With the EU there is no such thing as a bottomless pit.

The EU elites Barasso and Rumpy Pumpy included will never give up on their giant corrupt ponzi scheme, their mega salaries and mind blowing pension ; one way or the other the euro fall will be one of this biggest failure in modern history. It will end; when all the people from the austerity ridden countries rise up and topple their Governments. The EU will then collapse like a pack of cards. Good riddance, can't wait for the day!And so this ongoing financial analysis goes on! Stimulus, austerity or a combination of both? I can't see any of the above scenarios working. Austerity and the Western engine of the world economy spirals into decline, taking the BRICS with it. Stimulus and money printing and we end up like Zimbabwe. There's no magical growth on the horizon to pull us out of this spiral, at least nowhere near enough. Kicking the can ever further down the road won't work. You could save a lot of time and effort Ambrose and just tell us we're all bu**ered. One day the world will move on, but there will be a very different political and economic landscape. A New World Order: perhaps?? I think after a couple of years of frustrated viewing we are starting to see the 'markets' (whoever the people are that make up the 'market' they seem to be extremely gullible) FINALLY cottoning on to the fact that the pantry is bare and there is no solution to the Euro that doesn't involve the end of the Euro. As the saying goes "you can't fool all of the people all of the time"; well the time of fooling everyone except themselves seems to be running out for the EU 'elite' and they are going to be eating humble pie sooner now I think rather than later. Mind you they do have a remarkable capacity for dragging this out while they feather their own nests, but we do seem to be getting close to the end game finally...

German Chancellor Angela Merkel is well known for her opposition to further aid for crisis-stricken euro countries without additional controls, but what do German voters think? A new SPIEGEL ONLINE survey reveals that a narrow majority is opposed to any more bailouts, and almost three-quarters of Germans want stricter fiscal oversight from Brussels.

Europe is now in the third year of its sovereign debt crisis and the prospect of a breakup of the single currency no longer seems as farfetched as it once did. But from the perspective of most Germans, the euro crisis is still something that mainly affects other countries, namely Greece, Spain, Portugal, Italy, Ireland and now Cyprus.

But although the German economy has shown itself to be surprisingly robust, with unemployment falling and tax yields rising, Germany will not be able to withstand the negative trend in the euro zone for ever. "The crisis in the euro zone is catching up with the German economy," commented Ferdinand Fichtner, chief economist at the German Institute for Economic Research, earlier this week. Indeed, the institute has just dropped its growth forecast for the German economy for 2013 from 2.4 percent to just under 2 percent.

La Signora No in Italy

HAVE NO DOUBT : EUROPE IS BEEING RULED BY THE FOURTH. REICH - - -THERE IS NO ESCAPE !!!!

Mrs Merkel -- or La Signora No in Italy -- doused hopes of a break-through on proposals by the "Latin Bloc" leaders of Italy, France, and Spain to deploy the funds (EFSF and ESM) to cap the bond yields of "virtuous" countries vulnerable to contagion, or to re capitalize banks directly to take the strain off sovereign states. "If I give moneystriaght to Spanish banks, I can't control what they do. That is how the treaties are written," she said, before racing off to Danzig to tonight for Euro 2012 quarter final between Greece and German.. Christine Lagarde, the head of the IMF, warned before the summit that the eurozone is under "acute stress" and at risk of a downward spiral. "The viability of the European monetary system is questioned. There must be a overcapitalization of the weak banks, with preferably a direct link between the EFSF/ESM and the banks, in order to break the negative feedback loop that we have between banks and sovereigns."

"Angela Merkel defies Latin Europe and the IMF on bond rescue". The headline says it all - AEP seeds hate between European nations to obfuscate the fact that people the as well in Latin Europe as in Germany are enslaved by a financial system that plays dirty against the people. And the people can't win the game because mathematics always wins, no chance against compound interest on hot-air-money. But wait - the lenders are only a few, and the people are millions, and the lenders reside in big buildings in the center of towns. Just like Alexander solved the Gordian knot without dealing with the mathematical intricacies, the people of Europe might solve their problem with extremely leveraged private banks that enslave whole populations to pay compound interests on money that was simply created by a keystroke with no productive effort whatsoever - with the sword.

I wouldn't be surprised to hear that Greece has already started printing Drachmas in secret and that Germany had been printing DMs

The Pew Global Attitudes Project polled 8,000 people in France, Germany, Spain, Italy, Greece, Poland, Britain and the Czech Republic from mid-March to mid-April and identified unprecedented levels of discontent with the EU. "The European project, which began with the creation of a small common market in 1957, grew to a larger single market in 1992 and then created the single currency in 2002, is a major casualty of the sovereign debt crisis," the report concluded. "Majorities or near majorities in most nations now believe that the economic integration of Europe has actually weakened their economies." At a time when the EU is pushing closer to an economic and fiscal union for the eurozone, popular opinion is pulling the other way. That contradiction has led to electoral upsets across Europe, from Greece to the Netherlands and France in the past three months alone. Majorities in most countries now blame EU integration for damaging their economies, but the figures hit 70% in Greece, 63% in France and 61pc in Italy, all countries once regarded as staunchly pro-European. Just one third of the people – 34% – believe that economic integration, a central plank of the EU's raison d'etre, is a benefit.
De La Rue, the money printer, failed to dampen speculation that it has been secretly awarded a contract to start printing drachmas the moment Greece is forced out of the euro. The company said that its order book had increased by 14pc, to £248m, but its policy was to never reveal which specific contracts it was working on. The chief executive Tim Cobbold said: “We have people in every region in the world. We are very close to all geopolitical conditions that develop.”

He said, however, that in most circumstances it took six months between an initial order being placed by a central bank or government, and the notes being delivered. This was the time it took when South Sudan introduced the South Sudanese pound after it gained independence last year.

To print a new currency in the space of a couple of weeks “would be impossible”.

Sergey Shvestov, the vice president of Russia’s Central Bank, said that Greece already has a plan to introduce its own currency, in parallel to to the euro. He said it with high certainty.

Making contingency plans for different options is the right thing to do for anyone, but saying it about Greece and with such a degree of certainty is new.

Shvestov didn’t want to share more details, but said that leaving the euro-zone is a necessity for Greece. He said it would be a “good example” for other countries.

The Russian Center for Strategic Studies in Moscow said that a Grexit will ignite a global crisis affecting the price of oil. They see a a chance of more than 50% that Greece will leave the euro-zone and that it will cause other countries will leave as well. El Economista brings this report. Rumors about fresh polls show that anti-bailout SYRIZA is in the lead, with 30% support. The situation in Greece is so bad that the country may leave the zone even if pro-bailout parties win.

EUR/USD is struggling between 1.25 and 1.26. Is another fall coming?

GREECE HAS A GERMAN GOVERNOR - HORST REICHENBACH ...IF YOU DIDN'T KNOW !!!!

 THE PEOPLE OF GREECE SHOULD KEEP VOTING OUT THESE TRAITORS - Panos Kammenos, leader of a conservative party that opposes Greece's international bailout deal, emerged from the presidential mansion where the talks had been held and said that no deal had been reached. Greek socialist leader Evangelos Venizelos ( who is not a socialist in fact, but more of a Merkel slave infiltrated among the real socialists) backed up the report. "We are going again towards elections, in a few days, under very bad conditions," he said, while a statement from the president's office noted simply that efforts to form a government had failed.. Left-wing leader Fotis Kouvelis added: "I did everything I could to avoid new elections. From the very first moment some parties had chosen to go for new elections."...The leaders of Greece's main political parties have been trying to form a coalition since elections nine days ago. The anti-austerity Left Coalition party Syriza, which is widely expected to win the new elections in June, refused to take part in this week's discussions.

Party spokesman Panos Skourletis said: "It is obvious that there is an effort to bring about a government that will implement the bailout. We are not participating in such a government."

Spain reintroduced checks at the border with France ahead of the meeting, temporarily suspending the Schengen agreement. So far reports say 17 arrests have been made at the border and 43 people denied entrance because of previous police records involving "violent protest". Authorities want to avoid clashes staged by "anticapitalist" protestors who may travel from abroad for the event. However, students from Barcelona University are staging a "strike" today and have taken to the streets to protest education cuts announced by Mariano Rajoy's conservative government last month. Streets have been blocked by the demo in the centre of the city. Some 8,000 police are on the streets of Barcelona during the ECB meeting to prevent trouble. Snipers visible on rooftops, armoured vehicles and riot police at the ready and helicopters flying overhead. The sunny city is on lockdown with some twitter uses dubbing the Catalan capital "carcelona" - carcel means prison in Spanish. No signs of any trouble as yet.... Mr Draghi's predecessor, Jean-Claude Trichet (below) has told German TV that Europe is "only halfway" through the crisis. In an interview with he said: Hard work has been done, but we are only halfway, and a lot still has to be done [...] As the leader of the Governing Council which has taken all those difficult decisions, yes they are doing a very good job... Mario Draghi will tonight hold a private meeting with Prime Minister Mariano Rajoy in which the Spanish leader is expected to ask for affirmation that the ECB can be relied on to provide liquidity boosts for Spain’s ailing banks. Mr Draghi’s had some positive things to say about Spain. In the press conference he recognised that Spain had “carried out significant reforms in a short time” though insisted that “perseverance was needed to push through more structural reforms” especially in the banking sector. ... The online edition of Spain’s financial newspaper Expansion chose to highlight his comments on further reforms. “Draghi calls for more forceful measures: ‘If you have a problem with the banks, confront it’” said the headline. Overall the paper said there were no surprises in decisions taken during by the ECB governing council.

It is "not for Germany to decide for the rest of Europe",

It is "not for Germany to decide for the rest of Europe", said Francois Hollande, the frontrunner to replace Nicolas Sarkozy as French president.

If elected, Mr Hollande says that he will not pass the fiscal austerity pact agreed by the leaders of 25 European nations, unless it contains measures to spur on growth.

His stance puts him on a collision course with Angela Merkel, the German Chancellor. She hit back at the French Socialist candidate's plans, warning the deal is "not open to new negotiations".

"The fiscal pact is negotiated, it was signed by 25 government leaders and has already been ratified by Portugal and Greece," she told a German newspaper.

"Parliaments across Europe are on the verge of passing it. Ireland is having a referendum at the end of May."

Portugal's prime minister has admitted that his country may require more help. Writing in the Financial Times today, Pedro Passos Coelho said there were "no guarantees", but insisted that he will deliver on economic reforms. Full details and reaction shortly....Elsewhere... the International Monetary Fund's spring meeting continues in Washington. Today we get the Global Financial Stability Report.

In the UK, the latest unemployment data is released this morning, along with minutes from the last meeting of the Bank of England's monetary policy committee....City traders reckon European stock markets will open calmly after yesterday's rally.The Bank of England was split last month over whether to leave its quantitative easing programme unchanged, or pump even more electronic money into the economy. Minutes from the last meeting were just released, showing that David Miles wanted to increase the QE budget by another £25bn to £350bn. The rest of the committee voted to leave the asset purchase programme unchanged. According to the minutes, Miles took a 'finely balanced' decision that another stimulus measure was needed....Adam Posen, though, the long-time dove on the MPC, did not call for more QE. If anyone would want an extra dose, he seemed the most likely.

GERMANY - Schröder's labor market reforms remain controversial today in Germany. They included the combining of unemployment and welfare benefits, drastic cuts for the long-term unemployed, the deregulation of temporary work and the creation of mini-jobs, essentially limited part-time work that has no effect on welfare payments. Critics say the changes meant primarily that the unemployed were now expected to accept poorly paid jobs. Some 41 million people have a job in Germany today -- the highest employment figure ever, which could provide Schröder with some delayed satisfaction. But the flip side of the coin is that 23 percent of them work in the low-wage sector, and that real wages have in fact declined by 3 percent in the last 11 years.  By contrast, no one in the southern European countries was asked to make any sacrifices in the years leading up to the crisis. The boom on borrowed funds led to wage increases, but it also ensured that rigid labor market laws remained unchanged.

A de facto ban on dismissals persisted in southern Europe until recently, usually benefiting the individual, but not society as a whole. The unpleasant truth that employers only create jobs if they are also permitted to lay off workers in times of crisis was ignored.

Italy is a case in point. Even today, unlimited full-time employment and protection against dismissal are practically sacrosanct in Italy. A number of governments on the left and the right have already tried to tackle Italy's big taboo, a deregulation of the labor market, but have always ended up yielding to public opinion. Protection against dismissal is codified in Article 18 of the labor code, a symbol in the struggle between employer and unions for years.

The Copenhagen meeting degenerated into acrimony and some chaos when the Austrian finance minister, Maria Fekter, upstaged the eurozone leaders by first announcing an €800bn firewall. The deal agreed on Friday conformed to German prescriptions for a minimalist bailout fund, a recipe that the European commission in advance described as inadequate to the challenges confronting the euro. Ministers endeavored to impress the bond markets, the Americans, and the Chinese, trumpeting the agreement as worth "more than a trillion dollars" in the hope that this will press the big IMF donors into doubling the monetary fund's reserves to a similar figure next month. "We are now in a strong position for discussion on the IMF in April. It is a good signal," said the French finance minister, Francois Baroin. "All together the euro area is mobilising an overall firewall of approximately €800 bn, more than $1tn," said a Eurogroup statement. Jena-Claude Juncker, the veteran Luxembourg prime minister who has been chairing the eurogroup for eight years and whose term expires in June, threw a wobbly and abruptly cancelled a media conference at which he was to unveil the decisions. The new money comes in the form of the European Stability Mechanism (ESM), the permanent eurozone bailout kitty and embryonic European Monetary Fund which starts in July. The ESM's launch has already been brought forward and ministers on Friday also agreed to speed up the process of paid-in capital to get the fund fully operational within two years. Its lending capacity was capped at €500bn, as has long been planned. Friday's agreement represented yet another win in the long-running euro saga for Berlin in dictating the terms of the eurozone's response to the crisis. France and others had argued for a trillion-euro firewall. Germany insisted the permanent fund should not exceed €500bn and on Monday conceded the €200bn of current bailouts could run concurrently. "The euro area made substantial progress over the past 18 months to address the challenges stemming from the sovereign debt crisis," the ministers declared. "Important improvements were made to improve the governance of the euro area … robust firewalls have been established. This comprehensive strategy has paid off." I may have missed a statement somewhere, but I'm not aware of either Barroso or Rehn saying any such thing - the calls for an (even) bigger firewall, at €1 trillion or so, were from the head of the OECD and the French Prime Minister Barroin, I think. That's not the way the German press reported the concession, about ESM and EFSF to run concurrently, that Germany made on Monday. Lots of talk about "climb-downs" and "bowing to unprecedented international pressure" and so on.
Mircea Halaciuga, Esq.

It's very simple but few seem to learn - don't use a bank.

Credit card companies are using "shameful practices" to maximise profits from customers on interest-free balance transfer deals, the managing director of a bank has claimed. Brian Cole, of Capital One in the UK, the bank that first introduced zero-interest balance transfers to Britain in the 90s, says: "There's a lot of practice in the [banking] marketplace that is shameful, and credit card companies are not immune. [Balance transfer] customers think they're going to progress in getting out of debt, and get some relief from interest payments. But make a mistake and you will end up making money for your credit card company." Cole stopped Capital One making interest-free balance transfers available to mainstream customers in 2008. He says: "When we first introduced the interest-free balance transfer it was a very different product to now. The interest-free period lasted six months and it was a loyalty based play: we hoped the customer would stay at the end of the interest-free period, but if they didn't, we didn't lose lots of cash." Borrowers loved the idea of interest-free credit, and soon banks were vying for business by extending the interest-free period. The longer it became, the more difficult it was to make money, says Cole: "The pressure for issuers to find that revenue intensified, and on the back of that came sharp practices." Andrew Hagger of product comparison website MoneyNet says he was surprised that credit card companies not only continued offering zero-interest balance transfers after the credit crunch, but extended the length of the deals. In September 2007 there were 86 deals on offer with an average interest-free term of 9.14 months. Now there are 74, but the average term has increased to 12.64 months and Barclaycard and the Halifax are both offering 22-month deals. "It's surprising to see the balance transfer market still apparently thriving in this post-crunch era – however, while the number of deals remains high, the volume of people being declined is likely to have increased markedly as borrowers focus on consumers with a squeaky clean credit history. Offering long-term 0% balance transfer deals is a great way for card providers to get free advertising via the best buy tables," says Hagger. So how do banks make money out of what seems to be such a bargain for those who qualify? Banks lose money during the interest-free period, as they will be paying interest on the money lent to you. But they can recoup some of that with the balance transfer fee. Cole says: "If you're transferring £10,000 with a 2% balance transfer fee, that's costing you £200. That's quite a sizeable amount, but it still doesn't feel much to the customer because it doesn't come directly out of their pocket – it's added on to the credit balance.".....It's very simple but few seem to learn - don't use a bank. You want a better life - don't use banks. This is your choice. Credit Card use fuels the fractional reserve banking system which is the root of all the debt issues.

Kicking a "huge can" into a blind alley

Anyone who doesn't understand that electronically creating $1 trillion (the total of both tranches of EU LTRO=long term refinancing operation ) isn't kicking a huge can into a blind alley, really needs their head looking at.keep the banks going, sure, but even more importantly, gotta keep the 'European Project' going!.....however high the price economically, financially, socially....... ....Buying time..... ...and time got very, very expensive in the last year. Gotta keep those banks operating, gotta keep bailing them out with $1 trillion of LTRO (Long-Term Refinancing Operation) and several $ trillions of QE. Gotta keep them going so they don't lend to businesses, gotta keep 'em going so they can charge extortionate rates of interest on the money they got at 1%, gotta keep them going so they can make unlawful charges on their 'customers' accounts so as to keep them on the bread line and desperate for the kindness of the strangers who run banks, gotta keep them going so they can continue to avoid paying tax, gotta keep them going so they can donate a small percentage of their profits to political parties. Gotta keep them going so they can pay you 0.5% of interest on your life savings when inflation is running at 5%......CAN'T YOU SEE THAT IF WE DON'T KEEP THOSE BANKS GOING THEN IT'LL BE THE END OF SOCIETY AS WE KNOW IT !!!......There is no amount of poverty or deprivation, social unrest or unemployment that is not worth it when you really understand what the banks do for us. We must keep the young out of work, preferably in further education but if they aren't smart enough then, well, maybe we could find SOME work for them if they aren't going to expect a wage and we must 'encourage' the elderly to keep working. A ninety year old is the only one with the 'valuable life experience' to work in our fast food outlets and DIY superstores.----We gotta keep those banks operating or the whole pyramid scheme that our society is built on will collapse..........Italian and Spanish banks have borrowed from the ECB in record quantities and appear to have made sizable investments in domestic sovereign debt because they can make a profit off the difference between the interest rate on that debt and the one percent interest charged by the ECB. This makes a lot of sense; if one of the countries were allowed to default, domestic banks would be dealing with complete economic collapse. Default on sovereign bonds would prove just a trivial piece of a much greater catastrophe. In a closed economy, increasing domestic bank exposure to sovereign debt in order to pull an economy out of a trouble spot makes sense. So long as banks are there to buy up government debt, the government can issue as much debt as it wants and always find buyers. It can even give money to fund people and businesses and that excess money will eventually find its way back through the system as it's pumped through the financial system via saving and lending. Even in an economy with a single currency, currency risk will discourage (though not completely deter) investors (people, businesses, and banks) from putting money abroad. The structure of the eurozone, however, completely eliminates this currency risk, and in fact encourages investors in one country to keep their money in another if its economic prospects are better. And despite currency risk, the prognosis for the euro area—and thus the euro—is so uncertain in the long term that many investors are willing to overlook the currency risk of holding American or Japanese assets because of the assurance that those investments will be worth something someday.

Debts imposed by "fiat", by governments or foreign financial agencies in the face of strong popular opposition may be tenuous...

Addressing the German parliament on Friday morning, Merkel insisted treaty changes and tighter regulation of erring eurozone members were the only way out of what she described as "the most difficult chapter in the history of the euro, if not the most difficult in the history of the European Union". To a packed Bundestag, Merkel said it was "absurd" to claim Germany was trying to "dominate" Europe – an accusation which has become ever more widespread after one of her MPs made goading comments that "Europe was now speaking German". Despite criticism that her indecisiveness is accelerating the possibility of a collapse of the single currency, Merkel preferred to focus on what had been agreed in recent months. "It's no exaggeration to say that we have achieved an incredible amount," she said. "In Europe we are now arguing and wrestling over the fine print, not about the plan as a whole," she added. "Anyone who, a few months ago, had said that at the end of the year 2011 we would have taken very serious and concrete steps towards a European stability union, a European fiscal union with powers of enforcement, would have been considered crazy," she said. On the euro zone bailout fund, the European Financial Stability Facility (EFSF), Merkel said: "I don't think we should talk ill of the EFSF, but think we should be realistic about what the EFSF can do." Germany was not trying to take over Europe, she said. "It's important for me to say to you this morning that you don't need to worry about the fears you hear or read about at the moment – that Germany wants to lead or dominate Europe or similar. It's absurd. It's true that we are pushing for a certain stability and growth culture, but we're doing this in the European spirit of Konrad Adenauer and Helmut Kohl. European and German unification were and are two sides of the same medal and we will never forget it."...And I say : It is becoming more and more obvious that the financial sector is using successive financial crises to convince governments that that the economy will collapse if they do not “save the banks.” In doing so, the financial sector is consolidating its control over policy by way of financial proxies called technocrats.

Ollie Rehn - incompetent, corrupt is part of the problem facing Europe today

Olli Rehn, EU economic and monetary affairs commissioner, warned Germany that it alone could not determine the eurozone's fate, Italy only managed to secure cover for a two-year bond worth €2bn by paying 7.8%. A six-month loan for €8bn cost it 6.5% compared with 3.54% only a month ago. Rehn admitted in Rome that contagion had now spread to the core of the zone. He was speaking after talks with Mario Monti, Italy's new technocratic prime minister, who has yet to convince markets he can deliver on his promises of structural reforms and savage cuts in national debt. Meeting in Berlin, the finance ministers of Germany, Finland and the Netherlands even hinted at the prospect of an enhanced role for the European Central Bank (ECB) if all other steps to save the euro collapsed. But they again ruled it out as an immediate solution. Meeting in Berlin, the finance ministers of Germany, Finland and the Netherlands even hinted at the prospect of an enhanced role for the European Central Bank (ECB) if all other steps to save the euro collapsed. But they again ruled it out as an immediate solution.

LONDON (Dow Jones)--Consumers in the euro zone΄s three largest economies are looking fragile at best as the region΄s debt crisis continues, according to data released Tuesday. Confidence among French and German consumers improved slightly in the latest surveys despite underlying concerns. But Italian consumer confidence hit its lowest level in more than three years. In Germany, the forward-looking consumer climate index for November ticked up to 5.3 from 5.2 in October, beating economists΄ forecasts for a 5.1 reading. German consumers feel shielded from the debt crisis as long as the labor market remains strong, market research group GfK said. But consumers in the euro-zone΄s largest economy are increasingly worried about the economic outlook. The economic expectations sub-component of the index fell in October to a 26-month low, dropping to -6.2 points from 4.8 points in September. "Ongoing discussions relating to the government debt crisis and the threat of Greek insolvency, which will also put pressure on banks, continue to unsettle Germans," GfK said. French consumer sentiment for October, meanwhile, improved unexpectedly, but national statistics agency Insee said consumer confidence remains well below its long-term average. The French sentiment index rose to 82 in October from 80 in September. Economists polled by Dow Jones News wires had expected a reading of 79. Barclays Capital European economist Francois Cabau attributed the increase to the survey΄s monthly volatility and said there is "only limited scope" for marked improvement by the end of the year. In Italy, consumer confidence fell in October to its lowest level in more than three years as fiscal austerity and a domestic political impasse weighed on household sentiment. The consumer confidence index declined to 92.9 in October from 94.2 in September, national statistics institute Istat said. Istat΄s figure reflects a dramatic revision of its data series, which is now benchmarked to the year 2005. Consumer confidence in September was previously reported as 98.0. Economists surveyed by Dow Jones News wires expected Italian consumer confidence to fall by only half a point. The new October figure represents, in the revised data series, an almost 10-point drop from June, when Italian sovereign debt yields began to climb dramatically and credit rating companies began to raise vocal concerns about the country΄s political stability.

The European Banking Authority (EBA), was conspicuous by its silence

Nicolas Sarkozy, the French president, and Angela Merkel, the German chancellor, will meet in Berlin on Sunday to debate whether a government must empty its pockets to prop up its country's struggling banks, or if the euro region's shared rescue fund can be deployed outside a full-blown emergency. one notch to A+ from AA- and cut Spain's by two rungs, to AA- from AA+, citing a worsening of the eurozone's debt crisis. "A credible and comprehensive solution ... is politically and technically complex and will take time to put in place," it warned.
A string of European banks, including the UK's Royal Bank of Scotland and Lloyds TSB, saw their credit ratings downgraded on Friday, highlighting the pressure on politicians to agree coordinated action to recapitalise the sector.
Overnight deposits at the European Central Bank (ECB) made by eurozone banks reached their highest this year for the fifth consecutive day as banks become less willing to lend to each other, a warning signal of a credit crunch.
The European Commission is expected to offer an outline of a plan to member states before the deadline of October 17, when EU leaders meet for a Brussels summit.

Poland is urging Greece to seek help from the Paris Club - the informal group of creditors which has organised agreements worth $553 billion since it was founded in 1956. Poland's economy minister (also previous prime minister of Poland, and Brigadier General in the country's volunteer fire service), Waldemar Pawlak, said today: Where the Greek debt is concerned, it is necessary to call on the broad institutional experience of groups like the Paris Club which has carried out restructuring in several dozen countries. Good solutions are required and they've proven themselves. There should be no political declarations about Greece going into a controlled default because this leads only to destabilising. Instead, public and private institutions should lead restructuring in order to stabilise the Greek situation in a civilised manner.

Otmar Issing, the European Central Bank's former chief economist, told German TV a move to eurobonds would impoverish Germany and subvert the Bundestag. "That would be catastrophic. I cannot understand how any German politician agree to this," he said. Germany's constitutional court has yet to rule on the legality of EMU's bail-out machinery and is likely to pay close attention to his warnings that the drift of EU policy is to concentrate budgetary powers in the hands of EU officials outside democratic control. Professor Wilhelm Hankel from Frankfurt University said a eurobond is camouflage for fiscal union. "That is forbidden under EU law and the German constitution. Everybody in parliament realises we are very near to the Rubicon and that if they say yes to eurobonds they cannot stop the march to a transfer union." Mrs Merkel's spokesman played down hopes of a breakthrough at Tuesday's meeting, denying reports that eurobonds are on the agenda. The meeting will focus on tougher rules for delinquents. Wolfgang Schäuble, Germany's finance minister, is sticking to the script that the EU's accord in July provides all the tools needed to tackle the crisis. "I'm ruling out eurobonds for as long as member states pursue their own financial policies and we need differing interest rates as a way to provide incentives and sanctions, in order to enforce fiscal solidity. Without this solidity, the foundations for a common currency don't exist," he told Der Spiegel. However, events are moving at lightning speed and markets fear the €440bn bail-out fund (EFSF) is too small to cope with dual strains in Italy and Spain. The crisis has now escalated to a new and dangerous level as concerns over a global double-dip recession put the spotlight on the debt dynamics of France. The French economy stood still in the second quarter and EFSF costs may see the country to lose its AAA rating. The simmering revolt in the Bundestag makes it almost impossible for Mrs Merkel to offer real concessions at Tuesday's emergency summit with French president Nicolas Sarkozy. "We are categorical that the FDP-group will not vote for eurobonds. Everybody must understand that there is no working majority for this," said Frank Schäffler, the finance spokesman for the Free Democrats (FDP).

The cost of insuring European sovereign and corporate debt against default using credit default swaps jumped higher in early trading Friday, as the intensifying euro-zone debt crisis and fears of a global slowdown hit financial markets around the world. The SovX Western Europe index, which investors can use to buy or sell default protection on a basket of 15 sovereign borrowers, was 12.5 basis points wider at 305/311 basis points, according to index owner Markit. CDS function like a default insurance contract for debt. A widening of one basis point in a five-year CDS spread equates to a $1,000 increase in the annual cost of protecting $10 million of debt for five years. The iTraxx Crossover index of 40 mostly sub-investment grade corporate borrowers was 39 basis points wider at 549/553. And the Europe index of 125 investment-grade borrowers was six basis points wider at 137/138. The rise in default-insurance costs comes as stock markets around the world tumble on euro-zone debt fears and worries about a slowing world economy, even after the European Central Bank Thursday bought sovereign bonds for the first time since March. “Today’s U.S. nonfarm payroll figures will be pivotal for market sentiment,” said Christian Weber, strategist at UniCredit Bank.

ECB gives signal for euro-denominated loans to become more expensive. The European Central Bank (ECB) gave the signal for euro-denominated loans to become more expensive yesterday by raising its key interest rate by a quarter of a percentage point, to 1.25% a year, reacting to accelerated inflation. The decision will also impact the Romanian market directly, with almost two thirds of loans granted to individuals and companies being euro-denominated. For instance, a client with a 40,000-euro loan that extends over 30 years used to pay a monthly installment of 230 euros amid an interest of 5.75% a year. If the interest climbs to 6% a year, the installment reaches 240 euros. Euro lending becomes more expensive at a time when the Romanian economy is struggling to come out of an over two year-long recession, but local economists say the impact will not be dramatic.

"Overall, I don't think the impact of the ECB decision will be beneficial to Romania's recovery from recession, but I think in terms of size it will be marginal. In theory, raising the interest makes investments more expensive and saving more attractive. Romania needs investments, but it also needs to save," says Florian Libocor, chief-economist of BRD-SocGen. He says he is considering improving this year's economic growth forecast to 1.5% from 1.2% at present, with the decision being based on expectations of a better absorption of EU funds. Players on international financial markets anticipated the decision, with three-month Euribor (the indicator that reflects the cost at which top-ranking banks lend to each other) yesterday reaching 1.28% a year, the highest level recorded since June 2009, from a 0.6% a year low in the spring of last year.

Cutting social security contributions paid by the employer and the employee by 3% (from an overall 44% to 41% of contributions for every gross salary) could lead to the creation of 100,000 new jobs, while contributions to the state budget would decline by around 380 million euros, according to specialists. The ruling coalition has discussed cutting social security contributions, and the measure could be introduced in the second half of this year. The information was confirmed by Labour Minister Ioan Nelu Botiş, who added that talks on this issue would continue this week. The cut would apply only to contributions paid by the employer. The state collects around 22.9 billion lei in social security contributions in six months' time, with contributions amounting to 44% of employees' gross incomes. If the contribution is cut to 41%, the amount collected by the state is down to 21.3 billion lei, i.e. a decline of 1.6 billion lei (380 million euros), an amount that could remain at the disposal of companies.(source Z.F.)