greece in the 19-nation bloc.  Analysis showed around 30pc of Greeks would end up receiving such "IOUs" rather than cash, which would put further pressure on Greek banks as workers dipped into their their savings.  Mr Merch singled out Greece as the eurozone's black sheep. “Rarely have I seen Europe so united, except for one country, on the need to follow the rules. Those countries wouldn’t like everything achieved in the past, the effort made, frustrated now that it is starting to bear fruit."   He also suggested that a Greek exit may be relatively pain-free for the rest of the bloc. "There have been defaults in the US and other monetary unions without political consequences," he said. However, Mr Mersh added that policymakers remained ready to defend the single currency "by all means". "The markets have greatly underestimated the political will to save the euro," he added.   Meanwhile, Michel Sapin, France's finance minister, said that eurozone policymakers remained determined to keep Greece in the eurozone, but insisted that the country "must respect its commitments" to remain in the bloc.  Sarah Carlson, an analyst at Moody's said the risk of a Greek exit had grown, adding that any exit from the monetary union by a country would mark a significant change in how the euro area is viewed.  A poll by Paddy Power on Thursday indicated a 56% chance of a Grexit.

Earthquake............

Earthquake hits on Tuesday with shockwaves felt as far away as New Delhi. Follow the latest developments as aftershocks rock country

The Polish electorate is fed-up with Brxelles...

Bronislaw Komorowski, the Polish president, has a fight on his hands to remain in office after coming a surprise second in the first round of voting in Poland’s presidential elections on Sunday, according to exit polls.  Taken after voting stopped at 9pm local time, the polls put Andrzej Duda, candidate from the conservative Law and Justice party, 2.6 per cent ahead of the president with 34.8 per cent. With no candidate securing an outright majority the two men will meet in a fortnight’s time in a run-off vote.   If the result stands, it will come as major surprise.  An affable former anti-communist dissident Mr Komorowski became acting president in April 2010 when as speaker of parliament he was elevated to the office under the terms of the Polish constitution following the death of Lech Kaczynski, then the president, in a plane crash in western Russia. Opinion polls had routinely found the president as the most popular politician in Poland, and polls before Sunday’s vote had put ahead of Mr Duda.  Political commentators in were quick to attribute Sunday’s surprise result to the president’s apparently low-key and complacent election campaign.  Along with Mr Duda, the other big winner on the night was Pawel Kukiz, a former rock star and strident government critic, who won 20.3 per cent of the vote, according to the polls.  The night was a disaster for the left-wing Democratic Left Alliance. Once a dominant force in Polish politics, the party’s candidate Magdalena Ogorek came in with just 2.4 per cent.  

The agreement signed between Greece and the EU after three weeks of lively negotiations is a compromise reached under economic duress. Its only merit for Greece is that it has kept the Syriza government alive and able to fight another day. That day is not far off. Greece will have to negotiate a long-term financing agreement in June, and has substantial debt repayments to make in July and August. In the coming four months the government will have to get its act together to negotiate those hurdles and implement its radical programme. The European left has a stake in Greek success, if it is to beat back the forces of austerity that are currently strangling the continent.   In February the Greek negotiating team fell into a trap of two parts. The first was the reliance of Greek banks on the European Central Bank for liquidity, without which they would stop functioning. Mario Draghi, president of the European Central Bank, ratcheted up the pressure by tightening the terms of liquidity provision. Worried by developments, depositors withdrew funds; towards the end of negotiations Greek banks were losing The second was the Greek state’s need for finance to service debts and pay wages. As negotiations proceeded, funds became tighter. The EU, led by Germany, cynically waited until the pressure on Greek banks had reached fever pitch. By the evening of Friday 20 February the Syriza government had to accept a deal or face chaotic financial conditions the following week, for which it was not prepared at all.  The resulting deal has extended the loan agreement, giving Greece four months of guaranteed finance, subject to regular review by the “institutions”, ie the European Commission, the ECB and the IMF. The country was forced to declare that it will meet all obligations to its creditors “fully and timely”.   Furthermore, it will aim to achieve “appropriate” primary surpluses; desist from unilateral actions that would “negatively impact fiscal targets”; and undertake “reforms” that run counter to Syriza pledges to lower taxes, raise the minimum wage, reverse privatisations, and relieve the humanitarian crisis.   In short, the Syriza government has paid a high price to remain alive. Things will be made even harder by the parlous state of the Greek economy. Growth in 2014 was a measly 0.7%, while GDP actually contracted during the last quarter. Industrial output fell by a further 3.8% in December, and even retail sales declined by 3.7%, despite Christmas. The most worrying indication, however, is the fall in prices by 2.8% in January. This is an economy in a deflationary spiral with little or no drive left to it. Against this background, insisting on austerity and primary balances is vindictive madness.  The coming four months will be a period of constant struggle for Syriza. There is little doubt that the government will face major difficulties in passing the April review conducted by the “institutions” to secure the release of much-needed funds. Indeed, so grave is the fiscal situation that events might unravel even faster. Tax income is collapsing, partly because the economy is frozen and partly because people are withholding payment in the expectation of relief from the extraordinary tax burden imposed over the last few years. The public purse will come under considerable strain already in March, when there are sizeable debt repayments to be made.  But even assuming that the government successfully navigates these straits, in June Greece will have to re-enter negotiations with the EU for a long-term financing agreement. The February trap is still very much there, and ready to be sprung again.  What should we as Syriza do and how could the left across Europe help? The most vital step is to realise that the strategy of hoping to achieve radical change within the institutional framework of the common currency has come to an end. The strategy has given us electoral success by promising to release the Greek people from austerity without having to endure a major falling-out with the eurozone. Unfortunately, events have shown beyond doubt that this is impossible, and it is time that we acknowledged reality.   For Syriza to avoid collapse or total surrender, we must be truly radical. Our strength lies exclusively in the tremendous popular support we still enjoy. The government should rapidly implement measures relieving working people from the tremendous pressures of the last few years: forbid house foreclosures, write off domestic debt, reconnect families to the electricity network, raise the minimum wage, stop privatisations. This is the programme we were elected on. Fiscal targets and monitoring by the “institutions” should take a back seat in our calculations, if we are to maintain our popular support. At the same time, our government must approach the looming June negotiations with a very different frame of mind from February. The eurozone cannot be reformed and it will not become a “friendly” monetary union that supports working people. Greece must bring a full array of options to the table, and it must be prepared for extraordinary liquidity measures in the knowledge that all eventualities could be managed, if its people were ready. After all, the EU has already wrought disaster on the country.   Syriza could gain succour from the European left, but only if the left shakes off its own illusions and begins to propose sensible policies that might at last rid Europe of the absurdity that the common currency has become. There might then be a chance of properly lifting austerity across the continent. Time is indeed very short for all of us. ( source : The Guardian)

Eurozone finance ministers have approved reform proposals submitted by Greece as a condition for extending its bailout by four months, officials say.  The Eurogroup said it had agreed to begin national procedures - parliamentary votes in several states to give the deal final approval.   The measures proposed by Greece include combating tax evasion and tackling the smuggling of fuel and tobacco.  The European Commission said earlier they were a "valid starting point".   Eurozone finance ministers - known as the Eurogroup - then held a conference call before giving their backing to the Greek proposals.  "We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close co-ordination with the institutions," the Eurogroup said in a statement.  The agreement had "averted an immediate crisis", said European Commissioner for Economic Affairs Pierre Moscovici.   "It does not mean we approve those reforms, it means the approach is serious enough for further discussion," he added.  'Lack of clear assurances' .  However, International Monetary Fund (IMF) head Christine Lagarde was quoted as expressing reservations about the reform proposals.  "In some areas like combating tax evasion and corruption I am encouraged by what appears to be a stronger resolve on the part of the new authorities in Athens," she wrote in a letter to the Eurogroup.  "In quite a few areas, however, including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged."

Greece and Germany are on the frontline in a fierce battle about the future of European economic policy, with Syriza determined to show that ditching austerity is a better recipe for economic recovery than relentless cuts, and Germany determined to make Athens stick to the deficit-cutting agenda – and pay back the €240bn (£180bn) in bailout loans it received from the international community.  As Varoufakis returned to Athens , thousands of people gathered on the streets to show solidarity in the party’s battle with Greece’s creditors.  The fresh outpouring of public concern, with protesters gathering in Syntagma Square, the centre of anti-government riots during repeated crises in recent years, came after the European Central Bank outraged policymakers by restricting access to emergency funds for Greece’s struggling banks.   In Berlin, Varoufakis promised to meet the alarmist warnings of some in the eurozone about the consequences of Syriza’s radical policies with “a frenzy of reasonableness”.   Just before the Berlin meeting the Russian president, Vladimir Putin, had ratcheted up the pressure on the eurozone to find a solution to the crisis by inviting the new Greek prime minister, Alexis Tsipras, to talks in Moscow in May.  Schäuble said Germany would “fully respect the mandate” handed to Varoufakis and his colleagues by the electorate in the general election last month, but Germany had its own democratic pressures.

Searching for support and "handouts" (from the US) as usual ...

German Chancellor (Merkel) arrives in Washington late  this sunday for upcoming  meetings with President Obama that start Monday..."We think it's wise to have an (...) accord tied to achievements and bench marks,"  = this is a funny statement though.  Anyway,  here's what they will talk about ( this is the "public agenda" - background talks about further economic support from the FED not made public by neither of the participants - Germany needs help for sure):

 

UKRAINE

"One of the most pressing issues is the crisis in Ukraine," said Peter Wittig, Germany's ambassador to Washington. "All of us are concerned this is a spiraling military conflict. We want to explore the diplomatic options."  Merkel's visit comes as Obama considers providing modern weapons to Ukraine, which has been losing territory in the country's eastern regions to pro-Russian separatists armed with tanks and personnel carriers sporting Russia's most advanced armor.

Ukrainian President Petro Poroshenko on Saturday asked Western leaders at the Munich Security Conference to push for a quick cease-fire and defensive weapons capable of countering the separatists' armored assaults... Merkel, French President Francois Hollande and Russian President Vladimir Putin agreed Friday during a meeting in Moscow to draft a peace plan for Ukraine based on ideas proposed by Putin and Poroshenko, but previous agreements have fallen apart even as the conflict has resulted in more than 5,300 dead in Ukraine.  Merkel has opposed sending weapons to Ukraine. On Saturday, she said she "cannot imagine any situation in which improved equipment for the Ukrainian army leads to President Putin being so impressed that he believes he will lose militarily," according to the Associated Press.  Wittig, who briefed reporters in Washington in advance of Merkel's visit, said that if the West delivered weapons to Ukraine, "Moscow would probably reciprocate" by providing separatists with more weapons.  "How far are we willing to escalate that military spiral? I'm not sure that we are," Wittig said.

TRADE

Finally, the two leaders will discuss a thorny trade pact, the Transatlantic Trade and Investment Partnership (TTIP), which would unite the economies of the USA and the 28-nations of the European Union. The deal would eliminate most trade barriers for many products and financial services.

Backers say it could produce free-market prosperity, but the negotiations have also been controversial because the pact would increase competition. Greece's new leftist ruling party, Syriza, has said it opposes the plan.

THE ISLAMIC "STATE"

Obama and Merkel will also discuss a training center Germany is setting up in Erbil, in Kurdish-controlled Iraq, to train and provide arms to Kurdish Peshmerga forces fighting against the Islamic State, which has seized territory in Iraq and Syria. Merkel will also discuss German interest in pursuing other tracks of destabilizing the militant group, including counter-financing and supporting messages that de-legitimize the group's claims that its actions, including the murder by fire last month of a captured Jordanian pilot, are backed by Muslim religious ideals.
Source - USA Today

Syriza swept to power pledging to rebuild Greece on four pillars - restarting the economy, regaining employment, transforming the political system and confronting the humanitarian crisis.

It has pledged to dramatically increase the minimum wage by over £100 a week, which was cut as part of the austerity programme and get 300,000 more people into work.

In a similar way to post-war Germany, Greece also wants Europe to write off most of its £240billion national debt.  The party also wants Germany to repay a loan that the Nazis forced the Bank of Greece to pay during the occupation and pay war reparations.  German Finance Minister Schaeuble has warned Greece over its negotiating tactics, saying the nation and the EU would not "be blackmailed".  In another newspaper interview this morning with Berliner Morgenpost, Chancellor Merkel said: "We - Germany and the other European partners - will now wait and see what concept the new Greek government come to us with."... However she added: "I don't see a further debt haircut". ... And as for demands over war reparations, she said: "This question doesn't arise."

New Greek PM Alexis Tsipras will visit Cyprus, Italy and France next week but there are no plans as yet to visit Germany. As well as scrapping some austerity measures demanded by the troika, such as a privatisation programme, Greece is now trying to negotiate with other EU members over its level of debt.  There are fears though that if Greece refuses to meet its debt demands, it could be forced out of the Eurozone.  Ms Merkel today said she wanted Greece to be successful and acknowledged "many people there have hard times behind them.  "The aim of our policies was and is for Greece to remain a part of the euro community permanently."

se tiparesc bani - "euro"...

Preşedintele Băncii Central Europene, Mario Draghi, a anunţat joi măsuri de relaxare cantitativă (QE) de până la 60 de miliarde de euro pe lună, din martie 2015 până în septembrie 2016, pentru a revigora economia zonei euro, transmite Reuters. Conform programului extins al BCE, achiziţiile lunare combinate de obligaţiuni suverane ale statelor din zona euro şi bonduri corporatiste se vor ridica la 60 de miliarde de euro', a afirmat Mario Draghi.  Propunerea de a injecta bani în economia zonei euro reflectă determinarea preşedintelui BCE, Mario Draghi, de a extinde bilanţul instituţiei pentru a preveni deflaţia şi a stimula redresarea zonei euro.  Majoritatea analiştilor se aştepta ca BCE să nu modifice costul creditului în zona euro, după ce rata anuală a inflaţiei în eurozonă a continuat să scadă în luna decembrie 2014, ajungând la minus 0,2%, mult sub ţinta de 2% avută în vedere de BCE. Aceasta este prima scădere a inflaţiei în teritoriul negativ înregistrată de zona euro după luna octombrie 2009. Dacă această tendinţă se va prelungi, zona euro va intra într-o perioadă de deflaţie. SURSA: Agerpres

The European Central Bank head Mario Draghi is expected to make good on his promise to “do whatever it takes” to save the deflating euro and sagging economy and introduce US-style quantitative easing to the tune of €500 billion in bond purchases. The sovereign bond purchases could inject €550 billion ($650 billion), according to a survey of economist by Bloomberg News. The bank meets Thursday and will make a rate decision announcement at 13:45 CET in Frankfurt, which will be followed by a news conference at 14:30 CET.  A non-standard monetary policy to purchase bonds and asset-backed securities is likely to be announced, and will include sovereign debt purchases, but not gold. It is very similar to the US stimulus scheme to ease the money supply. Declining prices and low growth have brought the EU economy, and its currency, to a sluggish stasis. Record low interest rates of 0.05 percent haven’t boosted the economy, either. This extra cash liquidity measure in the banking system will be instead of the current support program known as “suspending sterilization,” which amounted to about €175 billion in weekly fund extractions from EU banks over the last 4 years. This money won’t disappear, but will stay in the banks, and possibly be leant out, thus stimulating growth.   Germany has been against the stimulus, as it believes it could further agitate highly-indebted EU countries, and the German authorities have argued the bond buying program is illegal. Under EU law it is illegal to finance governments and debt. However, the ECB is allowed to buy government bonds in the secondary market and the move wouldn’t be in violation of any eurozone law. At December’s meeting, the ECB Governing Council said it will reassess the monetary stimulus package “early next year.”

 

....and a lot of BS - since the "FED" pumped trillions of dollars in the Bundesbank in the last 3 years

Germany has balanced its budget for the first time in more than 40 years, and pressed eurozone partners to follow its austere example rather than try to stimulate their stagnant economies with borrowing or central bank money-printing.   Berlin had aimed to achieve the so-called "schwarze Null" (zero deficit) this year, but strong tax revenues and lower debt service costs due to rock-bottom interest rates helped it meet the goal a year early in 2014, the finance ministry said.   It is the first time Germany has balanced its budget since 1969 .  Chancellor Angela Merkel's government has rebuffed calls from EU partners, led by France and Italy, and international organizations such as the IMF and the OECD to spend some of the fiscal windfall on growth-promoting public investment.   Germany's announcement came nine days before the European Central Bank (ECB) may decide to launch large-scale purchases of eurozone government bonds in an effort to boost growth and avert deflation in the 19-nation currency area. The European Commission set out detailed rules on Tuesday for a planned €315bn investment programme over the next three years, involving no new public money in deference to German objections.  Public investment and structural reforms could win limited leeway for countries breaking EU budget rules, it said. That reduces the likelihood of tough penalties on France or Italy, the eurozone's second and third largest economies, when their fiscal plans are reviewed again in March.   Countries that put capital into a proposed European Fund for Strategic Investment would not be penalized if it tips them over the EU's deficit limit of 3pc of gross domestic product. However, those that already have an deficit in excess of the ceiling would win no indulgence.  The mood of self-congratulation in Berlin over the balanced budget made any easing of fiscal policy seem unlikely, even though the German economy is expected to slow this year. 

Far from using the leeway to invest more in creaking public infrastructure or cut taxes to stimulate weak domestic demand, politicians in Ms Merkel's conservative CDU party said the government should now focus on paying down the country's debt.

Quantitive Easing is just distribution of money from the poor to the rich !

2015 will show the complete collapse of the Western world we have known since 1945. It will be a gigantic hurricane, which will blow and rock the whole planet, but the breach points are to be found in the “Western Port”, which hasn’t been a port for a long time but, as will be clearly shown in 2015, has been in the eye of the storm in fact, as we have repeatedly said since 2006. Whilst some boats will try to head offshore,  the Ukrainian crisis has had the effect of bringing some of them back  to port and firmly re-mooring them there. Unfortunately, it’s the port itself which is rocking the boats and it’s those with the strongest  moorings which will break up first. Of course, we are thinking of Europe first and foremost, but more so Israel, the financial markets and world governance.....Come on guys.. Look the similarity of the so called Wirtschaftswunder in Germany after the WWII and the current hate to the €uro currency in the Anglosphere...."Wirtschaftswunder (German for "economic miracle") describes the rapid reconstruction and development of the economies of West Germany and Austria after World War II (adopting an Ordoliberalism based social market economy). The expression referring to this phenomenon was first used by The Times in 1959.[1]  Beginning with the replacement of the Reichsmark with the Deutsche Mark as legal tender (the Schilling was similarly established in Austria), a lasting period of low inflation and rapid industrial growth was overseen by the government led by German Chancellor Konrad Adenauer and his Minister of Economics, Ludwig Erhard, who went down in history as the "father of the German economic miracle." In Austria, efficient labor practices led to a similar period of economic growth."... Bear in mind the EU is anti democratic.  Its powers are centralized and in the hands of the few.  Examples: Merkel stage managed Juncker becoming  chief commissioner and he, in turn, appointed the others.  The central bank dictates fiscal policy.  The EU even wants a centrist defence policy.  In truth the euro cannot survive long term because it defies  bedrock economics. The interactive, social, daily  value of any currency finds its own level.  Greece will be better off outside the EU in the medium  and longer term.  With a naturally evolving currency.....And now, the big lie - :
There are concerns….once deflation actually takes hold there is no stopping it….until all debt is destroyed….this would be a ghastly ghastly human catastrophe…social welfare states would collapse plunging millions upon millions into untold misery…it might already be too late to stop deflation…there is no evidence that quantative easing actually always solves the structural problem of too much debt - rather it might just delay the great reckoning of too much debt…meaning the destruction of debt by default or hypo inflation...   In brief: The banks loaded everyone up with so much debt that it can't be repaid even at zero rates. The owners of that debt (the rich) won't take a haircut on their "investment". So they need to sell the debt to the public indirectly, via the central bank. Meanwhile if everyday prices show a hint of dropping and making people's lives easier (deflation!), even more money must be given to the banks and the wealthy. And if at some point wages show a hint of rising and making people's lives easier (inflation!), interest rates will rise. Nice system isn't it? I wonder who profits most from this arrangement. It should be simple enough to work out: look around and see who has all the money. It's not us.

...a sign to start stuffing the mattresses...

I still hold out hope that an economic implosion of the Eurozone could lead to the break up of the EU which affords Romania and others an easy low cost and smooth exit without any political upheaval. If such a bounty were to happen it could mark the very lowest point of 100 years of perpetual decline. The eurozone has officially slipped into deflation, after latest figures showed prices in December were 0.2pc lower than a year earlier.   The figure, far short of the European Central Bank's target of just under 2pc, is the latest pointer towards fresh intervention by the bank as it tries to prop up a sluggish economy.   Energy prices slumped 6.3pc compared to a year ago, driven by falling oil prices. The cost of industrial goods and food was flat while services rose 1.2pc. This is the first time the euro area has experienced deflation since 2009.   The ECB will meet on January 22 to consider whether to go beyond its existing stimulus measures and start buying sovereign bonds in a program of quantitative easing.   ECB president Mario Draghi has dropped numerous hints that he hopes to push cash through the eurozone economy in this way, despite grumblings in Germany that such measures are outside the central bank’s mandate. The euro, which reached a fresh nine-year low of $1.1842 before the figures were released, rose slightly after the announcement.   The currency has dropped from a high of $1.39 in May as the economic recovery in the United States diverged from the torpid eurozone.  The inflation figures follow German data on Monday showing that the currency bloc’s biggest member had experienced inflation of just 0.1pc in December, down from 0.5pc in the previous month and short of forecasts of 0.2pc. A purchasing managers’ index for December was published on Tuesday showing continued weak growth in the eurozone economy, with a reading of 51.4. A score of 50 or above denotes growth, but survey compiler Markit said the reading pointed to expansion of just 0.1pc in the final three months of 2014.   Watched from the sidelines of the UK, a fanatically driven religious war and deflationary spiral both coming from different directions to annihilate the entire European Project and re ignite a nationalist / fascist backlash throughout Central and Eastern Europe that engulfs the Continent would undoubtedly be the most exhilarating and awesome piece of history to unfold in 1000 years.   Armed with 24 hour digital media, chilled beers and comfy armchairs it would deliver the most stunning entertainment on a perennial basis as seminal pages of history are written whose importance to the future of Humanity and the map of the earth is of such magnitude that will be taught, debated and analyzed for hundreds, possibly thousands of years into the future.   Every time I dismiss it as just a dream events take it one big step nearer....So, the Eurozone enters a deflationary spiral and the markets? Shows just how disconnected they are from real economic data. Pushing up on a few words of obfuscation from Draghi as opposed to looking at the hard aspects of economics and the ability for major companies to generate profit / return.   If that ain't a sign to start stuffing the mattresses, I don't know what is.

The number of people seeking work in France has risen to a record high, official figures show. The jobless total rose by 27,400 in November to 3,488,300 - the highest level yet seen.  That means the number looking for a job has risen by 5.8% in the past year.  The claimant count rose in November for the third month in a row, and official government estimates suggest the economy will have grown by just 0.4% this past year.  The jobless figures count the number of people claiming benefits and looking for work with the National Agency for Unemployment.  The alternative international measure of unemployment, devised by the International Labour Organization and based on a regular survey, says that unemployment in France rose to 2.84 million in the third quarter of the year, giving an unemployment rate of 9.9%.  President Francois Hollande, elected in 2012, made the creation of more jobs a key feature of his election campaign.  He recently stated that if he failed in this aim, he would not stand again in the 2017 presidential elections.  The latest attempt to rouse the economy from stagnation and to create more jobs was announced earlier in December. The French Prime Minister, Manuel Valls, and the Economy Minister, Emmanuel Macron, outlined plans that included increasing the number of businesses operating on Sundays, and opening up regulated sectors, such as certain professions, to competition. It is not obvious this strategy would succeed in reviving the economy, even if implemented fully. The deregulation plan produced immediate protests by thousands of people in Paris and faces opposition from within the ruling Socialist Party.